<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1996
FILE NO. 333-02593
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MCI COMMUNICATIONS CORPORATION DELAWARE 52-0886267
MCI CAPITAL I DELAWARE 52-6793953
MCI CAPITAL II DELAWARE TO BE APPLIED FOR
MCI CAPITAL III DELAWARE TO BE APPLIED FOR
MCI CAPITAL IV DELAWARE TO BE APPLIED FOR
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) JURISDICTION IDENTIFICATION
OF INCORPORATION NUMBER)
OR ORGANIZATION)
1801 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20006
(202) 872-1600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
MICHAEL H. SALSBURY
EXECUTIVE VICE PRESIDENT
AND
GENERAL COUNSEL
MCI COMMUNICATIONS CORPORATION
1801 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20006
(202) 872-1600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
PETER S. KOLEVZON ROBERT H. CRAFT, JR.
KRAMER, LEVIN, SULLIVAN & CROMWELL
NAFTALIS & FRANKEL 1701 PENNSYLVANIA AVENUE, N.W.
919 THIRD AVENUE WASHINGTON, D.C. 20006
NEW YORK, NEW YORK 10022 (202) 956-7500
(212) 715-9100
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the Securities covered by this Registration Statement, other than underwriting
discounts and commissions, are as follows:
<TABLE>
<S> <C>
(a)SEC registration fee (actual)................................. $ 258,621
(b)Printing fees and expenses.................................... 300,000
(c)Legal fees and expenses....................................... 250,000
(d)Accounting fees and expenses.................................. 50,000
(e)Blue Sky fees and expenses.................................... 15,500
(f)Nasdaq National Market Listing Fee............................ 50,000
(g)Rating Agency Fees............................................ 40,000
(h)Trustees' Fees................................................ 10,000
(i)Other......................................................... 25,879
----------
Total........................................................ $1,000,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
MCI has in effect an insurance policy covering officers' and directors'
legal liability containing a maximum limit of $50 million per loss per policy
year, including legal fees and expenses, with retained liability for each loss
of $2,000,000 for MCI.
MCI's Restated Certificate of Incorporation, at Section 8, provides as
follows:
(a) No director of this corporation shall be personally liable to this
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to this corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after
approval by the stockholders of this paragraph (a) to authorize corporate
action further limiting or eliminating the personal liability of directors,
then the liability of a director of this Corporation shall be limited or
eliminated to the fullest extent permitted by the General Corporation Law
of the State of Delaware, as so amended. No amendment or repeal of this
paragraph (a) shall apply to or have any effect on the liability or alleged
liability of any director of this corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or
repeal.
(b) This corporation shall, to the fullest extent permitted by Delaware
law, as in effect from time to time, indemnify all persons who are or were
directors, officers and employees of this corporation or any wholly-owned
subsidiary, and all such directors, officers and employees who, at the
request of this corporation, are or were at any time serving any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity. This corporation may also indemnify all
other persons to the fullest extent permitted by Delaware law.
The General Corporation Law of the State of Delaware, at Section 145,
provides, in pertinent part, that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation), by reason of
II-1
<PAGE>
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as the
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere plea or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful. In addition, the indemnification of expenses (including
attorneys' fees) is allowed in derivative actions, except no indemnification
is allowed in respect to any claim, issue or matter as to which any such
person has been adjudged to be liable to the corporation, unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought decides that indemnification is proper. To the extent that
any such person succeeds on the merits or otherwise, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith. The determination that the person to be
indemnified met the applicable standard of conduct, if not made by a court, is
made by the directors of the corporation by a majority vote of the directors
not party to such an action, suit or proceeding even though less than a quorum
or, if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion or by the stockholders.
Expenses may be paid in advance upon the receipt of undertakings to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. A corporation
may purchase indemnity insurance.
The above described indemnification and advancement of expenses, unless
otherwise provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and inure to the
benefit of such person's heirs, executors and administrators.
MCI has indemnification agreements with each of its directors which have
been approved by stockholders. The indemnification under the indemnification
agreements differs from that provided in Section 8 of MCI's Certificate of
Incorporation in the following ways: (i) MCI is obligated to advance
litigation expenses to an indemnitee, subject to reimbursement if the
Reviewing Party (as defined in the indemnification agreements) determines that
the director would not be permitted such indemnification under applicable
laws; (ii) MCI must prove that the applicable standard of conduct has not been
met for indemnification if MCI denies protection to a director; (iii) upon a
potential change in control (as defined in the indemnification agreements) MCI
is required to contribute an amount sufficient to pay all claims for which the
indemnitee is entitled to be indemnified to a trust for the benefit of the
indemnitee (subject to an overall maximum amount on such trust); (iv) a
subsequent board of directors, hostile to an indemnitee entitled to
indemnification, will not have the right to make a final determination that
the indemnitee has not met the required standard of care; and (v) the period
of time in which MCI may sue an indemnitee for an action is limited to two
years from the date of accrual of such cause of action.
Reference is made to the Underwriting Agreement Basic Provisions which is
filed as Exhibit 1.01 to this Registration Statement.
Under the Trust Agreements, MCI will agree to indemnify each of the Trustees
of the Issuer or any predecessor Trustee for the Issuer, and to hold the
Trustees harmless against, any loss, damage, claims, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the Trust Agreements,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties under the Trust Agreements.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, the Registrants have been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrants
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question 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.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.01* Proposed form of Underwriting Agreement Basic Provisions for Preferred
Securities.
3.01 Restated Certificate of Incorporation of MCI (incorporated herein by
reference to Exhibit 3(a) to MCI's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).
3.02 By-Laws of MCI, as amended (incorporated herein by reference to Exhibit
3(ii) to MCI's Registration Statement on Form S-3, Registration No. 33-
57155).
4.01* Junior Subordinated Indenture between MCI and Wilmington Trust Company,
as Debenture Trustee.
4.02* Certificate of Trust of MCI Capital I.
4.03* Trust Agreement of MCI Capital I.
4.04* Certificate of Trust of MCI Capital II.
4.05* Trust Agreement of MCI Capital II.
4.06* Certificate of Trust of MCI Capital III.
4.07* Trust Agreement of MCI Capital III.
4.08* Certificate of Trust of MCI Capital IV.
4.09* Trust Agreement of MCI Capital IV.
4.10* Form of Amended and Restated Trust Agreement for MCI Capital I.
4.10A Form of Amended and Restated Trust Agreement for MCI Capital II.
4.10B Form of Amended and Restated Trust Agreement for MCI Capital III.
4.10C Form of Amended and Restated Trust Agreement for MCI Capital IV.
4.11 Form of Preferred Security Certificate for MCI Capital I (included as
Exhibit E of Exhibit 4.10 hereto).
4.11A Form of Preferred Security Certificate for MCI Capital II (included as
Exhibit E 4.10A hereto).
4.11B Form of Preferred Security Certificate for MCI Capital III (included as
Exhibit E 4.10B hereto).
4.11C Form of Preferred Security Certificate for MCI Capital IV (included as
Exhibit E 4.10C hereto).
4.12* Form of Guarantee Agreement in respect of MCI Capital I.
4.12A Form of Guarantee Agreement in respect of MCI Capital II.
4.12B Form of Guarantee Agreement in respect of MCI Capital III.
4.12C Form of Guarantee Agreement in respect of MCI Capital IV.
4.13* Form of Supplemental Indenture between MCI and Wilmington Trust
Company, as Debenture Trustee (Supplemental Indentures for MCI Capital
I, MCI Capital II, MCI Capital III and MCI Capital IV are substantially
identical except for names and dates).
5.01* Opinion of Kramer, Levin, Naftalis & Frankel, relating to the legality
of the Junior Subordinated Debentures and the Guarantees.
5.02* Opinion of Richards, Layton & Finger, special Delaware counsel,
relating to the legality of the Preferred Securities of MCI Capital I,
MCI Capital II, MCI Capital III and MCI Capital IV.
8.01* Opinion of Kramer, Levin, Naftalis & Frankel, as to certain United
States federal income tax matters.
12.01 Statement Re: Computation of Ratio of Earnings to Fixed Charges
(Incorporated by reference to Exhibit 12 to MCI's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996).
23.01* Consent of Price Waterhouse LLP.
23.02 Consent of Kramer, Levin, Naftalis & Frankel (included in Exhibit 5.01
hereto).
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
23.03 Consent of Richards, Layton & Finger, special Delaware counsel
(included in Exhibit 5.02 hereto).
23.04 Consent of Kramer, Levin, Naftalis & Frankel (included in Exhibit 8.01
hereto).
25.01* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Trustee for the Junior
Subordinated Indenture.
25.02* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Property Trustee for the
Amended and Restated Trust Agreement of MCI Capital I.
25.03* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Guarantee Trustee for the
Guarantee for MCI Capital I.
25.04* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Property Trustee for the
Amended and Restated Trust Agreement of MCI Capital II.
25.05* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Guarantee Trustee for the
Guarantee for MCI Capital II.
25.06* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Property Trustee for the
Amended and Restated Trust Agreement of MCI Capital III.
25.07* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Guarantee Trustee for the
Guarantee for MCI Capital III.
25.08* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Property Trustee for the
Amended and Restated Trust Agreement of MCI Capital IV.
25.09* Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Wilmington Trust Company, as Guarantee Trustee for the
Guarantee for MCI Capital IV.
</TABLE>
- --------
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(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 the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
II-4
<PAGE>
Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference in
the Registration Statement.
(2) That, for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(3) 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.
(4) 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.
(5) 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
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MCI
COMMUNICATIONS CORPORATION CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WASHINGTON AND DISTRICT
OF COLUMBIA ON MAY 22, 1996.
MCI Communications Corporation
By: /s/ Bert C. Roberts, Jr.
----------------------------------
BERT C. ROBERTS, JR. CHAIRMAN
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING OFFICERS AND DIRECTORS
OF MCI COMMUNICATIONS CORPORATION ON MAY 22, 1996 IN THE CAPACITIES INDICATED
BELOW.
SIGNATURE TITLE
/s/ Bert C. Roberts, Jr. Principal Executive Officer,
- ------------------------------------- Director
BERT C. ROBERTS, JR.
/s/ Douglas L. Maine Principal Financial
- ------------------------------------- Officer
DOUGLAS L. MAINE
/s/ James M. Schneider Principal Accounting Officer
- -------------------------------------
JAMES M. SCHNEIDER
/s/ Clifford L. Alexander, Jr. Director
- -------------------------------------
CLIFFORD L. ALEXANDER, JR.
/s/ Judith C. Areen Director
- -------------------------------------
JUDITH C. AREEN
/s/ Michael H. Bader Director
- -------------------------------------
MICHAEL H. BADER
/s/ Sir Peter L. Bonfield Director
- -------------------------------------
SIR PETER L. BONFIELD
II-6
<PAGE>
SIGNATURE TITLE
--------- -----
/s/ Richard M. Jones Director
- -------------------------------------
RICHARD M. JONES
/s/ Gordon S. Macklin Director
- -------------------------------------
GORDON S. MACKLIN
/s/ Alfred T. Mockett Director
- -------------------------------------
ALFRED T. MOCKETT
/s/ K. Rupert Murdoch Director
- -------------------------------------
K. RUPERT MURDOCH
Director
- -------------------------------------
DR. ALAN W. RUDGE
/s/ Richard B. Sayford Director
- -------------------------------------
RICHARD B. SAYFORD
/s/ Gerald H. Taylor Director
- -------------------------------------
GERALD H. TAYLOR
/s/ Judith Whittaker Director
- -------------------------------------
JUDITH WHITTAKER
/s/ John R. Worthington Director
- -------------------------------------
JOHN R. WORTHINGTON
II-7
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MCI CAPITAL I,
MCI CAPITAL II, MCI CAPITAL III AND MCI CAPITAL IV CERTIFY THAT THEY HAVE
REASONABLE GROUNDS TO BELIEVE THAT THEY MEET ALL OF THE REQUIREMENTS FOR
FILING ON FORM S-3 AND HAVE DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON THEIR BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF WASHINGTON AND DISTRICT OF COLUMBIA ON MAY 22, 1996.
MCI Capital I
(Registrant)
By: MCI Communications Corporation,
as Depositor
By:/s/ Jonelle St. John
----------------------------------
Jonelle St. John
Vice President and Treasurer
MCI Capital II
(Registrant)
By: MCI Communications Corporation,
as Depositor
By:/s/ Jonelle St. John
----------------------------------
Jonelle St. John
Vice President and Treasurer
MCI Capital III
(Registrant)
By: MCI Communications Corporation,
as Depositor
By:/s/ Jonelle St. John
----------------------------------
Jonelle St. John
Vice President and Treasurer
MCI Capital IV
(Registrant)
By: MCI Communications Corporation,
as Depositor
By:/s/ Jonelle St. John
----------------------------------
Jonelle St. John
Vice President and Treasurer
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
1.01* Proposed form of Underwriting Agreement Basic Provisions for
Preferred Securities.........................................
3.01 Restated Certificate of Incorporation of MCI (incorporated
herein by reference to Exhibit 3(a) to MCI's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994).......
3.02 By-Laws of MCI, as amended (incorporated herein by reference
to Exhibit 3(ii) to MCI's Registration Statement on Form S-3,
Registration No. 33-57155)...................................
4.01* Junior Subordinated Indenture between MCI and Wilmington
Trust Company, as Debenture Trustee..........................
4.02* Certificate of Trust of MCI Capital I........................
4.03* Trust Agreement of MCI Capital I.............................
4.04* Certificate of Trust of MCI Capital II.......................
4.05* Trust Agreement of MCI Capital II............................
4.06* Certificate of Trust of MCI Capital III......................
4.07* Trust Agreement of MCI Capital III...........................
4.08* Certificate of Trust of MCI Capital IV.......................
4.09* Trust Agreement of MCI Capital IV............................
4.10* Form of Amended and Restated Trust Agreement for MCI Capital
I............................................................
4.10A Form of Amended and Restated Trust Agreement for MCI Capital
II...........................................................
4.10B Form of Amended and Restated Trust Agreement for MCI Capital
III..........................................................
4.10C Form of Amended and Restated Trust Agreement for MCI Capital
IV...........................................................
4.11 Form of Preferred Security Certificate for MCI Capital I
(included as Exhibit E of Exhibit 4.10 hereto)...............
4.11A Form of Preferred Security Certificate for MCI Capital II
(included as Exhibit E to 4.10A hereto)......................
4.11B Form of Preferred Security Certificate for MCI Capital III
(included as Exhibit E to 4.10B hereto)......................
4.11C Form of Preferred Security Certificate for MCI Capital IV
(included as Exhibit E to 4.10C hereto)......................
4.12* Form of Guarantee Agreement in respect of MCI Capital I......
4.12A Form of Guarantee Agreement in respect of MCI Capital II.....
4.12B Form of Guarantee Agreement in respect of MCI Capital III....
4.12C Form of Guarantee Agreement in respect of MCI Capital IV.....
4.13* Form of Supplemental Indenture between MCI and Wilmington
Trust Company, as Debenture Trustee (Supplemental Indentures
for MCI Capital I MCI Capital II MCI Capital III and MCI
Capital IV are substantially identical except for names and
dates).......................................................
5.01* Opinion of Kramer, Levin, Naftalis & Frankel, relating to the
legality of the Junior Subordinated Debentures and the
Guarantees...................................................
5.02* Opinion of Richards, Layton & Finger, special Delaware
counsel, relating to the legality of the Preferred Securities
of MCI Capital I, MCI Capital II, MCI Capital III and MCI
Capital IV...................................................
8.01* Opinion of Kramer, Levin, Naftalis & Frankel, as to certain
United States federal income tax matters.....................
12.01 Statement Re: Computation of Ratio of Earnings to Fixed
Charges (Incorporated by reference to Exhibit 12 to MCI's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1996)........................................................
23.01* Consent of Price Waterhouse LLP..............................
23.02 Consent of Kramer, Levin, Naftalis & Frankel (included in
Exhibit 5.01 hereto).........................................
23.03 Consent of Richards, Layton & Finger, special Delaware
counsel (included in Exhibit 5.02 hereto)....................
23.04 Consent of Kramer, Levin, Naftalis & Frankel (included in
Exhibit 8.01 hereto).........................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
25.01* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as Trustee
for the Junior Subordinated Indenture........................
25.02* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Property Trustee for the Amended and Restated Trust Agreement
of MCI Capital I.............................................
25.03* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Guarantee Trustee for the Guarantee for MCI Capital I........
25.04* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Property Trustee for the Amended and Restated Trust Agreement
of MCI Capital II............................................
25.05* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Guarantee Trustee for the Guarantee for MCI Capital II.......
25.06* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Property Trustee for the Amended and Restated Trust Agreement
of MCI Capital III...........................................
25.07* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Guarantee Trustee for the Guarantee for MCI Capital III......
25.08* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Property Trustee for the Amended and Restated Trust Agreement
of MCI Capital IV............................................
25.09* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Wilmington Trust Company, as
Guarantee Trustee for the Guarantee for MCI Capital IV.......
</TABLE>
- --------
* Previously filed.
<PAGE>
===============================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
MCI COMMUNICATIONS CORPORATION, as Depositor,
Wilmington Trust Company, as Property Trustee
and Delaware Trustee,
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
Dated as of ________ __, 1996
MCI CAPITAL II
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<PAGE>
MCI Capital II
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section
<S> <C> <C> <C>
(S) 310 (a)(1).......................................... 807
(a)(2).......................................... 807
(a)(3).......................................... 809
(a)(4).......................................... 207(a)(ii)
(b)............................................. 808
(S) 311 (a)............................................. 813
(b)............................................. 813
(S) 312 (a)............................................. 507
(b)............................................. 507
(c)............................................. 507
(S) 313 (a)............................................. 814(a)
(a)(4).......................................... 814(b)
(b)............................................. 814(b)
(c)............................................. 1008
(d)............................................. 814(c)
(S) 314 (a)............................................. 815
(b)............................................. Not Applicable
(c)(1).......................................... 816
(c)(2).......................................... 816
(c)(3).......................................... Not Applicable
(d)............................................. Not Applicable
(e)............................................. 101, 816
(S) 315 (a)............................................. 801(a), 803(a)
(b)............................................. 802, 1008
(c)............................................. 801(a)
(d)............................................. 801, 803
(e)............................................. Not Applicable
(S) 316 (a)............................................. Not Applicable
(a)(1)(A)....................................... Not Applicable
(a)(1)(B)....................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. Not Applicable
(c)............................................. 607
(S) 317 (a)(1).......................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. 509
(S) 318 (a)............................................. 1010
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</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
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<PAGE>
TABLE OF CONTENTS
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Page
ARTICLE I
Defined Terms
SECTION 101. Definitions.................................... 2
ARTICLE II
Establishment of the Trust
SECTION 201. Name........................................... 13
SECTION 202. Office of the Delaware Trustee; Principal
Place of Business.............................. 13
SECTION 203. Initial Contribution of Trust Property;
Organizational Expenses........................ 13
SECTION 204. Issuance of the Preferred Securities........... 13
SECTION 205. Issuance of the Common Securities;
Subscription and Purchase of Debentures........ 14
SECTION 206. Declaration of Trust........................... 15
SECTION 207. Authorization to Enter into Certain
Transactions................................... 15
SECTION 208. Assets of Trust................................ 20
SECTION 209. Title to Trust Property........................ 20
ARTICLE III
Payment Account
SECTION 301. Payment Account................................... 20
ARTICLE IV
Distributions; Redemption
SECTION 401. Distributions..................................... 20
SECTION 402. Redemption........................................ 21
SECTION 403. Subordination of Common Securities................ 24
SECTION 404. Payment Procedures................................ 25
SECTION 405. Tax Returns and Reports........................... 25
SECTION 406. Payment of Taxes, Duties, Etc. of the Trust....... 25
SECTION 407. Payments under Indenture.......................... 26
ARTICLE V
Trust Securities Certificates
SECTION 501. Initial Ownership.............................. 26
SECTION 502. The Trust Securities Certificates.............. 26
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SECTION 503. Execution and Delivery of Trust Securities
Certificates...................................... 27
SECTION 504. Registration of Transfer and Exchange of
Preferred Securities Certificates................. 27
SECTION 505. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates........................... 28
SECTION 506. Persons Deemed Securityholders.................... 29
SECTION 507. Access to List of Securityholders' Names and
Addresses......................................... 29
SECTION 508. Maintenance of Office or Agency................... 29
SECTION 509. Appointment of Paying Agent....................... 30
SECTION 510. Ownership of Common Securities by Depositor....... 31
SECTION 511. Book-Entry Preferred Securities Certificates;
Common Securities Certificate..................... 31
SECTION 512. Notices to Clearing Agency........................ 32
SECTION 513. Definitive Preferred Securities Certificates...... 32
SECTION 514. Rights of Securityholders......................... 33
ARTICLE VI
Acts of Securityholders; Meetings; Voting
SECTION 601. Limitations on Voting Rights...................... 34
SECTION 602. Notice of Meetings................................ 35
SECTION 603. Meetings of Preferred Securityholders............. 36
SECTION 604. Voting Rights..................................... 36
SECTION 605. Proxies, etc...................................... 36
SECTION 606. Securityholder Action by Written Consent.......... 37
SECTION 607. Record Date for Voting and Other Purposes......... 37
SECTION 608. Acts of Securityholders........................... 37
SECTION 609. Inspection of Records............................. 39
ARTICLE VII
Representations and Warranties
SECTION 701. Representations and Warranties of the Bank,
the Property Trustee and the Delaware Trustee..... 39
SECTION 702. Representations and Warranties of Depositor....... 40
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ARTICLE VIII
The Trustees
SECTION 801. Certain Duties and Responsibilities............ 41
SECTION 802. Certain Notices................................ 43
SECTION 803. Certain Rights of Property Trustee............. 43
SECTION 804. Not Responsible for Recitals or Issuance of
Securities..................................... 46
SECTION 805. May Hold Securities............................ 46
SECTION 806. Compensation; Indemnity; Fees.................. 46
SECTION 807. Corporate Property Trustee Required;
Eligibility of Trustees........................ 47
SECTION 808. Conflicting Interests.......................... 48
SECTION 809. Co-Trustees and Separate Trustee............... 48
SECTION 810. Resignation and Removal; Appointment of
Successor...................................... 50
SECTION 811. Acceptance of Appointment by Successor......... 52
SECTION 812. Merger, Conversion, Consolidation or
Succession to Business......................... 53
SECTION 813. Preferential Collection of Claims Against
Depositor or Trust............................. 53
SECTION 814. Reports by Property Trustee.................... 54
SECTION 815. Reports to the Property Trustee................ 54
SECTION 816. Evidence of Compliance with Conditions
Precedent...................................... 55
SECTION 817. Number of Trustees............................. 55
SECTION 818. Delegation of Power............................ 55
ARTICLE IX
Termination, Liquidation and Merger
SECTION 901. Termination Upon Expiration Date............... 56
SECTION 902. Early Termination.............................. 56
SECTION 903. Termination.................................... 57
SECTION 904. Liquidation.................................... 57
SECTION 905. Mergers, Consolidations, Amalgamations or
Replacements of the Trust...................... 59
ARTICLE X
Miscellaneous Provisions
SECTION 1001. Limitation of Rights of Securityholders........ 60
SECTION 1002. Amendment...................................... 60
SECTION 1003. Separability................................... 62
SECTION 1004. GOVERNING LAW.................................. 62
SECTION 1005. Payments Due on Non-Business Day............... 62
SECTION 1006. Successors..................................... 63
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SECTION 1007. Headings....................................... 63
SECTION 1008. Reports, Notices and Demands................... 63
SECTION 1009. Agreement Not to Petition...................... 64
SECTION 1010. Trust Indenture Act; Conflict with Trust
Indenture Act.................................. 64
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT,
GUARANTEE AND INDENTURE........................ 65
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities
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<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________ __, 1996,
among (i) MCI Communications Corporation, a Delaware corporation (including
any successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as property trustee and Delaware trustee (in each such
capacity, the "Property Trustee" and "Delaware Trustee," respectively, and, in
its separate corporate capacity and not in its capacity as Property Trustee or
Delaware Trustee, the "Bank"), (iii) Douglas L. Maine, an individual, and
Jonelle St. John, an individual, each of whose address is c/o MCI
Communications Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C.
20006 (each, an "Administrative Trustee" and, collectively, the
"Administrative Trustees" and, collectively with the Property Trustee and
Delaware Trustee, the "Trustees") and (iv) the several Holders, as hereinafter
defined.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into of that certain Trust Agreement, dated as of
April 17, 1996 (the "Original Trust Agreement"), and by the execution and
filing by the Delaware Trustee with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on April 17, 1996, attached as
Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Trust pursuant to the Underwriting Agreement, (iii) the
acquisition by the Trust from the Depositor of all of the right, title and
interest in the Debentures and (iv) the appointment of the Administrative
Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Securityholders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
<PAGE>
ARTICLE I
---------
Defined Terms
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SECTION 101. Definitions.
-----------
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 608.
---
"Additional Amount" means, with respect to Trust Securities of a
-----------------
given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Indenture) paid by the Depositor on a Like Amount
of Debentures for such period.
"Additional Sums" has the meaning specified in Section 1007 of the
---------------
Indenture.
"Administrative Trustee" means each of Douglas L. Maine and Jonelle
----------------------
St. John, each solely in such person's capacity as Administrative Trustee of
the Trust formed and continued hereunder and not in such person's individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor trustee appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly
---------
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
2
<PAGE>
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust
----
Agreement.
"Bankruptcy Event" means, with respect to any Person:
----------------
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjudication or composition of or in respect of such Person under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of such Person or of
any substantial part of its property or ordering the winding-up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated
a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or similar official) of such Person or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due and its
willingness to be adjudicated a bankrupt, or the taking of corporate
action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 1009.
---------------
"Board Resolution" means a copy of a resolution certified by the
----------------
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board
3
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of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustees.
