-----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, BKlB1mHkAplD58d7YHAEuONUdcAFeGy45hbKlQdOd1ty0wCcqlMeTkazS7G28aRw cVT9PNEHv3TuF5UEJweqYQ== 0001005477-01-500824.txt : 20010824 0001005477-01-500824.hdr.sgml : 20010824 ACCESSION NUMBER: 0001005477-01-500824 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20010822 EFFECTIVENESS DATE: 20010822 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-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-68204 FILM NUMBER: 1721698 BUSINESS ADDRESS: STREET 1: 500 CLINTON CENTER DRIVE CITY: CLINTON STATE: MS ZIP: 39056 BUSINESS PHONE: 6014605600 FORMER COMPANY: FORMER CONFORMED NAME: LDDS COMMUNICATIONS INC /GA/ DATE OF NAME CHANGE: 19930916 FORMER COMPANY: FORMER CONFORMED NAME: MCI WORLDCOM INC DATE OF NAME CHANGE: 19980914 FORMER COMPANY: FORMER CONFORMED NAME: WORLDCOM INC /GA/ DATE OF NAME CHANGE: 19970127 S-8 1 s8.txt REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 2001 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------- WORLDCOM, INC. (Exact name of registrant as specified in its charter) GEORGIA 58-1521612 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) ---------------------------------------- 500 CLINTON CENTER DRIVE CLINTON, MISSISSIPPI 39056 (Address of Principal Executive Offices) --------------------------------------------------------- INTERMEDIA COMMUNICATIONS INC. 401(K) PROFIT SHARING PLAN DIGEX, INCORPORATED 401(K) PLAN (Full title of the plans) ------------------------------------ P. BRUCE BORGHARDT, ESQ. WORLDCOM, INC. 10777 SUNSET OFFICE DRIVE, SUITE 330 ST. LOUIS, MISSOURI 63127 (314) 909-4100 (Name, address and telephone number, including area code, of agent for service) ------------------------- CALCULATION OF REGISTRATION FEE
====================================================================================================================== PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE SECURITIES TO BE REGISTERED BE REGISTERED(1) SHARE (2) PRICE (2) (3) - ---------------------------------------------------------------------------------------------------------------------- WorldCom, Inc.-MCI group common stock, 500,000 shares $13.1 $6,550,000 $1,638 par value $0.01 per share................ - ----------------------------------------------------------------------------------------------------------------------
(1) These shares are registered in connection with the Intermedia Communications Inc. 401(k) Profit Sharing Plan and the Digex, Incorporated 401(k) Plan. Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the "Securities Act"), this Registration Statement shall also cover any additional shares of the Registrant's MCI group common stock that may be issued to the Plans described herein by reason of any stock dividend, stock split, recapitalization or other similar transaction leading to an adjustment of the number of the Registrant's outstanding shares of MCI group common stock as well as any additional shares of the Registrant's MCI group common stock that may be issued pursuant to anti-dilution provisions. In addition, pursuant to Rule 416(c) under the Securities Act, this Registration Statement also covers an indeterminate amount of interests to be offered or sold pursuant to the above referenced 401(k) Plans. (2) Estimated solely for the purposes of computing the amount of the registration fee pursuant to Rules 457(h) and 457(c) under the Securities Act, based upon the average of the high and low prices of the WorldCom, Inc.-MCI group common stock as reported on The Nasdaq National Market on August 15, 2001. (3) In accordance with Rule 457(p) under the Securities Act, the filing fee is offset against the filing fee previously paid in connection with WorldCom's Registration Statement on Form S-4 (Registration No. 333-48012) filed with the Securities and Exchange Commission ("SEC") on October 16, 2000 in connection with the merger (the "Merger") of a wholly owned subsidiary of WorldCom, Inc. ("WorldCom") with and into Intermedia Communications Inc. A portion ($685,159) of the filing fee paid in connection with the Registration Statement No. 333-48012 has been carried forward and, in addition to being partly applied towards full payment of the filing fee due hereunder, has been previously applied in part towards full payment of (i) the filing fee of $435,716 due in connection with the offering of 98,110,430 shares of WorldCom, Inc.-WorldCom group common stock and 3,599,217 shares of WorldCom, Inc.-MCI group common stock in connection with the Merger pursuant to WorldCom's Registration Statement on Form S-4 (Registration No. 333-60482) (which also constituted Post-Effective Amendment No. 2 to the Registration Statement No. 333-48012) and (ii) the filing fee of $1,727 due in connection with the prior registration of 500,000 shares of WorldCom, Inc.-WorldCom group common stock in connection with the above referenced 401(k) Plans. - -------------------------------------------------------------------------------- 2 INTRODUCTORY STATEMENT PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS ITEM 1. PLAN INFORMATION. Not required to be filed with the SEC. ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION. Not required to be filed with the SEC. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. We hereby incorporate by reference into this Registration Statement the following documents previously filed with the SEC: (a) Our Annual Report on Form 10-K for the year ended December 31, 2000, as amended; (b) Annual Report on Form 11-K for the year ended December 31, 2000 for the Intermedia Communications Inc. 401(k) Profit Sharing Plan; (c) Transition Report on Form 11-K for the period from July 1, 2000 (inception) to December 31, 2000 for the Digex, Incorporated 401(k) Plan; (d) Our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2001 and June 30, 2001; (e) Our Current Reports on Form 8-K dated April 26, 2001 (filed April 26, 2001), dated May 1, 2001 (filed May 1, 2001), dated May 9, 2001 (filed May 16, 2001), dated June 7, 2001 (filed June 7, 2001) and dated June 8, 2001 (filed June 12, 2001); and (f) The description of WorldCom, Inc.-MCI group common stock set forth in WorldCom's Registration Statement on Form 8-A, under Item 1 - "Description of Registrant's Securities to be Registered", filed on April 25, 2001 pursuant to Section 12 of the Securities and Exchange Act of 1934 (the "Exchange Act"), including any amendments or reports filed for the purpose of updating such description. All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and all documents filed by the Intermedia Communications Inc. 401(k) Profit Sharing Plan or Digex, Incorporated 401(k) Plan pursuant to Section 15(d) of the Exchange Act, in each case subsequent to the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents (such documents, and the 3 documents enumerated above, being hereinafter referred to as "Incorporated Documents"); PROVIDED, HOWEVER, that the documents enumerated above or subsequently filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act or by the Intermedia Communications Inc. 401(k) Profit Sharing Plan or Digex, Incorporated 401(k) Plan pursuant to Section 15(d) of the Exchange Act in each year during which the offering made hereby is in effect prior to the filing with the SEC of our Annual Report on Form 10-K or each Plan's Annual Report on Form 11-K, as applicable, covering such year shall not be Incorporated Documents or be incorporated by reference herein or be a part hereof from and after the filing of such Annual Report on Form 10-K or Form 11-K, as applicable. Any statement contained in an Incorporated Document or in a document deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein or in any subsequently filed document which also is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 14-2-202(b)(4) of the Georgia Business Corporation Code (the "GBCC") provides that a corporation's articles of incorporation may include a provision that eliminates or limits the personal liability of directors for monetary damages to the corporation or its shareholders for any action taken, or any failure to take any action, as a director, PROVIDED, HOWEVER, that the Section does not permit a corporation to eliminate or limit the liability of a director for appropriating, in violation of his or her duties, any business opportunity of the corporation, for acts or omissions including intentional misconduct or a knowing violation of law, receiving from any transaction an improper personal benefit, or voting for or assenting to an unlawful distribution (whether as a dividend, stock repurchase or redemption, or otherwise) as provided in Section 14-2-832 of the GBCC. Section 14-2-202(b)(4) also does not eliminate or limit the rights of us or any shareholder to seek an injunction or other nonmonetary relief in the event of a breach of a director's duty to the corporation and its shareholders. Additionally, Section 14-2-202(b)(4) applies only to claims against a director arising out of his or her role as a director, and does not relieve a director from liability arising from his or her role as an officer or in any other capacity. The provisions of Article Ten of our Second Amended and Restated Articles of Incorporation, as amended, are similar in all substantive respects to those contained in Section 14-2-202(b)(4) of the GBCC as outlined above. Article Ten further provides that the liability of our directors shall be limited to the fullest extent permitted by amendments to Georgia law. Sections 14-2-850 to 14-2-859, inclusive, of the GBCC govern the indemnification of directors, officers, employees, and agents. Section 14-2-851 of the GBCC permits indemnification of an individual for liability incurred by him or her in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal (including, subject to certain limitations, civil actions brought as derivative actions by or in our right) in which 4 he or she is made a party by reason of being our director and a director who, at our request, acts as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. This Section permits indemnification if the director acted in good faith and reasonably believed (1) in the case of conduct in his or her official capacity, that such conduct was in the best interests of the corporation, (2) in all other cases other than a criminal proceeding that such conduct was at least not opposed to the best interests of the corporation, and (3) in the case of a criminal proceeding, that he or she had no reasonable cause to believe his or her conduct was unlawful. If the required standard of conduct is met, indemnification may include judgments, settlements, penalties, fines or reasonable expenses (including attorneys' fees) incurred with respect to a proceeding. A Georgia corporation may not indemnify a director under Section 14-2-851: (1) in connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred by such director in connection with the proceeding provided it is determined that such director met the relevant standard of conduct set forth above, or (2) in connection with any proceeding with respect to conduct for which such director was adjudged liable on the basis that he or she received an improper personal benefit. Prior to indemnifying a director under Section 14-2-851 of the GBCC, a determination must be made that the director has met the relevant standard of conduct. Such determination must be made by: (1) a majority vote of a quorum consisting of disinterested directors; (2) a duly designated committee of disinterested directors; (3) duly selected special legal counsel; or (4) a vote of the shareholders, excluding shares owned by or voted under the control of directors who do not qualify as disinterested directors. Section 14-2-856 of the GBCC provides that a Georgia corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding because he or she is a director, provided that such director delivers to the corporation a written affirmation of his or her good faith belief that he or she met the relevant standard of conduct described in Section 14-2-851 of the GBCC, and a written undertaking by the director to repay any funds advanced if it is ultimately determined that such director was not entitled to such indemnification. Section 14-2-852 of the GBCC provides that directors who are successful with respect to any claim brought against them, which claim is brought because they are or were our directors, are entitled to mandatory indemnification against reasonable expenses incurred in connection therewith. The GBCC also allows a Georgia corporation to indemnify directors made a party to a proceeding without regard to the above-referenced limitations, if authorized by the articles of incorporation or a bylaw, contract, or resolution duly adopted by a vote of the shareholders of the corporation by a majority of votes entitled to be cast, excluding shares owned or voted under the control of the director or directors who are not disinterested, and to advance funds to pay for or reimburse reasonable expenses incurred in the defense thereof, subject to restrictions similar to the restrictions described in the preceding paragraph; PROVIDED, HOWEVER, that the corporation may not indemnify a director adjudged liable (1) for any appropriation, in violation of his or her duties, of any business opportunity of WorldCom, (2) for acts or omissions which involve intentional misconduct or a knowing violation of law, (3) for unlawful distributions under Section 14-2-832 of the GBCC, or (4) for any transaction in which the director obtained an improper personal benefit. Section 14-2-857 of the GBCC provides that an officer of WorldCom (but not an employee or agent generally) who is not a director has the mandatory right of indemnification granted to directors under Section 14-2-852, subject to the same limitations as described above. In addition, we may, as provided by either (1) our Second Amended and Restated Articles of Incorporation, as amended, (2) our Restated Bylaws, (3) general or 5 specific actions by our board of directors or (4) 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 our Restated Bylaws and Article Twelve of our Second Amended and Restated Articles of Incorporation, as amended, are consistent with the foregoing provisions of the GBCC. However, our Second Amended and Restated Articles of Incorporation, as amended, prohibit indemnification of a director who did not believe in good faith that his or her actions were in, or not opposed to, our best interests, or to have improperly received a personal benefit, or in the case of a criminal proceeding, if such director had reasonable cause to believe his or her conduct was unlawful, or in the case of a proceeding by or in the right of us in which such director was adjudged liable to us, unless a court shall determine that the director is fairly and reasonably entitled to indemnification in view of all the circumstances. Our Restated Bylaws extend the indemnification available to officers under the GBCC to employees and agents. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. See Exhibit Index below. ITEM 9. UNDERTAKINGS. (a) The Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; PROVIDED, HOWEVER that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the Registration Statement is on Form S-3 or Form S-8 and the information required to be included in a post-effective amendment by such paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. 6 (2) That, for the purpose 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. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The 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 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 this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act 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 SEC 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 Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Clinton, State of Mississippi, on August 22, 2001. WORLDCOM, INC. By: /s/ Scott D. Sullivan ------------------------------------ Scott D. Sullivan Chief Financial Officer POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints Bernard J. Ebbers, Scott D. Sullivan, and P. Bruce Borghardt, and each of them (with full power to each of them to act alone), his true and lawful attorneys in fact and agents for him and on his behalf and in his name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with exhibits and any and all other documents filed with respect thereto, with the Securities and Exchange Commission (or any other governmental or regulatory authority), granting unto said attorneys, and each of them, full power and authority to do and to perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as he himself might or could do if personally present, hereby ratifying and confirming all that said attorneys in fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE - --------- ----- ---- /s/ Clifford L. Alexander, Jr. Director August 22, 2001 - ------------------------------ Clifford L. Alexander, Jr. /s/ James C. Allen Director August 22, 2001 - ------------------------------ James C. Allen /s/ Judith Areen Director August 22, 2001 - ------------------------------ Judith Areen /s/ Carl J. Aycock Director August 22, 2001 - ------------------------------ Carl J. Aycock /s/ Max E. Bobbitt Director August 22, 2001 - ------------------------------ Max E. Bobbitt 8 /s/ Bernard J. Ebbers Director, President and Chief August 22, 2001 - ------------------------------ Executive Officer (Principal Bernard J. Ebbers Executive Officer) /s/ Francesco Galesi Director August 22, 2001 - ------------------------------ Francesco Galesi /s/ Stiles A. Kellett, Jr. Director August 22, 2001 - ------------------------------ Stiles A. Kellett, Jr. /s/ Gordon S. Macklin Director August 22, 2001 - ------------------------------ Gordon S. Macklin /s/ Bert C. Roberts, Jr. Chairman of the Board August 22, 2001 - ------------------------------ Bert C. Roberts, Jr. /s/ John W. Sidgmore Director August 22, 2001 - ------------------------------ John W. Sidgmore /s/ Scott D. Sullivan Director and Chief Financial August 22, 2001 - ------------------------------ Officer (Principal Financial Scott D. Sullivan Officer and Principal Accounting Officer) 9 THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the trustee (or other persons who administer the employee benefit plan) has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tampa, State of Florida, on this 21st day of August, 2001. INTERMEDIA COMMUNICATIONS INC. 401(K) PROFIT SHARING PLAN, By: /s/ Michael J. Randels ---------------------------------------- Michael J. Randels Plan Administrator 10 THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the trustee (or other persons who administer the employee benefit plan) has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Beltsville, State of Maryland, on this 21st day of August, 2001. DIGEX, INCORPORATED 401(K) PLAN, By: /s/ Tim Walkup ------------------------------------ Tim Walkup Plan Administrator 11 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 3.1 Articles of Amendment to the Second Amended and Restated Articles of Incorporation of WorldCom (amending former Article Seven by inserting Articles Seven D, E, F and G) 3.2 Articles of Amendment to the Second Amended and Restated Articles of Incorporation of WorldCom (amending former Article Four by deleting the text thereof and substituting new Article Four) 3.3 Articles of Amendment to the Second Amended and Restated Articles of Incorporation of WorldCom (amending former Article Eleven by deleting the text thereof and substituting new Article Eleven) 3.4 Second Amended and Restated Articles of Incorporation of WorldCom (including preferred stock designations), as amended as of May 1, 2000 3.5 Restated ByLaws of WorldCom 3.6 Restated Rights Agreement dated as of June 7, 2001, between WorldCom and The Bank of New York, which includes the form of Certificate of Designations, setting forth the terms of the Series 4 Junior Participating Preferred Stock, par value $.01 per share, and the Series 5 Junior Participating Preferred Stock, par value $.01 per share, as Exhibit A, and the form of Rights Certificates as Exhibits B and C (incorporated by reference to Exhibit 4.4 to WorldCom's Current Report on Form 8-K dated June 7, 2001 (filed on June 7, 2001) (File No. 0-11258)) 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Dowell and Perez, P.A. 23.3 Consent of Ernst & Young LLP 24.1 Power of Attorney (included on the signature pages hereto) - ---------- The Registrant will submit or has submitted the Intermedia Communications Inc. 401(k) Profit Sharing Plan and the Digex, Incorporated 401(k) Plan and any amendment thereto to the Internal Revenue Service ("IRS") in a timely manner and has made or will make all changes required by the IRS in order to qualify such plans. EX-3.1 3 ex3-1.txt ARTICLES OF AMENDMENT TO THE SECOND AMENDED Exhibit 3.1 ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF WORLDCOM, INC. Pursuant to the provisions of Section 14-2-602 of the Georgia Business Corporation Code, the undersigned corporation hereby amends its Articles of Incorporation, and for that purpose, submits the following statement: 1. The name of the corporation is WorldCom, Inc. (the "Corporation"). 2. Effective as of the date hereof, Article Seven of the Corporation's Second Amended and Restated Articles of Incorporation, as amended, is amended by inserting the following new Articles Seven D, E, F and G to read in their entirety as follows: "SEVEN D A series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit G." "SEVEN E A series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit H." "SEVEN F A series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit I." "SEVEN G A Series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit J." 3. All other provisions of the Second Amended and Restated Articles of Incorporation, as previously amended, shall remain in full force and effect. 4. The foregoing amendment was approved and adopted on June 7, 2001 by the Board of Directors of the Corporation in accordance with the provisions of Section 14-2-1002 of the Georgia Business Corporation Code. Shareholder action was not required. WORLDCOM, INC. By:_____________________________________ Bernard J. Ebbers President EXHIBIT G 1. DESIGNATION, AMOUNT AND LIQUIDATION PREFERENCE. The designation of this series of Preferred Stock shall be Series D Junior Convertible preferred stock, par value $0.01 per share (the "Series D Preferred Stock"). The number of shares shall be 53,724. The liquidation preference of shares of Series D Preferred Stock shall be $2,500 per share (the "Liquidation Preference"). 2. RANKING. The Series D Preferred Stock shall rank, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation, (i) senior to all classes of common stock of the Corporation and to each other class of capital stock or series of preferred stock established after the Preferred Stock Issue Date by the Board of Directors the terms of which do not expressly provide that it ranks senior to or on a parity with the Series D Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation (collectively referred to with the Common Stock of the Corporation as "Junior Securities"); (ii) on a parity with the Existing Preferred Stock, any additional shares of Series D Preferred Stock issued by the Corporation in the future and any other class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board of Directors, the terms of which expressly provide that such class or series will rank on a parity with the Series D Preferred Stock as to dividend distributions upon the liquidation, winding-up and dissolution of the Corporation (collectively referred to as "Parity Securities"); and (iii) junior to each class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board of Directors the terms of which expressly provide that such class or series will rank senior to the Series D Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Corporation (collectively referred to as "Senior Securities"). No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series D Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a 1 sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Senior Securities. 3. DIVIDENDS. (i) The holders of shares of the Series D Preferred Stock shall be entitled to receive, when, as and if dividends are declared by the Board of Directors out of funds of the Corporation legally available therefor, cumulative dividends from the Prior Dividend Payment Date (whether or not such shares were outstanding on the Prior Dividend Payment Date) accruing at the rate per annum of 7% of the Liquidation Preference per share, payable quarterly in arrears on each July 15, October 15, January 15 and April 15, commencing on July 15, 2001 (each a "Dividend Payment Date"). If any such date is not a Business Day, such payment shall be made on the next succeeding Business Day, to the holders of record as of the next preceding July 1, October 1, January 1 and April 1 (each, a "Record Date"). Dividends will be payable, at the option of the Corporation, (i) in cash, (ii) in Common Stock Units or (iii) through any combination of the foregoing. If the dividends are paid in Common Stock Units, the number of Common Stock Units to be issued on each share of the Series D Preferred Stock on each Dividend Payment Date will be determined by dividing the total dividend to be paid on each share of the Series D Preferred Stock by 95% of the sum of (i) the WCG Stock Amount multiplied by the Average Stock Price as of the Record Date for the WorldCom Group Stock, plus (ii) the MCI Stock Amount multiplied by the Average Stock Price as of the Record Date for the MCI Group Stock. The Transfer Agent is hereby authorized and directed to aggregate any fractional shares of Common Stock that are issued as dividends, sell them at the best available price and distribute the proceeds to the holders in proportion to their respective interests therein. The Corporation shall pay the expenses of the Transfer Agent with respect to such sale, including brokerage commissions. Dividends payable on the Series D Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be deemed to accrue on a daily basis. (ii) Dividends on the Series D Preferred Stock shall accrue whether or not the Corporation has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate to the extent they are not paid on the Dividend Payment Date for the period in which they relate. The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code to permit the payment of dividends on the Series D Preferred Stock, including, without 2 limitation, through the revaluation of its assets in accordance with the Georgia Business Corporation Code, to make or keep funds legally available for the payment of dividends. (iii) No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series D Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Series D Preferred Stock. Unless full cumulative dividends on all outstanding shares of Series D Preferred Stock for all past dividend periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart, then: (a) no dividend (other than a dividend payable solely in shares of any Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities; (b) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities, other than a distribution consisting solely of Junior Securities; (c) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of other Junior Securities) by the Corporation or any of its Subsidiaries; and (d) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities by the Corporation or any of its Subsidiaries. Holders of the Series D Preferred Stock will not be entitled to any dividends, whether payable in cash, property or stock, in excess of the full cumulative dividends as herein described. (iv) When dividends are declared by the Board of Directors, the Corporation shall issue a press release at least 15 Business Days prior to the Record Date setting forth (a) the method of payment for such dividends (cash, Common Stock Unit or a combination thereof) and (b) the pricing period used to determine the Average Stock Price and the then effective Stock Amount for each class or series of the Common Stock to be issued. 4. CONVERSION. (i) A holder of shares of Series D Preferred Stock may convert such shares into Common Stock comprising a Common Stock Unit at any time after the Preferred Stock Issue Date. For the purposes of conversion, each share of Series D Preferred Stock shall be valued at the Liquidation Preference, which shall be 3 divided by the Conversion Price in effect on the Conversion Date to determine the number of Common Stock Units issuable upon conversion, except that the right to convert shares of Series D Preferred Stock called for redemption shall terminate at the close of business on the Business Day preceding the Redemption Date and shall be lost if not exercised prior to that time, unless the Corporation shall default in payment of the Optional Redemption Price. Immediately following such conversion, the rights of the holders of converted Series D Preferred Stock shall cease and the persons entitled to receive the Common Stock upon the conversion of Series D Preferred Stock shall be treated for all purposes as having become the owners of such Common Stock. (ii) To convert Series D Preferred Stock, a holder must (A) surrender the certificate or certificates evidencing the shares of Series D Preferred Stock to be converted, duly endorsed in a form satisfactory to the Corporation, at the office of the Corporation or the Transfer Agent, (B) notify the Corporation at such office that he elects to convert Series D Preferred Stock and the number of shares he wishes to convert, (C) state in writing the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued, and (D) pay any transfer or similar tax if required. In the event that a holder fails to notify the Corporation of the number of shares of Series D Preferred Stock which he wishes to convert, he shall be deemed to have elected to convert all shares represented by the certificate or certificates surrendered for conversion. The date on which the holder satisfies all those requirements is the "Conversion Date." As soon as practical, the Corporation shall deliver certificates for the number of full shares of Common Stock issuable upon the conversion, and a new certificate representing the unconverted portion, if any, of the shares of Series D Preferred Stock represented by the certificate or certificates surrendered for conversion. The person or persons in whose name the Common Stock certificates are registered shall be treated as the stockholder of record on and after the Conversion Date. No payment or adjustment will be made for accrued and unpaid dividends on converted shares of Series D Preferred Stock or for dividends on any class or series of Common Stock issued upon such conversion. A share of Series D Preferred Stock surrendered for conversion during the period from the close of business on any record date for the payment of dividends to the opening of business of the corresponding Dividend Payment Date must be accompanied by a payment in cash, Common Stock Units or a combination thereof, in an amount equal to the dividend payable on such Dividend Payment Date, unless such share of Series D Preferred Stock has been called for 4 redemption on a redemption date occurring during the period from the close of business on any record date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date. The dividend payment with respect to a share of Series D Preferred Stock called for redemption on a date during the period from the close of business on any record date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date will be payable on such Dividend Payment Date to the record holder of such share on such record date, notwithstanding the conversion of such share after such record date and prior to such Dividend Payment Date, and the holder converting such share of Series D Preferred Stock need not include a payment of such dividend amount upon surrender of such share of Series D Preferred Stock for conversion. If a holder of Series D Preferred Stock converts more than one share at a time, the number of full shares of Common Stock issuable upon conversion shall be based on the total Liquidation Preference of all shares of Series D Preferred Stock converted. If the last day on which Series D Preferred Stock may be converted is not a Business Day, Series D Preferred Stock may be surrendered for conversion on the next succeeding Business Day. (iii) The Corporation shall not issue any fractional shares of Common Stock upon conversion of Series D Preferred Stock. Instead the Corporation shall round the results of a conversion up to the nearest full share of each class or series of Common Stock. (iv) If a holder converts shares of Series D Preferred Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the holder shall pay any such tax that is due because the shares are issued in a name other than the holder's name. (v) The Corporation has reserved and shall continue to reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to permit the conversion of the Series D Preferred Stock in full. All shares of Common Stock that may be issued upon conversion of Series D Preferred Stock shall be fully paid and nonassessable. The Corporation shall endeavor to comply with all securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Series D Preferred Stock and shall endeavor to list such shares on each national securities exchange or automated quotation system on which the Common Stock is listed. 5 (vi) In case the Corporation shall pay or make a dividend or other distribution on any class or series of capital stock of the Corporation in a class or series of Common Stock other than the payment of dividends in Common Stock Units on the Series D Preferred Stock or any other regularly scheduled dividend on any other preferred stock which does not trigger any anti-dilution provisions in any other security, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by multiplying such Stock Amount by a fraction the numerator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination and the total number of shares of such class or series of Common Stock constituting such dividend or other distribution, and the denominator of which shall be the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such dividends and distributions. For the purposes of this paragraph 4(vi), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (vii) In case the Corporation shall issue rights, options or warrants to all holders of a class or series of its Common Stock entitling them to subscribe for, purchase or acquire shares of a class or series of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for such determination shall be increased by multiplying such Stock Amount by a fraction the numerator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so 6 offered for subscription, purchase or acquisition and the denominator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of such class or series of Common Stock which the aggregate offering price for the total number of shares of Common Stock so offered for subscription, purchase or acquisition would purchase at such current market price per share, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such rights, options or warrants. However, upon the expiration of any right, option or warrant to purchase such class or series of Common Stock, the issuance of which resulted in an adjustment in a Stock Amount pursuant to this paragraph 4(vii), if any such right, option or warrant shall expire and shall not have been exercised, such Stock Amount shall be recomputed immediately upon such expiration and effective immediately upon such expiration shall be decreased to the amount it would have been (but reflecting any other adjustments to such Stock Amount made pursuant to the provisions of this Section 4 after the issuance of such rights, options or warrants) had the adjustment of the Stock Amount made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of such class or series of Common Stock actually purchased upon the exercise of such rights, options or warrants. No further adjustment shall be made upon exercise of any right, option or warrant if any adjustment shall have been made upon the issuance of such security. For the purposes of this paragraph 4(vii), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not issue any rights, options or warrants in respect of shares of Common Stock held in the treasury of the Corporation. (viii) In case the outstanding shares of a class or series of Common Stock shall be subdivided into a greater number of shares of such class or series of Common Stock, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be increased, and, conversely, in case the outstanding shares of a class or series of Common Stock shall each be combined into a smaller number of shares of such class or series of Common Stock, the applicable Stock Amount in effect at the opening of business on the day following the day upon which such combination becomes effective 7 shall be decreased to equal the product of the applicable Stock Amount in effect on such date and a fraction, the numerator of which shall be the number of shares of such class or series of Common Stock outstanding immediately after such subdivision or combination, as the case may be, and the denominator of which shall be the number of shares of such class or series of Common Stock outstanding immediately prior to such subdivision or combination, as the case may be. Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (ix) In case the Corporation shall, by dividend or otherwise, distribute to all holders of a class or series of its Common Stock (A) evidences of its indebtedness or (B) shares of any class or series of capital stock, cash or other assets (including securities, but excluding (x) any rights, options or warrants referred to in paragraph 4(vii) above, (y) any dividend or distribution referred to in paragraph 4(vi) or 4(viii) above, and (z) cash dividends paid from the Corporation's retained earnings, unless the sum of (1) all such cash dividends and distributions made within the preceding 12 months in respect of which no adjustment has been made and (2) any cash and the fair market value of other consideration paid in respect of any repurchases of such class or series of Common Stock by the Corporation or any of its subsidiaries within the preceding 12 months in respect of which no adjustment has been made, exceeds 20% of the market capitalization for such class or series of Common Stock (being the product of the then current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock times the aggregate number of shares of such class or series of Common Stock then outstanding on the record date for such distribution), then in each case, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for the determination of holders of such class or series of Common Stock entitled to receive such distribution shall be adjusted by multiplying such Stock Amount by a fraction, of which the numerator shall be the current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock on such date of determination (or, if earlier, on the date on which the Common Stock goes "ex-dividend" in respect of such distribution) and the denominator shall be such current market price per share of such class or series of Common Stock less the then fair market value as determined by the Board of Directors (whose 8 determination shall be conclusive and shall be described in a statement filed with the Transfer Agent) of the portion of the capital stock, cash or other assets or evidences of indebtedness so distributed (and for which an adjustment to a Stock Amount has not previously been made pursuant to the terms of this paragraph 4) applicable to one share of such class or series of Common Stock, such adjustment to become effective immediately after the opening of business on the day following such date of determination of the holders entitled to such distribution. The following transactions shall be excluded from the foregoing clauses (1) and (2): (I) repurchases of Common Stock issued under the Corporation's stock incentive programs; and (II) dividends or distributions payable-in-kind in additional shares of, or warrants, rights, calls or options exercisable for or convertible into additional shares of Junior Securities. (x) The reclassification or change of a class or series of Common Stock into securities, including securities other than Common Stock (other than any reclassification upon a consolidation or merger to which paragraph 4(xviii) below shall apply) shall be deemed to involve (A) a distribution of such securities other than Common Stock to all holders of such class or series of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of holders of Common Stock entitled to receive such distribution" within the meaning of paragraph 4(ix) above), and (B) a subdivision or combination, as the case may be, of the number of shares of such class or series of Common Stock outstanding immediately prior to such reclassification into the number of shares of such class or series of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective," as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of paragraph 4(viii) above). (xi) For the purpose of any computation under paragraph 4(vii) or 4(ix) above, the current market price per share of a class or series of Common Stock on any day shall be deemed to be the average of the Closing Prices of a share of such class or series of Common Stock for the 20 consecutive Trading Days selected by the Board of Directors commencing no more than 30 Trading Days before and ending no later than the day before the day in question; provided that, in the case of paragraph 4(ix), if the period between the date of the public announcement of the dividend or distribution and the date for the determination of holders of such class or series of Common Stock entitled to receive such dividend or distribution (or, if earlier, the date 9 on which the Common Stock goes "ex-dividend" in respect of such dividend or distribution) shall be less than 20 Trading Days, the period shall be such lesser number of Trading Days but, in any event, not less than five Trading Days. (xii) No adjustment in a Stock Amount need be made until all cumulative adjustments amount to 1% or more of such Stock Amount as last adjusted. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph 4 shall be made to the nearest 1/10,000th of a cent or the nearest 1/10,000th of a share, as the case may be. (xiii) For purposes of this paragraph 4, "Common Stock" includes WorldCom Group Stock, MCI Group Stock and any other stock of any class or series of the Corporation which has no preference in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which is not subject to redemption by the Corporation. Subject to the provisions of paragraph 4(xviii) below, shares issuable on conversion of shares of Series D Preferred Stock shall include only shares of (i) WorldCom Group Stock, (ii) MCI Group Stock, and (iii) any class or classes or series resulting from any reclassification of WorldCom Group Stock or MCI Group Stock and which have no preferences in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which are not subject to redemption by the Corporation; PROVIDED that, if at any time there shall be more than one such resulting class or series, the shares of each such class or series then so issuable shall be substantially in the proportion which the total number of shares of such class or series resulting from all such reclassifications bears to the total number of shares of all such classes or series resulting from all such reclassifications. (xiv) No adjustment in the Conversion Price shall reduce the Conversion Price below the then aggregate par value of one Common Stock Unit. No adjustment in a Stock Amount need be made under paragraphs 4(vi), 4(vii) and 4(ix) above if the Corporation issues or distributes to each holder of Series D Preferred Stock the shares of Common Stock, evidences of indebtedness, assets, rights, options or warrants referred to in those paragraphs which each holder would have been entitled to receive had Series D Preferred Stock been converted into Common Stock prior to the happening of such event or the record date with respect thereto. 10 (xv) Whenever the Conversion Price or a Stock Amount is adjusted, the Corporation shall promptly mail to holders of Series D Preferred Stock, first class, postage prepaid, a notice of the adjustment. The Corporation shall file with the Transfer Agent for the Series D Preferred Stock, if any, a certificate from the Corporation's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. Subject to paragraph 4(xvi) below, the certificate shall be conclusive evidence that the adjustment is correct. (xvi) The Corporation from time to time may reduce the Conversion Price if it considers such reductions to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of Common Stock by any amount, but in no event may the Conversion Price be less than the aggregate par value of one Common Stock Unit. Whenever the Conversion Price is reduced, the Corporation shall mail to holders of Series D Preferred Stock a notice of the reduction. The Corporation shall mail, first class, postage prepaid, the notice at least 15 days before the date the reduced Conversion Price takes effect. The notice shall state the reduced Conversion Price and the period it will be in effect. A reduction of the Conversion Price does not change or adjust the Conversion Price or any Stock Amount otherwise in effect for purposes of paragraphs 4(vi), 4(vii), 4(viii) and 4(ix) above. (xvii) If: (A) the Corporation takes any action which would require an adjustment in a Stock Amount pursuant to paragraph 4(vii), 4(ix) or 4(x) above; (B) the Corporation consolidates or merges with, or transfers all or substantially all of its assets to, another corporation, and stockholders of the Corporation must approve the transaction; or (C) there is a dissolution or liquidation of the Corporation; the Corporation shall mail to holders of the Series D Preferred Stock, first class, postage prepaid, a notice stating the proposed record or effective date, as the case may be. The Corporation shall mail the notice at least 10 days before such date. However, failure to mail the notice or any defect in it shall not affect the validity of any transaction referred to in clause (A), (B) or (C) of this paragraph 4(xvii). 11 (xviii) In the case of any consolidation of the Corporation or the merger of the Corporation with or into any other entity or the sale or transfer of all or substantially all the assets of the Corporation pursuant to which a class or series of Common Stock is converted into other securities, cash or assets, upon consummation of such transaction, each share of Series D Preferred Stock shall automatically become convertible into the kind and amount of securities, cash or other assets receivable upon the consolidation, merger, sale or transfer by a holder of the number of shares of such class or series of Common Stock into which such share of Series D Preferred Stock might have been converted immediately prior to such consolidation, merger, transfer or sale (assuming such holder of Common Stock failed to exercise any rights of election and received per share the kind and amount of consideration receivable per share by a plurality of non-electing shares). Appropriate adjustment (as determined by the Board of Directors of the Corporation) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of Series D Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustment of the applicable Stock Amount and the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any share of stock or other securities or property thereafter deliverable upon the conversion of Series D Preferred Stock. If this paragraph 4(xviii) applies, paragraphs 4(vi), 4(viii) and 4(x) do not apply. (xix) In any case in which this Section 4 shall require that an adjustment as a result of any event become effective from and after a record date, the Corporation may elect to defer until after the occurrence of such event the issuance to the holder of any shares of Series D Preferred Stock converted after such record date and before the occurrence of such event of the additional shares of Common Stock issuable upon such conversion over and above the shares issuable on the basis of the Stock Amount or Conversion Price in effect immediately prior to adjustment; provided, however, that if such event shall not have occurred and authorization of such event shall be rescinded by the Corporation, the Stock Amount or Conversion Price shall be recomputed immediately upon such recision to the Stock Amount or Conversion Price that would have been in effect had such event not been authorized, provided that such recision is permitted by and effective under applicable laws. 5. LIQUIDATION RIGHTS. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation or reduction or decrease in its capital stock resulting in a 12 distribution of assets to the holders of any class or series of the Corporation's capital stock, each holder of shares of the Series D Preferred Stock will be entitled to payment out of the assets of the Corporation available for distribution of an amount equal to the Liquidation Preference per share of Series D Preferred Stock held by such holder, plus accrued and unpaid dividends and Liquidated Damages, if any, to the date fixed for liquidation, dissolution, winding-up or reduction or decrease in capital stock, before any distribution is made on any Junior Securities, including, without limitation, any class or series of Common Stock of the Corporation. After payment in full of the Liquidation Preference and all accrued dividends and Liquidated Damages, if any, to which holders of Preferred Stock are entitled, such holders will not be entitled to any further participation in any distribution of assets of the Corporation. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the amounts payable with respect to the Series D Preferred Stock and all other Parity Securities are not paid in full, the holders of the Series D Preferred Stock and the Parity Securities will share equally and ratably in any distribution of assets of the Corporation in proportion to the full liquidation preference and accumulated and unpaid dividends and Liquidated Damages, if any, to which each is entitled. However, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more Persons will be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Corporation or reduction or decrease in capital stock, unless such sale, conveyance, exchange or transfer shall be in connection with a liquidation, dissolution or winding-up of the business of the Corporation or reduction or decrease in capital stock. 6. OPTIONAL REDEMPTION. (i) The Series D Preferred Stock may be redeemed for cash, in whole or in part, at the option of the Corporation, at the redemption prices specified below (expressed as percentages of the Liquidation Preference thereof), in each case, together with accumulated and unpaid dividends (including an amount in cash equal to a prorated dividend for any partial dividend period) and Liquidated Damages, if any, to the date of redemption (the "Applicable Redemption Price"), upon not less than 30 nor more than 60 days' prior written notice, if redeemed during the 12-month period commencing on July 19 of each of the years set forth below: 13
YEAR PERCENTAGE ---- ---------- 2001................................ 103.00% 2002................................ 102.00% 2003................................ 101.00% 2004 and thereafter................. 100.00%
No optional redemption pursuant to this paragraph 6(i) shall be authorized or made unless, prior to giving the applicable redemption notice, all accumulated and unpaid dividends for periods ended prior to the date of such redemption notice shall have been paid in cash, Common Stock Units or a combination thereof. (ii) In case of redemption of less than all of the shares of Series D Preferred Stock at the time outstanding, the shares to be redeemed shall be selected PRO RATA or by lot as determined by the Corporation in its sole discretion. (iii) Notice of any redemption shall be sent by or on behalf of the Corporation not less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the "Redemption Date"), by first class mail, postage prepaid, to all holders of record of the Series D Preferred Stock at their last addresses as they shall appear on the books of the Corporation; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series D Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which Series D Preferred Stock may be listed or admitted to trading, such notice shall state: (i) that such redemption is being made pursuant to the optional redemption provisions hereof; (ii) the Redemption Date; (iii) the Applicable Redemption Price; (iv) the number of shares of Series D Preferred Stock to be redeemed and, if less than all shares held by such holder are to be redeemed, the number of such shares to be redeemed; (v) the place or places where certificates for such shares are to be surrendered for payment of the Applicable Redemption Price, including any procedures applicable to redemptions to be accomplished through book-entry transfers; and (vi) that dividends on the shares to be redeemed will cease to accumulate on the Redemption Date. Upon the mailing of any such notice of redemption, the Corporation shall become obligated to redeem at the time of redemption specified thereon all shares called for redemption. 14 (iv) If notice has been mailed in accordance with Section 6(iii) above and provided that on or before the Redemption Date specified in such notice, all funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds in trust for the PRO RATA benefit of the holders of the shares so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, dividends on the shares of the Series D Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series D Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the Applicable Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the Applicable Redemption Price. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof. (v) Any funds deposited with a bank or trust company for the purpose of redeeming Series D Preferred Stock shall be irrevocable except that: (a) the Corporation shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (b) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series D Preferred Stock entitled thereto at the expiration of two years from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings. (vi) No Series D Preferred Stock may be redeemed except with funds legally available for such purpose. The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code to permit any such redemption. 15 (vii) Notwithstanding the foregoing provisions of this Section 6, unless the full cumulative dividends on all outstanding shares of Series D Preferred Stock shall have been paid or contemporaneously are declared and paid for all past dividend periods, none of the shares of Series D Preferred Stock shall be redeemed unless all outstanding shares of Series D Preferred Stock are simultaneously redeemed. 7. CHANGE OF CONTROL. (i) Subject to paragraph 7(v) hereof, upon the occurrence of a Change of Control, the Corporation shall be required to make an offer (a "Preferred Stock Change of Control Offer") to each holder of shares of Series D Preferred Stock to repurchase all or any part of such holder's shares of Series D Preferred Stock at an offer price in cash equal to 100% of the aggregate Liquidation Preference thereof, plus accumulated and unpaid dividends (including an amount equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Change of Control Payment Date) and Liquidated Damages, if any, thereon to the date of repurchase (the "Change of Control Payment"). (ii) Within 30 days following any Change of Control, the Corporation shall (a) publish a notice of the Change of Control in The Wall Street Journal or a similar daily business publication of national distribution and (b) mail a notice to each holder of Series D Preferred Stock describing the transaction that constitutes the Change of Control, together with such other information as may be required pursuant to the securities laws, and stating: (A) that the Change of Control Offer is being made pursuant to this Certificate of Designations and that, to the extent lawful, all shares of Series D Preferred Stock validly tendered will be accepted for payment; (B) the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (C) that any shares of Series D Preferred Stock not tendered will continue to accrue dividends in accordance with the terms of this Certificate of Designations; (D) that, unless the Corporation defaults in the payment of the Change of Control Payment, all shares of Series D Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to accrue dividends on the Change of Control Payment Date; and (E) a description of the procedures to be followed by such holder in order to have its shares of Series D Preferred Stock repurchased. (iii) On the Change of Control Payment Date, the Corporation shall, to the extent lawful, (A) accept for payment shares of 16 Series D Preferred Stock validly tendered pursuant to the Change of Control Offer and (B) promptly mail to each holder of shares of Series D Preferred Stock so accepted payment in an amount equal to the purchase price for such shares and (C) unless the Corporation defaults in the payment for the shares of Series D Preferred Stock tendered pursuant to the Preferred Stock Change of Control Offer, dividends will cease to accrue with respect to the shares of Series D Preferred Stock tendered and all rights of holders of such tendered shares will terminate, except for the right to receive payment therefor, on the Change of Control Payment Date. The Corporation shall publicly announce the results of the Preferred Stock Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (iv) The Corporation shall comply with any securities laws and regulations, to the extent such laws and regulations are applicable to the repurchase of shares of the Series D Preferred Stock in connection with a Change of Control. (v) Notwithstanding the foregoing, prior to complying with this paragraph 7, but in any event within 90 days following a Change of Control, the Corporation shall either (a) repay or refinance all outstanding indebtedness or (b) obtain the requisite consents, if any, under all agreements governing outstanding indebtedness necessary to permit the repurchase of the Series D Preferred Stock required by this paragraph 7. The Corporation must first comply with the covenants in its outstanding indebtedness or take the actions described in the preceding sentence before it will be required to repurchase shares of Series D Preferred Stock in the event of a Change of Control; provided, that if the Corporation fails to repurchase shares of Series D Preferred Stock, the sole remedy to holders of Series D Preferred Stock will be the voting rights arising from a Voting Rights Triggering Event. (vi) Notwithstanding the foregoing, the Corporation shall not be required to make a Preferred Stock Change of Control Offer following a Change of Control if a third party makes the Preferred Stock Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Certificate of Designations applicable to a Preferred Stock Change of Control Offer made by the Corporation and purchases all of the Series D Preferred Stock validly tendered and not withdrawn under such Preferred Stock Change of Control Offer. 8. VOTING RIGHTS. 17 (i) The holders of record of outstanding shares of the Series D Preferred Stock shall be entitled to vote, together with the outstanding shares of Common Stock and any other classes of voting securities of the Corporation, including the Existing Preferred Stock, as one class, except as otherwise required by Georgia law, on all matters on which holders of Common Stock are entitled to vote. Each outstanding share of Series D Preferred Stock shall be entitled to one-tenth of one vote per share of Series D Preferred Stock. Additionally, the holders of record of shares of the Series D Preferred Stock shall have voting rights as required by law and as hereinafter provided in this Section 8. (ii) Upon: (a) the accumulation of accrued and unpaid dividends on the outstanding Series D Preferred Stock in an amount equal to six (6) quarterly dividends (whether or not consecutive); or (b) the failure of the Corporation to make a Preferred Stock Change of Control Offer or to repurchase all of the Series D Preferred Stock tendered in a Preferred Stock Change of Control Offer (each of the events described in clauses (a) and (b) being referred to herein as a "Voting Rights Triggering Event"); then the holders of a majority of the outstanding shares of Series D Preferred Stock, voting as a separate single class, shall be entitled to elect such number of members to the Board of Directors of the Corporation constituting at least 20% of the then existing Board of Directors before such election (rounded to the nearest whole number), provided, however, that such number shall be no less than one nor greater than two, and the number of members of the Corporation's Board of Directors shall be immediately and automatically increased by one or two, as the case may be. (iii) Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of Series D Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such annual meetings or by written consent of the holders of Series D Preferred Stock. Such right of the holders of Series D Preferred Stock to elect directors may be exercised until (a) all dividends in arrears shall have been paid in full and (b) all other Voting Rights Triggering Events have been cured or waived, at which time the terms of such directors previously 18 elected shall thereupon terminate, and such directors shall be deemed to have resigned. (iv) At any time when such voting right shall have vested in the holders of Series D Preferred Stock and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of holders of record of 10% or more of the Series D Preferred Stock then outstanding, addressed to the Secretary of the Corporation, call a special meeting of holders of Series D Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation or, if none, at a place designated by the Secretary of the Corporation. If such meeting shall not be called by the proper officers of the Corporation within 30 days after the personal service of such written request upon the Secretary of the Corporation, or within 30 days after mailing the same within the United States, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% of the shares of Series D Preferred Stock then outstanding may designate in writing a holder of Series D Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders and shall be held at the place for holding annual meetings of the Corporation or, if none, at a place designated by such holder. Any holder of Series D Preferred Stock that would be entitled to vote at such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this Section 8. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called if any such request is received less than 90 days before the date fixed for the next ensuing annual or special meeting of stockholders. (v) If any director so elected by the holders of Series D Preferred Stock shall cease to serve as a director before his term shall expire, the holders of Series D Preferred Stock then outstanding may, at a special meeting of the holders called as provided above, elect a successor to hold office for the unexpired term of the director whose place shall be vacant. (vi) The Corporation shall not, without the affirmative vote or consent of the holders of at least a majority of the shares of Series D Preferred Stock then outstanding (with shares held by the Corporation or any of its Affiliates not being 19 considered to be outstanding for this purpose) voting or consenting as the case may be, as one class: (a) authorize, create (by way of reclassification or otherwise) or issue any Senior Securities or any obligation or security convertible or exchangeable into or evidencing the right to purchase, shares of any class or series of Senior Securities; (b) amend or otherwise alter this Certificate of Designation (including the provisions of Section 8 hereof) in any manner that adversely affects the specified rights, preferences, privileges or voting rights of holders of Series D Preferred Stock; (c) authorize the issuance of any additional shares of Series D Preferred Stock; or (d) waive any existing Voting Rights Triggering Event or compliance with any provision of this Certificate of Designation; provided, however, that the Corporation shall not amend the Change of Control provisions of this Certificate of Designation (including the related definitions) without the approval of the holders of at least 662/3% of the then outstanding shares of Series D Preferred Stock, voting or consenting, as the case may be, as one class. (vii) Without the consent of each holder affected, an amendment or waiver of the Corporation's Articles of Incorporation or of this Certificate of Designation may not (with respect to any shares of Series D Preferred Stock held by a non-consenting holder): (a) alter the rights with respect to the Series D Preferred Stock or reduce the number of shares of Series D Preferred Stock whose holders must consent to an amendment, supplement or waiver; (b) reduce the Liquidation Preferences of or alter the provisions with respect to the redemption of the Series D Preferred Stock (except as provided with respect to Section 7 hereof); (c) reduce the rate of or change the time for payment of dividends on any share of Series D Preferred Stock; (d) waive the consequences of any failure to pay dividends on the Series D Preferred Stock; 20 (e) make any share of Series D Preferred Stock payable in any form other than that stated in this Certificate of Designation; (f) make any change in the provisions of this Certificate of Designation relating to waivers of the rights of holders of Series D Preferred Stock to receive the Liquidation Preference and dividends on the Series D Preferred Stock; (g) waive a redemption payment with respect to any share of Series D Preferred Stock (except as provided with respect to Section 7 hereof); or (h) make any changes in the foregoing amendment and waiver provisions. (viii) The Corporation in its sole discretion may without the vote or consent of any holders of the Series D Preferred Stock amend or supplement this Certificate of Designation: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Series D Preferred Stock in addition to or in place of certificated Series D Preferred Stock; or (c) to make any change that would provide any additional rights or benefits to the holders of the Series D Preferred Stock or that does not adversely affect the legal rights under this Certificate of Designation of any such holder. Except as set forth above, (x) the creation, authorization or issuance of any shares of Junior Securities, Parity Securities or Senior Securities or (y) the increase or decrease in the amount of authorized capital stock of any class, including any preferred stock, shall not require the consent of the holders of the Series D Preferred Stock and shall not be deemed to affect adversely the rights, preferences, privileges, special rights or voting rights of holders of shares of Series D Preferred Stock. 9. MERGER, CONSOLIDATION AND SALE OF ASSETS. Without the vote or consent of the holders of a majority of the then outstanding shares of Series D Preferred Stock, the Corporation may not consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, any person unless (i) the entity formed by such consolidation or merger (if other than the Corporation) or to which such sale, assignment, transfer, lease, 21 conveyance or other disposition shall have been made (in any such case, the "resulting entity") is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) if the Corporation is not the resulting entity, the Series D Preferred Stock is converted into or exchanged for and becomes shares of such resulting entity, having in respect of such resulting entity the same (or more favorable) powers, preferences and relative, participating, optional or other special rights thereof that the Series D Preferred Stock had immediately prior to such transaction; and (iii) immediately after giving effect to such transaction, no Voting Rights Triggering Event has occurred and is continuing. The resulting entity of such transaction shall thereafter be deemed to be the "Corporation" for all purposes of this Certificate of Designations. 10. REPORTS. The Corporation shall file within 15 days after it files them with the Commission copies of the annual and quarterly reports and the information, documents, and other reports that the Corporation is required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports") with the Transfer Agent. In the event the Corporation is not required or shall cease to be required to file SEC Reports, pursuant to the Exchange Act, the Corporation shall nevertheless continue to file such reports with the Commission (unless the Commission shall not accept such a filing) and the Transfer Agent. Whether or not required by the Exchange Act to file SEC Reports with the Commission, as long as any Series D Preferred Stock are outstanding, the Corporation shall furnish copies of the SEC Reports to the holders of Series D Preferred Stock at the time the Corporation is required to make such information available to the Transfer Agent and any investors who request it in writing. In addition, the Corporation has agreed that, for so long as any Series D Preferred Stock remains outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. 11. AMENDMENT. This Certificate of Designation shall not be amended, either directly or indirectly, or through merger or consolidation with another entity, in any manner that would alter or change the powers, preferences or special rights of the Series D Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding Series D Preferred Stock, voting separately as a class. 22 12. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Series D Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Designation and in the Articles of Incorporation. The shares of Series D Preferred Stock shall have no preemptive or subscription rights. 13. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 14. SEVERABILITY OF PROVISIONS. If any voting powers, preferences and relative, participating, optional and other special rights of the Series D Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series D Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Series D Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Series D Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Series D Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein. 15. REISSUANCE OF PREFERRED STOCK. Shares of Series D Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Georgia) have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to series and may be designated or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation, provided that any issuance of such shares as Series D Preferred Stock must be in compliance with the terms hereof. 23 16. MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES. If any of the Series D Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall issue, in exchange and in substitution for and upon cancellation of the mutilated Series D Preferred Stock certificate, or in lieu of and substitution for the Series D Preferred Stock certificate lost, stolen or destroyed, a new Series D Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Series D Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Series D Preferred Stock certificate and indemnity, if requested, satisfactory to the Corporation and the Transfer Agent (if other than the Corporation). 17. CERTAIN DEFINITIONS. As used in this Certificate of Designations, the following terms shall have the following meanings (with terms defined in the singular but having comparable meanings when used in the plural and VICE VERSA), unless the context otherwise requires: "AVERAGE STOCK PRICE" means with respect to a security, as of a certain date, the average of the high and low sales prices of such security as reported by the Nasdaq National Market or any national securities exchange upon which such security is then listed, for each of the ten consecutive Trading Days immediately preceding the fifth Trading Day preceding such date. "BOARD" means the board of directors of the Corporation. "BUSINESS DAY" means any day except a Saturday, a Sunday, or any day on which banking institutions in New York, New York are required or authorized by law or other governmental action to be closed. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Corporation and its subsidiaries, taken as a whole, (ii) the adoption of a plan relating to the liquidation or dissolution of the Corporation, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the Corporation, unless (A) the aggregate market price 24 for shares of Common Stock comprising a Common Stock Unit based upon the Closing Price per share of each class or series of Common Stock comprising a Common Stock Unit for any five Trading Days within the period of ten consecutive Trading Days ending immediately after the announcement of such Change of Control equals or exceeds 105% of the Conversion Price then in effect or (B) at least 90% of the consideration in the transaction or transactions constituting a Change of Control pursuant to clause (iii) consists of shares of common stock traded or to be traded immediately following such Change of Control on a national securities exchange or the Nasdaq National Market and, as a result of such transaction or transactions, the Series D Preferred Stock becomes convertible solely into such common stock (and any rights attached thereto), or (iv) the first day on which more than a majority of the Board of Directors are not Continuing Directors; provided, however, that a transaction in which the Corporation becomes a subsidiary of another entity shall not constitute a Change of Control if (A) the stockholders of the Corporation immediately prior to such transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the Corporation immediately following the consummation of such transaction and (B) immediately following the consummation of such transaction, no "person" or "group" (as such terms are defined above), other than such other entity (but including holders of equity interests of such other entity), "beneficially owns" (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding voting stock of the Corporation. "CLOSING PRICE" means, for each Trading Day, the last reported sale price regular way on the Nasdaq National Market or, if the class or series of Common Stock is not quoted on the Nasdaq National Market, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the corporation for that purpose. "COMMISSION" means the Securities and Exchange Commission. "COMMON STOCK" means any class or series of common stock of the Corporation including the WorldCom Group Stock and the MCI Group Stock. "COMMON STOCK UNIT" means a number of shares of WorldCom Group Stock equal to the WCG Stock Amount and a number of shares of MCI Group Stock equal to the MCI Stock Amount. 