United States District Court, S.D. New York
August 24, 2005.
IN RE WORLDCOM, INC. ERISA LITIGATION. This Document Relates to: All Actions.
The opinion of the court was delivered by: DENISE COTE, District Judge
Order Approving Plan of Allocation
This matter having come before the Court pursuant the Class
Action Settlement Agreement (the "Agreement") dated July 2, 2004,
and specifically section 8.3 thereof, and on the ERISA
Plaintiffs' Motion for Final Approval of Settlement filed
September 1, 2004, and the matter having been heard and good
IT IS ORDERED:
A. Capitalized terms used herein shall have the meanings
ascribed to them in section 1 of the Agreement or in this Order.
B. "Participant" means a person who was a participant, as that
term is used in ERISA, in the Plan during the Class Period.
C. "Plan Administrator" means the administrator of the Plan
pursuant to ERISA § 16(A).
D. "Company Stock" means WorldCom, Inc. stock and MCI Group
tracking stock. II. Amount to Be Distributed.
A. As soon as practicable on or immediately after the Effective
Date, the Custodian shall pay into the Plan:
(1) the Principal Class Settlement Amount
($46,750,000 pursuant to Section 7.2.1 of the
(2) the Ebbers Initial Settlement Payment ($400,000
pursuant to Section 7.2.2 of the Agreement); plus
(3) any interest earned on those amounts pursuant to
Section 7.1.2 of the Agreement; minus
(1) attorneys' fees, expenses, and Named Plaintiff
compensation awarded by the Court, as contemplated by
Section 10 of the Agreement or as reserved for or
otherwise ordered by the Court; and
(2) any reasonable and necessary expenses of the
Settlement Fund, as contemplated by Section 7.1.2 of
This amount is the "Net Class Settlement Amount."
B. The total amount to be distributed to the Participants (the
"Distribution Amount") shall be the Net Class Settlement Amount,
as set out in Paragraph II.A above, minus any reasonable and
necessary out-of-pocket expenses of the implementation of the
Plan of Allocation, as contemplated by Section 8.3 of the
III. Calculation of Each Participant's Share of the
A. The Plan Administrator shall calculate, for each
Participant, a Net Loss. The Net Loss for each Participant shall
be equal to (a) the dollar amount of the account balance invested
in Company Stock at the beginning of the Class Period, plus (b)
the dollar amounts of any additional investment(s) in Company
Stock during the Class Period, as of the date of the investment(s), minus (c) the
proceeds of all dispositions of Company Stock during the Class
B. The Net Losses of the Participants as calculated in Section
III.A above will be totaled to yield the loss of the Plan as a
whole over the Class Period (the "Plan's Loss").
C. The Plan Administrator shall calculate for each Participant
his or her "Preliminary Fractional Share" of the Plan's Loss,
i.e., by dividing each Participant's Net Loss by the Plan's Loss.
D. The Plan Administrator shall then calculate for each
Participant his "Preliminary Dollar Recovery" of the Distribution
Amount by multiplying the Participant's Preliminary Fractional
Share by the Distribution Amount.
E. The Plan Administrator shall identify all Participants whose
Preliminary Dollar Recovery is greater than zero but less than
ten dollars ($10.00) (the "De Minimis Amount"). All such
Participants shall receive an allocation from Distribution Amount
of the De Minimis Amount.
F. The Plan Administrator shall then, taking into account the
Participants who receive the De Minimis Amount, recalculate the
Preliminary Fractional Shares and the Preliminary Dollar
Recoveries as many times as necessary so as to arrive at the
"Final Fractional Share" and the "Final Dollar Recovery" for each
Participant. The sum of the Final Dollar Recoveries must equal
the Distribution Amount.
IV. Distribution of the Allocated Amounts.
A. Current Participants. As promptly as possible after deposit
of Net Class Settlement Amount into the Plan, the Plan
Administrator shall deposit into each current Participant's account his or her Final Dollar Recovery as
calculated above. The deposited amount shall be allocated among
the Participant's investment options in accordance with the
existing investment elections then in effect and treated
thereafter for all purposes under the Plan as assets of the Plan
properly credited to that Participant's account.
B. Former Participants. With respect to former Participants who
withdrew their accounts after the beginning of the Class Period
but prior to the entry of the instant Order, the Plan
Administrator shall invest each such former Participant's Final
Dollar Recovery in a suitable short term investment vehicle, the
primary purpose of which is the preservation of assets, pending
distribution to the former Participant. The deposited amount,
plus interest, shall then, as soon as is practical, be
distributed to the former Participant in the same manner as a
qualified distribution from the Plan pursuant to ERISA and the
Internal Revenue Code. Amounts payable to former Participants who
cannot be located shall be reallocated among other Participants
and former Participants pro rata in accordance with their Final
Fractional Shares to the extent permitted by ERISA.
C. Additional Procedures for Subsequent Payments on Ebbers
Note. As soon as practicable on or immediately after the
Effective Date, Lead Counsel shall deliver to the Plan
Administrator the Ebbers Note. Any payments on the Ebbers Note
after the Ebbers Initial Settlement Payment shall be distributed
to Participants and former Participants pro rata in accordance
with their Final Fractional Shares. V. Qualifications and Continuing Jurisdiction
A. In light of the manner in which the data is kept and the
ease with which it can be manipulated, it may be appropriate to
simplify some of the features of these calculations. Such
simplifications are acceptable as long as the two basic features
of the distribution are preserved: (1) that each Participant
receives a share of the Distribution Amount based approximately
on the decline in the value of WorldCom stock he held over the
Class Period in comparison with the decline in value of WorldCom
stock held by others; and (2) that the distribution take place
through the Plan as an entity so as to realize the tax advantages
of investment in the Plan. Any such simplifications shall be
submitted to Lead Counsel and, if acceptable to Lead Counsel,
shall be submitted to the Court on stipulation for approval. In
the event the Plan Administrator and Lead Counsel are unable to
agree on such a simplification, the matter shall be submitted to
the Court for resolution.
B. The Court will retain jurisdiction over this Plan of
Allocation to the extent necessary to ensure that it is fully and
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