"Book-Entry Preferred Securities Certificates" means a beneficial
--------------------------------------------
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 511.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
------------
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the
--------------------------------
Trust, the Depositor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Trust Securities
Certificates, substantially in the form attached as Exhibit B, as the same may
be amended and supplemented from time to time.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means the First Time of Delivery, which date is also
------------
the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now
4
<PAGE>
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Security" means an undivided beneficial interest in the
---------------
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
-----------------------------
ownership of Common Securities, substantially in the form attached as Exhibit
C.
"Corporate Trust Office" means the principal office of the Property
----------------------
Trustee located in Wilmington, Delaware.
"Debenture Event of Default" means an "Event of Default" as defined
--------------------------
in the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to
-------------------------
be redeemed under the Indenture, the date fixed for redemption under the
Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the
-------------------
Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware
-----------------
banking corporation organized under the laws of the State of Delaware and any
successor thereto.
"Debentures" means the aggregate principal amount of the Depositor's
----------
____% Junior Subordinated Deferrable Interest Debentures, Series A, issued
pursuant to the Indenture.
"Definitive Preferred Securities Certificates" means either or both
--------------------------------------------
(as the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificates as provided in Section 511(a) and
(b) Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 513.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
---------------------------
Delaware Code, 12 Del. C. (S) 3801, et seq., as it may be amended from time to
-- ---
time.
"Delaware Trustee" means the commercial bank or trust company
----------------
identified as the "Delaware Trustee" in the preamble to this Trust Agreement
solely in its capacity as
5
<PAGE>
Delaware Trustee of the Trust formed and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
---------
Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
-----------------
"Distributions" means amounts payable in respect of the Trust
-------------
Securities as provided in Section 401.
"Event of Default" means any one of the following events (whatever
----------------
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(c) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Trustees in this Trust Agreement
(other than a covenant or warranty a default in the performance of which
or the breach of which is dealt with in clause (b) or (c) above) and
continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the defaulting
Trustee or Trustees by the Holders of at least 25% in aggregate
liquidation preference of the Outstanding Preferred Securities a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee and the failure by the Depositor to appoint a successor
Property Trustee within 60 days thereof.
6
<PAGE>
"Expense Agreement" means the Agreement as to Expenses and
-----------------
Liabilities between the Depositor and the Trust, substantially in the form
attached as Exhibit D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
---------------
"First Time of Delivery" has the meaning specified in the
----------------------
Underwriting Agreement.
"Guarantee" means the Guarantee Agreement executed and delivered by
---------
the Depositor and Wilmington Trust Company, as trustee, contemporaneously with
the execution and delivery of this Trust Agreement, for the benefit of the
holders of the Preferred Securities, as amended from time to time.
"Indenture" means the Junior Subordinated Indenture, dated as of
---------
________ __, 1996, as supplemented by a Supplemental Indenture No. 1, dated as
of ________ __, 1996, between the Depositor and the Debenture Trustee, as
trustee, as amended or supplemented from time to time.
"Investment Company Event" means the receipt by the Trust of an
------------------------
Opinion of Counsel, rendered by a law firm having a recognized national tax
and securities practice, to the effect that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), the Trust is or will be
considered an "investment company" that is required to be registered under the
1940 Act, which Change in 1940 Act Law becomes effective on or after the date
of original issuance of the Preferred Securities under this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
----
trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
-----------
Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Debentures to be contemporaneously redeemed in accordance
with the Indenture the proceeds of which will be used to pay the Redemption
Price of such Trust Securities and (b) with respect to a distribution of
Debentures to Holders of Trust Securities in connection with a dissolution or
liquidation
7
<PAGE>
of the Trust, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the Holder to whom such
Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust
------------------
Security.
"Liquidation Date" means the date on which Debentures are to be
----------------
distributed to Holders of Trust Securities in connection with a termination
and liquidation of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section
------------------------
904(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
--------
"Officers' Certificate" means a certificate signed by the Chairman
---------------------
and Chief Executive Officer, President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the appropriate
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 816 shall be the principal executive, financial or accounting
officer of the Depositor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
------------------
counsel for the Trust, the Property Trustee or the Depositor or General
Counsel of the
8
<PAGE>
Depositor, and who shall be reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals
------------------------
to this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means,
-----------
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
------
(a) Preferred Securities theretofore cancelled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Preferred Securities;
provided that, if such Preferred Securities are to be redeemed, notice of
--------
such redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or
in lieu of which other Preferred Securities have been executed and
delivered pursuant to Section 504, 505, 511 and 513;
provided, however, that in determining whether the Holders of the requisite
-------- -------
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Preferred Securities owned by the Depositor, any Trustee or any
Affiliate of the Depositor or any Trustee shall be disregarded and deemed not
to be Outstanding, except that (a) in determining whether any Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Preferred Securities that such Trustee knows
to be so owned shall be so disregarded and (b) the foregoing shall not apply
at any time when all of the outstanding Preferred Securities are owned by the
Depositor, one or more of the Trustees and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustees the pledgee's right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or any
Affiliate of the Depositor.
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<PAGE>
"Owner" means each Person who is the beneficial owner of a Book-Entry
-----
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account with such Clearing
Agency (directly or indirectly, in accordance with the rules of such Clearing
Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
------------
pursuant to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
---------------
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee
shall make payments to the Securityholders in accordance with Sections 401 and
402.
"Person" means any individual, corporation, partnership, joint
------
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the
------------------
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
--------------------------------
ownership of Preferred Securities, substantially in the form attached as
Exhibit E.
"Property Trustee" means the commercial bank or trust company
----------------
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as
herein provided.
"Redemption Date" means, with respect to any Trust Security to be
---------------
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated
--------
maturity of the Debentures shall be a Redemption Date for a Like Amount of
Trust Securities.
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<PAGE>
"Redemption Price" means, with respect to any Trust Security, the
----------------
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures, allocated on a pro rata basis (based on Liquidation Amounts)
among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
----------------
"Second Time of Delivery" has the meaning specified in the
-----------------------
Underwriting Agreement.
"Securities Register" and "Securities Registrar" have the respective
------------------- --------------------
meanings specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a Trust
-------------- ------
Security or Securities is registered in the Securities Register; any such
Person shall be deemed to be a beneficial owner within the meaning of the
Delaware Business Trust Act.
"Special Event" means a Tax Event or an Investment Company Event.
-------------
"Tax Event" means the receipt by the Trust of an Opinion of Counsel,
---------
rendered by a law firm having a national tax and securities practice, to the
effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities under
this Trust Agreement, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days after the date of such Opinion of Counsel,
subject to United States federal income tax with respect to income received or
accrued on the Debentures, (ii) interest payable by the Depositor on the
Debentures is not, or within 90 days after the date of such Opinion of
Counsel, will not be, deductible by the Depositor, in whole or in part, for
United States federal income tax purposes or (iii) the Trust is, or will be
within 90 days after the date of such Opinion of Counsel, subject to more than
a de minimis amount of other taxes, duties, assessments or other governmental
charges.
11
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"Time of Delivery" means, collectively, the First Time of Delivery
----------------
and the Second Time of Delivery.
"Trust" means the Delaware business trust created and continued
-----
hereby and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
---------------
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for
all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment
or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
-------------------
force at the date as of which this instrument was executed; provided, however,
-------- -------
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) the rights of the
--------------
Property Trustee under the Guarantee, (c) any cash on deposit in, or owing to,
the Payment Account and (d) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed
to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
--------------
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
----------------------------
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware
--------
Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Terms Agreement, dated as of
----------------------
________ __, 1996, among the Trust, the Depositor and the Underwriters named
therein, incorporating the Underwriting Agreement Basic Provisions of the
Trust.
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<PAGE>
ARTICLE II
----------
Establishment of the Trust
--------------------------
SECTION 201. Name.
----
The Trust created and continued hereby shall be known as "MCI
Capital II," as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 202. Office of the Delaware Trustee; Principal Place of Business
-----------------------------------------------------------
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, 1100 North Market Street, Wilmington 19890,
Delaware, Attention: Corporate Trust Administration, or such other address in
the State of Delaware as the Delaware Trustee may designate by written notice
to the Securityholders and the Depositor. The principal executive office of
the Trust is c/o MCI Communications Corporation, 1801 Pennsylvania Avenue,
N.W., Washington, D.C. 20006.
SECTION 203. Initial Contribution of Trust Property; Organizational
------------------------------------------------------
Expenses
--------
The Property Trustee acknowledges receipt in trust from the
Depositor in connection with the Original Trust Agreement of the sum of $10,
which constituted the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of
any Trustee, promptly reimburse such Trustee for any such expenses paid by
such Trustee. The Depositor shall make no claim upon the Trust Property for
the payment of such expenses.
SECTION 204. Issuance of the Preferred Securities
------------------------------------
On _____ __, 1996 the Depositor, on behalf of the Trust and pursuant
to the Original Trust Agreement, executed and delivered the Underwriting
Agreement. Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Underwriters named in the
Underwriting Agreement Preferred Securities Certificates, registered in the
name of the nominee of the initial Clearing Agency, in an aggregate amount of
__________ Preferred Securities having an
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<PAGE>
aggregate Liquidation Amount of $___________, against receipt of the aggregate
purchase price of such Preferred Securities of $___________, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee. If
there is a Second Time of Delivery, an Administrative Trustee, on behalf of
the Trust, shall execute in accordance with Section 502 and deliver to the
Underwriters named in the Underwriting Agreement Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of up to __________ Preferred Securities having
an aggregate Liquidation Amount of up to $___________, against receipt of the
aggregate purchase price of such Preferred Securities of 96.85% of the
Liquidation Amount thereof, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee.
SECTION 205. Issuance of Common Securities; Subscription and Purchase of
-----------------------------------------------------------
Debentures.
----------
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of _______ Common Securities having an aggregate Liquidation Amount of
$__________ against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
equal to $___________, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the sum of $___________. If there is a Second Time of Delivery, an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 502 and deliver to the Depositor Common Securities Certificates,
registered in the name of the Depositor, in an aggregate amount of up to
_______ Common Securities having an aggregate Liquidation Amount of up to
$__________ against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
of up to $___________, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the amount received from one of the Administrative Trustees pursuant
to the last sentence of Section 204.
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<PAGE>
SECTION 206. Declaration of Trust
--------------------
The exclusive purposes and functions of the Trust are (a) to issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Debentures and (b) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it will hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Securityholders.
The Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust
for the sole and limited purpose of fulfilling the requirements of Section
3807 of the Delaware Business Trust Act.
SECTION 207. Authorization to Enter into Certain Transactions
------------------------------------------------
(a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance
with the following provisions (i) and (ii), the Administrative Trustees
shall have the authority to enter into all transactions and agreements
determined by the Trustees to be appropriate in exercising the authority,
express or implied, otherwise granted to the Trustees under this Trust
Agreement, and to perform all acts in furtherance thereof, including
without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall have
the power and authority to act on behalf of the Trust with respect to
the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense Agreement
and the Certificate Depository Agreement and such other agreements
as
15
<PAGE>
may be necessary or desirable in connection with the purposes and
function of the Trust;
(C) assisting in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of this
Trust Agreement as a trust indenture under the Trust Indenture Act;
(D) assisting in the listing of the Preferred
Securities upon such national securities exchange, the Nasdaq
National Market or such other interdealer quotation system or self-
regulatory organization as shall be determined by the Depositor and
the registration of the Preferred Securities under the Securities
Exchange Act of 1934, as amended, and the preparation and filing of
all periodic and other reports and other documents pursuant to the
foregoing;
(E) the sending of notices (other than notices of
default) and other information regarding the Trust Securities and
the Debentures to the Securityholders in accordance with this Trust
Agreement;
(F) the appointment of a Paying Agent, authenticating
agent and Securities Registrar in accordance with this Trust
Agreement;
(G) registering transfer of the Trust Securities in
accordance with this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding-up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(I) unless otherwise determined by the Depositor, the
Property Trustee or the Administrative Trustees, or as otherwise
required by the Delaware Business Trust Act or the Trust Indenture
Act, to execute on behalf of the Trust (either acting alone or
together with any or all of the Administrative Trustees) any
documents that the Administrative Trustees have the power to execute
pursuant to this Trust Agreement; and
16
<PAGE>
(J) the taking of any action incidental to the
foregoing as the Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this Trust
Agreement for the benefit of the Securityholders (without
consideration of the effect of any such action on any particular
Securityholder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with respect
to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any
other payments made in respect of the Debentures in the Payment
Account;
(D) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding-up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(I) after an Event of Default the taking of any
action incidental to the foregoing as the Property Trustee may from
time to time determine is necessary or advisable to give effect to
the terms of this Trust Agreement and protect and
17
<PAGE>
conserve the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder);
(J) registering transfers of the Trust Securities in
accordance with this Trust Agreement; and
(K) except as otherwise provided in this Section
207(a)(ii), the Property Trustee shall have none of the duties,
liabilities, powers or the authority of the Administrative Trustees
set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein
or contemplated hereby. In particular, the Trustees shall not (i) acquire
any investments or engage in any activities not authorized by this Trust
Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off
or otherwise dispose of any of the Trust Property or interests therein,
including to Securityholders, except as expressly provided herein, (iii)
take any action that would cause the Trust to fail or cease to qualify as a
"grantor trust" for United States federal income tax purposes, (iv) incur
any indebtedness for borrowed money or issue any other debt or (v) take or
consent to any action that would result in the placement of a Lien on any
of the Trust Property. The Administrative Trustees shall defend all claims
and demands of all Persons at any time claiming any Lien on any of the
Trust Property adverse to the interest of the Trust or the Securityholders
in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to assist
the Trust with respect to, or effect on behalf of the Trust, the following
(and any actions taken by the Depositor in furtherance of the following
prior to the date of this Trust Agreement are hereby ratified and confirmed
in all respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration
statement on the appropriate form in relation to the Preferred Securities
and the Debentures, including any amendments thereto;
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<PAGE>
(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and the determination of any and all such acts,
other than actions which must be taken by or on behalf of the Trust, and
the advice to the Trustees of actions they must take on behalf of the
Trust, and the preparation for execution and filing of any documents to
be executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such states;
(iii) the preparation for filing by the Trust and execution on
behalf of the Trust of an application to the New York Stock Exchange or
any other national stock exchange or the Nasdaq National Market for
listing upon notice of issuance of any Preferred Securities;
(iv) the preparation for filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Exchange Act, including
any amendments thereto;
(v) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the
Preferred Securities; and
(vi) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs
of the Trust and to operate the Trust so that the Trust will not be deemed
to be an "investment company" required to be registered under the 1940 Act,
or taxed as a corporation for United States federal income tax purposes and
so that the Debentures will be treated as indebtedness of the Depositor for
United States federal income tax purposes. In this connection, the
Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or
this Trust Agreement, that each of the Depositor and the Administrative
Trustees determines in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any
material respect the interests of the holders of the Preferred Securities.
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<PAGE>
SECTION 208. Assets of Trust
---------------
The assets of the Trust shall consist of the Trust Property.
SECTION 209. Title to Trust Property
-----------------------
Legal title to all Trust Property shall be vested at all times in
the Property Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee for the benefit of the Securityholders in
accordance with this Trust Agreement.
ARTICLE III
-----------
Payment Account
---------------
SECTION 301. Payment Account
---------------
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal
with respect to the Payment Account for the purpose of making deposits in
and withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the Securityholders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held
in the Payment Account shall not be invested by the Property Trustee
pending distribution thereof.
ARTICLE IV
----------
Distributions; Redemption
-------------------------
SECTION 401. Distributions
-------------
(a) Distributions on the Trust Securities shall be cumulative,
and will accumulate whether or not there are funds of the Trust available
for the payment of Distributions. Distributions shall accrue from ________
__, 1996, and, except in the event that the Depositor exercises its right
to defer the payment of interest on the Debentures pursuant to the
Indenture, shall be payable quarterly in
20
<PAGE>
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on June 30, 1996. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, payment of such Distribution shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date (each date on which distributions are
payable in accordance with this Section 401(a) a "Distribution Date").
(b) The Trust Securities represent undivided beneficial
interests in the Trust Property, and, the Distributions on the Trust
Securities shall be payable at a rate of ____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for
any full period shall be computed on the basis of a 360-day year of twelve
30-day months. The amount of Distributions for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year of
twelve 30-day months. The amount of Distributions payable for any period
shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on
the Securities Register for the Trust Securities on the relevant record
date, which shall be one Business Day prior to such Distribution Date;
provided, however, that in the event that the Preferred Securities do not
-------- -------
remain in book-entry-only form, the relevant record date shall be the date
15 days prior to the relevant Distribution Date.
SECTION 402. Redemption
----------
(a) On each Debenture Redemption Date and on the stated
maturity of the Debentures, the Trust will be required to redeem a Like
Amount of Trust Securities at the Redemption Price.
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<PAGE>
(b) Notice of redemption shall be given by the Property Trustee
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 Trust Securities to
be redeemed, at such Holder's address appearing in the Security Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust
Securities are to be redeemed, the identification and the total
Liquidation Amount of the particular Trust Securities to be
redeemed; and
(v) that on the Redemption Date the Redemption Price
will become due and payable upon each such Trust Security to be
redeemed and that distributions thereon will cease to accrue on and
after said date.
(c) The Trust Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption
Price.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York City
time, on the Redemption Date, subject to Section 402(c), the Property
Trustee will, so long as the Preferred Securities are in book-entry-only
form, irrevocably deposit with the Clearing Agency for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will
give such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the holders thereof. If the Preferred Securities are
no longer in book-entry-only form, the Property Trustee, subject to Section
402(c), will irrevocably deposit with the Paying Agent funds sufficient to
pay the applicable Redemption Price and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price to the
Holders thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for
22
<PAGE>
any Trust Securities called for redemption shall be payable to the Holders
of such Trust Securities as they appear on the Register for the Trust
Securities on the relevant record dates for the related Distribution Dates.
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of Securityholders
holding Trust Securities so called for redemption will cease, except the
right of such Securityholders to receive the Redemption Price and any
Distribution payable on or prior to the Redemption Date, but without
interest, and such Securities will cease to be outstanding. In the event
that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on
the immediately preceding Business Day, in each case, with the same force
and effect as if made on such date. In the event that payment of the
Redemption Price in respect of any Trust Securities called for redemption
is improperly withheld or refused and not paid either by the Trust or by
the Depositor pursuant to the Guarantee, Distributions on such Trust
Securities will continue to accrue, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust
Securities to the date such Redemption Price is actually paid, in which
case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities
shall be made to the recordholders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall
be one Business Day prior to the relevant Redemption Date; provided,
--------
however, that in the event that the Preferred Securities do not remain in
-------
book-entry-only form, the relevant record date shall be the date fifteen
days prior to the relevant Redemption Date.
(f) Subject to Section 403(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of Trust Securities to be redeemed shall be
allocated on a pro rata basis (based on Liquidation Amounts) among the
Common Securities and the Preferred Securities. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis (based upon
Liquidation Amounts) not more than 60 days prior to the Redemption Date by
the Property Trustee from the Outstanding Preferred Securities not
23
<PAGE>
previously called for redemption, by such method (including, without
limitation, by lot) as the Property Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal
to $25 or an integral multiple of $25 in excess thereof) of the Liquidation
Amount of Preferred Securities of a denomination larger than $25. The
Property Trustee shall promptly notify the Security Registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed. For all purposes of this Trust Agreement,
unless the context otherwise requires, all provisions relating to the
redemption of Preferred Securities shall relate, in the case of any
Preferred Securities redeemed or to be redeemed only in part, to the
portion of the Liquidation Amount of Preferred Securities that has been or
is to be redeemed.
SECTION 403. Subordination of Common Securities
----------------------------------
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 402(f), pro rata among the
Common Securities and the Preferred Securities based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any
-------- -------
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution (including Additional Amounts, if applicable)
on, or Redemption Price of, any Common Security, and no other payment on
account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated
and unpaid Distributions (including Additional Amounts, if applicable) on
all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all
Outstanding Preferred Securities, shall have been made or provided for, and
all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of,
Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Holder of Common
Securities will be deemed to have waived any right to act with respect to
any such Event of Default under this Trust Agreement until the effect of
all such
24
<PAGE>
Events of Default with respect to the Preferred Securities have been cured,
waived or otherwise eliminated. Until any such Event of Default under this
Trust Agreement with respect to the Preferred Securities has been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the Holders of the Preferred Securities and not the Holder of the
Common Securities, and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee to act on their behalf.
SECTION 404. Payment Procedures
------------------
Payments of Distributions (including Additional Amounts, if
applicable) in respect of the Preferred Securities shall be made by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register or, if the Preferred Securities are held by
a Clearing Agency, such Distributions shall be made to the Clearing Agency in
immediately available funds, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable distribution dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Common Securityholder.
SECTION 405. Tax Returns and Reports
-----------------------
The Administrative Trustees shall prepare (or cause to be prepared),
at the Depositor's expense, and file all United States federal, state and
local tax and information returns and reports required to be filed by or in
respect of the Trust. In this regard, the Administrative Trustees shall (a)
prepare and file (or cause to be prepared and filed) the appropriate Internal
Revenue Service Form required to be filed in respect of the Trust in each
taxable year of the Trust and (b) prepare and furnish (or cause to be prepared
and furnished) to each Securityholder the appropriate Internal Revenue Service
form required to be furnished to such Securityholder or the information
required to be provided on such form. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such returns
and reports promptly after such filing or furnishing. The Trustees shall
comply with United States federal withholding and backup withholding tax laws
and information reporting requirements with respect to any payments to
Securityholders under the Trust Securities.
SECTION 406. Payment of Taxes, Duties, Etc. of the Trust.
-------------------------------------------
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes,
25
<PAGE>
duties or governmental charges of whatsoever nature (other than withholding
taxes) imposed on the Trust by the United States or any other taxing
authority.
SECTION 407. Payments under Indenture
------------------------
Any amount payable hereunder to any Holder of Preferred Securities
(and any Owner with respect thereto) shall be reduced by the amount of any
corresponding payment such Holder (and Owner) has directly received pursuant
to Section 508 of the Indenture.
ARTICLE V
---------
Trust Securities Certificates
-----------------------------
SECTION 501. Initial Ownership
-----------------
Upon the formation of the Trust and the contribution by the
Depositor pursuant to Section 203 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Trust.
SECTION 502. The Trust Securities Certificates
---------------------------------
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in
excess thereof, and the Common Securities Certificates shall be issued in
denominations of $25 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by
manual signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefits of
this Trust Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the delivery of such Trust
Securities Certificates or did not hold such offices at the date of delivery
of such Trust Securities Certificates. A transferee of a Trust Securities
Certificate shall become a Securityholder, and shall be entitled to the rights
and subject to the obligations of a Securityholder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's name
pursuant to Sections 504, 511 and 513.
26
<PAGE>
SECTION 503. Execution and Delivery of Trust Securities Certificates
-------------------------------------------------------
At each Time of Delivery, the Administrative Trustees shall cause
Trust Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 204 and 205, to be executed on behalf of the Trust and delivered
to or upon the written order of the Depositor, signed by its chairman of the
board, its president, any executive vice president, senior vice president or
any vice president, treasurer or assistant treasurer or controller without
further corporate action by the Depositor, in authorized denominations.
SECTION 504. Registration of Transfer and Exchange of Preferred Securities
-------------------------------------------------------------
Certificates
------------
The Depositor shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 508, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and
exchanges of Preferred Securities Certificates (the "Securities Register") in
which, the registrar designated by the Depositor (the "Securities Registrar"),
subject to such reasonable regulations as it may prescribe, shall provide for
the registration of Preferred Securities Certificates and Common Securities
Certificates (subject to Section 510 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. The Bank shall be the initial
Securities Registrar.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
508, the Administrative Trustees or any one of them shall execute and deliver,
in the name of the designated transferee or transferees, one or more new
Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount dated the date of execution by such
Administrative Trustee or Trustees. The Securities Registrar shall not be
required to register the transfer of any Preferred Securities that have been
called for redemption. At the option of a Holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 508.
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<PAGE>
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Property Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Preferred Securities Certificates.
SECTION 505. Mutilated, Destroyed, Lost or Stolen Trust Securities
-----------------------------------------------------
Certificates
------------
If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar
shall receive evidence to its satisfaction of the destruction, loss or
theft of any Trust Securities Certificate and (b) there shall be delivered
to the Securities Registrar and the Administrative Trustees such security
or indemnity as may be required by them to save each of them harmless, then
in the absence of notice that such Trust Securities Certificate shall have
been acquired by a bona fide purchaser, the Administrative Trustees, or any
one of them, on behalf of the Trust shall execute and make available for
delivery, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Securities Certificate, a new Trust Securities Certificate
of like class, tenor and denomination. In connection with the issuance of
any new Trust Securities Certificate under this Section, the Administrative
Trustees or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an undivided beneficial interest in the assets of the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Trust
Securities Certificate shall be found at any time.
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SECTION 506. Persons Deemed Securityholders
------------------------------
The Administrative Trustees or the Securities Registrar shall treat
the Person in whose name any Trust Securities Certificate shall be registered
in the Securities Register as the owner of such Trust Securities Certificate
for the purpose of receiving distributions and for all other purposes
whatsoever, and neither the Trustees nor the Securities Registrar shall be
bound by any notice to the contrary.
SECTION 507. Access to List of Securityholders' Names and Addresses
------------------------------------------------------
The Administrative Trustees or the Depositor shall furnish or cause
to be furnished (a) to the Property Trustee, semi-annually on or before
January 15 and July 15 in each year, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent Record Date and (b) to the Property
Trustee, promptly after receipt by any Administrative Trustee or the Depositor
of a request therefor from the Property Trustee in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, in
each case to the extent such information is in the possession or control of
the Administrative Trustees or the Depositor and is not identical to a
previously supplied list or has not otherwise been received by the Property
Trustee in its capacity as Securities Registrar. The rights of
Securityholders to communicate with other Securityholders with respect to
their rights under this Trust Agreement or under the Trust Securities, and the
corresponding rights of the Trustee shall be as provided in the Trust
Indenture Act. Each Holder, by receiving and holding a Trust Securities
Certificate, and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source
from which such information was derived.