25 "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of the Corporation who (a) was a member of the Board of Directors on the Preferred Stock Issue Date or (b) was nominated for election to the Board of Directors with the approval of, or whose election was ratified by, at least two-thirds of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election. "CONVERSION PRICE" shall initially mean $19.45 per share and thereafter shall be subject to adjustment from time to time pursuant to the terms of paragraph 4 hereof. "CORPORATION" mean WorldCom, Inc., a Georgia corporation and its successors. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXISTING PREFERRED STOCK" means the Series B Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock. "LIQUIDATED DAMAGES" means all liquidated damages then owing under the Registration Rights Agreement. "MCI GROUP STOCK" means the WorldCom, Inc. - MCI Group Common Stock, par value $0.01 per share of the Corporation. "MCI STOCK AMOUNT" means the number of shares of MCI Group Stock in a Common Stock Unit, as adjusted from time to time pursuant to Section 4 of this Certificate of Designation. The MCI Stock Amount shall initially be 1/25 of a share of MCI Group Stock. "MERGER" means the merger of Merger Sub with and into Intermedia Communications Inc. pursuant to the Merger Agreement. "MERGER AGREEMENT" means the Agreement and Plan of Merger dated September 1, 2000, as amended by the First Amendment dated February 15, 2001 and the Second Amendment dated as of May 14, 2001, among the Corporation, Merger Sub and Intermedia Communications Inc. "MERGER SUB" means Wildcat Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Corporation. "PERSON" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, 26 unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PREFERRED STOCK ISSUE DATE" means July 1, 2001. "PRIOR DIVIDEND PAYMENT DATE" means April 15, 2001. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement with respect to the Preferred Stock, dated as of July 9, 1997, by and among the Company, Bear, Stearns & Co. Inc. and Salomon Brothers Inc, as such agreement may be amended, modified or supplemented from time to time. "SERIES B PREFERRED STOCK" means the Corporation's outstanding 7.75% Series B Convertible Preferred Stock "SERIES E PREFERRED STOCK" means the Corporation's outstanding 7% Series E Junior Convertible Preferred Stock. "SERIES F PREFERRED STOCK" means the Corporation's outstanding 7% Series F Junior Convertible Preferred Stock. "SERIES G PREFERRED STOCK" means the Corporation's outstanding 7% Series G Junior Convertible Participating Preferred Stock. "STOCK AMOUNT" means with respect to the MCI Group Stock, the MCI Stock Amount, and with respect to the WorldCom Group Stock, the WCG Stock Amount. "TRADING DAY" means any day on which the Nasdaq National Market or other applicable stock exchange or market is open for business. "TRANSFER AGENT" shall be The Bank of New York unless and until a successor is selected by the Corporation. "WCG STOCK AMOUNT" means the number of shares of WorldCom Group Stock in a Common Stock Unit, as adjusted from time to time pursuant to Section 4 of this Certificate of Designation. The WCG Stock Amount shall initially be one share of WorldCom Group Stock. "WORLDCOM GROUP STOCK" means the WorldCom, Inc. - WorldCom Group Common Stock, par value $0.01 per share of the Corporation. 27 EXHIBIT H 1. DESIGNATION, AMOUNT AND LIQUIDATION PREFERENCE. The designation of this series of Preferred Stock shall be Series E Junior Convertible preferred stock, par value $0.01 per share (the "Series E Preferred Stock"). The number of shares shall be 64,047. The liquidation preference of shares of Series E Preferred Stock shall be $2,500 per share (the "Liquidation Preference"). 2. RANKING. The Series E Preferred Stock shall rank, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation, (i) senior to all classes of common stock of the Corporation and to each other class of capital stock or series of preferred stock established after the Preferred Stock Issue Date by the Board of Directors the terms of which do not expressly provide that it ranks senior to or on a parity with the Series E Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation (collectively referred to with the Common Stock of the Corporation as "Junior Securities"); (ii) on a parity with the Existing Preferred Stock, any additional shares of Series D Preferred Stock or Series E Preferred Stock issued by the Corporation in the future and any other class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board of Directors, the terms of which expressly provide that such class or series will rank on a parity with the Series E Preferred Stock as to dividend distributions upon the liquidation, winding-up and dissolution of the Corporation (collectively referred to as "Parity Securities"); and (iii) junior to each class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board of Directors the terms of which expressly provide that such class or series will rank senior to the Series E Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Corporation (collectively referred to as "Senior Securities"). 1 No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series E Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Senior Securities. 3. DIVIDENDS. (i) The holders of shares of the Series E Preferred Stock shall be entitled to receive, when, as and if dividends are declared by the Board of Directors out of funds of the Corporation legally available therefor, cumulative dividends from the Prior Dividend Payment Date (whether or not such shares were outstanding on the Prior Dividend Payment Date) accruing at the rate per annum of 7% of the Liquidation Preference per share, payable quarterly in arrears on each July 15, October 15, January 15 and April 15, commencing on July 15, 2001 (each a "Dividend Payment Date"). If any such date is not a Business Day, such payment shall be made on the next succeeding Business Day, to the holders of record as of the next preceding July 1, October 1, January 1 and April 1 (each, a "Record Date"). Dividends will be payable, at the option of the Corporation, (i) in cash, (ii) in Common Stock Units or (iii) through any combination of the foregoing. If the dividends are paid in Common Stock Units, the number of Common Stock Units to be issued on each share of the Series E Preferred Stock on each Dividend Payment Date will be determined by dividing the total dividend to be paid on each share of the Series E Preferred Stock by 95% of the sum of (i) the WCG Stock Amount multiplied by the Average Stock Price as of the Record Date for the WorldCom Group Stock, plus (ii) the MCI Stock Amount multiplied by the Average Stock Price as of the Record Date for the MCI Group Stock. The Transfer Agent is hereby authorized and directed to aggregate any fractional shares of Common Stock that are issued as dividends, sell them at the best available price and distribute the proceeds to the holders in proportion to their respective interests therein. The Corporation shall pay the expenses of the Transfer Agent with respect to such sale, including brokerage commissions. In the event the sale by the Transfer Agent of such aggregated fractional interests would be restricted, the Corporation and the Transfer Agent will agree upon other appropriate arrangements for the cash realization of the fractional interests. Dividends payable on the Series E Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be deemed to accrue on a daily basis. 2 (ii) Dividends on the Series E Preferred Stock shall accrue whether or not the Corporation has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate to the extent they are not paid on the Dividend Payment Date for the period in which they relate. The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code to permit the payment of dividends on the Series E Preferred Stock, including, without limitation, through the revaluation of its assets in accordance with the Georgia Business Corporation Code, to make or keep funds legally available for the payment of dividends. (iii) No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series E Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Series E Preferred Stock. Unless full cumulative dividends on all outstanding shares of Series E Preferred Stock for all past dividend periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart, then: (a) no dividend (other than a dividend payable solely in shares of any Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities; (b) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities, other than a distribution consisting solely of Junior Securities; (c) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of other Junior Securities) by the Corporation or any of its Subsidiaries; and (d) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities by the Corporation or any of its Subsidiaries. Holders of the Series E Preferred Stock will not be entitled to any dividends, whether payable in cash, property or stock, in excess of the full cumulative dividends as herein described. (iv) When dividends are declared by the Board of Directors, the Corporation shall issue a press release at least 15 Business Days prior to the Record Date setting forth (a) the method of payment for such dividends (cash, Common Stock Unit or a combination thereof) and (b) the pricing period used to determine the Average Stock Price and the then effective Stock 3 Amount for each class or series of the Common Stock to be issued. 4. CONVERSION. (i) A holder of shares of Series E Preferred Stock may convert such shares into Common Stock comprising a Common Stock Unit at any time after the Preferred Stock Issue Date. For the purposes of conversion, each share of Series E Preferred Stock shall be valued at the Liquidation Preference, which shall be divided by the Conversion Price in effect on the Conversion Date to determine the number of Common Stock Units issuable upon conversion, except that the right to convert shares of Series E Preferred Stock called for redemption shall terminate at the close of business on the Business Day preceding the Redemption Date and shall be lost if not exercised prior to that time, unless the Corporation shall default in payment of the Applicable Redemption Price. Immediately following such conversion, the rights of the holders of converted Series E Preferred Stock shall cease and the persons entitled to receive the Common Stock upon the conversion of Series E Preferred Stock shall be treated for all purposes as having become the owners of such Common Stock. (ii) To convert Series E Preferred Stock, a holder must (A) surrender the certificate or certificates evidencing the shares of Series E Preferred Stock to be converted, duly endorsed in a form satisfactory to the Corporation, at the office of the Corporation or the Transfer Agent, (B) notify the Corporation at such office that he elects to convert Series E Preferred Stock and the number of shares he wishes to convert, (C) state in writing the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued, and (D) pay any transfer or similar tax if required. In the event that a holder fails to notify the Corporation of the number of shares of Series E Preferred Stock which he wishes to convert, he shall be deemed to have elected to convert all shares represented by the certificate or certificates surrendered for conversion. The date on which the holder satisfies all those requirements is the "Conversion Date." As soon as practical, the Corporation shall deliver certificates for the number of full shares of Common Stock issuable upon the conversion, and a new certificate representing the unconverted portion, if any, of the shares of Series E Preferred Stock represented by the certificate or certificates surrendered for conversion. The person or persons in whose name the Common Stock certificates are registered shall be treated as the stockholder of record on and after the Conversion Date. No payment or adjustment will be made for accrued and unpaid dividends on converted shares of Series E 4 Preferred Stock or for dividends on any class or series of Common Stock issued upon such conversion. A share of Series E Preferred Stock surrendered for conversion during the period from the close of business on any record date for the payment of dividends to the opening of business of the corresponding Dividend Payment Date must be accompanied by a payment in cash, Common Stock Units or a combination thereof, in an amount equal to the dividend payable on such Dividend Payment Date, unless such share of Series E Preferred Stock has been called for redemption on a redemption date occurring during the period from the close of business on any record date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date. The dividend payment with respect to a share of Series E Preferred Stock called for redemption on a date during the period from the close of business on any record date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date will be payable on such Dividend Payment Date to the record holder of such share on such record date, notwithstanding the conversion of such share after such record date and prior to such Dividend Payment Date, and the holder converting such share of Series E Preferred Stock need not include a payment of such dividend amount upon surrender of such share of Series E Preferred Stock for conversion. If a holder of Series E Preferred Stock converts more than one share at a time, the number of full shares of Common Stock issuable upon conversion shall be based on the total Liquidation Preference of all shares of Series E Preferred Stock converted. If the last day on which Series E Preferred Stock may be converted is not a Business Day, Series E Preferred Stock may be surrendered for conversion on the next succeeding Business Day. (iii) The Corporation shall not issue any fractional shares of Common Stock upon conversion of Series E Preferred Stock. Instead the Corporation shall round the results of a conversion up to the nearest full share of each class or series of Common Stock. (iv) If a holder converts shares of Series E Preferred Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the holder shall pay any such tax that is due because the shares are issued in a name other than the holder's name. (v) The Corporation has reserved and shall continue to reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to 5 permit the conversion of the Series E Preferred Stock in full. All shares of Common Stock that may be issued upon conversion of Series E Preferred Stock shall be fully paid and nonassessable. The Corporation shall endeavor to comply with all securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Series E Preferred Stock and shall endeavor to list such shares on each national securities exchange or automated quotation system on which the Common Stock is listed. (vi) In case the Corporation shall pay or make a dividend or other distribution on any class or series of capital stock of the Corporation in a class or series of Common Stock other than the payment of dividends in Common Stock Units on the Series E Preferred Stock or any other regularly scheduled dividend on any other preferred stock which does not trigger any anti-dilution provisions in any other security, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by multiplying such Stock Amount by a fraction the numerator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination and the total number of shares of such class or series of Common Stock constituting such dividend or other distribution, and the denominator of which shall be the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such dividends and distributions. For the purposes of this paragraph 4(vi), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (vii) In case the Corporation shall issue rights, options or warrants to all holders of a class or series of its Common Stock entitling them to subscribe for, purchase or acquire shares of a class or series of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants, the Stock Amount with respect to such class or series of Common Stock and, as a 6 result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for such determination shall be increased by multiplying such Stock Amount by a fraction the numerator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription, purchase or acquisition and the denominator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of such class or series of Common Stock which the aggregate offering price for the total number of shares of Common Stock so offered for subscription, purchase or acquisition would purchase at such current market price per share, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such rights, options or warrants. However, upon the expiration of any right, option or warrant to purchase such class or series of Common Stock, the issuance of which resulted in an adjustment in a Stock Amount pursuant to this paragraph 4(vii), if any such right, option or warrant shall expire and shall not have been exercised, such Stock Amount shall be recomputed immediately upon such expiration and effective immediately upon such expiration shall be decreased to the amount it would have been (but reflecting any other adjustments to the Stock Amount made pursuant to the provisions of this Section 4 after the issuance of such rights, options or warrants) had the adjustment of the Stock Amount made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of such class or series of Common Stock actually purchased upon the exercise of such rights, options or warrants. No further adjustment shall be made upon exercise of any right, option or warrant if any adjustment shall have been made upon the issuance of such security. For the purposes of this paragraph 4(vii), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not issue any rights, options or warrants in respect of shares of Common Stock held in the treasury of the Corporation. (viii) In case the outstanding shares of a class or series of Common Stock shall be subdivided into a greater number of shares of such class or series of Common Stock, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common 7 Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be increased, and, conversely, in case the outstanding shares of a class or series of Common Stock shall each be combined into a smaller number of shares of such class or series of Common Stock, the applicable Stock Amount in effect at the opening of business on the day following the day upon which such combination becomes effective shall be decreased to equal the product of the applicable Stock Amount in effect on such date and a fraction, the numerator of which shall be the number of shares of such class or series of Common Stock outstanding immediately after such subdivision or combination, as the case may be, and the denominator of which shall be the number of shares of such class or series of Common Stock outstanding immediately prior to such subdivision or combination, as the case may be. Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (ix) In case the Corporation shall, by dividend or otherwise, distribute to all holders of a class or series of its Common Stock (A) evidences of its indebtedness or (B) shares of any class or series of capital stock, cash or other assets (including securities, but excluding (x) any rights, options or warrants referred to in paragraph 4(vii) above, (y) any dividend or distribution referred to in paragraph 4(vi) or 4(viii) above, and (z) cash dividends paid from the Corporation's retained earnings, unless the sum of (1) all such cash dividends and distributions made within the preceding 12 months in respect of which no adjustment has been made and (2) any cash and the fair market value of other consideration paid in respect of any repurchases of such class or series of Common Stock by the Corporation or any of its subsidiaries within the preceding 12 months in respect of which no adjustment has been made, exceeds 20% of the market capitalization for such class or series of Common Stock (being the product of the then current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock times the aggregate number of shares of such class or series of Common Stock then outstanding on the record date for such distribution), then in each case, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for the determination of holders of such class or series of Common Stock entitled to receive such distribution shall be adjusted by multiplying such Stock Amount by a 8 fraction, of which the numerator shall be the current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock on such date of determination (or, if earlier, on the date on which the Common Stock goes "ex-dividend" in respect of such distribution) and the denominator shall be such current market price per share of such class or series of Common Stock less the then fair market value as determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed with the Transfer Agent) of the portion of the capital stock, cash or other assets or evidences of indebtedness so distributed (and for which an adjustment to a Stock Amount has not previously been made pursuant to the terms of this paragraph 4) applicable to one share of such class or series of Common Stock, such adjustment to become effective immediately after the opening of business on the day following such date of determination of the holders entitled to such distribution. The following transactions shall be excluded from the foregoing clauses (1) and (2): (I) repurchases of Common Stock issued under the Corporation's stock incentive programs; and (II) dividends or distributions payable-in-kind in additional shares of, or warrants, rights, calls or options exercisable for or convertible into additional shares of Junior Securities. (x) The reclassification or change of a class or series of Common Stock into securities, including securities other than Common Stock (other than any reclassification upon a consolidation or merger to which paragraph 4(xviii) below shall apply) shall be deemed to involve (A) a distribution of such securities other than Common Stock to all holders of such class or series of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of holders of Common Stock entitled to receive such distribution" within the meaning of paragraph 4(ix) above), and (B) a subdivision or combination, as the case may be, of the number of shares of such class or series of Common Stock outstanding immediately prior to such reclassification into the number of shares of such class or series of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective," as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of paragraph 4(viii) above). (xi) For the purpose of any computation under paragraph 4(vii) or 4(ix) above, the current market price per share of a class or series of Common Stock on any day shall be deemed to be the average of the Closing Prices of a share of such class or 9 series of Common Stock for the 20 consecutive Trading Days selected by the Board of Directors commencing no more than 30 Trading Days before and ending no later than the day before the day in question; provided that, in the case of paragraph 4(ix), if the period between the date of the public announcement of the dividend or distribution and the date for the determination of holders of such class or series of Common Stock entitled to receive such dividend or distribution (or, if earlier, the date on which the Common Stock goes "ex-dividend" in respect of such dividend or distribution) shall be less than 20 Trading Days, the period shall be such lesser number of Trading Days but, in any event, not less than five Trading Days. (xii) No adjustment in a Stock Amount need be made until all cumulative adjustments amount to 1% or more of such Stock Amount as last adjusted. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph 4 shall be made to the nearest 1/10,000th of a cent or the nearest 1/10,000th of a share, as the case may be. (xiii) For purposes of this paragraph 4, "Common Stock" includes WorldCom Group Stock, MCI Group Stock and any other stock of any class or series of the Corporation which has no preference in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which is not subject to redemption by the Corporation. Subject to the provisions of paragraph 4(xviii) below, shares issuable on conversion of shares of Series E Preferred Stock shall include only shares of (i) WorldCom Group Stock, (ii) MCI Group Stock, and (iii) any class or classes or series resulting from any reclassification of WorldCom Group Stock or MCI Group Stock and which have no preferences in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which are not subject to redemption by the Corporation; PROVIDED that, if at any time there shall be more than one such resulting class or series, the shares of each such class or series then so issuable shall be substantially in the proportion which the total number of shares of such class or series resulting from all such reclassifications bears to the total number of shares of all such classes or series resulting from all such reclassifications. (xiv) No adjustment in the Conversion Price shall reduce the Conversion Price below the then aggregate par value of one Common Stock Unit. No adjustment in a Stock Amount need be made under paragraphs 4(vi), 4(vii) and 4(ix) above if the 10 Corporation issues or distributes to each holder of Series E Preferred Stock the shares of Common Stock, evidences of indebtedness, assets, rights, options or warrants referred to in those paragraphs which each holder would have been entitled to receive had Series E Preferred Stock been converted into Common Stock prior to the happening of such event or the record date with respect thereto. (xv) Whenever the Conversion Price or a Stock Amount is adjusted, the Corporation shall promptly mail to holders of Series E Preferred Stock, first class, postage prepaid, a notice of the adjustment. The Corporation shall file with the Transfer Agent for the Series E Preferred Stock, if any, a certificate from the Corporation's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. Subject to paragraph 4(xvi) below, the certificate shall be conclusive evidence that the adjustment is correct. (xvi) The Corporation from time to time may reduce the Conversion Price if it considers such reductions to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of Common Stock by any amount, but in no event may the Conversion Price be less than the aggregate par value of one Common Stock Unit. Whenever the Conversion Price is reduced, the Corporation shall mail to holders of Series E Preferred Stock a notice of the reduction. The Corporation shall mail, first class, postage prepaid, the notice at least 15 days before the date the reduced Conversion Price takes effect. The notice shall state the reduced Conversion Price and the period it will be in effect. A reduction of the Conversion Price does not change or adjust the Conversion Price or any Stock Amount otherwise in effect for purposes of paragraphs 4(vi), 4(vii), 4(viii) and 4(ix) above. (xvii) If: (A) the Corporation takes any action which would require an adjustment in a Stock Amount pursuant to paragraph 4(vii), 4(ix) or 4(x) above; (B) the Corporation consolidates or merges with, or transfers all or substantially all of its assets to, another corporation, and stockholders of the Corporation must approve the transaction; or (C) there is a dissolution or liquidation of the Corporation; the Corporation shall mail to holders of the Series 11 E Preferred Stock, first class, postage prepaid, a notice stating the proposed record or effective date, as the case may be. The Corporation shall mail the notice at least 10 days before such date. However, failure to mail the notice or any defect in it shall not affect the validity of any transaction referred to in clause (A), (B) or (C) of this paragraph 4(xvii). (xviii) In the case of any consolidation of the Corporation or the merger of the Corporation with or into any other entity or the sale or transfer of all or substantially all the assets of the Corporation pursuant to which a class or series of Common Stock is converted into other securities, cash or assets, upon consummation of such transaction, each share of Series E Preferred Stock shall automatically become convertible into the kind and amount of securities, cash or other assets receivable upon the consolidation, merger, sale or transfer by a holder of the number of shares of such class or series of Common Stock into which such share of Series E Preferred Stock might have been converted immediately prior to such consolidation, merger, transfer or sale (assuming such holder of Common Stock failed to exercise any rights of election and received per share the kind and amount of consideration receivable per share by a plurality of non-electing shares). Appropriate adjustment (as determined by the Board of Directors of the Corporation) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of Series E Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustment of the applicable Stock Amount and the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of Series E Preferred Stock. If this paragraph 4(xviii) applies, paragraphs 4(vi), 4(viii) and 4(x) do not apply. (xix) In any case in which this Section 4 shall require that an adjustment as a result of any event become effective from and after a record date, the Corporation may elect to defer until after the occurrence of such event the issuance to the holder of any shares of Series E Preferred Stock converted after such record date and before the occurrence of such event of the additional shares of Common Stock issuable upon such conversion over and above the shares issuable on the basis of the Stock Amount or Conversion Price in effect immediately prior to adjustment; provided, however, that if such event shall not have occurred and authorization of such event shall be rescinded by the Corporation, the Stock Amount or Conversion Price shall be recomputed immediately upon such recision to the Stock Amount or 12 Conversion Price that would have been in effect had such event not been authorized, provided that such recision is permitted by and effective under applicable laws. 5. LIQUIDATION RIGHTS. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation or reduction or decrease in its capital stock resulting in a distribution of assets to the holders of any class or series of the Corporation's capital stock, each holder of shares of the Series E Preferred Stock will be entitled to payment out of the assets of the Corporation available for distribution of an amount equal to the Liquidation Preference per share of Series E Preferred Stock held by such holder, plus accrued and unpaid dividends and Liquidated Damages, if any, to the date fixed for liquidation, dissolution, winding-up or reduction or decrease in capital stock, before any distribution is made on any Junior Securities, including, without limitation, any class or series of Common Stock of the Corporation. After payment in full of the Liquidation Preference and all accrued dividends and Liquidated Damages, if any, to which holders of Series E Preferred Stock are entitled, such holders will not be entitled to any further participation in any distribution of assets of the Corporation. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the amounts payable with respect to the Series E Preferred Stock and all other Parity Securities are not paid in full, the holders of the Series E Preferred Stock and the Parity Securities will share equally and ratably in any distribution of assets of the Corporation in proportion to the full liquidation preference and accumulated and unpaid dividends and Liquidated Damages, if any, to which each is entitled. However, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more Persons will be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Corporation or reduction or decrease in capital stock, unless such sale, conveyance, exchange or transfer shall be in connection with a liquidation, dissolution or winding-up of the business of the Corporation or reduction or decrease in capital stock. 6. OPTIONAL REDEMPTION. (i) The Series E Preferred Stock may be redeemed for cash, in whole or in part, at the option of the Corporation, at the redemption prices specified below (expressed as percentages of the Liquidation Preference thereof), in each case, together with accumulated and unpaid dividends (including an amount in cash 13 equal to a prorated dividend for any partial dividend period) and Liquidated Damages, if any, to the date of redemption (the "Applicable Redemption Price"), upon not less than 30 nor more than 60 days' prior written notice, if redeemed during the 12-month period commencing on October 18 of each of the years set forth below:
YEAR PERCENTAGE ---- ---------- 2001.................................... 103.00% 2002.................................... 102.00% 2003.................................... 101.00% 2004 and thereafter..................... 100.00%
No optional redemption pursuant to this paragraph 6(i) shall be authorized or made unless, prior to giving the applicable redemption notice, all accumulated and unpaid dividends for periods ended prior to the date of such redemption notice shall have been paid in cash, Common Stock Units or a combination thereof. (ii) In case of redemption of less than all of the shares of Series E Preferred Stock at the time outstanding, the shares to be redeemed shall be selected PRO RATA or by lot as determined by the Corporation in its sole discretion. (iii) Notice of any redemption shall be sent by or on behalf of the Corporation not less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the "Redemption Date"), by first class mail, postage prepaid, to all holders of record of the Series E Preferred Stock at their last addresses as they shall appear on the books of the Corporation; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series E Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which Series E Preferred Stock may be listed or admitted to trading, such notice shall state: (i) that such redemption is being made pursuant to the optional redemption provisions hereof; (ii) the Redemption Date; (iii) the Applicable Redemption Price; (iv) the number of shares of Series E Preferred Stock to be redeemed and, if less than all shares held by such holder are to be redeemed, the number of such shares to be redeemed; (v) the place or places where certificates for such shares are to be surrendered for payment of the Applicable Redemption Price, including any procedures applicable to redemptions to be accomplished through book-entry transfers; and 14 (vi) that dividends on the shares to be redeemed will cease to accumulate on the Redemption Date. Upon the mailing of any such notice of redemption, the Corporation shall become obligated to redeem at the time of redemption specified thereon all shares called for redemption. (iv) If notice has been mailed in accordance with Section 6(iii) above and provided that on or before the Redemption Date specified in such notice, all funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds in trust for the PRO RATA benefit of the holders of the shares so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, dividends on the shares of the Series E Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series E Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the Applicable Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the Applicable Redemption Price. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof. (v) Any funds deposited with a bank or trust company for the purpose of redeeming Series E Preferred Stock shall be irrevocable except that: (a) the Corporation shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (b) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series E Preferred Stock entitled thereto at the expiration of two years from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings. 15 (vi) No Series E Preferred Stock may be redeemed except with funds legally available for such purpose. The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code to permit any such redemption. (vii) Notwithstanding the foregoing provisions of this Section 6, unless the full cumulative dividends on all outstanding shares of Series E Preferred Stock shall have been paid or contemporaneously are declared and paid for all past dividend periods, none of the shares of Series E Preferred Stock shall be redeemed unless all outstanding shares of Series E Preferred Stock are simultaneously redeemed. 7. CHANGE OF CONTROL. (i) Subject to paragraph 7(v) hereof, upon the occurrence of a Change of Control, the Corporation shall be required to make an offer (a "Preferred Stock Change of Control Offer") to each holder of shares of Series E Preferred Stock to repurchase all or any part of such holder's shares of Series E Preferred Stock at an offer price in cash equal to 100% of the aggregate Liquidation Preference thereof, plus accumulated and unpaid dividends (including an amount equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Change of Control Payment Date) and Liquidated Damages, if any, thereon to the date of repurchase (the "Change of Control Payment"). (ii) Within 30 days following any Change of Control, the Corporation shall (a) publish a notice of the Change of Control in The Wall Street Journal or a similar daily business publication of national distribution and (b) mail a notice to each holder of Series E Preferred Stock describing the transaction that constitutes the Change of Control, together with such other information as may be required pursuant to the securities laws, and stating: (A) that the Change of Control Offer is being made pursuant to this Certificate of Designations and that, to the extent lawful, all shares of Series E Preferred Stock validly tendered will be accepted for payment; (B) the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (C) that any shares of Series E Preferred Stock not tendered will continue to accrue dividends in accordance with the terms of this Certificate of Designations; (D) that, unless the Corporation defaults in the payment of the Change of Control Payment, all shares of Series E Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to accrue dividends on the Change of Control Payment Date; and (E) a description of 16 the procedures to be followed by such holder in order to have its shares of Series E Preferred Stock repurchased. (iii) On the Change of Control Payment Date, the Corporation shall, to the extent lawful, (A) accept for payment shares of Series E Preferred Stock validly tendered pursuant to the Change of Control Offer and (B) promptly mail to each holder of shares of Series E Preferred Stock so accepted payment in an amount equal to the purchase price for such shares and (C) unless the Corporation defaults in the payment for the shares of Series E Preferred Stock tendered pursuant to the Preferred Stock Change of Control Offer, dividends will cease to accrue with respect to the shares of Series E Preferred Stock tendered and all rights of holders of such tendered shares will terminate, except for the right to receive payment therefor, on the Change of Control Payment Date. The Corporation shall publicly announce the results of the Preferred Stock Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (iv) The Corporation shall comply with any securities laws and regulations, to the extent such laws and regulations are applicable to the repurchase of shares of the Series E Preferred Stock in connection with a Change of Control. (v) Notwithstanding the foregoing, prior to complying with this paragraph 7, but in any event within 90 days following a Change of Control, the Corporation shall either (a) repay or refinance all outstanding indebtedness or (b) obtain the requisite consents, if any, under all agreements governing outstanding indebtedness necessary to permit the repurchase of the Series E Preferred Stock required by this paragraph 7. The Corporation must first comply with the covenants in its outstanding indebtedness or take the actions described in the preceding sentence before it will be required to repurchase shares of Series E Preferred Stock in the event of a Change of Control; provided, that if the Corporation fails to repurchase shares of Series E Preferred Stock, the sole remedy to holders of Series E Preferred Stock will be the voting rights arising from a Voting Rights Triggering Event. (vi) Notwithstanding the foregoing, the Corporation shall not be required to make a Preferred Stock Change of Control Offer following a Change of Control if a third party makes the Preferred Stock Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Certificate of Designations applicable to a Preferred Stock Change of Control Offer made by the Corporation and purchases all of the Series E Preferred Stock validly 17 tendered and not withdrawn under such Preferred Stock Change of Control Offer. 8. VOTING RIGHTS. (i) The holders of record of outstanding shares of the Series E Preferred Stock shall be entitled to vote, together with the outstanding shares of Common Stock and any other classes of voting securities of the Corporation, including the Existing Preferred Stock, as one class, except as otherwise required by Georgia law, on all matters on which holders of Common Stock are entitled to vote. Each outstanding share of Series E Preferred Stock shall be entitled to one-tenth of one vote per share of Series E Preferred Stock. Additionally, the holders of record of shares of the Series E Preferred Stock shall have voting rights as required by law and as hereinafter provided in this Section 8. (ii) Upon: (a) the accumulation of accrued and unpaid dividends on the outstanding Series E Preferred Stock in an amount equal to six (6) quarterly dividends (whether or not consecutive); or (b) the failure of the Corporation to make a Preferred Stock Change of Control Offer or to repurchase all of the Series E Preferred Stock tendered in a Preferred Stock Change of Control Offer (each of the events described in clauses (a) and (b) being referred to herein as a "Voting Rights Triggering Event"); then the holders of a majority of the outstanding shares of Series E Preferred Stock, voting together with any parity securities then entitled to voting rights as a separate single class, shall be entitled to elect such number of members to the Board of Directors of the Corporation constituting at least 20% of the then existing Board of Directors before such election (rounded to the nearest whole number), provided, however, that such number shall be no less than one nor greater than two, and the number of members of the Corporation's Board of Directors shall be immediately and automatically increased by one or two, as the case may be. (iii) Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of Series E Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such annual meetings or by the written consent of the holders of Series E 18 Preferred Stock. Such right of the holders of Series E Preferred Stock to elect directors may be exercised until (a) all dividends in arrears shall have been paid in full and (b) all other Voting Rights Triggering Events have been cured or waived, at which time the term of such directors previously elected shall thereupon terminate, and such directors shall be deemed to have resigned. (iv) At any time when such voting right shall have vested in the holders of Series E Preferred Stock and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of holders of record of 10% or more of the Series E Preferred Stock then outstanding, addressed to the Secretary of the Corporation, call a special meeting of holders of Series E Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation or, if none, at a place designated by the Secretary of the Corporation. If such meeting shall not be called by the proper officers of the Corporation within 30 days after the personal service of such written request upon the Secretary of the Corporation, or within 30 days after mailing the same within the United States, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% of the shares of Series E Preferred Stock then outstanding may designate in writing a holder of Series E Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders and shall be held at the place for holding annual meetings of the Corporation or, if none, at a place designated by such holder. Any holder of Series E Preferred Stock that would be entitled to vote at such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this Section 8. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called if any such request is received less than 90 days before the date fixed for the next ensuing annual or special meeting of stockholders. (v) If any director so elected by the holders of Series E Preferred Stock shall cease to serve as a director before his term shall expire, the holders of Series E Preferred Stock then outstanding may, at a special meeting of the holders called as provided above, elect a successor to hold office for the unexpired term of the director whose place shall be vacant. 19 (vi) The Corporation shall not, without the affirmative vote or consent of the holders of at least a majority of the shares of Series E Preferred Stock then outstanding (with shares held by the Corporation or any of its affiliates not being considered to be outstanding for this purpose) voting or consenting as the case may be, as one class: (a) authorize, create (by way of reclassification or otherwise) or issue any Senior Securities or any obligation or security convertible or exchangeable into or evidencing the right to purchase, shares of any class or series of Senior Securities; (b) amend or otherwise alter this Certificate of Designation (including the provisions of Section 8 hereof) in any manner that adversely affects the specified rights, preferences, privileges or voting rights of holders of Series E Preferred Stock; (c) authorize the issuance of any additional shares of Series E Preferred Stock; or (d) waive any existing Voting Rights Triggering Event or compliance with any provision of this Certificate of Designation; provided, however, that the Corporation shall not amend the Change of Control provisions of this Certificate of Designation (including the related definitions) without the approval of the holders of at least 662/3% of the then outstanding shares of Series E Preferred Stock, voting or consenting, as the case may be, as one class. (vii) Without the consent of each holder affected, an amendment or waiver of the Corporation's Articles of Incorporation or of this Certificate of Designation may not (with respect to any shares of Series E Preferred Stock held by a non-consenting holder): (a) alter the voting rights with respect to the Series E Preferred Stock or reduce the number of shares of Series E Preferred Stock whose holders must consent to an amendment, supplement or waiver; (b) reduce the Liquidation Preference of or alter the provisions with respect to the redemption of the Series E Preferred Stock (except as provided with respect to Section 7 hereof); 20 (c) reduce the rate of or change the time for payment of dividends on any share of Series E Preferred Stock; (d) waive the consequences of any failure to pay dividends on the Series E Preferred Stock; (e) make any share of Series E Preferred Stock payable in any form other than that stated in this Certificate of Designation; (f) make any change in the provisions of this Certificate of Designation relating to waivers of the rights of holders of Series E Preferred Stock to receive the Liquidation Preference and dividends on the Series E Preferred Stock; (g) waive a redemption payment with respect to any share of Series E Preferred Stock (except as provided with respect to Section 7 hereof); or (h) make any change in the foregoing amendment and waiver provisions. (viii) The Corporation in its sole discretion may without the vote or consent of any holders of the Series E Preferred Stock amend or supplement this Certificate of Designation: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Series E Preferred Stock in addition to or in place of certificated Series E Preferred Stock; or (c) to make any change that would provide any additional rights or benefits to the holders of the Series E Preferred Stock or that does not adversely affect the legal rights under this Certificate of Designation of any such holder. Except as set forth above, (x) the creation, authorization or issuance of any shares of Junior Securities, Parity Securities or Senior Securities or (y) the increase or decrease in the amount of authorized capital stock of any class, including any preferred stock, shall not require the consent of the holders of the Series E Preferred Stock and shall not be deemed to affect adversely the rights, preferences, privileges, special rights or voting rights of holders of shares of Series E Preferred Stock. 9. MERGER, CONSOLIDATION AND SALE OF ASSETS. Without the vote or consent of the holders of a majority of the then 21 outstanding shares of Series E Preferred Stock, the Corporation may not consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, any person unless (i) the entity formed by such consolidation or merger (if other than the Corporation) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (in any such case, the "resulting entity") is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) if the Corporation is not the resulting entity, the Series E Preferred Stock is converted into or exchanged for and becomes shares of such resulting entity, having in respect of such resulting entity the same (or more favorable) powers, preferences and relative, participating, optional or other special rights thereof that the Series E Preferred Stock had immediately prior to such transaction; and (iii) immediately after giving effect to such transaction, no Voting Rights Triggering Event has occurred and is continuing. The resulting entity of such transaction shall thereafter be deemed to be the "Corporation" for all purposes of this Certificate of Designations. 10. REPORTS. The Corporation shall file within 15 days after it files them with the Commission copies of the annual and quarterly reports and the information, documents, and other reports that the Corporation is required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports") with the Transfer Agent. In the event the Corporation is not required or shall cease to be required to file SEC Reports, pursuant to the Exchange Act, the Corporation shall nevertheless continue to file such reports with the Commission (unless the Commission shall not accept such a filing) and the Transfer Agent. Whether or not required by the Exchange Act to file SEC Reports with the Commission, as long as any Series E Preferred Stock are outstanding, the Corporation shall furnish copies of the SEC Reports to the holders of Series E Preferred Stock at the time the Corporation is required to make such information available to the Transfer Agent and any investors who request it in writing. In addition, the Corporation has agreed that, for so long as any Series E Preferred Stock remains outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. 11. AMENDMENT. This Certificate of Designation shall not be amended, either directly or indirectly, or through merger or consolidation with another entity, in any manner that would alter or change the powers, preferences or special rights of the 22 Series E Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding Series E Preferred Stock, voting separately as a class. 12. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Series E Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Designation and in the Articles of Incorporation. The shares of Series E Preferred Stock shall have no preemptive or subscription rights. 13. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 14. SEVERABILITY OF PROVISIONS. If any voting powers, preferences and relative, participating, optional and other special rights of the Series E Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series E Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Series E Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Series E Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Series E Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein. 15. REISSUANCE OF PREFERRED STOCK. Shares of Series E Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Georgia) have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to series and may be designated or redesignated 23 and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation, provided that any issuance of such shares as Series E Preferred Stock must be in compliance with the terms hereof. 16. MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES. If any of the Series E Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall issue, in exchange and in substitution for and upon cancellation of the mutilated Series E Preferred Stock certificate, or in lieu of and substitution for the Series E Preferred Stock certificate lost, stolen or destroyed, a new Series E Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Series E Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Series E Preferred Stock certificate and indemnity, if requested, satisfactory to the Corporation and the Transfer Agent (if other than the Corporation). 17. CERTAIN DEFINITIONS. As used in this Certificate of Designations, the following terms shall have the following meanings (with terms defined in the singular but having comparable meanings when used in the plural and VICE VERSA), unless the context otherwise requires: "AVERAGE STOCK PRICE" means with respect to a security, as of a certain date, the average of the high and low sales prices of such security as reported by the Nasdaq National Market or any national securities exchange upon which such security is then listed, for each of the ten consecutive Trading Days immediately preceding the fifth Trading Day preceding such date." "BOARD" means the board of directors of the Corporation. "BUSINESS DAY" means any day except a Saturday, a Sunday, or any day on which banking institutions in New York, New York are required or authorized by law or other governmental action to be closed." "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Corporation and its subsidiaries, taken as a whole, (ii) the adoption of a plan relating to the liquidation or dissolution of the Corporation, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any 24 "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the Corporation, unless (A) the aggregate market price for shares of Common Stock comprising a Common Stock Unit based upon the Closing Price per share of each class or series of Common Stock comprising a Common Stock Unit for any five Trading Days within the period of ten consecutive Trading Days ending immediately after the announcement of such Change of Control equals or exceeds 105% of the Conversion Price then in effect or (B) at least 90% of the consideration in the transaction or transactions constituting a Change of Control pursuant to clause (iii) consists of shares of common stock traded or to be traded immediately following such Change of Control on a national securities exchange or the Nasdaq National Market and, as a result of such transaction or transactions, the Series E Preferred Stock becomes convertible solely into such common stock (and any rights attached thereto), or (iv) the first day on which more than a majority of the Board of Directors are not Continuing Directors; provided, however, that a transaction in which the Corporation becomes a subsidiary of another entity shall not constitute a Change of Control if (A) the stockholders of the Corporation immediately prior to such transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the Corporation immediately following the consummation of such transaction and (B) immediately following the consummation of such transaction, no "person" or "group" (as such terms are defined above), other than such other entity (but including holders of equity interests of such other entity), "beneficially owns" (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding voting stock of the Corporation." "CLOSING PRICE" means, for each Trading Day, the last reported sale price regular way on the Nasdaq National Market or, if the class or series of Common Stock is not quoted on the Nasdaq National Market, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the corporation for that purpose." "COMMISSION" means the Securities and Exchange Commission." 25 "COMMON STOCK" means any class or series of common stock of the Corporation including the WorldCom Group Stock and the MCI Group Stock." "COMMON STOCK UNIT" means a number of shares of WorldCom Group Stock equal to the WCG Stock Amount and a number of shares of MCI Group Stock equal to the MCI Stock Amount." "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of the Corporation who (a) was a member of the Board of Directors on the Preferred Stock Issue Date or (b) was nominated for election to the Board of Directors with the approval of, or whose election was ratified by, at least two-thirds of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election." "CONVERSION PRICE" shall initially mean $30.235 per share and thereafter shall be subject to adjustment from time to time pursuant to the terms of paragraph 4 hereof." "CORPORATION" mean WorldCom, Inc., a Georgia corporation and its successors." "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended." "EXISTING PREFERRED STOCK" means the Series B Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock." "LIQUIDATED DAMAGES" means all liquidated damages then owing under the Registration Rights Agreement." "MCI GROUP STOCK" means the WorldCom, Inc. - MCI Group Common Stock, par value $0.01 per share of the Corporation." "MCI STOCK AMOUNT" means the number of shares of MCI Group Stock in a Common Stock Unit, as adjusted from time to time pursuant to Section 4 of this Certificate of Designation. The MCI Stock Amount shall initially be 1/25 of a share of MCI Group Stock." "MERGER" means the merger of Merger Sub with and into Intermedia Communications Inc. pursuant to the Merger Agreement." "MERGER AGREEMENT" means the Agreement and Plan of Merger dated September 1, 2000, as amended by the First Amendment dated February 15, 2001 and the Second Amendment dated as of May 14, 26 2001, among the Corporation, Merger Sub and Intermedia Communications Inc." "MERGER SUB" means Wildcat Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Corporation." "PERSON" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity." "PREFERRED STOCK ISSUE DATE" means July 1, 2001." "PRIOR DIVIDEND PAYMENT DATE" means April 15, 2001." "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement with respect to the Preferred Stock, dated as of October 30, 1997, by and among the Corporation, Bear, Stearns & Co. Inc. and Salomon Brothers Inc, as such agreement may be amended, modified or supplemented from time to time." "SERIES B PREFERRED STOCK" means the Corporation's outstanding 7.75% Series B Convertible Preferred Stock." "SERIES D PREFERRED STOCK" means the Corporation's outstanding 7% Series D Junior Convertible Preferred Stock." "SERIES F PREFERRED STOCK" means the Corporation's outstanding 7% Series F Junior Convertible Preferred Stock." "SERIES G PREFERRED STOCK" means the Corporation's outstanding 7% Series G Junior Convertible Participating Preferred Stock." "STOCK AMOUNT" means with respect to the MCI Group Stock, the MCI Stock Amount, and with respect to the WorldCom Group Stock, the WCG Stock Amount." "TRADING DAY" means any day on which the Nasdaq National Market or other applicable stock exchange or market is open for business." "TRANSFER AGENT" shall be The Bank of New York unless and until a successor is selected by the Corporation." "WCG STOCK AMOUNT" means the number of shares of WorldCom Group Stock in a Common Stock Unit, as adjusted from time to time pursuant to Section 4 of this Certificate of Designation. The WCG Stock Amount shall initially be one share of WorldCom Group Stock." 27 "WORLDCOM GROUP STOCK" means the WorldCom, Inc. - WorldCom Group Common Stock, par value $0.01 per share of the Corporation." EXHIBIT I 1. DESIGNATION, AMOUNT AND LIQUIDATION PREFERENCE. The designation of this series of Preferred Stock shall be Series F Junior Convertible preferred stock, par value $0.01 per share (the "Series F Preferred Stock"). The number of shares shall be 79,600. The liquidation preference of shares of Series F Preferred Stock shall be $2,500 per share (the "Liquidation Preference"). 2. RANKING. The Series F Preferred Stock shall rank, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation, (i) senior to all classes of common stock of the Corporation and to each other class of capital stock or series of preferred stock established after the Preferred Stock Issue Date by the Board of Directors the terms of which do not expressly provide that it ranks senior to or on a parity with the Series F Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation (collectively referred to with the Common Stock of the Corporation as "Junior Securities"); (ii) on a parity with the Existing Preferred Stock, any additional shares of Series D Preferred Stock, Series E Preferred Stock, or Series F Preferred Stock issued by the Corporation in the future and any other class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board of Directors, the terms of which expressly provide that such class or series will rank on a parity with the Series F Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation (collectively referred to as "Parity Securities"); and (iii) junior to each class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board of Directors the terms of which expressly provide that such class or series will rank senior to the Series F Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and 1 dissolution of the Corporation (collectively referred to as "Senior Securities"). No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series F Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Senior Securities. 3. DIVIDENDS. (i) The holders of shares of the Series F Preferred Stock shall be entitled to receive, when, as and if dividends are declared by the Board of Directors out of funds of the Corporation legally available therefor, cumulative dividends from the Prior Dividend Payment Date (whether or not such shares were outstanding on the Prior Dividend Payment Date) accruing at the rate per annum of 7% of the Liquidation Preference per share, payable quarterly in arrears on each July 15, October 15, January 15 and April 15, commencing on July 15, 2001 (each a "Dividend Payment Date"). If any such date is not a Business Day, such payment shall be made on the next succeeding Business Day, to the holders of record as of the next preceding July 1, October 1, January 1 and April 1 (each, a "Record Date"). Dividends will be payable, at the option of the Corporation, (i) in cash, (ii) in Common Stock Units or (iii) through any combination of the foregoing. If the dividends are paid in Common Stock Units, the number of Common Stock Units to be issued on each share of the Series F Preferred Stock on each Dividend Payment Date will be determined by dividing the total dividend to be paid on each share of Series F Preferred Stock by 95% of the sum of (i) the WCG Stock Amount multiplied by the Average Stock Price as of the Record Date for the WorldCom Group Stock, plus (ii) the MCI Stock Amount multiplied by the Average Stock Price as of the Record Date for the MCI Group Stock. The Transfer Agent is hereby authorized and directed to aggregate any fractional shares of Common Stock that are issued as dividends, sell them at the best available price and distribute the proceeds to the holders in proportion to their respective interests therein. The Corporation shall pay the expenses of the Transfer Agent with respect to such sale, including brokerage commissions. In the event the sale by the Transfer Agent of such aggregated fractional interests would be restricted, the Corporation and the Transfer Agent will agree upon other appropriate arrangements for the cash realization of the fractional interests. Dividends payable on the Series F Preferred Stock will be computed on the basis of a 360-day year 2 consisting of twelve 30-day months and will be deemed to accrue on a daily basis. At the option of the Corporation, whenever dividends are to be paid by delivery of shares of Common Stock, such delivery shall be deemed to be made pursuant to the terms of a dividend reinvestment plan for the Series F Preferred Stock in which each holder of the Series F Preferred Stock shall be a participant. (ii) Dividends on the Series F Preferred Stock shall accrue whether or not the Corporation has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate to the extent they are not paid on the Dividend Payment Date for the period to which they relate. The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code to permit the payment of dividends on the Series F Preferred Stock, including, without limitation, through the revaluation of its assets in accordance with the Georgia Business Corporation Code, to make or keep funds legally available for the payment of dividends. (iii) No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series F Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Series F Preferred Stock. Unless full cumulative dividends on all outstanding shares of Series F Preferred Stock for all past dividend periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart, then: (a) no dividend (other than a dividend payable solely in shares of any Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities; (b) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities, other than a distribution consisting solely of Junior Securities; (c) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of other Junior Securities) by the Corporation or any of its Subsidiaries; and (d) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities by the Corporation or any of its Subsidiaries. Holders of the Series F Preferred Stock will not be entitled to any dividends, whether payable in 3 cash, property or stock, in excess of the full cumulative dividends as herein described. (iv) When dividends are declared by the Board of Directors, the Corporation shall issue a press release at least 15 Business Days prior to the Record Date setting forth (a) the method of payment for such dividends (cash, Common Stock Unit or a combination thereof) and (b) the pricing period used to determine the Average Stock Price and the then effective Stock Amount for each class or series of the Common Stock to be issued. 4. CONVERSION. (i) A holder of shares of Series F Preferred Stock may convert such shares into Common Stock comprising a Common Stock Unit at any time after the Preferred Stock Issue Date. For the purposes of conversion, each share of Series F Preferred Stock shall be valued at the Liquidation Preference, which shall be divided by the Conversion Price in effect on the Conversion Date to determine the number of Common Stock Units issuable upon conversion, except that the right to convert shares of Series F Preferred Stock called for redemption shall terminate at the close of business on the Business Day preceding the Redemption Date and shall be lost if not exercised prior to that time, unless the Corporation shall default in payment of the Applicable Redemption Price. Immediately following such conversion, the rights of the holders of converted Series F Preferred Stock shall cease and the persons entitled to receive the Common Stock upon the conversion of Series F Preferred Stock shall be treated for all purposes as having become the owners of such Common Stock. (ii) To convert Series F Preferred Stock, a holder must (A) surrender the certificate or certificates evidencing the shares of Series F Preferred Stock to be converted, duly endorsed in a form satisfactory to the Corporation, at the office of the Corporation or the Transfer Agent, (B) notify the Corporation at such office that he elects to convert Series F Preferred Stock and the number of shares he wishes to convert, (C) state in writing the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued, and (D) pay any transfer or similar tax if required. In the event that a holder fails to notify the Corporation of the number of shares of Series F Preferred Stock which he wishes to convert, he shall be deemed to have elected to convert all shares represented by the certificate or certificates surrendered for conversion. The date on which the holder satisfies all those requirements is the "Conversion Date." As soon as practical, the Corporation shall 4 deliver certificates for the number of full shares of Common Stock issuable upon the conversion, and a new certificate representing the unconverted portion, if any, of the shares of Series F Preferred Stock represented by the certificate or certificates surrendered for conversion. The person or persons in whose name the Common Stock certificates are registered shall be treated as the stockholder of record on and after the Conversion Date. No payment or adjustment will be made for accrued and unpaid dividends on converted shares of Series F Preferred Stock or for dividends on any class or series of Common Stock issued upon such conversion. A share of Series F Preferred Stock surrendered for conversion during the period from the close of business on any record date for the payment of dividends to the opening of business of the corresponding Dividend Payment Date must be accompanied by a payment in cash, Common Stock Units or a combination thereof, in an amount equal to the dividend payable on such Dividend Payment Date, unless such share of Series F Preferred Stock has been called for redemption on a redemption date occurring during the period from the close of business on any record date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date. The dividend payment with respect to a share of Series F Preferred Stock called for redemption on a date during the period from the close of business on any record date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date will be payable on such Dividend Payment Date to the record holder of such share on such record date, notwithstanding the conversion of such share after such record date and prior to such Dividend Payment Date, and the holder converting such share of Series F Preferred Stock need not include a payment of such dividend amount upon surrender of such share of Series F Preferred Stock for conversion. If a holder of Series F Preferred Stock converts more than one share at a time, the number of full shares of Common Stock issuable upon conversion shall be based on the total Liquidation Preference of all shares of Series F Preferred Stock converted. If the last day on which Series F Preferred Stock may be converted is not a Business Day, Series F Preferred Stock may be surrendered for conversion on the next succeeding Business Day. (iii) The Corporation shall not issue any fractional shares of Common Stock upon conversion of Series F Preferred Stock. Instead the Corporation shall round the results of a conversion up to the nearest full share of each class or series of Common Stock. 5 (iv) If a holder converts shares of Series F Preferred Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the holder shall pay any such tax that is due because the shares are issued in a name other than the holder's name. (v) The Corporation has reserved and shall continue to reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to permit the conversion of the Series F Preferred Stock in full. All shares of Common Stock that may be issued upon conversion of Series F Preferred Stock shall be fully paid and nonassessable. The Corporation shall endeavor to comply with all securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Series F Preferred Stock and shall endeavor to list such shares on each national securities exchange or automated quotation system on which the Common Stock is listed. (vi) In case the Corporation shall pay or make a dividend or other distribution on any class or series of capital stock of the Corporation in a class or series of Common Stock other than the payment of dividends in Common Stock Units on the Series F Preferred Stock or any other regularly scheduled dividend on any other preferred stock which does not trigger any anti-dilution provisions in any other security, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by multiplying such Stock Amount by a fraction the numerator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination and the total number of shares of such class or series of Common Stock constituting such dividend or other distribution, and the denominator of which shall be the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such dividends and distributions. For the purposes of this paragraph 4(vi), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. 6 (vii) In case the Corporation shall issue rights, options or warrants to all holders of a class or series of its Common Stock entitling them to subscribe for, purchase or acquire shares of a class or series of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for such determination shall be increased by multiplying such Stock Amount by a fraction the numerator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription, purchase or acquisition and the denominator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of such class or series of Common Stock which the aggregate offering price for the total number of shares of Common Stock so offered for subscription, purchase or acquisition would purchase at such current market price per share, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such rights, options or warrants. However, upon the expiration of any right, option or warrant to purchase such class or series of Common Stock, the issuance of which resulted in an adjustment in a Stock Amount pursuant to this paragraph 4(vii), if any such right, option or warrant shall expire and shall not have been exercised, such Stock Amount shall be recomputed immediately upon such expiration and effective immediately upon such expiration shall be decreased to the amount it would have been (but reflecting any other adjustments to the Stock Amount made pursuant to the provisions of this Section 4 after the issuance of such rights, options or warrants) had the adjustment of the Stock Amount made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of such class or series of Common Stock actually purchased upon the exercise of such rights, options or warrants. No further adjustment shall be made upon exercise of any right, option or warrant if any adjustment shall have been made upon the issuance of such security. For the purpose of this paragraph 4(vii), the number of shares of Common Stock at any 7 time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not issue any rights, options or warrants in respect of shares of Common Stock held in the treasury of the Corporation. (viii) In case the outstanding shares of a class or series of Common Stock shall be subdivided into a greater number of shares of such class or series of Common Stock, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be increased, and, conversely, in case the outstanding shares of a class or series of Common Stock shall each be combined into a smaller number of shares of such class or series of Common Stock, the applicable Stock Amount in effect at the opening of business on the day following the day upon which such combination becomes effective shall be decreased to equal the product of the applicable Stock Amount in effect on such date and a fraction, the numerator of which shall be the number of shares of such class or series of Common Stock outstanding immediately after such subdivision or combination, as the case may be, and the denominator of which shall be the number of shares of such class or series of Common Stock outstanding immediately prior to such subdivision or combination, as the case may be. Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (ix) In case the Corporation shall, by dividend or otherwise, distribute to all holders of a class or series of its Common Stock (A) evidences of its indebtedness or (B) shares of any class or series of capital stock, cash or other assets (including securities, but excluding (x) any rights, options or warrants referred to in paragraph 4(vii) above, (y) any dividend or distribution referred to in paragraph 4(vi) or 4(viii) above, and (z) cash dividends paid from the Corporation's retained earnings, unless the sum of (1) all such cash dividends and distributions made within the preceding 12 months in respect of which no adjustment has been made and (2) any cash and the fair market value of other consideration paid in respect of any repurchases of such class or series of Common Stock by the Corporation or any of its subsidiaries within the preceding 12 months in respect of which no adjustment has been made, exceeds 20% of the market capitalization for such class or series of Common Stock (being the product of the then current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock times the aggregate number 8 of shares of such class or series of Common Stock then outstanding on the record date for such distribution), then in each case, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for the determination of holders of such class or series of Common Stock entitled to receive such distribution shall be adjusted by multiplying such Stock Amount by a fraction, of which the numerator shall be the current market price per share (determined as provided in paragraph 4(xi) below) of such class or series of Common Stock on such date of determination (or, if earlier, on the date on which the Common Stock goes "ex-dividend" in respect of such distribution) and the denominator shall be such current market price per share of such class or series of Common Stock less the then fair market value as determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed with the Transfer Agent) of the portion of the capital stock, cash or other assets or evidences of indebtedness so distributed (and for which an adjustment to a Stock Amount has not previously been made pursuant to the terms of this paragraph 4) applicable to one share of such class or series of Common Stock, such adjustment to become effective immediately after the opening of business on the day following such date of determination of the holders entitled to such distribution. The following transactions shall be excluded from the foregoing clauses (1) and (2): (I) repurchases of Common Stock issued under the Corporation's stock incentive programs; and (II) dividends or distributions payable-in-kind in additional shares of, or warrants, rights, calls or options exercisable for or convertible into additional shares of Junior Securities. (x) The reclassification or change of a class or series of Common Stock into securities, including securities other than Common Stock (other than any reclassification upon a consolidation or merger to which paragraph 4(xviii) below shall apply) shall be deemed to involve (A) a distribution of such securities other than Common Stock to all holders of such class or series of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of holders of Common Stock entitled to receive such distribution" within the meaning of paragraph 4(ix) above), and (B) a subdivision or combination, as the case may be, of the number of shares of such class or series of Common Stock outstanding immediately prior to such reclassification into the number of shares of such class or series of Common Stock outstanding immediately thereafter (and the effective date of 9 such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective," as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of paragraph 4(viii) above). (xi) For the purposes of any computation under paragraph 4(vii) or 4(ix) above, the current market price per share of a class or series of Common Stock on any day shall be deemed to be the average of the Closing Prices of a share of such class or series of Common Stock for the 20 consecutive Trading Days selected by the Board of Directors commencing no more than 30 Trading Days before and ending no later than the day before the day in question; provided that, in the case of paragraph 4(ix), if the period between the date of the public announcement of the dividend or distribution and the date for the determination of holders of such class or series of Common Stock entitled to receive such dividend or distribution (or, if earlier, the date on which the Common Stock goes "ex-dividend" in respect of such dividend or distribution) shall be less than 20 Trading Days, the period shall be such lesser number of Trading Days but, in any event, not less than five Trading Days. (xii) No adjustment in a Stock Amount need be made until all cumulative adjustments amount to 1% or more of such Stock Amount as last adjusted. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph 4 shall be made to the nearest 1/10,000th of a cent or the nearest 1/10,000th of a share, as the case may be. (xiii) For purposes of this paragraph 4, "Common Stock" includes WorldCom Group Stock, MCI Group Stock and any other stock of any class or series of the Corporation which has no preference in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which is not subject to redemption by the Corporation. Subject to the provisions of paragraph 4(xviii) below, shares issuable on conversion of shares of Series F Preferred Stock shall include only shares of (i) WorldCom Group Stock, (ii) MCI Group Stock, and (iii) any class or classes or series resulting from any reclassification of WorldCom Group Stock or MCI Group Stock and which have no preferences in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which are not subject to redemption by the Corporation; PROVIDED that, if at any time there shall be more than one such resulting class or series, the shares of each such class or series then so issuable shall be 10 substantially in the proportion which the total number of shares of such class or series resulting from all such reclassifications bears to the total number of shares of all such classes or series resulting from all such reclassifications. (xiv) No adjustments in the Conversion Price shall reduce the Conversion Price below the then aggregate par value of one Common Stock Unit. No adjustment in a Stock Amount need be made under paragraphs 4(vi), 4(vii) and 4(ix) above if the Corporation issues or distributes to each holder of Series F Preferred Stock the shares of Common Stock, evidences of indebtedness, assets, rights, options or warrants referred to in those paragraphs which each holder would have been entitled to receive had Series F Preferred Stock been converted into Common Stock prior to the happening of such event or the record date with respect thereto. (xv) Whenever the Conversion Price or a Stock Amount is adjusted, the Corporation shall promptly mail to holders of Series F Preferred Stock, first class, postage prepaid, a notice of the adjustment. The Corporation shall file with the Transfer Agent for the Series F Preferred Stock, if any, a certificate from the Corporation's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. Subject to paragraph 4(xvi) below, the certificate shall be conclusive evidence that the adjustment is correct. (xvi) The Corporation from time to time may reduce the Conversion Price if it considers such reductions to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of Common Stock by any amount, but in no event may the Conversion Price be less than the aggregate par value of one Common Stock Unit. Whenever the Conversion Price is reduced, the Corporation shall mail to holders of Series F Preferred Stock a notice of the reduction. The Corporation shall mail, first class, postage prepaid, the notice at least 15 days before the date the reduced Conversion Price takes effect. The notice shall state the reduced Conversion Price and the period it will be in effect. A reduction of the Conversion Price does not change or adjust the Conversion Price or any Stock Amount otherwise in effect for purposes of paragraphs 4(vi), 4(vii), 4(viii) and 4(ix) above. (xvii) If: 11 (a) the Corporation takes any action which would require an adjustment in a Stock Amount pursuant to paragraph 4(vii), 4(ix) or 4(x) above; (b) the Corporation consolidates or merges with, or transfers all or substantially all of its assets to, another corporation, and stockholders of the Corporation must approve the transaction; or (c) there is a dissolution or liquidation of the Corporation; the Corporation shall mail to holders of the Series F Preferred Stock, first class, postage prepaid, a notice stating the proposed record or effective date, as the case may be. The Corporation shall mail the notice at least 10 days before such date. However, failure to mail the notice or any defect in it shall not affect the validity of any transaction referred to in clause (A), (B) or (C) of this paragraph 4(xvii). (xviii) In the case of any consolidation of the Corporation or the merger of the Corporation with or into any other entity or the sale or transfer of all or substantially all the assets of the Corporation pursuant to which a class or series of Common Stock is converted into other securities, cash or assets, upon consummation of such transaction, each share of Series F Preferred Stock shall automatically become convertible into the kind and amount of securities, cash or other assets receivable upon the consolidation, merger, sale or transfer by a holder of the number of shares of such class or series of Common Stock into which such share of Series F Preferred Stock might have been converted immediately prior to such consolidation, merger, transfer or sale (assuming such holder of Common Stock failed to exercise any rights of election and received per share the kind and amount of consideration receivable per share by a plurality of non-electing shares). Appropriate adjustment (as determined by the Board of Directors of the Corporation) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of Series F Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustment of the applicable Stock Amount and the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any share of stock or other securities or property thereafter deliverable upon the conversion of Series F Preferred Stock. If this paragraph 4(xviii) applies, paragraphs 4(vi), 4(viii) and 4(x) do not apply. 12 (xix) In any case in which this Section 4 shall require that an adjustment as a result of any event become effective from and after a record date, the Corporation may elect to defer until after the occurrence of such event the issuance to the holder of any shares of Series F Preferred Stock converted after such record date and before the occurrence of such event of the additional shares of Common Stock issuable upon such conversion over and above the shares issuable on the basis of the Stock Amount or Conversion Price in effect immediately prior to adjustment; provided, however, that if such event shall not have occurred and authorization of such event shall be rescinded by the Corporation, the Stock Amount or Conversion Price shall be recomputed immediately upon such recision to the Stock Amount or Conversion Price that would have been in effect had such event not been authorized, provided that such recision is permitted by and effective under applicable laws. 5. LIQUIDATION RIGHTS. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation or reduction or decrease in its capital stock resulting in a distribution of assets to the holders of any class or series of the Corporation's capital stock, each holder of shares of the Series F Preferred Stock will be entitled to payment out of the assets of the Corporation available for distribution of an amount equal to the Liquidation Preference per share of Series F Preferred Stock held by such holder, plus accrued and unpaid dividends and Liquidated Damages, if any, to the date fixed for liquidation, dissolution, winding-up or reduction or decrease in capital stock, before any distribution is made on any Junior Securities, including, without limitation, any class or series of Common Stock of the Corporation. After payment in full of the Liquidation Preference and all accrued dividends and Liquidated Damages, if any, to which holders of Series F Preferred Stock are entitled, such holders will not be entitled to any further participation in any distribution of assets of the Corporation. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the amounts payable with respect to the Series F Preferred Stock and all other Parity Securities are not paid in full, the holders of the Series F Preferred Stock and the Parity Securities will share equally and ratably in any distribution of assets of the Corporation in proportion to the full liquidation preference and accumulated and unpaid dividends and Liquidated Damages, if any, to which each is entitled. However, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or 13 more Persons will be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Corporation or reduction or decrease in capital stock, unless such sale, conveyance, exchange or transfer shall be in connection with a liquidation, dissolution or winding-up of the business of the Corporation or reduction in capital stock. 6. OPTIONAL REDEMPTION. (i) The Series F Preferred Stock may not be redeemed at the option of the Corporation prior to October 17, 2001. The Series F Preferred Stock may be redeemed for cash, in whole or in part, at the option of the Corporation on or after October 17, 2001, at the redemption prices specified below (expressed as percentages of the Liquidation Preference thereof), in each case, together with accumulated and unpaid dividends (including an amount in cash equal to a prorated dividend for any partial dividend period) and Liquidated Damages, if any, to the date of redemption (the "Applicable Redemption Price"), upon not less than 30 nor more than 60 days' prior written notice, if redeemed during the 12-month period commencing on October 17 of each of the years set forth below:
YEAR PERCENTAGE ---- ---------- 2001 ........................................ 104.00% 2002 ........................................ 103.00% 2003 ........................................ 102.00% 2004 ........................................ 101.00% 2005 and thereafter ......................... 100.00%
No optional redemption pursuant to this paragraph 6(i) shall be authorized or made unless, prior to giving the applicable redemption notice, all accumulated and unpaid dividends for periods ended prior to the date of such redemption notice shall have been paid in cash, Common Stock Units or a combination thereof. (ii) In case of redemption of less than all of the shares of Series F Preferred Stock at the time outstanding, the shares to be redeemed shall be selected PRO RATA or by lot as determined by the Corporation in its sole discretion. (iii) Notice of any redemption shall be sent by or on behalf of the Corporation not less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the "Redemption Date"), by first class mail, postage prepaid, to all holders of record of the Series F Preferred Stock at their last addresses as they shall appear on the books of the Corporation; provided, however, that no failure to give such notice or any 14 defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series F Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which Series F Preferred Stock may be listed or admitted to trading, such notice shall state: (i) that such redemption is being made pursuant to the optional redemption provisions hereof; (ii) the Redemption Date; (iii) the Applicable Redemption Price; (iv) the number of shares of Series F Preferred Stock to be redeemed and, if less than all shares held by such holder are to be redeemed, the number of such shares to be redeemed; (v) the place or places where certificates for such shares are to be surrendered for payment of the Applicable Redemption Price, including any procedures applicable to redemptions to be accomplished through book-entry transfers; and (vi) that dividends on the shares to be redeemed will cease to accumulate on the Redemption Date. Upon the mailing of any such notice of redemption, the Corporation shall become obligated to redeem at the time of redemption specified thereon all shares called for redemption. (iv) If notice has been mailed in accordance with Section 6(iii) above and provided that on or before the Redemption Date specified in such notice, all funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds in trust for the PRO RATA benefit of the holders of the shares so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, dividends on the shares of the Series F Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series F Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the Applicable Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the Applicable Redemption Price. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof. 15 (v) Any funds deposited with a bank or trust company for the purpose of redeeming Series F Preferred Stock shall be irrevocable except that: (A) the Corporation shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (B) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series F Preferred Stock entitled thereto at the expiration of two years from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings. (vi) No Series F Preferred Stock may be redeemed except with funds legally available for such purpose. The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code to permit any such redemption. (vii) Notwithstanding the foregoing provisions of this Section 6, unless the full cumulative dividends on all outstanding shares of Series F Preferred Stock shall have been paid or contemporaneously are declared and paid for all past dividend periods, none of the shares of Series F Preferred Stock shall be redeemed unless all outstanding shares of Series F Preferred Stock are simultaneously redeemed. 7. CHANGE OF CONTROL. (i) Subject to paragraph 7(v) hereof, upon the occurrence of a Change of Control, the Corporation shall be required to make an offer (a "Preferred Stock Change of Control Offer") to each holder of shares of Series F Preferred Stock to repurchase all or any part of such holder's shares of Series F Preferred Stock at an offer price in cash equal to 100% of the aggregate Liquidation Preference thereof, plus accumulated and unpaid dividends (including an amount equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Change of Control Payment Date) and Liquidated Damages, if any, thereon to the date of repurchase (the "Change of Control Payment"). (ii) Within 30 days following any Change of Control, the Corporation shall (a) publish a notice of the Change of Control 16 in The Wall Street Journal or a similar daily business publication of national distribution and (b) mail a notice to each holder of Series F Preferred Stock describing the transaction that constitutes the Change of Control, together with such other information as may be required pursuant to the securities laws, and stating: (A) that the Change of Control Offer is being made pursuant to this Certificate of Designations and that, to the extent lawful, all shares of Series F Preferred Stock validly tendered will be accepted for payment; (B) the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (C) that any shares of Series F Preferred Stock not tendered will continue to accrue dividends in accordance with the terms of this Certificate of Designations; (D) that, unless the Corporation defaults in the payment of the Change of Control Payment, all shares of Series F Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to accrue dividends on the Change of Control Payment Date; and (E) a description of the procedures to be followed by such holder in order to have its shares of Series F Preferred Stock repurchased. (iii) On the Change of Control Payment Date, the Corporation shall, to the extent lawful, (A) accept for payment shares of Series F Preferred Stock validly tendered pursuant to the Change of Control Offer and (B) promptly mail to each holder of shares of Series F Preferred Stock so accepted payment in an amount equal to the purchase price for such shares and (C) unless the Corporation defaults in the payment for the shares of Series F Preferred Stock tendered pursuant to the Preferred Stock Change of Control Offer, dividends will cease to accrue with respect to the shares of Series F Preferred Stock tendered and all rights of holders of such tendered shares will terminate, except for the right to receive payment therefor, on the Change of Control Payment Date. The Corporation shall publicly announce the results of the Preferred Stock Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (iv) The Corporation shall comply with any securities laws and regulations, to the extent such laws and regulations are applicable to the repurchase of shares of the Series F Preferred Stock in connection with a Change of Control. (v) Notwithstanding the foregoing, prior to complying with this paragraph 7, but in any event within 90 days following a Change of Control, the Corporation shall either (a) repay or refinance all outstanding indebtedness or (b) obtain the requisite consents, if any, under all agreements governing 17 outstanding indebtedness necessary to permit the repurchase of the Series F Preferred Stock required by this paragraph 7. The Corporation must first comply with the covenants in its outstanding indebtedness or take the actions described in the preceding sentence before it will be required to repurchase shares of Series F Preferred Stock in the event of a Change of Control; provided, that if the Corporation fails to repurchase shares of Series F Preferred Stock, the sole remedy to holders of Series F Preferred Stock will be the voting rights arising from a Voting Rights Triggering Event. (vi) Notwithstanding the foregoing, the Corporation shall not be required to make a Preferred Stock Change of Control Offer following a Change of Control if a third party makes the Preferred Stock Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Certificate of Designations applicable to a Preferred Stock Change of Control Offer made by the Corporation and purchases all of the Series F Preferred Stock validly tendered and not withdrawn under such Preferred Stock Change of Control Offer. 8. VOTING RIGHTS. (i) The holders of record of outstanding shares of the Series F Preferred Stock shall be entitled to vote, together with the outstanding shares of Common Stock and any other classes of voting securities of the Corporation, including the Existing Preferred Stock, as one class, except as otherwise required by Georgia law, on all matters on which holders of Common Stock are entitled to vote. Each outstanding share of Series F Preferred Stock shall be entitled to one-tenth of one vote per share of Series F Preferred Stock. Additionally, the holders of record of shares of the Series F Preferred Stock shall have voting rights as required by law and as hereinafter provided in this Section 8. (ii) Upon: (A) the accumulation of accrued and unpaid dividends on the outstanding Series F Preferred Stock in an amount equal to six (6) quarterly dividends (whether or not consecutive); or (B) the failure of the Corporation to make a Preferred Stock Change of Control Offer or to repurchase all of the Series F Preferred Stock tendered in a Preferred Stock Change of Control Offer (each of the events described in clauses (a) and (b) being referred to herein as a "Voting Rights Triggering Event"); 18 then the holders of a majority of the outstanding shares of Series F Preferred Stock, voting together with any parity securities then entitled to voting rights, shall be entitled to elect such number of members to the Board of Directors of the Corporation constituting at least 20% of the then existing Board of Directors before such election (rounded to the nearest whole number), provided, however, that such number shall be no less than one nor greater than two, and the number of members of the Corporation's Board of Directors shall be immediately and automatically increased by one or two, as the case may be. (iii) Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of Series F Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such annual meetings or by the written consent of the holders of Series F Preferred Stock. Such right of the holders of Series F Preferred Stock to elect directors may be exercised until (a) all dividends in arrears shall have been paid in full and (b) all other Voting Rights Triggering Events have been cured or waived, at which time the term of such directors previously elected shall thereupon terminate, and such directors shall be deemed to have resigned. (iv) At any time when such voting right shall have vested in the holders of Series F Preferred Stock and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of holders of record of 10% or more of the Series F Preferred Stock then outstanding, addressed to the Secretary of the Corporation, call a special meeting of holders of Series F Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation or, if none, at a place designated by the Secretary of the Corporation. If such meeting shall not be called by the proper officers of the Corporation within 30 days after the personal service of such written request upon the Secretary of the Corporation, or within 30 days after mailing the same within the United States, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% of the shares of Series F Preferred Stock then outstanding may designate in writing a holder of Series F Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders and shall be 19 held at the place for holding annual meetings of the Corporation or, if none, at a place designated by such holder. Any holder of Series F Preferred Stock that would be entitled to vote at such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this Section 8. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called if any such request is received less than 90 days before the date fixed for the next ensuing annual or special meeting of stockholders. (v) If any directors so elected by the holders of Series F Preferred Stock shall cease to serve as a director before his term shall expire, the holders of Series F Preferred Stock then outstanding may, at a special meeting of the holders called as provided above, elect a successor to hold office for the unexpired term of the director whose place shall be vacant. (vi) The Corporation shall not, without the affirmative vote or consent of the holders of at least a majority of the shares of Series F Preferred Stock then outstanding (with shares held by the Corporation or any of its affiliates not being considered to be outstanding for this purpose) voting or consenting as the case may be, as one class: (A) authorize, create (by way of reclassification or otherwise) or issue any Senior Securities or any obligation or security convertible or exchangeable into or evidencing the right to purchase, shares of any class or series of Senior Securities; (B) amend or otherwise alter this Certificate of Designation (including the provisions of Section 8 hereof) in any manner that adversely affects the specified rights, preferences, privileges or voting rights of holders of Series F Preferred Stock; (C) authorize the issuance of any additional shares of Series F Preferred Stock; or (D) waive any existing Voting Rights Triggering Event or compliance with any provision of this Certificate of Designation; provided, however, that the Corporation shall not amend the Change of Control provisions of this Certificate of Designation (including the related definitions) without the approval of the holders of at least 662/3% of the then outstanding shares of Series F Preferred Stock, voting or consenting, as the case may be, as one class. 20 (vii) Without the consent of each holder affected, an amendment or waiver of the Corporation's Articles of Incorporation or of this Certificate of Designation may not (with respect to any shares of Series F Preferred Stock held by a non-consenting holder): (A) alter the rights with respect to the Series F Preferred Stock or reduce the number of shares of Series F Preferred Stock whose holders must consent to an amendment, supplement or waiver; (B) reduce the Liquidation Preferences of or alter the provisions with respect to the redemption of the Series F Preferred Stock (except as provided with respect to Section 7 hereof); (C) reduce the rate of or change the time for payment of dividends on any share of Series F Preferred Stock; (D) waive the consequences of any failure to pay dividends on the Series F Preferred Stock; (E) make any share of Series F Preferred Stock payable in any form other than that stated in this Certificate of Designation; (F) make any changes in the provisions of this Certificate of Designation relating to waivers of the rights of holders of Series F Preferred Stock to receive the Liquidation Preference and dividends on the Series F Preferred Stock; (G) waive a redemption payment with respect to any share of Series F Preferred Stock (except as provided with respect to Section 7 hereof); or (H) make any changes in the foregoing amendment and waiver provisions. (viii) The Corporation in its sole discretion may without the vote or consent of any holders of the Series F Preferred Stock amend or supplement this Certificate of Designation: (A) to cure any ambiguity, defect or inconsistency; (B) to provide for uncertificated Series F Preferred Stock in addition to or in place of certificated Series F Preferred Stock; or (C) to make any change that would provide any additional rights or benefits to the holders of the Series F 21 Preferred Stock or that does not adversely affect the legal rights under this Certificate of Designation of such holder. Except as set forth above, (x) the creation, authorization or issuance of any shares of Junior Securities, Parity Securities or Senior Securities or (y) the increase or decrease in the amount of authorized capital stock of any class, including any preferred stock, shall not require the consent of the holders of the Series F Preferred Stock and shall not be deemed to affect adversely the rights, preferences, privileges, special rights or voting rights of holders of shares of Series F Preferred Stock. 9. MERGER, CONSOLIDATION AND SALE OF ASSETS. Without the vote or consent of the holders of a majority of the then outstanding shares of Series F Preferred Stock, the Corporation may not consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, any person unless (i) the entity formed by such consolidation or merger (if other than the Corporation) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (in any such case, the "resulting entity") is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (ii) if the Corporation is not the resulting entity, the Series F Preferred Stock is converted into or exchanged for and becomes shares of such resulting entity, having in respect of such resulting entity the same (or more favorable) powers, preferences and relative, participating, optional or other special rights thereof that the Series F Preferred Stock had immediately prior to such transaction; and (iii) immediately after giving effect to such transaction, no Voting Rights Triggering Event has occurred and is continuing. The resulting entity of such transaction shall thereafter be deemed to be the "Corporation" for all purposes of this Certificate of Designations. 10. REPORTS. The Corporation shall file within 15 days after it files them with the Commission copies of the annual and quarterly reports and the information, documents, and other reports that the Corporation is required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports") with the Transfer Agent. In the event the Corporation is not required or shall cease to be required to file SEC Reports, pursuant to the Exchange Act, the Corporation shall nevertheless continue to file such reports with the Commission (unless the Commission shall not accept such a filing) and the Transfer Agent. Whether or not required by the Exchange Act to file SEC Reports with the Commission, so long as any shares of Series F Preferred Stock are outstanding, the 22 Corporation shall furnish copies of the SEC Reports to the holders of Series F Preferred Stock at the time the Corporation is required to make such information available to the Transfer Agent and any investors who request it in writing. In addition, the Corporation has agreed that, for so long as any Series F Preferred Stock remains outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. 11. AMENDMENT. This Certificate of Designation shall not be amended, either directly or indirectly, or through merger or consolidation with another entity, in any manner that would alter or change the powers, preferences or special rights of the Series F Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding Series F Preferred Stock, voting separately as a class. 12. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Series F Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Designation and in the Articles of Incorporation. The shares of Series F Preferred Stock shall have no preemptive or subscription rights. 13. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 14. SEVERABILITY OF PROVISIONS. If any voting powers, preferences and relative, participating, optional and other special rights of the Series F Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series F Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Series F 23 Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Series F Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Series F Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein. 15. REISSUANCE OF PREFERRED STOCK. Shares of Series F Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Georgia) have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to series and may be designated or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation, provided that any issuance of such shares as Series F Preferred Stock must be in compliance with the terms hereof. 16. MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES. If any of the Series F Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall issue, in exchange and in substitution for and upon cancellation of the mutilated Series F Preferred Stock certificate, or in lieu of and substitution for the Series F Preferred Stock certificate lost, stolen or destroyed, a new Series F Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Series F Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Series F Preferred Stock certificate and indemnity, if requested, satisfactory to the Corporation and the Transfer Agent (if other than the Corporation). 17. CERTAIN DEFINITIONS. As used in this Certificate of Designations, the following terms shall have the following meanings (with terms defined in the singular but having comparable meanings when used in the plural and VICE VERSA), unless the context otherwise requires: "AVERAGE STOCK PRICE" means with respect to a security, as of a certain date, the average of the high and low sales prices of such security as reported by the Nasdaq National Market or any national securities exchange upon which such security is then listed, for each of the ten consecutive Trading Days immediately preceding the fifth Trading Day preceding such date. "BOARD" means the board of directors of the Corporation. 24 "BUSINESS DAY" means any day except a Saturday, a Sunday, or any day on which banking institutions in New York, New York are required or authorized by law or other governmental action to be closed. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Corporation and its subsidiaries, taken as a whole, (ii) the adoption of a plan relating to the liquidation or dissolution of the Corporation, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the Corporation, unless (A) the aggregate market price for shares of Common Stock comprising a Common Stock Unit based upon the Closing Price per share of each class or series of Common Stock comprising a Common Stock Unit for any five Trading Days within the period of ten consecutive Trading Days ending immediately after the announcement of such Change of Control equals or exceeds 105% of the Conversion Price then in effect or (B) at least 90% of the consideration in the transaction or transactions constituting a Change of Control pursuant to clause (iii) consists of shares of common stock traded or to be traded immediately following such Change of Control on a national securities exchange or the Nasdaq National Market and, as a result of such transaction or transactions, the Series F Preferred Stock becomes convertible solely into such common stock (and any rights attached thereto), or (iv) the first day on which more than a majority of the Board of Directors are not Continuing Directors; provided, however, that a transaction in which the Corporation becomes a subsidiary of another entity shall not constitute a Change of Control if (A) the stockholders of the Corporation immediately prior to such transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the Corporation immediately following the consummation of such transaction and (B) immediately following the consummation of such transaction, no "person" or "group" (as such terms are defined above), other than such other entity (but including holders of equity interests of such other entity), "beneficially owns" (as such term is defined above), directly or indirectly through one or 25 more intermediaries, more than 50% of the voting power of the outstanding voting stock of the Corporation. "CLOSING PRICE" means, for each Trading Day, the last reported sale price regular way on the Nasdaq National Market or, if the class or series of Common Stock is not quoted on the Nasdaq National Market, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the corporation for that purpose. "COMMISSION" means the Securities and Exchange Commission. "COMMON STOCK" means any class or series of common stock of the Corporation including the WorldCom Group Stock and the MCI Group Stock. "COMMON STOCK UNIT" means a number of shares of WorldCom Group Stock equal to the WCG Stock Amount and a number of shares of MCI Group Stock equal to the MCI Stock Amount. "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of the Corporation who (a) was a member of the Board of Directors on the Preferred Stock Issue Date or (b) was nominated for election to the Board of Directors with the approval of, or whose election was ratified by, at least two-thirds of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election. "CONVERSION PRICE" shall initially mean $42.075 per share and thereafter shall be subject to adjustment from time to time pursuant to the terms of paragraph 4 hereof. "CORPORATION" mean WorldCom, Inc., a Georgia corporation and its successors. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXISTING PREFERRED STOCK" means the Series B Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock. "LIQUIDATED DAMAGES" means all liquidated damages then owing under the Registration Rights Agreement. "MCI GROUP STOCK" means the WorldCom, Inc. - MCI Group Common Stock, par value $0.01 per share of the Corporation. "MCI STOCK AMOUNT" means the number of shares of MCI Group Stock in a Common Stock Unit, as adjusted from time to time pursuant to Section 4 of this Certificate of Designation. The MCI Stock Amount shall initially be 1/25 of a share of MCI Group Stock. "MERGER" means the merger of Merger Sub with and into Intermedia Communications Inc. pursuant to the Merger Agreement. "MERGER AGREEMENT" means the Agreement and Plan of Merger dated September 1, 2000, as amended by the First Amendment dated February 15, 2001 and the Second Amendment dated as of May 14, 26 2001, among the Corporation, Merger Sub and Intermedia Communications Inc. "MERGER SUB" means Wildcat Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Corporation. "PERSON" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PREFERRED STOCK ISSUE DATE" means July 1, 2001. "PRIOR DIVIDEND PAYMENT DATE" means April 15, 2001. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement with respect to the Preferred Stock, dated as of August 18, 1998, by and among the Corporation, Bear, Stearns & Co., Inc., Smith Barney Inc., Merrill Lynch & Co. and Warburg Dillon Read LLC, as such agreement may be amended, modified or supplemented from time to time. "SERIES B PREFERRED STOCK" means the Corporation's outstanding 7.75% Series B Convertible Preferred Stock. "SERIES D PREFERRED STOCK" means the Corporation's outstanding 7% Series D Junior Convertible Preferred Stock. "SERIES E PREFERRED STOCK" means the Corporation's outstanding 7% Series E Junior Convertible Preferred Stock. "SERIES F PREFERRED STOCK" means the Corporation's outstanding 7% Series F Junior Convertible Preferred Stock. "SERIES G PREFERRED STOCK" means the Corporation's outstanding 7% Series G Junior Convertible Participating Preferred Stock. "STOCK AMOUNT" means with respect to the MCI Group Stock, the MCI Stock Amount, and with respect to the WorldCom Group Stock, the WCG Stock Amount. "TRADING DAY" means any day on which the Nasdaq National Market or other applicable stock exchange or market is open for business. "TRANSFER AGENT" shall be The Bank of New York unless and until a successor is selected by the Corporation. "WCG STOCK AMOUNT" means the number of shares of WorldCom Group Stock in a Common Stock Unit, as adjusted from time to time pursuant to Section 4 of this Certificate of Designation. The WCG Stock Amount shall initially be one share of WorldCom Group Stock. "WORLDCOM GROUP STOCK" means the WorldCom, Inc. - WorldCom Group Common Stock, par value $0.01 per share of the Corporation. 27 EXHIBIT J 1. DESIGNATION, AMOUNT AND LIQUIDATION PREFERENCE. The designation of this series of preferred stock shall be Series G Junior Convertible Participating Preferred Stock, par value $0.01 per share (the "Series G Preferred Stock"). The number of shares shall be 200,000. The liquidation preference of shares of the Series G Preferred Stock shall be $1,000 per share (the "Liquidation Preference"). 2. RANKING. The Series G Preferred Stock shall rank, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation, (i) senior to all classes of common stock of the Corporation and to each other class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board, the terms of which do not expressly provide that it ranks senior to or on a parity with the Series G Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Corporation (collectively referred to with the Common Stock of the Corporation as "Junior Securities"); (ii) on a parity with the Existing Preferred Stock and any additional shares of Series G Preferred Stock issued by the Corporation in the future and any other class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board, the terms of which expressly provide that such class or series will rank on a parity with the Series G Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Corporation (collectively referred to as "Parity Securities"); and (iii) junior to each class of capital stock or series of preferred stock issued by the Corporation established after the Preferred Stock Issue Date by the Board, the terms of which expressly provide that such class or series will rank senior to the -1- Series G Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Corporation (collectively referred to as "Senior Securities"). No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series G Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Senior Securities. 3. DIVIDENDS. -2- i. The holders of shares of the Series G Preferred Stock shall be entitled to receive, when, as and if dividends are declared by the Board out of funds of the Corporation legally available therefor, cumulative dividends from the Prior Dividend Payment Date (whether or not such shares were outstanding on the Prior Dividend Payment Date) accruing at the rate per annum of 7% of the sum of (i) the Liquidation Preference per share and (ii) all compounded accumulated and unpaid dividends on such shares of Series G Preferred Stock from the Prior Dividend Payment Date, payable and compounded quarterly in arrears on each January 15, April 15, July 15 and October 15, commencing on July 15, 2001 (each a "Dividend Payment Date"). If any such date is not a Business Day, such payment shall be made on the next succeeding Business Day, to the holders of record as of the next preceding January 1, April 1, July 1 and October 1 (each, a "Record Date"). Dividends will be payable, at the option of the Corporation, (i) in cash, (ii) in Common Stock Units to holders (based upon the Average Stock Price) or (iii) through any combination of the foregoing. If the dividends are paid in Common Stock Units, the number of Common Stock Units to be issued on each Dividend Payment Date will be determined by dividing the total dividend to be paid on all outstanding shares of Series G Preferred Stock held by each holder by the sum of (i) the WCG Stock Amount multiplied by the Average Stock Price as of the Record Date for the WorldCom Group Stock, plus (ii) the MCI Stock Amount multiplied by the Average Stock Price as of the Record Date for the MCI Group Stock. In the event of a Sale of the Corporation, Significant Event or Change of Control where the Series G Preferred Stock remains outstanding, the term Common Stock, as used solely in this paragraph 3(i), paragraph 3(v) and paragraph 3(vi), shall mean securities issuable to the holders of Common Stock comprising a Common Stock Unit in connection with such Sale of the -3- Corporation, Significant Event or Change of Control, as the case may be. The Transfer Agent shall not issue any fractional shares of Common Stock as a dividend payment. Instead the Transfer Agent shall round the number of shares of Common Stock payable as a dividend hereunder up to the nearest full share of Common Stock. Dividends payable on the Series G Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be deemed to accumulate on a daily basis. ii. Dividends on the Series G Preferred Stock shall accumulate and compound quarterly whether or not the Corporation has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate and compound quarterly to the extent they are not paid on the Dividend Payment Date for the period to which they relate. The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code (x) to permit the payment of dividends on the Series G Preferred Stock, including, without limitation, through the revaluation of its assets in accordance with the Georgia Business Corporation Code, to make or keep funds legally available for the payment of dividends and (y) to declare and pay such dividends to the extent there are funds legally available therefor. iii. No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series G Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Series G Preferred Stock. Unless full cumulative dividends on all outstanding shares of Series G Preferred Stock -4- for all past dividend periods shall have been declared and paid in full, or declared and a sufficient sum for the payment thereof set apart, then: (A) no dividend (other than a dividend payable solely in shares of any Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities; (B) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities, other than a distribution consisting solely of Junior Securities; (C) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of other Junior Securities) by the Corporation or any of its Subsidiaries; and (D) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities by the Corporation or any of its Subsidiaries. iv. Unless full cumulative dividends on all outstanding shares of Series G Preferred Stock for all past dividend periods shall have been declared and paid in full or declared and a sum sufficient for the payment thereof set apart, then: (A) no dividend (other than a dividend payably solely in shares of any Parity Securities or Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Parity Securities; (B) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Parity Securities, other than a distribution consisting solely of Parity Securities; (C) no shares of Parity Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of Junior Securities) by the Corporation or any of its Subsidiaries; and (D) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition or retirement for -5- value of any shares of Parity Securities by the Corporation or any of its Subsidiaries. If at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series G Preferred Stock, such payment shall be distributed ratably among the holders of Series G Preferred Stock based upon the aggregate accumulated but unpaid dividends on the Series G Preferred Stock held by each holder. When dividends are not paid in full or a sum sufficient for such payment is not set apart as aforesaid, all dividends declared upon any other class or series of Parity Securities shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series G Preferred Stock and accumulated and unpaid on such Parity Securities. v. Holders of the Series G Preferred Stock shall also be entitled to receive, when, as and if dividends on a class or series of Common Stock are declared or other distributions are made by the Board out of funds of the Corporation legally available therefor, any dividends or other distributions, whether payable in cash, property or stock, payable to all holders of such class or series of Common Stock as if such holder of Series G Preferred Stock held the number of shares of such class or series of Common Stock into which such shares of Series G Preferred Stock might have been converted pursuant to the terms of Section 4 hereof on the date fixed for the determination of holders of such class or series of Common Stock entitled to receive such distribution. Any such declared and unpaid dividends will be payable upon a liquidation, dissolution or winding-up, first to the holders of the Series G Preferred Stock and then to the holders of the Common Stock. Notwithstanding anything to the contrary contained herein, no adjustment in the Conversion Price or any Stock Amount shall be made pursuant to Section 4 below if the Corporation distributes to each holder of Series G Preferred Stock any dividends or other distribution payable on the Common Stock pursuant to this paragraph 3(v). vi. When dividends are declared by the Board, the Corporation shall issue a press release within 3 Business Days of the Record Date setting forth (A) the method of payment for such dividends (cash, Common Stock Units or a -6- combination thereof) and (B) the Average Stock Price and the then effective Stock Amount for each class or series of the Common Stock to be issued. vii. The Corporation has reserved and shall continue to reserve, out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to permit the payment of dividends on the Series G Preferred Stock pursuant to this Section 3. All shares of Common Stock that may be issued in payment of dividends on the Series G Preferred Stock shall be fully paid and nonassessable. The Corporation shall endeavor to comply with all securities laws regulating the offer and delivery of shares of Common Stock in payment of dividends and shall endeavor to list such shares of Common Stock on each national securities exchange or automated quotation system on which the Common Stock is listed. In the event that dividends are payable in securities other than Common Stock pursuant to paragraph 3(i), the Corporation shall use its reasonable efforts to cause the issuer of such other securities to comply with this paragraph 3(vii). 4. CONVERSION. -7- i. A holder of shares of Series G Preferred Stock may convert such shares into Common Stock Units comprising a Common Stock Unit at any time after the Preferred Stock Issue Date, but only in lots of 100 shares of Series G Preferred Stock or integral multiples thereof if less than all of the shares of Series G Preferred Stock then held by such holder are being converted. For the purposes of conversion, each share of Series G Preferred Stock shall be valued at the Liquidation Preference plus all accumulated, compounded and unpaid dividends on such share (which shall include any dividends described in the last sentence of paragraph 4(ii) below), which shall be divided by the Conversion Price in effect on the Conversion Date (as defined below) to determine the number of Common Stock Units issuable upon conversion. Immediately following such conversion, the rights of the holders of converted Series G Preferred Stock shall cease and the persons entitled to receive the Common Stock upon the conversion of Series G Preferred Stock shall be treated for all purposes as having become the owners of such Common Stock. ii. To convert Series G Preferred Stock, a holder must (A) surrender the certificate or certificates evidencing the shares of Series G Preferred Stock to be converted, duly endorsed in a form reasonably satisfactory to the Corporation, at the principal office of the Corporation or the Transfer Agent, (B) notify the Corporation at such office that he elects to convert Series G Preferred Stock and the number of shares he wishes to convert, (C) state in writing the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued, and (D) pay any transfer or similar tax if required (other than any such tax required to be paid by the Corporation pursuant to paragraph 4(iv)). In the event that a holder fails to notify the Corporation of the number of shares of Series G Preferred Stock which he -8- wishes to convert, he shall be deemed to have elected to convert all shares represented by the certificate or certificates surrendered for conversion. The date on which the holder satisfies all those requirements is the "Conversion Date." As soon as practical after the Conversion Date, the Corporation shall deliver certificates for the number of full shares of Common Stock issuable upon the conversion, and a new certificate representing the unconverted portion, if any, of the shares of Series G Preferred Stock represented by the certificate or certificates surrendered for conversion. The person or persons in whose name the Common Stock certificates are registered shall be treated as the stockholder of record on and after the Conversion Date. If a holder of Series G Preferred Stock converts more than one share at a time, the number of full shares of Common Stock issuable upon conversion shall be based on the total liquidation preference plus the aggregate of accumulated and unpaid dividends of all shares of Series G Preferred Stock converted. If the last day on which Series G Preferred Stock may be converted is not a Business Day, Series G Preferred Stock may be surrendered for conversion on the next succeeding Business Day. If a Conversion Date occurs during the period from the close of business on any Record Date to the opening of business of the corresponding Dividend Payment Date, the registered holder of Series G Preferred Stock so surrendered for conversion shall not be entitled to any dividend payment with respect to the shares of Series G Preferred Stock surrendered for conversion on such Dividend Payment Date. iii. The Corporation shall not issue any fractional shares of Common Stock upon conversion of Series G Preferred Stock. Instead the Corporation shall round the results of a conversion up to the nearest full share of Common Stock. -9- iv. If a holder converts shares of Series G Preferred Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the holder shall pay any such tax that is due because the shares are issued in a name other than the holder's name. v. The Corporation has reserved and shall continue to reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury enough shares of Common Stock to permit the conversion of the Series G Preferred Stock in full. All shares of Common Stock that may be issued upon conversion of Series G Preferred Stock shall be fully paid and nonassessable. The Corporation shall endeavor to comply with all securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Series G Preferred Stock and shall endeavor to list such shares of Common Stock on each national securities exchange or automated quotation system on which the Common Stock is listed. vi. If the Corporation shall pay or make a dividend or other distribution on any class or series of capital stock of the Corporation in a class or series of Common Stock other than the payment of dividends in Common Stock Units on the Series G Preferred Stock or any other regularly scheduled dividend on any other preferred stock, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by multiplying such Stock Amount by a fraction, the numerator of which shall be the sum of the number -10- of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination and the total number of shares of such class or series of Common Stock constituting such dividend or other distribution and the denominator of which shall be the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such dividends and distributions. For the purposes of this paragraph 4(vi), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. Without in any way limiting the requirements of paragraph 3(v), this paragraph 4(vi) shall only apply if the Corporation has not made an appropriate distribution to the holders of the Series G Preferred Stock pursuant to paragraph 3(v) above. vii. In case the Corporation shall issue rights, options or warrants to all holders of a class or series of its Common Stock entitling them to subscribe for, purchase or acquire shares of such class or series of Common Stock at a price per share less than the current market price per share (determined as provided in paragraph 4(xiii) below) of such class or series of Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of the Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date fixed for such determination shall be increased by -11- multiplying such Stock Amount by a fraction the numerator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription, purchase or acquisition and the denominator of which shall be the sum of the number of shares of such class or series of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of such class or series of Common Stock which the aggregate offering price for the total number of shares of Common Stock so offered for subscription, purchase or acquisition would purchase at such current market price per share, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination of the holders entitled to such rights, options or warrants. However, upon the expiration of any right, option or warrant to purchase such class or series of Common Stock, the issuance of which resulted in an adjustment in the Stock Amount pursuant to this paragraph 4(vii), if any such right, option or warrant shall expire and shall not have been exercised, the Stock Amount shall be recomputed immediately upon such expiration and effective immediately upon such expiration shall be decreased to the amount it would have been (but reflecting any other adjustments to the Stock Amount made pursuant to the provisions of this Section 4 after the issuance of such rights, options or warrants) had the adjustment of the Stock Amount made upon the issuance of such rights, options or warrants been made on the basis of offering for subscription or purchase only that number of shares of such class or series of Common Stock actually purchased upon the exercise of such rights, options or warrants. No further adjustment shall be made upon exercise of any right, option or warrant if any adjustment shall -12- have been made upon the issuance of such security. For the purposes of this paragraph 4(vii), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not issue any rights, options or warrants in respect of shares of Common Stock held in the treasury of the Corporation. Without in any way limiting the requirements of paragraph 3(v), this paragraph 4(vii) shall only apply if the Corporation has not made an appropriate distribution to the holders of the Series G Preferred Stock pursuant to paragraph 3(v) above. viii. In case the outstanding shares of a class or series of Common Stock shall be subdivided into a greater number of shares of such class or series of Common Stock, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be increased, and, conversely, in case the outstanding shares of a class or series of Common Stock shall each be combined into a smaller number of shares of such class or series of Common Stock, the applicable Stock Amount in effect at the opening of business on the day following the day upon which such combination becomes effective shall be decreased to equal the product of the applicable Stock Amount in effect on such date and a fraction, the numerator of which shall be the number of shares of such class or series of Common Stock outstanding immediately after such subdivision or combination, as the case may be, and the denominator of which shall be the number of shares of such class or series of Common -13- Stock outstanding immediately prior to such subdivision or combination, as the case may be. Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. ix. In case the Corporation shall, by dividend or otherwise, distribute to all holders of a class or series of its Common Stock (A) evidences of its indebtedness or (B) shares of any class or series of capital stock, cash or other property or assets (including securities, but excluding (x) any rights, options or warrants referred to in paragraph 4(vii) above and (y) any dividend or distribution referred to in paragraph 4(vi) above), unless with respect to cash dividends, cash distributions and cash repurchases, the sum of (1) all such cash dividends and cash distributions made within the preceding 12 months in respect of which no adjustment has been made and (2) any cash consideration paid in respect of any repurchases of such class or series of Common Stock by the Corporation or any of its subsidiaries within the preceding 12 months in respect of which no adjustment has been made, does not exceed 20% of the market capitalization for such class or series of Common Stock (being the product of the then current market price per share (determined as provided in paragraph 4(xiii) below) of such class or series of Common Stock times the aggregate number of shares of such class or series of Common Stock then outstanding on the date fixed for the determination of the holders of such class or series of Common Stock entitled to receive such distribution), then in each case, the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at -14- the opening of business on the day following the date fixed for the determination of holders of such class or series of Common Stock entitled to receive such distribution shall be adjusted by multiplying such Stock Amount by a fraction of which the numerator shall be the current market price per share (determined as provided in paragraph 4(xiii) below) of such class or series of Common Stock on such date of determination, and the denominator shall be such current market price per share of such class or series of Common Stock less the then fair market value as determined by the Board (whose determination shall be conclusive) of the portion of the capital stock, cash or other assets or evidences of indebtedness so distributed (and for which an adjustment to the Stock Amount has not previously been made pursuant to the terms of this Section 4) applicable to one share of such class or series of Common Stock, such adjustment to become effective immediately after the opening of business on the day following such date of determination of the holders entitled to such distribution. Repurchases of Common Stock issued under the Corporation's stock incentive programs, to the extent permitted by the Corporation's then existing indentures, shall be excluded from the foregoing clauses (1) and (2). Without in any way limiting the requirements of paragraph 3(v), this paragraph 4(ix) shall only apply if the Corporation has not made an appropriate distribution to the holders of the Series G Preferred Stock pursuant to paragraph 3(v) above. x. The reclassification or change of a class or series of Common Stock into securities, including securities other than Common Stock, (other than any reclassification upon a consolidation or merger to which paragraph 4(xxi) below shall apply) shall be deemed to involve (A) a distribution of such securities other than Common Stock to all holders of such class or series of Common Stock (and the effective date of such -15- reclassification shall be deemed to be "the date fixed for the determination of holders of Common Stock entitled to receive such distribution" within the meaning of paragraph 3(v) or 4(ix) above), and (B) a subdivision or combination, as the case may be, of the number of shares of such class or series of Common Stock outstanding immediately prior to such reclassification into the number of shares of such class or series of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision or combination becomes effective" within the meaning of paragraph 4(viii) above). If a class or series of Common Stock shall be reclassified or changed into securities or property other than Common Stock (other than any reclassification upon a consolidation or merger to which paragraph 4(xxi) below shall apply), then and in each such event the holder of each share of Series G Preferred Stock shall have the right thereafter to convert such share into the kind and amount of securities and property receivable upon such reclassification by the holders of the number and class or series of shares of Common Stock into which such share of Series G Preferred Stock could have been converted immediately prior to such reclassification, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof. xi. In case the Corporation shall issue shares of a class or series of its Common Stock (excluding shares issued (i) in any of the transactions described in paragraphs 3(v) (only to the extent the holders of the Series G Preferred Stock actually receive such shares of Common Stock), 4(vi), 4(vii), 4(viii) or 4(ix) above, (ii) upon exercise of options or other awards issued pursuant to the Corporation's employee incentive plans, (iii) upon exercise of -16- options and warrants of the Corporation outstanding as of the date hereof, (iv) to shareholders of any corporation (which is not an affiliate of the Corporation) which merges into the Corporation or a subsidiary of the Corporation in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger, (v) as regularly scheduled dividend payments on shares of preferred stock of the Corporation, (vi) upon conversion or exchange of any preferred stock or convertible debt of the Corporation, (vii) in a bona fide offering pursuant to a firm commitment underwriting or distribution pursuant to Rule 144A under the Securities Act, or (viii) pursuant to the Corporation's Incentivized Conversion Program) for a consideration per share less than the current market price per share of such class or series of Common Stock (as defined in paragraph 4 (xiii) below) in effect immediately prior to the earlier of (x) issuance of such securities, or (y) the date the Corporation has a contractual obligation to issue such securities (whether or not such obligation is contingent upon the passage of time, the occurrence of certain events or both), then the Stock Amount with respect to such class or series of Common Stock and, as a result, the number of shares of such class or series of Common Stock contained in a Common Stock Unit, in effect at the opening of business on the day following the date of issuance of such shares of Common Stock shall be increased by multiplying such Stock Amount by a fraction (A) the numerator of which shall be the number of shares of such class or series of Common Stock outstanding (on a fully diluted basis) immediately after such issuance, and (B) the denominator of which shall be the sum of (1) the total number of shares of such class or series of Common Stock outstanding (on a fully diluted basis) immediately prior to such issuance and (2) the number of shares of Common Stock which the aggregate consideration received by the -17- Corporation (determined as provided in paragraph 4(xiv) below) for the total number of shares of Common Stock issued would purchase at the current market price per share (as defined in paragraph 4(xiii)). xii. In case the Corporation shall issue any securities (including rights, warrants and options) convertible into, exercisable for or exchangeable for a class or series of its Common Stock (excluding securities issued (i) as a dividend or distribution to all holders of such class or series of Common Stock, (ii) upon exercise of options or other awards issued pursuant to the Corporation's employee incentive plans, (iii) upon exercise of options and warrants of the Corporation outstanding as of the date hereof, (iv) to shareholders of any corporation (which is not an affiliate of the Corporation) which merges into the Corporation or a subsidiary of the Corporation in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger, (v) as regularly scheduled dividend payments on shares of preferred stock of the Corporation, (vi) upon conversion or exchange of any preferred stock or convertible debt of the Corporation, (vii) in a bona fide offering pursuant to a firm commitment underwriting or distribution pursuant to Rule 144A under the Securities Act, or (viii) pursuant to the Corporation's Incentivized Conversion Program) for a consideration per share of such class or series of Common Stock initially deliverable upon conversion, exercise or exchange of such securities (determined as provided in paragraph 4(xiv) below) less than the current market price per share of such class or series of Common Stock (as defined in paragraph 4(xiii) below) in effect immediately prior to the earlier of (x) issuance of such securities, or (y) the date the Corporation has a contractual obligation to issue such securities (whether or not such obligation -18- is contingent upon the passage of time, the occurrence of certain events or both), then the Stock Amount with respect to such class or series of Common Stock and, as a result, the Common Stock comprising a Common Stock Unit, in effect at the opening of business on the day following the date of issuance of such securities shall be increased by multiplying such Stock Amount by a fraction, (A) the numerator of which shall be the sum of (1) the number of shares of such class or series of Common Stock outstanding (on a fully diluted basis) immediately prior to the issuance of such securities, and (2) the maximum number of shares of such class or series of Common Stock of the Corporation deliverable upon conversion, exercise or exchange of such securities at the initial conversion, exercise or exchange price or rate, and (B) the denominator of which shall be the sum of (1) the number of shares of such series Common Stock outstanding immediately prior to such issuance and (2) the number of shares of such class or series of Common Stock which the aggregate consideration received by the Corporation (determined as provided in paragraph 4(xiv) below) for such securities would purchase at such current market price per share of such class or series of Common Stock. However, upon the expiration of any security convertible into, exercisable for or exchangeable into such class or series of Common Stock, the issuance of which resulted in an adjustment in a Stock Amount pursuant to this paragraph 4(xii), if any such security shall expire and shall not have been converted, exercised or exchanged, the affected Stock Amount shall be recomputed immediately upon such expiration and effective immediately upon such expiration shall be decreased to the price it would have been (but reflecting any other adjustments to the Stock Amount Price made pursuant to the provisions of this Section 4 after the issuance of such security) had the adjustment of the Stock Amount made upon the issuance of such security been made on the basis -19- of offering for subscription or purchase only that number of shares of such class or series of Common Stock actually purchased upon the conversion, exercise or exchange of such security. No further adjustment shall be made upon the conversion, exercise or exchange of such security if any adjustment shall have been made upon the issuance of such security. xiii. For the purpose of any computation under this Section 4 or elsewhere in this Certificate of Designation, the current market price per share of a class or series of Common Stock on any day shall be deemed to be the average of the Closing Prices of such class or series of Common Stock for the 10 consecutive Trading Days immediately preceding the Trading Day before the day in question and the current market price per Common Stock Unit on any day shall be deemed to be the sum of the products obtained by multiplying the Stock Amount for each series or class of Common Stock contained in a Common Stock Unit by the current market price per share (as determined pursuant to this Section 4(xiii)) of such series or class of Common Stock on such day. For the purpose of any computation under paragraphs 5(ii), 6(i) or 7(v) only, if applicable, the term Common Stock as used in the preceding sentence shall include securities issuable to the holders of such class or series of Common Stock in connection with a Sale of the Corporation, Significant Event or Change of Control, as the case may be. xiv. For purposes of any computation respecting consideration received pursuant to paragraphs 4(xi) and 4(xii) above, the following shall apply: (A) in the case of the issuance of shares of Common Stock for cash, the -20- consideration shall be the gross proceeds to the Corporation from such issuance, which shall not include any deductions for any customary commissions, discounts or other expenses incurred by the Corporation in connection therewith; (B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash (subject to clause (C) below) shall be deemed to be the fair market value thereof as determined in good faith by the Board (irrespective of the accounting treatment thereof), whose determination shall be conclusive; (C) in the case of the issuance of shares of Common Stock for a consideration in whole or in part consisting of securities, the value of any securities shall be deemed to be: (x) if traded on a securities exchange or through the Nasdaq National Market, the average of the closing prices of the securities on such exchange or quotation system over the 10 trading day period ending on the trading day immediately preceding the day in question, (y) if actively traded over-the-counter, the average of the closing bid or sale prices (whichever is applicable) over the 10 trading day period ending on the trading day immediately preceding the day in question and (z) if there is no active public market, fair market value thereof, determined as provided in clause (B) above; and (D) in the case of the issuance of securities convertible into, exercisable for or exchangeable for shares of Common Stock, the aggregate consideration received therefor shall be deemed to be the consideration received by the Corporation for the issuance of such securities plus the minimum additional consideration, if any, to be received by the Corporation upon the conversion, exercise or exchange thereof (the -21- consideration in each case to be determined in the same manner as provided in clauses (A) through (C) of this paragraph 4(xiv)). xv. No adjustment in a Stock Amount need be made until all cumulative adjustments amount to 1% or more of such Stock Amount as last adjusted. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 4 shall be made to the nearest 1/1,000th of a cent or to the nearest 1/1,000th of a share, as the case may be. xvi. For purposes of this Section 4, "Common Stock" includes WorldCom Group Stock, MCI Group Stock and any other stock of any class of the Corporation which has no preference in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which is not subject to redemption by the Corporation. Subject to the provisions of paragraph 4(xxi) below, shares issuable on conversion of shares of Series G Preferred Stock shall include only shares of (i) WorldCom Group Stock, (ii) MCI Group Stock and (iii) any class or classes or series resulting from any reclassification of WorldCom Group Stock or MCI Group Stock and which have no preferences in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation and which are not subject to redemption by the Corporation; provided that, if at any time there shall be more than one such resulting class or series, the shares of each such class or series then so issuable shall be substantially in the proportion which the total number of shares of such class or series resulting from all such reclassifications bears to the total number of shares of all such classes or series resulting from all such reclassifications. -22- xvii. No adjustment in the Conversion Price shall reduce the Conversion Price below the then aggregate par value of one Common Stock Unit. The Corporation hereby agrees with each holder of Series G Preferred Stock that it shall not increase the par value of any class or series of Common Stock above its current par value of $.01 per share. xviii. Whenever the Conversion Price or a Stock Amount is adjusted, the Corporation shall promptly mail to holders of Series G Preferred Stock, first class, postage prepaid, a notice of the adjustment together with a certificate from the Corporation's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct. xix. The Corporation from time to time may reduce the Conversion Price if it considers such reductions to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of Common Stock by any amount, but in no event may the Conversion Price be less than the aggregate par value of one Common Stock Unit. Whenever the Conversion Price is reduced pursuant to this paragraph 4(xix), the Corporation shall mail to holders of Series G Preferred Stock a notice of the reduction. The Corporation shall mail, first class, postage prepaid, the notice at least 5 days before the date the reduced Conversion Price takes effect pursuant to this paragraph 4(xix). The notice shall state the reduced Conversion Price and the period it will be in effect. A reduction of the Conversion Price does not change or adjust the Conversion Price or any Stock Amount otherwise in -23- effect for purposes of paragraphs 4(vi) or 4(viii) above. xx. If: (A) the Corporation takes any action which would require an adjustment in a Stock Amount pursuant to paragraphs 4(vi) through 4(xii) above; (B) the Corporation consolidates or merges with, or transfers all or substantially all of its assets to, another corporation, and stockholders of the Corporation must approve the transaction; or (C) there is a dissolution or liquidation of the Corporation; the Corporation shall mail to holders of the Series G Preferred Stock, first class, postage prepaid, a notice stating the proposed record or effective date, as the case may be. The Corporation shall mail the notice at least 5 days before such proposed record or effective date. However, failure to mail the notice or any defect in it shall not affect the validity of any transaction referred to in clause (A), (B) or (C) of this paragraph 4(xx). xxi. In the case of any consolidation of the Corporation or the merger of the Corporation with or into any other entity or the sale or transfer of all or substantially all the assets of the Corporation pursuant to which a class or series of Common Stock is converted into other securities, cash or assets, upon consummation of such transaction, each share of Series G Preferred Stock shall, unless the election in paragraph 5(ii) has been timely exercised, automatically become convertible into the kind and amount of securities, cash or other assets receivable upon the consolidation, merger, sale or transfer by a holder of the number of shares of such class or series of Common Stock into which such share of Series G Preferred Stock might have been converted immediately prior to -24- such consolidation, merger, transfer or sale (assuming such holder of Common Stock failed to exercise any rights of election and received per share the kind and amount of consideration receivable per share by a plurality of non-electing shares). Appropriate adjustment (as determined by the Board) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of Series G Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustment of the applicable Stock Amount and the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of Series G Preferred Stock. If this paragraph 4(xxi) applies to a transaction, paragraphs 4(vi), 4(viii) and 4(x) do not apply to such transaction. xxii. In any case in which this Section 4 shall require that an adjustment as a result of any event become effective from and after a record date, the Corporation may elect to defer until after the occurrence of such event the issuance to the holder of any shares of Series G Preferred Stock converted after such record date and before the occurrence of such event of the additional shares of Common Stock issuable upon such conversion over and above the shares issuable on the basis of a Stock Amount or Conversion Price in effect immediately prior to adjustment; provided, however, that if such event shall not have occurred and authorization of such event shall be rescinded by the Corporation, such Stock Amount or Conversion Price shall be recomputed immediately upon such recision to the Stock Amount or Conversion Price that -25- would have been in effect had such event not been authorized, provided that such recision is permitted by and effective under applicable laws. xxiii. The Corporation will not by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series G Preferred Stock against impairment to the extent required hereunder. Nothing in this Section 4 shall affect the continued accumulation of dividends on the Series G Preferred Stock in accordance with the terms of this Certificate of Designation. (xxiv) Upon delivery to the Corporation of the notice referred to in paragraph 4(ii)(B), the right of the Corporation to redeem the shares of Series G Preferred Stock referred to in such notice shall terminate regardless of whether a notice of redemption pursuant to paragraph 6(ii) has been made by the Corporation. 5. LIQUIDATION RIGHTS. Upon any liquidation, dissolution or winding up of the Corporation, voluntary or involuntary: i. The holders of the Series G Preferred Stock will be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Junior Securities by reason of their ownership thereof, but subsequent to the repurchase or payment in full or other satisfaction of the Corporation's outstanding indebtedness and Senior Securities, an amount per share of Series G Preferred Stock equal to the greater of (A) the Liquidation Preference plus all compounded accumulated but unpaid dividends, if any, to the date fixed for liquidation, dissolution or winding-up -26- (whether or not declared and whether or not funds of the Corporation are legally available for the payment of dividends), and (B) the amount the holder of one share of Series G Preferred Stock would have received in such liquidation, dissolution or winding up if such share of Series G Preferred Stock had been converted to Common Stock pursuant to Section 4 immediately prior to such event (such greater amount, the "Liquidation Amount"). After payment in full of the Liquidation Amount, such holders will not be entitled to any further participation in any distribution of assets of the Corporation. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the assets of the Corporation shall be insufficient to pay the full Liquidation Amount with respect to the Series G Preferred Stock and the full liquidation preference plus accumulated and unpaid dividends with respect to all other Parity Securities, the holders of the Series G Preferred Stock and the Parity Securities will share equally and ratably in any distribution of assets of the Corporation in proportion to the full Liquidation Amount in the case of the Series G Preferred Stock and the full liquidation preference plus accumulated and unpaid dividends in the case of any Parity Securities to which each is entitled. ii. At the written election of the holders of a majority of the then outstanding shares of Series G Preferred Stock exercised by written notice (the "Liquidation Notice") to the Corporation within ten Business Days after receipt of notice from the Corporation (which will be deemed received on the same day the Corporation delivers such notice by confirmed facsimile), a Sale of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation. If the Liquidation Notice is not timely received by the Corporation, the holders of the Series G Preferred Stock shall have forfeited this right of election. Within four Business Days of receipt of a Liquidation Notice, the Corporation shall deliver to the holders of the outstanding shares of Series G Preferred Stock a certificate (a "Liquidation Certificate") certifying whether the Corporation can then pay the Liquidation Amount in cash pursuant to the terms of its outstanding indebtedness, and if the entire Liquidation -27- Amount cannot be paid in cash, specifying the portion of such amount that can be paid in cash. Within four Business Days of delivery of a Liquidation Certificate providing that the entire Liquidation Amount cannot be paid in cash, the holders of a majority of the then outstanding shares of Series G Preferred Stock may send a written notice to the Corporation withdrawing the Liquidation Notice. If such holders of the Series G Preferred Stock do not timely deliver such withdrawal notice to the Corporation, then, if the terms of the Corporation's outstanding indebtedness do not permit payment of all or any portion of the Liquidation Amount payable pursuant to this paragraph 5(ii) in cash (any such portion of the Liquidation Amount, the "Non-Cash Liquidation Amount"), any such portion of the Liquidation Amount that may be paid in cash shall be paid in cash and, the remainder of the outstanding shares of Series G Preferred Stock shall not be redeemed or repurchased but instead shall automatically be converted into the number of Common Stock Units (or, if applicable, securities issuable to the holders of Common Stock in connection with a Sale of the Corporation) equal to the Non-Cash Liquidation Amount divided by the aggregate current market price per Common Stock Unit (as defined in paragraph 4(xiii)). 6. REDEMPTION. -28- (i) If permitted by the terms of the Corporation's outstanding indebtedness at the time of receipt of the Redemption Notice (as defined below), at any time (i) after the fifth anniversary of the Original Preferred Stock Issue Date, (ii) within 45 days after the consummation of a Significant Event, (iii) within 45 days after the consummation of the Merger or (iv) after an Event of Default (as defined in paragraph 8(vi)) for so long as such Event of Default has not been cured, registered holders of a majority of the shares of outstanding Series G Preferred Stock may require the Corporation to redeem all, but not less than all, of the outstanding shares of Series G Preferred Stock (an "Optional Redemption") by notifying the Corporation in writing (the "Redemption Notice") of their intent to exercise the rights afforded by this paragraph 6(i) and specifying a date not less than 30 nor more than 60 days from the date of such notice on which the outstanding shares of Series G Preferred Stock shall be redeemed (the "Optional Redemption Date"). Upon receipt of such notice, the Corporation shall promptly deliver to the holders of the outstanding shares of Series G Preferred Stock a certificate (a "Redemption Certificate") certifying whether the Corporation can then pay the Optional Redemption Price (as defined below) in cash pursuant to the terms of its outstanding indebtedness, and if the entire Optional Redemption Price cannot be paid in cash, specifying the portion of such amount that can be paid in cash and specifying the Optional Redemption Date. All recipients of such Redemption Certificate shall be required to participate in the Optional Redemption. Within five Business Days of delivery of a Redemption Certificate providing that the entire Optional Redemption Price cannot be paid in cash, the holders of a majority of the then outstanding shares of Series G Preferred Stock may send a written notice to the Corporation withdrawing the Redemption Notice (without prejudice to the rights of the holders of Series G Preferred Stock to timely exercise such rights pursuant to this paragraph 6(i) at any time in the future to the extent permitted hereby). If such holders of Series G Preferred Stock do not timely deliver such withdrawal notice to the Corporation, then, subject to the last sentence of this paragraph 6(i), the Corporation shall redeem on the Optional Redemption Date all the outstanding -29- shares of Series G Preferred Stock. Each share of Series G Preferred Stock to be redeemed shall be redeemed for an amount in cash equal to the sum of the Liquidation Preference plus all compounded, accumulated but unpaid dividends (the "Optional Redemption Price"). If the terms of the Corporation's outstanding indebtedness do not permit payment of all or any portion of the aggregate Optional Redemption Price in cash (any such portion of the aggregate Optional Redemption Price, the "Non-Cash Redemption Price"), then if the holders of the Series G Preferred Stock do not timely withdraw their Redemption Notice as provided above, on the Optional Redemption Date, any shares of Series G Preferred Stock which may be redeemed for cash shall be redeemed for an amount in cash equal to the Optional Redemption Price and the remainder of the outstanding shares of Series G Preferred Stock shall not be redeemed or repurchased but instead shall be automatically converted into the number of Common Stock Units (or, if applicable, securities issuable to holders of the Common Stock in connection with a Significant Event) equal to the Non-Cash Redemption Price divided by the aggregate current market price per Common Stock Unit (as defined in paragraph 4(xiii)). (ii) Until the fifth anniversary of the Original Preferred Stock Issue Date, the shares of Series G Preferred Stock shall not be redeemed by the Corporation at its option. After the fifth anniversary of the Original Preferred Stock Issue Date, all, but not less than all, of the outstanding shares of Series G Preferred Stock may be redeemed, at the Corporation's option, (i) for cash, or (ii) by delivery of the number of Common Stock Units having an aggregate current market price (as defined in paragraph 4(xiii)), in each case equal to the redemption prices specified below (expressed as percentages of the Liquidation Preference thereof), together with accumulated, compounded and unpaid dividends (including an amount equal to a prorated dividend for any partial dividend period) to the date of redemption (the "Applicable Redemption Price"), upon not less than 30 nor more than 60 days' prior written notice, if redeemed during the 12-month period commencing on the 17th day of February of each of the years set forth below: -30-
YEAR PERCENTAGE ---- ---------- 2005 .......................................................... 103.50% 2006 .......................................................... 102.34% 2007 .......................................................... 101.17% 2008 and thereafter ........................................... 100.00%
No optional redemption pursuant to this paragraph 6(ii) shall be authorized or made unless, prior to giving the applicable redemption notice, all accumulated, compounded and unpaid dividends for periods ended prior to the date of such redemption notice shall have been paid in cash, Common Stock Units or a combination thereof. (iii) Notice of any redemption shall be sent by or on behalf of the Corporation not less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the "Redemption Date"), by first class mail, postage prepaid, to all holders of record of the Series G Preferred Stock at their last addresses as they shall appear on the books of the Corporation; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series G Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which Series G Preferred Stock may be listed or admitted to trading, such notice shall state: (i) that such redemption is being made pursuant to the optional redemption provisions hereof; (ii) the Redemption Date; (iii) the Applicable Redemption Price and whether payable in cash or Common Stock Units; (iv) that all the outstanding shares of Series G Preferred Stock are to be redeemed; (v) the place or places where certificates for such shares are to be surrendered for payment of the Applicable Redemption Price; and (vi) that dividends on the shares of Series G Preferred Stock will cease to accumulate -31- on the Redemption Date. Upon the mailing of any such notice of redemption, the Corporation shall become obligated to redeem at the time of redemption specified thereon all shares called for redemption. (iv) If notice has been mailed in accordance with Section 6(iii) above and if the Applicable Redemption Price is to be paid (x) in cash, on or before the Redemption Date specified in such notice, all funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds in trust for the benefit of the holders of the outstanding shares of Series G Preferred Stock, so as to be, and to continue to be available therefor or (y) in Common Stock Units, on or before the Redemption Date specified in such notice, shares of Common Stock contained in such number of Common Stock Units necessary for such redemption shall have been set aside by the Corporation in trust for the benefit of the holders of the outstanding shares of Series G Preferred Stock, so as to be, and continue to be available therefor, then, from and after the Redemption Date, dividends on the shares of the Series G Preferred Stock so called for redemption shall cease to accumulate, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series G Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the Applicable Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the Applicable Redemption Price. (v) The Corporation shall take all actions required or permitted under the Georgia Business Corporation Code to permit any such redemption. (vi) Notwithstanding the delivery by the Corporation of a notice of redemption described in paragraph 6(iii), the holders of the Series G Preferred Stock shall continue to have the rights set forth in paragraph 4(i) to convert -32- the Series G Preferred Stock into Common Stock until the close of business on the day prior to the Redemption Date. 7. CHANGE OF CONTROL. i. Subject to paragraph (7)(v) hereof, upon the occurrence of a Change of Control, the Corporation shall be required to make an offer (a "Preferred Stock Change of Control Offer") to each holder of shares of Series G Preferred Stock to repurchase all or any part of such holder's shares of Series G Preferred Stock at an offer price in cash equal to 100% of the aggregate Liquidation Preference thereof, plus compounded accumulated and unpaid dividends to the date of repurchase (the "Change of Control Payment"). ii. Within 30 days following any Change of Control, the Corporation shall (a) publish a notice of the Change of Control in The Wall Street Journal or a similar daily business publication of national distribution and (b) mail a notice to each holder of Series G Preferred Stock describing the transaction that constitutes the Change of Control, together with such other information as may be required pursuant to the securities laws, and stating: (A) that the Preferred Stock Change of Control Offer is being made pursuant to this Certificate of Designation and that, to the extent lawful, all shares of Series G Preferred Stock validly tendered will be accepted for payment; (B) the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (C) that any shares of Series G Preferred Stock not tendered will continue to accumulate dividends in accordance with the terms of this Certificate of Designation; (D) that, unless the Corporation defaults in the payment of the Change of Control Payment, all shares of Series G Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to -33- accumulate dividends on the Change of Control Payment Date; (E) a description of the procedures to be followed by such holder in order to have its shares of Series G Preferred Stock repurchased, and (F) whether the Corporation can then pay the Change of Control Payment in cash pursuant to the terms of its outstanding indebtedness, and if the entire Change of Control Payment cannot be paid in cash, specifying the portion of such amount that can be paid in cash. iii. On the Change of Control Payment Date, the Corporation shall, to the extent lawful, (A) accept for payment shares of Series G Preferred Stock validly tendered pursuant to the Preferred Stock Change of Control Offer and (B) promptly mail to each holder of shares of Series G Preferred Stock so accepted payment in an amount equal to the purchase price for such shares and (C) unless the Corporation defaults in the payment for the shares of Series G Preferred Stock tendered pursuant to the Preferred Stock Change of Control Offer, dividends will cease to accumulate with respect to the shares of Series G Preferred Stock tendered and all rights of holders of such tendered shares will terminate, except for the right to receive payment therefor, on the Change of Control Payment Date. The Corporation shall publicly announce the results of the Preferred Stock Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. iv. The Corporation shall comply with any securities laws and regulations, to the extent such laws and regulations are applicable to the repurchase of shares of the Series G Preferred Stock in connection with a Change of Control. v. If the holders of the Series G Preferred Stock timely tender their shares of Series G Preferred Stock pursuant to the Preferred Stock Change of Control Offer and if -34- the terms of the Corporation's outstanding indebtedness do not permit payment of all or any portion of the Change of Control Payment in cash (any such portion of the Change of Control Payment, the "Non-Cash Change of Control Payment"), any such portion of the Change of Control Payment that may be paid in cash shall be paid in cash and, the remainder of the outstanding shares of Series G Preferred Stock shall not be redeemed or repurchased but instead shall automatically be converted into the number of Common Stock Units (or, if applicable, securities issuable to holders of the Common Stock in connection with such Change of Control) equal to the Non-Cash Change of Control Payment divided by the aggregate current market price per Common Stock Unit (as defined in paragraph 4(xiii)). The Corporation shall not make a Change of Control Payment in cash until all similar change of control payments required under the Corporation's outstanding indebtedness and Senior Securities are made in full. vi. Notwithstanding the foregoing, the Corporation shall not be required to make a Preferred Stock Change of Control Offer following a Change of Control if a third party makes the Preferred Stock Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Certificate of Designation applicable to a Preferred Stock Change of Control Offer made by the Corporation and purchases all of the Series G Preferred Stock validly tendered and not withdrawn under such Preferred Stock Change of Control Offer. 8. VOTING RIGHTS. i. The holders of record of outstanding shares of the Series G Preferred Stock shall be entitled to vote, together with all the outstanding shares of Common Stock and the -35- Existing Preferred Stock, as a single class, except as otherwise required by Georgia law, on all matters on which holders of Common Stock are entitled to vote. Each outstanding share of Series G Preferred Stock shall be entitled to the number of votes per share equal to the number of votes that holders of Common Stock Units issuable upon conversion of such share of Series G Preferred Stock in accordance with Section 4 hereof would be entitled to cast as of the date fixed for the determination of holders of Common Stock entitled to vote on such proposal. ii. Intentionally omitted; iii. For so long as at least 100,000 shares of Series G Preferred Stock are outstanding (or any shares of Series G Preferred Stock are outstanding in the case of paragraphs (A), (B), (F), (G) and (H)), the Corporation shall not, without the affirmative vote or consent of the holders of at least a majority of the shares of Series G Preferred Stock then outstanding (with shares held by the Corporation or any of its affiliates not being considered to be outstanding for this purpose) voting or consenting as the case may be, as one class: (A) amend or otherwise alter this Certificate of Designation in any manner that adversely affects the specified rights, preferences, privileges or voting rights of holders of Series G Preferred Stock; (B) authorize, create (by way of reclassification or otherwise) or issue any additional shares of Series G Preferred Stock or decrease the total authorized or outstanding number of shares of Series G Preferred Stock; (C) authorize, create (by way of reclassification or otherwise) or issue any Senior Securities or any obligation or security convertible into or evidencing the right to purchase, shares of any class or series of Senior Securities; -36- (D) intentionally omitted; (E) redeem, acquire or otherwise purchase (except for repurchases of Common Stock issued under the Corporation's stock incentive programs to the extent permitted by the terms of all indentures governing the Corporation's then-outstanding indebtedness) any shares of Common Stock or preferred stock of the Corporation, unless, in the case of preferred stock, such action is required by the terms of such preferred stock; (F) amend or otherwise alter the Articles of Incorporation or by-laws of the Corporation in any manner that adversely affects the specified rights, preferences, privileges or voting rights of holders of Series G Preferred Stock; (G) consummate the liquidation, dissolution or winding up of the Corporation other than in connection with a sale of substantially all the assets or other Sale of the Corporation; or (H) take any other actions that require a vote of the holders of the Series G Preferred Stock under Georgia law. iv. Without the consent of each holder affected, an amendment or waiver of the Corporation's Articles of Incorporation or of this Certificate of Designation may not (with respect to any shares of Series G Preferred Stock held by a non-consenting holder): (A) alter the voting rights with respect to the Series G Preferred Stock or reduce the percentage of shares of Series G Preferred Stock whose holders must consent to an amendment, supplement or waiver; (B) reduce the Liquidation Preference or Liquidation Amount of the Series G Preferred Stock; (C) reduce the rate of or change the time for payment of dividends on any share of Series G Preferred Stock; -37- (D) make any conversion of shares of Series G Preferred Stock payable in any form other than that stated in this Certificate of Designation; or (E) make any change in the provisions of this Certificate of Designation relating to waivers of the rights of holders of Series G Preferred Stock to receive the Liquidation Preference, Liquidation Amount and dividends on the Series G Preferred Stock. (v) The Corporation in its sole discretion may without the vote or consent of any holders of the Series G Preferred Stock amend or supplement this Certificate of Designation: (A) to cure any ambiguity, defect or inconsistency, except if such amendment or supplement adversely affects the specified rights, preferences, privileges or voting rights of the holders of the Series G Preferred Stock; (B) to provide for uncertificated Series G Preferred Stock in addition to or in place of certificated Series G Preferred Stock; or (C) to make any change that would provide any additional rights or benefits to the holders of the Series G Preferred Stock or that does not adversely affect the legal rights under this Certificate of Designation of any such holder. Except as set forth above, (x) the creation, authorization or issuance of any shares of Junior Securities, Parity Securities or Senior Securities or (y) the increase or decrease in the amount of authorized capital stock of any class, including any preferred stock, shall not require the consent of the holders of the Series G Preferred Stock and shall not be deemed to affect adversely the rights, preferences, privileges, special rights or voting rights of holders of shares of Series G Preferred Stock. -38- (vi) Upon: (A) the failure by the Corporation to pay any dividend on the Series G Preferred Stock when due and the continuation of such failure for a period of 5 Business Days; (B) the failure of the Corporation to satisfy any liquidation payment obligation or mandatory or optional redemption or repurchase obligation (including, without limitation, pursuant to any required Change of Control Offer) with respect to the Series G Preferred Stock; (C) the failure of the Corporation to comply in all material respects with the covenants or agreements set forth in Sections 2, 3, 4 and 5 of the Registration Rights Agreement, or at all times reserve and keep available for issuance (1) such reasonable number of authorized shares (until such shares are actually issued as dividends) of Common Stock sufficient for payment of the dividends on the Series G Preferred Stock for a period of five years and (2) enough shares of Common Stock to permit the conversion of the Series G Preferred Stock in full and the continuance of such failure for 45 consecutive days or more after notice; (D) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Corporation (or the payment of which is guaranteed by the Corporation) whether such indebtedness or guarantee now exists, or is created after the Preferred Stock Issue Date, which default (1) is caused by a failure to pay principal of or premium, if any, or interest on such indebtedness prior to the expiration of the grace period provided in such indebtedness on the date of such default (a "Payment Default") and (2) results in the acceleration of such indebtedness prior to its express maturity and, in each case, the principal amount of any such indebtedness, together with the principal amount of any other such indebtedness under which there has been a Payment Default and the maturity of which has been so accelerated, aggregates $5.0 million or more; -39- (E) (1) the Corporation's voluntary or involuntary bankruptcy, receivership, assignment for the benefit of creditors, or liquidation, or (2) acceleration of third party obligations or unsatisfied final and non-appealable judgments (or judgments which the Corporation has not taken reasonable steps to appeal) in excess of $1 million which remain unsatisfied, are not discharged or remain unstayed for at least 30 consecutive days (each of the events described in clauses (A), (B), (C), (D) and (E) being referred to herein as an "Event of Default"); then the holders of a majority of the outstanding shares of Series G Preferred Stock, voting as a separate single class, shall be entitled to appoint two members to the board of directors of the Corporation and the number of members of the board of directors of the Corporation shall be immediately and automatically increased by two. The voting rights provided for in this paragraph 8(vi) shall be in addition to the optional redemption rights provided in Section 6, and together, such voting rights and optional redemption rights shall be the exclusive remedies for the holders of the Series G Preferred Stock for any violation by the Corporation of its obligations under this Certificate of Designation that constitutes an Event of Default. The rights of the holders of Series G Preferred Stock to elect directors to the Board pursuant to this paragraph 8(vi) may be exercised until (x) all dividends in arrears shall have been paid in full, and (y) all other Events of Default have been cured or waived, at which time the term of such directors previously elected shall thereupon terminate and such directors shall be deemed to have resigned. If the right set forth in this paragraph 8(vi) shall not have been initially exercised or if any director so elected by the holders of Series G Preferred Stock shall cease to serve as a director before his term shall expire, the holders of Series G Preferred Stock then outstanding, at a special meeting of the holders of Series G Preferred Stock, may elect the initial director or a successor, as the case may be, to hold such office. Upon the written request of holders of record of at least 10% of the Series G Preferred Stock then outstanding, addressed to the -40- Secretary of the Corporation, a proper officer of the Corporation shall call a special meeting of holders of Series G Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation or, if none, at a place designated by the Secretary of the Corporation. If such meeting shall not be called by the proper officers of the Corporation within 30 days after the personal service of such written request upon the Secretary of the Corporation, or within 30 days after mailing the same within the United States, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of at least 10% of the shares of Series G Preferred Stock then outstanding may designate in writing a holder of Series G Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders and shall be held at the place for holding annual meetings of the Corporation or, if none, at a place designated by such holder. Any holder of Series G Preferred Stock that would be entitled to vote at a special meeting shall have access to the stock books of the Corporation for purpose of causing a meeting of stockholders to be called pursuant to the provisions of this paragraph 8(vi). Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called if any such request is received less than 90 days before the date fixed for the next ensuing annual or special meeting of stockholders. The Corporation will deliver, or will cause to be delivered, to each designee of the holders of the Series G Preferred Stock to the Board: (X) as soon as practical after the end of each month and in any event within thirty (30) days thereafter, a consolidated balance sheet of the Corporation and its subsidiaries as of the end of such month and consolidated statements of income and cash flows of the Corporation and -41- its Subsidiaries, for each month and for the current fiscal year of the Corporation to date, all subject to normal year-end audit adjustments, prepared in accordance with generally accepted accounting principles, together with a comparison of such statements to the corresponding periods of the prior fiscal year and to the Corporation's business plan then in effect and approved by the Board; and (Y) an annual budget, a business plan and financial forecasts for the Corporation for the next fiscal year of the Corporation, no later than thirty (30) days before the beginning of the Corporation's next fiscal year, in such manner and form as approved by the Board, which shall include at least a projection of income and a projected cash flow statement for each fiscal quarter in such fiscal year and a projected balance sheet as of the end of each fiscal quarter in such fiscal year. Any material changes in such business plan shall be delivered to each designee of the holders of the Series G Preferred Stock to the Board as promptly as practicable after such changes have been approved by the Board. The Corporation shall, and shall cause its subsidiaries, officers, directors, employees, auditors and other agents to, (a) afford the officers, employees, auditors and other agents of each designee of the holders of the Series G Preferred Stock to the Board, during normal business hours reasonable access at all reasonable times to its officers, employees, auditors, legal counsel, properties, offices, plants and other facilities and to all books and records, (b) furnish each designee of the holders of the Series G Preferred Stock to the Board with all financial, operating and other data and information as such designee directly or through his agents or representatives, may from time to time reasonably request and (c) afford each designee of the holders of the Series G Preferred Stock to the Board the opportunity to discuss the Corporation's affairs, finances and accounts with the Corporation's officers from time to time as each such designee may reasonably request. 9. REPORTS. The Corporation shall file within 15 days after it files them with the Commission copies of the -42- annual and quarterly reports and the information, documents, and other reports that the Corporation is required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports") with the Transfer Agent. In the event the Corporation is not required or shall cease to be required to file SEC Reports, pursuant to the Exchange Act, the Corporation shall nevertheless continue to file such reports with the Commission (unless the Commission shall not accept such a filing) and the Transfer Agent. Whether or not required by the Exchange Act to file SEC Reports with the Commission, so long as any shares of Series G Preferred Stock are outstanding, the Corporation shall furnish copies of the SEC Reports to the holders of Series G Preferred Stock at the time the Corporation is required to make such information available to the Transfer Agent and any investors who request it in writing. 10. AMENDMENT. This Certificate of Designation shall not be amended, either directly or indirectly, or through merger or consolidation with another entity, in any manner that would alter or change the powers, preferences or special rights of the Series G Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding Series G Preferred Stock, voting separately as a class. 11. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Series G Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Designation and in the Articles of Incorporation. The shares of Series G Preferred Stock shall have no preemptive or subscription rights. 12. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 13. SEVERABILITY OF PROVISIONS. If any voting powers, preferences and relative, participating, optional -43- and other special rights of the Series G Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series G Preferred Stock and qualifications, limitations and restrictions thereof set forth in this Certificate of Designation which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Series G Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Series G Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Series G Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein. 14. REISSUANCE OF PREFERRED STOCK. Shares of Series G Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of Georgia) have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to series and may be designated or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation, provided that any issuance of such shares as Series G Preferred Stock must be in compliance with the terms hereof. 15. MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES. If any of the Series G Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall issue, in exchange and in substitution for and upon cancelation of the mutilated Series G Preferred Stock certificate, or in lieu of and -44- substitution for the Series G Preferred Stock certificate lost, stolen or destroyed, a new Series G Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Series G Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Series G Preferred Stock certificate and indemnity, if requested, reasonably satisfactory to the Corporation and the Transfer Agent (if other than the Corporation). 16. CERTAIN DEFINITIONS. As used in this Certificate of Designation, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and VICE VERSA), unless the context otherwise requires: "AVERAGE STOCK PRICE" means with respect to a security, as of a certain date, the average of the high and low sales prices of such security as reported by the Nasdaq National Market or any national securities exchange upon which such security is then listed, for each of the ten consecutive Trading Days immediately preceding the fifth Trading Day preceding such date. "BOARD" means the board of directors of the Corporation. "BUSINESS DAY" means any day except a Saturday, a Sunday, or any day on which banking institutions in New York, New York are required or authorized by law or other governmental action to be closed. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Corporation and its subsidiaries, taken as a whole, (ii) the adoption of a plan relating to the liquidation or dissolution of the Corporation, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such -45- term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the Corporation, unless (A) the aggregate market price for shares of Common Stock comprising a Common Stock Unit based upon the Closing Price per share of Common Stock for any five Trading Days within the period of ten consecutive Trading Days ending immediately after the announcement of such Change of Control equals or exceeds 105% of the Conversion Price then in effect or (B) at least 90% of the consideration in the transaction or transactions constituting a Change of Control pursuant to clause (iii) consists of shares of common stock traded or to be traded immediately following such Change of Control on a national securities exchange or the Nasdaq National Market and, as a result of such transaction or transactions, the Series G Preferred Stock becomes convertible solely into such common stock (and any rights attached thereto) or (iv) the first day on which more than a majority of the Board are not Continuing Directors; provided, however, that a transaction in which the Corporation becomes a subsidiary of another entity shall not constitute a Change of Control if (A) the stockholders of the Corporation immediately prior to such transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the Corporation immediately following the consummation of such transaction and (B) immediately following the consummation of such transaction, no "person" or "group" (as such terms are defined above), other than such other entity (but including holders of equity interests of such other entity), "beneficially owns" (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding voting stock of the Corporation. "CLOSING PRICE" means, for each Trading Day, the last reported sale price regular way on the Nasdaq National Market or, if the Common Stock is not quoted on the Nasdaq National Market, the average of the closing bid and asked prices in the over-the-counter market as furnished by any -46- New York Stock Exchange member firm selected from time to time by the Corporation for that purpose. "COMMISSION" means the Securities and Exchange Commission. "COMMON STOCK" means any class or series of common stock of the Corporation, including WorldCom Group Stock and MCI Group Stock. "COMMON STOCK UNIT" means a number of shares of WorldCom Group Stock equal to the WCG Stock Amount and a number of shares of MCI Group Stock equal to the MCI Stock Amount. "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board who (a) was a member of the Board on the Preferred Stock Issue Date or (b) was nominated for election to the Board with the approval of, or whose election was ratified by, at least two-thirds of the Continuing Directors who were members of the Board at the time of such nomination or election. "CONVERSION PRICE" shall initially mean $36.00 per share and thereafter shall be subject to adjustment from time to time pursuant to the terms of Section 4 hereof. "CORPORATION" means WorldCom, Inc., a Georgia corporation and its successors. "EVENT OF DEFAULT" has the meaning set forth in paragraph 8(vi) hereof. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXISTING PREFERRED STOCK" means the Series B Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock. "INCENTIVIZED CONVERSION PROGRAM" means a program which may, from time to time at the option of the Corporation, be instituted by the Corporation whereby the Corporation offers cash and/or non-cash incentives (by way -47- of reducing the conversion price or otherwise) to holders of its outstanding convertible securities to convert such securities into shares of Common Stock. "MCI GROUP STOCK" means the WorldCom, Inc. - MCI Group Common Stock, par value $0.01 per share of the Corporation. "MCI STOCK AMOUNT" means the number of shares of MCI Group Stock in a Common Stock Unit, as adjusted from time to time pursuant to Section 4 of this Certificate of Designation. The MCI Stock Amount shall initially be 1/25 of a share of MCI Group Stock. "MERGER" means the merger of Merger Sub with and into Intermedia Communications Inc. pursuant to the Merger Agreement. "MERGER AGREEMENT" means the Agreement and Plan of Merger dated September 1, 2000, as amended by the First Amendment dated February 15, 2001 and the Second Amendment dated as of May 14, 2001, among the Corporation, Merger Sub and Intermedia Communications Inc. "MERGER SUB" means Wildcat Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Corporation. "ORIGINAL PREFERRED STOCK ISSUE DATE" means February 17, 2000. "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PREFERRED STOCK ISSUE DATE" means July 1, 2001. "PRIOR DIVIDEND PAYMENT DATE" means April 15, 2001. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights agreement entered into as of February 17, 2000 between Intermedia Communications Inc, a Delaware company, -48- and ICI Ventures LLC, a Delaware limited liability company, as amended by the Assumption and Amendment of Registration Rights Agreement, dated as of June 29, 2001, by and among the Corporation, Intermedia Communications Inc. and ICI Ventures LLC. "SALE OF THE CORPORATION" means the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Corporation or any merger or consolidation of the Corporation unless (i) the Corporation is the surviving entity and no alteration or change is made in the rights, powers, preferences or privileges of the Series G Preferred Stock, or (ii), if the Corporation is not the surviving entity, (A) the entity formed by such consolidation or merger or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (in any such case, the "resulting entity") is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia, and (B) the Series G Preferred Stock is converted into or exchanged for and becomes shares of such resulting entity, having in respect of such resulting entity the same (or more favorable) powers, preferences and relative, participating, optional or other special rights thereof than the Series G Preferred Stock had immediately prior to such transaction. The resulting entity of such transaction shall thereafter be deemed to be the "Corporation" for all purposes of this Certificate of Designation. "SERIES B PREFERRED STOCK" means the Corporation's outstanding 7.75% Series B Convertible Preferred Stock. "SERIES D PREFERRED STOCK" means the Corporation's outstanding 7% Series D Junior Convertible Preferred Stock. "SERIES E PREFERRED STOCK" means the Corporation's outstanding 7% Series E Junior Convertible Preferred Stock. "SERIES F PREFERRED STOCK" means the Corporation's outstanding 7% Series F Junior Convertible Preferred Stock. -49- "SIGNIFICANT EVENT" means (i) during any period of two consecutive years, individuals who at the beginning of such period constituted the directors of the Corporation (together with any new directors whose election by such directors or whose nomination for election by the stockholders of the Corporation was approved by a vote of a majority of the directors 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 a majority of the directors then in office, (ii) any merger or consolidation with or into any other entity or any other similar transaction, whether in a single transaction or series of related transactions where (A) the stockholders of the Corporation immediately prior to such transaction in the aggregate cease to own at least 50% of the voting securities of the entity surviving or resulting from such transaction (or the ultimate parent thereof) or (B) any Person or "group" (as such term is defined in Section 13(d)(3) of the Exchange Act) becomes the beneficial owner of more than 50% of the voting securities of the entity surviving or resulting from such transaction (or the ultimate parent thereof), (iii) any transaction or series of related transactions in which in excess of 50% of the Corporation's voting power is transferred to any Person or group, (iv) the sale, transfer, lease, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Corporation and its subsidiaries, or (v) any liquidation, dissolution or winding-up of the Corporation. "STOCK AMOUNT" means with respect to the MCI Group Stock, the MCI Stock Amount, and with respect to the WorldCom Group Stock, the WCG Stock Amount. "TRADING DAY" means any day on which the Nasdaq National Market or other applicable stock exchange or market is open for business. "TRANSFER AGENT" shall be The Bank of New York unless and until a successor is selected by the Corporation. "WCG STOCK AMOUNT" means the number of shares of WorldCom Group Stock in a Common Stock Unit, as adjusted -50- from time to time pursuant to Section 4 of this Certificate of Designation. The WCG Stock Amount shall initially be one share of WorldCom Group Stock. "WORLDCOM GROUP STOCK" means the WorldCom, Inc. - WorldCom Group Common Stock, par value $0.01 per share of the Corporation. -51- EX-3.2 4 ex3-2.txt ARTICLES OF AMENDMENT TO THE SECOND AMENDED EXHIBIT 3.2 ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF WORLDCOM, INC. 1. The name of the Corporation is WorldCom, Inc. 2. Effective the date hereof, Section A of Article Four of the Second Amended and Restated Articles of Incorporation of the Corporation, as amended, is hereby amended by deleting the text thereof and substituting therefor the text of the amendment attached hereto as Exhibit A. 3. All other provisions of the Second Amended and Restated Articles of Incorporation, as previously amended, shall remain in full force and effect. 4. The provisions of Section A of Article Four of the Second Amended and Restated Articles of Incorporation, as amended, were duly approved by the shareholders of the Corporation in accordance with the provisions of Section 14-2-1003 of the Georgia Business Corporation Code on the 7th day of June, 2001. 5. The provisions of Section A of Article Four of the Second Amended and Restated Articles of Incorporation, as amended, were duly adopted and authorized by the Board of Directors of the Corporation on October 31, 2000. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed by its duly authorized officer, this 7th day of June, 2001. WORLDCOM, INC. By: /s/ Bernard J. Ebbers --------------------- Name: Bernard J. Ebbers Title: President EXHIBIT A (A) Common Stock. There shall be two series of common stock created, having the number of shares and the voting powers, preferences, designations, rights, qualifications, limitations or restrictions set forth below: (i) WorldCom Stock. One series of common stock of the Corporation is hereby created and designated as "WorldCom, Inc.--WorldCom Group Common Stock" ("WorldCom Stock") consisting of 4.85 billion shares. (ii) MCI Stock. One series of common stock of the Corporation is hereby created and designated as "WorldCom, Inc.--MCI Group Common Stock" ("MCI Stock") consisting of 150 million shares. (iii) Upon the date on which this Section A of Article 4 shall become effective, and without any further action on the part of the Corporation or its stockholders, each share of the Corporation's common stock, par value $0.01 per share, that is issued and outstanding shall be changed into one share of WorldCom Stock and 1/25 (0.04) of a share of MCI Stock. (iv) For the purpose of making "lawful and adequate provision" to implement the existing right of the holders of the Company's Series B Convertible Preferred Stock to acquire and receive upon the conversion of the Series B Convertible Preferred Stock such shares of stock issuable with respect to or in exchange for each outstanding share of the Company's "Common Stock" (as such term is defined in Exhibit B to these Second Amended and Restated Articles of Incorporation) as would have been received upon conversion of the Series B Convertible Preferred Stock at the "Conversion Rate" (as such term is defined in Section 5(a) of said Exhibit B) then in effect, all references to a share of "Common Stock" of the Company in Section 5 and Section 7 of Exhibit B shall be deemed, from and after the date on which this Section A of Article 4 shall become effective, to refer to one share of WorldCom Stock and 0.04 of a share of MCI Stock (or such other number and designation of shares as may then be applicable following lawful adjustment pursuant to Section 6 of Exhibit B). Section 1. Distributions and Share Dividends. Subject to the prior and superior or other rights of the holders of the preferred stock or any other shares of the Corporation and subject to the limitations provided for below in this Section 1, distributions and share dividends may be declared and paid upon either series of common stock, as the board of directors may determine and with the effect provided for in these Second Amended and Restated Articles of Incorporation. (A) Distributions on WorldCom Stock. Distributions on WorldCom Stock may be declared and paid only out of the lesser of: (i) the funds legally available for that purpose; and (ii) the WorldCom Group Available Distribution Amount. 2 (B) Distributions on MCI Stock. Distributions on MCI Stock may be declared and paid only out of the lesser of: (i) the funds legally available for that purpose; and (ii) the MCI Group Available Distribution Amount. (C) Additional Limitations on Distributions and Share Dividends. The board of directors may declare and pay share dividends of WorldCom Stock and MCI Stock (or distributions of Convertible Securities convertible into or exchangeable or exercisable for shares of WorldCom Stock or MCI Stock) or distributions of assets (including securities) or properties attributed to the WorldCom Group or the MCI Group on shares of common stock only as follows or as permitted by Section 4: (i) on shares of WorldCom Stock-share dividends of WorldCom Stock (or distributions of Convertible Securities convertible into or exchangeable or exercisable for shares of WorldCom Stock) or distributions of assets (including securities) or properties attributed to the WorldCom Group; (ii) on shares of MCI Stock-share dividends of MCI Stock (or distributions of Convertible Securities convertible into or exchangeable or exercisable for shares of MCI Stock) or distributions of assets (including securities) or properties attributed to the MCI Group. (iii) on shares of MCI Stock-share dividends of WorldCom Stock (or distributions of Convertible Securities convertible into or exchangeable or exercisable for shares of WorldCom Stock), but only if (x) the MCI Group is a Holder Group holding an Inter-Group Interest in the WorldCom Group and (y) the sum of: (1) the number of shares of WorldCom Stock to be so issued (or the number of such shares that would be issuable upon conversion, exchange or exercise of any Convertible Securities to be so issued); and (2) the number of shares of WorldCom Stock that are issuable upon conversion, exchange or exercise of any Convertible Securities then outstanding that are attributed as a liability to, or an equity interest in, the MCI Group is less than or equal to the Number of Shares Issuable with Respect to the Inter-Group Interest in the WorldCom Group held by the MCI Group; (iv) on shares of WorldCom Stock-share dividends of MCI Stock (or distributions of Convertible Securities convertible into or exchangeable or exercisable for shares of MCI Stock), but only if (x) the WorldCom Group is a Holder Group holding an Inter-Group Interest in the MCI Group and (y) the sum of: (1) the number of shares of MCI Stock to be so issued (or the number of such shares that would be issuable upon conversion, exchange or exercise of any Convertible Securities to be so issued); and 3 (2) the number of shares of MCI Stock that are issuable upon conversion, exchange or exercise of any Convertible Securities then outstanding that are attributed as a liability to, or an equity interest in, the WorldCom Group is less than or equal to the Number of Shares issuable with Respect to the Inter-Group Interest in the MCI Group held by the WorldCom Group; (v) on shares of MCI Stock-distributions of assets (including securities) or properties attributed as an asset to the WorldCom Group, but only if the number or amount of such assets (including securities) or properties to be so paid is less than or equal to the product of: (1) the number or amount of such assets (including securities) or properties to be paid concurrently to holders of outstanding WorldCom Stock; and (2) a fraction (which may be greater than one), the numerator of which is equal to the Number of Shares Issuable with Respect to the Inter-Group Interest in the WorldCom Group held by the MCI Group and the denominator of which is equal to the number of outstanding shares of WorldCom Stock, in each case, on the record date for such distribution; and (vi) on shares of WorldCom Stock-distributions of assets (including securities) or properties attributed as an asset to the MCI Group, but only if the number or amount of such assets (including securities) or properties to be so paid is less than or equal to the product of: (1) the number or amount of such assets (including securities) or properties to be paid concurrently to holders of outstanding MCI Stock; and (2) a fraction (which may be greater than one), the numerator of which is equal to the Number of Shares Issuable with Respect to the Inter-Group Interest in the MCI Group held by the WorldCom Group and the denominator of which is equal to the number of outstanding shares of MCI Stock, in each case, on the record date for such distribution. For purposes of this Section l(C), any outstanding Convertible Securities that are convertible into or exchangeable or exercisable for any other Convertible Securities which are themselves convertible into or exchangeable or exercisable for any series of common stock (or other Convertible Securities that are so convertible, exchangeable or exercisable) shall be deemed to have been converted, exchanged or exercised in full for such Convertible Securities. (D) Discrimination Between Series of Common Stock. The board of directors, subject to the provisions of this Section 1, may at any time declare and pay distributions and share dividends exclusively on WorldCom Stock or exclusively on MCI Stock, in equal or unequal amounts, notwithstanding the relationship between the Available Distribution Amount with respect to either Group, the amount of distributions and share dividends previously declared or paid on either series, the respective voting or liquidation rights of either series or other factor. 4 Section 2. Voting Rights. (A) General. Except as otherwise provided by law, by the terms of any outstanding preferred stock or by any provision in these Second Amended and Restated Articles of Incorporation allocating the power to vote on a specified matter to other shareholders or in a different manner, the common stock shall together have unlimited voting rights. Both series of common stock shall vote on all matters together as a single voting group, except as otherwise provided by law or by any provision in these Second Amended and Restated Articles of Incorporation. (B) Number of Votes for Each Series of Common Stock. On each matter to be voted on by the holders of each series of common stock voting together as a single voting group, the number of votes per share of each series shall be as follows: (i) each outstanding share of WorldCom Stock shall have one vote; and (ii) each outstanding share of MCI Stock shall have a number of votes (including a fraction of one vote) equal to the quotient, rounded to the nearest 1/10,000 (.0001), of (1) the average Market Value of one share of MCI Stock during the 20-Trading Day period ending on the tenth Trading Day prior to the record date for determining the shareholders entitled to vote, divided by (2) the average Market Value of one share of WorldCom Stock during such 20-Trading Day period. Notwithstanding the foregoing provisions of this Section 2(B), if shares of only one series of common stock are outstanding on the record date for determining the holders of common stock entitled to vote on any matter, then each share of that series shall be entitled to one vote and, if either series of common stock is entitled to vote as a separate voting group with respect to any matter, each share of that series shall, for the purpose of such vote, be entitled to one vote on such matter. Section 3. Liquidation Rights. (A) General. In the event of any voluntary or involuntary dissolution of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and after making provision for any outstanding preferred stock and any other shares prior and superior to common stock as to payments upon dissolution (regardless of the Group to which such shares are attributed), the holders of WorldCom Stock and MCI Stock shall be entitled to receive the net assets of the Corporation remaining for distribution to holders of the common stock (regardless of the Group to which such assets are then attributed) in an amount determined on a per share basis in proportion to the liquidation units per share of such series. For purposes of this Section 3, neither (x) the voluntary sale, lease, exchange or other disposition of all or substantially all of the property or assets of the Corporation; (y) a merger of the Corporation or a share exchange by the Corporation with one or more other corporations (whether or not the Corporation is the corporation surviving such merger or the acquiring company in such share exchange); nor (z) any transaction or event pursuant to Section 4 shall be deemed a voluntary or involuntary dissolution of the Corporation. 5 (B) Liquidation Units for Each Series of Common Stock. The liquidation units per share of each series of common stock shall be as follows: (i) each share of WorldCom Stock shall have one liquidation unit; and (ii) each share of MCI Stock shall have 1/25 of one liquidation unit. provided that, if the Corporation shall in any manner subdivide (by stock split, reclassification or otherwise) or combine (by reverse stock split, reclassification or otherwise) the outstanding shares of either series of common stock, or declare and pay a share dividend of either series of common stock to holders of such series, the per share liquidation units of the series of common stock, as adjusted from time to time, shall be appropriately adjusted, as determined by the board of directors, so as to avoid any dilution in the aggregate, relative liquidation rights of the shares of either series of common stock. Section 4. Special Distributions on, and Conversion or Redemption of, WorldCom Stock and MCI Stock. (A) Special Distributions on, and Conversion or Redemption of, WorldCom Stock if a Disposition of All or Substantially All Assets of the WorldCom Group Occurs. (i) In the event of the Disposition, in one transaction or a series of related transactions (other than in one or a series of Excluded Transactions), by the Corporation and/or its subsidiaries of all or substantially all of the businesses, assets, properties and liabilities attributed to the WorldCom Group, the Corporation shall, on or prior to the 120th Trading Day after the Disposition Date, as determined by the board of directors in its sole discretion: (1) provided that there are funds legally available for the purpose: (a) subject to compliance with Section 1, pay to the holders of the shares of WorldCom Stock a distribution pro rata in accordance with the number of shares of WorldCom Stock held by each such holder in cash and/or securities or other property having a Fair Value as of the Disposition Date in the aggregate equal to the product of: (x) the Outstanding Interest Fraction with respect to WorldCom Stock as of the record date for determining holders entitled to receive such distribution; and (y) the Fair Value as of the Disposition Date of the Net Proceeds of such Disposition; or (b) (I) subject to the last sentence of this Section 4(A)(i), if such Disposition involves all (not merely substantially all) of the businesses, assets, properties and liabilities attributed to the WorldCom Group, redeem or exchange as of the Redemption Date, determined as provided by Section 4(G)(iii)(2), all outstanding shares of WorldCom Stock in 6 exchange for, on a pro rata basis, cash and/or securities (other than shares of a series of common stock) or other property having a Fair Value as of the Disposition Date in the aggregate equal to the product of: (x) the Outstanding Interest Fraction with respect to WorldCom Stock as of the record date for determining holders entitled to receive such distribution; and (y) the Fair Value of the Disposition Date of the Net Proceeds of such Disposition; or (II) subject to the last sentence of this Section 4(A)(i), if such Disposition involves substantially all (but not all) of the businesses, assets, properties and liabilities attributed to the WorldCom Group, redeem or exchange as of the Redemption Date, determined as provided by Section 4(G)(iv)(2), the number of whole shares of WorldCom Stock equal to the lesser of: (x) the number of shares of WorldCom Stock outstanding; and (y) such number of shares of WorldCom Stock as have in the aggregate an average Market Value during the period of ten consecutive Trading Days beginning on the 51st Trading Day immediately succeeding the Disposition Date closest to the product of: (AA) the Outstanding Interest Fraction with respect to WorldCom Stock as of the record date for determining such shares selected for redemption or exchange; and (BB) the Fair Value as of the Disposition Date of the Net Proceeds of such Disposition, in exchange for, on a pro rata basis, cash and/or securities (other than shares of a series of the Corporation's common stock) or other property having a Fair Value as of the Disposition Date in the aggregate equal to such product; or (2) declare that each outstanding share of MCI Stock shall be converted as of the Conversion Date, determined as provided by Section 4(G)(v)(2), into a number of fully paid and nonassessable shares of WorldCom Stock, equal to the ratio, rounded to the nearest 1/10,000 (.0001), of the average Market Value of one share of MCI Stock over the period of ten consecutive Trading Days beginning on the 51st Trading Day following the Disposition Date to the average Market Value of one share of WorldCom Stock during such ten-Trading Day period. Notwithstanding the foregoing provisions of this Section 4(A)(i), the Corporation shall redeem or exchange shares of WorldCom Stock as provided by Section 4(A)(i)(1)(b)(I) or (II) only if the 7 amount to be paid in redemption or exchange of such stock is less than or equal to the WorldCom Group Available Distribution Amount as of the Redemption Date. (ii) For purposes of this Section 4(A): (1) as of any date, "substantially all of the businesses, assets, properties and liabilities" attributed to the WorldCom Group shall mean a portion of such businesses, assets, properties and liabilities that represents at least 80% of the Fair Value of the businesses, assets, properties and liabilities attributed to the WorldCom Group as of such date; (2) in the case of a Disposition of the businesses, assets, properties and liabilities attributed to the WorldCom Group in a series of related transactions, such Disposition shall not be deemed to have been consummated until the consummation of the last of such transactions; and (3) the board of directors may pay any distribution or redemption price referred to in Section 4(A)(i)(1) in cash, securities (other than shares of a series of the Corporation's common stock) or other property, regardless of the form or nature of the proceeds of the Disposition. (iii) After the payment of any distribution or redemption price with respect to the WorldCom Stock as provided for by Section 4(A)(i)(l), the board of directors may declare that each share of WorldCom Stock remaining outstanding shall be converted as of a Conversion Date, determined as provided by Section 4(G)(v)(2), into a number of fully paid and nonassessable shares of MCI Stock equal to the ratio, rounded to the nearest 1/10,000 (.0001), of the average Market Value of one share of WorldCom Stock during the period of 20 consecutive Trading Days ending on the fifth Trading Day immediately preceding the date of the notice of such conversion required by Section 4(G)(v) to the average Market Value of one share of MCI Stock during such 20-Trading Day period. (B) Special Distributions on, and Conversion and Redemption of, MCI Stock If a Disposition of All or Substantially All Assets of the MCI Group Occurs. (i) In the event of the Disposition, in one transaction or a series of related transactions (other than in one or a series of Excluded Transactions), by the Corporation and/or its subsidiaries of all or substantially all of the businesses, assets, properties and liabilities attributed to the MCI Group, the Corporation shall, on or prior to the 120th Trading Day after the Disposition Date, as determined by the board of directors in its sole discretion: (1) provided that there are funds legally available for the purpose: (a) subject to compliance with Section 1, pay to the holders of the shares of MCI Stock a distribution pro rata in accordance with the number of shares of MCI Stock held by each such holder, in 8 cash and/or securities or other property having a Fair Value as of the Disposition Date in the aggregate equal to the product of: (x) the Outstanding Interest Fraction with respect to MCI Stock as of the record date for determining holders entitled to receive such distribution; and (y) the Fair Value as of the Disposition Date of the Net Proceeds of such Disposition; or (b) (I) subject to the last sentence of this Section 4(B)(i), if such Disposition involves all (not merely substantially all) of the businesses, assets, properties and liabilities attributed to the MCI Group, redeem or exchange as of the Redemption Date, determined as provided by Section 4(G)(iii)(2), all outstanding shares of MCI Stock in exchange for, on a pro rata basis, cash and/or securities (other than shares of a series of common stock) or other property having a Fair Value as of the Disposition Date in the aggregate equal to the product of: (x) the Outstanding Interest Fraction with respect to MCI Stock as of such Redemption Date; and (y) the Fair Value as of the Disposition Date of the Net Proceeds of such Disposition; or (II) subject to the last sentence of this Section 4(B)(i), if such Disposition involves substantially all (but not all) of the businesses, assets, properties and liabilities attributed to the MCI Group, redeem or exchange as of the Redemption Date, determined as provided by Section 4(G)(iv)(2), the number of whole shares of MCI Stock equal to the lesser of: (x) the number of shares of MCI Stock outstanding; and (y) such number of MCI Stock as have in the aggregate an average Market Value during the period of ten consecutive Trading Days beginning on the 51st Trading Day immediately succeeding the Disposition Date closest to the product of: (AA) the Outstanding Interest Fraction with respect to MCI Stock as of the record date for determining such shares selected for redemption or exchange; and (BB) the Fair Value as of the Disposition Date of the Net Proceeds of such Disposition, 9 in exchange for, on a pro rata basis, cash and/or securities (other than shares of a series of the Corporation's common stock) or other property having a Fair Value as of the Disposition Date in the aggregate equal to such product; or (2) declare that each outstanding share of MCI Stock shall be converted as of the Conversion Date, determined as provided by Section 4(G)(v)(2), into a number of fully paid and nonassessable shares of WorldCom Stock equal to 110% (if the disposition is consummated within three years of the date of the Initial Issuance Date or 100% thereafter), of the ratio, rounded to the nearest 1/10,000 (.0001), of the average Market Value of one share of MCI Stock over the period of ten consecutive Trading Days beginning on the 51st Trading Day following the Disposition Date to the average Market Value of one share of WorldCom Stock during such ten-Trading Day period. Notwithstanding the foregoing provisions of this Section 4(B)(i), the Corporation shall redeem or exchange shares of MCI Stock as provided by Section 4(B)(i)(1)(b)(I) or (II) only if the amount to be paid in redemption or exchange of such stock is less than or equal to the MCI Group Available Distribution Amount as of the Redemption Date. (ii) For purposes of this Section 4(B): (1) as of any date, "substantially all of the businesses, assets, properties and liabilities" attributed to the MCI Group shall mean a portion of such businesses, assets, properties and liabilities that represents at least 80% of the Fair Value of the businesses, assets, properties and liabilities attributed to the MCI Group as of such date; (2) in the case of a Disposition of the businesses, assets, properties and liabilities attributed to the MCI Group in a series of related transactions, such Disposition shall not be deemed to have been consummated until the consummation of the last of such transactions; and (3) the board of directors may pay any