SECTION 508. Maintenance of Office or Agency
-------------------------------
The Administrative Trustees shall maintain an office or offices or
agency or agencies where Preferred Securities Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate MCI Communications
Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006,
Attention: Treasurer, as the office for such purposes. The
29
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Administrative Trustees shall give prompt written notice to the Depositor and
to the Securityholders of any change in the location of the Securities
Register or any such office or agency.
SECTION 509. Appointment of Paying Agent.
---------------------------
The Paying Agent shall make distributions to Securityholders from
the Payment Account and shall report the amounts of such distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the distributions referred to above. The Administrative Trustees
may revoke such power and remove the Paying Agent if such Trustees determine
in their sole discretion that the Paying Agent shall have failed to perform
its obligations under this Trust Agreement in any material respect. The
Paying Agent shall initially be the Bank, and any co-paying agent chosen by
the Bank and acceptable to the Administrative Trustees and the Depositor. Any
Person acting as Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Administrative Trustees, the Property
Trustee and the Depositor. In the event that the Bank shall no longer be the
Paying Agent or a successor Paying Agent shall resign or its authority to act
be revoked, the Administrative Trustees shall appoint a successor that is
acceptable to the Property Trustee and the Depositor to act as Paying Agent
(which shall be a bank or trust company). The Administrative Trustees shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Administrative Trustees to execute and deliver to the Trustees an
instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Securityholders in trust for the benefit of the Securityholders
entitled thereto until such sums shall be paid to such Securityholders. The
Paying Agent shall return all unclaimed funds to the Property Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Property Trustee. The provisions of Sections 801, 803 and
806 shall apply to the Bank also in its role as Paying Agent, for so long as
the Bank shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
30
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SECTION 510. Ownership of Common Securities by Depositor.
-------------------------------------------
At each Time of Delivery, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities. To the fullest
extent permitted by law, other than a transfer in connection with a
consolidation or merger of the Depositor into another corporation, or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 801 of the
Indenture, any attempted transfer of the Common Securities shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".
SECTION 511. Book-Entry Preferred Securities Certificates; Common Securities
---------------------------------------------------------------
Certificate.
-----------
(a) The Preferred Securities Certificates, upon original
issuance, will be issued in the form of a typewritten Preferred Securities
Certificate or Certificates representing Book-Entry Preferred Securities
Certificates, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Preferred Securities
Certificate or Certificates shall initially be registered on the Securities
Register in the name of Cede & Co., the nominee of the initial Clearing
Agency, and no beneficial owner will receive a Definitive Preferred
Securities Certificate representing such beneficial owner's interest in
such Preferred Securities, except as provided in Section 513. Unless and
until Definitive Preferred Securities Certificates have been issued to
beneficial owners pursuant to Section 513:
(i) the provisions of this Section 511(a) shall be in full
force and effect;
(ii) the Securities Registrar and the Trustees shall be
entitled to deal with the Clearing Agency for all purposes of this Trust
Agreement relating to the Book-Entry Preferred Securities Certificates
(including the payment of the Liquidation Amount of and Distributions on
the Book-Entry Preferred Securities and the giving of instructions or
directions to Owners of Book-Entry Preferred Securities) as the sole
Holder of Book-Entry Preferred Securities and shall have no obligations
to the Owners thereof;
(iii) to the extent that the provisions of this Section 511
conflict with any other provisions of this
31
<PAGE>
Trust Agreement, the provisions of this Section 511 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
between such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement, unless
and until Definitive Preferred Securities Certificates are issued
pursuant to Section 513, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments on the Preferred Securities to such Clearing Agency
Participants.
(b) A single Common Securities Certificate representing the
Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
SECTION 512. Notices to Clearing Agency.
--------------------------
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
513, the Trustees shall give all such notices and communications specified
herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION 513. Definitive Preferred Securities Certificates.
--------------------------------------------
If (a) the Depositor advises the Trustees in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Preferred Securities Certificates, and
the Depositor is unable to locate a qualified successor, (b) the Depositor at
its option advises the Trustees in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (c) after the occurrence of
a Debenture Event of Default, Owners of Preferred Securities Certificates
representing beneficial interests aggregating at least a majority of the
Liquidation Amount advise the Property Trustee in writing that the
continuation of a book-entry system through the Clearing Agency is no longer
in the best interest of the Owners of Preferred Securities Certificates, then
the Property Trustee shall notify the Clearing Agency and the Clearing Agency
shall notify all Owners of Preferred Securities Certificates and the other
Trustees of the
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<PAGE>
occurrence of any such event and of the availability of the Definitive
Preferred Securities Certificates to Owners of such class or classes, as
applicable, requesting the same. Upon surrender to the Property Trustee of the
typewritten Preferred Securities Certificate or Certificates representing the
Book-Entry Preferred Securities Certificates by the Clearing Agency,
accompanied by registration instructions, the Administrative Trustees, or any
one of them, shall execute the Definitive Preferred Securities Certificates in
accordance with the instructions of the Clearing Agency. Neither the
Securities Registrar nor the Trustees shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Preferred Securities Certificates, the Trustees shall recognize the Holders of
the Definitive Preferred Securities Certificates as Securityholders. The
Definitive Preferred Securities Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
SECTION 514. Rights of Securityholders.
-------------------------
(a) The legal title to the Trust Property is vested exclusively in
the Property Trustee (in its capacity as such) in accordance with Section 209,
and the Securityholders shall not have any right or title therein other than
the undivided beneficial interest in the assets of the Trust conferred by
their Trust Securities and they shall have no right to call for any partition
or division of property, profits or rights of the Trust except as described
below. The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Securityholders against payment of the purchase price therefor
will be fully paid and nonassessable by the Trust. The Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders
of not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least 25% in
33
<PAGE>
Liquidation Amount of the Preferred Securities then Outstanding shall have
such right by a notice in writing to the Depositor and the Debenture Trustee;
and upon any such declaration such principal amount of and the accrued
interest on all of the Debentures shall become immediately due and payable,
provided that the payment of principal and interest on such Debentures shall
remain subordinated to the extent provided in the Indenture.
(c) For so long as any Preferred Securities remain Outstanding, to
the fullest extent permitted by law and subject to the terms of this Trust
Agreement, if, upon a Debenture Event of Default specified in Section 501(1)
or 501(2) of the Indenture, any Holder of Preferred Securities shall have the
right to directly institute a proceeding for enforcement of payment to such
Holder of the principal amount of or interest on the Debentures having a
principal amount equal to the Liquidation Amount of the Preferred Securities
of such Holder (a "Direct Action"). In connection with such Direct Action,
the rights of the Holders of the Common Securities will be subrogated to the
rights of any Holder of the Preferred Securities to the extent of any payment
made by the Depositor to such Holder of Preferred Securities in such Direct
Action. Except as set forth in this Section 514(c), the Holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures or assert directly any other rights in respect
of the Debentures.
ARTICLE VI
-----------
Acts of Securityholders; Meetings; Voting
-----------------------------------------
SECTION 601. Limitations on Voting Rights
----------------------------
(a) Except as provided in this Section, in Sections 810 and
1002 and in the Indenture and as otherwise required by law, no Holder of
Preferred Securities shall have any right to vote or in any manner
otherwise control the administration, operation and management of the Trust
or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as
partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee,
the Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with
respect to such Debentures, (ii) waive any past default
34
<PAGE>
which is waiveable under Section 513 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation Amount of all
Outstanding Preferred Securities; provided, however, that where a consent
-------- -------
under the Indenture would require the consent of each Holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each Holder of Preferred Securities.
The Trustees shall not revoke any action previously authorized or approved
by a vote of the Holders of Preferred Securities, except by a subsequent
vote of the Holders of Preferred Securities. The Property Trustee shall
notify all Holders of the Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the
Preferred Securities, prior to taking any of the foregoing actions, the
Trustees shall, at the expense of the Depositor, obtain an Opinion of
Counsel experienced in such matters to the effect that the Trust will not
be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than pursuant to the terms of this Trust
Agreement, then the Holders of Outstanding Preferred Securities as a class
will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of the Holders
of at least a majority in Liquidation Amount of the Outstanding Preferred
Securities. No amendment to this Trust Agreement may be made if, as a
result of such amendment, the Trust would be classified as an association
taxable as a corporation for United States federal income tax purposes.
35
<PAGE>
SECTION 602. Notice of Meetings.
------------------
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be
so considered whether or not stated in the notice of the meeting. Any
adjourned meeting may be held as adjourned without further notice.
SECTION 603. Meetings of Preferred Securityholders.
-------------------------------------
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Preferred Securityholders
of record of 25% of the Preferred Securities (based upon their Liquidation
Amount) and the Administrative Trustees or the Property Trustee may, at any
time in their discretion, call a meeting of Preferred Securityholders to vote
on any matters as to which Preferred Securityholders are entitled to vote.
Preferred Securityholders of record of 50% of the Outstanding
Preferred Securities (based upon their Liquidation Amount), present in person
or by proxy, shall constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding
more than a majority of the Preferred Securities (based upon their Liquidation
Amount) held by the Preferred Securityholders of record present, either in
person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 604. Voting Rights
-------------
Securityholders shall be entitled to one vote for each $25 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
36
<PAGE>
SECTION 605. Proxies, etc.
-------------
At any meeting of Securityholders, any Securityholder entitled to
vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Administrative
Trustees, or with such other officer or agent of the Trust as the
Administrative Trustees may direct, for verification prior to the time at
which such vote shall be taken. Pursuant to a resolution of the Property
Trustee, proxies may be solicited in the name of the Property Trustee or one
or more officers of the Property Trustee. Only Securityholders of record
shall be entitled to vote. When Trust Securities are held jointly by several
persons, any one of them may vote at any meeting in person or by proxy in
respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. No proxy shall be valid more than three years
after its date of execution.
SECTION 606. Securityholder Action by Written Consent.
----------------------------------------
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their Liquidation Amount) entitled to
vote in respect of such action (or such larger proportion thereof as shall be
required by any express provision of this Trust Agreement) shall consent to
the action in writing.
SECTION 607. Record Date for Voting and Other Purposes
-----------------------------------------
For the purposes of determining the Securityholders who are entitled
to notice of and to vote at any meeting or by written consent, or to
participate in any distribution on the Trust Securities in respect of which a
record date is not otherwise provided for in this Trust Agreement, or for the
purpose of any other action, the Administrative Trustees may from time to time
fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of a distribution or other action, as the case
may be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
37
<PAGE>
SECTION 608. Acts of Securityholders
-----------------------
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Trust Agreement to be
given, made or taken by Securityholders or Owners may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders or Owners in person or by an agent duly appointed in
writing; and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to an
Administrative Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Securityholders or Owners signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Trust
Agreement and (subject to Section 801) conclusive in favor of the Trustees, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which any Trustee receiving the same
deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Securityholder of any Trust Security shall bind
every future Securityholder of the same Trust Security and the Securityholder
of every Trust Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustees or the Trust in reliance thereon, whether
or not notation of such action is made upon such Trust Security.
38
<PAGE>
Without limiting the foregoing, a Securityholder entitled hereunder
to take any action hereunder with regard to any particular Trust Security may
do so with regard to all or any part of the Liquidation Amount of such Trust
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such
liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
A Securityholder may institute a legal proceeding directly against
the Depositor under the Guarantee to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee (as
defined in the Guarantee), the Trust or any person or entity.
SECTION 609. Inspection of Records
---------------------
Upon reasonable notice to the Administrative Trustees and the
Property Trustee, the records of the Trust shall be open to inspection by
Securityholders during normal business hours for any purpose reasonably
related to such Securityholder's interest as a Securityholder.
ARTICLE VII
Representations and Warranties
------------------------------
SECTION 701. Representations and Warranties of the Bank, the Property
--------------------------------------------------------
Trustee and the Delaware Trustee.
---------------------------------
The Bank, the Property Trustee and the Delaware Trustee, each
severally on behalf of and as to itself, hereby represents and warrants for
the benefit of the Depositor and the Securityholders that:
(a) the Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware;
(b) the Bank has full corporate power, authority and legal
right to execute, deliver and perform its
39
<PAGE>
obligations under this Trust Agreement and has taken all necessary action
to authorize the execution, delivery and performance by it of this Trust
Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Bank and constitutes the valid and legally binding
agreement of the Bank enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(d) the execution, delivery and performance by the Bank of this
Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Bank, the Property Trustee and the
Delaware Trustee and does not require any approval of stockholders of the
Bank and such execution, delivery and performance will not (i) violate
the Bank's charter or by-laws, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Property Trustee, the Bank or the Delaware
Trustee is a party or by which it is bound, or (iii) violate any law,
governmental rule or regulation of the United States or the State of
Delaware, as the case may be, governing the banking or trust powers of
the Bank, the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property
Trustee, the Bank or the Delaware Trustee;
(e) neither the authorization, execution or delivery by the
Bank of this Trust Agreement nor the consummation of any of the
transactions by the Bank, the Property Trustee or the Delaware Trustee
(as appropriate in context) contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or
the taking of any other action with respect to any governmental authority
or agency under any existing federal law governing the banking or trust
powers of the Bank, the Property Trustee or the Delaware Trustee, as the
case may be, under the laws of the United States or the State of
Delaware;
40
<PAGE>
(f) there are no proceedings pending or, to the best of each of
the Bank's, the Property Trustee's and the Delaware Trustee's knowledge,
threatened against or affecting the Bank, the Property Trustee or the
Delaware Trustee in any court or before any governmental authority,
agency or arbitration board or tribunal which, individually or in the
aggregate, would materially and adversely affect the Trust or would
question the right, power and authority of the Bank, the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
SECTION 702. Representations and Warranties of Depositor.
-------------------------------------------
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at each Time of
Delivery on behalf of the Trust have been duly authorized and will have
been duly and validly executed, issued and delivered by the Trustees
pursuant to the terms and provisions of, and in accordance with the
requirements of, this Trust Agreement and the Securityholders will be, as
of such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Trust (or the Trustees on behalf of the Trust) under the laws of
the State of Delaware or any political subdivision thereof in connection
with the execution, delivery and performance by the Bank, the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust
Agreement.
ARTICLE VIII
------------
The Trustees
------------
SECTION 801. Certain Duties and Responsibilities
-----------------------------------
(a) The duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee,
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of
this Trust Agreement shall require the Trustees to expend or risk their own
funds or otherwise incur any financial liability in the performance of any
of their duties hereunder, or in the exercise of any of their rights or
powers, if they shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability
41
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is not reasonably assured to it. Whether or not therein expressly so
provided, every provision of this Trust Agreement relating to the conduct
or affecting the liability of or affording protection to the Trustees shall
be subject to the provisions of this Section. Nothing in this Trust
Agreement shall be construed to release the Property Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct. To the extent that, at law or in equity, an
Administrative Trustee has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to the Securityholders, such
Administrative Trustee shall not be liable to the Trust or to any
Securityholder for such Trustee's good faith reliance on the provisions of
this Trust Agreement. The provisions of this Trust Agreement, to the extent
that they restrict the duties and liabilities of the Administrative
Trustees otherwise existing at law or in equity, are agreed by the
Depositor and the Securityholders to replace such other duties and
liabilities of the Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent
in respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Property Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Securityholder, by its acceptance of a Trust Security,
agrees that it will look solely to the revenue and proceeds from the Trust
Property to the extent legally available for distribution to it as herein
provided and that the Trustees are not personally liable to it for any
amount distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 801(b) does not
limit the liability of the Trustees expressly set forth elsewhere in this
Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except
that:
(i) the Property Trustee shall not be liable for any error
of judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
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(ii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a majority
in Liquidation Amount of the Trust Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Payment Account shall be to deal with such Property in a similar manner
as the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Depositor, and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the Payment
Account maintained by the Property Trustee pursuant to Section 301 and
except to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Depositor
with their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for the default or misconduct of the
Administrative Trustees or the Depositor.
SECTION 802. Certain Notices.
----------------
Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
such Event of Default to the Securityholders, the Administrative Trustees and
the Depositor, unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Administrative Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
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such exercise to the Securityholders and the Property Trustee, unless such
exercise shall have been revoked.
SECTION 803. Certain Rights of Property Trustee.
-----------------------------------
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in
acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement
the Property Trustee is required to decide between alternative courses of
action or (ii) in construing any of the provisions of this Trust
Agreement the Property Trustee finds the same ambiguous or inconsistent
with any other provisions contained herein or (iii) the Property Trustee
is unsure of the application of any provision of this Trust Agreement,
then, except as to any matter as to which the Preferred Securityholders
are entitled to vote under the terms of this Trust Agreement, the
Property Trustee shall deliver a notice to the Depositor requesting
written instructions of the Depositor as to the course of action to be
taken and the Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall be instructed in
writing to take, or to refrain from taking, by the Depositor; provided,
--------
however, that if the Property Trustee does not receive such instructions
-------
of the Depositor within ten Business Days after it has delivered such
notice, or such reasonably shorter period of time set forth in such
notice (which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Trust Agreement as it
shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its
own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust
44
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Agreement shall be sufficiently evidenced by an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established
before undertaking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Depositor or the Administrative
Trustees;
(e) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel (which
counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon and in accordance with such advice; the Property Trustee shall
have the right at any time to seek instructions concerning the
administration of this Trust Agreement from any court of competent
jurisdiction;
(g) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Agreement
at the request or direction of any of the Securityholders pursuant to
this Trust Agreement, unless such Securityholders shall have offered to
the Property Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, note or other evidence of
indebtedness or other paper or document, unless requested in writing to
do so by one or more Securityholders, but the Property Trustee may make
such
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further inquiry or investigation into such facts or matters as it
may see fit;
(i) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall
--------
be responsible for its own negligence or recklessness with respect to
selection of any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder the Property Trustee (i) may request instructions from the
Holders of the Trust Securities which instructions may only be given by
the Holders of the same proportion in Liquidation Amount of the Trust
Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action,
(ii) may refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be protected
in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this Trust
Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property
Trustee shall be construed to be a duty.
SECTION 804. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Trust, and the Trustees
do not assume any responsibility for their correctness. The Trustees shall
not be
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accountable for the use or application by the Depositor of the proceeds
of the Debentures.
SECTION 805. May Hold Securities.
-------------------
Except as provided in the definition of the term "Outstanding" in
Article I, any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 808 and 813, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such
other agent.
SECTION 806. Compensation; Indemnity; Fees.
-----------------------------
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees in accordance
with any provision of this Trust Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify each of the Trustees or any predecessor
Trustee for, and to hold the Trustees harmless against, any loss, damage,
claims, liability, penalty or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
No Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 806.
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SECTION 807. Corporate Property Trustee Required; Eligibility of
---------------------------------------------------
Trustees
--------
(a) There shall at all times be a Property Trustee hereunder
with respect to the Trust Securities. The Property Trustee shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $50,000,000. If any
such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the
Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at least 21
years of age or a legal entity that shall act through one or more persons
authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be (i)
a natural person who is at least 21 years of age and a resident of the
State of Delaware or (ii) a legal entity with its principal place of
business in the State of Delaware and that otherwise meets the requirements
of applicable Delaware law that shall act through one or more persons
authorized to bind such entity.
SECTION 808. Conflicting Interests.
---------------------
If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and
this Trust Agreement.
SECTION 809. Co-Trustees and Separate Trustee.
--------------------------------
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property
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may at the time be located, the Depositor and the Administrative Trustees,
by agreed action of the majority of such Trustees, shall have power to
appoint, and upon the written request of the Administrative Trustees, the
Depositor shall for such purpose join with the Administrative Trustees in the
execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If
the Depositor does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power to
make such appointment. Any co-trustee or separate trustee appointed pursuant
to this Section shall either be (i) a natural person who is at least 21 years
of age and a resident of the United States or (ii) a legal entity with its
principal place of business in the United States that shall act through one or
more persons authorized to bind such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and
delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed and delivered and
all rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustees specified
hereunder, shall be exercised, solely by such Trustees and not by such
co-trustee or separate trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Property Trustee in respect of any property
covered by such appointment
49
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shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act is to be
performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or
separate trustee.
(c) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case a Debenture Event of
Default has occurred and is continuing, the Property Trustee shall have
power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Depositor. Upon the
written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner provided in
this Section.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee or any other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 810. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
No resignation or removal of any Trustee (the "Relevant Trustee")
and no appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 811.
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Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time with respect to the Trust Securities by giving written
notice thereof to the Securityholders. If the instrument of acceptance by the
successor Trustee required by Section 811 shall not have been delivered to the
Relevant Trustee within 30 days after the giving of such notice of
resignation, the Relevant Trustee may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor
Relevant Trustee with respect to the Trust Securities.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee
may be removed by the Common Securityholder at any time.
If any Trustee shall resign, be removed or become incapable of
acting as Trustee, or if a vacancy shall occur in the office of any Trustee
for any cause, at a time when no Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder, by Act of the Common
Securityholder delivered to the retiring Trustee, shall promptly appoint a
successor Trustee or Trustees with respect to the Trust Securities and the
Trust, and the successor Trustee shall comply with the applicable requirements
of Section 811. If the Property Trustee or the Delaware Trustee shall resign,
be removed or become incapable of continuing to act as the Property Trustee or
the Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and be continuing, the Preferred Securityholders,
by Act of the Securityholders of a majority in Liquidation Amount of the
Preferred Securities then Outstanding delivered to the retiring Relevant
Trustee, shall promptly appoint a successor Relevant Trustee or Trustees with
respect to the Trust Securities and the Trust, and such successor Trustee
shall comply with the applicable requirements of Section 811. If an
Administrative Trustee shall resign, be removed or become incapable of acting
as Administrative Trustee, at a time when a Debenture Event of Default shall
have occurred and be continuing, the Common Securityholder, by Act of the
Common Securityholder delivered to the Administrative Trustee, shall promptly
appoint a successor Administrative
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Trustee or Administrative Trustees with respect to the Trust Securities and
the Trust, and such successor Administrative Trustee or Administrative
Trustees shall comply with the applicable requirements of Section 811. If no
successor Relevant Trustee with respect to the Trust Securities shall have
been so appointed by the Common Securityholder or the Preferred
Securityholders and accepted appointment in the manner required by Section
811, any Securityholder who has been a Securityholder of Trust Securities for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of
a successor Relevant Trustee with respect to the Trust Securities.
The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give notice
to the Depositor. Each notice shall include the name of the successor
Relevant Trustee and the address of its Corporate Trust Office if it is the
Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who
is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence
or incapacity may be filled by (a) the unanimous act of remaining
Administrative Trustees if there are at least two of them or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies
the eligibility requirement for Administrative Trustees set forth in Section
807).
SECTION 811. Acceptance of Appointment by Successor.
--------------------------------------
In case of the appointment hereunder of a successor Trustee such
successor Trustee so appointed shall execute, acknowledge and deliver to the
Trust and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Depositor or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and if the Property Trustee is the
resigning Trustee shall duly assign,
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transfer and deliver to the successor Trustee all property and money held by
such retiring Property Trustee hereunder.
In case of the appointment hereunder of a successor Relevant Trustee
with respect to the Trust Securities and the Trust, the retiring Relevant
Trustee and each successor Relevant Trustee with respect to the Trust
Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Relevant Trustee, it being understood that nothing herein or in such amendment
shall constitute such Relevant Trustees co-trustees of the same trust and that
each such Relevant Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Relevant Trustee and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Relevant
Trustee with respect to the Trust Securities and the Trust; but, on request of
the Trust or any successor Relevant Trustee such retiring Relevant Trustee
shall duly assign, transfer and deliver to such successor Relevant Trustee all
Trust Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
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SECTION 812. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Property Trustee or the Delaware
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which such Relevant Trustee shall be a party, or any corporation succeeding to
all or substantially all the corporate trust business of such Relevant
Trustee, shall be the successor of such Relevant Trustee hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
SECTION 813. Preferential Collection of Claims Against Depositor or Trust.
------------------------------------------------------------
If and when the Property Trustee or the Delaware Trustee shall be or
become a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 814. Reports by Property Trustee.
---------------------------
(a) Not later than July 15 of each year commencing with July 15,
1997, the Property Trustee shall transmit to all Securityholders in accordance
with Section 1008, and to the Depositor, a brief report dated as of such
December 31 with respect to:
(i) its eligibility under Section 807 or, in lieu thereof,
if to the best of its knowledge it has continued to be eligible under
said Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the twelve-month
period (or, in the case of the initial report, the period since the
Closing Date) ending with such December 31 or, if the Property Trustee
has not complied in any material respect with such obligations, a
description of such noncompliance; and
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(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties hereunder
which it has not previously reported and which in its opinion materially
affects the Trust Securities.
(b) In addition, the Property Trustee shall transmit to
Securityholders such reports concerning the Property Trustee and its actions
under this Trust Agreement as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each national
securities exchange, the Nasdaq National Market or such other interdealer
quotation system or self-regulatory organization upon which the Trust
Securities are listed or traded, with the Commission and with the Depositor.
SECTION 815. Reports to the Property Trustee.
-------------------------------
The Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 816. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Depositor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the
form of an Officers' Certificate.
SECTION 817. Number of Trustees.
------------------
(a) The number of Trustees shall be four, provided that the Holder
of all of the Common Securities by written instrument may increase or decrease
the number of Administrative Trustees. The Property Trustee and the Delaware
Trustee may be the same person.
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(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 817(a),
or if the number of Trustees is increased pursuant to Section 817(a), a
vacancy shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 810.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not
operate to annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 810, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Trust Agreement.
SECTION 818. Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 207(a), including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing.
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to the Depositor the doing of such
things and the execution of such instruments either in the name of the Trust
or the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited
by applicable law or contrary to the provisions of the Trust, as set forth
herein.