distribution or redemption price referred to in Section 4(B)(i)(1) in cash, securities (other than shares of a series of the Corporation's common stock) or other property, regardless of the form or nature of the proceeds of the Disposition. (C) Conversion of MCI Stock at Corporation's Option At Any Time or if a Tax Event Occurs. (i) The Board of Directors may at any time declare that each outstanding share of MCI Stock shall be converted, as of the Conversion Date, determined as provided by Section 4(G)(v)(2), into a number of fully paid and nonassessable shares of WorldCom Stock, equal to the applicable percentage set forth in the following sentence of the ratio, rounded to the nearest 1/10,000 (.0001), of the average Market Value of one share of MCI Stock over the period of 20 consecutive Trading Days ending on the fifth Trading Day immediately preceding the date of the notice of conversion required by Section 4(G)(v) to the average Market Value of one share of WorldCom Stock during 10 such 20-Trading Day period. The applicable percentage referred to in the preceding sentence shall equal: (1) prior to the third anniversary of the Initial Issuance Date, 110%; and (2) on or after the third anniversary of the Initial Issuance Date, 100%. (ii) If a Tax Event occurs, the board of directors may at any time declare that each outstanding share of MCI Stock shall be converted, as of the Conversion Date, determined as provided by Section 4(G)(v)(2), into a number of fully paid and nonassessable shares of WorldCom Stock equal to 100% of the ratio, rounded to the nearest 1/10,000 (.0001), of the average Market Value of one share of MCI Stock over the period of 20 consecutive Trading Days ending on the fifth Trading Day immediately preceding the date of the notice of conversion required by Section 4(G)(v) to the average Market Value of one share of WorldCom Stock or Additional Group Stock, as applicable, during such 20-Trading Day period. (D) Redemption of WorldCom Stock for WorldCom Subsidiary Stock. At any time at which all of the businesses, assets, properties and liabilities attributed to the WorldCom Group (and no other businesses, assets, properties or liabilities of the Corporation or any subsidiary thereof) are held directly or indirectly by one or more wholly owned subsidiaries of the Corporation (each, a "WorldCom Subsidiary"), the board of directors may, subject to the satisfaction of such conditions that it determines are appropriate, provided that there are funds legally available for the purpose: (i) if neither Group holds an Inter-Group Interest in the other Group, redeem or exchange all of the outstanding shares of WorldCom Stock, on a Redemption Date of which notice is delivered in accordance with Section 4(G)(vi), in exchange for all of the shares of common stock of each WorldCom Subsidiary as will be outstanding immediately following such exchange of shares; such shares of common stock of each WorldCom Subsidiary shall be delivered to the holders of shares of WorldCom Stock on the Redemption Date either directly or indirectly through the delivery of shares of another WorldCom Subsidiary that owns directly or indirectly all such shares, and shall be divided among the holders of WorldCom Stock pro rata in accordance with the number of shares of WorldCom Stock held by each such holder on such Redemption Date; each share of common stock of such WorldCom Subsidiary shall be, upon such delivery, fully paid and nonassessable; (ii) if the MCI Group holds an Inter-Group Interest in the WorldCom Group, redeem or exchange all of the outstanding shares of WorldCom Stock, on a Redemption Date of which notice is delivered in accordance with Section 4(G)(vi), in exchange for the number of shares of common stock of each WorldCom Subsidiary equal to the product of: (x) the Outstanding Interest Fraction with respect to WorldCom Stock; and 11 (y) the number of shares of common stock of such WorldCom Subsidiary as will be outstanding immediately following such exchange of shares; such shares of common stock of each WorldCom Subsidiary shall be delivered to the holders of shares of WorldCom Stock on the Redemption Date either directly or indirectly through the delivery of shares of another WorldCom Subsidiary that owns directly or indirectly all such shares, and shall be divided among the holders of WorldCom Stock pro rata in accordance with the number of shares of WorldCom Stock held by each such holder on such Redemption Date; each share of common stock of such WorldCom Subsidiary shall be, upon such delivery, fully paid and nonassessable; or (iii) if the WorldCom Group holds an Inter-Group Interest in the MCI Group, either: (1) redeem or exchange all of the outstanding shares of WorldCom Stock, on a Redemption Date of which notice is delivered in accordance with Section 4(G)(vi), in exchange for: (a) all of the shares of common stock of each WorldCom Subsidiary as will be outstanding immediately following such exchange of shares; and (b) with respect to the MCI Group, a number of shares of MCI Stock equal to the related Number of Shares Issuable with Respect to the Inter-Group Interest in the MCI Group held by the WorldCom Group; such shares of common stock of each WorldCom Subsidiary shall be delivered to the holders of shares of WorldCom Stock on the Redemption Date either directly or indirectly through the delivery of shares of another WorldCom Subsidiary that owns directly or indirectly all such shares, and the shares of common stock of each WorldCom Subsidiary and the shares of MCI Stock equal to the related Number of Shares Issuable with Respect to the Inter-Group Interest in the MCI Group held by the WorldCom Group shall be divided among the holders of WorldCom Stock pro rata in accordance with the number of shares of WorldCom Stock held by each such holder on such Redemption Date; each share of common stock of each WorldCom Subsidiary and share of MCI Stock in respect of such Number of Shares Issuable with Respect to the Inter-Group Interest shall be, upon such delivery, fully paid and nonassessable; or (2) (a) redeem or exchange all of the outstanding shares of WorldCom Stock as contemplated by clause (1)(a) above and (b) issue to one or more of the WorldCom Subsidiaries a number of shares of MCI Stock equal to the Number of Shares Issuable with Respect to the Inter-Group Interest in the MCI Group held by the WorldCom Group. (E) Redemption of MCI Stock for MCI Subsidiary Stock. At any time at which all of the businesses, assets, properties and liabilities attributed to the MCI Group (and no other businesses, assets, properties or liabilities of the Corporation or any subsidiary thereof) are held directly or indirectly by one or more wholly owned subsidiaries of the Corporation (each, a 12 "MCI Subsidiary"), the Board of Directors may, subject to the satisfaction of such conditions that it determines are appropriate, provided that there are funds legally available for the purpose: (i) if neither Group holds an Inter-Group Interest in the other Group, redeem or exchange all of the outstanding shares of MCI Stock, on a Redemption Date of which notice is delivered in accordance with Section 4(G)(vi), in exchange for all of the shares of common stock of each MCI Subsidiary as will be outstanding immediately following such exchange of shares; such shares of common stock of each MCI Subsidiary shall be delivered to the holders of shares of MCI Stock on the Redemption Date either directly or indirectly through the delivery of shares of another MCI Subsidiary that owns directly or indirectly all such shares, and shall be divided among the holders of MCI Stock pro rata in accordance with the number of shares of MCI Stock held by each such holder on such Redemption Date; each share of common stock of such MCI Subsidiary shall be, upon such delivery, fully paid and nonassessable; (ii) if the WorldCom Group holds an Inter-Group Interest in the MCI Group, redeem or exchange all of the outstanding shares of MCI Stock, on a Redemption Date of which notice is delivered in accordance with Section 4(G)(vi), in exchange for the number of shares of common stock of each MCI Subsidiary equal to the product of: (x) the Outstanding Interest Fraction with respect to MCI Stock; and (y) the number of shares of common stock of such MCI Subsidiary as will be outstanding immediately following such exchange of shares; such shares of common stock of each MCI Subsidiary shall be delivered to the holders of shares of MCI Stock on the Redemption Date either directly or indirectly through the delivery of shares of another MCI Subsidiary that owns directly or indirectly all such shares, and shall be divided among the holders of MCI Stock pro rata in accordance with the number of shares of MCI Stock held by each such holder on such Redemption Date; each share of common stock of such MCI Subsidiary shall be, upon such delivery, fully paid and nonassessable; or (iii) if the MCI Group holds an Inter-Group Interest in the WorldCom Group, either: (1) redeem or exchange all of the outstanding shares of MCI Stock, on a Redemption Date of which notice is delivered in accordance with Section 4(G)(vi), in exchange for: (a) all of the shares of common stock of each MCI Subsidiary as will be outstanding immediately following such exchange of shares; and (b) with respect to the WorldCom Group, a number of shares of WorldCom Stock equal to the related Number of Shares Issuable with Respect to the Inter-Group Interest in the WorldCom Group held by the MCI Group; 13 such shares of common stock of each MCI Subsidiary shall be delivered to the holders of shares of MCI Stock on the Redemption Date either directly or indirectly through the delivery of shares of another MCI Subsidiary that owns directly or indirectly all such shares, and the shares of common stock of each MCI Subsidiary and the shares of common stock of each series equal to the related Number of Shares Issuable with Respect to the Inter-Group Interest in the WorldCom Group held by the MCI Group shall be divided among the holders of MCI Stock pro rata in accordance with the number of shares of MCI Stock held by each such holder on such Redemption Date; each share of common stock of each MCI Subsidiary and share of common stock in respect of such Number of Shares Issuable with Respect to the Inter-Group Interest shall be, upon such delivery, fully paid and nonassessable; or (2) (a) redeem or exchange all of the outstanding shares of MCI Stock as contemplated by clause (1)(a) above and (b) issue to one or more of the MCI Subsidiaries a number of shares of WorldCom Stock equal to the Number of Shares Issuable with Respect to the Inter-Group Interest in the WorldCom Group held by the MCI Group. (F) Treatment of Convertible Securities. After any Redemption Date or Conversion Date on which all outstanding shares of either WorldCom Stock or MCI Stock are redeemed or converted, any share of any series of common stock of the Corporation that is to be issued on exchange, conversion or exercise of any Convertible Securities shall, immediately upon such exchange, conversion or exercise and without any notice from or to, or any other action on the part of, the Corporation or its board of directors or the holder of such Convertible Security: (i) in the event the shares of such series of common stock outstanding on such Redemption Date were redeemed pursuant to Section 4(A)(i)(1)(b)(I), Section 4(B)(i)(1)(b)(I), Section 4(D) or Section 4(E), be redeemed, to the extent of funds legally available therefor, for $.01 per share in cash for each share of such series of common stock that otherwise would be issued upon such exchange, conversion or exercise; or (ii) in the event the shares of such series of common stock outstanding on such Conversion Date were converted into shares of another series of common stock pursuant to Section 4(A)(i)(2), Section 4(A)(iii), Section 4(B)(i)(2) or Section 4(C), be converted into the amount of cash and/or the number of shares of the kind of capital stock and/or other securities or property of the Corporation that shares of such series of common stock would have received had such shares been converted and outstanding on such Conversion Date. The provisions of the immediately preceding sentence of this Section 4 shall not apply to the extent that other adjustments or alternative provisions in respect of such conversion, exchange or redemption of a series of common stock are otherwise made or applied pursuant to the provisions of such Convertible Securities. (G) Notice and Other Provisions. (i) Not later than the 45th Trading Day following the Disposition Date referred to in Section 4(A)(i) (in the case of WorldCom Stock) or 14 Section 4(B)(i) (in the case of MCI Stock), the Corporation shall announce publicly by press release: (1) the Net Proceeds of such Disposition; (2) the number of shares outstanding of the series of common stock relating to the Group subject to such Disposition; (3) the number of shares of such series of common stock into or for which Convertible Securities are then convertible, exchangeable or exercisable and the conversion, exchange or exercise price thereof; and (4) if applicable for the Group subject to such Disposition, the Outstanding Interest Fraction for the series of common stock relating to such Group on the date of such notice. Not earlier than the 61st Trading Day and not later than the 65th Trading Day following the Disposition Date, the Corporation shall announce publicly by press release which of the actions specified in Section 4(A)(i) or Section 4(B)(i), as the case may be, it has irrevocably determined to take in respect of such Disposition. (ii) If the Corporation determines to pay a distribution pursuant to Section 4(A)(i)(1)(a) (in the case of WorldCom Stock) or Section 4(B)(i)(1)(a) (in the case of MCI Stock), the Corporation shall, not later than the 65th Trading Day following the Disposition Date, cause notice to be given to each holder of shares of the series of common stock relating to the Group subject to such Disposition and to each holder of Convertible Securities that are convertible into or exchangeable or exercisable for shares of such series of common stock (unless alternate provision for such notice to the holders of such Convertible Securities is made pursuant to the terms of such Convertible Securities), setting forth: (1) the record date for determining holders entitled to receive such distribution, which shall be not earlier than the tenth Trading Day and not later than the 20th Trading Day following the date of such notice; (2) the anticipated payment date of such distribution (which shall not be more than 120 Trading Days following the Disposition Date); (3) the type of property to be paid as such distribution in respect of the outstanding shares of such series of common stock; (4) the Net Proceeds of such Disposition; (5) if applicable for the Group subject to such Disposition, the Outstanding Interest Fraction for the series of common stock relating to such Group on the date of such notice; 15 (6) the number of outstanding shares of such series of common stock and the number of shares of such series of common stock into or for which outstanding Convertible Securities are then convertible, exchangeable or exercisable and the conversion, exchange or exercise price thereof; and (7) in the case of notice to be given to holders of Convertible Securities, a statement to the effect that a holder of such Convertible Securities shall be entitled to receive such distribution only if such holder properly converts, exchanges or exercises such Convertible Securities on or prior to the record date referred to in clause (1) of this sentence. (iii) If the Corporation determines to undertake a redemption pursuant to Section 4(A)(i)(1)(b)(I) (in the case of WorldCom Stock) or Section 4(B)(i)(1)(b)(I) (in the case of MCI Stock), the Corporation shall, not earlier than the 45th Trading Day and not later than the 35th Trading Day prior to the Redemption Date, cause notice to be given to each holder of shares of the series of common stock relating to the Group subject to the Disposition referred to in such Section and to each holder of Convertible Securities convertible into or exchangeable or exercisable for shares of such series of common stock (unless alternate provision for such notice to the holders of such Convertible Securities is made pursuant to the terms of such Convertible Securities), setting forth: (1) a statement that all shares of such series of common stock outstanding on the Redemption Date shall be redeemed; (2) the Redemption Date (which shall not be more than 120 Trading Days following the Disposition Date); (3) the type of property in which the redemption price for the shares of such series of common stock to be redeemed is to be paid; (4) the Net Proceeds of such Disposition; (5) if applicable for the Group subject to such Disposition, the Outstanding Interest Fraction for the series of common stock relating to such Group on the date of such notice; (6) the place or places where certificates for shares of such series of common stock, properly endorsed or assigned for transfer (unless the Corporation shall waive such requirement), are to be surrendered for delivery of cash and/or securities or other property; (7) the number of outstanding shares of such series of common stock and the number of shares of such series of common stock into or for which outstanding Convertible Securities are then convertible, exchangeable or exercisable and the conversion, exchange or exercise price thereof; (8) in the case of notice to be given to holders of Convertible Securities, a statement to the effect that a holder of such Convertible Securities shall be 16 entitled to participate in such redemption only if such holder properly converts, exchanges or exercises such Convertible Securities on or prior to the Redemption Date referred to in clause (1) of this sentence and a statement as to what, if anything, such holder will be entitled to receive pursuant to the terms of such Convertible Securities or, if applicable, this Section 4 if such holder thereafter converts, exchanges or exercises such Convertible Securities; and (9) a statement to the effect that, except as otherwise provided by Section 4(G)(x), distributions on shares of such series of common stock shall cease to be paid as of such Redemption Date. (iv) If the Corporation determines to undertake a redemption pursuant to Section 4(A)(i)(1)(b)(II) (in the case of WorldCom Stock) or Section 4(B)(i)(1)(b)(II) (in the case of MCI Stock), the Corporation shall, not later than the 65th Trading Day following the Disposition Date referred to in such Section, cause notice to be given to each holder of shares of the series of common stock relating to the Group subject to such Disposition and to each holder of Convertible Securities that are convertible into or exchangeable or exercisable for shares of such series of common stock (unless alternate provision for such notice to the holders of such Convertible Securities is made pursuant to the terms of such Convertible Securities) setting forth: (1) a date not earlier than the tenth Trading Day and not later than the 20th Trading Day following the date of such notice on which shares of such series of common stock shall be selected for redemption; (2) the anticipated Redemption Date (which shall not be more than 120 Trading Days following the Disposition Date); (3) the type of property in which the redemption price for the shares of such series of common stock to be redeemed is to be paid; (4) the Net Proceeds of such Disposition; (5) if applicable for the Group subject to such Disposition, the Outstanding Interest Fraction for the series of common stock relating to such Group on the date of such notice; (6) the number of outstanding shares of such series of common stock and the number of shares of such series of common stock into or for which outstanding Convertible Securities are then convertible, exchangeable or exercisable and the conversion, exchange or exercise price thereof; (7) in the case of notice to be given to holders of Convertible Securities, a statement to the effect that a holder of such Convertible Securities shall be eligible to participate in such selection for redemption only if such holder properly converts, exchanges or exercises such Convertible Securities on or prior to the record date referred to in clause (1) of this sentence, and a statement as to what, if anything, such holder will be entitled to receive pursuant to the terms of 17 such Convertible Securities or, if applicable, this Section 4 if such holder thereafter converts, exchanges or exercises such Convertible Securities; and (8) a statement that the Corporation will not be required to register a transfer of any shares of such series of common stock for a period of 15 Trading Days next preceding the date referred to in clause (1) of this sentence. Promptly following the date referred to in clause (1) of the preceding sentence, the Corporation shall cause a notice to be given to each holder of record of shares of such series of common stock to be redeemed setting forth: (1) the number of shares of such series of common stock held by such holder to be redeemed; (2) a statement that such shares of such series of common stock shall be redeemed; (3) the Redemption Date; (4) the kind and per share amount of cash and/or securities or other property to be received by such holder with respect to each share of such series of common stock to be redeemed, including details as to the calculation thereof; (5) the place or places where certificates for shares of such series of common stock, properly endorsed or assigned for transfer (unless the Corporation shall waive such requirement), are to be surrendered for delivery of such cash and/or securities or other property; (6) if applicable, a statement to the effect that the shares being redeemed may no longer be transferred on the transfer books of the Corporation after the Redemption Date; and (7) a statement to the effect that, subject to Section 4(G)(x), dividends on such shares of such series of common stock shall cease to be paid as of the Redemption Date. (v) If the Corporation determines to convert WorldCom Stock or MCI Stock into the other series of common stock pursuant to Section 4(A)(iii) (in the case of WorldCom Stock) or Section 4(A)(i)(2), Section 4(B)(i)(2), Section 4(B)(iii) or Section 4(C) (in the case of MCI Stock), the Corporation shall, not earlier than the 45th Trading Day and not later than the 35th Trading Day prior to the Conversion Date, cause notice to be given to each holder of shares of the series of common stock to be so converted and to each holder of Convertible Securities that are convertible into or exchangeable or exercisable for shares of such series of common stock (unless alternate provision for such notice to the holders of such Convertible Securities is made pursuant to the terms of such Convertible Securities) setting forth: 18 (1) a statement that all outstanding shares of such series of common stock shall be converted; (2) the Conversion Date (which, in the case of a conversion after a Disposition, shall not be more than 120 Trading Days following the Disposition Date); (3) the number of shares of the series of common stock to be received with respect to each share of such series of common stock, including details as to the calculation thereof; (4) the place or places where certificates for shares of such series of common stock, properly endorsed or assigned for transfer (unless the Corporation shall waive such requirement), are to be surrendered for delivery of certificates for shares of such series of common stock; (5) the number of outstanding shares of such series of common stock and the number of shares of such series of common stock into or for which outstanding Convertible Securities are then convertible, exchangeable or exercisable and the conversion, exchange or exercise price thereof; (6) a statement to the effect that, subject to Section 4(G)(x), dividends on shares of such series of common stock shall cease to be paid as of such Conversion Date; and (7) in the case of notice to holders of such Convertible Securities, a statement to the effect that a holder of such Convertible Securities shall be entitled to receive shares of such series of common stock upon such conversion only if such holder properly converts, exchanges or exercises such Convertible Securities on or prior to such Conversion Date and a statement as to what, if anything, such holder will be entitled to receive pursuant to the terms of such Convertible Securities or, if applicable, this Section 4 if such holder thereafter converts, exchanges or exercises such Convertible Securities. (vi) If the Corporation determines to redeem shares of WorldCom Stock pursuant to Section 4(D) or MCI Stock pursuant to Section 4(E), the Corporation shall, not earlier than the 35th Trading Day and not later than the 45th Trading Day prior to the Redemption Date, cause notice to be given to each holder of shares of such series of common stock to be redeemed and to each holder of Convertible Securities that are convertible into or exchangeable or exercisable for shares of such series of common stock (unless alternate provision for such notice to the holders of such Convertible Securities is made pursuant to the terms of such Convertible Securities), setting forth: (1) a statement that all shares of such series of common stock outstanding on the Redemption Date shall be redeemed in exchange for shares of common stock of each WorldCom Subsidiary or MCI Subsidiary, as applicable (and, if such redemption is pursuant to Section 4(D)(iii)(1) or Section 4(D)(iv)(l) (in the case of WorldCom Stock) or pursuant to Section 4(E)(iii)(1) or Section 19 4(E)(iv)(l) (in the case of MCI Stock), shares of the series of common stock specified in such Sections); (2) if such redemption is conditioned upon the satisfaction of one or more conditions on or prior to the Redemption Date, a description of such conditions and whether such conditions may be waived by the Corporation or another Person; (3) the Redemption Date; (4) if applicable for the series of common stock subject to such redemption, the Outstanding Interest Fraction for such series of common stock on the date of such notice; (5) the place or places where certificates for shares of the series of common stock to be redeemed, properly endorsed or assigned for transfer (unless the Corporation shall waive such requirement), are to be surrendered for delivery of certificates for shares of common stock of each WorldCom Subsidiary or MCI Subsidiary, as applicable (and, if such redemption is pursuant to Section 4(D)(iii)(1) or Section 4(D)(iv)(1) (in the case of WorldCom Stock) or pursuant to Section 4(E)(iii)(1) or Section 4(E)(iv)(1) (in the case of MCI Stock), shares of the series of common stock specified in such Sections); (6) a statement to the effect that, subject to Section 4(G)(x), dividends on shares of such series of common stock shall cease to be paid as of such Redemption Date; (7) the number of outstanding shares of such series of common stock and the number of shares of such series of common stock into or for which outstanding Convertible Securities are then convertible, exchangeable or exercisable and the conversion, exchange or exercise price thereof; and (8) in the case of notice to holders of Convertible Securities, a statement to the effect that a holder of Convertible Securities shall be entitled to receive shares of common stock of each WorldCom Subsidiary or MCI Subsidiary, as applicable (and, if such redemption is pursuant to Section 4(D)(iii)(1) or Section 4(D)(iv)(1) (in the case of a redemption of WorldCom Stock) or pursuant to Section 4(E)(iii)(1) or Section 4(E)(iv)(1) (in the case of a redemption of MCI Stock), shares of the series of common stock specified in such Sections), upon redemption only if such holder properly converts, exchanges or exercises such Convertible Securities on or prior to the Redemption Date and a statement as to what, if anything, such holder will be entitled to receive pursuant to the terms of such Convertible Securities or, if applicable, this Section 4, if such holder thereafter converts, exchanges or exercises such Convertible Securities. (vii) Any notice required to be given each holder of shares of common stock or Convertible Securities pursuant to this Section 4(G) shall be sent by first-class mail, postage prepaid, to each such holder at such holder's address as the same appears on the 20 transfer books of the Corporation or the Corporation's transfer agent or registrar on the record date fixed for such notice. Neither the failure to mail any notice required by this Section 4(G) to any particular holder of the common stock or of Convertible Securities nor any defect therein shall affect the sufficiency thereof with respect to any other holder of outstanding shares of the common stock or of Convertible Securities or the validity of any such redemption or conversion. (viii) If less than all of the outstanding shares of either series of common stock are to be redeemed pursuant to Section 4(A)(i)(1)(b)(II) (in the case of WorldCom Stock) or Section 4(B)(i)(1)(b)(Il) (in the case of MCI Stock), the shares to be redeemed by the Corporation shall be selected from among the holders of shares of such series of common stock outstanding at the close of business on the record date for such redemption on a pro rata basis among all such holders or by lot or by such other method as may be determined by the Board of Directors to be equitable. (ix) The Corporation shall not be required to issue or deliver fractional shares of any capital stock or of any other securities to any holder of either series of common stock upon any dividend or other distribution, redemption or conversion pursuant to this Section 4. If more than one share of a series of common stock shall be held at the same time by the same holder, the Corporation may aggregate the number of shares of any capital stock that shall be issuable or any other securities or property that shall be distributable in respect of such series to such holder upon any dividend or other distribution, redemption or conversion (including any fractional shares). If there are fractional shares of any capital stock or of any other securities remaining to be issued or distributed to the holders of any series of common stock, the Corporation shall, if such fractional shares are not issued or distributed to the holder, pay cash in respect of such fractional shares in an amount equal to the Fair Value thereof (without interest). (x) No adjustments in respect of dividends shall be made upon the redemption or conversion of shares of either series of common stock; provided, however, that if the Redemption Date or Conversion Date, as the case may be, with respect to shares of either series of common stock shall be subsequent to the record date for the payment of a dividend or other distribution thereon or with respect thereto, the holders of such series of common stock at the close of business on such record date shall be entitled to receive the dividend or other distribution payable on or with respect to such shares on the date set for payment of such dividend or other distribution, in each case without interest, notwithstanding the subsequent conversion or redemption of such shares. (xi) Before any holder of shares of either series of common stock shall be entitled to receive any cash payment and/or certificates or instruments representing shares of any capital stock and/or other securities or property to be distributed to such holder with respect to such series of common stock pursuant to this Section 4, such holder shall surrender at such place as the Corporation shall specify certificates for such shares of the common stock, properly endorsed or assigned for transfer (unless the Corporation shall waive such requirement). The Corporation shall as soon as practicable after receipt of certificates representing such shares of the common stock deliver to the person for whose account such shares of the common stock were so surrendered, or to such person's 21 nominee or nominees, the cash and/or the certificates or instruments representing the number of whole shares of the kind of capital stock and/or other securities or property to which such person shall be entitled as aforesaid, together with any payment in respect of fractional shares contemplated by Section 4(G)(ix), in each case without interest. If less than all of the shares of either series of common stock represented by any one certificate are to be redeemed, the Corporation shall issue and deliver a new certificate for the shares of such series of common stock not redeemed. (xii) From and after any applicable Redemption Date or Conversion Date, as the case may be, all rights of a holder of shares of either series of common stock that were converted or redeemed shall cease except for the right, upon surrender of the certificates representing such shares of the common stock as required by Section 4(G)(xi), to receive the certificates representing shares of the kind and amount of capital stock and/or other securities or property for which such shares were redeemed or converted, together with any payment in respect of fractional shares contemplated by Section 4(G)(ix) and rights to dividends as provided in Section 4(G)(x), in each case without interest. No holder of a certificate that immediately prior to the applicable Redemption Date or Conversion Date represented shares of a series of common stock shall be entitled to receive any dividend or other distribution or interest payment with respect to shares of any kind of capital stock or other security or instrument for which such series of common stock was redeemed or converted until the surrender as required by this Section 4 of such certificate in exchange for a certificate or certificates or instrument or instruments representing such capital stock or other security. Upon such surrender, there shall be paid to the holder the amount of any dividends or other distributions (without interest) which theretofore became payable on any class or series of capital stock of the Corporation as of a record date after the Conversion Date, but that were not paid by reason of the foregoing, with respect to the number of whole shares of the kind of capital stock represented by the certificate or certificates issued upon such surrender. From and after a Redemption Date or Conversion Date, the Corporation shall be entitled, however, to treat the certificates for a series of common stock that have not yet been surrendered for conversion as evidencing the ownership of the number of whole shares of the kind or kinds of capital stock of the Corporation for which the shares of such series of common stock represented by such certificates shall have been converted, notwithstanding the failure to surrender such certificates. (xiii) The Corporation shall pay any and all documentary, stamp or similar issue or transfer taxes that may be payable in respect of the issuance or delivery of any shares of capital stock and/or other securities upon redemption or conversion of shares of any series of common stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax that may be payable in respect of any transfer involved in the issuance or delivery of any shares of capital stock and/or other securities in a name other than that in which the shares of such series of common stock so redeemed or converted were registered, and no such issuance or delivery shall be made unless the person requesting such issuance or delivery has paid to the Corporation the amount of any such tax or has established to the satisfaction of the Corporation that such tax has been paid. 22 (xiv) The board of directors may establish such rules and requirements to facilitate the effectuation of the transactions contemplated by this Section 4 as the Board of Directors shall determine to be appropriate. Section 5. Inter-Group Interest and Related Transfers Between and Among Groups. (A) Changes in Inter-Group Interest. The Number of Shares Issuable with Respect to the Inter-Group Interest in any Issuer Group held by any Holder Group shall from time to time be: (i) adjusted, if before such adjustment such number is greater than zero, as determined by the board of directors to be appropriate to reflect equitably any subdivision (by stock split or otherwise) or combination (by reverse stock split or otherwise) of the series of common stock related to such Issuer Group; (ii) decreased (but to not less than zero), if before such adjustment such number is greater than zero, by action of the board of directors by: (1) such the number of shares of the series of common stock related to such Issuer Group issued or sold by the Corporation that, immediately prior to such issuance or sale, was included in the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group held by such Holder Group; (2) the number of shares of such series of common stock issued upon the conversion, exchange or exercise of any Convertible Securities that, immediately prior to the issuance or sale of such Convertible Securities, were included in the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group held by such Holder Group; (3) the number of shares of such series of common stock issued by the Corporation as a share dividend or in connection with any reclassification or exchange of shares, including an exchange offer, to holders of the series of common stock related to such Holder Group; (4) the number of shares of such series of common stock issued upon the conversion, exchange or exercise of any Convertible Securities issued by the Corporation as a distribution or in connection with any reclassification or exchange of shares, including an exchange offer, to holders of the series of common stock related to such Holder Group; (5) the number of shares (rounded, if necessary, to the nearest whole number) of such series of common stock equal to the product of (x) the number of shares of such series of common stock redeemed or exchanged pursuant to Section 4(A)(i)(l)(b)(I) or (II) or Section 4(B)(i)(1)(b)(I) or (II) and (y) a fraction (which may be greater than one), the numerator of which is the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group held by 23 such Holder Group, and the denominator of which is the number of shares of series of common stock outstanding, in each case, on the record date for determining such shares selected for such redemption or exchange; and (6) the number of shares (rounded, if necessary, to the nearest whole number) of such series of common stock equal to the quotient of (x) the aggregate Fair Value as of the date of transfer of (i) businesses, assets (including cash) or properties transferred from such Issuer Group to such Holder Group or (ii) liabilities transferred from such Holder Group to such Issuer Group, in either case, for the purpose of reducing the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group held by such Holder Group, divided by (y) the average Market Value of one share of the series of common stock related to such Issuer Group during the period of 20 consecutive Trading Days ending on the date of such contribution or transfer, (iii) increased by action of the Board of Directors by: (1) the number of outstanding shares of the series of common stock related to such Issuer Group repurchased by the Corporation for consideration that was attributed as an asset as provided by Section 7(O) or 7(CC) to such Holder Group; (2) the number of shares of such series of common stock equal to the product of (x) the quotient of (i) the number of shares of such series of common stock issued by the Corporation as a share dividend or in connection with any reclassification to holders of such series of common stock divided by (ii) the number of shares of such series of common stock outstanding on the record date for such share dividend or reclassification and (y) the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group on such record date; (3) the number of shares of such series of common stock into or for which Convertible Securities attributed as a liability to, or equity interest in, such Issuer Group are deemed converted, exchanged or exercised by such Holder Group pursuant to Section 5(C); and (4) the number of shares (rounded to the nearest whole number) of such series of common stock equal to the quotient of (x) the aggregate Fair Value as of the date of (i) contribution of businesses, assets (including cash) or properties transferred from such Holder Group to such Issuer Group or (ii) transfer of liabilities from such Issuer Group to such Holder Group, in consideration of an increase in the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group held by such Holder Group, divided by (y) the average Market Value of one share of the series of common stock related to such Issuer Group during the period of 20 consecutive Trading Days ending on the date of such contribution or transfer; 24 (iv) increased or decreased under such other circumstances as the board of directors determines appropriate to reflect the economic substance of any other event or circumstance; provided that, in each case, the adjustment shall be made in a manner that is fair and equitable to holders of common stock and intended to reflect the relative economic interest in one Group held by the other Group. (B) Reattribution Upon Certain Distributions. (i) If the Corporation shall make a distribution with respect to shares of either series of common stock (payable in consideration other than securities of the Corporation), effective on the payment date of such distribution, the Holder Group holding an Inter-Group Interest in the Issuer Group in respect of which such distribution has been paid shall be attributed as an asset an amount of assets or properties, previously attributed to such Issuer Group, of the same kind as were paid in such distribution, as have a Fair Value on the record date for such distribution equal to the product of: (1) the Fair Value on such record date of the aggregate distribution to holders of shares of such series of common stock; and (2) a fraction (which may be greater than one), the numerator of which is equal to the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group held by such Holder Group and the denominator of which is equal to the number of outstanding shares of the series of common stock related to such Issuer Group, in each case, on the record date for such distribution. (ii) If the Corporation shall make a distribution with respect to shares of either series of common stock payable in securities of the Corporation that are attributed to the related Issuer Group as a liability of, or an equity interest in, such Issuer Group, the Holder Group holding an Inter-Group Interest in such Issuer Group shall be attributed as assets the number or amount of such securities equivalent to such liability or equity interest that is equal to the product of: (x) the number or amount of securities so distributed to holders of outstanding shares of the series of common stock related to such Issuer Group; and (y) a fraction (which may be greater than one), the numerator of which is equal to the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group held by such Holder Group and the denominator of which is equal to the number of outstanding shares of the series of common stock related to such Issuer Group, in each case, on the record date for such dividend or other distribution; and, to the extent interest is or distributions are paid on the securities so distributed, the Holder Group shall be attributed at the time of such payment a corresponding ratable amount of the kind of assets paid as such interest or distributions as would have been paid in respect of such securities so deemed to be held by such Holder Group if such securities were outstanding. 25 (C) Deemed Conversion of Certain Convertible Securities Held by the Holder Group. To the extent Convertible Securities are paid as a distribution to the holders of either series of common stock, the Corporation may (in addition to making an adjustment pursuant to Section 5(B)(ii)) when at any time such Convertible Securities are convertible into or exchangeable or exercisable for shares of such series of common stock, treat such Convertible Securities as converted, exchanged or exercised for purposes of determining the increase in the Number of Shares Issuable with Respect to the Inter-Group Interest in such Issuer Group pursuant to Section 5(A)(iii)(3), and must do so to the extent such Convertible Securities are mandatorily converted, exchanged or exercised (and to the extent the terms of such Convertible Securities require payment of consideration for such conversion, exchange or exercise, such Holder Group shall then no longer be attributed as an asset an amount of the kind of assets or properties required to be paid as such consideration for the amount of Convertible Securities deemed converted, exchanged or exercised (and such Issuer Group shall be attributed such assets or properties)), in which case, from and after such time, the shares of common stock into or for which such Convertible Securities were so considered converted, exchanged or exercised shall be deemed held by such Holder Group and such Convertible Securities shall no longer be deemed to be held by such Holder Group. A statement setting forth the election to effectuate any such deemed conversion, exchange or exercise of Convertible Securities and the assets or properties, if any, to be attributed to the other Group in consideration of such conversion, exchange or exercise shall be filed in the records of the actions of the board of directors and, upon such filing, such deemed conversion, exchange or exercise shall be effectuated. (D) Permitted Inter-Group Interests. Either Group may hold an Inter-Group Interest in the other Group; provided that neither Group may hold an Inter-Group Interest in the other Group if, immediately after the creation of such Inter-Group Interest, the Groups would hold Inter-Group Interests in each other. Section 6. Application of the Provisions of Section A of Article 4. (A) Certain Determinations by the Board of Directors. The board of directors shall make such determinations with respect to (a) the businesses, assets, properties and liabilities to be attributed to the WorldCom Group and the MCI Group, (b) the application of the provisions of these Second Amended and Restated Articles of Incorporation to transactions to be engaged in by the Corporation and (c) the voting powers, preferences, designations, rights, qualifications, limitations or restrictions of either series of common stock or of the holders thereof, as may be or become necessary or appropriate to the exercise of, or to give effect to, such voting powers, preferences, designations, rights, qualifications, limitations or restrictions, including, without limiting the foregoing, the determinations referred to in this Section 6. A record of any such determination shall be filed with the records of the actions of the board of directors. (i) Upon any acquisition by the Corporation or its subsidiaries of any businesses, assets or properties, or any assumption of liabilities, outside of the ordinary course of business of either Group, the board of directors shall determine whether such businesses, assets, properties and liabilities (or an interest therein) shall be for the benefit of the WorldCom Group or the MCI Group or both and, accordingly, shall be attributed to such Group or Groups, in accordance with Section 7(O) or 7(CC), as the case may be. 26 (ii) Upon any issuance of shares of any series of common stock at a time when the Number of Shares Issuable with Respect to the Inter-Group Interest in the Issuer Group related to such series is greater than zero, the Board of Directors shall determine, based on the use of the proceeds of such issuance and any other relevant factors, whether all or any part of the shares of such series so issued shall reduce such Number of Shares Issuable with Respect to the Inter-Group Interest. (iii) Upon any issuance by the Corporation or any subsidiary thereof of any Convertible Securities that are convertible into or exchangeable or exercisable for shares of either series of common stock, if at the time such Convertible Securities are issued the Number of Shares Issuable with Respect to the Inter-Group Interest in the Issuer Group related to such series is greater than zero, the board of directors shall determine, based on the use of the proceeds of such issuance and any other relevant factors, whether, upon conversion, exchange or exercise thereof, the issuance of shares of such series of common stock pursuant thereto shall, in whole or in part, reduce such Number of Shares Issuable with Respect to the Inter-Group Interest. (iv) Upon any issuance of any shares of preferred stock (or stock other than common stock) of any series, the board of directors shall attribute, based on the use of proceeds of such issuance of shares of preferred stock (or stock other than common stock) in the business of either Group and any other relevant factors, the shares so issued entirely to the WorldCom Group, entirely to the MCI Group, or partly to both Groups, in such proportion as the Board of Directors shall determine. (v) Upon any redemption or repurchase by the Corporation or any subsidiary thereof of shares of preferred stock (or stock other than common stock) of any class or series or of other securities or debt obligations of the Corporation, the board of directors shall determine, based on the property used to redeem or purchase such shares, other securities or debt obligations, which, if any, of such shares, other securities or debt obligations redeemed or repurchased shall be attributed to the WorldCom Group, to the MCI Group, or both, and, accordingly, how many of the shares of such series or class of preferred stock (or stock other than common stock) or of such other securities, or how much of such debt obligations, that remain outstanding, if any, are thereafter attributed to each Group. (vi) Upon any transfer to either Group of businesses, assets, properties or liabilities attributed to either Group to the other Group, the consideration therefor to be attributed to the transferring Group in exchange therefor, including, without limitation, cash, securities or other property of such other Group or, if permitted by Section 5(D), a decrease or an increase in the Number of Shares of Shares Issuable with Respect to the Inter-Group Interest in such other Group, as described in Section 5(A)(ii)(6) or Section 5(A)(iii)(4). (B) Certain Determinations Not Required. Notwithstanding the foregoing provisions of this Section 6 or any other provision in these Second Amended and Restated Articles of Incorporation, at any time when there are not outstanding more than one series of 27 common stock (or Convertible Securities convertible into or exchangeable or exercisable for more than one series of common stock), the Corporation need not: (i) attribute any of the businesses, assets, properties or liabilities of the Corporation or any of its subsidiaries to the WorldCom Group or the MCI Group; or (ii) make any determination required in connection therewith, nor shall the board of directors be required to make any of the determinations otherwise required by this Section A of Article 4, and in such circumstances the holders of the shares of WorldCom Stock and MCI Stock outstanding, as the case may be, shall (unless otherwise specifically provided in these Second Amended and Restated Articles of Incorporation) be entitled to all the voting powers, preferences, designations, rights, qualifications, limitations or restrictions of common stock of the Corporation. (C) Board Determinations Binding. Any determinations made in good faith by the board of directors of the Corporation under any provision of this Section 6 or otherwise in furtherance of the application of this Article 4A shall be final and binding on all shareholders. Section 7. Certain Definitions and Rules of Interpretation. As used in this Section A of Article 4, the following terms shall have the following meanings (with terms defined in the singular having comparable meaning when used in the plural and vice versa), unless the context otherwise requires. For purposes of this Section A of Article 4, the WorldCom Stock, when issued, shall be considered issued in respect of or related to the WorldCom Group, and the MCI Stock, when issued, shall be considered issued in respect of or related to the MCI Group. As used in this Section 7, a "contribution" or "transfer" of businesses, assets, properties or liabilities from one Group to the other shall refer to the reattribution of such businesses, assets, properties or liabilities from the contributing or transferring Group to the other Group and correlative phrases shall have correlative meanings. (A) "Available Distribution Amount" shall mean, as the context requires, a reference to the WorldCom Group Available Distribution Amount and MCI Group Available Distribution Amount. (B) "Conversion Date" shall mean the date fixed by the board of directors as the effective date for the conversion of shares of WorldCom Stock into shares of MCI Stock or shares of MCI Stock into shares of WorldCom Stock, as shall be set forth in the notice to holders of shares of the series of common stock subject to such conversion and to holders of any Convertible Securities that are convertible into or exchangeable or exercisable for shares of the series of common stock subject to such conversion requirements pursuant to Section 4(G)(v). (C) "Convertible Securities" shall mean, at any time, any securities of the Corporation or of any subsidiary thereof (other than shares of common stock), including warrants and options, outstanding at such time that by their terms are convertible into or exchangeable or exercisable for or evidence the right to acquire any shares of any series of common stock, whether convertible, exchangeable or exercisable at such time or a later time or only upon the 28 occurrence of certain events, but in respect of antidilution provisions of such securities only upon the effectiveness thereof. (D) "Disposition" shall mean a sale, conveyance, assignment or other disposition (whether by merger, share exchange, sale or contribution of assets or stock or otherwise) of businesses, assets (including stock, other securities and goodwill), properties or liabilities. (E) "Disposition Date," with respect to the WorldCom Group or the MCI Group, shall mean the date of consummation of the Disposition of such Group referred to in Section 4(A)(i) or Section 4(C)(i), as applicable. (F) "Distribution" shall mean a direct or indirect transfer of money or other property (except its own shares or rights to acquire its own shares) or incurrence of indebtedness by the Corporation to or for the benefit of its shareholders in respect of any of its shares. A distribution may be in the form of: (i) a declaration or payment of a dividend; (ii) a purchase, redemption, or other acquisition of shares; (iii) a distribution of indebtedness, or otherwise; provided that for purposes of this Section A of Article 4 a distribution shall not include (x) payments made pursuant to Section 3 or (y) for purposes of Section l(C)(v) and I(C)(vi), a repurchase of shares of common stock. (G) "Excluded Transaction" shall mean, with respect to the WorldCom Group or the MCI Group, as applicable: (i) the Disposition by the Corporation of all or substantially all of its businesses, assets, properties and liabilities in one transaction or a series of related transactions in connection with the dissolution of the Corporation and the distribution of assets to shareholders as referred to in Section 3; (ii) the Disposition of the businesses, assets, properties and liabilities of such Group as contemplated by Section 4(D) or 4(E) or otherwise (x) to all holders of shares of the series of common stock related to such Group, divided among such holders on a pro rata basis in accordance with the number of shares of common stock of such series outstanding or (y) if the Number of Shares Issuable with Respect to the Inter-Group Interest in such Group is greater than zero, to all holders of shares of the series of common stock related to such Group and the Corporation or subsidiaries thereof, divided among such holders and the Corporation or subsidiaries thereof on a pro rata basis in accordance with the number of shares of common stock of such series outstanding and the Number of Shares Issuable with Respect to the Inter-Group Interest in such Group; (iii) the Disposition to any person or entity controlled (as determined by the board of directors) by the Corporation; (iv) the Disposition in connection with a Related Business Transaction in respect of such Group; or (v) a Disposition conditioned upon the approval of the holders of common stock related to such Group, voting as a separate voting group. 29 (H) "Fair Value" shall mean: (i) in the case of equity securities or debt securities of a class or series that has previously been Publicly Traded for a period of at least 15 months, the Market Value thereof (if such Market Value, as so defined, can be determined); (ii) in the case of an equity security or debt security that has not been Publicly Traded for at least 15 months or the Market Value of which cannot be determined, the fair value per share of stock or per other unit of such security, on a fully distributed basis, as determined by an independent investment banking firm experienced in the valuation of securities selected in good faith by the board of directors, or, if no such investment banking firm is, as determined in the good faith judgment of the board of directors, available to make such determination, in good faith by the board of directors; (iii) in the case of cash denominated in U.S. dollars, the face amount thereof and in the case of cash denominated in other than U.S. dollars, the face amount thereof converted into U.S. dollars at the rate published in The Wall Street Journal on the date for the determination of Fair Value or, if not so published, at such rate as shall be determined in good faith by the board of directors based upon such information as the board of directors shall in good faith determine to be appropriate; and (iv) in the case of property other than securities or cash, the "Fair Value" thereof shall be determined in good faith by the board of directors based upon such appraisals, valuation reports or opinions of such experts as the board of directors shall in good faith determine to be appropriate. Any such determination of Fair Value shall be described in a statement filed with the records of the actions of the board of directors. (I) "Group" shall mean, as of any date, the WorldCom Group or the MCI Group. (J) "Holder Group" shall mean any Group which holds or, as a result of the issuance of Convertible Securities, may hold an Inter-Group Interest in the other Group. (K) "Initial Issuance Date" shall mean the date of first issuance of WorldCom Stock and MCI Stock. (L) "Inter-Group Interest" shall mean, as of any date, the Number of Shares Issuable with Respect to the Inter-Group Interest in either Issuer Group that are held or permitted to be held, as applicable, as of such date by the other Holder Group. (M) "Issuer Group" shall mean any Group in which the other Group holds or, as a result of the issuance of Convertible Securities, may hold an Inter-Group Interest. (N) "Market Value" shall mean, with respect to a share of any class or series of capital stock of the Corporation on any day, 30 (i) average of the high and low reported sales prices of a share of such class or series on such Trading Day, as reported on the Nasdaq National Market; or (ii) in case no such reported sale takes place on such Trading Day, the average of the reported closing bid and asked prices regular way of a share of such class or series on such Trading Day, as reported on the Nasdaq National Market; or (iii) if the shares of such class or series are not listed or admitted to trading on the Nasdaq National Market on such Trading Day, on the principal national securities exchange in the United States on which the shares of such class or series are listed or admitted to trading; or (iv) if the shares of such class or series are not listed or admitted to trading on any national securities exchange or quoted on the Nasdaq National Market on such Trading Day, the average of the closing bid and asked prices of a share of such class or series in the over-the-counter market on such Trading Day, as furnished by any New York Stock Exchange member firm selected from time to time by the Corporation; or (v) if such closing bid and asked prices are not made available by any such Nasdaq National Market broker/dealer on such Trading Day, the Fair Value of a share of such class or series as set forth in clause (ii) of the definition of Fair Value; provided that, for purposes of determining the market value of a share of any class or series of capital stock for any period: (x) the "Market Value" of a share of capital stock on any day prior to any "ex-dividend" date or any similar date occurring during such period for any dividend or distribution (other than any dividend or distribution contemplated by clause (y)(2) of this sentence) paid or to be paid with respect to such capital stock shall be reduced by the Fair Value of the per share amount of such dividend or distribution; and (y) the "Market Value" of any share of capital stock on any day prior to: (1) the effective date of any subdivision (by stock split or otherwise) or combination (by reverse stock split or otherwise) of outstanding shares of such class or series of capital stock occurring during such period; or (2) any "ex-dividend" date or any similar date occurring during such period for any dividend or distribution with respect to such capital stock to be made in shares of such class or series of capital stock or Convertible Securities that are convertible, exchangeable or exercisable for such class or series of capital stock; shall be appropriately adjusted, as determined by the board of directors, to reflect such subdivision, combination, dividend or distribution. 31 (O) "MCI Group" shall mean, as of any date: (i) the interest of the Corporation and any of its subsidiaries on such date in all of the businesses, assets, properties and liabilities reflected in the combined financial statements of the MCI Group as of September 30, 2000, which were publicly filed by the Corporation with the Securities and Exchange Commission in Registration Statement on Form S-4, as amended (File No. 333-52920); (ii) the interest of the Corporation or any of its subsidiaries in any business, asset or property acquired and any liabilities assumed by the Corporation or any of its subsidiaries and attributed to the MCI Group, as determined by the board of directors as contemplated by Section 6(A); (iii) all businesses, assets, properties and liabilities transferred to the MCI Group from the WorldCom Group (other than in a transaction pursuant to clause (v) or (vi) of this Section 7(O)) pursuant to transactions in the ordinary course of business of the MCI Group and the WorldCom Group or otherwise as the board of directors may have directed as permitted by these Second Amended and Restated Articles of Incorporation; (iv) a proportionate undivided interest in each and every business, asset, property and liability attributed to the WorldCom Group equal to the Inter-Group Interest in the WorldCom Group held by the MCI Group as of such date; (v) all businesses, assets, properties and liabilities transferred to the MCI Group from the WorldCom Group in connection with an increase in the Inter-Group Interest in the MCI Group held by the WorldCom Group; (vi) all businesses, assets, properties and liabilities transferred to the MCI Group from the WorldCom Group in connection with a decrease in the Inter-Group Interest in the WorldCom Group held by the MCI Group; (vii) any assets (including securities) or properties attributed to the MCI Group pursuant to Section 5(B) or Section 5(C); and (viii) all net income and net losses arising in respect of the foregoing and proceeds of the Disposition thereof; provided that from and after any transfer of any businesses, assets, properties or liabilities from the MCI Group to the WorldCom Group as permitted by these Second Amended and Restated Articles of Incorporation, the MCI Group shall no longer include such businesses, assets, properties or liabilities so contributed or transferred (other than as reflected, to the extent applicable, in respect of such a transfer by the Inter-Group Interest in the WorldCom Group held by the MCI Group). (P) "MCI Group Available Distribution Amount" shall mean, on any date the product of: (i) the Outstanding Interest Fraction with respect to MCI Stock; and 32 (ii) the lesser of: (x) any amount in excess of the minimum amount necessary to pay debts attributed to the MCI Group as they become due in the usual course of business; and (y) the total assets attributed to the MCI Group, less the sum of its total liabilities plus (unless these Second Amended and Restated Articles of Incorporation provide otherwise) the amount that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shares of stock attributed to the MCI Group superior to the MCI Stock. Notwithstanding the foregoing provisions of this Section 7(P), and consistent with Section 6(B), at any time when there are not outstanding both: (i) one or more shares of MCI Stock or Convertible Securities convertible into or exchangeable or exercisable for MCI Stock; and (ii) one or more shares of WorldCom Stock or Convertible Securities convertible into or exchangeable or exercisable for WorldCom Stock, the "Available Distribution Amount," on any calculation date during such time period, with respect to the MCI Stock or the WorldCom Stock (depending on which of such series of common stock or Convertible Securities convertible into or exchangeable or exercisable for such series of common stock is outstanding), shall mean the amount available for the payment of dividends on such common stock in accordance with law. (Q) "Net Proceeds" shall mean, as of any date with respect to any Disposition of any of the businesses, assets, properties and liabilities attributed to either the WorldCom Group or the MCI Group, an amount, if any, equal to what remains of the gross proceeds of such Disposition after payment of, or reasonable provision is made as determined by the board of directors for: (i) any taxes the Corporation estimates will be payable by the Corporation (or which the Corporation estimates would have been payable but for the utilization of tax benefits attributable to the other Group) in respect of such Disposition or in respect of any resulting dividend or redemption pursuant to Section 4(A)(i)(l)(a), Section 4(A)(i)(1)(b), Section 4(B)(i)(1)(a) or Section 4(B)(i)(l)(b); (ii) any transaction costs, including, without limitation, any legal, investment banking and accounting fees and expenses; and (iii) any liabilities (contingent or otherwise) of or attributed to such Group, including, without limitation, any liabilities for deferred taxes or any indemnity or guarantee obligations of the Corporation incurred in connection with the Disposition or otherwise, and any liabilities for future purchase price adjustments and any preferential 33 amounts plus any accumulated and unpaid dividends in respect of the preferred stock attributed to such Group. For purposes of this definition, any businesses, properties and assets attributed to the Group, the businesses, assets, properties and liabilities of which are subject to such Disposition, remaining after such Disposition shall constitute "reasonable provision" for such amount of taxes, costs and liabilities (contingent or otherwise) as the Board of Directors determines can be expected to be supported by such businesses, properties and assets. (R) "Number of Shares Issuable with Respect to the Inter-Group Interest" shall mean with respect to any Issuer Group, a number of shares of the series of common stock related to such Issuer Group that are deemed to be held by a Holder Group. The Number of Shares Issuable with Respect to the Inter-Group Interest with respect to the WorldCom Stock and MCI Stock shall initially each be zero and in each case shall be adjusted, increased or decreased from time to time pursuant to Section 5. (S) "Outstanding Interest Fraction" shall mean, as of any date with respect to WorldCom Stock or MCI Stock, the fraction (which may simplify to 1/1), the numerator of which shall be the number of outstanding shares of such series of common stock on such date and the denominator of which shall be the sum of the number of outstanding shares of such series of common stock on such date and the Number of Shares Issuable with Respect to the Inter-Group Interest in the Group related to such series of common stock on such date. A statement setting forth the Outstanding Interest Fraction for any series of common stock as of the record date for the payment of any distribution or share dividend on any series of common stock shall be filed by the secretary of the Corporation in the records of the actions of the board of directors not later than ten days after such date. (T) "Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting in an individual, fiduciary or other capacity. (U) "Publicly Traded" shall mean, with respect to any security: (i) registered under Section 12 of the Securities Exchange Act of 1934, as amended (or any successor provision of law); and (ii) listed for trading on the New York Stock Exchange or the American Stock Exchange (or any national securities exchange registered under Section 7 of the Securities Exchange Act of 1934, as amended (or any successor provision of law), that is the successor to either such exchange) or quoted in the Nasdaq National Market (or any successor market system). (V) "Redemption Date" shall mean the date fixed by the board of directors as the effective date for a redemption of shares of any series of common stock, as set forth in a notice to holders thereof required pursuant to Section 4(G)(iii), Section 4(G)(iv) or Section 4(G)(vi). 34 (W) "Related Business Transaction" shall mean any Disposition of all or substantially all of the businesses, assets, properties and liabilities attributed to the WorldCom Group or the MCI Group, as the case may be, in a transaction or series of related transactions that result in the Corporation, one or more of its Subsidiaries or the holders of common stock receiving in consideration of such businesses, assets, properties and liabilities primarily equity securities (including, without limitation, capital stock, debt securities convertible into or exchangeable for equity securities or interests in a general or limited partnership or limited liability company, without regard to the voting power or other management or governance rights associated therewith) of any entity which: (i) acquires such assets or properties or succeeds (by merger, formation of a joint venture or otherwise) to the business conducted with such assets or properties or controls such acquiror or successor; and (ii) the board of directors determines is primarily engaged or proposes to engage primarily in one or more businesses similar or complementary to the businesses conducted by such Group prior to such Disposition. (X) "Share dividend" shall have the meaning contained in the Georgia Business Corporation Code, as in effect on the Initial Issuance Date. (Y) "Subsidiary" shall mean, with respect to any Person, any corporation, limited liability company or partnership 50% or more of whose outstanding voting securities or membership or partnership interests, as the case may be, are, directly or indirectly, owned by such Person. (Z) "Substantially all of the businesses, assets, properties and liabilities" shall have the meaning specified in Section 4(A)(ii) or Section 4(B)(ii), as applicable. (AA) "Tax Event" shall mean receipt by the Corporation of an opinion of its tax counsel to the effect that, as a result of any amendment to, clarification of, or change or proposed change in, the laws (or any interpretation or application of the laws) of the United States or any political subdivision or taxing authority thereof or therein (including, but not limited to, the enactment of any legislation, the publication of any judicial or regulatory decision, determination or pronouncement or any announced proposed change in law by an applicable legislative committee or the chair thereof), regardless of whether such amendment, clarification, change or proposed change is issued to or in connection with a proceeding involving the Corporation, the WorldCom Group or the MCI Group and whether or not subject to appeal, there is more than an insubstantial risk that: (i) for tax purposes, any issuance of WorldCom Stock or MCI Stock would be treated as a sale or other taxable disposition by the Corporation or any of its subsidiaries of any of the assets, operations or relevant subsidiaries to which the WorldCom Stock or MCI Stock relates; (ii) the issuance or existence of WorldCom Stock or MCI Stock would subject the Corporation, its subsidiaries or affiliates, or any of their respective successors or shareholders to the imposition of tax or to other adverse tax consequences; or 35 (iii) for tax purposes, either WorldCom Stock or MCI Stock is not or, at any time in the future will not be, treated solely as common stock of the Corporation. For purposes of rendering such opinion, tax counsel shall assume that any legislative or administrative proposals will be adopted or enacted as proposed. (BB) "Trading Day" shall mean each weekday other than any day on which the relevant series of common stock is not traded on any national securities exchange or quoted on the Nasdaq National Market or otherwise in the over-the-counter market. (CC) "WorldCom Group" shall mean, as of any date: (i) the interest of the Corporation and any of its subsidiaries on such date in all of the businesses, assets, properties and liabilities of the Corporation and any of its subsidiaries (and any successor companies), other than any businesses, assets, properties and liabilities attributed in accordance with these Second Amended and Restated Articles of Incorporation to the MCI Group pursuant to Section 7(O)(i); (ii) the interest of the Corporation or any of its subsidiaries in any business, asset or property acquired and any liabilities assumed by the Corporation or any of its subsidiaries and attributed to the WorldCom Group, as determined by the board of directors as contemplated by Section 6(A); (iii) all businesses, assets, properties and liabilities transferred to the WorldCom Group from the MCI Group (other than in a transaction pursuant to clause (v) and (vi) of this Section 7(CC)) pursuant to transactions in the ordinary course of business of the WorldCom Group and the MCI Group or otherwise as the board of directors may have directed as permitted by these Second Amended and Restated Articles of Incorporation; (iv) a proportionate undivided interest in each and every business, asset, property and liability attributed to the MCI Group equal to the Inter-Group Interest in the MCI Group held by the WorldCom Group as of such date; (v) all businesses, assets, properties and liabilities transferred to the WorldCom Group from the MCI Group in connection with an increase in the Inter-Group Interest in the WorldCom Group held by the MCI Group; (vi) all businesses, assets, properties and liabilities transferred to the WorldCom Group from the MCI Group in connection with a decrease in the Inter-Group Interest in the MCI Group held by the WorldCom Group; (vii) any assets (including securities) or properties attributed to the WorldCom Group pursuant to Section 5(B) or Section 5(C); and (viii) all net income and net losses arising in respect of the foregoing and proceeds of the Disposition thereof; 36 provided that from and after any transfer of any businesses, assets, properties or liabilities from the WorldCom Group to the MCI Group as permitted by these Second Amended and Restated Articles of Incorporation, the WorldCom Group shall no longer include such businesses, assets, properties or liabilities so contributed or transferred (other than as reflected, to the extent applicable, in respect of such a transfer by the Inter-Group Interest in the MCI Group held by the WorldCom Group). (DD) "WorldCom Group Available Distribution Amount" shall mean, on any date, the product of: (i) the Outstanding Interest Fraction with respect to WorldCom Stock; and (ii) the lesser of: (x) any amount in excess of the minimum amount necessary for the WorldCom Group to pay debts attributed to the WorldCom Group as they become due in the usual course of business; and (y) the total assets attributed to the WorldCom Group, less the sum of its total liabilities plus (unless these Second Amended and Restated Articles of Incorporation provide otherwise) the amount that would be needed if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shares of stock attributed to the WorldCom Group superior to the WorldCom Stock. Notwithstanding the foregoing provisions of this Section 7(DD), and consistent with Section 6(B), at any time when there are not outstanding both: (i) one or more shares of WorldCom Stock or Convertible Securities convertible into or exchangeable or exercisable for WorldCom Stock; and (ii) one or more shares of MCI Stock or Convertible Series convertible into or exchangeable or exercisable for MCI Stock, the "Available Distribution Amount," on any calculation date during such time period, with respect to the WorldCom Stock or the MCI Stock (depending on which of such series of common stock or Convertible Securities convertible into or exchangeable or exercisable for such series of common stock is outstanding), shall mean the amount available for the payment of dividends on such common stock in accordance with law. Section 8. Severability of Provisions. If any term of any provision with respect to voting powers, preferences, designations, rights, qualifications, limitations or restrictions of the WorldCom Stock or the MCI Stock set forth in this Section A of Article 4 (as it may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms and provisions with respect to voting powers, preferences, designations, rights, qualifications, limitations or restrictions of the WorldCom Stock or the MCI Stock set forth in this Section A of Article 4 (as it may be amended from time to time) which can be given effect without the invalid, unlawful or unenforceable voting powers, 37 preferences, designations, rights, qualifications, limitations or restrictions of such series shall, nevertheless, remain in full force and effect, and no term of such series of common stock herein set forth shall be deemed dependent upon any other terms with respect to such voting powers, preferences, designations, rights, qualifications, limitations or restrictions of the WorldCom Stock or the MCI Stock unless so expressed herein. 