ARTICLE IX
Termination, Liquidation and Merger18.
-------------------------------------
SECTION 901. Termination Upon Expiration Date.
-------------------------------
Unless earlier terminated, the Trust shall automatically terminate
on _________ __, 2051 (the "Expiration Date"), following the distribution of
the Trust Property in accordance with Section 904.
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SECTION 902. Early Termination.
-----------------
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from the
Depositor at any time (which direction is optional and wholly within the
discretion of the Depositor) to terminate the Trust and distribute the
Debentures in exchange for the Preferred Securities;
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all of the Debentures; and
(d) the entry of an order for dissolution of the Trust by a
court of competent jurisdiction.
SECTION 903. Termination.
-----------
The respective obligations and responsibilities of the Trustees and
the Trust created and continued hereby shall terminate upon the latest to
occur of the following: (a) the distribution by the Property Trustee to
Securityholders upon the liquidation of the Trust pursuant to Section 904, or
upon the redemption of all of the Trust Securities pursuant to Section 402, of
all amounts required to be distributed hereunder upon the final payment of the
Trust Securities; (b) the payment of any expenses owed by the Trust; and (c)
the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to the
Trust or the Securityholders.
SECTION 904. Liquidation.
-----------
(a) If an Early Termination Event specified in clause (a), (b)
or (d) of Section 902 occurs or upon the Expiration Date, the Trust shall
be liquidated by the Trustees as expeditiously as the Trustees determine to
be possible by distributing, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, to each Securityholder a Like
Amount of Debentures, subject to Section 904(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage
prepaid, mailed not later than 30 nor more than 60 days prior to the
Liquidation Date to each Holder of Trust Securities at such
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Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
--------------------------
(ii) state that from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Debentures,
or if Section 904(d) applies receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to
effect the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures
will be issued to holders of Trust Securities Certificates, upon surrender
of such certificates to the Administrative Trustees or their agent for
exchange, (iii) the Depositor shall use its reasonable efforts to have the
Debentures listed on the New York Stock Exchange or on such other stock
exchange, interdealer quotation system or self-regulatory organization as
the Preferred Securities are then listed or traded, (iv) any Trust
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures, accruing interest at the rate
provided for in the Debentures from the last Distribution Date on which a
Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made to holders
of Trust Securities Certificates with respect to such Debentures), and (v)
all rights of Securityholders holding Trust Securities will cease, except
the right of such
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Securityholders to receive Debentures upon surrender of Trust Securities
Certificates.
(d) In the event that, notwithstanding the other provisions of
this Section 904, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the
Debentures in the manner provided herein is determined by the Property
Trustee not to be practical, the Trust Property shall be liquidated, and
the Trust shall be dissolved, wound-up or terminated, by the Property
Trustee in such manner as the Property Trustee determines. In such event,
on the date of the dissolution, winding-up or other termination of the
Trust, Securityholders will be entitled to receive out of the assets of the
Trust available for distribution to Securityholders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an
amount equal to the Liquidation Amount per Trust Security plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being
the "Liquidation Distribution"). If, upon any such dissolution, winding-up
or termination, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be
paid on a pro rata basis (based upon Liquidation Amounts). The holder of
the Common Securities will be entitled to receive Liquidation Distributions
upon any such dissolution, winding-up or termination pro rata (determined
as aforesaid) with Holders of Preferred Securities, except that, if a
Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities.
SECTION 905. Mergers, Consolidations, Amalgamations or Replacements of
---------------------------------------------------------
the Trust.
---------
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the
Preferred Securities, the Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the
laws of any state; provided, that (i) such successor entity either (a)
--------
expressly assumes all of the obligations of the Trust with respect to the
Preferred
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Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Preferred Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Depositor
expressly appoints a trustee of such successor entity possessing the same
powers and duties as the Property Trustee as the holder of the Debentures,
(iii) the Successor Securities are listed or traded, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities
are then listed or traded, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of
Counsel to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (viii)
the Depositor owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding
the foregoing, the Trust shall not, except with the consent of holders of 100%
in Liquidation Amount of the Preferred Securities, consolidate, amalgamate,
merge with or into, be replaced by or convey, transfer or lease its properties
and assets substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity to be classified as other
than a grantor trust for United States federal income tax purposes.
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ARTICLE X
---------
Miscellaneous Provisions
------------------------
SECTION 1001. Limitation of Rights of Securityholders.
---------------------------------------
The death or incapacity of any person having an interest, beneficial
or otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such person or
any Securityholder for such person, to claim an accounting, take any action or
bring any proceeding in any court for a partition or winding-up of the
arrangements contemplated hereby, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.
SECTION 1002. Amendment.
---------
(a) This Trust Agreement may be amended from time to time by
the Trustees and the Depositor, without the consent of any Securityholders,
(i) to cure any ambiguity, correct or supplement any provision herein which
may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of
this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that
the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Trust Securities are outstanding
or to ensure that the Trust will not be required to register as an
investment company under the 1940 Act; provided, however, that in the case
-------- -------
of clause (i), such action shall not adversely affect in any material
respect the interests of any Securityholder, and any amendments of this
Trust Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 1002(c) hereof, any provision
of this Trust Agreement may be amended by the Trustees and the Depositor
with (i) the consent of Securityholders representing not less than a
majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust for United States federal income tax purposes or
the Trust's exemption from status of an investment company under the 1940
Act.
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(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Securityholder
(such consent being obtained in accordance with Section 603 or 606 hereof),
this Trust Agreement may not be amended to (i) change the amount or timing
of any Distribution on the Trust Securities or otherwise adversely affect
the amount of any Distribution required to be made in respect of the Trust
Securities as of a specified date or (ii) restrict the right of a
Securityholder to institute suit for the enforcement of any such payment on
or after such date; notwithstanding any other provision herein, without the
unanimous consent of the Securityholders (such consent being obtained in
accordance with Section 603 or 606 hereof), this paragraph (c) of this
Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this
Trust Agreement which would cause the Trust to fail or cease to qualify for
the exemption from status of an investment company under the 1940 Act or
fail or cease to be classified as a grantor trust for United States federal
income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor, this Trust Agreement may
not be amended in a manner which imposes any additional obligation on the
Depositor.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrative Trustees shall promptly provide to the Depositor a
copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall
be required to enter into any amendment to this Trust Agreement which
affects its own rights, duties or immunities under this Trust Agreement.
The Property Trustee shall be entitled to receive an Opinion of Counsel and
an Officers' Certificate stating that any amendment to this Trust Agreement
is in compliance with this Trust Agreement.
SECTION 1003 Separability.
------------
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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SECTION 1004. GOVERNING LAW.
-------------
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
SECTION 1005. Payments Due on Non-Business Day.
--------------------------------
If the date fixed for any payment on any Trust Security shall be a
day that is not a Business Day, then such payment need not be made on such
date but may be made on the next succeeding day that is a Business Day (except
as otherwise provided in Sections 401(a) and 402(d)), with the same force and
effect as though made on the date fixed for such payment, and no interest
shall accrue thereon for the period after such date.
SECTION 1006 Successors.
----------
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Trust or the Relevant Trustee,
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article Eight of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
SECTION 1007. Headings.
--------
The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.
SECTION 1008. Reports, Notices and Demands.
----------------------------
Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon any Securityholder or the Depositor may be given or served
in writing by deposit thereof, first-class postage prepaid, in the United
States mail, hand delivery or facsimile transmission, in each case, addressed,
(a) in the case of a Preferred Securityholder, to such Preferred
Securityholder as such Securityholder's name and address may appear on the
Securities Register; and (b) in the case of the Common Securityholder or the
Depositor, to MCI Communications Corporation, 1801 Pennsylvania Avenue, N.W.,
Washington,
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D.C. 20006, Attention: Treasurer, facsimile no.: (202) 887-2198.
Any notice to Preferred Securityholders shall also be given to such owners as
have, within two years preceding the giving of such notice, filed their names
and addresses with the Property Trustee for that purpose. Such notice, demand
or other communication to or upon a Securityholder shall be deemed to have
been sufficiently given or made, for all purposes, upon hand delivery, mailing
or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given
in writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee to Wilmington Trust
Company, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Department; (b) with respect to the Delaware Trustee, to
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware
19890, Attention: Corporate Trust Department; and (c) with respect to the
Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention: Administrative Trustees of MCI Capital II."
Such notice, demand or other communication to or upon the Trust or the
Property Trustee shall be deemed to have been sufficiently given or made only
upon actual receipt of the writing by the Trust or the Property Trustee.
SECTION 1009. Agreement Not to Petition.
-------------------------
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 1009, the
Property Trustee agrees, for the benefit of Securityholders, that at the
expense of the Depositor, it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor
against the Trust or the commencement of such action and raise the defense
that the Depositor has agreed in writing not to take such action and should be
stopped and precluded therefrom and such other defenses, if any, as counsel
for the Trustee or the Trust may assert. The provisions of this Section 1009
shall survive the termination of this Trust Agreement.
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SECTION 1010. Trust Indenture Act; Conflict with Trust Indenture Act.
------------------------------------------------------
(a) This Trust Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Trust Agreement
and shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this
Trust Agreement by any of the provisions of the Trust Indenture Act, such
required provision shall control. If any provision of this Trust Agreement
modifies or excludes any provision of the Trust Indenture Act which may be
so modified or excluded, the latter provision shall be deemed to apply to
this Trust Agreement as so modified or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
-----------------------------------------------------
INDENTURE.
---------
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT
ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE
AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
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MCI COMMUNICATIONS CORPORATION
By: _________________________
Name:
Title:
WILMINGTON TRUST COMPANY
as Property Trustee
and Delaware Trustee
By: _______________________
Name:
Title:
By: _________________________
as Administrative Trustee
By: _________________________
as Administrative Trustee
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<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
MCI CAPITAL II
THIS Certificate of Trust of MCI Capital II (the "Trust"), dated as
of April 17, 1996, is being duly executed and filed by Wilmington Trust
Company, a Delaware banking corporation, as trustee, to form a business trust
under the Delaware Business Trust Act (12 Del. C. (S) 3801 et seq.).
1. Name. The name of the business trust formed hereby is MCI
----
Capital II.
2. Delaware Trustee. The name and business address of the trustee
----------------
of the Trust in the State of Delaware are Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective
--------------
upon filing with the Secretary of State.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
as trustee
By_________________________
Name: Donald G. MacKelcan
Title: Assistant Vice President
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<PAGE>
EXHIBIT B
_________ ___, 1996
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099.
Attention:________________________
General Counsel's Office
Re: MCI Capital II ____% Cumulative Quarterly Income Preferred Securities,
---------------------------------------------------------------------
Series A
--------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the MCI
Capital II ___% Cumulative Quarterly Income Preferred Securities, Series A (the
"Preferred Securities"), of MCI Capital II, a Delaware business trust (the
"Issuer"), formed pursuant to a Trust Agreement between MCI Communications
Corporation ("MCI") and Wilmington Trust Company, as Trustee. The payment of
distributions on the Preferred Securities and payments due upon liquidation of
Issuer or redemption of the Preferred Securities, to the extent the Issuer has
funds available for the payment thereof, are guaranteed by MCI to the extent set
forth in a Guarantee Agreement dated ________ __, 1996 by MCI with respect to
the Preferred Securities. MCI and the Issuer propose to sell the Preferred
Securities to certain Underwriters (the "Underwriters") pursuant to an
Underwriting Agreement dated _________ __, 1996 by and among the Underwriters,
the Issuer and MCI, and the Underwriters wish to take delivery of the Preferred
Securities through DTC. Wilmington Trust Company is acting as transfer agent and
registrar with respect to the Preferred Securities (the "Transfer Agent and
Registrar").
To induce DTC to accept the Preferred Securities as eligible for deposit at
DTC, and to act in accordance with DTC's rules with respect to the Preferred
Securities, the Issuer, the Transfer Agent and Registrar and DTC agree among
each other as follows:
1. Prior to the closing of the sale of the Preferred Securities to the
Underwriters, which is expected to occur on or about ________ __, 1996, there
shall be deposited with DTC one or more global certificates (individually and
collectively, the "Global Certificate")
1
<PAGE>
registered in the name of DTC's Preferred Securities nominee, Cede & Co.,
representing an aggregate of __________ Preferred Securities and bearing the
following legend:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for the
voting by holders of the Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event at least 5
business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Preferred Securities is required; and (c) the date any required notice is to be
mailed by or on behalf of the Issuer to holders of Preferred Securities or
published by or on behalf of the Issuer (whether by mail or publication, the
"Publication Date"). Such notice shall be sent to DTC by a secure means
(e.g., legible telecopy, registered or certified mail, overnight delivery) in a
2
<PAGE>
timely manner designed to assure that such notice is in DTC's possession no
later than the close of business on the business day before the Publication
Date. The Issuer or the Transfer Agent and Registrar will forward such notice
either in a separate secure transmission for each CUSIP number or in a secure
transmission of multiple CUSIP numbers (if applicable) that includes a manifest
or list of each CUSIP number submitted in that transmission. (The party sending
such notice shall have a method to verify subsequently the use of such means and
the timeliness Of such notice.) The Publication Date shall be not less than 30
calendar days nor more than 60 calendar days prior to the payment of any such
distribution or any such offering or issuance of rights with respect to the
Preferred Securities. After establishing the amount of payment to be made on the
Preferred Securities, the Issuer or the Transfer Agent and Registrar will notify
DTC's Dividend Department of such payment 5 business days prior to payment date.
Notices to DTC's Dividend Department by telecopy shall be sent to (212) 709-
1723. Such notices by mail or by any other means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's receipt
of such telecopy by telephoning the Dividend Department at (212) 709-1270.
5. In the event of a redemption by the Issuer of the Preferred
Securities, notice specifying the terms of the redemption and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC not less than 30 calendar days prior to such event by a secure
means in the manner set forth in paragraph 4. Such redemption notice shall be
sent to DTC's Call Notification Department at (516) 227-4164 or (516) 227-4190,
and receipt of such notice shall be confirmed by telephoning (516) 227-4070.
Notice by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Preferred Securities,
notice specifying the terms of the
3
<PAGE>
tender and the Publication Date of such notice shall be sent by the Issuer or
the Transfer Agent and Registrar to DTC by a secure means and in a timely manner
as described in paragraph 4. Notices to DTC pursuant to this paragraph and
notices of other corporate actions (including mandatory tenders, exchanges and
capital changes), shall be sent, unless notification to another department is
expressly provided for herein, by telecopy to DTC's Reorganization Department at
(212) 709-1093 or (212) 709-1094 and receipt of such notice shall be confirmed
by telephoning (212) 709-6884, or by mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Preferred Securities and the accompanying designation
of the Preferred Securities, which, as of the date of this letter, is "MCI
Capital II ___% Cumulative Quarterly Income Preferred Securities, Series A".
8. Distribution payments or other cash payments with respect to the
Preferred Securities evidenced by the Global Certificate shall be received by
Cede & Co., as nominee of DTC, or its registered assigns in next day funds on
each payment date (or in accordance with existing arrangements between the
Issuer or the Transfer Agent and Registrar and DTC). Such payments shall be
made payable to the order of Cede & Co., and shall be addressed as follows:
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
9. DTC may by prior written notice direct the Issuer and the Transfer
Agent and Registrar to use any other telecopy number or address of DTC as the
number or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
- -
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Preferred Securities outstanding evidenced by the Global
Certificate, DTC, in its discretion:
4
<PAGE>
(a) may request the Issuer or the Transfer Agent and Registrar to issue and
countersign a new Global Certificate; or (b) may make an appropriate notation on
the Global Certificate indicating the date and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Preferred Securities at any time by giving at least 90 days'
prior written notice to the Issuer and the Transfer Agent and Registrar (at
which time DTC will confirm with the Issuer or the Transfer Agent and Registrar
the aggregate number of Preferred Securities deposited with it) and discharging
its responsibilities with respect thereto under applicable law. Under such
circumstances, the Issuer may determine to make alternative arrangements for
book-entry settlement for the Preferred Securities, make available one or more
separate global certificates evidencing Preferred Securities to any Participant
having Preferred Securities credited to its DTC account, or issue definitive
Preferred Securities to the beneficial holders thereof, and in any such case,
DTC agrees to cooperate fully with the Issuer and the Transfer Agent and
Registrar and to return the Global Certificate, duly endorsed for transfer as
directed by the Issuer or the Transfer Agent and Registrar, together with any
other documents of transfer reasonably requested by the Issuer or the Transfer
Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of
Preferred Securities shall be able to obtain definitive Preferred Securities,
the Issuer or the Transfer Agent and Registrar shall notify DTC of the
availability of certificates. In such event, the Issuer or the Transfer Agent
and Registrar shall issue, transfer and exchange certificates in appropriate
amounts, as required by DTC and others, and DTC agrees to cooperate fully with
the Issuer and the Transfer Agent and Registrar and to return the Global
Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
5
<PAGE>
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of MCI Capital II.
Very truly yours,
MCI CAPITAL II
(As Issuer)
By:______________________
Administrative Trustee
By___________________________
Name:
Title:
_____________________________
(As Transfer Agent and Registrar)
By___________________________
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By__________________________
Authorized Officer
6
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
C-1
Certificate Evidencing Common Securities
of
MCI Capital II
___% Common Securities
(liquidation amount $25 per Common Security)
MCI Capital II, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that MCI Communications
Corporation (the "Holder") is the registered owner of ____________________
____________________ (________) common securities of the Trust representing
undivided beneficial interests in the assets of the Trust and designated the
____% Common Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). In accordance with Section 510 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof shall be void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of _________ __, 1996, as the same may be amended from time to time (the
"Trust Agreement") including the designation of the terms of the Common
Securities as set forth therein. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
1
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ______ day of ________, ____.
MCI CAPITAL II
By___________________________
Name:
Administrative Trustee
2
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of ____________ __ 1996, between MCI Communications
Corporation, a Delaware corporation ("MCI"), and MCI Capital II, a Delaware
business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Debentures from MCI and to issue and sell ____%
Cumulative Quarterly Income Preferred Securities (the "Preferred Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Trust dated as of
________ __, 1996 as the same may be amended from time to time (the "Trust
Agreement");
WHEREAS, MCI will directly or indirectly own all of the Common Securities
of Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase MCI hereby agrees shall benefit MCI and
which purchase MCI acknowledges will be made in reliance upon the execution and
delivery of this Agreement, MCI and Trust hereby agree as follows:
ARTICLE I
Section 1.1. Guarantee by MCI.
----------------
Subject to the terms and conditions hereof, MCI hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This Agreement is
1
<PAGE>
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
Section 1.2. Term of Agreement.
-----------------
This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Preferred Securities (whether upon redemption,
liquidation, exchange or otherwise) and (b) the date on which there are no
Beneficiaries remaining; provided, however, that this Agreement shall continue
-------- -------
to be effective or shall be reinstated, as the case may be, if at any time any
holder of Preferred Securities or any Beneficiary must restore payment of any
sums paid under the Preferred Securities, under any Obligation, under the
Guarantee Agreement dated the date hereof by MCI and Wilmington Trust Company as
guarantee trustee or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.3. Waiver of Notice.
----------------
MCI hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and MCI hereby waives presentment,
demand for payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.4. No Impairment.
-------------
The obligations, covenants, agreements and duties of MCI under this
Agreement shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the
Obligations or any action on the part of the Trust granting indulgence or
extension of any kind; or
2
<PAGE>
(c) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, MCI with respect to the happening of any of the foregoing.
Section 1.5. Enforcement.
-----------
A Beneficiary may enforce this Agreement directly against MCI and MCI
waives any right or remedy to require that any action be brought against the
Trust or any other person or entity before proceeding against MCI.
Section 1.6. Subrogation.
-----------
MCI shall be subrogated to all (if any) rights of the Trust in respect of
any amounts paid to the Beneficiaries by MCI under this Agreement; provided,
--------
however, that MCI shall not (except to the extent required by mandatory
- -------
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Agreement, if, at the
time of any such payment, any amounts are due and unpaid under this Agreement.
ARTICLE II
Section 2.1. Binding Effect.
--------------
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of MCI and shall
inure to the benefit of the Beneficiaries.
Section 2.2. Amendment.
---------
So long as there remains any Beneficiary or any Preferred Securities of any
series are outstanding, this Agreement shall not be modified or amended in any
manner adverse to such Beneficiary or to the holders of the Preferred
Securities.
Section 2.3. Notices.
-------
3
<PAGE>
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or by registered
or certified mail, addressed as follows (and if so given, shall be deemed given
when mailed or upon receipt of an answer-back, if sent by telex):
MCI Capital II
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware
Facsimile No.: (302) 651-8882
Attention: Corporate Trust Department
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2198
Attention: Treasurer
Section 2.4 This agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
THIS AGREEMENT is executed as of the day and year first above written.
MCI COMMUNICATIONS CORPORATION
By:_________________________
Name:
Title:
MCI CAPITAL II
By:_________________________
Name:
Administrative Trustee
4
<PAGE>
EXHIBIT E
IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depository or its nominee only in the
limited circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to MCI Capital II or
its agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
P-
CUSIP NO.
Certificate Evidencing Preferred Securities
of
MCI Capital II
___% Cumulative Quarterly Income Preferred Securities,
Series A
(liquidation amount $25 per Preferred Security)
MCI Capital II, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that ____________________ (the
"Holder") is the registered owner of ______ (______) preferred securities of the
Trust representing an undivided beneficial interest in the assets of the Trust
and designated the MCI Capital II ____% Cumulative Quarterly Income Preferred
Securities, Series A (liquidation amount $25 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are
1
<PAGE>
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 504 of the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of ________ __, 1996, as the same
may be amended from time to time (the "Trust Agreement") including the
designation of the terms of Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered into by
MCI Communications Corporation, a Delaware corporation, and Wilmington Trust
Company, as guarantee trustee, dated as of ________ __, 1996 (the "Guarantee"),
to the extent provided therein. The Trust will furnish a copy of the Trust
Agreement and the Guarantee to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
2
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ___________ day of __________, ____.
MCI CAPITAL II
By:______________________________
Name:
Administrative Trustee
3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:_____________
Signature:___________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature(s) Guaranteed:
- -------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
4
<PAGE>
===============================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
MCI COMMUNICATIONS CORPORATION, as Depositor,
Wilmington Trust Company, as Property Trustee
and Delaware Trustee,
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
Dated as of ________ __, 1996
MCI CAPITAL III
===============================================================================
<PAGE>
MCI Capital III
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section
<S> <C> <C> <C>
(S) 310 (a)(1).......................................... 807
(a)(2).......................................... 807
(a)(3).......................................... 809
(a)(4).......................................... 207(a)(ii)
(b)............................................. 808
(S) 311 (a)............................................. 813
(b)............................................. 813
(S) 312 (a)............................................. 507
(b)............................................. 507
(c)............................................. 507
(S) 313 (a)............................................. 814(a)
(a)(4).......................................... 814(b)
(b)............................................. 814(b)
(c)............................................. 1008
(d)............................................. 814(c)
(S) 314 (a)............................................. 815
(b)............................................. Not Applicable
(c)(1).......................................... 816
(c)(2).......................................... 816
(c)(3).......................................... Not Applicable
(d)............................................. Not Applicable
(e)............................................. 101, 816
(S) 315 (a)............................................. 801(a), 803(a)
(b)............................................. 802, 1008
(c)............................................. 801(a)
(d)............................................. 801, 803
(e)............................................. Not Applicable
(S) 316 (a)............................................. Not Applicable
(a)(1)(A)....................................... Not Applicable
(a)(1)(B)....................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. Not Applicable
(c)............................................. 607
(S) 317 (a)(1).......................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. 509
(S) 318 (a)............................................. 1010
- ---------------
</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
-i-
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE I
Defined Terms
SECTION 101. Definitions.................................... 2
ARTICLE II
Establishment of the Trust
SECTION 201. Name........................................... 13
SECTION 202. Office of the Delaware Trustee; Principal
Place of Business.............................. 13
SECTION 203. Initial Contribution of Trust Property;
Organizational Expenses........................ 13
SECTION 204. Issuance of the Preferred Securities........... 13
SECTION 205. Issuance of the Common Securities;
Subscription and Purchase of Debentures........ 14
SECTION 206. Declaration of Trust........................... 15
SECTION 207. Authorization to Enter into Certain
Transactions................................... 15
SECTION 208. Assets of Trust................................ 20
SECTION 209. Title to Trust Property........................ 20
ARTICLE III
Payment Account
SECTION 301. Payment Account................................... 20
ARTICLE IV
Distributions; Redemption
SECTION 401. Distributions..................................... 20
SECTION 402. Redemption........................................ 21
SECTION 403. Subordination of Common Securities................ 24
SECTION 404. Payment Procedures................................ 25
SECTION 405. Tax Returns and Reports........................... 25
SECTION 406. Payment of Taxes, Duties, Etc. of the Trust....... 25
SECTION 407. Payments under Indenture.......................... 26
ARTICLE V
Trust Securities Certificates
SECTION 501. Initial Ownership.............................. 26
SECTION 502. The Trust Securities Certificates.............. 26
-i-
<PAGE>
SECTION 503. Execution and Delivery of Trust Securities
Certificates...................................... 27
SECTION 504. Registration of Transfer and Exchange of
Preferred Securities Certificates................. 27
SECTION 505. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates........................... 28
SECTION 506. Persons Deemed Securityholders.................... 29
SECTION 507. Access to List of Securityholders' Names and
Addresses......................................... 29
SECTION 508. Maintenance of Office or Agency................... 29
SECTION 509. Appointment of Paying Agent....................... 30
SECTION 510. Ownership of Common Securities by Depositor....... 31
SECTION 511. Book-Entry Preferred Securities Certificates;
Common Securities Certificate..................... 31
SECTION 512. Notices to Clearing Agency........................ 32
SECTION 513. Definitive Preferred Securities Certificates...... 32
SECTION 514. Rights of Securityholders......................... 33
ARTICLE VI
Acts of Securityholders; Meetings; Voting
SECTION 601. Limitations on Voting Rights...................... 34
SECTION 602. Notice of Meetings................................ 35
SECTION 603. Meetings of Preferred Securityholders............. 36
SECTION 604. Voting Rights..................................... 36
SECTION 605. Proxies, etc...................................... 36
SECTION 606. Securityholder Action by Written Consent.......... 37
SECTION 607. Record Date for Voting and Other Purposes......... 37
SECTION 608. Acts of Securityholders........................... 37
SECTION 609. Inspection of Records............................. 39
ARTICLE VII
Representations and Warranties
SECTION 701. Representations and Warranties of the Bank,
the Property Trustee and the Delaware Trustee..... 39
SECTION 702. Representations and Warranties of Depositor....... 40
-ii-
<PAGE>
ARTICLE VIII
The Trustees
SECTION 801. Certain Duties and Responsibilities............ 41
SECTION 802. Certain Notices................................ 43
SECTION 803. Certain Rights of Property Trustee............. 43
SECTION 804. Not Responsible for Recitals or Issuance of
Securities..................................... 46
SECTION 805. May Hold Securities............................ 46
SECTION 806. Compensation; Indemnity; Fees.................. 46
SECTION 807. Corporate Property Trustee Required;
Eligibility of Trustees........................ 47
SECTION 808. Conflicting Interests.......................... 48
SECTION 809. Co-Trustees and Separate Trustee............... 48
SECTION 810. Resignation and Removal; Appointment of
Successor...................................... 50
SECTION 811. Acceptance of Appointment by Successor......... 52
SECTION 812. Merger, Conversion, Consolidation or
Succession to Business......................... 53
SECTION 813. Preferential Collection of Claims Against
Depositor or Trust............................. 53
SECTION 814. Reports by Property Trustee.................... 54
SECTION 815. Reports to the Property Trustee................ 54
SECTION 816. Evidence of Compliance with Conditions
Precedent...................................... 55
SECTION 817. Number of Trustees............................. 55
SECTION 818. Delegation of Power............................ 55
ARTICLE IX
Termination, Liquidation and Merger
SECTION 901. Termination Upon Expiration Date............... 56
SECTION 902. Early Termination.............................. 56
SECTION 903. Termination.................................... 57
SECTION 904. Liquidation.................................... 57
SECTION 905. Mergers, Consolidations, Amalgamations or
Replacements of the Trust...................... 59
ARTICLE X
Miscellaneous Provisions
SECTION 1001. Limitation of Rights of Securityholders........ 60
SECTION 1002. Amendment...................................... 60
SECTION 1003. Separability................................... 62
SECTION 1004. GOVERNING LAW.................................. 62
SECTION 1005. Payments Due on Non-Business Day............... 62
SECTION 1006. Successors..................................... 63
-iii-
<PAGE>
SECTION 1007. Headings....................................... 63
SECTION 1008. Reports, Notices and Demands................... 63
SECTION 1009. Agreement Not to Petition...................... 64
SECTION 1010. Trust Indenture Act; Conflict with Trust
Indenture Act.................................. 64
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT,
GUARANTEE AND INDENTURE........................ 65
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities
-iv-
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________ __, 1996,
among (i) MCI Communications Corporation, a Delaware corporation (including
any successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as property trustee and Delaware trustee (in each such
capacity, the "Property Trustee" and "Delaware Trustee," respectively, and, in
its separate corporate capacity and not in its capacity as Property Trustee or
Delaware Trustee, the "Bank"), (iii) Douglas L. Maine, an individual, and
Jonelle St. John, an individual, each of whose address is c/o MCI
Communications Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C.
20006 (each, an "Administrative Trustee" and, collectively, the
"Administrative Trustees" and, collectively with the Property Trustee and
Delaware Trustee, the "Trustees") and (iv) the several Holders, as hereinafter
defined.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into of that certain Trust Agreement, dated as of
April 17, 1996 (the "Original Trust Agreement"), and by the execution and
filing by the Delaware Trustee with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on April 17, 1996, attached as
Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Trust pursuant to the Underwriting Agreement, (iii) the
acquisition by the Trust from the Depositor of all of the right, title and
interest in the Debentures and (iv) the appointment of the Administrative
Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Securityholders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
<PAGE>
ARTICLE I
---------
Defined Terms
-------------
SECTION 101. Definitions.
-----------
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 608.
---
"Additional Amount" means, with respect to Trust Securities of a
-----------------
given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Indenture) paid by the Depositor on a Like Amount
of Debentures for such period.
"Additional Sums" has the meaning specified in Section 1007 of the
---------------
Indenture.
"Administrative Trustee" means each of Douglas L. Maine and Jonelle
----------------------
St. John, each solely in such person's capacity as Administrative Trustee of
the Trust formed and continued hereunder and not in such person's individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor trustee appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly
---------
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
2
<PAGE>
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust
----
Agreement.
"Bankruptcy Event" means, with respect to any Person:
----------------
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjudication or composition of or in respect of such Person under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of such Person or of
any substantial part of its property or ordering the winding-up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated
a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or similar official) of such Person or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due and its
willingness to be adjudicated a bankrupt, or the taking of corporate
action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 1009.
---------------
"Board Resolution" means a copy of a resolution certified by the
----------------
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board
3
<PAGE>
of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustees.
"Book-Entry Preferred Securities Certificates" means a beneficial
--------------------------------------------
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 511.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
------------
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the
--------------------------------
Trust, the Depositor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Trust Securities
Certificates, substantially in the form attached as Exhibit B, as the same may
be amended and supplemented from time to time.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means the First Time of Delivery, which date is also
------------
the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now
4
<PAGE>
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Security" means an undivided beneficial interest in the
---------------
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
-----------------------------
ownership of Common Securities, substantially in the form attached as Exhibit
C.
"Corporate Trust Office" means the principal office of the Property
----------------------
Trustee located in Wilmington, Delaware.
"Debenture Event of Default" means an "Event of Default" as defined
--------------------------
in the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to
-------------------------
be redeemed under the Indenture, the date fixed for redemption under the
Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the
-------------------
Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware
-----------------
banking corporation organized under the laws of the State of Delaware and any
successor thereto.
"Debentures" means the aggregate principal amount of the Depositor's
----------
____% Junior Subordinated Deferrable Interest Debentures, Series A, issued
pursuant to the Indenture.
"Definitive Preferred Securities Certificates" means either or both
--------------------------------------------
(as the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificates as provided in Section 511(a) and
(b) Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 513.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
---------------------------
Delaware Code, 12 Del. C. (S) 3801, et seq., as it may be amended from time to
-- ---
time.
"Delaware Trustee" means the commercial bank or trust company
----------------
identified as the "Delaware Trustee" in the preamble to this Trust Agreement
solely in its capacity as
5
<PAGE>
Delaware Trustee of the Trust formed and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
---------
Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
-----------------
"Distributions" means amounts payable in respect of the Trust
-------------
Securities as provided in Section 401.
"Event of Default" means any one of the following events (whatever
----------------
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(c) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Trustees in this Trust Agreement
(other than a covenant or warranty a default in the performance of which
or the breach of which is dealt with in clause (b) or (c) above) and
continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the defaulting
Trustee or Trustees by the Holders of at least 25% in aggregate
liquidation preference of the Outstanding Preferred Securities a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee and the failure by the Depositor to appoint a successor
Property Trustee within 60 days thereof.
6
<PAGE>
"Expense Agreement" means the Agreement as to Expenses and
-----------------
Liabilities between the Depositor and the Trust, substantially in the form
attached as Exhibit D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
---------------
"First Time of Delivery" has the meaning specified in the
----------------------
Underwriting Agreement.
"Guarantee" means the Guarantee Agreement executed and delivered by
---------
the Depositor and Wilmington Trust Company, as trustee, contemporaneously with
the execution and delivery of this Trust Agreement, for the benefit of the
holders of the Preferred Securities, as amended from time to time.
"Indenture" means the Junior Subordinated Indenture, dated as of
---------
________ __, 1996, as supplemented by a Supplemental Indenture No. 1, dated as
of ________ __, 1996, between the Depositor and the Debenture Trustee, as
trustee, as amended or supplemented from time to time.
"Investment Company Event" means the receipt by the Trust of an
------------------------
Opinion of Counsel, rendered by a law firm having a recognized national tax
and securities practice, to the effect that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), the Trust is or will be
considered an "investment company" that is required to be registered under the
1940 Act, which Change in 1940 Act Law becomes effective on or after the date
of original issuance of the Preferred Securities under this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
----
trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
-----------
Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Debentures to be contemporaneously redeemed in accordance
with the Indenture the proceeds of which will be used to pay the Redemption
Price of such Trust Securities and (b) with respect to a distribution of
Debentures to Holders of Trust Securities in connection with a dissolution or
liquidation
7
<PAGE>
of the Trust, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the Holder to whom such
Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust
------------------
Security.
"Liquidation Date" means the date on which Debentures are to be
----------------
distributed to Holders of Trust Securities in connection with a termination
and liquidation of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section
------------------------
904(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
--------
"Officers' Certificate" means a certificate signed by the Chairman
---------------------
and Chief Executive Officer, President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the appropriate
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 816 shall be the principal executive, financial or accounting
officer of the Depositor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
------------------
counsel for the Trust, the Property Trustee or the Depositor or General
Counsel of the
8
<PAGE>
Depositor, and who shall be reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals
------------------------
to this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means,
-----------
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
------
(a) Preferred Securities theretofore cancelled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Preferred Securities;
provided that, if such Preferred Securities are to be redeemed, notice of
--------
such redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or
in lieu of which other Preferred Securities have been executed and
delivered pursuant to Section 504, 505, 511 and 513;
provided, however, that in determining whether the Holders of the requisite
-------- -------
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Preferred Securities owned by the Depositor, any Trustee or any
Affiliate of the Depositor or any Trustee shall be disregarded and deemed not
to be Outstanding, except that (a) in determining whether any Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Preferred Securities that such Trustee knows
to be so owned shall be so disregarded and (b) the foregoing shall not apply
at any time when all of the outstanding Preferred Securities are owned by the
Depositor, one or more of the Trustees and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustees the pledgee's right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or any
Affiliate of the Depositor.
9
<PAGE>
"Owner" means each Person who is the beneficial owner of a Book-Entry
-----
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account with such Clearing
Agency (directly or indirectly, in accordance with the rules of such Clearing
Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
------------
pursuant to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
---------------
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee
shall make payments to the Securityholders in accordance with Sections 401 and
402.
"Person" means any individual, corporation, partnership, joint
------
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the
------------------
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
--------------------------------
ownership of Preferred Securities, substantially in the form attached as
Exhibit E.
"Property Trustee" means the commercial bank or trust company
----------------
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as
herein provided.
"Redemption Date" means, with respect to any Trust Security to be
---------------
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated
--------
maturity of the Debentures shall be a Redemption Date for a Like Amount of
Trust Securities.
10
<PAGE>
"Redemption Price" means, with respect to any Trust Security, the
----------------
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures, allocated on a pro rata basis (based on Liquidation Amounts)
among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
----------------
"Second Time of Delivery" has the meaning specified in the
-----------------------
Underwriting Agreement.
"Securities Register" and "Securities Registrar" have the respective
------------------- --------------------
meanings specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a Trust
-------------- ------
Security or Securities is registered in the Securities Register; any such
Person shall be deemed to be a beneficial owner within the meaning of the
Delaware Business Trust Act.
"Special Event" means a Tax Event or an Investment Company Event.
-------------
"Tax Event" means the receipt by the Trust of an Opinion of Counsel,
---------
rendered by a law firm having a national tax and securities practice, to the
effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities under
this Trust Agreement, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days after the date of such Opinion of Counsel,
subject to United States federal income tax with respect to income received or
accrued on the Debentures, (ii) interest payable by the Depositor on the
Debentures is not, or within 90 days after the date of such Opinion of
Counsel, will not be, deductible by the Depositor, in whole or in part, for
United States federal income tax purposes or (iii) the Trust is, or will be
within 90 days after the date of such Opinion of Counsel, subject to more than
a de minimis amount of other taxes, duties, assessments or other governmental
charges.
11
<PAGE>
"Time of Delivery" means, collectively, the First Time of Delivery
----------------
and the Second Time of Delivery.
"Trust" means the Delaware business trust created and continued
-----
hereby and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
---------------
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for
all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment
or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
-------------------
force at the date as of which this instrument was executed; provided, however,
-------- -------
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) the rights of the
--------------
Property Trustee under the Guarantee, (c) any cash on deposit in, or owing to,
the Payment Account and (d) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed
to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
--------------
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
----------------------------
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware
--------
Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Terms Agreement, dated as of
----------------------
________ __, 1996, among the Trust, the Depositor and the Underwriters named
therein, incorporating the Underwriting Agreement Basic Provisions of the
Trust.
12
<PAGE>
ARTICLE II
----------
Establishment of the Trust
--------------------------
SECTION 201. Name.
----
The Trust created and continued hereby shall be known as "MCI
Capital II," as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 202. Office of the Delaware Trustee; Principal Place of Business
-----------------------------------------------------------
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, 1100 North Market Street, Wilmington 19890,
Delaware, Attention: Corporate Trust Administration, or such other address in
the State of Delaware as the Delaware Trustee may designate by written notice
to the Securityholders and the Depositor. The principal executive office of
the Trust is c/o MCI Communications Corporation, 1801 Pennsylvania Avenue,
N.W., Washington, D.C. 20006.
SECTION 203. Initial Contribution of Trust Property; Organizational
------------------------------------------------------
Expenses
--------
The Property Trustee acknowledges receipt in trust from the
Depositor in connection with the Original Trust Agreement of the sum of $10,
which constituted the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of
any Trustee, promptly reimburse such Trustee for any such expenses paid by
such Trustee. The Depositor shall make no claim upon the Trust Property for
the payment of such expenses.
SECTION 204. Issuance of the Preferred Securities
------------------------------------
On _____ __, 1996 the Depositor, on behalf of the Trust and pursuant
to the Original Trust Agreement, executed and delivered the Underwriting
Agreement. Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Underwriters named in the
Underwriting Agreement Preferred Securities Certificates, registered in the
name of the nominee of the initial Clearing Agency, in an aggregate amount of
__________ Preferred Securities having an
13
<PAGE>
aggregate Liquidation Amount of $___________, against receipt of the aggregate
purchase price of such Preferred Securities of $___________, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee. If
there is a Second Time of Delivery, an Administrative Trustee, on behalf of
the Trust, shall execute in accordance with Section 502 and deliver to the
Underwriters named in the Underwriting Agreement Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of up to __________ Preferred Securities having
an aggregate Liquidation Amount of up to $___________, against receipt of the
aggregate purchase price of such Preferred Securities of 96.85% of the
Liquidation Amount thereof, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee.
SECTION 205. Issuance of Common Securities; Subscription and Purchase of
-----------------------------------------------------------
Debentures.
----------
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of _______ Common Securities having an aggregate Liquidation Amount of
$__________ against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
equal to $___________, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the sum of $___________. If there is a Second Time of Delivery, an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 502 and deliver to the Depositor Common Securities Certificates,
registered in the name of the Depositor, in an aggregate amount of up to
_______ Common Securities having an aggregate Liquidation Amount of up to
$__________ against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
of up to $___________, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the amount received from one of the Administrative Trustees pursuant
to the last sentence of Section 204.
14
<PAGE>
SECTION 206. Declaration of Trust
--------------------
The exclusive purposes and functions of the Trust are (a) to issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Debentures and (b) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it will hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Securityholders.
The Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust
for the sole and limited purpose of fulfilling the requirements of Section
3807 of the Delaware Business Trust Act.
SECTION 207. Authorization to Enter into Certain Transactions
------------------------------------------------
(a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance
with the following provisions (i) and (ii), the Administrative Trustees
shall have the authority to enter into all transactions and agreements
determined by the Trustees to be appropriate in exercising the authority,
express or implied, otherwise granted to the Trustees under this Trust
Agreement, and to perform all acts in furtherance thereof, including
without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall have
the power and authority to act on behalf of the Trust with respect to
the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense Agreement
and the Certificate Depository Agreement and such other agreements
as
15
<PAGE>
may be necessary or desirable in connection with the purposes and
function of the Trust;
(C) assisting in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of this
Trust Agreement as a trust indenture under the Trust Indenture Act;
(D) assisting in the listing of the Preferred
Securities upon such national securities exchange, the Nasdaq
National Market or such other interdealer quotation system or self-
regulatory organization as shall be determined by the Depositor and
the registration of the Preferred Securities under the Securities
Exchange Act of 1934, as amended, and the preparation and filing of
all periodic and other reports and other documents pursuant to the
foregoing;
(E) the sending of notices (other than notices of
default) and other information regarding the Trust Securities and
the Debentures to the Securityholders in accordance with this Trust
Agreement;
(F) the appointment of a Paying Agent, authenticating
agent and Securities Registrar in accordance with this Trust
Agreement;
(G) registering transfer of the Trust Securities in
accordance with this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding-up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(I) unless otherwise determined by the Depositor, the
Property Trustee or the Administrative Trustees, or as otherwise
required by the Delaware Business Trust Act or the Trust Indenture
Act, to execute on behalf of the Trust (either acting alone or
together with any or all of the Administrative Trustees) any
documents that the Administrative Trustees have the power to execute
pursuant to this Trust Agreement; and
16
<PAGE>
(J) the taking of any action incidental to the
foregoing as the Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this Trust
Agreement for the benefit of the Securityholders (without
consideration of the effect of any such action on any particular
Securityholder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with respect
to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any
other payments made in respect of the Debentures in the Payment
Account;
(D) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding-up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(I) after an Event of Default the taking of any
action incidental to the foregoing as the Property Trustee may from
time to time determine is necessary or advisable to give effect to
the terms of this Trust Agreement and protect and
17
<PAGE>
conserve the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder);
(J) registering transfers of the Trust Securities in
accordance with this Trust Agreement; and
(K) except as otherwise provided in this Section
207(a)(ii), the Property Trustee shall have none of the duties,
liabilities, powers or the authority of the Administrative Trustees
set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein
or contemplated hereby. In particular, the Trustees shall not (i) acquire
any investments or engage in any activities not authorized by this Trust
Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off
or otherwise dispose of any of the Trust Property or interests therein,
including to Securityholders, except as expressly provided herein, (iii)
take any action that would cause the Trust to fail or cease to qualify as a
"grantor trust" for United States federal income tax purposes, (iv) incur
any indebtedness for borrowed money or issue any other debt or (v) take or
consent to any action that would result in the placement of a Lien on any
of the Trust Property. The Administrative Trustees shall defend all claims
and demands of all Persons at any time claiming any Lien on any of the
Trust Property adverse to the interest of the Trust or the Securityholders
in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to assist
the Trust with respect to, or effect on behalf of the Trust, the following
(and any actions taken by the Depositor in furtherance of the following
prior to the date of this Trust Agreement are hereby ratified and confirmed
in all respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration
statement on the appropriate form in relation to the Preferred Securities
and the Debentures, including any amendments thereto;
18
<PAGE>
(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and the determination of any and all such acts,
other than actions which must be taken by or on behalf of the Trust, and
the advice to the Trustees of actions they must take on behalf of the
Trust, and the preparation for execution and filing of any documents to
be executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such states;
(iii) the preparation for filing by the Trust and execution on
behalf of the Trust of an application to the New York Stock Exchange or
any other national stock exchange or the Nasdaq National Market for
listing upon notice of issuance of any Preferred Securities;
(iv) the preparation for filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Exchange Act, including
any amendments thereto;
(v) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the
Preferred Securities; and
(vi) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs
of the Trust and to operate the Trust so that the Trust will not be deemed
to be an "investment company" required to be registered under the 1940 Act,
or taxed as a corporation for United States federal income tax purposes and
so that the Debentures will be treated as indebtedness of the Depositor for
United States federal income tax purposes. In this connection, the
Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or
this Trust Agreement, that each of the Depositor and the Administrative
Trustees determines in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any
material respect the interests of the holders of the Preferred Securities.
19
<PAGE>
SECTION 208. Assets of Trust
---------------
The assets of the Trust shall consist of the Trust Property.
SECTION 209. Title to Trust Property
-----------------------
Legal title to all Trust Property shall be vested at all times in
the Property Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee for the benefit of the Securityholders in
accordance with this Trust Agreement.
ARTICLE III
-----------
Payment Account
---------------
SECTION 301. Payment Account
---------------
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal
with respect to the Payment Account for the purpose of making deposits in
and withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the Securityholders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held
in the Payment Account shall not be invested by the Property Trustee
pending distribution thereof.
ARTICLE IV
----------
Distributions; Redemption
-------------------------
SECTION 401. Distributions
-------------
(a) Distributions on the Trust Securities shall be cumulative,
and will accumulate whether or not there are funds of the Trust available
for the payment of Distributions. Distributions shall accrue from ________
__, 1996, and, except in the event that the Depositor exercises its right
to defer the payment of interest on the Debentures pursuant to the
Indenture, shall be payable quarterly in
20
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arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on June 30, 1996. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, payment of such Distribution shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date (each date on which distributions are
payable in accordance with this Section 401(a) a "Distribution Date").
(b) The Trust Securities represent undivided beneficial
interests in the Trust Property, and, the Distributions on the Trust
Securities shall be payable at a rate of ____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for
any full period shall be computed on the basis of a 360-day year of twelve
30-day months. The amount of Distributions for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year of
twelve 30-day months. The amount of Distributions payable for any period
shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on
the Securities Register for the Trust Securities on the relevant record
date, which shall be one Business Day prior to such Distribution Date;
provided, however, that in the event that the Preferred Securities do not
-------- -------
remain in book-entry-only form, the relevant record date shall be the date
15 days prior to the relevant Distribution Date.
SECTION 402. Redemption
----------
(a) On each Debenture Redemption Date and on the stated
maturity of the Debentures, the Trust will be required to redeem a Like
Amount of Trust Securities at the Redemption Price.
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(b) Notice of redemption shall be given by the Property Trustee
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 Trust Securities to
be redeemed, at such Holder's address appearing in the Security Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust
Securities are to be redeemed, the identification and the total
Liquidation Amount of the particular Trust Securities to be
redeemed; and
(v) that on the Redemption Date the Redemption Price
will become due and payable upon each such Trust Security to be
redeemed and that distributions thereon will cease to accrue on and
after said date.
(c) The Trust Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption
Price.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York City
time, on the Redemption Date, subject to Section 402(c), the Property
Trustee will, so long as the Preferred Securities are in book-entry-only
form, irrevocably deposit with the Clearing Agency for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will
give such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the holders thereof. If the Preferred Securities are
no longer in book-entry-only form, the Property Trustee, subject to Section
402(c), will irrevocably deposit with the Paying Agent funds sufficient to
pay the applicable Redemption Price and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price to the
Holders thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for
22
<PAGE>
any Trust Securities called for redemption shall be payable to the Holders
of such Trust Securities as they appear on the Register for the Trust
Securities on the relevant record dates for the related Distribution Dates.
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of Securityholders
holding Trust Securities so called for redemption will cease, except the
right of such Securityholders to receive the Redemption Price and any
Distribution payable on or prior to the Redemption Date, but without
interest, and such Securities will cease to be outstanding. In the event
that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on
the immediately preceding Business Day, in each case, with the same force
and effect as if made on such date. In the event that payment of the
Redemption Price in respect of any Trust Securities called for redemption
is improperly withheld or refused and not paid either by the Trust or by
the Depositor pursuant to the Guarantee, Distributions on such Trust
Securities will continue to accrue, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust
Securities to the date such Redemption Price is actually paid, in which
case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities
shall be made to the recordholders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall
be one Business Day prior to the relevant Redemption Date; provided,
--------
however, that in the event that the Preferred Securities do not remain in
-------
book-entry-only form, the relevant record date shall be the date fifteen
days prior to the relevant Redemption Date.
(f) Subject to Section 403(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of Trust Securities to be redeemed shall be
allocated on a pro rata basis (based on Liquidation Amounts) among the
Common Securities and the Preferred Securities. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis (based upon
Liquidation Amounts) not more than 60 days prior to the Redemption Date by
the Property Trustee from the Outstanding Preferred Securities not
23
<PAGE>
previously called for redemption, by such method (including, without
limitation, by lot) as the Property Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal
to $25 or an integral multiple of $25 in excess thereof) of the Liquidation
Amount of Preferred Securities of a denomination larger than $25. The
Property Trustee shall promptly notify the Security Registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed. For all purposes of this Trust Agreement,
unless the context otherwise requires, all provisions relating to the
redemption of Preferred Securities shall relate, in the case of any
Preferred Securities redeemed or to be redeemed only in part, to the
portion of the Liquidation Amount of Preferred Securities that has been or
is to be redeemed.
SECTION 403. Subordination of Common Securities
----------------------------------
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 402(f), pro rata among the
Common Securities and the Preferred Securities based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any
-------- -------
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution (including Additional Amounts, if applicable)
on, or Redemption Price of, any Common Security, and no other payment on
account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated
and unpaid Distributions (including Additional Amounts, if applicable) on
all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all
Outstanding Preferred Securities, shall have been made or provided for, and
all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of,
Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Holder of Common
Securities will be deemed to have waived any right to act with respect to
any such Event of Default under this Trust Agreement until the effect of
all such
24
<PAGE>
Events of Default with respect to the Preferred Securities have been cured,
waived or otherwise eliminated. Until any such Event of Default under this
Trust Agreement with respect to the Preferred Securities has been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the Holders of the Preferred Securities and not the Holder of the
Common Securities, and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee to act on their behalf.
SECTION 404. Payment Procedures
------------------
Payments of Distributions (including Additional Amounts, if
applicable) in respect of the Preferred Securities shall be made by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register or, if the Preferred Securities are held by
a Clearing Agency, such Distributions shall be made to the Clearing Agency in
immediately available funds, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable distribution dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Common Securityholder.