38 EX-3.3 5 ex3-3.txt ARTICLES OF AMENDMENT TO THE SECOND AMENDED EXHIBIT 3.3 ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF WORLDCOM, INC. 1. The name of the Corporation is WorldCom, Inc. 2. Effective the date hereof, Article Eleven of the Second Amended and Restated Articles of Incorporation of the Corporation, as amended, is hereby amended by deleting the text thereof and substituting therefor the text of the amendments attached hereto as Exhibit A. 3. All other provisions of the Second Amended and Restated Articles of Incorporation, as previously amended, shall remain in full force and effect. 4. The provisions of Article Eleven of the Second Amended and Restated Articles of Incorporation, as amended, were duly approved by the shareholders of the Corporation in accordance with the provisions of Section 14-2-1003 of the Georgia Business Corporation Code on the 7th day of June, 2001. 5. The provisions of Article Eleven of the Second Amended and Restated Articles of Incorporation, as amended, were duly adopted and authorized by the Board of Directors of the Corporation on October 31, 2000. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed by its duly authorized officer, this 7th day of June, 2001. WORLDCOM, INC. By: /s/ Bernard J. Ebbers --------------------------- Name: Bernard J. Ebbers Title: President Exhibit A ELEVEN (a) In addition to the requirements of the provisions of any series of preferred stock which may be outstanding, and whether or not a vote of the shareholders is otherwise required, the affirmative vote of the holders of not less than seventy percent (70%) of the voting power of the Corporation's Voting Stock shall be required for the approval or authorization of any Business Transaction with a Related Person, or any Business Transaction in which a Related Person has an interest (other than only a proportionate interest as a shareholder of the corporation); provided, however, that the seventy percent (70%) voting requirement shall not be applicable if (i) the Business Transaction is Duly Approved by the Continuing Directors, or (ii) all of the following conditions are satisfied: (i) the aggregate amount of cash and the fair market value of the property, securities or other consideration to be received per share, (on the date of effectiveness of such Business Transaction) for a particular class or series of a class if there is more than one series in a class, by holders of capital stock of the Corporation (other than such Related Person) in connection with such Business Transaction is at least equal in value to such Related Person's Highest Stock Purchase Price for such class or series; (ii) the consideration to be received by holders of capital stock of the Corporation in connection with such Business Transaction is in (a) cash, or (b) if the majority of the shares of any particular class or series of stock of the Corporation as to which the Related Person is the Beneficial Owner shall have been acquired for a consideration in a form other than cash, in the same form of consideration used by the Related Person to acquire the largest number of shares of such class or series of stock; (iii) after such Related Person has become a Related Person and prior to the consummation of such Business Transaction, such Related Person shall not have become the Beneficial Owner of any additional shares of capital stock of the Corporation or securities convertible into capital stock of the Corporation, except (i) as a part of the transaction which resulted in such Related Person becoming a Related Person or (ii) as a result of a pro rata stock dividend or stock split; (iv) prior to the consummation of such Business Transaction, such Related Person shall not have, directly or indirectly, except as Duly Approved by the Continuing Directors (i) received the benefit (other than only a proportionate benefit as a shareholder of the corporation) of any loans, advances, guarantees, pledges or other financial assistance or tax credits or tax advantages provided by the Corporation or any of its subsidiaries, (ii) caused any material change in the Corporation's business or equity capital structure, including, without limitation, the issuance of shares of capital stock of the Corporation, or other securities convertible into or exercisable for such shares, or (iii) caused the Corporation to fail to declare and pay at the regular date therefor quarterly cash dividends on the outstanding capital stock of the Corporation entitled to receive dividends, on a per share basis at least equal to the cash dividends being paid thereon by the corporation immediately prior to the date on which the Related Person became a Related Person; and (v) a proxy or information statement describing the proposed Business Transaction and complying with the requirements of the Securities Exchange Act of 1934, as amended (the "Act"), and the rules and regulations thereunder (or any subsequent provisions replacing the Act or such rules or regulations) shall be mailed to shareholders of the Corporation at least thirty (30) days prior to the consummation of such Business Transaction (whether or not such proxy or information statement is required to be mailed pursuant to the Act and such rules and regulations or subsequent provisions). (b) For the purpose of this Article ELEVEN: (i) The term "Affiliate", used to indicate a relationship to a specified person, shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified person. (ii) The term "Associate", used to indicate a relationship with a specified person, shall mean (A) any corporation, partnership or other organization of which such specified person is an officer or partner, (B) any trust or other estate in which such specified person has a substantial beneficial interest or as to which such specified person serves as trustee or in a similar fiduciary capacity, (C) any relative or spouse of such specified person who has the same home as such specified person or who is a director or officer of the corporation or any of its subsidiaries, and (D) any person who is a director, officer or partner of such specified person or of any corporation (other than the corporation or any wholly-owned subsidiary of the corporation), partnership or other entity which is an Affiliate of such specified person. (iii) The term "Beneficial Owner" shall be defined by reference to Rule 13d-3 under the Act as in effect on September 15, 1993; provided, however, that any individual, corporation, partnership, group, association or other person or entity which has the right to acquire any capital stock of the corporation having voting power at any time in the future, whether such right is contingent or absolute, pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed the Beneficial Owner of such capital stock. (iv) The term "Business Transaction" shall mean: (A) any merger, share exchange or consolidation involving the Corporation or a subsidiary of the Corporation; (B) any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions), including, without limitation, a mortgage, pledge or any other security device of all or any Substantial Part of the 3 assets either of the Corporation or of a subsidiary of the Corporation; (C) any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions) of all or any Substantial Part of the assets of any entity to the Corporation or a subsidiary of the Corporation; (D) the issuance, sale, exchange, transfer or other disposition (in one transaction or a series of related transactions) by the Corporation or a subsidiary of the Corporation of any securities of the Corporation or any subsidiary of the Corporation in exchange for cash, securities or other property, or a combination thereof, having an aggregate fair market value of $15 million or more; (E) any merger, share exchange or consolidation of the Corporation with any of its subsidiaries or any similar transaction in which the Corporation is not the survivor and the charter or certificate or articles of incorporation of the consolidated or surviving Corporation do not contain provisions substantially similar to those in this Article ELEVEN; (F) any recapitalization or reorganization of the Corporation or any reclassification of the securities of the Corporation (including, without limitation, any reverse stock split) or other transaction that would have the effect of increasing the voting power of a Related Person or reducing the number of shares of each class of voting securities outstanding; (G) any liquidation, spin-off, split-off, split-up or dissolution of the Corporation; and (H) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Transaction or having a similar purpose or effect. (v) The term "Continuing Director" shall mean a director who either was a member of the Board of Directors of the Corporation on September 15, 1993, or who became a director of the Corporation subsequent to such date and whose election or nomination for election by the Corporation's shareholders was Duly Approved by the Continuing Directors then on the Board, either by a specific vote or by approval of the proxy statement issued by the Corporation on behalf of the Board of Directors in which such person is named as nominee for director; provided, however, that in no event shall a director be considered a "Continuing Director" if such director is a Related Person and the Business Transaction to be voted upon is with such Related Person or is one in which such Related Person has an interest (other than only a proportionate interest as a shareholder of the Corporation). (vi) The term "Duly Approved by the Continuing Directors" shall mean an action approved by the vote of at least a majority of the Continuing Directors then on the Board; provided, however, that if the votes of such Continuing Directors in favor of such action would be insufficient to constitute an act of the Board of Directors (if a vote by the entire Board of Directors were to have been taken), then such term shall mean an action approved by the unanimous vote of the Continuing Directors so long as there are at least three (3) Continuing Directors on the Board of Directors at the time of such unanimous vote. (vii) The term "Fair Market Value", in the case of stock, means the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock 4 Exchange Listed Stocks, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith. (viii) The term "Highest Stock Purchase Price" with respect to shares of a particular class, or series of a class if there are more than one series in a class, shall mean the greatest of the following: (A) the highest amount of consideration paid by a Related Person for a share of such class or series of capital stock of the Corporation (including any brokerage commissions, transfer taxes and soliciting dealers' fees) in the transaction which resulted in such Related Person becoming a Related Person or within two years prior to the first public announcement of the Business Transaction (the "Announcement Date"), whichever is higher; provided, however, that the Highest Stock Purchase Price calculated under this subsection (A) shall be appropriately adjusted to reflect the occurrence of any reclassification, recapitalization, stock-split, reverse stock-split or other similar corporate readjustment in the number or kind of outstanding shares of capital stock of the Corporation between the last date upon which such Related Person paid the Highest Stock Purchase Price up to the effective date of the merger, share exchange or consolidation or the date of distribution to shareholders of the Corporation of the proceeds from the sale of substantially all of the assets of the Corporation referred to in subparagraph (i) of Section (a)(ii) of this Article Eleven; (B) the Fair Market Value per share of ^such classes^ or series of stock of the Corporation on the Announcement Date; (C) the Fair Market Value per share of ^such classes^ or series of stock of the Corporation on the date that the Related Person becomes a Related Person; (D) if applicable, the Fair Market Value per share determined pursuant to subsection (b)(viii)(B) or (C) of this Article ELEVEN, whichever is higher, multiplied by the ratio of (i) the highest price per share (including any brokerage commissions, transfer taxes or soliciting dealers' fees and adjusted for any subsequent stock dividends, splits, combinations, recapitalizations, reclassifications or other such reorganizations) paid to acquire any shares of such ^ classes^ or series Beneficially Owned by the Related Person within the two years prior to the Announcement Date, to (ii) the Fair Market Value per share (adjusted for any subsequent stock dividends, 5 splits, combinations, recapitalizations, reclassifications or other such reorganizations) of shares of such ^classes^ or series on the first day in the two-year period ending on the Announcement Date on which such shares Beneficially Owned by the Related Person were acquired; or (E) the amount per share of any preferential payment to which holders of shares of such ^classes^ or series are entitled in the event of a liquidation, dissolution or winding up of the Corporation. (ix) ^The phrase "property, securities or other consideration to be received", for the purpose of subparagraph (i) of Section (a)(ii) of this Article ELEVEN and in the event of a merger in which the corporation is the surviving corporation, shall include, without limitation, common stock of the Corporation retained by its shareholders (other than such Related Person). (x) The term "Related Person" shall mean and include (A) any individual, corporation, partnership, group, association or other person or entity which, together with its Affiliates and Associates, is the Beneficial Owner of not less than ten percent (10%) of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote or was the Beneficial Owner of not less than ten percent (10%) of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote (x) at the time the definitive agreement providing for the Business Transaction (including any amendment thereof) was entered into, (y) at the time resolution approving the Business Transaction was adopted by the Board of Directors of the Corporation, or (z) as of the record date for the determination of shareholders entitled to notice of and to vote on or consent to the Business Transaction, and (B) any Affiliate or Associate of any such individual, corporation, partnership, group, association or other person or entity; provided, however, and notwithstanding any thing in the foregoing to the contrary, that the term "Related Person" shall not include the Corporation, a more than 90% owned subsidiary of the Corporation, any employee stock ownership or other employee benefit plan of either the Corporation or any more than 90% owned subsidiary of the Corporation, or any trustee of or fiduciary with respect to any such plan when acting in such capacity. (xi) The term "Substantial Part" shall mean more than twenty percent (20%) of the total assets of the entity in question, as reflected on the most recent consolidated balance sheet of such entity existing at the time the shareholders of the Corporation would be required to approve or authorize the Business Transaction involving the assets constituting any such Substantial Part. (xii) The term "Voting Stock" shall mean all outstanding shares of capital stock of the Corporation whose holders are present at a meeting of shareholders, in person or by proxy, and which entitle their holders to vote generally in the election of directors, and considered for the purpose of this Article ELEVEN as one class. 6 (c) For the purpose of this Article ELEVEN, so long as Continuing Directors constitute at least two-thirds (2/3) of the entire Board of Directors of the Corporation, the Board of Directors shall have the power to make a good faith determination, on the basis of information known to them, of (i) the number of shares of Voting Stock of which any person is the Beneficial Owner, (ii) whether a person is a Related Person or is an Affiliate or Associate of another, (iii) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of Beneficial Owner herein, (iv) whether the assets subject to any Business Transaction constitute a Substantial Part, (v) whether any Business Transaction is with a Related Person or is one in which a Related Person has an interest (other than only a proportionate interest as a shareholder of the corporation), (vi) whether a Related Person has, directly or indirectly, received the benefits or caused any of the changes referred to in subparagraph (iv) of clause (ii) of Section (a) of this Article ELEVEN, (vii) the fair market value of any consideration to be received in a Business Transaction and (viii) such other matters with respect to which a determination is required under this Article ELEVEN; and such determination by the Board of Directors shall be conclusive and binding for all purposes of this Article ELEVEN. (d) Nothing contained in this Article ELEVEN shall be construed to relieve any Related Person of any fiduciary obligation imposed by law. (e) The fact that any Business Transaction complies with the provisions of Section (a) of this Article ELEVEN shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board of Directors, or any member thereof, to approve such Business Transaction or recommend its adoption or approval to the shareholders of the corporation. (f) Notwithstanding any other provisions of these Second Amended and Restated Articles of Incorporation or the Bylaws of the corporation (and notwithstanding that a lesser percentage may be permitted by law), the provisions of this Article ELEVEN may not be repealed or amended, directly or indirectly in any respect, unless such action is approved by the affirmative vote of the holders of not less than seventy percent (70%) of the voting power of the Corporation's Voting Stock. 7 EX-3.4 6 ex3-4.txt SECOND AMENDED AND RESTATED ARTICLES EXHIBIT 3.4 ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MCI WORLDCOM, INC. ----------------------------------------------- 1. The name of the corporation is MCI WORLDCOM, Inc. (the "Corporation"). 2. Effective the date hereof, Article One of the Corporation's Second Amended and Restated Articles of Incorporation, as amended, is amended, in its entirety, to read as follows: ONE The name of this corporation is WorldCom, Inc. This corporation is referred to hereinafter as the "Corporation." 3. All other provisions of the Second Amended and Restated Articles of Incorporation, as previously amended, shall remain in full force and effect. 4. The foregoing amendment was approved and adopted on April 28, 2000 by the Board of Directors of the Corporation in accordance with the provisions of Section 14-2-1002 of the Georgia Business Corporation Code. Shareholder action was not required. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed by its duly authorized officer as of May 1, 2000. MCI WORLDCOM, INC. By: /s/ Bernard J. Ebbers ------------------------------------- Bernard J. Ebbers, President ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MCI WORLDCOM, INC. -------------------------------------------------------- 1. The name of the corporation is MCI WORLDCOM, Inc. (the "Corporation"). 2. Effective the date hereof, the Corporation's Second Amended and Restated Articles of Incorporation, as amended, is further amended to add a new Article Seven A to read in its entirety as follows: SEVEN A A series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit D. 3. All other provisions of the Second Amended and Restated Articles of Incorporation, as previously amended, shall remain in full force and effect. 4. The foregoing amendment was approved and duly adopted by the Board of Directors of the Corporation on September 9, 1999, in accordance with the provisions of Sections 14-2-602 and 14-2-1002 of the Georgia Business Corporation Code. Shareholder action was not required. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed by its duly authorized officer this 1st day of October, 1999. MCI WORLDCOM, INC. By: /s/ Bernard J. Ebbers --------------------------------- Bernard J. Ebbers, President ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MCI WORLDCOM, INC. -------------------------------------------------------- 1. The name of the corporation is MCI WORLDCOM, Inc. (the "Corporation"). 2. Effective the date hereof, Section A of Article Four of the Corporation's Second Amended and Restated Articles of Incorporation is amended, in its entirety, to read as follows: A. Common Stock. The authorized voting common stock of the Corporation is five billion (5,000,000,000) shares, par value $.01 per share. 3. Effective the date hereof, Section 1 of Exhibit C of the Second Amended and Restated Articles of Incorporation is amended, in its entirety, to read as follows: Section 1. Designation and Amount. There shall be a series of the Preferred Stock which shall be designated as the "Series 3 Junior Participating Preferred Stock," par value $.01 per share, and the number of shares constituting such series shall be 5,000,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series 3 Junior Participating Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Company. 4. All other provisions of the Second Amended and Restated Articles of Incorporation, as previously amended, shall remain in full force and effect. 5. The amendment in Article 2, above, was duly approved by the shareholders of the Corporation in accordance with the provisions of Section 14-2-1003 of the Georgia Business Corporation Code and adopted on May 20, 1999. 6. The amendment in Article 3, above, was approved and adopted by the Board of Directors of the Corporation in accordance with the provisions of Section 14-2-1002 of the Georgia Business Corporation Code. Shareholder action was not required. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed by its duly authorized officer this 20th day of May, 1999. MCI WORLDCOM, INC. By: /s/ Bernard J. Ebbers -------------------------------- Bernard J. Ebbers, President ARTICLES OF AMENDMENT TO THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF WORLDCOM, INC. 1. The name of the corporation is WorldCom, Inc. (the "Corporation"). 2. Effective the date hereof, Article One of the Corporation's Second Amended and Restated Articles of Incorporation is amended, in its entirety, to read as follows: ONE The name of this corporation is MCI WORLDCOM, Inc. This corporation is referred to hereinafter as the "Corporation." 3. All other provisions of the Second Amended and Restated Articles of Incorporation shall remain in full force and effect. 4. The foregoing amendment was approved and adopted by the Board of Directors of the Corporation in accordance with the provisions of Section 14-2-1002 of the Georgia Business Corporation Code. Shareholder action was not required. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed by its duly authorized officer this 14th day of September, 1998. WORLDCOM, INC. /s/ Bernard J. Ebbers ----------------------------------- Bernard J. Ebbers, President SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION OF WORLDCOM, INC. ONE The name of this corporation is WORLDCOM, INC. This corporation is referred to hereinafter as the "Corporation." TWO The Corporation shall have perpetual duration. THREE The Corporation has been organized as a corporation for profit pursuant to the Georgia Business Corporation Code, for the purpose of engaging in any lawful activities whatsoever. FOUR A. Common Stock. The authorized voting common stock of the Corporation is two billion five hundred million (2,500,000,000) shares, par value $.01 per share. B. Preferred Stock. The authorized preferred stock of the Corporation is fifty million (50,000,000) shares, par value $.01 per share. The Corporation, acting by its board of directors, without action by the shareholders, may, from time to time by resolution and upon the filing of such certificate or articles of amendment as may be required by the Georgia Business Corporation Code as then in effect, authorize the issuance of shares of preferred stock in one or more series, determine the preferences, limitations and relative rights of the class or of any series within the class, and designate the number of shares within that series. FIVE A series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit A. SIX A series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit B. SEVEN A series of the class of authorized preferred stock, par value $.01 per share, of the Corporation is hereby created having the designation and number of shares thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof, as are set forth on Exhibit C. EIGHT Subject to the provisions of Article THIRTEEN, each share of common stock of the Corporation shall have unlimited voting rights and shall be entitled to receive the net assets of the Corporation upon dissolution, except as express1y provided herein. The preferred stock of the Corporation shall have such voting rights as are set forth in Exhibits A, B or C hereto or in the certificate or articles of amendment filed to authorize the issuance of shares of preferred stock in one of more series and as are provided by law. NINE Shareholders shall not have the preemptive right to acquire unissued shares of the Corporation. TEN No director of the Corporation shall be liable to the Corporation or to its shareholders for monetary damages for breach of duty of care or other duty as a director, except for liability (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation; (ii) for acts or omissions which involve intentional misconduct or a knowing violation of the law; (iii) for the types of liability set forth in section 14-2-832 of the Revised Georgia Business Corporation Code; or (iv) for any transaction from which the director received an improper personal benefit. If the Georgia Business Corporation Code is amended to authorize corporate action further limiting the personal liability of directors, then the liability of a director of the Corporation shall be limited to the fullest extent permitted by the Georgia Business Corporation Code, as so amended. Any repeal or modification of the foregoing paragraph by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing immediately prior to the time of such repeal or modification. ELEVEN (a) In addition to the requirements of the provisions of any series of preferred stock which may be outstanding, and whether or not a vote of the shareholders is otherwise required, the affirmative vote of the holders of not less than seventy percent (70%) of the Voting Stock shall be required for the approval or authorization of any Business Transaction with a Related Person, or any Business Transaction in which a Related Person has an interest (other than only a proportionate interest as a shareholder of the corporation); provided, however, that the seventy percent (70%) voting requirement shall not be applicable if (i) the Business Transaction is Duly Approved by the Continuing Directors, or (ii) all of the following conditions are satisfied: -2- (i) the aggregate amount of cash and the fair market value of the property, securities or other consideration to be received per share (on the date of effectiveness of such Business Transaction) by holders of capital stock of the corporation (other than such Related Person) in connection with such Business Transaction is at least equal in value to such Related Person's Highest Stock Price; (ii) the consideration to be received by holders of capital stock of the Corporation in connection with such Business Transaction is in (a) cash, or (b) if the majority of the shares of any particular class or series of stock of the Corporation as to which the Related Person is the Beneficial Owner shall have been acquired for a consideration in a form other than cash, in the same form of Consideration used by the Related Person to acquire the largest number of shares of such class or series of stock; (iii) after such Related Person has become a Related Person and prior to the consummation of such Business Transaction, such Related Person shall not have become the Beneficial Owner of any additional shares of capital stock of the Corporation or securities convertible into capital stock of the Corporation, except (i) as a part of the transaction which resulted in such Related Person becoming a Related Person or (ii) as a result of a pro rata stock dividend or stock split; (iv) prior to the consummation of such Business Transaction, such Related Person shall not have, directly or indirectly, except as Duly Approved by the Continuing Directors (i) received the benefit (other than only a proportionate benefit as a shareholder of the corporation) of any loans, advances, guarantees, pledges or other financial assistance or tax credits or tax advantages provided by the Corporation or any of its subsidiaries, (ii) caused any material change in the Corporation's business or equity capital structure, including, without limitation, the issuance of shares of capital stock of the Corporation, or other securities convertible into or exercisable for such shares, or (iii) caused the Corporation to fail to declare and pay at the regular date therefor quarterly cash dividends on the outstanding capital stock of the Corporation entitled to receive dividends, on a per share basis at least equal to the cash dividends being paid thereon by the Corporation immediately prior to the date on which the Related Person became a Related Person; and (v) a proxy or information statement describing the proposed Business Transaction and complying with the requirements of the Securities Exchange Act of 1934, as amended (the "Act"), and the rules and regulations thereunder (or any subsequent provisions replacing the Act or such rules or regulations) shall be mailed to shareholders of the Corporation at least thirty (30) days prior to the consummation of such Business Transaction (whether or not such proxy or information statement is required to be mailed pursuant to the Act and such rules and regulations or subsequent provisions). -3- (b) For the purpose of this Article ELEVEN: (i) The term "Affiliate", used to indicate a relationship to a specified person, shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified person. (ii) The term "Associate", used to indicate a relationship with a specified person, shall mean (A) any corporation, partnership or other organization of which such specified person is an officer or partner, (B) any trust or other estate in which such specified person has a substantial beneficial interest or as to which such specified person serves as trustee or in a similar fiduciary capacity, (C) any relative or spouse of such specified person who has the same home as such specified person or who is a director or officer of the corporation or any of its subsidiaries, and (D) any person who is a director, officer or partner of such specified person or of any corporation (other than the corporation or any wholly-owned subsidiary of the corporation), partnership or other entity which is an Affiliate of such specified person. (iii) The term "Beneficial Owner" shall be defined by reference to Rule 13d-3 under the Act as in effect on September 15, 1993; provided, however, that any individual, corporation, partnership, group, association or other person or entity which has the right to acquire any capital stock of the corporation having voting power at any time in the future, whether such right is contingent or absolute, pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed the Beneficial Owner of such capital stock. (iv) The term "Business Transaction" shall mean: (A) any merger, share exchange or consolidation involving the Corporation or a subsidiary of the Corporation; (B) any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions), including, without limitation, a mortgage, pledge or any other security device of all or any Substantial Part of the assets either of the Corporation or of a subsidiary of the Corporation; (C) any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions) of all or any Substantial Part of the assets of any entity to the Corporation or a subsidiary of the Corporation; (D) the issuance, sale, exchange, transfer or other disposition (in one transaction or a series of related transactions) by the Corporation or a subsidiary of the Corporation of any securities of the Corporation or any subsidiary of the Corporation in exchange for cash, securities or other property, or a combination thereof, having an aggregate fair market value of $15 million or more; (E) any merger, share exchange or consolidation of the Corporation with any of its subsidiaries or any similar transaction in which the Corporation is not the survivor and the charter or certificate or articles of incorporation of the consolidated or surviving Corporation do not contain provisions substantially similar to those in this Article ELEVEN; (F) any recapitalization or reorganization of the Corporation or any reclassification of the securities of the Corporation (including, without limitation, any reverse stock split) or other transaction that would have the effect of increasing the voting power of a Related Person or reducing the number of shares of each class of voting securities outstanding; (G) any liquidation, spin-off, split-off, split-up or dissolution of the Corporation; and (H) any agreement, contract or other arrangement -4- providing for any of the transactions described in this definition of Business Transaction or having a similar purpose or effect. (v) The term "Continuing Director" shall mean a director who either was a member of the Board of Directors of the Corporation on September 15, 1993, or who became a director of the Corporation subsequent to such date and whose election or nomination for election by the Corporation's shareholders was Duly Approved by the Continuing Directors then on the Board, either by a specific vote or by approval of the proxy statement issued by the Corporation on behalf of the Board of Directors in which such person is named as nominee for director; provided, however, that in no event shall a director be considered a "Continuing Director" if such director is a Related Person and the Business Transaction to be voted upon is with such Related Person or is one in which such Related Person has an interest (other than only a proportionate interest as a shareholder of the Corporation). (vi) The term "Duly Approved by the Continuing Directors" shall mean an action approved by the vote of at least a majority of the Continuing Directors then on the Board; provided, however, that if the votes of such Continuing Directors in favor of such action would be insufficient to constitute an act of the Board of Directors (if a vote by the entire Board of Directors were to have been taken), then such term shall mean an action approved by the unanimous vote of the Continuing Directors so long as there are at least three (3) Continuing Directors on the Board of Directors at the time of such unanimous vote. (vii) The term "Fair Market Value", in the case of stock, means the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not on such Exchange, on the principal United States securities exchange registered under the Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith. (viii) The term "Highest Stock Purchase Price" shall mean the greatest of the following: (A) the highest amount of consideration paid by a Related Person for a share of capital stock of the Corporation (including any brokerage commissions, transfer taxes and soliciting dealers' fees) in the transaction which resulted in such Related Person becoming a Related Person or within two years prior to the first public announcement of the Business Transaction (the "Announcement Date"), whichever is higher; provided, however, that the Highest Stock Purchase Price calculated under this subsection (A) shall be appropriately adjusted to reflect the occurrence of any reclassification, recapitalization, stock-split, reverse stock-split or other similar corporate readjustment in the number of outstanding shares of capital stock of the -5- Corporation between the last date upon which such Related Person paid the Highest Stock Purchase Price up to the effective date of the merger, share exchange or consolidation or the date of distribution to shareholders of the Corporation of the proceeds from the sale of substantially all of the assets of the Corporation referred to in subparagraph (i) of Section (a)(ii) of this Article ELEVEN; (B) the Fair Market Value per share of the respective classes and series of stock of the Corporation on the Announcement Date; (C) the Fair Market Value per share of the respective classes and series of stock of the Corporation on the date that the Related Person becomes a Related Person; (D) if applicable, the Fair Market Value per share determined pursuant to subsection (b)(viii)(B) or (C) of this Article ELEVEN, whichever is higher, multiplied by the ratio of (i) the highest price per share (including any brokerage commissions, transfer taxes or soliciting dealers' fees and adjusted for any subsequent stock dividends, splits, combinations, recapitalizations, reclassifications or other such reorganizations) paid to acquire any shares of such respective classes and series Beneficially owned by the Related Person within the two years prior to the Announcement Date, to (ii) the Fair market value per share (adjusted for any subsequent stock dividends, splits, combinations, recapitalizations, reclassifications or other such reorganizations) of shares of such respective classes and series on the first day in the two-year period ending on the Announcement Date on which such shares Beneficially owned by the Related Person were acquired; or (E) the amount per share of any preferential payment to which holders of shares of such respective classes and series are entitled in the event of a liquidation, dissolution or winding up of the Corporation. (ix) The term "Preferred Stock" shall mean each class or series of capital stock which may from time to time be authorized in or by these Second Amended and Restated Articles of Incorporation (as amended from time to time) which is not designated as "Common Stock." (x) The phrase "property, securities or other consideration to be received", for the purpose of subparagraph (i) of Section (a)(ii) of this Article ELEVEN and in the event of a merger in which the corporation is the surviving corporation, shall include, without limitation, common stock of the Corporation retained by its shareholders (other than such Related Person). (xi) The term "Related Person" shall mean and include (A) any individual, corporation, partnership, group, association or other person or entity which, together with its Affiliates and Associates, is the Beneficial Owner of not less than ten percent (10%) of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote or was the Beneficial Owner of not less than ten percent (10%) of the voting power of the issued and outstanding capital stock of the Corporation entitled to vote (x) at the time the definitive agreement providing for the Business Transaction (including any amendment thereof) was entered into, (Y) at the time a resolution approving the Business -6- Transaction was adopted by the Board of Directors of the Corporation, or (z) as of the record date for the determination of shareholders entitled to notice of and to vote on or consent to the Business Transaction, and (B) any Affiliate or Associate of any such individual, Corporation, partnership, group, association or other person or entity; provided, however, and notwithstanding anything in the foregoing to the contrary, that the term "Related Person" shall not include the Corporation, a more than 90% owned subsidiary of the Corporation, any employee stock ownership or other employee benefit plan of either the Corporation or any more than 90% owned subsidiary of the Corporation, or any trustee of or fiduciary with respect to any such plan when acting in such capacity. (xii) The term "Substantial Part" shall mean more than twenty percent (20%) of the total assets of the entity in question, as reflected on the most recent consolidated balance sheet of such entity existing at the time the shareholders of the Corporation would be required to approve or authorize the Business Transaction involving the assets constituting any such Substantial Part. (xiii) The term "Voting Stock" shall mean all outstanding shares of capital stock of the Corporation whose holders are present at a meeting of shareholders, in person or by proxy, and which entitle their holders to vote generally in the election of directors, and considered for the purpose of this Article ELEVEN as one class. (c) For the purpose of this Article ELEVEN, so long as Continuing Directors constitute at least two-thirds (2/3) of the entire Board of Directors of the Corporation, the Board of Directors shall have the power to make a good faith determination, on the basis of information known to them, of (i) the number of shares of Voting Stock of which any person is the Beneficial Owner, (ii) whether a person is a Related Person or is an Affiliate or Associate of another, (iii) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of Beneficial Owner herein, (iv) whether the assets subject to any Business Transaction constitute a Substantial Part, (v) whether any Business Transaction is with a Related Person or is one in which a Related Person has an interest (other than only a proportionate interest as a shareholder of the Corporation), (vi) whether a Related Person has, directly or indirectly, received the benefits or caused any of the changes referred to in subparagraph (iv) of clause (ii) of Section (a) of this Article ELEVEN, (vii) the fair market value of any consideration to be received in a Business Transaction and (viii) such other matters with respect to which a determination is required under this Article ELEVEN; and such determination by the Board of Directors shall be conclusive and binding for all purposes of this Article ELEVEN. (d) Nothing contained in this Article ELEVEN shall be construed to relieve any Related Person of any fiduciary obligation imposed by law. (e) The fact that any Business Transaction complies with the provisions of Section (a) of this Article ELEVEN shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board of Directors, or any member thereof, to approve such Business Transaction or recommend its adoption or approval to the shareholders of the corporation. -7- (f) Notwithstanding any other provisions of these Second Amended and Restated Articles of Incorporation or the Bylaws of the corporation (and notwithstanding that a lesser percentage may be permitted by law), the provisions of this Article ELEVEN may not be repealed or amended, directly or indirectly in any respect, unless such action is approved by the affirmative vote of the holders of not less than seventy percent (70%) of the Voting Stock. TWELVE The Corporation shall indemnify a director against reasonable expenses and liability incurred by him, and shall advance expenses upon receipt from the director of the written affirmation and repayment authorization required by section 14-2-853 of the Georgia Business Corporation code, provided, however, that the Corporation shall not indemnify a director for any liability incurred by a director if he failed to act in a manner he believed in good faith to be in or not opposed to the best interests of the Corporation, or to have improperly received a personal benefit or, in the case of any criminal proceeding, if he had reasonable cause to believe his conduct was unlawful, or in the case of a proceeding by or in the right of the Corporation, in which he was adjudged liable to the Corporation, unless a court shall determine that the director is fairly and reasonably entitled to indemnification in view of all the circumstances, in which case the director shall be indemnified for reasonable expenses incurred. THIRTEEN (a) For purposes of this Article THIRTEEN, the following terms shall have the respective meanings specified below: (i) "Act" shall have the meaning set forth in paragraph (a)(ii)(v) of Article ELEVEN of these Second Amended and Restated Articles of Incorporation. (ii) "Beneficial owner" shall have the meaning set forth in paragraph (b)(iii) of Article ELEVEN of these Second Amended and. Restated Articles of Incorporation. (iii) "Closing Price" of a share of stock on any day means the highest closing sales price or bid quotation on the National Association of Securities Dealers, Inc. Automated Quotation System (including the National Market System) or any comparable system then in use, or if the class or series in question is quoted on a United States securities exchange registered under the Act, the reported closing sales price or, in case no such sale takes place, the average of the reported closing bid and asked price on such exchange, or, if no such prices or quotations are available, the fair market value on the day in question as determined by the Board of Directors in good faith. (iv) "Communications Act" shall mean the Communications Act of 1934, 47 U.S.C. 151 et seq., as amended. (v) "Communications Laws" shall mean the Communications Act and the regulations promulgated by the Federal Communications Commission pursuant thereto, including any amendments thereof or successor or replacement provisions thereto. -8- (vi) "Fair Market Value" of a share of stock shall mean the average Closing Price for such share for each of the forty-five (45) most recent days during which shares of stock of such class or series shall have been traded preceding the day on which notice of redemption shall have been given pursuant to paragraph (iv) of Section (e) of this Article THIRTEEN; provided, however, that if shares of stock of such class or series are not traded on any securities exchange or in the over-the-counter market, "Fair Market Value" shall be determined by the Board of Directors in good faith; and provided, further, however, that "Fair Market Value" as to any stockholder who purchases any stock subject to redemption within one hundred twenty (120) days prior to a Redemption Date shall not (unless otherwise determined by the Board of Directors) exceed the purchase price paid for such shares. (vii) "Foreign Citizen" shall mean any of the following: (A) any alien; (B) any foreign government; (C) any representative of an alien or a foreign government; or (D) any corporation organized under the laws of any country other than the United States; and (E) any other Person falling within a class of Persons identified from time to time in the Communications Laws, including without limitation Section 310 of the Communications Act, as being within a class of Persons whose ownership of stock of a corporation holding station licenses referenced in Title III of the Communications Act is limited to a maximum percentage. (viii) "Permitted Percentage" shall mean twenty percent (20%), or such other percentage as may from time to time be specified by the Communications Laws as the maximum percentage of capital stock of a corporation holding licenses referenced in Section 310 of the Communications Act that may be owned by Foreign Citizens. (ix) "Person" shall mean an individual, partnership, corporation, trust or other entity. (x) "Redemption Date" shall mean the date fixed by the Board of Directors for the redemption of any shares of stock of the Corporation pursuant to Section (e) of this Article THIRTEEN. (xi) "Redemption Securities" shall mean any debt or equity securities of the Corporation, any Subsidiary or any other corporation, or any combination thereof, having such terms and conditions as shall be approved by the Board of Directors and which, together with any cash to be paid as part of the redemption price, in the opinion of any nationally recognized investment banking firm selected by the Board of Directors (which may be a firm which provides other investment banking, brokerage or other services to the Corporation), has a value, at the time notice of redemption is given pursuant to paragraph (d) of Section 5 of this Article THIRTEEN, at least equal to the Fair Market -9- Value of the shares to be redeemed pursuant to this Article THIRTEEN (assuming, in the case of Redemption Securities to be publicly traded, such Redemption Securities were fully distributed and subject only to normal trading activity). (b) It is the policy of the Corporation that Foreign Citizens should own of record or Beneficially Own, directly or indirectly, individually or in the aggregate, no more than the Permitted Percentage of its from time to time outstanding shares of capital stock. If at any time Foreign Citizens, directly or indirectly, individually or in the aggregate, become the record owners or the Beneficial owners of more than the Permitted Percentage of the capital stock of the Corporation, then the Corporation shall have the power to take the actions prescribed in this Section (b) through Section (f) of this Article THIRTEEN. The provisions of this Article THIRTEEN are intended to assure that the Corporation remains in continuous compliance with the citizenship requirements of the Communications Laws. Any amendments to the Communications Laws relating to the citizenship of station license holders or their shareholders are deemed to be incorporated herein by reference. To the extent necessary to enable the Corporation to submit any proof of direct or indirect citizenship required by law or by contract with the United States government (or any agency thereof), the corporation may require the record holders and the Beneficial owners of capital stock to confirm their direct or indirect citizenship status from time to time, and dividends payable with respect to stock held by such record holder or owner by such Beneficial owner may, in the discretion of the Board of Directors, be withheld until confirmation of such citizenship status is received. The Board of Directors is authorized to take such actions or make such interpretations as it may deem necessary or advisable in order to implement the policy set forth in this Section (b) including, without limitation, causing any transfer, or attempted transfer, of any shares of stock of the Corporation, the effect of which would be to cause one or more Foreign Citizens to own of record or Beneficially Own more than the Permitted Percentage of the Corporation's capital stock, to be ineffective as against the Corporation, and not registering (or permitting its transfer agent to register) such transfer or purported transfer on the stock transfer records of the Corporation. In addition, neither the Corporation (even if the transfer agent shall have recognized such transfer) nor its transfer agent shall be required to recognize the transferee or purported transferee thereof as a shareholder of the Corporation for any purpose whatsoever except to the extent necessary to effect any remedy available to the Corporation under this Article THIRTEEN. A citizenship certificate may be required from all transferees (and from any recipient upon original issuance) of capital stock of the Corporation and, if such transferee (or recipient) is acting as a fiduciary or nominee for a record owner or a Beneficial Owner, such Beneficial Owner or record owner, and registration of transfer (or original issuance) may be denied upon refusal to furnish such certificate. (a) If on any date (including any record date) the number of shares of capital stock that is owned of record or Beneficially Owned, directly or indirectly, by Foreign Citizens is in excess of the Permitted Percentage of all outstanding capital stock of the Corporation (such number of shares herein referred to as the "Excess Shares"), the Corporation shall identify a number of shares owned of record or Beneficially Owned, directly or indirectly, by Foreign Citizens equal to the number of Excess Shares. The determination of the Corporation as to those shares that constitute the Excess Shares shall be conclusive. Shares deemed to constitute such Excess Shares (so long as such excess exists) shall not be accorded any voting rights and shall not be deemed to be outstanding for purposes of determining the vote required on any matter -10- properly brought before the shareholders of the Corporation for a vote thereon. The Corporation shall (so long as such excess exists) withhold the payment of dividends and the sharing in any other distribution (upon liquidation or otherwise) in respect of the Excess Shares. At such time as the Permitted Percentage is no longer exceeded, full voting rights shall be restored to any shares previously deemed to be Excess Shares and any dividends or distribution with respect thereto that have been withheld, without interest thereon, shall be due and paid solely to the record holders of such shares at the time the Permitted Percentage is no longer exceeded. (b) Subject to the provisions of any resolution of the Board of Directors creating any series of preferred stock or any other class of stock which has a preference over common stock with regard to dividends or upon liquidation, and subject to the procedures in the series of preferred stock of the Corporation referenced in Articles FIVE, SIX and SEVEN hereof, the Excess Shares shall be subject to redemption at any time by the Corporation by action of the Board of Directors. The terms and conditions of such redemption shall be as follows: (i) the redemption price of the shares to be redeemed pursuant to this Article THIRTEEN shall be equal to the Fair Market Value of such shares or such other redemption price as required by pertinent state or federal law pursuant to which the redemption is required; (ii) the redemption price of such shares may be paid in cash, Redemption Securities or any combination thereof; (iii) if less than all the Excess Shares are to be redeemed, the shares to be redeemed shall be selected in such manner as set forth in Section (c) of this Article THIRTEEN or as otherwise determined by the Board of Directors; (iv) at least thirty (30) days' written notice of the Redemption Date shall be given to the record holders of the Excess Shares selected to be redeemed (unless waived in writing by any such holder) provided that the Redemption Date may be the date on which written notice shall be given to record holders if the cash or Redemption Securities necessary to effect the redemption shall have been deposited in trust for the benefit of such record holders and subject to immediate withdrawal by them upon surrender of the stock certificates for Excess Shares to be redeemed; (v) from and after the Redemption Date or such earlier date as mandated by pertinent state or federal law, any and all rights of whatever nature, which may be held by the record holder of Excess Shares selected for redemption (including without limitation any rights to vote or participate in dividends declared on stock of the same class or series as such shares), shall cease and terminate and they shall thenceforth be entitled only to receive the cash or Redemption Securities payable upon redemption; and (vi) such redemption shall be upon such other terms and conditions as the Board of Directors shall determine. (c) In determining the direct or indirect citizenship of owners of record or Beneficial Owners or their transferees of its capital stock, the Corporation may rely on the stock transfer records of the Corporation and the citizenship certificates given by Beneficial Owners or -11- owners of record or their transferees or any recipients (in the case of original issuance) (in each case whether such certificates have been given on their own behalf or on behalf of others) to prove the citizenship of such owners of record, Beneficial Owners, transferees or recipients of such capital stock. The determination of the direct or indirect citizenship of owners of record, Beneficial owners and their transferees of such capital stock may also be subject to proof in such other way or ways as the Corporation may deem reasonable. The Corporation may at any time require proof of citizenship, in addition to the citizenship certificates, of the record owner or Beneficial Owner or proposed transferees of shares of the Corporation's capital stock, and the payment of dividends may be withheld, and any application for transfer of ownership on the stock transfer records of the Corporation may be refused, until such additional proof is submitted. (d) Each provision of this Article THIRTEEN is intended to be severable from every other provision. If any provision contained in this Article THIRTEEN is held to be invalid, illegal or unenforceable, the validity, legality or enforceability of any other provision of this Article THIRTEEN shall not be affected, and this Article THIRTEEN shall be construed as if the provision held to be invalid, illegal or unenforceable had never been contained therein. -12- The provisions of Article FOUR, Section A of these Second Amended and Restated Articles of Incorporation were duly approved by the shareholders of the Corporation in accordance with the provisions of Sections 14-2-1007 and 14-2-1003 of the Georgia Business Corporation Code on the 20th day of December, 1996. These Second Amended and Restated Articles of Incorporation were duly adopted and authorized by the Board of Directors of the Company on November 20, 1996. IN WITNESS WHEREOF, WORLDCOM, INC. has caused its duly authorized officer to execute these Second Amended and Restated Articles of Incorporation as of this 30th day of December, 1996. WORLDCOM, INC. By: /s/ Bernard J. Ebbers ------------------------------------- Name: Bernard J. Ebbers Title: President and Chief Executive Officer ATTEST: /s/ Scott D. Sullivan - ------------------------- Name: Scott D. Sullivan Title: Secretary STATE OF MISSISSIPPI ) ) SS. CITY OF JACKSON ) I, Deborah A. Blackwell, a notary public, do hereby certify that on this 30th day of December, 1996, personally appeared before me Bernard J. Ebbers who, being by me first duly sworn, declared that he is the President of WorldCom, Inc., that he signed the foregoing document as President of the corporation, and that the statements therein contained are true. [SEAL] /s/ Deborah A. Blackwell ----------------------------- Notary Public My Commission Expires: 10-4-97 -13- Series A 8% Cumulative Convertible Preferred Stock 1. Designation. The designation of this Series shall be Series A 8% Cumulative Convertible Preferred Stock. The number of shares of this Series shall be 94,992. The liquidation value of shares of this Series shall be $3,350.00 per share. 2. Dividends (a) The holders of shares of this Series shall be entitled to receive, when, as and if declared by the Board of Directors of WorldCom, Inc. (the "Company") out of funds legally available therefor, cumulative preferential dividends from the issue date of such shares, at the rate per share of $268.00 per annum or $67.00 per quarter, and no more, payable quarterly for each share of this Series, payable in arrears on each February 28, May 31, August 31 and November 30, respectively (each such date being hereinafter referred to as a "Dividend Payment Date") or, if any Dividend Payment Date is not a business day, then the Dividend Payment Date shall be the next succeeding business day; provided, however, that with respect to any dividend period during which a redemption occurs, the Company may, at its option, declare accrued dividends to, and pay such dividends on, the redemption date, in which case such dividends would be payable on the redemption date in shares of the Common Stock of the Company, par value $.0l per share (the "Common Stock"), to the holders of the shares of this Series as of the record date for such dividend payment and such accrued dividends would not be included in the calculation of the related Call Price (as hereinafter defined). Each dividend on the shares of this Series shall be payable to holders of record as they appear on the stock books of the Company on such record dates as shall be fixed by the Board of Directors. The first dividend payment of $67.00 shall be for the period from the date of issuance of shares of this Series to and including February 27, 1997 and shall be payable on February 28, 1997. Dividends (or amounts equal to accrued and unpaid dividends) payable on the shares of this Series for any period other than a quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30day months. At the election of the Board of Directors of the Company, dividends may be paid in cash or in shares of Common Stock. In the event the Board of Directors of the Company elects to pay a dividend in shares of Common Stock, the number of shares of Common Stock to be issued on the Dividend Payment Date will be determined by dividing the total dividend to be paid on each share of this Series by 90% of the average of the average of the high and low sales prices of the Common Stock as reported on the Nasdaq National Market for each of the ten consecutive Trading Days (as hereinafter defined) immediately preceding the fifth business day preceding the record date for such dividend. Dividends on the shares of this Series shall accrue (whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared) on a daily basis from the previous Dividend Payment Date, except that the first dividend shall accrue from the date of issuance of the shares of this Series. Dividends accumulate to the extent they are not paid on the Dividend Payment Date for the quarter for which they accrue ("Accumulated Unpaid Dividends"). Accumulated Unpaid Dividends shall not bear interest. (b) No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of this Series or Parity Stock (as hereinafter defined) for any dividend period unless all dividends for all past dividend periods have been declared and paid upon, or declared and a sufficient sum set apart for the payment of such dividends upon, all shares of this Series and Parity Stock outstanding other than the Exchange Preferred (as hereinafter defined). (c) Unless full cumulative dividends on all outstanding shares of this Series and (to the extent that the amount thereof shall have become determinable) any outstanding shares of Parity Stock due for all past dividend periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart, then, subject to the rights of holders of shares of previously issued series of Preferred Stock: (i) no dividend (other than a dividend payable solely in Junior Stock (as hereinafter defined)) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Stock; (ii) no other distribution shall be made upon any shares of Junior Stock; (iii) no shares of Junior Stock or any other series of Preferred Stock shall be purchased, redeemed or otherwise acquired for cash or other property of the Company (excluding shares of Junior Stock or Exchange Preferred) by the Company or by any Subsidiary; and (iv) no monies shall be paid into or set apart or made available for a sinking or other like fund for the purchase, redemption or other acquisition for value of any shares of Junior Stock by the Company or any Subsidiary. (d) Any dividend payment made on shares of this Series shall be distributed pro rata to the holders entitled thereto and be credited first against the earliest accrued but unpaid dividend due with respect to shares of this Series. 3. Voting Rights. (a) The holders of shares of this Series shall have the right with the holders of Common Stock to vote in the election of directors of the Company and upon each other matter coming before any meeting of the shareholders of the Company on the basis of ten votes for each such share held. The holders of shares of this Series and the holders of Common Stock shall vote together as a single class except as otherwise set forth herein or as otherwise provided by law or by the Second Amended and Restated Articles of Incorporation of the Company. (b) The approval of more than two-thirds of the votes entitled to be cast by the holders of the outstanding shares of this Series (voting separately as a class), shall be required for the adoption of any amendment to the Second Amended and Restated Articles of Incorporation that materially adversely changes the rights, preferences or privileges of the shares of this Series. (c) The holders of the outstanding shares of this Series shall also have the right, voting together with the holders of any other outstanding shares of Voting Preferred Stock (as hereinafter defined) as a separate voting group, to elect two members of the Board of Directors of the Company at any time six or more quarterly dividends on any shares of Voting Preferred Stock shall be in arrears and unpaid, in whole or in part, whether or not declared and whether or not any funds shall be or have been legally available for payment -2- thereof. For this purpose, "Voting Preferred Stock" shall mean the shares of this Series and each other series of Preferred Stock which shall have substantially similar voting rights (including voting as one voting group with other shares of Voting Preferred Stock) with respect to the election of directors upon substantially similar arrearages of dividends. In such event, the number of Directors of the Company shall be increased by two, and, unless a regular meeting of the shareholders of the Company is to be held within 60 days thereof for the purpose of electing Directors, within 30 days thereafter, the Company shall call a special meeting of the holders of the outstanding shares of Voting Preferred Stock for the purpose of electing such Directors to take place at the time specified in the notice of the meeting, to be not more than 60 days after such holders become so entitled to elect two Directors and not less than 10 days nor more than 50 days after the date on which such notice is mailed. If such special meeting shall not have been so called by the Company, or such regular meeting shall not be so held, a special meeting may be called for such purpose at the expense of the Company by the holders of not less than 10% of the outstanding shares of any series of Voting Preferred Stock; and notice of any such special meeting shall be given by the person or persons calling the same to the holders of the outstanding shares of the Voting Preferred Stock by first-class mail, postage prepaid, at their last address as shall appear on the stock transfer records of the Company. At any such special meeting the holders of the outstanding shares of Voting Preferred Stock (voting separately as a class with each share having one vote) shall elect two members of the Board of Directors of the Company. If a regular meeting of the shareholders of the Company for the purpose of electing Directors is to be held within 60 days after the time the holders of the outstanding shares of Voting Preferred Stock become so entitled to elect two Directors, then the holders of the outstanding shares of Voting Preferred Stock shall be given notice thereof in the same manner as other shareholders of the Company entitled to vote thereat; and at such regular meeting, the holders of the outstanding shares of Voting Preferred Stock (voting separately as a class with each share having one vote) shall elect two members of the Board of Directors. The right of the holders of the Voting Preferred Stock (voting separately as a class) to elect two members of the Board of Directors of the Company shall continue until such time as no dividends on any outstanding shares of Voting Preferred Stock are in arrears and unpaid, in whole or in part, at which time (i) the voting power of the holders of the outstanding shares of Voting Preferred Stock so to elect two Directors shall cease, but always subject to the same provisions of this subparagraph (c) for the vesting of such voting power upon the occurrence of each and every like arrearage of dividends, and (ii) the term of office of each member of the Board of Directors who was elected pursuant to this subparagraph (c) shall automatically expire. 