SECTION 405. Tax Returns and Reports
-----------------------
The Administrative Trustees shall prepare (or cause to be prepared),
at the Depositor's expense, and file all United States federal, state and
local tax and information returns and reports required to be filed by or in
respect of the Trust. In this regard, the Administrative Trustees shall (a)
prepare and file (or cause to be prepared and filed) the appropriate Internal
Revenue Service Form required to be filed in respect of the Trust in each
taxable year of the Trust and (b) prepare and furnish (or cause to be prepared
and furnished) to each Securityholder the appropriate Internal Revenue Service
form required to be furnished to such Securityholder or the information
required to be provided on such form. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such returns
and reports promptly after such filing or furnishing. The Trustees shall
comply with United States federal withholding and backup withholding tax laws
and information reporting requirements with respect to any payments to
Securityholders under the Trust Securities.
SECTION 406. Payment of Taxes, Duties, Etc. of the Trust.
-------------------------------------------
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes,
25
<PAGE>
duties or governmental charges of whatsoever nature (other than withholding
taxes) imposed on the Trust by the United States or any other taxing
authority.
SECTION 407. Payments under Indenture
------------------------
Any amount payable hereunder to any Holder of Preferred Securities
(and any Owner with respect thereto) shall be reduced by the amount of any
corresponding payment such Holder (and Owner) has directly received pursuant
to Section 508 of the Indenture.
ARTICLE V
---------
Trust Securities Certificates
-----------------------------
SECTION 501. Initial Ownership
-----------------
Upon the formation of the Trust and the contribution by the
Depositor pursuant to Section 203 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Trust.
SECTION 502. The Trust Securities Certificates
---------------------------------
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in
excess thereof, and the Common Securities Certificates shall be issued in
denominations of $25 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by
manual signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefits of
this Trust Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the delivery of such Trust
Securities Certificates or did not hold such offices at the date of delivery
of such Trust Securities Certificates. A transferee of a Trust Securities
Certificate shall become a Securityholder, and shall be entitled to the rights
and subject to the obligations of a Securityholder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's name
pursuant to Sections 504, 511 and 513.
26
<PAGE>
SECTION 503. Execution and Delivery of Trust Securities Certificates
-------------------------------------------------------
At each Time of Delivery, the Administrative Trustees shall cause
Trust Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 204 and 205, to be executed on behalf of the Trust and delivered
to or upon the written order of the Depositor, signed by its chairman of the
board, its president, any executive vice president, senior vice president or
any vice president, treasurer or assistant treasurer or controller without
further corporate action by the Depositor, in authorized denominations.
SECTION 504. Registration of Transfer and Exchange of Preferred Securities
-------------------------------------------------------------
Certificates
------------
The Depositor shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 508, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and
exchanges of Preferred Securities Certificates (the "Securities Register") in
which, the registrar designated by the Depositor (the "Securities Registrar"),
subject to such reasonable regulations as it may prescribe, shall provide for
the registration of Preferred Securities Certificates and Common Securities
Certificates (subject to Section 510 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. The Bank shall be the initial
Securities Registrar.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
508, the Administrative Trustees or any one of them shall execute and deliver,
in the name of the designated transferee or transferees, one or more new
Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount dated the date of execution by such
Administrative Trustee or Trustees. The Securities Registrar shall not be
required to register the transfer of any Preferred Securities that have been
called for redemption. At the option of a Holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 508.
27
<PAGE>
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Property Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Preferred Securities Certificates.
SECTION 505. Mutilated, Destroyed, Lost or Stolen Trust Securities
-----------------------------------------------------
Certificates
------------
If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar
shall receive evidence to its satisfaction of the destruction, loss or
theft of any Trust Securities Certificate and (b) there shall be delivered
to the Securities Registrar and the Administrative Trustees such security
or indemnity as may be required by them to save each of them harmless, then
in the absence of notice that such Trust Securities Certificate shall have
been acquired by a bona fide purchaser, the Administrative Trustees, or any
one of them, on behalf of the Trust shall execute and make available for
delivery, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Securities Certificate, a new Trust Securities Certificate
of like class, tenor and denomination. In connection with the issuance of
any new Trust Securities Certificate under this Section, the Administrative
Trustees or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an undivided beneficial interest in the assets of the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Trust
Securities Certificate shall be found at any time.
28
<PAGE>
SECTION 506. Persons Deemed Securityholders
------------------------------
The Administrative Trustees or the Securities Registrar shall treat
the Person in whose name any Trust Securities Certificate shall be registered
in the Securities Register as the owner of such Trust Securities Certificate
for the purpose of receiving distributions and for all other purposes
whatsoever, and neither the Trustees nor the Securities Registrar shall be
bound by any notice to the contrary.
SECTION 507. Access to List of Securityholders' Names and Addresses
------------------------------------------------------
The Administrative Trustees or the Depositor shall furnish or cause
to be furnished (a) to the Property Trustee, semi-annually on or before
January 15 and July 15 in each year, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent Record Date and (b) to the Property
Trustee, promptly after receipt by any Administrative Trustee or the Depositor
of a request therefor from the Property Trustee in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, in
each case to the extent such information is in the possession or control of
the Administrative Trustees or the Depositor and is not identical to a
previously supplied list or has not otherwise been received by the Property
Trustee in its capacity as Securities Registrar. The rights of
Securityholders to communicate with other Securityholders with respect to
their rights under this Trust Agreement or under the Trust Securities, and the
corresponding rights of the Trustee shall be as provided in the Trust
Indenture Act. Each Holder, by receiving and holding a Trust Securities
Certificate, and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source
from which such information was derived.
SECTION 508. Maintenance of Office or Agency
-------------------------------
The Administrative Trustees shall maintain an office or offices or
agency or agencies where Preferred Securities Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate MCI Communications
Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006,
Attention: Treasurer, as the office for such purposes. The
29
<PAGE>
Administrative Trustees shall give prompt written notice to the Depositor and
to the Securityholders of any change in the location of the Securities
Register or any such office or agency.
SECTION 509. Appointment of Paying Agent.
---------------------------
The Paying Agent shall make distributions to Securityholders from
the Payment Account and shall report the amounts of such distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the distributions referred to above. The Administrative Trustees
may revoke such power and remove the Paying Agent if such Trustees determine
in their sole discretion that the Paying Agent shall have failed to perform
its obligations under this Trust Agreement in any material respect. The
Paying Agent shall initially be the Bank, and any co-paying agent chosen by
the Bank and acceptable to the Administrative Trustees and the Depositor. Any
Person acting as Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Administrative Trustees, the Property
Trustee and the Depositor. In the event that the Bank shall no longer be the
Paying Agent or a successor Paying Agent shall resign or its authority to act
be revoked, the Administrative Trustees shall appoint a successor that is
acceptable to the Property Trustee and the Depositor to act as Paying Agent
(which shall be a bank or trust company). The Administrative Trustees shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Administrative Trustees to execute and deliver to the Trustees an
instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Securityholders in trust for the benefit of the Securityholders
entitled thereto until such sums shall be paid to such Securityholders. The
Paying Agent shall return all unclaimed funds to the Property Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Property Trustee. The provisions of Sections 801, 803 and
806 shall apply to the Bank also in its role as Paying Agent, for so long as
the Bank shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
30
<PAGE>
SECTION 510. Ownership of Common Securities by Depositor.
-------------------------------------------
At each Time of Delivery, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities. To the fullest
extent permitted by law, other than a transfer in connection with a
consolidation or merger of the Depositor into another corporation, or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 801 of the
Indenture, any attempted transfer of the Common Securities shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".
SECTION 511. Book-Entry Preferred Securities Certificates; Common Securities
---------------------------------------------------------------
Certificate.
-----------
(a) The Preferred Securities Certificates, upon original
issuance, will be issued in the form of a typewritten Preferred Securities
Certificate or Certificates representing Book-Entry Preferred Securities
Certificates, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Preferred Securities
Certificate or Certificates shall initially be registered on the Securities
Register in the name of Cede & Co., the nominee of the initial Clearing
Agency, and no beneficial owner will receive a Definitive Preferred
Securities Certificate representing such beneficial owner's interest in
such Preferred Securities, except as provided in Section 513. Unless and
until Definitive Preferred Securities Certificates have been issued to
beneficial owners pursuant to Section 513:
(i) the provisions of this Section 511(a) shall be in full
force and effect;
(ii) the Securities Registrar and the Trustees shall be
entitled to deal with the Clearing Agency for all purposes of this Trust
Agreement relating to the Book-Entry Preferred Securities Certificates
(including the payment of the Liquidation Amount of and Distributions on
the Book-Entry Preferred Securities and the giving of instructions or
directions to Owners of Book-Entry Preferred Securities) as the sole
Holder of Book-Entry Preferred Securities and shall have no obligations
to the Owners thereof;
(iii) to the extent that the provisions of this Section 511
conflict with any other provisions of this
31
<PAGE>
Trust Agreement, the provisions of this Section 511 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
between such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement, unless
and until Definitive Preferred Securities Certificates are issued
pursuant to Section 513, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments on the Preferred Securities to such Clearing Agency
Participants.
(b) A single Common Securities Certificate representing the
Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
SECTION 512. Notices to Clearing Agency.
--------------------------
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
513, the Trustees shall give all such notices and communications specified
herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION 513. Definitive Preferred Securities Certificates.
--------------------------------------------
If (a) the Depositor advises the Trustees in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Preferred Securities Certificates, and
the Depositor is unable to locate a qualified successor, (b) the Depositor at
its option advises the Trustees in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (c) after the occurrence of
a Debenture Event of Default, Owners of Preferred Securities Certificates
representing beneficial interests aggregating at least a majority of the
Liquidation Amount advise the Property Trustee in writing that the
continuation of a book-entry system through the Clearing Agency is no longer
in the best interest of the Owners of Preferred Securities Certificates, then
the Property Trustee shall notify the Clearing Agency and the Clearing Agency
shall notify all Owners of Preferred Securities Certificates and the other
Trustees of the
32
<PAGE>
occurrence of any such event and of the availability of the Definitive
Preferred Securities Certificates to Owners of such class or classes, as
applicable, requesting the same. Upon surrender to the Property Trustee of the
typewritten Preferred Securities Certificate or Certificates representing the
Book-Entry Preferred Securities Certificates by the Clearing Agency,
accompanied by registration instructions, the Administrative Trustees, or any
one of them, shall execute the Definitive Preferred Securities Certificates in
accordance with the instructions of the Clearing Agency. Neither the
Securities Registrar nor the Trustees shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Preferred Securities Certificates, the Trustees shall recognize the Holders of
the Definitive Preferred Securities Certificates as Securityholders. The
Definitive Preferred Securities Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
SECTION 514. Rights of Securityholders.
-------------------------
(a) The legal title to the Trust Property is vested exclusively in
the Property Trustee (in its capacity as such) in accordance with Section 209,
and the Securityholders shall not have any right or title therein other than
the undivided beneficial interest in the assets of the Trust conferred by
their Trust Securities and they shall have no right to call for any partition
or division of property, profits or rights of the Trust except as described
below. The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Securityholders against payment of the purchase price therefor
will be fully paid and nonassessable by the Trust. The Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders
of not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least 25% in
33
<PAGE>
Liquidation Amount of the Preferred Securities then Outstanding shall have
such right by a notice in writing to the Depositor and the Debenture Trustee;
and upon any such declaration such principal amount of and the accrued
interest on all of the Debentures shall become immediately due and payable,
provided that the payment of principal and interest on such Debentures shall
remain subordinated to the extent provided in the Indenture.
(c) For so long as any Preferred Securities remain Outstanding, to
the fullest extent permitted by law and subject to the terms of this Trust
Agreement, if, upon a Debenture Event of Default specified in Section 501(1)
or 501(2) of the Indenture, any Holder of Preferred Securities shall have the
right to directly institute a proceeding for enforcement of payment to such
Holder of the principal amount of or interest on the Debentures having a
principal amount equal to the Liquidation Amount of the Preferred Securities
of such Holder (a "Direct Action"). In connection with such Direct Action,
the rights of the Holders of the Common Securities will be subrogated to the
rights of any Holder of the Preferred Securities to the extent of any payment
made by the Depositor to such Holder of Preferred Securities in such Direct
Action. Except as set forth in this Section 514(c), the Holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures or assert directly any other rights in respect
of the Debentures.
ARTICLE VI
-----------
Acts of Securityholders; Meetings; Voting
-----------------------------------------
SECTION 601. Limitations on Voting Rights
----------------------------
(a) Except as provided in this Section, in Sections 810 and
1002 and in the Indenture and as otherwise required by law, no Holder of
Preferred Securities shall have any right to vote or in any manner
otherwise control the administration, operation and management of the Trust
or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as
partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee,
the Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with
respect to such Debentures, (ii) waive any past default
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which is waiveable under Section 513 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation Amount of all
Outstanding Preferred Securities; provided, however, that where a consent
-------- -------
under the Indenture would require the consent of each Holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each Holder of Preferred Securities.
The Trustees shall not revoke any action previously authorized or approved
by a vote of the Holders of Preferred Securities, except by a subsequent
vote of the Holders of Preferred Securities. The Property Trustee shall
notify all Holders of the Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the
Preferred Securities, prior to taking any of the foregoing actions, the
Trustees shall, at the expense of the Depositor, obtain an Opinion of
Counsel experienced in such matters to the effect that the Trust will not
be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than pursuant to the terms of this Trust
Agreement, then the Holders of Outstanding Preferred Securities as a class
will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of the Holders
of at least a majority in Liquidation Amount of the Outstanding Preferred
Securities. No amendment to this Trust Agreement may be made if, as a
result of such amendment, the Trust would be classified as an association
taxable as a corporation for United States federal income tax purposes.
35
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SECTION 602. Notice of Meetings.
------------------
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be
so considered whether or not stated in the notice of the meeting. Any
adjourned meeting may be held as adjourned without further notice.
SECTION 603. Meetings of Preferred Securityholders.
-------------------------------------
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Preferred Securityholders
of record of 25% of the Preferred Securities (based upon their Liquidation
Amount) and the Administrative Trustees or the Property Trustee may, at any
time in their discretion, call a meeting of Preferred Securityholders to vote
on any matters as to which Preferred Securityholders are entitled to vote.
Preferred Securityholders of record of 50% of the Outstanding
Preferred Securities (based upon their Liquidation Amount), present in person
or by proxy, shall constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding
more than a majority of the Preferred Securities (based upon their Liquidation
Amount) held by the Preferred Securityholders of record present, either in
person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 604. Voting Rights
-------------
Securityholders shall be entitled to one vote for each $25 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
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SECTION 605. Proxies, etc.
-------------
At any meeting of Securityholders, any Securityholder entitled to
vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Administrative
Trustees, or with such other officer or agent of the Trust as the
Administrative Trustees may direct, for verification prior to the time at
which such vote shall be taken. Pursuant to a resolution of the Property
Trustee, proxies may be solicited in the name of the Property Trustee or one
or more officers of the Property Trustee. Only Securityholders of record
shall be entitled to vote. When Trust Securities are held jointly by several
persons, any one of them may vote at any meeting in person or by proxy in
respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. No proxy shall be valid more than three years
after its date of execution.
SECTION 606. Securityholder Action by Written Consent.
----------------------------------------
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their Liquidation Amount) entitled to
vote in respect of such action (or such larger proportion thereof as shall be
required by any express provision of this Trust Agreement) shall consent to
the action in writing.
SECTION 607. Record Date for Voting and Other Purposes
-----------------------------------------
For the purposes of determining the Securityholders who are entitled
to notice of and to vote at any meeting or by written consent, or to
participate in any distribution on the Trust Securities in respect of which a
record date is not otherwise provided for in this Trust Agreement, or for the
purpose of any other action, the Administrative Trustees may from time to time
fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of a distribution or other action, as the case
may be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
37
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SECTION 608. Acts of Securityholders
-----------------------
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Trust Agreement to be
given, made or taken by Securityholders or Owners may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders or Owners in person or by an agent duly appointed in
writing; and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to an
Administrative Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Securityholders or Owners signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Trust
Agreement and (subject to Section 801) conclusive in favor of the Trustees, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which any Trustee receiving the same
deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Securityholder of any Trust Security shall bind
every future Securityholder of the same Trust Security and the Securityholder
of every Trust Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustees or the Trust in reliance thereon, whether
or not notation of such action is made upon such Trust Security.
38
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Without limiting the foregoing, a Securityholder entitled hereunder
to take any action hereunder with regard to any particular Trust Security may
do so with regard to all or any part of the Liquidation Amount of such Trust
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such
liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
A Securityholder may institute a legal proceeding directly against
the Depositor under the Guarantee to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee (as
defined in the Guarantee), the Trust or any person or entity.
SECTION 609. Inspection of Records
---------------------
Upon reasonable notice to the Administrative Trustees and the
Property Trustee, the records of the Trust shall be open to inspection by
Securityholders during normal business hours for any purpose reasonably
related to such Securityholder's interest as a Securityholder.
ARTICLE VII
Representations and Warranties
------------------------------
SECTION 701. Representations and Warranties of the Bank, the Property
--------------------------------------------------------
Trustee and the Delaware Trustee.
---------------------------------
The Bank, the Property Trustee and the Delaware Trustee, each
severally on behalf of and as to itself, hereby represents and warrants for
the benefit of the Depositor and the Securityholders that:
(a) the Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware;
(b) the Bank has full corporate power, authority and legal
right to execute, deliver and perform its
39
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obligations under this Trust Agreement and has taken all necessary action
to authorize the execution, delivery and performance by it of this Trust
Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Bank and constitutes the valid and legally binding
agreement of the Bank enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(d) the execution, delivery and performance by the Bank of this
Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Bank, the Property Trustee and the
Delaware Trustee and does not require any approval of stockholders of the
Bank and such execution, delivery and performance will not (i) violate
the Bank's charter or by-laws, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Property Trustee, the Bank or the Delaware
Trustee is a party or by which it is bound, or (iii) violate any law,
governmental rule or regulation of the United States or the State of
Delaware, as the case may be, governing the banking or trust powers of
the Bank, the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property
Trustee, the Bank or the Delaware Trustee;
(e) neither the authorization, execution or delivery by the
Bank of this Trust Agreement nor the consummation of any of the
transactions by the Bank, the Property Trustee or the Delaware Trustee
(as appropriate in context) contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or
the taking of any other action with respect to any governmental authority
or agency under any existing federal law governing the banking or trust
powers of the Bank, the Property Trustee or the Delaware Trustee, as the
case may be, under the laws of the United States or the State of
Delaware;
40
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(f) there are no proceedings pending or, to the best of each of
the Bank's, the Property Trustee's and the Delaware Trustee's knowledge,
threatened against or affecting the Bank, the Property Trustee or the
Delaware Trustee in any court or before any governmental authority,
agency or arbitration board or tribunal which, individually or in the
aggregate, would materially and adversely affect the Trust or would
question the right, power and authority of the Bank, the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
SECTION 702. Representations and Warranties of Depositor.
-------------------------------------------
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at each Time of
Delivery on behalf of the Trust have been duly authorized and will have
been duly and validly executed, issued and delivered by the Trustees
pursuant to the terms and provisions of, and in accordance with the
requirements of, this Trust Agreement and the Securityholders will be, as
of such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Trust (or the Trustees on behalf of the Trust) under the laws of
the State of Delaware or any political subdivision thereof in connection
with the execution, delivery and performance by the Bank, the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust
Agreement.
ARTICLE VIII
------------
The Trustees
------------
SECTION 801. Certain Duties and Responsibilities
-----------------------------------
(a) The duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee,
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of
this Trust Agreement shall require the Trustees to expend or risk their own
funds or otherwise incur any financial liability in the performance of any
of their duties hereunder, or in the exercise of any of their rights or
powers, if they shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability
41
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is not reasonably assured to it. Whether or not therein expressly so
provided, every provision of this Trust Agreement relating to the conduct
or affecting the liability of or affording protection to the Trustees shall
be subject to the provisions of this Section. Nothing in this Trust
Agreement shall be construed to release the Property Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct. To the extent that, at law or in equity, an
Administrative Trustee has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to the Securityholders, such
Administrative Trustee shall not be liable to the Trust or to any
Securityholder for such Trustee's good faith reliance on the provisions of
this Trust Agreement. The provisions of this Trust Agreement, to the extent
that they restrict the duties and liabilities of the Administrative
Trustees otherwise existing at law or in equity, are agreed by the
Depositor and the Securityholders to replace such other duties and
liabilities of the Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent
in respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Property Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Securityholder, by its acceptance of a Trust Security,
agrees that it will look solely to the revenue and proceeds from the Trust
Property to the extent legally available for distribution to it as herein
provided and that the Trustees are not personally liable to it for any
amount distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 801(b) does not
limit the liability of the Trustees expressly set forth elsewhere in this
Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except
that:
(i) the Property Trustee shall not be liable for any error
of judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
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(ii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a majority
in Liquidation Amount of the Trust Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Payment Account shall be to deal with such Property in a similar manner
as the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Depositor, and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the Payment
Account maintained by the Property Trustee pursuant to Section 301 and
except to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Depositor
with their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for the default or misconduct of the
Administrative Trustees or the Depositor.
SECTION 802. Certain Notices.
----------------
Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
such Event of Default to the Securityholders, the Administrative Trustees and
the Depositor, unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Administrative Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
43
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such exercise to the Securityholders and the Property Trustee, unless such
exercise shall have been revoked.
SECTION 803. Certain Rights of Property Trustee.
-----------------------------------
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in
acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement
the Property Trustee is required to decide between alternative courses of
action or (ii) in construing any of the provisions of this Trust
Agreement the Property Trustee finds the same ambiguous or inconsistent
with any other provisions contained herein or (iii) the Property Trustee
is unsure of the application of any provision of this Trust Agreement,
then, except as to any matter as to which the Preferred Securityholders
are entitled to vote under the terms of this Trust Agreement, the
Property Trustee shall deliver a notice to the Depositor requesting
written instructions of the Depositor as to the course of action to be
taken and the Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall be instructed in
writing to take, or to refrain from taking, by the Depositor; provided,
--------
however, that if the Property Trustee does not receive such instructions
-------
of the Depositor within ten Business Days after it has delivered such
notice, or such reasonably shorter period of time set forth in such
notice (which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Trust Agreement as it
shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its
own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust
44
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Agreement shall be sufficiently evidenced by an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established
before undertaking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Depositor or the Administrative
Trustees;
(e) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel (which
counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon and in accordance with such advice; the Property Trustee shall
have the right at any time to seek instructions concerning the
administration of this Trust Agreement from any court of competent
jurisdiction;
(g) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Agreement
at the request or direction of any of the Securityholders pursuant to
this Trust Agreement, unless such Securityholders shall have offered to
the Property Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, note or other evidence of
indebtedness or other paper or document, unless requested in writing to
do so by one or more Securityholders, but the Property Trustee may make
such
45
<PAGE>
further inquiry or investigation into such facts or matters as it
may see fit;
(i) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall
--------
be responsible for its own negligence or recklessness with respect to
selection of any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder the Property Trustee (i) may request instructions from the
Holders of the Trust Securities which instructions may only be given by
the Holders of the same proportion in Liquidation Amount of the Trust
Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action,
(ii) may refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be protected
in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this Trust
Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property
Trustee shall be construed to be a duty.
SECTION 804. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Trust, and the Trustees
do not assume any responsibility for their correctness. The Trustees shall
not be
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<PAGE>
accountable for the use or application by the Depositor of the proceeds
of the Debentures.
SECTION 805. May Hold Securities.
-------------------
Except as provided in the definition of the term "Outstanding" in
Article I, any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 808 and 813, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such
other agent.
SECTION 806. Compensation; Indemnity; Fees.
-----------------------------
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees in accordance
with any provision of this Trust Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify each of the Trustees or any predecessor
Trustee for, and to hold the Trustees harmless against, any loss, damage,
claims, liability, penalty or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
No Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 806.
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SECTION 807. Corporate Property Trustee Required; Eligibility of
---------------------------------------------------
Trustees
--------
(a) There shall at all times be a Property Trustee hereunder
with respect to the Trust Securities. The Property Trustee shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $50,000,000. If any
such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the
Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at least 21
years of age or a legal entity that shall act through one or more persons
authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be (i)
a natural person who is at least 21 years of age and a resident of the
State of Delaware or (ii) a legal entity with its principal place of
business in the State of Delaware and that otherwise meets the requirements
of applicable Delaware law that shall act through one or more persons
authorized to bind such entity.
SECTION 808. Conflicting Interests.
---------------------
If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and
this Trust Agreement.
SECTION 809. Co-Trustees and Separate Trustee.
--------------------------------
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property
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<PAGE>
may at the time be located, the Depositor and the Administrative Trustees,
by agreed action of the majority of such Trustees, shall have power to
appoint, and upon the written request of the Administrative Trustees, the
Depositor shall for such purpose join with the Administrative Trustees in the
execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If
the Depositor does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power to
make such appointment. Any co-trustee or separate trustee appointed pursuant
to this Section shall either be (i) a natural person who is at least 21 years
of age and a resident of the United States or (ii) a legal entity with its
principal place of business in the United States that shall act through one or
more persons authorized to bind such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and
delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed and delivered and
all rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustees specified
hereunder, shall be exercised, solely by such Trustees and not by such
co-trustee or separate trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Property Trustee in respect of any property
covered by such appointment
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shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act is to be
performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or
separate trustee.
(c) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case a Debenture Event of
Default has occurred and is continuing, the Property Trustee shall have
power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Depositor. Upon the
written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner provided in
this Section.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee or any other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 810. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
No resignation or removal of any Trustee (the "Relevant Trustee")
and no appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 811.