4. Redemptions and Conversions. (a) Mandatory Conversion. On May 31, 1999 (the "Mandatory Conversion Date"), each outstanding share of this Series shall convert automatically (the "Mandatory Conversion") into shares of Common Stock at the Common Equivalent Rate (as hereinafter defined) in effect on the Mandatory Conversion Date and the right to receive, out of funds legally available therefor, an amount equal to all accrued and unpaid dividends on such share of this Series to the Mandatory Conversion Date, whether or not declared (payable in cash or in shares of Common Stock on the same basis as that used to determine dividends), subject to the right of the Company to redeem the shares of this Series on or after the Initial Redemption Date (as hereinafter defined) and prior to the Mandatory Conversion Date, as described below, and subject to the conversion of the shares of this Series at the option of the holder at any time -3- prior to the Mandatory Conversion Date. Notwithstanding the foregoing, if the Mandatory Conversion Date occurs after a record date for a quarterly dividend and before the corresponding Dividend Payment Date, such dividend shall be paid, out of funds legally available therefor, on the Dividend Payment Date rather than on the Mandatory Conversion Date. The Common Equivalent Rate is initially four-hundred and twenty shares of Common Stock for each share of this Series. Dividends on the shares of this Series shall cease to accrue and such shares shall cease to be outstanding on the Mandatory Conversion Date. The Company shall make such arrangements as it deems appropriate for the issuance of certificates representing shares of Common Stock and for the payment (in cash or in shares of Common Stock, at the election of the Board of Directors of the Company) in respect of such accrued and unpaid dividends, if any, or cash in lieu of fractional shares, if any, in exchange for and contingent upon surrender of certificates representing the shares of this Series, provided that the Company shall give the holders of the shares of this Series such notice of any such actions as the Company deems appropriate and upon such surrender such holder, shall be entitled to receive such dividends declared and paid on such shares of Common Stock subsequent to the Mandatory Conversion Date. Amounts payable in cash in respect of the shares of this series or in respect of such shares of Common Stock shall not bear interest. (b) Redemption by the Company. (i) Right to Redeem. Shares of this Series are not redeemable by the Company prior to May 31, 1998 (the "Initial Redemption Date"). At any time and from time to time on or after the Initial Redemption Date and prior to the Mandatory Conversion Date, the Company shall have the right to redeem, in whole or in part, the outstanding shares of this Series. Upon any such redemption, the Company shall deliver to the holders of shares of this Series, in accordance with the provisions of these Articles of Amendment in exchange for each share so redeemed, a number of shares of Common Stock equal to (A) the Call Price (as hereinafter defined) in effect on the date of redemption, divided by (B) the Current Market Price (as hereinafter defined) of the Common Stock determined as of the date which is one trading day prior to the public announcement of the redemption. The Call Price of each share of this Series is an amount equal to the sum of (X) $3,417.00 on and after the Initial Redemption Date through August 30, 1998, $3,400.25 on and after August 31, 1998 through November 29, 1998, $3,383.50 on and after November 30, 1998 through February 27, 1999, $3,366.75 on and after February 28, 1999 through April 29, 1999 and $3,350.00 on and after April 30, 1999 until the Mandatory Conversion Date plus (Y) all accrued and unpaid dividends thereon to the date fixed for redemption. Notwithstanding the foregoing, if the date fixed for redemption occurs after a record date for a quarterly dividend and prior to the corresponding Dividend Payment Date, such dividend shall be paid, out of funds legally available therefor, on the Dividend Payment Date and the Call Price shall not include the amount of the dividend to be so paid. Dividends on the shares of this Series shall cease to accrue and such shares shall cease to be outstanding on the date fixed for redemption. A public announcement of any call for redemption shall be made prior to the mailing of the notice of such call to holders of shares of this Series as described below. If fewer than all the outstanding shares of this Series are to be redeemed, shares to be redeemed shall be selected by the Company from outstanding shares of this Series not previously redeemed by lot or pro rata (as nearly as may be practicable) or by any other method determined by the Board of Directors of the Company in its sole discretion to be fair and proper. -4- (ii) Current Market Price. As used in this subparagraph (b), the term "Current Market Price" per share of the Common Stock on any date of determination means the lesser of (X) the average of the average of the high and low sales prices of the Common Stock as reported on the Nasdaq National Market or any national securities exchange upon which the Common Stock is then listed, for each of the ten consecutive Trading Dates ending on and including such date of determination and (Y) the Closing Price (as hereinafter defined) of the Common Stock for such date of determination; provided, however, that, with respect to any redemption of shares of this Series if any event that results in an adjustment of the Common Equivalent Rate occurs during the period beginning on the first day of such ten-day period and ending on the applicable redemption date, the Current Market Price as determined pursuant to the foregoing shall be appropriately adjusted to reflect the occurrence of such event. (iii) Notice of Redemption. The Company shall provide notice of any redemption of the shares of this Series to holders of record of the shares of this Series to be called for redemption not less than 15 nor more than 60 days prior to the date fixed for such redemption. Such notice shall be provided by mailing notice of such redemption first class postage prepaid, to each holder of record of shares of this Series to be redeemed, at such holder's address as it appears on the stock register of the Company; provided, however, that neither failure to give such notice nor any defect therein shall affect the validity of the proceeding for the redemption of any shares of this Series to be redeemed. Each such notice shall state, as appropriate, the following and may contain such other information as the Company deems advisable: (A) the redemption date; (B) that all outstanding shares of this Series are to be redeemed or, in the case of a call for redemption of fewer than all outstanding shares of this Series, the number of such shares held by such holder to be redeemed; (C) the Call Price, the number of shares of Common Stock deliverable upon redemption of each share of this Series to be redeemed and the Current Market Price used to calculate such number of shares of Common Stock; (D) the place or places where certificates for such shares are to be surrendered for redemption; and (E) that dividends on the shares of this Series to be redeemed shall cease to accrue on such redemption date (except as otherwise provided herein). (iv) Deposit of Shares and Funds. The Company's obligation to deliver shares of Common Stock and provide funds upon redemption in accordance with this paragraph 4 shall be deemed fulfilled if, on or before a redemption date, the Company shall irrevocably deposit, with a bank or trust company, or an affiliate of a bank or trust company, having an office or agency in New York City and having a capital and surplus of at least -5- $50,000,000, or shall set aside or make other reasonable provision for the issuance of, such number of shares of Common Stock as are required to be delivered by the Company pursuant to this paragraph 4 upon the occurrence of the related redemption (and for the payment of cash in lieu of the issuance of fractional share amounts and accrued and unpaid dividends payable in cash, if any, on the shares to be redeemed as and to the extent provided by this paragraph 4). Any interest accrued on such funds shall be paid to the Company from time to time. Any shares of Common Stock or funds so deposited and unclaimed at the end of two years from such redemption date shall be repaid and released to the Company, after which the holder or holders of such shares of this Series so called for redemption shall look only to the Company for delivery of such shares of Common Stock or funds. (v) Surrender of Certificates; Status. Each holder of shares of this Series to be redeemed shall surrender the certificates evidencing such shares (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state) to the Company at the place designated in the notice of such redemption and shall thereupon be entitled to receive certificates evidencing shares of Common Stock and to receive any funds or shares of Common Stock payable pursuant to this paragraph (4) following such surrender and following the date of such redemption. In case fewer than all the shares represented by any such surrendered certificate are called for redemption, a new certificate shall be issued at the expense of the Company representing the unredeemed shares. If such notice of redemption shall have been given, and if on the date fixed for redemption shares of Common Stock and funds necessary for the redemption shall have been irrevocably either set aside by the Company separate and apart from its other funds or assets in trust for the account of the holders of the shares to be redeemed or converted (and so as to be and continue to be available therefor) or deposited with a bank or a trust company or an affiliate thereof as provided herein or the Company shall have made other reasonable provision therefor, then, notwithstanding that the certificates evidencing any shares of this Series so called for redemption or subject to conversion shall not have been surrendered, the shares represented thereby so called for redemption shall be deemed no longer outstanding, dividends with respect to the shares so called for redemption shall cease to accrue on the date fixed for redemption (except that holders of shares of this series at the close of business on a record date for any payment of dividends shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares following such record date and prior to such Dividend Payment Date) and all rights with respect to the shares so called for redemption shall forthwith after such date cease and terminate, except for the rights of the holders to receive the shares of Common Stock and funds, if any, payable pursuant to this paragraph (4) without interest upon surrender of their certificates therefor. Holders of shares of this Series that are redeemed shall not be entitled to receive dividends declared and paid on such shares of Common Stock, and such shares of Common Stock shall not be entitled to vote, until such shares of Common Stock are issued upon the surrender of the certificates representing such shares of this Series and upon such surrender such holders shall be entitled to receive such dividends declared and paid on such shares of Common Stock subsequent to such redemption date. (c) Conversion at Option of Holder. Shares of this series are convertible, in whole or in part, at the option of the holder thereof, at any time prior to the Mandatory Conversion Date, unless previously redeemed, into shares of Common Stock at a rate of 344.274 shares of Common Stock for each share of this Series (the "Optional Conversion Rate") -6- (equivalent to a conversion price of $9.73 per share of Common Stock). The right to convert shares of this series called for redemption shall terminate at the close of business on the redemption date. Conversion of shares of this Series may be effected by delivering certificates evidencing such shares, together with written notice of conversion and a proper assignment of such certificates to the Company or in blank, to the office or agency to be maintained by the Company for that purpose (and, if applicable, payment by the Company of an amount, out of funds legally available therefor (in cash or in shares of Common Stock, at the election of the Company), equal to the dividend payable on such shares), and otherwise in accordance with conversion procedures established by the Company. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the foregoing requirements shall have been satisfied. The conversion shall be at the Optional Conversion Rate in effect at such time and on such date. Holders of shares of this Series at the close of business on a record date for any payment of dividends shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such record date and prior to such Dividend Payment Date. The Company shall make no other payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of this Series or for dividends or distributions on the shares of Common Stock issued upon such conversion. (d) Common Equivalent Rate and Optional Conversion Rate Adjustments. The Common Equivalent Rate and the optional conversion Rate also shall be subject to adjustment from time to time as provided below in this paragraph. (i) If the Company shall: (A) pay a dividend or make a distribution with respect to its Common Stock in shares of such stock, (B) subdivide or split its outstanding shares of Common Stock into a greater number of shares, (C) combine its outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of its shares of Common Stock any shares of Common Stock of the Company, then, in any such event, the Common Equivalent Rate and the Optional Conversion Rate in effect immediately prior to such event shall each be adjusted so that the holder of any shares of this Series shall thereafter be entitled to receive, upon Mandatory Conversion or upon conversion at the option of the holder, the number of shares of Common Stock of the Company which such holder would have owned or been entitled to receive immediately following any event described above had such shares of this Series been converted immediately prior to such event or any record date with respect thereto. Such adjustment shall become effective at the opening of -7- business on the business day next following the record date for determination of shareholders entitled to receive such dividend or distribution in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, split, combination or reclassification. Such adjustment shall be made successively. (ii) If the Company shall, after the date hereof, issue rights or warrants to all holders of its Common Stock entitling them (for a period not exceeding forty-five days from the date of such issuance) to subscribe for or purchase shares of Common Stock at a price per share less than the current market price of the Common Stock, then in each case the Common Equivalent Rate and Optional Conversion Rate shall each be adjusted by multiplying the Common Equivalent Rate and the Optional Conversion Rate, in effect immediately prior to the date of issuance of such rights or warrants, by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights or warrants, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered for subscription or purchase pursuant to such rights or warrants would purchase at such current market price (determined by multiplying such total number of shares by the exercise price of such rights or warrants and dividing the product so obtained by such current market price). Such adjustment shall become effective at the opening of business on the business day next following the record date for the determination of shareholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Common Equivalent Rate shall be readjusted to the Common Equivalent Rate which would then be in effect had the adjustments been made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock actually delivered. Such adjustment shall be made successively. (iii) If the Company shall pay a dividend or make a distribution to all holders of its Common Stock of evidences of its indebtedness, securities of a Subsidiary or other assets -8- (excluding any dividends or distributions referred to in clause (i) above or any cash dividends other than Extraordinary Cash Distributions (as hereinafter defined)) or shall issue to all holders of its Common Stock rights or warrants to subscribe for or purchase any of its securities (other than those referred to in clause (ii) above), then in each such case, the Common Equivalent Rate and the Optional Conversion Rate shall each be adjusted by multiplying the Common Equivalent Rate and the Optional Conversion Rate in effect on the record date mentioned below, by a fraction of which the numerator shall be the current market price per share of the Common Stock on the record date for the determination of shareholders entitled to receive such dividend or distribution, and of which the denominator shall be such current market price per share of Common Stock less the fair market value (as determined by the Board of Directors of the Company, whose good faith determination shall be conclusive, and described in a resolution adopted with respect thereto) as of such record date of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights or warrants applicable to one share of Common Stock. Such adjustment shall become effective on the opening of business on the business day next following the record date for the determination of shareholders entitled to receive such dividend or distribution. Such adjustment shall be made successively. (iv) Any shares of Common Stock issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend for purposes of calculating the number of outstanding shares of Common Stock under clause (ii) above. For purposes of any computation under clause (ii) and (iii) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily Closing Prices for the thirty consecutive Trading Dates preceding the date in question; provided, however, if any event that results in an adjustment of the Common Equivalent Rate occurs during such thirty-day period, the current market price as determined pursuant to the foregoing shall be appropriately adjusted to reflect the occurrence of such event. (v) The Company shall also be entitled to make upward adjustments in the Common Equivalent Rate, the Optional Conversion Rate and the Call Price, as the Board of -9- Directors in its good faith discretion shall determine to be advisable, in order that any stock dividends, subdivisions of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock (or any transaction which could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended) hereafter made by the Company to its shareholders shall not be taxable. (vi) In any case in which clause (iii) above shall require that an adjustment as a result of any event become effective at the opening of business on the business day next following a record date and the date fixed for conversion pursuant to subparagraph (4)(c) or redemption pursuant to subparagraph w(b) occurs after such record date, but before the occurrence of such event, the Company may in its sole discretion, elect to defer, until after the occurrence of such event, issuing to the holder of any converted or redeemed shares of this series the additional shares of Common Stock issuable upon such conversion or redemption over the shares of Common Stock issuable before giving effect to such adjustment. (vii) All adjustments to the Common Equivalent Rate and the Optional Conversion Rate shall be calculated to the nearest 1/1000th of a share of Common Stock (or if there is not a nearest 1/1000th of a share to the next lower 1/1000th of a share). No adjustment in the Common Equivalent Rate and the Optional Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least one percent therein; provided, however, that any adjustments which by reason of this subparagraph are not required to be made shall be carried forward and taken into account in any subsequent adjustments. (e) Adjustment for Consolidation or Merger. In case of any consolidation or merger to which the Company is a party (other than a merger or consolidation in which the Company is the continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged), or in case of any sale or transfer to another corporation of the property of the Company as an entirety or substantially as an entirety, or in case of any statutory exchange of securities with another corporation (other than in connection with a merger or acquisition), proper provision shall be made so that each share of this Series shall, after consummation of such transaction, be subject to (i) conversion at the option of the holder into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such share of this Series might have been converted immediately prior to -10- consummation of such transaction, (ii) conversion on the Mandatory Conversion Date into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such share of this Series would have been converted if the conversion on the Mandatory Conversion Date had occurred immediately prior to the date of consummation of such transaction, and (iii) redemption on any redemption date in exchange for the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock that would have been issuable at the Call Price in effect on such redemption date upon a redemption of such shares immediately prior to the consummation of such transaction, assuming that the public announcement of such redemption had been made on the last possible date permitted by the terms of this Series and applicable law; assuming in each case that such holder of shares of this Series failed to exercise rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon consummation of such transaction (provided that if the kind or amount of securities, cash or other property receivable upon consummation of such transaction is not the same for each non-electing share, then the kind and amount of securities, cash or other property receivable upon consummation of such transaction for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The kind and amount of securities into which the shares of this Series shall be convertible after the consummation of such transaction shall be subject to adjustment as described in the immediately preceding subparagraph 4(d) following the date of consummation of such transaction. The Company shall not, without the affirmative vote of more than the holders of two-thirds of all the outstanding shares of this Series, become a party to any such transaction unless the terms thereof are consistent with the foregoing. (f) Notice of Adjustments. Whenever the Common Equivalent Rate and optional Conversion Rate are adjusted as herein provided, the Company shall: (i) forthwith compute the adjusted Common Equivalent Rate and Optional Conversion Rate in accordance herewith and prepare a certificate signed by an officer of the Company setting forth the adjusted Common Equivalent Rate and the Optional Conversion Rate, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based, which certificate shall be conclusive, final and binding evidence of the correctness of the adjustment, and file such certificate forthwith with the transfer agent for the shares of this Series and the Common Stock; and (ii) mail a notice to the holders of the outstanding shares of this Series stating that the Common Equivalent Rate and the Optional Conversion Rate have been adjusted, the facts requiring such adjustment and upon which such adjustment is based and setting forth the adjusted Common Equivalent Rate and Optional Conversion Rate, such notice to be mailed at or prior to the time the Company mails an interim statement to its shareholders covering the fiscal quarter during which the facts requiring such adjustment occurred, but in any event within 45 days of the end of such fiscal quarter. (g) Notices. In case, at any time while any of the shares of this series are outstanding: -11- (i) the Company shall declare a dividend (or any other distribution) on its Common Stock, excluding any cash dividends; or (ii) the Company shall authorize the issuance to all holders of its Common Stock of rights or warrants to subscribe for or purchase shares of its Common Stock or of any other subscription rights or warrants; or (iii) the Company shall authorize any reclassification of the Common Stock of the Company (other than a subdivision or combination thereof) or of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required (except for a merger of the Company into a Subsidiary solely for the purpose of changing the corporate domicile of the Company to another state of the United States and in connection with which there is no substantive change in the rights or privileges of any securities of the Company other than changes resulting from differences in the corporate statutes of the then existing and the new state of domicile), or of the sale or transfer of all or substantially all of the assets of the Company; or (iv) there shall be commenced the voluntary or involuntary dissolution, liquidation or winding up of the Company; then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the shares of this Series, and shall cause to be mailed to the holders of shares of this Series at their last addresses as they shall appear on the stock register, at least 10 days before the date hereinafter specified (or the earlier of the dates hereinafter specified, in the event that more than one date is specified), a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (B) the date on which any such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property (including cash), if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. The failure to give or receive the notice required by this subparagraph (g) or any defect therein shall not affect the legality or validity of any such dividend, distribution, right or warrant or other action. (h) Effective Date of Conversions and Redemptions. The person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon any conversion or redemption shall be deemed to have become on the date of any such conversion or redemption the holder or holders of record of the shares represented thereby; provided, however, that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding business day on which such stock transfer books are open. -12- (i) No Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the redemption or conversion of any shares of this Series or in respect of any dividend paid in shares of Common Stock. In lieu of any fractional share otherwise issuable in respect of all the shares of this Series of any holder which are redeemed or converted on any redemption date or upon Mandatory conversion or any optional Conversion or in respect of any dividend paid in shares of Common Stock, the Company shall, at the election of the Company, either (i) sell such fractional share, as agent for the person entitled thereto, and distribute the proceeds of such sale, net of any discounts, commissions, fees or expenses associated with such sale, to such person, all in accordance with applicable rules under the Securities Act of 1933, as amended, or (ii) pay to the person entitled thereto an amount in cash equal to the current value of such fraction, calculated to the nearest one-hundredth (1/100) of a share, to be computed (x) if the shares of this Series are listed on any national securities exchange or the Nasdaq National Market, on the basis of the last sales price (or the quoted closing bid price if there shall have been no sales) of the shares of this Series on such exchange or the Nasdaq National Market (as the case may be) on the date of any such conversion or redemption or the date of payment of any such dividend, or (y) if the shares of this Series are not so listed, on the basis of the mean between the closing bid and asked prices for the shares of this Series on the date of any such conversion or redemption or the date of payment of any such dividend, as reported by Nasdaq, or its successor, or (z) if the shares of this Series are not so listed and if there are no such closing bid and asked prices, on the basis of the fair market value per share as determined in good faith by the Board of Directors. (j) Reissuance. Shares of this Series that have been issued and reacquired in any manner, including shares purchased, exchanged, redeemed or converted, shall not be reissued as part of this Series and shall (upon compliance with any applicable provisions of the laws of the State of Georgia) have the status of authorized and unissued shares of the Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock. (k) Definitions. As used herein: (i) the term "business day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close or are closed because of a banking moratorium or otherwise; (ii) the term "Capital Stock" means any capital stock of any class or series (however designated) of the Company; (iii) the term "Closing Price" on any day shall mean the closing sale price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way, in each case on the Nasdaq National Market or, if the Common Stock is not listed or admitted to trading on the Nasdaq National Market then on the principal national securities exchange on which the Common Stock is listed or admitted to trading (which shall be the national securities exchange on which the greatest number of shares of Common Stock has been traded during the five consecutive Trading Dates ending on and -13- including the date of determination), or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of the Common Stock on the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or if not so available as determined in good faith by the Board of Directors, on the basis of such relevant factors as it in good faith considers appropriate; (iv) the term "Exchange Preferred" means the Series B Convertible Preferred Stock of the Company. (v) the term "Extraordinary Cash Distributions" means, with respect to any cash dividend or distribution paid on any date, the amount, if any, by which all cash dividends and cash distributions on the Common Stock paid during the consecutive 12-month period ending on and including such date (other than cash dividends and cash distributions for which an adjustment to the Common Equivalent Rate and the Optional Conversion Rate was previously made) exceeds, on a per share of Common Stock basis, 10% of the average daily Closing Price of the Common Stock over such 12-month period; (vi) the term "Junior Stock" means any Capital Stock ranking as to dividends or as to rights in liquidation, dissolution or winding up of the affairs of the Company junior to the shares of this Series; (vii) the term "Parity Stock" means any Capital Stock ranking as to dividends or as to rights in liquidation, dissolution or winding up the affairs of the Company equally with the shares of this Series; (viii) the term "Subsidiary" means any corporation a majority of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company or by one or more Subsidiaries or by the Company and one or more Subsidiaries. For this purpose, the term "Voting Stock" means stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the board of directors (or other governing body) of such corporation, other than stock having such powers only by reason of the happening of a contingency; (ix) the term "Trading Date" shall mean a date on which the Nasdaq National Market (or any successor thereto) is open for the transaction of business. (l) Payment of Taxes. The Company shall pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on the redemption or conversion of shares of this Series pursuant to this paragraph 4; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any registration of transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the registered holder of shares of this Series redeemed or converted or to be redeemed or converted, and no such issue or delivery shall be made unless and -14- until the person requesting such issue has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid. (m) Reservation of Common Stock. The Company shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock and/or its issued Common Stock held in its treasury, for the purpose of effecting any Mandatory Conversion of the shares of this Series or any conversion of the shares of this Series at the option of the holder, the full number of shares of Common Stock then deliverable upon any such conversion of all outstanding shares of this Series. 5. Liquidation Rights. (a) In the event of the liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of shares of this Series then outstanding, after payment or provision for payment of the debts and other liabilities of the Company and the payment or provision for payment of any distribution on any shares of the Company having a preference and a priority over the shares of this Series on liquidation, and before any distribution to the holders of the Common Stock, or any other stock ranking junior to the shares of this Series with respect to distributions upon liquidation, dissolution or winding up, shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, an amount per share of this Series equal to the greater of (i) the sum of (a) the liquidation value set forth in paragraph (1) above and (b) all accrued and unpaid dividends thereon to the date of liquidation, dissolution or winding up and (ii) the value of the shares of Common Stock into which such shares of this Series are convertible on the date of such liquidation, dissolution or winding up, before any payment shall be made or any assets distributed to the holders of any shares of the Company ranking junior to the shares of this Series upon liquidation. In the event the assets of the Company available for distribution to the holders of the shares of this Series upon any dissolution, liquidation or winding up of the Company shall be insufficient to pay in full the liquidation payments payable to the holders of outstanding shares of this Series and any shares of Parity Stock, then the holders of all such shares of this Series shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of this Series and the holders of outstanding shares of such shares of Parity Stock are entitled were paid in full. Except as provided in this paragraph 5, holders of this Series shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Company. (b) For the purposes of this paragraph 5, none of the following shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Company: (i) the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Company; (ii) the consolidation or merger of the Company with or into one or more other corporations, or other associations; -15- (iii) the consolidation or merger of one or more corporations or other associations with or into the Company; or (iv) the participation by the Company in a share exchange. 6. Definition. As used herein, the term "Common Stock" shall mean any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. However, shares of Common Stock issuable upon conversion of shares of this Series shall include only shares of the class designated as Common Stock as of the original date of issuance of shares of this Series, or shares of the Company of any class or classes resulting from any reclassification or reclassification thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from such reclassification bears to the total number of shares of all classes resulting from all such reclassification. 7. No Preemptive Rights. The holders of shares of this Series shall have no preemptive rights, including preemptive rights with respect to any shares of Capital Stock or other securities of the Company convertible into or carrying rights or options to purchase any such shares. -16- EXHIBIT B Series B Convertible Preferred Stock 1. Designation and Amount. The shares of such series shall be designated "Series B Convertible Preferred Stock" (the "Series B Preferred Stock"), and the number of shares constituting such series shall be 15,000,000. 2. Dividends. (a) The holders of Series B Preferred Stock shall be entitled to receive, when and as declared, out of the funds legally available for that purpose, dividends per share of Series B Preferred Stock at the rate of 7.75 cents per annum, payable when and as the Board of Directors (the "Board of Directors") of WorldCom, Inc. (the "Company") may determine, in cash, before any dividends shall be set apart for or paid upon the common stock of the Company, par value $.01 per share (the "Common Stock"), or any stock ranking as to dividends junior to the Series B Preferred Stock (such stock being referred to hereinafter collectively as "Junior Stock") in any year. All dividends declared upon Series B Preferred Stock shall be declared pro rata per share and shall be payable to holders of record as they appear on the stock books of the Company on such record dates as shall be fixed by the Board of Directors. Notwithstanding the foregoing, the Company may declare, set apart and pay dividends on shares of the Company's Series A 8% Cumulative Convertible Preferred Stock (the "Series A Preferred Stock") whether or not dividends have been declared, set apart or paid on the shares of Series B Preferred Stock. The Board of Directors shall not be required to declare any dividends on the Series B Preferred Stock and the failure to declare any such dividends shall not constitute a default or otherwise vest the holders of Series B Preferred Stock with any right, other than the right to receive amounts in respect of accrued but unpaid dividends pursuant to Sections 3, 5 and 7 hereof. (b) Dividends on the Series B Preferred Stock shall be cumulative and shall accrue on a daily basis, whether or not in any fiscal year there shall be net profits or surplus available for the payment of dividends in such fiscal year, so that if in any fiscal year or years, dividends in whole or in part are not paid upon the Series B Preferred Stock, unpaid dividends shall accumulate as against the holders of the Junior Stock. Accrued but unpaid dividends shall not bear interest. (c) Dividends (or amounts equal to accrued and unpaid dividends) payable on the shares of Series B Preferred Stock shall be computed on the basis of a 360-day year of twelve 30-day months. (d) The Company shall not set apart for or pay upon the Common Stock any Extraordinary Cash Dividend unless, at the same time, the Company shall have set apart for or paid upon all shares of Series B Preferred Stock an amount of cash per share of Series B Preferred Stock equal to the Extraordinary Cash Dividend that would have been paid in respect of such share if the holder of such share had converted such share into shares of Common Stock pursuant to Section 5 immediately prior to the record date for such Extraordinary Cash Dividend. For purposes of this paragraph 2(d), "Extraordinary Cash Dividend" shall mean, with respect to any cash dividend or distribution paid on any date, the amount, if any, by which all cash dividends and cash distributions on the Common Stock paid during the consecutive 12-month period ending on and including such date exceeds, on a per share of Common Stock basis, 10% of the average daily closing price of the Common Stock over such 12-month period. 3. Liquidation, Dissolution or Winding Up. (a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, no distribution shall be made (i) to the holders of Junior Stock unless, prior thereto, the holders of the Series B Preferred Stock shall have received $1.00 per share, plus an amount equal to unpaid dividends thereon, including accrued dividends, whether or not declared, to the date of such payment and subject to the payment in full of all amounts required to be distributed to the holders of any other Preferred Stock of the Company ranking on liquidation prior and in preference to the Series B Preferred Stock (such Preferred Stock being referred to hereinafter as "Senior Preferred Stock") or (ii) to the holders of stock ranking on a parity, either as to dividends or upon liquidation with the Series B Preferred Stock, except distributions made ratably on the Series B Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation. In the event the assets of the Company available for distribution to the holders of the shares of the Series B Preferred Stock upon any dissolution, liquidation or winding up of the Company shall be insufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series B Preferred Stock and the holders of any shares of stock ranking on a parity with the Series B Preferred Stock, then the holders of all such shares of the Series B Preferred Stock shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of the Series B Preferred Stock and the holders of outstanding shares of such shares of parity stock are entitled were paid in full. The Series A Preferred Stock shall rank on a parity with the Series B Preferred Stock for purposes of this paragraph 3(a). (b) The merger or consolidation of the Company into or with another company, the merger or consolidation of any other company into or with the Company, or the sale, conveyance, mortgage, pledge or lease of all or substantially all the assets of the Company shall not be deemed to be a liquidation, dissolution or winding up of the Company for purposes of this Section 3. 4. Voting. (a) Each issued and outstanding share of Series B Preferred Stock shall be entitled to one vote per share with respect to any and all matters presented to the shareholders of the Company for their action or consideration. Except as provided by law and by the provisions of paragraph 4(b) below, holders of Series B Preferred Stock shall vote together with the holders of Common Stock as a single class. (b) The Company shall not amend, alter or repeal the preferences, special rights or other powers or terms of the Series B Preferred Stock so as to affect adversely the Series B Preferred Stock, without the written consent or affirmative vote of the holders of at least a majority of the then outstanding aggregate number of shares of Series B Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class. -2- For this purpose, the authorization or issuance of any series of preferred stock with preference or priority over, or being on a parity with the Series B Preferred Stock as to the right to receive either dividends or amounts distributable upon liquidation, dissolution or winding up of the Company shall not be deemed to affect adversely the Series B Preferred Stock. 5. Optional Conversion. (a) Each share of Series B Preferred Stock may be converted at any time, unless previously redeemed, at the option of the holder thereof, in the manner hereinafter provided, into fully paid and nonassessable shares of Common Stock at the rate of 0.0973912 shares (or an effective initial conversion price of $10.268 per share of Common Stock) of Common Stock for each one share of Series B Preferred Stock surrendered for conversion, or at such other rate as may then be effective following adjustment pursuant to Section 6 hereof (the "Conversion Rate"). (b) The Company shall not issue fractions of shares of Common Stock upon conversion of Series B Preferred Stock or scrip in lieu thereof. If any fraction of a share of Common Stock would, except for the provisions of this paragraph 5(b), be issuable upon conversion of any Series B Preferred Stock, the Company shall in lieu thereof at the election of the Company, either (i) sell such fractional share, as agent for the person entitled thereto, and distribute the proceeds of such sale, net of any discounts, commissions, fees or expenses associated with such sale, to such person, all in accordance with all applicable rules under the Securities Act of 1933, as amended, or (ii) pay to the person entitled thereto an amount in cash equal to the current value of such fraction, calculated to the nearest one-hundredth (1/100) of a share, to be computed (x) if the Common Stock is listed on any national securities exchange or the Nasdaq National Market, on the basis of the last sales price (or the quoted closing bid price if there shall have been no sales) of the Common Stock on such exchange or the Nasdaq National market (as the case may be) on the date of conversion, or (y) if the Common Stock is not so listed, on the basis of the mean between the closing bid and asked prices for the Common Stock on the date of conversion as reported by Nasdaq, or its successor, or (z) if the Common Stock is not so listed and if there are no such closing bid and asked prices, on the basis of the fair market value per share as determined by the Board of Directors. (c) In order to exercise the conversion privilege, the holder of any Series B Preferred Stock to be converted shall surrender his, her or its certificate or certificates therefor to the principal office of the transfer agent for the Series B Preferred Stock (or if no transfer agent be at the time appointed, then the Company at its principal office), and shall give written notice to the Company at such office that the holder elects to convert the Series B Preferred Stock represented by such certificates, or any number thereof. Such notice shall also state the name or names (with address) in which the certificate or certificates for shares of Common Stock that shall be issuable on such conversion shall be issued. If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company. The date of receipt by the transfer agent (or by the Company if the Company serves as its own transfer agent) of the certificates and notice shall be the conversion date (the "Conversion Date"). As soon as practicable after receipt of such notice and the surrender of the certificate or certificates for Series B Preferred Stock as aforesaid, the Company shall cause to be issued and delivered at such office to such holder, or on -3- such holder's written order, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and cash as provided in paragraph 5(b) in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion. (d) The Company shall at all times when the Series B Preferred Stock shall be outstanding reserve and keep available out of its authorized but unissued stock, for the purposes of effecting the conversion of the Series B Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B Preferred Stock. (e) Shares of Series B Preferred Stock may not be converted after the close of business on the business day preceding the date fixed for redemption of such shares pursuant to Section 7. (f) Upon any such conversion, the Company shall pay, out of funds legally available therefor, to the person entitled thereto an amount equal to all accrued but unpaid dividends to, but not including, the Conversion Date in respect of the shares of Series B Preferred Stock surrendered for conversion, which amount shall be payable, at the election of the Company, in cash or shares of Common Stock. In the event the Company elects to pay such amount in shares of Common Stock, the number of shares of Common Stock to be issued in respect of unpaid dividends on each share of Series B Preferred Stock surrendered for conversion shall, subject to paragraph 5(b), be determined by dividing (x) the total amount of accrued but unpaid dividends to be paid on each such share of Series B Preferred Stock by (y) the Fair Market Value of a share of Common Stock. For purposes hereof, the term "Fair Market Value" shall mean (i) if the Common Stock is listed on any national securities exchange or the Nasdaq National Market, the average of the last sales price (or the quoted closing bid price if there shall have been no sales) of the Common Stock on such exchange or the Nasdaq National Market (as the case may be) for a period of 30 trading days prior to the Conversion Date, or (ii) if the Common Stock is not so listed, on the basis of the average of the mean between the closing bid and asked prices for the Common Stock for each day in the 30 trading day period prior to the Conversion Date, as reported by Nasdaq, or its successor, or (iii) if the Common Stock is not so listed and if there are no such closing bid and asked prices, on the basis of the fair market value per share as determined by the Board of Directors. (g) All shares of Series B Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall forthwith cease and terminate except only the right of the holder thereof to receive shares of Common Stock in exchange therefor and payment of any accrued and unpaid dividends thereon. Any shares of Series B Preferred Stock so converted shall be retired and canceled and shall not be reissued, and the Company may from time to time take such appropriate action as may be necessary to reduce the authorized Series B Preferred Stock accordingly. -4- 6. Adjustment Provisions. (a) In case the Company shall at any time (x) subdivide (whether by stock dividend, stock split or otherwise) its outstanding shares of Common Stock into a greater number of shares or (y) combine its outstanding shares of Common Stock into a smaller number of shares, the Conversion Rate in effect immediately prior thereto shall be proportionately adjusted so that the holder of any shares of Series B Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of capital stock of the Company which the holder would have owned or have been entitled to receive after the happening of any of the events described above, had such shares of Series B Preferred Stock been converted immediately prior to the happening of such event. In case the Company shall at any time prior to March 23, 1999 subdivide (whether by stock dividend, stock split or otherwise) its outstanding shares of Common Stock into a greater number of shares (each a "Subdivision"), the voting rights of each share of Series B Preferred Stock shall be adjusted to provide that the percentage of the aggregate voting power of the Common Stock represented by the Series B Preferred Stock, shall be the same as such percentage immediately prior to such Subdivision, with the holder of each share of Series B Preferred Stock being entitled to the number of votes proportionate to such adjustment. The adjustment made pursuant to this paragraph 6(a) shall become effective immediately after the effective date of the event requiring such adjustment and shall be made by the Board of Directors of the Company, whose judgment shall be final, binding and conclusive absent manifest error. Such adjustment made pursuant to this paragraph 6(a) shall become effective immediately after the effective date of the event requiring such adjustment. (b) If any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another company, or the sale of all or substantially all of its assets to another company shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, cash or other property with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the holders of the Series B Preferred Stock shall have the right to acquire and receive upon conversion of the Series B Preferred Stock, which right shall be prior to the rights of the holders of Junior Stock (but after and subject to the rights of holders of Senior Preferred Stock, if any, and on parity with the rights of holders of Series A Preferred Stock), such shares of stock, securities, cash or other property issuable or payable (as part of the reorganization, reclassification, consolidation, merger or sale) with respect to or in exchange for such number of outstanding shares of the Company's Common Stock as would have been received upon conversion of the Series B Preferred Stock at the Conversion Rate then in effect. The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof the successor company (if other than the Company) resulting from such consolidation or merger or the Company purchasing such assets shall assume by written instrument mailed or delivered to the holders of the Series B Preferred Stock at the last address of each such holder appearing on the books of the Company, the obligation to deliver to each such holder such shares of stock, securities, cash or other property as, in accordance with the foregoing provisions, such holder may be entitled to purchase. -5- (c) In the event that: (1) the Company shall declare any dividend upon its common stock payable in stock or make any special dividend or other distribution to the holders of its Common Stock; or (2) there shall be any capital reorganization or reclassification of the capital stock of the Company, including any subdivision or combination of its outstanding shares of Common Stock, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another company, or (3) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in accordance with such event, the Company shall give to the holders of the Series B Preferred Stock: (i) at least twenty (20) days prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend or distribution or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up; and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, at least twenty (20) days prior written notice of the date when the same shall take place. A notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend or distribution, the date on which the holders of Common Stock shall be entitled thereto, and a notice in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Each such written notice shall be sent by mail, first class, postage prepaid, addressed to the holders of the Series B Preferred Stock at the address of each such holder as shown on the books of the Company. (d) If any event occurs as to which, in the opinion of the Board of Directors of the Company, the provisions of this Section 6 are not strictly applicable or if strictly applicable would not fairly protect the rights of the holders of the Series B Preferred stock in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights as aforesaid, but in no event shall any adjustment have the effect of decreasing the Conversion Rate as otherwise determined pursuant to any of the provisions of this Section 6 except in the case of a combination of shares of a type contemplated in paragraph 6(a) and then in no event to a rate less than the Conversion Rate as adjusted pursuant to paragraph 6(a). -6- (e) Whenever the Conversion Rate shall be adjusted pursuant to this Section 6, the Company shall forthwith file at each office designated for the conversion of Series B Preferred Stock, a statement, signed by the Chairman of the Board, the President, any Vice President or Treasurer of the Company, showing in reasonable detail the facts requiring such adjustment and the Conversion Rate that will be effective after such adjustment. The Company shall also cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to each record holder of Series B Preferred Stock at his or its address appearing on the stock register. If such notice relates to an adjustment resulting from an event referred to in paragraph 6(c), such notice shall be included as part of the notice required to be mailed and published under the provisions of paragraph 6(c) hereof. 7. Redemption. The Company shall have the right to redeem shares of Series B Preferred Stock pursuant to the following provisions: (a) The Company shall not have any right to redeem shares of the Series B Preferred stock prior to September 30, 2001. Thereafter, the Company shall have the right, at its sole option and election, out of funds legally available therefor, to redeem the shares of Series B Preferred Stock, in whole or in part, at any time and from time to time at a redemption price of $1.00 per share plus an amount equal to all accrued and unpaid dividends thereon (the "Redemotion Price"), whether or not declared, to the redemption date; provided, that any amount due in respect of all or any portion of the Redemption Price, including accrued dividends, may be paid in cash or shares of Common Stock as determined by the Board of Directors. In the event the Board of Directors elects to pay any portion of the Redemption Price in shares of Common Stock, the number of shares of Common Stock to be issued shall be determined in accordance with the provisions of paragraph 5(f). (b) If less than all of the Series B Preferred Stock at the time outstanding is to be redeemed, the shares so to be redeemed shall be selected by lot, pro-rata or in such other manner as the Board of Directors may determine to be fair and proper. (c) Notice of any redemption of the Series B Preferred Stock (including notice of whether such redemption shall be paid in cash or shares of Common Stock) shall be mailed at least 30 days, but not more than 60 days prior to the date fixed for redemption to each holder of Series B Preferred Stock to be redeemed, at such holder's address as it appears on the books of the Company. In order to facilitate the redemption of the Series B Preferred Stock, the Board of Directors may fix a record date for the determination of holders of Series B Preferred Stock to be redeemed, or may cause the transfer books of the Company to be closed for the transfer of the Series B Preferred Stock, not more than 60 days prior to the date fixed for such redemption. (d) On the redemption date specified in the notice given pursuant to paragraph 7(c), the Company shall, and at any time after such notice shall have been mailed and before such redemption date the Company may, deposit for the pro-rata benefit of the holders of the shares of the Series B Preferred Stock so called for redemption, funds in an amount equal to the portion of the Redemption Price, if any, to be paid in cash with a bank or trust company in the Borough of Manhattan, The City of New York, having a capital and surplus of at least -7- $50,000,000. Any monies so deposited by the Company and unclaimed at the end of one (1) year from the date designated for such redemption shall revert to the general funds of the Company. After such reversion, any such bank or trust company shall, upon demand, pay over to the Company such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Company for the payment of the redemption price. Any interest accrued on funds so deposited pursuant to this paragraph 7(d) shall be paid from time to time to the company for its own account. (e) Upon the deposit of funds pursuant to paragraph 7(d) in respect of shares of the Series B Preferred Stock called for redemption, or, in the event that the Board of Directors elects to pay all or part of the Redemption Price in shares of Common Stock, on the date fixed for redemption, notwithstanding that any certificates for such shares shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the date of redemption designated in the notice of redemption and all rights of the holders of the shares of the Series B Preferred Stock called for redemption shall cease and terminate, excepting only the right to receive the Redemption Price therefor and the right to convert such shares into shares of Common Stock until the close of business on the business day preceding the redemption date, as provided in Section 5. 8. Reissuance. Shares of this Series that have been issued and reacquired in any manner including shares purchased, exchanged, redeemed or converted shall not be reissued as part of this Series and shall upon compliance with any applicable provisions of the laws of the State of Georgia have the status of authorized and unissued shares of the Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock. -8- EXHIBIT C Series 3 Junior Participating Preferred Stock Section 1. Designation and Amount. There shall be a series of the Preferred Stock which shall be designated as the "Series 3 Junior Participating Preferred Stock," par value $.01 per share, and the number of shares constituting such series shall be 2,500,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series 3 Junior Participating Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Company. Section 2. Dividends and Distributions. (A) Subject to the rights of the holders of any shares of any series of preferred stock of the Company ranking prior and superior to the Series 3 Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series 3 Junior Participating Preferred Stock, in preference to the holders of shares of Common Stock, par value $.01 per share of the Company (the "Common Stock"), and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on any regular quarterly dividend payment date as shall be established by the Board of Directors (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series 3 Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series 3 Junior Participating Preferred Stock. In the event the Company shall at any time after August 25, 1996 (the "Rights Declaration Date") declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series 3 Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Company shall declare a dividend or distribution on the Series 3 Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series 3 Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series 3 Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series 3 Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series 3 Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may, in accordance with applicable law, fix a record date for the determination of holders of shares of Series 3 Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than such number of days prior to the date fixed for the payment thereof as may be allowed by applicable law. Section 3. Voting Rights. The holders of shares of Series 3 Junior Participating Preferred Stock shall have the following voting rights: (A) Each share of Series 3 Junior Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Company. In the event the Company shall at any time after the Rights Declaration Date declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes to which holders of shares of Series 3 Junior Participating Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein, in the Company's Second Amended and Restated Articles of Incorporation, as amended, or by law, the holders of shares of series 3 Junior -2- Participating Preferred Stock, the holders of shares of common stock, and the holders of shares of any other capital stock of the Company having general voting rights, shall vote together as one class on all matters submitted to a vote of stockholders of the Company. (C) Except as otherwise set forth herein or in the company's Second Amended and Restated Articles of Incorporation, as amended, and except as otherwise provided by law, holders of Series 3 Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever dividends or distributions payable on the Series 3 Junior Participating Preferred stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series 3 Junior Participating Preferred Stock outstanding shall have been paid in full, the Company shall not: (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series 3 Junior Participating Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series 3 Junior Participating Preferred Stock, except dividends paid ratably on the Series 3 Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) except as permitted in Section 4(A)(iv) below, redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series 3 Junior Participating Preferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series 3 Junior Participating Preferred Stock; and (iv) purchase or otherwise acquire for consideration any shares of Series 3 Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series 3 Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. -3- (B) The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series 3 Junior Participating Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. The Company shall cause all such shares upon their cancellation to be authorized but unissued shares of Preferred Stock which may be reissued as part of a new series of Preferred Stock, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. (A) Subject to the rights of the holders of any shares of any series of Preferred Stock of the Company ranking prior and superior to the Series 3 Junior Participating Preferred Stock with respect to liquidation, upon any liquidation (voluntary or otherwise), dissolution or winding up of the Company, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series 3 Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series 3 Junior Participating Preferred Stock shall have received $1,000.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series 3 Liquidation Preference"). Following the payment of the full amount of the Series 3 Liquidation Preference, no additional distributions shall be made to the holders of shares of Series 3 Junior Participating Preferred Stock, unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series 3 Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock dividends, and subdivisions, combinations and consolidations with respect to the Common Stock) (such number in clause (ii) being referred to as the "Adjustment Number"). Following the payment of the full amount of the Series 3 Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series 3 Junior Participating Preferred Stock and Common Stock, respectively, holders of Series 3 Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Series 3 Junior Participating Preferred Stock and Common Stock, on a per share basis, respectively. (B) in the event there are not sufficient assets available to permit payment in full of the Series 3 Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series 3 Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. -4- (C) In the event the Company shall at any time after the Rights Declaration Date declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, merger, etc. In case the Company shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series 3 Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Company shall at any time after the Rights Declaration Date declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series 3 Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. Section 8. Redemption. The shares of Series 3 Junior Participating Preferred Stock shall not be redeemable. Section 9. Ranking. The Series 3 Junior Participating Preferred Stock shall rank junior to all other series of the Company's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 10. Fractional Shares. Series 3 Junior Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series 3 Junior Participating Preferred Stock. -5- EXHIBIT D SERIES C $2.25 CUMULATIVE CONVERTIBLE EXCHANGEABLE PREFERRED STOCK SECTION 1. Designation. There is hereby created a series of preferred stock, $.01 par value per share, of MCI WORLDCOM, Inc. (the "Corporation") to be known as "Series C $2.25 Cumulative Convertible Exchangeable Preferred Stock" (the "Series C Preferred Stock"). SECTION 2. Number of Shares. The number of shares of Series C Preferred Stock authorized for issuance is 3,750,000. SECTION 3. Stated Capital. The amount to be represented in stated capital at all times for each share of Series C Preferred Stock shall be $.01. SECTION 4. Dividends. (a) (i) The holders of shares of Series C Preferred Stock shall be entitled to receive dividends at the rate of $2.25 per annum per share of Series C Preferred Stock, which shall be fully cumulative and shall accrue without interest. Dividends shall be payable in cash quarterly on January 15, April 15, July 15, and October 15 of each year (commencing on January 15, 2000) (and, in the case of any accrued but unpaid dividends, at such additional times and for such interim periods, if any, as determined by the Board of Directors), except that if any such date is a Saturday, Sunday or legal holiday then such dividend shall be payable on the next day that is not a Saturday, Sunday or legal holiday on which banks in the State of New York are permitted to be closed (a "Business Day"), to holders of record as they appear on the stock books of the transfer agent for the Corporation (the "Transfer Agent") on the applicable record date, which shall be not more than 60 nor less than 10 days preceding the payment date for such dividends, as are fixed by the Board of Directors, but only when, as and if declared by the Board of Directors out of funds at the time legally available for the payment of dividends. The amount of dividends payable per share of Series C Preferred Stock for each quarterly dividend period shall be computed by dividing the annual dividend amount per share by four. The amount of dividends payable for any period that is shorter or longer than a full quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30-day months. Holders of shares of Series C Preferred Stock shall not be entitled to receive any dividends, whether payable in cash, property or stock, which are in excess of the cumulative dividends provided for herein. (ii) Notwithstanding Section 4(a)(i) above, (A) if the quarterly dividend payable on October 15, 1999 to the holders of $2.25 Cumulative Convertible Exchangeable Preferred Stock, par value $.01 per share ("SkyTel Preferred Stock"), of SkyTel Communications, Inc., a Delaware corporation ("SkyTel"), shall have been declared, then the first quarterly dividend of the Series C Preferred Stock payable on January 15, 2000 shall be equal to $0.5625 per share of Series C Preferred Stock, and (B) if the quarterly dividend payable to the holders of SkyTel Preferred Stock on October 15, 1999 shall not have been declared, then the first quarterly dividend of the Series C Preferred Stock payable on January 15, 2000 shall be equal to $1.125 per share of Series C Preferred Stock. Thereafter, dividends shall accrue as set forth in Section 4(a)(i). (b) No dividends or other distributions, other than dividends payable solely in shares of the Corporation's Common Stock, par value $.01 per share (the "Common Stock") or other capital stock of the Corporation ranking junior to the Series C Preferred Stock as to dividends (collectively, "Junior Dividend Stock") and rights to acquire the foregoing, shall be paid or declared and set apart for payment on any shares of Junior Dividend Stock, and no purchase, redemption or other acquisition shall be made by the Corporation of any shares of Junior Dividend Stock, unless and until all accrued and unpaid dividends on the Series C Preferred Stock shall have been paid or declared and set apart for payment. (c) No dividends, other than dividends payable solely in shares of Junior Dividend Stock and rights to acquire the foregoing, shall be paid or declared and set apart for payment on any class or series of the Corporation's capital stock ranking, as to dividends on a parity with the Series C Preferred Stock (collectively, "Parity Dividend Stock") for any period and no purchase, redemption or other acquisition shall be made by the Corporation of any shares of Parity Dividend Stock unless and until full cumulative dividends have been, or contemporaneously are, paid or declared and set apart for such payment on the Series C Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such dividends on the Parity Dividend Stock. When dividends are not paid in full upon the Series C Preferred Stock and the Parity Dividend Stock (other than the Corporation's Series B Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred Stock")), all dividends paid or declared and set aside for payment upon shares of Series C Preferred Stock and such other Parity Dividend Stock shall be paid or declared and set aside for payment pro rata so that the amount of dividends paid or declared and set aside for payment per share on the Series C Preferred Stock and such other Parity Dividend Stock shall in all cases bear to each other the same ratio that accrued and unpaid dividends per share on the shares of Series C Preferred Stock and such other Parity Dividend Stock bear to each other. Except as limited by the previous sentence, the Series B Preferred Stock shall be Parity Dividend Stock for all purposes herein. (d) The restrictions contained in this Section 4 shall not be deemed to restrict repurchases of capital stock of the Corporation from employees or consultants pursuant to employee stock option plans and the conversion of capital stock of the Corporation into, or the exchange of capital stock of the Corporation for, Junior Dividend Stock. (e) Holders of shares of Series C Preferred Stock called for redemption on a redemption date falling between a dividend payment record date and the associated dividend payment date shall, in lieu of receiving such dividend on the dividend payment date fixed therefor, receive such dividend payment together with all other accrued and unpaid dividends on the date fixed for redemption (unless such holders convert such shares to Common Stock pursuant to Section 9 hereof). (f) Any reference to "distribution" contained in this Section 4 shall not be deemed to include any stock dividend or distributions made in connection with any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. -2- SECTION 5. Liquidation Preference. (a) In the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of Series C Preferred Stock shall be entitled to receive out of the assets of the Corporation, whether such assets are stated capital or surplus of any nature, an amount equal to the dividends accrued and unpaid thereon to the date of final distribution to such holders, whether or not declared, without interest, and a sum equal to $50.00 per share, and no more, before any payment shall be made or any assets distributed to the holders of Common Stock or any other class or series of capital stock ranking junior to the Series C Preferred Stock as to a liquidation, dissolution or winding up of the Corporation ("Junior Liquidation Stock"). No full preferential payment on account of any liquidation, dissolution or winding up of the Corporation shall be made to the holders of any class or series of capital stock ranking on parity with the Series C Preferred Stock in the event of a liquidation, dissolution or winding up of the Corporation ("Parity Liquidation Stock") unless there shall likewise be paid at the same time to the holders of the Series C Preferred Stock the full amounts to which the holders of all outstanding shares of Series C Preferred Stock are entitled with respect to such distribution. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series C Preferred Stock and any shares of Parity Liquidation Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series C Preferred Stock and of any shares of Parity Liquidation Stock ratably in accordance with the full respective preferential amounts that would be payable on such shares of Series C Preferred Stock and such shares of Parity Liquidation Stock if all amounts payable thereon were paid in full. Neither a consolidation or merger of the Corporation with another entity nor a sale or transfer of all or part of the Corporation's assets for cash, securities or other property will be considered a liquidation, dissolution or winding up of the Corporation. The Series B Preferred Stock shall be Parity Liquidation Stock for purposes of this Section 5(a). (b) Written notice of any liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when the place or places where the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage prepaid, not less than 30 days prior to any payment date stated therein, to the holders of record of the Series C Preferred Stock at their respective addresses as the same shall appear on the stock books of the Transfer Agent. SECTION 6. Voting Rights. (a) Except as herein provided or as otherwise required by law, holders of Series C Preferred Stock shall have no voting rights. Whenever, at any time or times, dividends payable on the shares of Series C Preferred Stock at the time outstanding shall be cumulatively in arrears for such number of dividend periods that shall in the aggregate contain not less than 540 days, the holders of all outstanding shares of Series C Preferred Stock and any shares of Parity Dividend Stock upon which like voting rights have been conferred and are exercisable (the Series C Preferred Stock and any such Parity Dividend Stock, collectively for purposes of this Section 6, the "Defaulted Preferred Stock"), shall be entitled to elect two directors of the Corporation at the Corporation's next annual meeting of shareholders and at each subsequent annual meeting of shareholders; provided, however, the shares of Defaulted Preferred Stock shall be entitled to exercise their voting rights at a special meeting of the holders of shares of Defaulted Preferred Stock as set forth in paragraphs (b) and (c) of this Section 6. At elections for such directors, each holder of Series C Preferred Stock shall be -3- entitled to one vote for each share held (the holders of shares of any other series of Defaulted Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of stock held as may be granted to them). Upon the vesting of such right of the holders of Defaulted Preferred Stock, the maximum authorized number of members of the Board of Directors shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of outstanding Defaulted Preferred Stock as hereinafter set forth. The right of holders of Defaulted Preferred Stock, voting separately as a class without regard to series, to elect members of the Board of Directors as aforesaid shall continue until such time as all dividends accumulated and unpaid on Defaulted Preferred Stock shall have been paid or declared and funds set aside for payment in full, at which time such right shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned. (b) Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of shares of Defaulted Preferred Stock called as hereinafter provided, or at any annual meeting of shareholders held for the purpose of electing directors, and thereafter at such meeting or by the written consent of such holders pursuant to Section 14-2-704 of the Georgia Business Corporation Code. (c) At any time when such voting right shall have vested in the holders of shares of Defaulted Preferred Stock entitled to vote thereon, and if such right shall not already have been initially exercised, an officer of the Corporation shall, upon the written request of 10% of the holders of record of shares of such Defaulted Preferred Stock then outstanding, addressed to the Secretary of the Corporation, call a special meeting of holders of shares of such Defaulted Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for special meetings of shareholders at the place for holding annual meetings of shareholders of the Corporation or, if none, at a place designated by the Secretary of the Corporation. If such meeting shall not be called by the proper officers of the Corporation within 30 days after the personal service of such written request upon the Secretary of the Corporation, or within 30 days after mailing the same within the United States, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% of the shares of Defaulted Preferred Stock then outstanding may designate in writing any person to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for special meetings of shareholders and shall be held at the same place as is elsewhere provided in this paragraph. Any holder of shares of Defaulted Preferred Stock then outstanding that would be entitled to vote at such meeting shall have access to the stock books of the Transfer Agent for the purpose of causing a meeting of shareholders to be called pursuant to the provisions of this paragraph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called or held during a period within 45 days immediately preceding the date fixed for the next annual meeting of shareholders. (d) Subject to the provisions hereof, the directors elected pursuant to this Section shall serve until the next annual meeting or until their respective successors shall be elected and qualified. Any director elected by the holders of Defaulted Preferred Stock may be removed by, and shall not be removed otherwise than by, the vote of the holders of a majority of the outstanding shares of the Defaulted Preferred Stock who were entitled to participate in such -4- election of directors, voting as a separate class without regard to series, at a meeting called for such purpose or by written consent as permitted by law and the Articles of Incorporation and Bylaws of the Corporation. If the office of any director elected by the holders of Defaulted Preferred Stock, voting as a class, without regard to series, becomes vacant by reason of death, resignation, retirement, disqualification or removal from office or otherwise, the remaining director elected by the holders of Defaulted Preferred Stock, voting as a class, without regard to series, may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred upon any termination of the right of the holders of Defaulted Preferred Stock to vote for directors as herein provided, the term of office of all directors then in office elected by the holders of Defaulted Preferred Stock, voting as a class, without regard to series, shall terminate immediately. Whenever the terms of office of the directors elected by the holders of Defaulted Preferred Stock, voting as a class, without regard to series, shall so terminate and the special voting powers vested in the holders of Defaulted Preferred Stock shall have expired, the number of directors shall be such number as may be provided for in the Bylaws irrespective of any increase made pursuant to the provisions of this Section 6. (e) So long as any shares of the Series C Preferred Stock remain outstanding and in addition to any other vote required by law, the vote or consent of the holders of at least a majority of the shares of Series C Preferred Stock then outstanding given in person or by proxy either in writing (as permitted by law and the Articles of Incorporation and Bylaws of the Corporation) or at any special or annual meeting, shall be necessary to permit, effect or validate any one or more of the following: (i) the creation or issuance, or any increase in the authorized number of shares of any class or series of stock ranking prior to the Series C Preferred Stock either as to dividends ("Senior Dividend Stock") or upon liquidation, dissolution or winding up of the Corporation ("Senior Liquidation Stock"), or any security convertible into or exercisable or exchangeable for Senior Dividend Stock or Senior Liquidation Stock; or (ii) the amendment, alteration or repeal of any of the provisions of the Articles of Incorporation of the Corporation (including this Exhibit D) that would adversely affect any right, preference, privilege or voting power of the Series C Preferred Stock; provided, however, that any increase in the amount of authorized preferred stock or the creation and issuance of other series of Parity Dividend Stock, Parity Liquidation Stock, Junior Dividend Stock or Junior Liquidation Stock shall not be deemed to affect adversely such rights, preferences or voting powers. SECTION 7. Optional Redemption. (a) The Corporation at its option may redeem shares of Series C Preferred Stock out of funds legally available for the purpose, in whole or in part, at any time, at the redemption prices per share referred to below in effect on the date fixed for redemption (the "Redemption Date") during the period beginning on October 15 of the years shown below, plus an amount equal to the dividends accrued and unpaid on the shares of Series C Preferred Stock to be redeemed, whether or not declared, to the Redemption Date: -5-