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Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time with respect to the Trust Securities by giving written
notice thereof to the Securityholders. If the instrument of acceptance by the
successor Trustee required by Section 811 shall not have been delivered to the
Relevant Trustee within 30 days after the giving of such notice of
resignation, the Relevant Trustee may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor
Relevant Trustee with respect to the Trust Securities.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee
may be removed by the Common Securityholder at any time.
If any Trustee shall resign, be removed or become incapable of
acting as Trustee, or if a vacancy shall occur in the office of any Trustee
for any cause, at a time when no Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder, by Act of the Common
Securityholder delivered to the retiring Trustee, shall promptly appoint a
successor Trustee or Trustees with respect to the Trust Securities and the
Trust, and the successor Trustee shall comply with the applicable requirements
of Section 811. If the Property Trustee or the Delaware Trustee shall resign,
be removed or become incapable of continuing to act as the Property Trustee or
the Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and be continuing, the Preferred Securityholders,
by Act of the Securityholders of a majority in Liquidation Amount of the
Preferred Securities then Outstanding delivered to the retiring Relevant
Trustee, shall promptly appoint a successor Relevant Trustee or Trustees with
respect to the Trust Securities and the Trust, and such successor Trustee
shall comply with the applicable requirements of Section 811. If an
Administrative Trustee shall resign, be removed or become incapable of acting
as Administrative Trustee, at a time when a Debenture Event of Default shall
have occurred and be continuing, the Common Securityholder, by Act of the
Common Securityholder delivered to the Administrative Trustee, shall promptly
appoint a successor Administrative
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Trustee or Administrative Trustees with respect to the Trust Securities and
the Trust, and such successor Administrative Trustee or Administrative
Trustees shall comply with the applicable requirements of Section 811. If no
successor Relevant Trustee with respect to the Trust Securities shall have
been so appointed by the Common Securityholder or the Preferred
Securityholders and accepted appointment in the manner required by Section
811, any Securityholder who has been a Securityholder of Trust Securities for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of
a successor Relevant Trustee with respect to the Trust Securities.
The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give notice
to the Depositor. Each notice shall include the name of the successor
Relevant Trustee and the address of its Corporate Trust Office if it is the
Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who
is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence
or incapacity may be filled by (a) the unanimous act of remaining
Administrative Trustees if there are at least two of them or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies
the eligibility requirement for Administrative Trustees set forth in Section
807).
SECTION 811. Acceptance of Appointment by Successor.
--------------------------------------
In case of the appointment hereunder of a successor Trustee such
successor Trustee so appointed shall execute, acknowledge and deliver to the
Trust and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Depositor or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and if the Property Trustee is the
resigning Trustee shall duly assign,
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transfer and deliver to the successor Trustee all property and money held by
such retiring Property Trustee hereunder.
In case of the appointment hereunder of a successor Relevant Trustee
with respect to the Trust Securities and the Trust, the retiring Relevant
Trustee and each successor Relevant Trustee with respect to the Trust
Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Relevant Trustee, it being understood that nothing herein or in such amendment
shall constitute such Relevant Trustees co-trustees of the same trust and that
each such Relevant Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Relevant Trustee and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Relevant
Trustee with respect to the Trust Securities and the Trust; but, on request of
the Trust or any successor Relevant Trustee such retiring Relevant Trustee
shall duly assign, transfer and deliver to such successor Relevant Trustee all
Trust Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
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SECTION 812. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Property Trustee or the Delaware
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which such Relevant Trustee shall be a party, or any corporation succeeding to
all or substantially all the corporate trust business of such Relevant
Trustee, shall be the successor of such Relevant Trustee hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
SECTION 813. Preferential Collection of Claims Against Depositor or Trust.
------------------------------------------------------------
If and when the Property Trustee or the Delaware Trustee shall be or
become a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 814. Reports by Property Trustee.
---------------------------
(a) Not later than July 15 of each year commencing with July 15,
1997, the Property Trustee shall transmit to all Securityholders in accordance
with Section 1008, and to the Depositor, a brief report dated as of such
December 31 with respect to:
(i) its eligibility under Section 807 or, in lieu thereof,
if to the best of its knowledge it has continued to be eligible under
said Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the twelve-month
period (or, in the case of the initial report, the period since the
Closing Date) ending with such December 31 or, if the Property Trustee
has not complied in any material respect with such obligations, a
description of such noncompliance; and
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(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties hereunder
which it has not previously reported and which in its opinion materially
affects the Trust Securities.
(b) In addition, the Property Trustee shall transmit to
Securityholders such reports concerning the Property Trustee and its actions
under this Trust Agreement as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each national
securities exchange, the Nasdaq National Market or such other interdealer
quotation system or self-regulatory organization upon which the Trust
Securities are listed or traded, with the Commission and with the Depositor.
SECTION 815. Reports to the Property Trustee.
-------------------------------
The Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 816. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Depositor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the
form of an Officers' Certificate.
SECTION 817. Number of Trustees.
------------------
(a) The number of Trustees shall be four, provided that the Holder
of all of the Common Securities by written instrument may increase or decrease
the number of Administrative Trustees. The Property Trustee and the Delaware
Trustee may be the same person.
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(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 817(a),
or if the number of Trustees is increased pursuant to Section 817(a), a
vacancy shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 810.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not
operate to annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 810, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Trust Agreement.
SECTION 818. Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 207(a), including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing.
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to the Depositor the doing of such
things and the execution of such instruments either in the name of the Trust
or the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited
by applicable law or contrary to the provisions of the Trust, as set forth
herein.
ARTICLE IX
Termination, Liquidation and Merger18.
-------------------------------------
SECTION 901. Termination Upon Expiration Date.
-------------------------------
Unless earlier terminated, the Trust shall automatically terminate
on _________ __, 2051 (the "Expiration Date"), following the distribution of
the Trust Property in accordance with Section 904.
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SECTION 902. Early Termination.
-----------------
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from the
Depositor at any time (which direction is optional and wholly within the
discretion of the Depositor) to terminate the Trust and distribute the
Debentures in exchange for the Preferred Securities;
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all of the Debentures; and
(d) the entry of an order for dissolution of the Trust by a
court of competent jurisdiction.
SECTION 903. Termination.
-----------
The respective obligations and responsibilities of the Trustees and
the Trust created and continued hereby shall terminate upon the latest to
occur of the following: (a) the distribution by the Property Trustee to
Securityholders upon the liquidation of the Trust pursuant to Section 904, or
upon the redemption of all of the Trust Securities pursuant to Section 402, of
all amounts required to be distributed hereunder upon the final payment of the
Trust Securities; (b) the payment of any expenses owed by the Trust; and (c)
the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to the
Trust or the Securityholders.
SECTION 904. Liquidation.
-----------
(a) If an Early Termination Event specified in clause (a), (b)
or (d) of Section 902 occurs or upon the Expiration Date, the Trust shall
be liquidated by the Trustees as expeditiously as the Trustees determine to
be possible by distributing, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, to each Securityholder a Like
Amount of Debentures, subject to Section 904(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage
prepaid, mailed not later than 30 nor more than 60 days prior to the
Liquidation Date to each Holder of Trust Securities at such
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Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
--------------------------
(ii) state that from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Debentures,
or if Section 904(d) applies receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to
effect the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures
will be issued to holders of Trust Securities Certificates, upon surrender
of such certificates to the Administrative Trustees or their agent for
exchange, (iii) the Depositor shall use its reasonable efforts to have the
Debentures listed on the New York Stock Exchange or on such other stock
exchange, interdealer quotation system or self-regulatory organization as
the Preferred Securities are then listed or traded, (iv) any Trust
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures, accruing interest at the rate
provided for in the Debentures from the last Distribution Date on which a
Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made to holders
of Trust Securities Certificates with respect to such Debentures), and (v)
all rights of Securityholders holding Trust Securities will cease, except
the right of such
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Securityholders to receive Debentures upon surrender of Trust Securities
Certificates.
(d) In the event that, notwithstanding the other provisions of
this Section 904, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the
Debentures in the manner provided herein is determined by the Property
Trustee not to be practical, the Trust Property shall be liquidated, and
the Trust shall be dissolved, wound-up or terminated, by the Property
Trustee in such manner as the Property Trustee determines. In such event,
on the date of the dissolution, winding-up or other termination of the
Trust, Securityholders will be entitled to receive out of the assets of the
Trust available for distribution to Securityholders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an
amount equal to the Liquidation Amount per Trust Security plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being
the "Liquidation Distribution"). If, upon any such dissolution, winding-up
or termination, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be
paid on a pro rata basis (based upon Liquidation Amounts). The holder of
the Common Securities will be entitled to receive Liquidation Distributions
upon any such dissolution, winding-up or termination pro rata (determined
as aforesaid) with Holders of Preferred Securities, except that, if a
Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities.
SECTION 905. Mergers, Consolidations, Amalgamations or Replacements of
---------------------------------------------------------
the Trust.
---------
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the
Preferred Securities, the Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the
laws of any state; provided, that (i) such successor entity either (a)
--------
expressly assumes all of the obligations of the Trust with respect to the
Preferred
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Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Preferred Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Depositor
expressly appoints a trustee of such successor entity possessing the same
powers and duties as the Property Trustee as the holder of the Debentures,
(iii) the Successor Securities are listed or traded, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities
are then listed or traded, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of
Counsel to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (viii)
the Depositor owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding
the foregoing, the Trust shall not, except with the consent of holders of 100%
in Liquidation Amount of the Preferred Securities, consolidate, amalgamate,
merge with or into, be replaced by or convey, transfer or lease its properties
and assets substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity to be classified as other
than a grantor trust for United States federal income tax purposes.
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ARTICLE X
---------
Miscellaneous Provisions
------------------------
SECTION 1001. Limitation of Rights of Securityholders.
---------------------------------------
The death or incapacity of any person having an interest, beneficial
or otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such person or
any Securityholder for such person, to claim an accounting, take any action or
bring any proceeding in any court for a partition or winding-up of the
arrangements contemplated hereby, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.
SECTION 1002. Amendment.
---------
(a) This Trust Agreement may be amended from time to time by
the Trustees and the Depositor, without the consent of any Securityholders,
(i) to cure any ambiguity, correct or supplement any provision herein which
may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of
this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that
the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Trust Securities are outstanding
or to ensure that the Trust will not be required to register as an
investment company under the 1940 Act; provided, however, that in the case
-------- -------
of clause (i), such action shall not adversely affect in any material
respect the interests of any Securityholder, and any amendments of this
Trust Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 1002(c) hereof, any provision
of this Trust Agreement may be amended by the Trustees and the Depositor
with (i) the consent of Securityholders representing not less than a
majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust for United States federal income tax purposes or
the Trust's exemption from status of an investment company under the 1940
Act.
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(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Securityholder
(such consent being obtained in accordance with Section 603 or 606 hereof),
this Trust Agreement may not be amended to (i) change the amount or timing
of any Distribution on the Trust Securities or otherwise adversely affect
the amount of any Distribution required to be made in respect of the Trust
Securities as of a specified date or (ii) restrict the right of a
Securityholder to institute suit for the enforcement of any such payment on
or after such date; notwithstanding any other provision herein, without the
unanimous consent of the Securityholders (such consent being obtained in
accordance with Section 603 or 606 hereof), this paragraph (c) of this
Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this
Trust Agreement which would cause the Trust to fail or cease to qualify for
the exemption from status of an investment company under the 1940 Act or
fail or cease to be classified as a grantor trust for United States federal
income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor, this Trust Agreement may
not be amended in a manner which imposes any additional obligation on the
Depositor.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrative Trustees shall promptly provide to the Depositor a
copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall
be required to enter into any amendment to this Trust Agreement which
affects its own rights, duties or immunities under this Trust Agreement.
The Property Trustee shall be entitled to receive an Opinion of Counsel and
an Officers' Certificate stating that any amendment to this Trust Agreement
is in compliance with this Trust Agreement.
SECTION 1003 Separability.
------------
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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SECTION 1004. GOVERNING LAW.
-------------
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
SECTION 1005. Payments Due on Non-Business Day.
--------------------------------
If the date fixed for any payment on any Trust Security shall be a
day that is not a Business Day, then such payment need not be made on such
date but may be made on the next succeeding day that is a Business Day (except
as otherwise provided in Sections 401(a) and 402(d)), with the same force and
effect as though made on the date fixed for such payment, and no interest
shall accrue thereon for the period after such date.
SECTION 1006 Successors.
----------
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Trust or the Relevant Trustee,
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article Eight of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
SECTION 1007. Headings.
--------
The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.
SECTION 1008. Reports, Notices and Demands.
----------------------------
Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon any Securityholder or the Depositor may be given or served
in writing by deposit thereof, first-class postage prepaid, in the United
States mail, hand delivery or facsimile transmission, in each case, addressed,
(a) in the case of a Preferred Securityholder, to such Preferred
Securityholder as such Securityholder's name and address may appear on the
Securities Register; and (b) in the case of the Common Securityholder or the
Depositor, to MCI Communications Corporation, 1801 Pennsylvania Avenue, N.W.,
Washington,
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D.C. 20006, Attention: Treasurer, facsimile no.: (202) 887-2198.
Any notice to Preferred Securityholders shall also be given to such owners as
have, within two years preceding the giving of such notice, filed their names
and addresses with the Property Trustee for that purpose. Such notice, demand
or other communication to or upon a Securityholder shall be deemed to have
been sufficiently given or made, for all purposes, upon hand delivery, mailing
or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given
in writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee to Wilmington Trust
Company, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Department; (b) with respect to the Delaware Trustee, to
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware
19890, Attention: Corporate Trust Department; and (c) with respect to the
Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention: Administrative Trustees of MCI Capital II."
Such notice, demand or other communication to or upon the Trust or the
Property Trustee shall be deemed to have been sufficiently given or made only
upon actual receipt of the writing by the Trust or the Property Trustee.
SECTION 1009. Agreement Not to Petition.
-------------------------
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 1009, the
Property Trustee agrees, for the benefit of Securityholders, that at the
expense of the Depositor, it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor
against the Trust or the commencement of such action and raise the defense
that the Depositor has agreed in writing not to take such action and should be
stopped and precluded therefrom and such other defenses, if any, as counsel
for the Trustee or the Trust may assert. The provisions of this Section 1009
shall survive the termination of this Trust Agreement.
64
<PAGE>
SECTION 1010. Trust Indenture Act; Conflict with Trust Indenture Act.
------------------------------------------------------
(a) This Trust Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Trust Agreement
and shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this
Trust Agreement by any of the provisions of the Trust Indenture Act, such
required provision shall control. If any provision of this Trust Agreement
modifies or excludes any provision of the Trust Indenture Act which may be
so modified or excluded, the latter provision shall be deemed to apply to
this Trust Agreement as so modified or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
-----------------------------------------------------
INDENTURE.
---------
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT
ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE
AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
65
<PAGE>
MCI COMMUNICATIONS CORPORATION
By: _________________________
Name:
Title:
WILMINGTON TRUST COMPANY
as Property Trustee
and Delaware Trustee
By: _______________________
Name:
Title:
By: _________________________
as Administrative Trustee
By: _________________________
as Administrative Trustee
66
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
MCI CAPITAL II
THIS Certificate of Trust of MCI Capital II (the "Trust"), dated as
of April 17, 1996, is being duly executed and filed by Wilmington Trust
Company, a Delaware banking corporation, as trustee, to form a business trust
under the Delaware Business Trust Act (12 Del. C. (S) 3801 et seq.).
1. Name. The name of the business trust formed hereby is MCI
----
Capital II.
2. Delaware Trustee. The name and business address of the trustee
----------------
of the Trust in the State of Delaware are Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective
--------------
upon filing with the Secretary of State.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
as trustee
By_________________________
Name: Donald G. MacKelcan
Title: Assistant Vice President
1
<PAGE>
EXHIBIT B
_________ ___, 1996
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099.
Attention:________________________
General Counsel's Office
Re: MCI Capital II ____% Cumulative Quarterly Income Preferred Securities,
---------------------------------------------------------------------
Series A
--------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the MCI
Capital II ___% Cumulative Quarterly Income Preferred Securities, Series A (the
"Preferred Securities"), of MCI Capital II, a Delaware business trust (the
"Issuer"), formed pursuant to a Trust Agreement between MCI Communications
Corporation ("MCI") and Wilmington Trust Company, as Trustee. The payment of
distributions on the Preferred Securities and payments due upon liquidation of
Issuer or redemption of the Preferred Securities, to the extent the Issuer has
funds available for the payment thereof, are guaranteed by MCI to the extent set
forth in a Guarantee Agreement dated ________ __, 1996 by MCI with respect to
the Preferred Securities. MCI and the Issuer propose to sell the Preferred
Securities to certain Underwriters (the "Underwriters") pursuant to an
Underwriting Agreement dated _________ __, 1996 by and among the Underwriters,
the Issuer and MCI, and the Underwriters wish to take delivery of the Preferred
Securities through DTC. Wilmington Trust Company is acting as transfer agent and
registrar with respect to the Preferred Securities (the "Transfer Agent and
Registrar").
To induce DTC to accept the Preferred Securities as eligible for deposit at
DTC, and to act in accordance with DTC's rules with respect to the Preferred
Securities, the Issuer, the Transfer Agent and Registrar and DTC agree among
each other as follows:
1. Prior to the closing of the sale of the Preferred Securities to the
Underwriters, which is expected to occur on or about ________ __, 1996, there
shall be deposited with DTC one or more global certificates (individually and
collectively, the "Global Certificate")
1
<PAGE>
registered in the name of DTC's Preferred Securities nominee, Cede & Co.,
representing an aggregate of __________ Preferred Securities and bearing the
following legend:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for the
voting by holders of the Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event at least 5
business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Preferred Securities is required; and (c) the date any required notice is to be
mailed by or on behalf of the Issuer to holders of Preferred Securities or
published by or on behalf of the Issuer (whether by mail or publication, the
"Publication Date"). Such notice shall be sent to DTC by a secure means
(e.g., legible telecopy, registered or certified mail, overnight delivery) in a
2
<PAGE>
timely manner designed to assure that such notice is in DTC's possession no
later than the close of business on the business day before the Publication
Date. The Issuer or the Transfer Agent and Registrar will forward such notice
either in a separate secure transmission for each CUSIP number or in a secure
transmission of multiple CUSIP numbers (if applicable) that includes a manifest
or list of each CUSIP number submitted in that transmission. (The party sending
such notice shall have a method to verify subsequently the use of such means and
the timeliness Of such notice.) The Publication Date shall be not less than 30
calendar days nor more than 60 calendar days prior to the payment of any such
distribution or any such offering or issuance of rights with respect to the
Preferred Securities. After establishing the amount of payment to be made on the
Preferred Securities, the Issuer or the Transfer Agent and Registrar will notify
DTC's Dividend Department of such payment 5 business days prior to payment date.
Notices to DTC's Dividend Department by telecopy shall be sent to (212) 709-
1723. Such notices by mail or by any other means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's receipt
of such telecopy by telephoning the Dividend Department at (212) 709-1270.
5. In the event of a redemption by the Issuer of the Preferred
Securities, notice specifying the terms of the redemption and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC not less than 30 calendar days prior to such event by a secure
means in the manner set forth in paragraph 4. Such redemption notice shall be
sent to DTC's Call Notification Department at (516) 227-4164 or (516) 227-4190,
and receipt of such notice shall be confirmed by telephoning (516) 227-4070.
Notice by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Preferred Securities,
notice specifying the terms of the
3
<PAGE>
tender and the Publication Date of such notice shall be sent by the Issuer or
the Transfer Agent and Registrar to DTC by a secure means and in a timely manner
as described in paragraph 4. Notices to DTC pursuant to this paragraph and
notices of other corporate actions (including mandatory tenders, exchanges and
capital changes), shall be sent, unless notification to another department is
expressly provided for herein, by telecopy to DTC's Reorganization Department at
(212) 709-1093 or (212) 709-1094 and receipt of such notice shall be confirmed
by telephoning (212) 709-6884, or by mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Preferred Securities and the accompanying designation
of the Preferred Securities, which, as of the date of this letter, is "MCI
Capital II ___% Cumulative Quarterly Income Preferred Securities, Series A".
8. Distribution payments or other cash payments with respect to the
Preferred Securities evidenced by the Global Certificate shall be received by
Cede & Co., as nominee of DTC, or its registered assigns in next day funds on
each payment date (or in accordance with existing arrangements between the
Issuer or the Transfer Agent and Registrar and DTC). Such payments shall be
made payable to the order of Cede & Co., and shall be addressed as follows:
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
9. DTC may by prior written notice direct the Issuer and the Transfer
Agent and Registrar to use any other telecopy number or address of DTC as the
number or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
- -
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Preferred Securities outstanding evidenced by the Global
Certificate, DTC, in its discretion:
4
<PAGE>
(a) may request the Issuer or the Transfer Agent and Registrar to issue and
countersign a new Global Certificate; or (b) may make an appropriate notation on
the Global Certificate indicating the date and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Preferred Securities at any time by giving at least 90 days'
prior written notice to the Issuer and the Transfer Agent and Registrar (at
which time DTC will confirm with the Issuer or the Transfer Agent and Registrar
the aggregate number of Preferred Securities deposited with it) and discharging
its responsibilities with respect thereto under applicable law. Under such
circumstances, the Issuer may determine to make alternative arrangements for
book-entry settlement for the Preferred Securities, make available one or more
separate global certificates evidencing Preferred Securities to any Participant
having Preferred Securities credited to its DTC account, or issue definitive
Preferred Securities to the beneficial holders thereof, and in any such case,
DTC agrees to cooperate fully with the Issuer and the Transfer Agent and
Registrar and to return the Global Certificate, duly endorsed for transfer as
directed by the Issuer or the Transfer Agent and Registrar, together with any
other documents of transfer reasonably requested by the Issuer or the Transfer
Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of
Preferred Securities shall be able to obtain definitive Preferred Securities,
the Issuer or the Transfer Agent and Registrar shall notify DTC of the
availability of certificates. In such event, the Issuer or the Transfer Agent
and Registrar shall issue, transfer and exchange certificates in appropriate
amounts, as required by DTC and others, and DTC agrees to cooperate fully with
the Issuer and the Transfer Agent and Registrar and to return the Global
Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
5
<PAGE>
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of MCI Capital II.
Very truly yours,
MCI CAPITAL II
(As Issuer)
By:______________________
Administrative Trustee
By___________________________
Name:
Title:
_____________________________
(As Transfer Agent and Registrar)
By___________________________
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By__________________________
Authorized Officer
6
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
C-1
Certificate Evidencing Common Securities
of
MCI Capital II
___% Common Securities
(liquidation amount $25 per Common Security)
MCI Capital II, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that MCI Communications
Corporation (the "Holder") is the registered owner of ____________________
____________________ (________) common securities of the Trust representing
undivided beneficial interests in the assets of the Trust and designated the
____% Common Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). In accordance with Section 510 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof shall be void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of _________ __, 1996, as the same may be amended from time to time (the
"Trust Agreement") including the designation of the terms of the Common
Securities as set forth therein. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
1
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ______ day of ________, ____.
MCI CAPITAL II
By___________________________
Name:
Administrative Trustee
2
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of ____________ __ 1996, between MCI Communications
Corporation, a Delaware corporation ("MCI"), and MCI Capital II, a Delaware
business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Debentures from MCI and to issue and sell ____%
Cumulative Quarterly Income Preferred Securities (the "Preferred Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Trust dated as of
________ __, 1996 as the same may be amended from time to time (the "Trust
Agreement");
WHEREAS, MCI will directly or indirectly own all of the Common Securities
of Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase MCI hereby agrees shall benefit MCI and
which purchase MCI acknowledges will be made in reliance upon the execution and
delivery of this Agreement, MCI and Trust hereby agree as follows:
ARTICLE I
Section 1.1. Guarantee by MCI.
----------------
Subject to the terms and conditions hereof, MCI hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This Agreement is
1
<PAGE>
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
Section 1.2. Term of Agreement.
-----------------
This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Preferred Securities (whether upon redemption,
liquidation, exchange or otherwise) and (b) the date on which there are no
Beneficiaries remaining; provided, however, that this Agreement shall continue
-------- -------
to be effective or shall be reinstated, as the case may be, if at any time any
holder of Preferred Securities or any Beneficiary must restore payment of any
sums paid under the Preferred Securities, under any Obligation, under the
Guarantee Agreement dated the date hereof by MCI and Wilmington Trust Company as
guarantee trustee or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.3. Waiver of Notice.
----------------
MCI hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and MCI hereby waives presentment,
demand for payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.4. No Impairment.
-------------
The obligations, covenants, agreements and duties of MCI under this
Agreement shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the
Obligations or any action on the part of the Trust granting indulgence or
extension of any kind; or
2
<PAGE>
(c) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, MCI with respect to the happening of any of the foregoing.
Section 1.5. Enforcement.
-----------
A Beneficiary may enforce this Agreement directly against MCI and MCI
waives any right or remedy to require that any action be brought against the
Trust or any other person or entity before proceeding against MCI.
Section 1.6. Subrogation.
-----------
MCI shall be subrogated to all (if any) rights of the Trust in respect of
any amounts paid to the Beneficiaries by MCI under this Agreement; provided,
--------
however, that MCI shall not (except to the extent required by mandatory
- -------
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Agreement, if, at the
time of any such payment, any amounts are due and unpaid under this Agreement.
ARTICLE II
Section 2.1. Binding Effect.
--------------
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of MCI and shall
inure to the benefit of the Beneficiaries.
Section 2.2. Amendment.
---------
So long as there remains any Beneficiary or any Preferred Securities of any
series are outstanding, this Agreement shall not be modified or amended in any
manner adverse to such Beneficiary or to the holders of the Preferred
Securities.
Section 2.3. Notices.
-------
3
<PAGE>
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or by registered
or certified mail, addressed as follows (and if so given, shall be deemed given
when mailed or upon receipt of an answer-back, if sent by telex):
MCI Capital II
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware
Facsimile No.: (302) 651-8882
Attention: Corporate Trust Department
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2198
Attention: Treasurer
Section 2.4 This agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
THIS AGREEMENT is executed as of the day and year first above written.