If Redeemed During The 12-Month Period Beginning October 15, Redemption Price Per Share ------------------------------- -------------------------- 1998.................................... $51.00 1999.................................... $50.75 2000.................................... $50.50 2001.................................... $50.25 2002 and thereafter..................... $50.00
(b) In the event the Corporation shall redeem shares of Series C Preferred Stock, a notice of such redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each holder of record of the shares to be redeemed, at such holder's address as the same appears on the stock books of the Transfer Agent. Each such notice shall state: (i) the Redemption Date; (ii) the number of shares of Series C Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that payment will be made upon presentation and surrender of certificates evidencing such Series C Preferred Stock; (vi) the then current conversion price and the date on which the right to convert such shares of Series C Preferred Stock will expire; (vii) that dividends on the shares to be redeemed shall cease to accrue following such Redemption Date; (viii) that such redemption is at the option of the Corporation; and (ix) that dividends accrued to and including the Redemption Date will be paid as specified in said notice. Notice having been mailed as aforesaid, on and after the Redemption Date, unless the Corporation shall be in default in providing money for the payment of the redemption price (including an amount equal to any accrued and unpaid dividends to and including the Redemption Date), (x) dividends on the shares of the Series C Preferred Stock so called for redemption shall cease to accrue, (y) said shares shall be deemed no longer outstanding, and (z) all rights of the holders thereof as shareholders of the Corporation (except the right to receive from the Corporation the monies payable upon redemption, without interest thereon, upon surrender of the certificates evidencing such shares) shall cease. The Corporation's obligation to provide monies in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Redemption Date, the Corporation shall deposit with a bank or trust company having an office or agency in the Borough of Manhattan, City of New York, and having a capital and surplus of at least $50,000,000, the principal amount of funds necessary for such redemption, in trust for the account of the holders of the shares to be redeemed (and so as to be and continue to be available therefor), with irrevocable instructions and authority to such bank or trust company that such funds be applied to the redemption of the shares of Series C Preferred Stock so called for redemption. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so deposited and unclaimed at the end of three years from such Redemption Date shall be released or repaid to the Corporation, after which, subject to any applicable laws relating to escheat or unclaimed property, the holder or holders of such shares of Series C Preferred Stock so called for redemption shall look only to the Corporation for payment of the redemption price. -6- Upon surrender in accordance with said notice of the certificates for any such shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the applicable redemption price aforesaid. If fewer than all the outstanding shares of Series C Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Series C Preferred Stock not previously called for redemption by lot or pro rata or by any other equitable method determined by the Board of Directors in its sole discretion. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. Notwithstanding the foregoing, if the Corporation's notice of redemption has been given pursuant to this Section 7 and any holder of shares of Series C Preferred Stock shall, prior to the close of business on the third Business Day preceding the Redemption Date, give written notice to the Corporation pursuant to this Section 7(b) hereof of the conversion of any or all of the shares to be redeemed held by such holder (accompanied by a certificate or certificates for such shares, duly endorsed or assigned to the Corporation), then the conversion of such shares to be redeemed shall become effective as provided in Section 9. (c) The election by the Corporation to redeem shares of Series C Preferred Stock pursuant to Section 7(b) hereof shall become irrevocable only on the relevant Redemption Date. SECTION 8. Exchange. (a) In addition to the optional redemption rights of the Corporation as set forth in Section 7 above, the Corporation shall have the right to exchange the Series C Preferred Stock in whole, but not in part, on any dividend payment date for the Corporation's 4.5% Convertible Subordinated Debentures due 2003 (the "Debentures") to be issued substantially in the form set forth in the indenture (the "Debenture Indenture") filed as an exhibit to the Corporation's Registration Statement on Form S-4, Registration No. 333-85919, filed with the Securities and Exchange Commission on August 26, 1999. (b) No such exchange shall be made unless all dividends accrued and payable on the Series C Preferred Stock have been paid or declared and such amount set aside for their payment prior to the date fixed for such exchange (the "Exchange Date"). Holders of outstanding shares of Series C Preferred Stock will be entitled to receive $50.00 principal amount of Debentures in exchange for each share of series C Preferred Stock held by them at the time of exchange; provided that the Debentures will be issuable in denominations of $1,000.00 and integral multiples thereof. If the exchange results in an amount of Debentures that is not an integral multiple of $1,000.00, the amount exceeding the closest integral multiple of $1,000.00 will be paid in cash by the Corporation. (c) Notice of such exchange of shares of Series C Preferred Stock shall be mailed at least 30 days but not more than 60 days prior to the Exchange Date to each holder of Series C Preferred Stock, at such holder's address as it appears on the books of the Corporation. The notice shall specify the Exchange Date and the place where certificates for shares of Series C Preferred Stock are to be surrendered for Debentures and shall state that dividends on Series C Preferred Stock will cease to accrue on the Exchange Date. -7- (d) Prior to giving notice of intention to exchange pursuant to subsection 8(c) above, the Corporation and a bank or trust company selected by the Corporation shall execute and deliver an indenture substantially in the form of the Debenture Indenture with such changes as may be required by law, stock exchange rule, or usage that do not materially and adversely affect the rights of the holders of the Debentures (the "Indenture"). Prior to any exchange of shares of Series C Preferred Stock pursuant to subsection 8(a) above, any amendments or supplements to the Indenture which materially and adversely affect the rights of the holders of the Debentures shall be consented to by the holders of more than 50 percent of the then outstanding shares of Series C Preferred Stock. A copy of the Indenture may be inspected by the holders of any shares of Series C Preferred Stock at the offices of the Corporation during normal business hours. The Corporation will not give notice of its intention to exchange pursuant to subsection 8(c) above unless it shall file at the office or agency of the Corporation maintained for the exchange of shares of Series C Preferred Stock an opinion of counsel that the Indenture has been duly authorized, executed and delivered by the Corporation, has been duly qualified under the Trust Indenture Act of 1939 (or that such qualification is not necessary) and constitutes a valid and binding instrument enforceable against the Corporation in accordance with its terms (subject to bankruptcy, insolvency, reorganization or other laws of general applicability relating to or affecting creditors, rights and to the general principles of equity; and subject to such other qualifications as are then customarily contained in opinions of counsel experienced in such matters); and to the effect that the Debentures have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered in exchange for the shares of Series C Preferred Stock, will constitute valid and binding obligations of the Corporation entitled to the benefits of the Indenture (subject as aforesaid); and that under the laws of the State of Georgia, the Debentures will be treated as on a parity with the indebtedness of the Corporation to its general unsecured creditors, except to the extent subordinated in the Indenture; and that the exchange of Debentures for the Series C Preferred Stock will not violate the laws of the State of Georgia; and that neither the execution and delivery of the Indenture or the Debentures nor compliance with the terms, conditions or provisions of such instruments will result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument, known to such counsel, to which the Corporation or any of its subsidiaries is a party or by which it or any of them is bound, or any decree, judgment, order, rule or regulations known to counsel, of any court or governmental agency or body having jurisdiction over the Corporation and such subsidiaries or any of their property; and that issuance of the Debentures in exchange for the shares of Series C Preferred Stock is exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). (e) If on the Exchange Date the Corporation has taken all action required to authorize the issuance of the Debentures in exchange for the Series C Preferred Stock, then, notwithstanding that the certificates for such shares have not been surrendered for cancellation, from and after the Exchange Date, all of the shares of Series C Preferred Stock shall no longer be deemed outstanding and all rights relating to such shares shall terminate, except only the right to receive dividends accrued and unpaid to the Exchange Date and, upon surrender of certificates therefor, the right to receive the Debentures, and the person or persons entitled to receive the Debentures issuable upon the exchange shall be treated for all purposes as the registered holder or holders of such Debentures. Upon due surrender of a certificate representing shares of Series -8- C Preferred Stock, the holder thereof shall receive the principal amount of Debentures to which such holder is thereby entitled plus any amounts of cash which may be due hereunder. (f) The election of the Corporation to exchange the Series C Preferred Stock for the Debentures shall become irrevocable only on the Exchange Date. SECTION 9. Conversion at Option of Holder. (a) Each share of Series C Preferred Stock may be converted, at any time and at the option of the holder, into fully paid, non-assessable shares of Common Stock of the Corporation on and subject to the terms and conditions of this Section 9. (b) The number of shares of Common Stock issuable upon conversion of each share of the Series C Preferred Stock shall be equal to the quotient obtained by dividing (i) $50.00 by (ii) the Conversion Price (as hereinafter defined) in effect on the date of conversion (calculated as to each conversion to the nearest 1/100th of a share). The Conversion Price shall initially equal (i) $45.00 divided by (ii) the exchange ratio applicable to the common stock, par value $.01 per share, of SkyTel, in the merger of SkyTel with and into Empire Merger Inc., a wholly owned subsidiary of the Corporation; provided, however, that such Conversion Price shall be adjusted and readjusted from time to time as provided in this Section 9 and, as so adjusted and readjusted, shall remain in effect until a further adjustment or readjustment thereof is required by this Section 9. (c) Except as may be provided by the Board of Directors, upon conversion of the Series C Preferred Stock, the Corporation is not obligated to make any payment or adjustment with respect to dividends accrued on the Series C Preferred Stock through the date of conversion unless the holder of the shares of Series C Preferred Stock being converted was the record holder of such shares on the record date for the payment of such dividends. (d) Upon surrender to the Corporation at the office of the Transfer Agent or such other place or places, if any, as the Board of Directors may determine, of certificates duly endorsed to the Corporation or in blank for shares of Series C Preferred Stock to be converted together with appropriate evidence of the payment of any transfer or similar tax, if required, and written instructions to the Corporation requesting conversion of such shares and specifying the name and address of the person, corporation, firm or other entity to whom such shares of Common Stock are to be issued, the Corporation shall issue (i) the number of full shares of Common Stock issuable upon conversion thereof as of the time of such surrender and as promptly as practicable thereafter will deliver certificates for such shares of Common Stock, and (ii) cash for any remaining fraction of a share of Common Stock in an amount equaling the Current Market Price (as hereinafter defined) on the date such shares are tendered for conversion. Upon surrender of a certificate representing shares of Series C Preferred Stock to be converted in part, in addition to the foregoing, the Corporation shall also issue to such holder a new certificate representing any unconverted shares of Series C Preferred Stock represented by the certificate surrendered for conversion. -9- (e) The Corporation shall pay all documentary, stamp, or similar issue or transfer tax due on the issue of shares of Common Stock issuable upon conversion of the Series C Preferred Stock; provided, however, that the holder of shares of Series C Preferred Stock so converted shall pay any such tax which is due because such shares are to be issued in the name other than that of such holder. (f) The Conversion Price in effect at any time shall be adjusted as follows: (i) If the Corporation shall, at any time or from time to time, effect a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before such subdivision shall be proportionately decreased and, conversely, if the Corporation shall, at any time or from time to time, effect a combination of the outstanding Common Stock, the Conversion Price in effect immediately before such combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the close of business on the record date fixed for the applicable subdivision or combination. (ii) In the event the Corporation shall, at any time or from time to time, make or issue to all holders of shares of Common Stock (or fix a record date for the determination of holders of Common Stock entitled to receive) a dividend or other distribution payable in shares of Common Stock, then the Conversion Price then in effect shall be decreased as of the time of such issuance (or, in the event such a record date shall have been fixed, as of the close of business on such record date) in accordance with the following formula: O ----- C* = C x O + N where: C* = the adjusted Conversion Price. C = the current Conversion Price. O = the number of shares of Common Stock outstanding immediately prior to the applicable issuance (or the close of business on the record date). N = The number of additional shares of Common Stock issued in payment of such dividend of distribution. (iii) In the event the Corporation shall, at any time or from time to time, issue or sell (or be deemed pursuant to Section 9(g) hereto to have issued or sold) to all holders of shares of Common Stock any shares of Common Stock for a consideration per -10- share that is less than the Current Market Price immediately prior to such issuance or sale (or deemed issuance or sale), then the Conversion Price then in effect shall be decreased as of the time of such issuance or sale (or deemed issuance or sale) in accordance with the following formula: NxP --- C* = C x O + M ----- O+N where: C* = the adjusted Conversion Price. C = the current Conversion Price. O = the number of shares of Common Stock outstanding on the date of the applicable issuance or sale (or deemed issuance or sale). N = the number of additional shares of Common Stock issued or sold (or deemed issued or sold). P = the aggregate consideration per share received and/or to be received for each additional share of Common Stock issued or sold (or deemed issued or sold). M = the Current Market Price per share of Common Stock. (g) For purposes of determining the adjusted Conversion Price under Section 9(f), the following principles shall be applicable: (i) If the Corporation in any manner grants to all holders of shares of Common Stock any rights or options (collectively, "Options") to subscribe for or to purchase Common Stock or other securities convertible into or exercisable or exchangeable for Common Stock (collectively, "Convertible Securities") and the aggregate consideration payable with respect to the issuance of such options and with respect to the later conversion, exercise or exchange thereof for Common Stock is less than the Current Market Price in effect immediately prior to the granting of such options, then the maximum number of shares of Common Stock issuable upon the exercise of such options (and, if appropriate, upon the subsequent conversion, exercise or exchange of such Convertible Securities) shall be deemed to be outstanding and such Options shall be deemed to have been issued and sold for an aggregate consideration per share determined by dividing (A) the aggregate amount received or receivable by the Corporation as consideration for the granting of such options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such options (and, if appropriate, the minimum aggregate amount of -11- additional consideration payable upon the conversion, exercise or exchange of such Convertible Securities), by (B) the maximum number of shares of Common Stock issuable upon the exercise of all such Options (and, if appropriate, upon the conversion, exercise or exchange of such Convertible Securities). No further adjustment of the Conversion Price shall be made when Common Stock or Convertible Securities are issued upon the exercise of such options or when Common Stock is issued upon the conversion, exercise or exchange of such Convertible Securities. (ii) If the Corporation in any manner issues to all holders of shares of Common Stock any rights to subscribe for or to purchase Convertible Securities and the aggregate consideration for which Common Stock is issuable upon the conversion, exercise or exchange of such Convertible Securities is less than the Current Market Price in effect immediately prior to the issuance of such Convertible Securities, then the maximum number of shares of Common Stock issuable upon tile conversion, exercise or exchange of such Convertible Securities shall be deemed to be outstanding and such Convertible Securities shall be deemed to have been issued and sold for an aggregate consideration per share determined by dividing (A) the aggregate amount received or receivable by the Corporation as consideration for the issuance of such Convertible Securities, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the conversion, exercise or exchange of all such Convertible Securities, by (B) the maximum number of shares of Common Stock issuable upon the conversion, exercise or exchange of such Convertible Securities. No further adjustment of the Conversion Price shall be made when Common Stock is issued upon the conversion, exercise or exchange of such Convertible Securities. (iii) If the purchase price provided for in any Options, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable for common Stock change at any time, and such change is not due solely to the operation of anti-dilution provisions similar in nature to those set forth in this Section 9, then the Conversion Price in effect at the time of such change shall be readjusted to the Conversion Price which would have been in effect at such time had such options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. (iv) Upon the expiration of any Option or the termination of any right to convert, exercise or exchange any Convertible Securities without the conversion, exercise or exchange of any such Option or right, the Conversion Price then in effect hereunder will be adjusted to the Conversion Price which would have been in effect at the time of such expiration or termination had such option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued. (v) If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Corporation therefor. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration -12- other than cash received by the Corporation will be the fair value of such consideration, as determined in good faith by the Board of Directors. (vi) If Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold together with other stock or securities or other assets of the Corporation for a consideration that covers both, the consideration received by the Corporation for any Common Stock, Options or Convertible Securities shall be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such Common Stock, Options or Convertible Securities, as the case may be. (vii) Anything herein to the contrary notwithstanding, no adjustment will be made to the Conversion Price by reason of (A) the issuance of Common Stock, Options or Convertible Securities to employees or directors of the Corporation pursuant to employee benefit plans or otherwise, or the issuance of Common Stock upon the conversion, exercise or exchange thereof, (B) the issuance of Common Stock upon the conversion, exercise or exchange of options or Convertible Securities issued and outstanding on the date these Articles of Amendment are filed with the Secretary of State of the State of Georgia, (C) the issuance of any securities pursuant to and in accordance with the Rights Agreement dated August 25, 1996 between the Corporation and The Bank of New York, as amended (or any successor agreement), or (D) the issuance of Common Stock upon the conversion of the Series C Preferred Stock. (h) For purposes of this Exhibit D, the term "Current Market Price" per share of Common Stock on any date shall be deemed to be the average daily Closing Prices of the Common Stock for the 30 consecutive trading days commencing 45 trading days before such date. The "Closing Price" for each trading day shall be the last reported sales price regular way or, in case no sale takes place on such day, the average of the closing hid and asked prices regular way on such day, in either case as reported on the principal national securities exchange (which for this purpose shall include The Nasdaq National Market system ("NASDAQ/NMS")) on which the Common Stock is listed or admitted for trading, or if not listed or admitted to trading on any national securities exchange, the average of the high bid and low asked prices on such day as reported by the National Association of Securities Dealers, Inc. through the National Association of Securities Dealers Automated Quotation system ("NASDAQ"), or if the National Association of Securities Dealers, Inc. through NASDAQ shall not have reported any bid and asked prices for the Common Stock on such day, the average of the hid and asked prices for such day as furnished by any New York Stock Exchange member firm selected from time to time by the Corporation for such purpose, or if no such bid and asked prices can be obtained from any such firm, the fair market value of one share of the Common Stock on such day as determined in good faith by the Board of Directors. (i) No adjustment in the Conversion Price need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Price; provided, however, that any adjustments that are not made shall he carried forward and taken into account in any subsequent adjustment. All calculations under this Section 9 shall be made either to the nearest cent or to the nearest 1/100th of a share. -13- (j) No adjustment need be made for a change in the par value of the Common Stock. (k) Whenever the Conversion Price is adjusted, the Corporation shall promptly mail to holders of Series C Preferred Stock a notice of adjustment briefly stating the facts requiring the adjustment and the manner of computing it. (l) In case of any consolidation or merger of the Corporation with any other entity (other than a wholly-owned subsidiary of the Corporation), or in the case of any sale or transfer of all or substantially all of the assets of the Corporation, or in the case of any share exchange pursuant to which all of the outstanding shares of Common Stock are converted into other securities or property, the Corporation shall make appropriate provision or cause appropriate provision to be made so that holders of each share of Series C Preferred Stock then outstanding shall have the right thereafter to convert such share of Series C Preferred Stock into the kind and amount of shares of stock and other securities and property receivable upon such consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock into which such share of Series C Preferred Stock might have been converted immediately prior to the effective date of such consolidation, merger, sale, transfer or share exchange. If in connection with any such consolidation, merger, sale, transfer or share exchange, each holder of shares of Common Stock is entitled to elect to receive either securities, cash or other assets upon completion of such transaction, the Corporation shall provide or cause to be provided to each holder of Series C Preferred Stock the right to elect to receive the securities, cash or other assets into which the Series C Preferred Stock held by such holder shall be convertible after completion of any such transaction on the same terms and subject to the same conditions applicable to holders of the Common Stock (including, without limitation, notice of the right to elect, limitations on the period in which such election shall be made and the effect of failing to exercise the election). The Corporation shall not effect any such transaction unless the provisions of this paragraph have been fulfilled. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges. (m) The Corporation shall reserve and at all times keep available, free from preemptive rights, out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series C Preferred Stock, such number of its shares of duly authorized Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series C Preferred Stock. SECTION 10. Redemption Upon Fundamental Change. (a) If a Fundamental Change (as defined in paragraph (c) of this Section 10) occurs, each holder of Series C Preferred Stock shall have the right, at the holder's option, to require the Corporation to repurchase all of such holder's Series C Preferred Stock, or any portion thereof that has an aggregate liquidation value that is a multiple of $50.00, on the date (the "Repurchase Date") selected by the Corporation that is not less than ten nor more than 20 days after the Final Surrender Date (as defined in paragraph (b) of this Section 10), at a price per share equal to $50.00, plus an amount equal to accrued and unpaid dividends to the Repurchase Date. The Corporation may, at its option, pay all or any portion of the repurchase price upon a Fundamental Change in shares of Common Stock of the Corporation or any successor corporation. For purposes of calculating the number of shares of common stock issuable upon such redemption, the value of any such -14- common stock shall be equal to the average of the Closing Prices of such common stock for the five Trading Dates ending on the third Trading Date immediately preceding the Repurchase Date. Payment may not be made in shares of common stock unless such shares (i) have been, or will be, registered on or prior to the Final Surrender Date (as defined in paragraph (b) of this Section 10) under the Securities Act or are freely tradable pursuant to an exemption thereunder and (ii) are listed on a United States national securities exchange or quoted through the NASDAQ/NMS at the time of payment. (b) Within 30 days after the occurrence of a Fundamental Change, the Corporation must mail to all holders of record of the Series C Preferred Stock a notice containing the information set out in paragraph (b) of Section 7, except that, for purposes of this Section 10 only, instead of stating that such redemption is at the option of the Corporation, the notice shall describe the occurrence of such Fundamental Change and of the repurchase right arising as a result thereof. The Corporation must cause a copy of such notice to be published in a daily newspaper of national circulation (which shall be The Wall Street Journal, if then in circulation). At least two Business Days prior to the Repurchase Date, the Corporation must publish a similar notice stating whether and to what extent the repurchase price will be paid in cash or shares of common stock. To exercise the repurchase right, a holder of Series C Preferred Stock must surrender, on or before the date that is, subject to any contrary requirements of applicable law, 60 days after the date of mailing of the applicable notice (the "Final Surrender Date"), the certificates representing the Series C Preferred Stock with respect to which the right is being exercised, duly endorsed for transfer to the Corporation, together with a written notice of election. (c) The term "Fundamental Change" shall mean either of the following: (i) a "Person" or "Group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) becoming, in one transaction or a series of related transactions, the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of Voting Shares (as defined in this paragraph (c)) of the Corporation entitled to exercise more than 50% of the total voting power of all outstanding Voting Shares of the Corporation (including any Voting Shares that are not then outstanding of which such person or Group is deemed the beneficial owner); or (ii) any consolidation of the Corporation with, or merger of the Corporation into, any other entity, any merger of another entity into the Corporation, or any sale, lease or transfer of all or substantially all of the assets of the Corporation to another entity (other than a merger (a) that results in the holders of Common Stock of the Corporation immediately prior to giving effect to such transaction owning shares of capital stock of the surviving corporation in such transaction representing in excess of 40% of the total voting power of all shares of capital stock of such surviving corporation entitled to vote generally in the election of directors and (b) in which the shares of the surviving corporation held by such holders are, or immediately upon issuance will be, listed on a national securities exchange or quoted through the NASDAQ/NMS and are not subject to any right of repurchase by the issuer thereof or any third party and are not otherwise subject to any encumbrance as a result of such transaction, provided, that the -15- surviving corporation (x) amends its charter or certificate of incorporation to include the Series C Preferred Stock and its terms as set forth herein or (y) if the Series C Preferred Stock has been exchanged for the Debentures, assumes or guarantees the Corporation's obligations under the Debentures); provided, however, that a Fundamental Change shall not occur if either (i) for any five Trading Dates during the ten Trading Days immediately preceding either the public announcement by the Corporation of such transaction or the consummation of such transaction, the Closing Price of the Common Stock is at least equal to 105% of the conversion price in effect on such trading days or (ii) at least 90% of the consideration (excluding cash payments for fractional shares) in such transaction or transactions to the holders of Common Stock consists of shares of common stock that are, or immediately upon issuance will be, listed on a national securities exchange or quoted through the NASDAQ/NMS, and as a result of such transaction or transactions, the Series C Preferred Stock becomes convertible into such common stock. (d) An election by a holder of Series C Preferred Stock to have the Corporation redeem shares of Series C Preferred Stock pursuant to subsection 10(a) shall become irrevocable at the close of business on the Repurchase Date. (e) The Corporation agrees that it will not complete any Fundamental Change described in subsection 10(c) unless proper provision has been made to satisfy its obligations under this Section 10. For purposes of this Section 10, "Voting Shares" is defined to mean all outstanding shares of any class or classes (however designated) of capital stock entitled to vote generally in the election of members of the Board of Directors. SECTION 11. Limitation and Rights Upon Insolvency. Notwithstanding any other provision of this Exhibit D, the Corporation shall not be required to pay any dividend on, or to pay any amount in respect of any redemption of, the Series C Preferred stock at a time when immediately after making such payment the Corporation is or would be rendered insolvent (as defined by applicable law), provided that the obligation of the Corporation to make any such payment shall not be extinguished in the event the foregoing limitation applies. SECTION 12. Shares to be Retired. Any share of Series C Preferred Stock converted, redeemed or otherwise acquired by the Corporation shall be retired and canceled and shall upon cancellation be restored to the status of authorized but unissued shares of preferred stock, subject to reissuance by the Board of Directors as Series C Preferred Stock or as shares of preferred stock of one or more other series. SECTION 13. Record Holders. The Corporation and the Transfer Agent may deem and treat the record holder of any shares of Series C Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. SECTION 14. Notice. Except as may otherwise be provided for herein, all notices referred to herein shall be in writing, and all notices hereunder shall be deemed to have been given upon, the earlier of receipt of such notice or three Business Days after the mailing of -16- such notice if sent by registered mail (unless first-class mail shall be specifically permitted for such notice under the terms of these Articles of Incorporation) with postage prepaid, addressed: if to the Corporation, to its offices at 500 Clinton Center Drive, Clinton, Mississippi 39056, Attention: Corporate Secretary, or to an agent of the Corporation designated as permitted by this Articles of Incorporation or, if to any holder of the Series C Preferred Stock, to such holder at the address of such holder of the Series C Preferred Stock as listed in the stock record books of the Corporation (which may include the records of the Transfer Agent); or to such other address as the Corporation or holder, as the case may be, shall have designated by notice similarly given. -17- EX-3.5 7 ex3-5.txt RESTATED BYLAWS OF WORLDCOM EXHIBIT 3.5 RESTATED BYLAWS OF WORLDCOM, INC. (a Georgia Corporation) ARTICLE I OFFICES The principal office of the corporation shall be located in Clinton, Mississippi. The principal books of the corporation shall be kept at such principal office, with necessary books and records being kept at such other place or places as the Board of Directors may from time to time determine. The registered office of the corporation required by the Georgia Business Corporation Code shall be located within the State of Georgia. The corporation may have such other offices, either within or without the State of Georgia, as the Board of Directors may designate or as the business of the corporation may require from time to time. ARTICLE II SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders shall be held on the date and time fixed by the Board of Directors for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting. Section 2. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors or President, and shall be called by the President at the written request of the holders of not less than forty percent (40%) of all the votes entitled to be cast on any issue to be considered at the meeting (subject to any requirements or limitations imposed by the corporation's Articles of Incorporation, by these Bylaws or by law), which written request must describe the purpose or purposes for which the special meeting is to be held (which must be a proper subject for action by the corporation's shareholders) and further comply with the provisions of Section 11 of this Article II. Section 3. Place of Meeting. Meetings of the shareholders shall be held at such place as may be designated by the Board of Directors and stated in the notice of meeting. Section 4. Notice of Meeting. Written notice stating the place, date and time of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall, unless otherwise prescribed by statute, be delivered to each shareholder of record entitled to vote at such meeting not less than ten (10) days or more than sixty (60) days before the date of the meeting. Section 5. Record Date. In order that the corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other action, the Board of Directors may fix, in advance, a record date, which shall not be more than seventy (70) days before the date of such meeting or action. If no record date is fixed, (i) the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day before the day on which the first notice is given to such shareholders, and (ii) the record date for determining shareholders for any other purpose shall be at the close of business on the day which the Board of Directors authorizes the action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting, unless the Board of Directors fixes a new record date. The Board of Directors is required to fix a new record date if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting. Section 6. Voting Record. The officer or agent having charge of the stock transfer books for shares of the corporation shall make a complete record of the shareholders entitled to vote at each meeting of shareholders or any adjournment thereof, arranged by voting group in alphabetical order, with the address of and the number of shares held by each. Such record shall be made available for inspection by any shareholder at the time and place of the meeting. Such record may also be copied by any shareholder, at such shareholder's expense, if (i) the demand is made in good faith and for a proper purpose that is reasonably relevant to such shareholder's legitimate interest as a shareholder, (ii) the shareholder describes with reasonable particularity such shareholder's purpose and the records such shareholder desires to inspect, (iii) the records are directly connected with this purpose, and (iv) the records are to be used only for the stated purpose. Section 7. Quorum. The holders of shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum exists with respect to that matter. Unless the Articles of Incorporation or the Georgia Business Corporation Code, as amended from time to time, provide otherwise, the holders of a majority of the votes entitled to be cast on a matter by the voting group constitute a quorum of that voting group for action on that matter. Once a share is represented for any purpose at a meeting, the holder is deemed present for quorum purposes for the remainder of the meeting, unless a new record date is or must be set for an adjournment of such meeting. Section 8. Proxies. At all meetings of shareholders, a shareholder may vote in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. The appointment of a proxy is revocable by the shareholder, unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. 2 Section 9. Voting of Shares. Except as otherwise provided in the Articles of Incorporation, directors shall be elected by a vote of the holders of common stock of the corporation, voting together as a single class. Directors shall be elected by a plurality of the votes cast by shareholders entitled to vote in the election at a meeting at which a quorum is present. Shareholder action on all other matters shall be approved if the votes cast in favor of the action exceed the votes cast in opposition to such action, unless otherwise provided by law or the Articles of Incorporation. If two or more groups are entitled to vote separately on a matter, action on a matter is taken only when approved by each voting group. Each outstanding share of the capital stock having voting power shall be entitled to the number of votes specified in the Articles of Incorporation with respect to each matter submitted to a vote at a meeting of shareholders. Section 10. Adjournment. When a meeting of shareholders is adjourned to another date, time or place, notice need not be given of the adjourned meeting if the new date, time and place are announced at the meeting before the adjournment; provided, however, that if a new record date is or must be fixed under the Georgia Business Corporation Code, as amended from time to time, or these Bylaws, a notice of the adjourned meeting must be given to shareholders as of the new record date. At the adjourned meeting the shareholders may transact any business which might have been transacted had a quorum been present at the time originally designated for the meeting. Section 11. Advance Notice of Nominations and Shareholder Proposals. All nominations of individuals for election to the Board of Directors and proposals of business to be considered at any meeting of the shareholders shall be made as set forth in this Section 11. (a) Annual Meeting of Shareholders. (1) Nominations of individuals for election to the Board of Directors and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (i) pursuant to the corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or a committee appointed by the Board of Directors, or (iii) by any shareholder of the corporation who was a shareholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the meeting, who is entitled to vote at the meeting and who complied with the notice and other requirements set forth in this Section 11. (2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the shareholder must have given timely notice thereof in writing to the Secretary as hereinafter provided and, in the case of other business, such other business must otherwise be a proper subject for action by the corporation's shareholders. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive offices of the corporation and received not less than one hundred twenty (120) days nor more than one hundred fifty (150) days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, notice by the shareholder to be timely must be so delivered and received not earlier than the 150th day prior to such annual meeting and not later than the close of business on the later of the 120th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Such shareholder's notice shall set forth (i) as to each person whom the shareholder proposes to nominate for election or 3 reelection as a director (a) the name, age, business and residential addresses, and principal occupation or employment of each proposed nominee, (b) the class and number of shares of capital stock of the corporation that are beneficially owned by such nominee on the date of such notice, (c) a description of all arrangements or understandings between the shareholder and each nominee and the name of any other person or persons pursuant to which the nomination or nominations are to be made by the shareholder, (d) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any successor provision, and (e) the written consent of each proposed nominee to being named as a nominee in the proxy statement and to serve as a director of the corporation if so elected; (ii) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and of the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (x) the name and address of such shareholder, as they appear on the corporation's books, and of such beneficial owner, (y) the class and number of shares of stock of the corporation which are owned beneficially and of record by such shareholder and such beneficial owner, and (z) a representation that the shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or to propose such other business. The corporation may require any proposed nominee to furnish any information, in addition to that furnished pursuant to clause (i) above, it may reasonably require to determine the eligibility of the proposed nominee to serve as a director of the corporation. (3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 11 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least one hundred thirty (130) days prior to the first anniversary of the preceding year's annual meeting, a shareholder's notice required by this Section 11(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to and received by the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the corporation. (b) Special Meetings of Shareholders. Only such business shall be conducted, and only such proposals shall be acted upon, at a special meeting of shareholders as shall have been brought before such meeting pursuant to the corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected (i) by or at the direction of the Board of Directors or a committee appointed by the Board of Directors, or (ii) provided that the notice of the special meeting states that the purpose or one of the purposes of the special meeting is to elect directors at such special meeting, by any shareholder of the corporation who is a shareholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the meeting, who is entitled to vote at the meeting and who complied with the notice and other requirements set forth in this Section 11. In the event the corporation calls a special meeting of shareholders for the purpose of electing one or 4 more directors to the Board of Directors, any shareholder may nominate a person or persons (as the case may be) for election to such position as specified in the corporation's notice of meeting, if a notice containing the same information as would be required under Section 11(a)(2) of this Article II for an annual meeting is delivered to and received by the Secretary at the principal executive offices of the corporation not earlier than the 150th day prior to such special meeting and not later than the close of business on the later of the 120th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and/or of the nominees proposed by the Board of Directors or a committee appointed by the Board of Directors to be elected at such meeting. Proposals of business other than the nomination of persons for election to the Board of Directors may be considered at a special meeting requested by shareholders in accordance with Section 2 of this Article II only if the shareholders give a notice containing the same information as would be required under Section 11(a)(2) of this Article II for an annual meeting at the time such shareholders requested the meeting. (c) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 11 shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 11. The Board of Directors may reject any nomination or shareholder proposal submitted for consideration at any meeting of shareholders which is not made in accordance with the provisions of this Section 11 or which is not a proper subject for shareholder action in accordance with provisions of applicable law. Alternatively, if the Board of Directors fails to consider the validity of any nomination or shareholder proposal, the presiding officer of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the provisions of this Section 11 and is a proper subject for shareholder action in accordance with provisions of applicable law and, if any proposed nomination or business is not in compliance with this Section 11 or not a proper subject for shareholder action, to declare that such defective nomination or proposal be disregarded. This provision shall not prevent the consideration and approval or disapproval at the meeting of reports of officers, directors and committees of the Board of Directors, but, in connection with such reports, no new business shall be acted upon at the meeting unless stated, submitted and received as herein provided. (2) For purposes of this Section 11, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, Reuters or comparable news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act or any successor provision. In no event shall the public announcement of a postponement or adjournment of a meeting commence a new time period for the giving of a shareholder's notice pursuant to this Section 11. (3) Notwithstanding the foregoing provisions of this Section 11, a shareholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any rights of shareholders to request inclusion of proposals in, or the corporation's right to omit proposals from, the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or any successor provision. 5 ARTICLE III BOARD OF DIRECTORS Section 1. Rights, Powers Duties, Rules and Procedures. The powers of the corporation shall be exercised, its business conducted and managed, and its property controlled under the direction of the Board of Directors. Except to the extent prohibited by law, the Board of Directors shall have the right (which, to the extent exercised, shall be exclusive) to establish the rights, powers, duties, rules and procedures that from time to time shall govern the Board of Directors and each of its members, including, without limitation, the vote required for any action by the Board of Directors, and that from time to time shall affect the directors' power to manage the business and affairs of the corporation. Except to the extent required by law, no Bylaw shall be adopted by shareholders which shall impair or impede the implementation of the foregoing Section 2. Number, Tenure and Qualifications. The number of directors of the corporation shall be not less than three (3); the number thereof to be determined from time to time by the Board of Directors. Each director shall hold office until the next annual meeting of shareholders following his election or appointment and until his successor shall have been elected and qualified or until his earlier resignation, removal from office, or death. A director need not be a resident of the State of Georgia or a shareholder of the corporation. Section 3. Nomination. Nominations for the election of directors shall be made as provided in Section 11 of Article II of these Bylaws. Section 4. Regular Meetings. A regular meeting of the Board of Directors shall be held without notice other than this Bylaw immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place for the holding of additional regular meetings without notice other than such resolution. Section 5. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or a majority of directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors so called. Section 6. Chairman of the Board. The Chairman of the Board shall be chosen from among the members of the Board of Directors. If requested to do so, the Chairman of the Board shall preside at all meetings of the Board of Directors and shareholders. The Chairman of the Board shall perform such other duties as from time to time may be assigned by the Board of Directors. Section 7. Telephonic Meetings. Meetings of the Board of Directors may be conducted by conference telephone or similar communications equipment by means of which all persons participating can hear each other, and participation in such a meeting shall constitute presence in person at such meeting. Section 8. Notice of Meeting. Notice of any special meeting shall be given at least 6 one (1) day prior thereto. Notice is not required prior to any regular meeting of the Board of Directors. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 9. Adjournment. When a meeting of the Board of Directors is adjourned to another time or place, notice need not be given of the adjourned meeting if the new time and place are fixed at the meeting at which the adjournment is taken and if the period of adjournment does not exceed one (1) month in any one adjournment. At the adjourned meeting the Board of Directors may transact any business which might have been transacted had a quorum been present at the time originally designated for the meeting. Section 10. Quorum and Voting. A quorum of the Board of Directors consists of a majority of the number of directors fixed pursuant to these Bylaws. The affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, except as otherwise may be specifically provided by law, by the Articles of Incorporation or by these Bylaws. Section 11. Action without a Meeting. Any action required or permitted to be taken by the Board of Directors at a meeting may be taken without a meeting if all members of the Board consent thereto in writing, setting forth the action so taken, and there is an affirmative vote of the number of directors which would be necessary to authorize or take such action at a meeting, evidenced in writing. The writing or writings are to be filed with the minutes of the proceedings of the Board. Section 12. Vacancies. Any vacancy occurring on the Board of Directors created by an increase in the number of directors by action of the shareholders shall be filled by the shareholders in the same manner as at an annual election. The Board of Directors shall fill any vacancy occurring on the Board created by an increase in the number of directors by action of the Board or the removal or resignation of a director as set forth in Sections 14 and 15 of this Article III, except such vacancy shall be filled pursuant to the Articles of Incorporation to the extent the Articles of Incorporation provide that a class of shareholders may fill a vacancy created by the removal or resignation of a director elected by that class. A director elected to fill a vacancy shall hold office for the unexpired term of his predecessor. Section 13. Compensation. By resolution of the Board of Directors, each director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a stated salary as director, or a fixed sum for attendance at each meeting of the Board of Directors, or both, payable in cash or securities of the corporation. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 14. Removal. Any or all of the directors may be removed with or without cause by majority vote of the shares represented at a meeting of the shareholders at which a quorum is present. 7 Section 15. Resignation. A director may resign at any time by delivering written notice to the corporation, the Chairman of the Board, the Board of Directors or the President. A resignation is effective when the notice is delivered unless the notice specifies a later effective date. ARTICLE IV OFFICERS Section 1. Number. The officers of the corporation shall be a President and a Secretary, each of whom shall be elected by the Board of Directors. The Board may also elect or appoint a Chairman of the Board, one or more Vice Presidents (with or without a modified title such as "Senior," "Executive," or "Assistant"), an Assistant Secretary, a Treasurer, an Assistant Treasurer and such other officers and assistant officers as may be deemed necessary. One person may hold any number of such offices, except the President may not hold the office of Senior Vice President, Vice President, Secretary or Assistant Secretary, and the Secretary and Treasurer shall not hold the office of Assistant Secretary and Assistant Treasurer, respectively. Section 2. Election and Term of Office. The officers of the corporation shall be elected from time to time by the Board of Directors, as it deems advisable. Each officer shall hold office until his successor shall have been duly elected and qualified, or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. Section 3. Removal. The Board of Directors may remove any officer or agent of the corporation at any time with or without cause. Removal of an officer or agent shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create any contract rights. Section 4. Resignation. Any officer may resign at any time by delivering notice to the corporation. A resignation is effective when the notice is delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date and the corporation accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date if it provides that the successor does not take office until the effective date. An officer's resignation does not affect the corporation's contract rights, if any, with the officer. Section 5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. In the event of an absence of any officer of the corporation, or for any other reason which the Board of Directors may deem sufficient, the Board may delegate for the time being the powers or duties, or any of them, of such officer to any other officer or director, in connection with these Bylaws. Section 6. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. 8 Section 7. President. The President shall be the chief executive officer of the corporation and, subject to the control of the Board of Directors, shall be primarily responsible for the general management of the business affairs of the corporation and for implementing the policies and directives of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect, shall have authority to make contracts on behalf of the corporation in the ordinary course of business of the corporation, shall preside at all meetings of the Board of Directors and shareholders if requested to do so and shall perform such other duties as from time to time may be assigned by the Board of Directors. Section 8. The Vice Presidents. The Vice Presidents shall assist the President in the management of the business. During the absence or disability of the President, the Vice Presidents in the order designated by the President or the Board of Directors, or in the absence of any designation, then in the order of their election, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents shall perform such other duties as from time to time may be assigned to them by the President. Section 9. The Secretary. The Secretary shall: (a) keep the minutes of the proceedings of the shareholders, the Board of Directors and the standing committees in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents, the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign, with the President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors or the President. Section 10. The Treasurer. The Treasurer shall be the chief financial officer of the corporation and shall have custody of all valuables. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for monies due and payable to the corporation from any source whatsoever, and deposit all such monies in the corporation's account(s); and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President. Section 11. Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries may sign with the President certificates for shares of the corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or the President. 9 ARTICLE V CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 1. Certificates for Shares. Shares may be issued by the corporation by the delivery of certificates representing such shares and in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the President and by the Secretary or an Assistant Secretary. The signature of such officers upon a certificate may be facsimiles. Each certificate for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number and class of shares, the designation of the series, if any, the certificate represents, and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled, and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed, or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the President or the Board of Directors may prescribe. Section 2. Shares without Certificates. Shares of common stock of the corporation need not be represented by certificates. The Board of Directors of the corporation may authorize the issuance of some or all of the shares of any or all of the corporation's other classes or series of stock without certificates. Any such authorization shall not affect shares already represented by certificates until such certificated shares are surrendered to the corporation. Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send to the holder thereof a written statement which includes: (1) the name of the corporation and that it is organized under the laws of the State of Georgia; (2) the name of the person to whom the shares are issued; (3) the number and class and designation of the series, if any, of the shares; and (4) any restrictions on the transfer or registration of transfer of such shares. Section 3. Transfer of Shares. Transfers of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of his authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or a transfer agent or registrar, and on surrender for cancellation of the certificate for such shares, if a certificate representing such shares shall have been issued. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ARTICLE VI FISCAL YEAR The fiscal year of the corporation shall be determined and fixed by the Board of Directors. 10 ARTICLE VII CORPORATE SEAL The Board of Directors of the corporation may adopt a corporate seal for the corporation and when so adopted and impressed on the margin hereof or the margin of the minutes of the meeting at which the seal is adopted, the same shall be and constitute the corporate seal of this corporation, but unless and until such action be taken by the Board of Directors, this corporation shall have no corporate seal. In the event that no corporate seal is adopted, or if it is inconvenient to use such seal at any time, the signature of the corporation followed by the word "Seal" enclosed in parentheses shall be deemed the seal of the corporation, but the absence of such seal on any instrument, or its addition thereto, shall not affect its character or validity or legal effect in any respect. ARTICLE VIII WAIVER OF NOTICE Whenever any notice is required to be given to any shareholder or director of the corporation pursuant to law or under the provisions of the Articles of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice delivered to the corporation and filed in the corporation's minutes or corporate records, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. A shareholder's or director's attendance at, or participation in, a meeting shall constitute waiver of notice and consent to the consideration of matters not described in any notice as set forth in the Georgia Business Corporation Code, as amended from time to time. Neither the business to be transacted at, nor the purpose of, any meeting of the shareholders or directors is required to be specified in any waiver of notice. ARTICLE IX COMMITTEES Section 1. Appointment. The Board of Directors, by resolution adopted by a majority of all the directors in office when the action is taken, may designate one or more of its members to constitute a committee. The designation of a committee and the delegation of authority thereto shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed by law. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disabled member at any meeting of the committee. Section 2. Tenure. The members of a committee serve at the pleasure of the Board of Directors, which may at any time, for any or no reason, remove any individual committee member, increase or decrease the number of members of a committee, or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his removal, resignation or death. The Board of Directors may fill any vacancy on a committee created by 11 removal, resignation, death or an increase in the number of members of the committee. Section 3. Authority. All duly delegated committees may exercise such power and authority in the management of the business and affairs of the corporation as specified by resolution of the Board of Directors and to the extent allowed by applicable law, the Articles of Incorporation and these Bylaws and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Section 4. Executive Committee. The Board of Directors may appoint an Executive Committee which, to the extent permitted by law, shall have and may exercise when the Board of Directors is not in session all powers of the Board of Directors regarding the supervision of the management of the business and affairs of the corporation. The Executive Committee shall be chaired by the President of the corporation. ARTICLE X INDEMNIFICATION OF OFFICERS AND DIRECTORS Section 1. Definitions and References. Terms used in this Article shall have the meanings assigned such terms in Part 5 of Article 8 of the Georgia Business Corporation Code. Whenever in these Bylaws reference is made to the Georgia Business Corporation Code generally or to a specific provision of the Georgia Business Corporation Code, such reference shall be deemed to refer to the Georgia Business Corporation Code or such provision as amended from time to time or any successor provision. Section 2. Indemnification of and Advancement of Expenses to Directors. The corporation shall indemnify and advance expenses to its directors to the fullest extent permitted under, and in accordance with, the corporation's Articles of Incorporation and the applicable provisions of Part 5 of Article 8 of the Georgia Business Corporation Code. Section 3. Mandatory Indemnification of Officers. The corporation shall indemnify and advance expenses to its officers who are not directors to the same extent as to directors under Section 2 of this Article X. Section 4. Permissive Indemnification of Employees and Agents. The corporation may, to the extent and on such conditions as may be authorized by the Board of Directors, indemnify and advance expenses to its employees and agents who are not directors to the fullest extent permitted under, and in accordance with, Section 14-2-857 of the Georgia Business Corporation Code. Section 5. Advancement of Expenses of Officers, Employees and Agents. No advancement or reimbursement of expenses to officers, employees or agents in accordance with Sections 3 or 4 of this Article X shall be made unless the proposed indemnitee furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct set forth in the corporation's Articles of Incorporation with respect to directors, and he furnishes the 12 corporation a written undertaking, executed personally or on his behalf, to repay any advances if it is ultimately determined that he is not entitled to indemnification under this Article X or Part 5 of Article 8 of the Georgia Business Corporation Code. Section 6. Liability Insurance. The corporation may purchase and maintain insurance on behalf of an individual who is a director, officer, employee or agent of the corporation or who, while a director, officer, employee or agent of the corporation, serves at the corporation's request as a director, officer, partner, trustee, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan, or other entity against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify or advance expenses to him against the same liability under this Article X or under Part 5 of Article 8 of the Georgia Business Corporation Code. Section 7. Contract Rights. The right to indemnification and advancement of expenses conferred hereunder to directors and officers shall be a contract right and shall not be affected adversely to any director or officer by any amendment of these Bylaws with respect to any action or inaction occurring prior to such amendment; provided, however, that this provision shall not confer upon any indemnitee or potential indemnitee (in his capacity as such) the right to consent or object to any subsequent amendment of these Bylaws. Section 8. Nonexclusivity. The rights of a director or officer hereunder shall be in addition to any other rights with respect to indemnification, advancement of expenses or otherwise that he may have under contract or the Georgia Business Corporation Code or otherwise. Section 9. Amendments. No amendment, modification or rescission of this Article X, or any provision hereof, the effect of which would diminish the rights to indemnification or advancement of expenses as set forth herein shall be effective as to any director or officer of the corporation with respect to any action taken or omitted by such person prior to such amendment, modification or rescission. Section 10. Severability. To the extent that the provisions of this Article X are held to be inconsistent with the provisions of Part 5 of Article 8 of the Georgia Business Corporation Code, such provisions of such Code shall govern. In the event that any of the provisions of this Article X (including any provision within a single section, subsection, division or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions of this Article X shall remain enforceable to the fullest extent permitted by law. ARTICLE XI AMENDMENTS The Bylaws of the corporation may be altered, amended or repealed, and new Bylaws may be adopted, by the shareholders at any annual or special meeting of the shareholders or by the Board of Directors at any regular or special meeting of the Board of Directors; provided, however, 13 that, the notice of such meeting shall specify that amendments to the Bylaws will be considered at such meeting and shall summarize the proposed amendments; and provided further, that the Bylaws may not be altered, amended or repealed by the Board of Directors to the extent: (1) the Articles of Incorporation or applicable law reserve the power to alter, amend or repeal a particular Bylaw exclusively to the shareholders, in whole or in part; or (2) the shareholders in altering, amending or repealing a particular Bylaw provide expressly that the Board of Directors may not alter, amend or repeal that Bylaw. ARTICLE XII ARTICLES OF INCORPORATION In the event that any provision of these Bylaws is inconsistent or in conflict with any provision contained in the corporation's Articles of Incorporation (including any amendment thereto setting forth the preferences, limitations and rights of any series or class of the corporation's preferred stock) the provision contained in the Articles of Incorporation shall govern. 14 EX-23.1 8 ex23-1.txt CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-8, to be filed on or around August 22, 2001, of our report dated March 30, 2001 on the consolidated financial statements of WorldCom, Inc., included in WorldCom's Annual Report on Form 10-K for the year ended December 31, 2000, as amended, and to all references to our firm included in or made a part of this Registration Statement. /s/ Arthur Andersen LLP Jackson, Mississippi August 22, 2001 EX-23.2 9 ex23-2.txt CONSENT OF DOWELL AND PEREZ P.A. EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of WorldCom, Inc. of our report dated June 27, 2001, included in the Annual Report on Form 11-K of the Intermedia Communications Inc. 401(k) Profit Sharing Plan for the year ended December 31, 2000, and to all references to our firm included in or made a part of this Registration Statement. /s/ DOWELL and PEREZ P.A. Tampa, Florida August 21, 2001 EX-23.3 10 ex23-3.txt CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 of WorldCom, Inc. pertaining to the Intermedia Communications Inc. 401(k) Profit Sharing Plan and the Digex, Incorporated 401(k) Plan of our report dated June 19, 2001, with respect to the financial statements and schedule of the Digex, Incorporated 401(k) Plan included in the Digex, Incorporated Annual Report on Form 11-K for the period July 1, 2000 (inception) to December 31, 2000. /s/ ERNST & YOUNG LLP McLean, Virginia August 22, 2001 -----END PRIVACY-ENHANCED MESSAGE-----