MCI COMMUNICATIONS CORPORATION
By:_________________________
Name:
Title:
MCI CAPITAL II
By:_________________________
Name:
Administrative Trustee
4
<PAGE>
EXHIBIT E
IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depository or its nominee only in the
limited circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to MCI Capital II or
its agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
P-
CUSIP NO.
Certificate Evidencing Preferred Securities
of
MCI Capital II
___% Cumulative Quarterly Income Preferred Securities,
Series A
(liquidation amount $25 per Preferred Security)
MCI Capital II, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that ____________________ (the
"Holder") is the registered owner of ______ (______) preferred securities of the
Trust representing an undivided beneficial interest in the assets of the Trust
and designated the MCI Capital II ____% Cumulative Quarterly Income Preferred
Securities, Series A (liquidation amount $25 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are
1
<PAGE>
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 504 of the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of ________ __, 1996, as the same
may be amended from time to time (the "Trust Agreement") including the
designation of the terms of Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered into by
MCI Communications Corporation, a Delaware corporation, and Wilmington Trust
Company, as guarantee trustee, dated as of ________ __, 1996 (the "Guarantee"),
to the extent provided therein. The Trust will furnish a copy of the Trust
Agreement and the Guarantee to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
2
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ___________ day of __________, ____.
MCI CAPITAL II
By:______________________________
Name:
Administrative Trustee
3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:_____________
Signature:___________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature(s) Guaranteed:
- -------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
4
<PAGE>
===============================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
MCI COMMUNICATIONS CORPORATION, as Depositor,
Wilmington Trust Company, as Property Trustee
and Delaware Trustee,
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
Dated as of ________ __, 1996
MCI CAPITAL IV
===============================================================================
<PAGE>
MCI Capital IV
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section
<S> <C> <C> <C>
(S) 310 (a)(1).......................................... 807
(a)(2).......................................... 807
(a)(3).......................................... 809
(a)(4).......................................... 207(a)(ii)
(b)............................................. 808
(S) 311 (a)............................................. 813
(b)............................................. 813
(S) 312 (a)............................................. 507
(b)............................................. 507
(c)............................................. 507
(S) 313 (a)............................................. 814(a)
(a)(4).......................................... 814(b)
(b)............................................. 814(b)
(c)............................................. 1008
(d)............................................. 814(c)
(S) 314 (a)............................................. 815
(b)............................................. Not Applicable
(c)(1).......................................... 816
(c)(2).......................................... 816
(c)(3).......................................... Not Applicable
(d)............................................. Not Applicable
(e)............................................. 101, 816
(S) 315 (a)............................................. 801(a), 803(a)
(b)............................................. 802, 1008
(c)............................................. 801(a)
(d)............................................. 801, 803
(e)............................................. Not Applicable
(S) 316 (a)............................................. Not Applicable
(a)(1)(A)....................................... Not Applicable
(a)(1)(B)....................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. Not Applicable
(c)............................................. 607
(S) 317 (a)(1).......................................... Not Applicable
(a)(2).......................................... Not Applicable
(b)............................................. 509
(S) 318 (a)............................................. 1010
- ---------------
</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
-i-
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE I
Defined Terms
SECTION 101. Definitions.................................... 2
ARTICLE II
Establishment of the Trust
SECTION 201. Name........................................... 13
SECTION 202. Office of the Delaware Trustee; Principal
Place of Business.............................. 13
SECTION 203. Initial Contribution of Trust Property;
Organizational Expenses........................ 13
SECTION 204. Issuance of the Preferred Securities........... 13
SECTION 205. Issuance of the Common Securities;
Subscription and Purchase of Debentures........ 14
SECTION 206. Declaration of Trust........................... 15
SECTION 207. Authorization to Enter into Certain
Transactions................................... 15
SECTION 208. Assets of Trust................................ 20
SECTION 209. Title to Trust Property........................ 20
ARTICLE III
Payment Account
SECTION 301. Payment Account................................... 20
ARTICLE IV
Distributions; Redemption
SECTION 401. Distributions..................................... 20
SECTION 402. Redemption........................................ 21
SECTION 403. Subordination of Common Securities................ 24
SECTION 404. Payment Procedures................................ 25
SECTION 405. Tax Returns and Reports........................... 25
SECTION 406. Payment of Taxes, Duties, Etc. of the Trust....... 25
SECTION 407. Payments under Indenture.......................... 26
ARTICLE V
Trust Securities Certificates
SECTION 501. Initial Ownership.............................. 26
SECTION 502. The Trust Securities Certificates.............. 26
-i-
<PAGE>
SECTION 503. Execution and Delivery of Trust Securities
Certificates...................................... 27
SECTION 504. Registration of Transfer and Exchange of
Preferred Securities Certificates................. 27
SECTION 505. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates........................... 28
SECTION 506. Persons Deemed Securityholders.................... 29
SECTION 507. Access to List of Securityholders' Names and
Addresses......................................... 29
SECTION 508. Maintenance of Office or Agency................... 29
SECTION 509. Appointment of Paying Agent....................... 30
SECTION 510. Ownership of Common Securities by Depositor....... 31
SECTION 511. Book-Entry Preferred Securities Certificates;
Common Securities Certificate..................... 31
SECTION 512. Notices to Clearing Agency........................ 32
SECTION 513. Definitive Preferred Securities Certificates...... 32
SECTION 514. Rights of Securityholders......................... 33
ARTICLE VI
Acts of Securityholders; Meetings; Voting
SECTION 601. Limitations on Voting Rights...................... 34
SECTION 602. Notice of Meetings................................ 35
SECTION 603. Meetings of Preferred Securityholders............. 36
SECTION 604. Voting Rights..................................... 36
SECTION 605. Proxies, etc...................................... 36
SECTION 606. Securityholder Action by Written Consent.......... 37
SECTION 607. Record Date for Voting and Other Purposes......... 37
SECTION 608. Acts of Securityholders........................... 37
SECTION 609. Inspection of Records............................. 39
ARTICLE VII
Representations and Warranties
SECTION 701. Representations and Warranties of the Bank,
the Property Trustee and the Delaware Trustee..... 39
SECTION 702. Representations and Warranties of Depositor....... 40
-ii-
<PAGE>
ARTICLE VIII
The Trustees
SECTION 801. Certain Duties and Responsibilities............ 41
SECTION 802. Certain Notices................................ 43
SECTION 803. Certain Rights of Property Trustee............. 43
SECTION 804. Not Responsible for Recitals or Issuance of
Securities..................................... 46
SECTION 805. May Hold Securities............................ 46
SECTION 806. Compensation; Indemnity; Fees.................. 46
SECTION 807. Corporate Property Trustee Required;
Eligibility of Trustees........................ 47
SECTION 808. Conflicting Interests.......................... 48
SECTION 809. Co-Trustees and Separate Trustee............... 48
SECTION 810. Resignation and Removal; Appointment of
Successor...................................... 50
SECTION 811. Acceptance of Appointment by Successor......... 52
SECTION 812. Merger, Conversion, Consolidation or
Succession to Business......................... 53
SECTION 813. Preferential Collection of Claims Against
Depositor or Trust............................. 53
SECTION 814. Reports by Property Trustee.................... 54
SECTION 815. Reports to the Property Trustee................ 54
SECTION 816. Evidence of Compliance with Conditions
Precedent...................................... 55
SECTION 817. Number of Trustees............................. 55
SECTION 818. Delegation of Power............................ 55
ARTICLE IX
Termination, Liquidation and Merger
SECTION 901. Termination Upon Expiration Date............... 56
SECTION 902. Early Termination.............................. 56
SECTION 903. Termination.................................... 57
SECTION 904. Liquidation.................................... 57
SECTION 905. Mergers, Consolidations, Amalgamations or
Replacements of the Trust...................... 59
ARTICLE X
Miscellaneous Provisions
SECTION 1001. Limitation of Rights of Securityholders........ 60
SECTION 1002. Amendment...................................... 60
SECTION 1003. Separability................................... 62
SECTION 1004. GOVERNING LAW.................................. 62
SECTION 1005. Payments Due on Non-Business Day............... 62
SECTION 1006. Successors..................................... 63
-iii-
<PAGE>
SECTION 1007. Headings....................................... 63
SECTION 1008. Reports, Notices and Demands................... 63
SECTION 1009. Agreement Not to Petition...................... 64
SECTION 1010. Trust Indenture Act; Conflict with Trust
Indenture Act.................................. 64
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT,
GUARANTEE AND INDENTURE........................ 65
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities
-iv-
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________ __, 1996,
among (i) MCI Communications Corporation, a Delaware corporation (including
any successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as property trustee and Delaware trustee (in each such
capacity, the "Property Trustee" and "Delaware Trustee," respectively, and, in
its separate corporate capacity and not in its capacity as Property Trustee or
Delaware Trustee, the "Bank"), (iii) Douglas L. Maine, an individual, and
Jonelle St. John, an individual, each of whose address is c/o MCI
Communications Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C.
20006 (each, an "Administrative Trustee" and, collectively, the
"Administrative Trustees" and, collectively with the Property Trustee and
Delaware Trustee, the "Trustees") and (iv) the several Holders, as hereinafter
defined.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into of that certain Trust Agreement, dated as of
April 17, 1996 (the "Original Trust Agreement"), and by the execution and
filing by the Delaware Trustee with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on April 17, 1996, attached as
Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Trust pursuant to the Underwriting Agreement, (iii) the
acquisition by the Trust from the Depositor of all of the right, title and
interest in the Debentures and (iv) the appointment of the Administrative
Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Securityholders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
<PAGE>
ARTICLE I
---------
Defined Terms
-------------
SECTION 101. Definitions.
-----------
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 608.
---
"Additional Amount" means, with respect to Trust Securities of a
-----------------
given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Indenture) paid by the Depositor on a Like Amount
of Debentures for such period.
"Additional Sums" has the meaning specified in Section 1007 of the
---------------
Indenture.
"Administrative Trustee" means each of Douglas L. Maine and Jonelle
----------------------
St. John, each solely in such person's capacity as Administrative Trustee of
the Trust formed and continued hereunder and not in such person's individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor trustee appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly
---------
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
2
<PAGE>
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust
----
Agreement.
"Bankruptcy Event" means, with respect to any Person:
----------------
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjudication or composition of or in respect of such Person under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of such Person or of
any substantial part of its property or ordering the winding-up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated
a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or similar official) of such Person or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due and its
willingness to be adjudicated a bankrupt, or the taking of corporate
action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 1009.
---------------
"Board Resolution" means a copy of a resolution certified by the
----------------
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board
3
<PAGE>
of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustees.
"Book-Entry Preferred Securities Certificates" means a beneficial
--------------------------------------------
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 511.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
------------
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the
--------------------------------
Trust, the Depositor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Trust Securities
Certificates, substantially in the form attached as Exhibit B, as the same may
be amended and supplemented from time to time.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means the First Time of Delivery, which date is also
------------
the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now
4
<PAGE>
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Security" means an undivided beneficial interest in the
---------------
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
-----------------------------
ownership of Common Securities, substantially in the form attached as Exhibit
C.
"Corporate Trust Office" means the principal office of the Property
----------------------
Trustee located in Wilmington, Delaware.
"Debenture Event of Default" means an "Event of Default" as defined
--------------------------
in the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to
-------------------------
be redeemed under the Indenture, the date fixed for redemption under the
Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the
-------------------
Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware
-----------------
banking corporation organized under the laws of the State of Delaware and any
successor thereto.
"Debentures" means the aggregate principal amount of the Depositor's
----------
____% Junior Subordinated Deferrable Interest Debentures, Series A, issued
pursuant to the Indenture.
"Definitive Preferred Securities Certificates" means either or both
--------------------------------------------
(as the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificates as provided in Section 511(a) and
(b) Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 513.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
---------------------------
Delaware Code, 12 Del. C. (S) 3801, et seq., as it may be amended from time to
-- ---
time.
"Delaware Trustee" means the commercial bank or trust company
----------------
identified as the "Delaware Trustee" in the preamble to this Trust Agreement
solely in its capacity as
5
<PAGE>
Delaware Trustee of the Trust formed and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
---------
Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
-----------------
"Distributions" means amounts payable in respect of the Trust
-------------
Securities as provided in Section 401.
"Event of Default" means any one of the following events (whatever
----------------
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(c) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Trustees in this Trust Agreement
(other than a covenant or warranty a default in the performance of which
or the breach of which is dealt with in clause (b) or (c) above) and
continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the defaulting
Trustee or Trustees by the Holders of at least 25% in aggregate
liquidation preference of the Outstanding Preferred Securities a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee and the failure by the Depositor to appoint a successor
Property Trustee within 60 days thereof.
6
<PAGE>
"Expense Agreement" means the Agreement as to Expenses and
-----------------
Liabilities between the Depositor and the Trust, substantially in the form
attached as Exhibit D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
---------------
"First Time of Delivery" has the meaning specified in the
----------------------
Underwriting Agreement.
"Guarantee" means the Guarantee Agreement executed and delivered by
---------
the Depositor and Wilmington Trust Company, as trustee, contemporaneously with
the execution and delivery of this Trust Agreement, for the benefit of the
holders of the Preferred Securities, as amended from time to time.
"Indenture" means the Junior Subordinated Indenture, dated as of
---------
________ __, 1996, as supplemented by a Supplemental Indenture No. 1, dated as
of ________ __, 1996, between the Depositor and the Debenture Trustee, as
trustee, as amended or supplemented from time to time.
"Investment Company Event" means the receipt by the Trust of an
------------------------
Opinion of Counsel, rendered by a law firm having a recognized national tax
and securities practice, to the effect that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), the Trust is or will be
considered an "investment company" that is required to be registered under the
1940 Act, which Change in 1940 Act Law becomes effective on or after the date
of original issuance of the Preferred Securities under this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
----
trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
-----------
Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Debentures to be contemporaneously redeemed in accordance
with the Indenture the proceeds of which will be used to pay the Redemption
Price of such Trust Securities and (b) with respect to a distribution of
Debentures to Holders of Trust Securities in connection with a dissolution or
liquidation
7
<PAGE>
of the Trust, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the Holder to whom such
Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust
------------------
Security.
"Liquidation Date" means the date on which Debentures are to be
----------------
distributed to Holders of Trust Securities in connection with a termination
and liquidation of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section
------------------------
904(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
--------
"Officers' Certificate" means a certificate signed by the Chairman
---------------------
and Chief Executive Officer, President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the appropriate
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 816 shall be the principal executive, financial or accounting
officer of the Depositor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
------------------
counsel for the Trust, the Property Trustee or the Depositor or General
Counsel of the
8
<PAGE>
Depositor, and who shall be reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals
------------------------
to this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means,
-----------
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
------
(a) Preferred Securities theretofore cancelled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Preferred Securities;
provided that, if such Preferred Securities are to be redeemed, notice of
--------
such redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or
in lieu of which other Preferred Securities have been executed and
delivered pursuant to Section 504, 505, 511 and 513;
provided, however, that in determining whether the Holders of the requisite
-------- -------
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Preferred Securities owned by the Depositor, any Trustee or any
Affiliate of the Depositor or any Trustee shall be disregarded and deemed not
to be Outstanding, except that (a) in determining whether any Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Preferred Securities that such Trustee knows
to be so owned shall be so disregarded and (b) the foregoing shall not apply
at any time when all of the outstanding Preferred Securities are owned by the
Depositor, one or more of the Trustees and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustees the pledgee's right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or any
Affiliate of the Depositor.
9
<PAGE>
"Owner" means each Person who is the beneficial owner of a Book-Entry
-----
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account with such Clearing
Agency (directly or indirectly, in accordance with the rules of such Clearing
Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
------------
pursuant to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
---------------
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee
shall make payments to the Securityholders in accordance with Sections 401 and
402.
"Person" means any individual, corporation, partnership, joint
------
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the
------------------
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
--------------------------------
ownership of Preferred Securities, substantially in the form attached as
Exhibit E.
"Property Trustee" means the commercial bank or trust company
----------------
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as
herein provided.
"Redemption Date" means, with respect to any Trust Security to be
---------------
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated
--------
maturity of the Debentures shall be a Redemption Date for a Like Amount of
Trust Securities.
10
<PAGE>
"Redemption Price" means, with respect to any Trust Security, the
----------------
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures, allocated on a pro rata basis (based on Liquidation Amounts)
among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
----------------
"Second Time of Delivery" has the meaning specified in the
-----------------------
Underwriting Agreement.
"Securities Register" and "Securities Registrar" have the respective
------------------- --------------------
meanings specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a Trust
-------------- ------
Security or Securities is registered in the Securities Register; any such
Person shall be deemed to be a beneficial owner within the meaning of the
Delaware Business Trust Act.
"Special Event" means a Tax Event or an Investment Company Event.
-------------
"Tax Event" means the receipt by the Trust of an Opinion of Counsel,
---------
rendered by a law firm having a national tax and securities practice, to the
effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities under
this Trust Agreement, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days after the date of such Opinion of Counsel,
subject to United States federal income tax with respect to income received or
accrued on the Debentures, (ii) interest payable by the Depositor on the
Debentures is not, or within 90 days after the date of such Opinion of
Counsel, will not be, deductible by the Depositor, in whole or in part, for
United States federal income tax purposes or (iii) the Trust is, or will be
within 90 days after the date of such Opinion of Counsel, subject to more than
a de minimis amount of other taxes, duties, assessments or other governmental
charges.
11
<PAGE>
"Time of Delivery" means, collectively, the First Time of Delivery
----------------
and the Second Time of Delivery.
"Trust" means the Delaware business trust created and continued
-----
hereby and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
---------------
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for
all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment
or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
-------------------
force at the date as of which this instrument was executed; provided, however,
-------- -------
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) the rights of the
--------------
Property Trustee under the Guarantee, (c) any cash on deposit in, or owing to,
the Payment Account and (d) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed
to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
--------------
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
----------------------------
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware
--------
Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Terms Agreement, dated as of
----------------------
________ __, 1996, among the Trust, the Depositor and the Underwriters named
therein, incorporating the Underwriting Agreement Basic Provisions of the
Trust.
12
<PAGE>
ARTICLE II
----------
Establishment of the Trust
--------------------------
SECTION 201. Name.
----
The Trust created and continued hereby shall be known as "MCI
Capital IV," as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 202. Office of the Delaware Trustee; Principal Place of Business
-----------------------------------------------------------
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, 1100 North Market Street, Wilmington 19890,
Delaware, Attention: Corporate Trust Administration, or such other address in
the State of Delaware as the Delaware Trustee may designate by written notice
to the Securityholders and the Depositor. The principal executive office of
the Trust is c/o MCI Communications Corporation, 1801 Pennsylvania Avenue,
N.W., Washington, D.C. 20006.
SECTION 203. Initial Contribution of Trust Property; Organizational
------------------------------------------------------
Expenses
--------
The Property Trustee acknowledges receipt in trust from the
Depositor in connection with the Original Trust Agreement of the sum of $10,
which constituted the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of
any Trustee, promptly reimburse such Trustee for any such expenses paid by
such Trustee. The Depositor shall make no claim upon the Trust Property for
the payment of such expenses.
SECTION 204. Issuance of the Preferred Securities
------------------------------------
On _____ __, 1996 the Depositor, on behalf of the Trust and pursuant
to the Original Trust Agreement, executed and delivered the Underwriting
Agreement. Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Underwriters named in the
Underwriting Agreement Preferred Securities Certificates, registered in the
name of the nominee of the initial Clearing Agency, in an aggregate amount of
__________ Preferred Securities having an
13
<PAGE>
aggregate Liquidation Amount of $___________, against receipt of the aggregate
purchase price of such Preferred Securities of $___________, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee. If
there is a Second Time of Delivery, an Administrative Trustee, on behalf of
the Trust, shall execute in accordance with Section 502 and deliver to the
Underwriters named in the Underwriting Agreement Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of up to __________ Preferred Securities having
an aggregate Liquidation Amount of up to $___________, against receipt of the
aggregate purchase price of such Preferred Securities of 96.85% of the
Liquidation Amount thereof, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee.
SECTION 205. Issuance of Common Securities; Subscription and Purchase of
-----------------------------------------------------------
Debentures.
----------
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 502 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of _______ Common Securities having an aggregate Liquidation Amount of
$__________ against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
equal to $___________, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the sum of $___________. If there is a Second Time of Delivery, an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 502 and deliver to the Depositor Common Securities Certificates,
registered in the name of the Depositor, in an aggregate amount of up to
_______ Common Securities having an aggregate Liquidation Amount of up to
$__________ against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
of up to $___________, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the amount received from one of the Administrative Trustees pursuant
to the last sentence of Section 204.
14
<PAGE>
SECTION 206. Declaration of Trust
--------------------
The exclusive purposes and functions of the Trust are (a) to issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Debentures and (b) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it will hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Securityholders.
The Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust
for the sole and limited purpose of fulfilling the requirements of Section
3807 of the Delaware Business Trust Act.
SECTION 207. Authorization to Enter into Certain Transactions
------------------------------------------------
(a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance
with the following provisions (i) and (ii), the Administrative Trustees
shall have the authority to enter into all transactions and agreements
determined by the Trustees to be appropriate in exercising the authority,
express or implied, otherwise granted to the Trustees under this Trust
Agreement, and to perform all acts in furtherance thereof, including
without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall have
the power and authority to act on behalf of the Trust with respect to
the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense Agreement
and the Certificate Depository Agreement and such other agreements
as
15
<PAGE>
may be necessary or desirable in connection with the purposes and
function of the Trust;
(C) assisting in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of this
Trust Agreement as a trust indenture under the Trust Indenture Act;
(D) assisting in the listing of the Preferred
Securities upon such national securities exchange, the Nasdaq
National Market or such other interdealer quotation system or self-
regulatory organization as shall be determined by the Depositor and
the registration of the Preferred Securities under the Securities
Exchange Act of 1934, as amended, and the preparation and filing of
all periodic and other reports and other documents pursuant to the
foregoing;
(E) the sending of notices (other than notices of
default) and other information regarding the Trust Securities and
the Debentures to the Securityholders in accordance with this Trust
Agreement;
(F) the appointment of a Paying Agent, authenticating
agent and Securities Registrar in accordance with this Trust
Agreement;
(G) registering transfer of the Trust Securities in
accordance with this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding-up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(I) unless otherwise determined by the Depositor, the
Property Trustee or the Administrative Trustees, or as otherwise
required by the Delaware Business Trust Act or the Trust Indenture
Act, to execute on behalf of the Trust (either acting alone or
together with any or all of the Administrative Trustees) any
documents that the Administrative Trustees have the power to execute
pursuant to this Trust Agreement; and
16
<PAGE>
(J) the taking of any action incidental to the
foregoing as the Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this Trust
Agreement for the benefit of the Securityholders (without
consideration of the effect of any such action on any particular
Securityholder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with respect
to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any
other payments made in respect of the Debentures in the Payment
Account;
(D) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
the winding-up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware;
(I) after an Event of Default the taking of any
action incidental to the foregoing as the Property Trustee may from
time to time determine is necessary or advisable to give effect to
the terms of this Trust Agreement and protect and
17
<PAGE>
conserve the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder);
(J) registering transfers of the Trust Securities in
accordance with this Trust Agreement; and
(K) except as otherwise provided in this Section
207(a)(ii), the Property Trustee shall have none of the duties,
liabilities, powers or the authority of the Administrative Trustees
set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein
or contemplated hereby. In particular, the Trustees shall not (i) acquire
any investments or engage in any activities not authorized by this Trust
Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off
or otherwise dispose of any of the Trust Property or interests therein,
including to Securityholders, except as expressly provided herein, (iii)
take any action that would cause the Trust to fail or cease to qualify as a
"grantor trust" for United States federal income tax purposes, (iv) incur
any indebtedness for borrowed money or issue any other debt or (v) take or
consent to any action that would result in the placement of a Lien on any
of the Trust Property. The Administrative Trustees shall defend all claims
and demands of all Persons at any time claiming any Lien on any of the
Trust Property adverse to the interest of the Trust or the Securityholders
in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to assist
the Trust with respect to, or effect on behalf of the Trust, the following
(and any actions taken by the Depositor in furtherance of the following
prior to the date of this Trust Agreement are hereby ratified and confirmed
in all respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration
statement on the appropriate form in relation to the Preferred Securities
and the Debentures, including any amendments thereto;
18
<PAGE>
(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and the determination of any and all such acts,
other than actions which must be taken by or on behalf of the Trust, and
the advice to the Trustees of actions they must take on behalf of the
Trust, and the preparation for execution and filing of any documents to
be executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such states;
(iii) the preparation for filing by the Trust and execution on
behalf of the Trust of an application to the New York Stock Exchange or
any other national stock exchange or the Nasdaq National Market for
listing upon notice of issuance of any Preferred Securities;
(iv) the preparation for filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Exchange Act, including
any amendments thereto;
(v) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the
Preferred Securities; and
(vi) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs
of the Trust and to operate the Trust so that the Trust will not be deemed
to be an "investment company" required to be registered under the 1940 Act,
or taxed as a corporation for United States federal income tax purposes and
so that the Debentures will be treated as indebtedness of the Depositor for
United States federal income tax purposes. In this connection, the
Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or
this Trust Agreement, that each of the Depositor and the Administrative
Trustees determines in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any
material respect the interests of the holders of the Preferred Securities.
19
<PAGE>
SECTION 208. Assets of Trust
---------------
The assets of the Trust shall consist of the Trust Property.
SECTION 209. Title to Trust Property
-----------------------
Legal title to all Trust Property shall be vested at all times in
the Property Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee for the benefit of the Securityholders in
accordance with this Trust Agreement.
ARTICLE III
-----------
Payment Account
---------------
SECTION 301. Payment Account
---------------
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal
with respect to the Payment Account for the purpose of making deposits in
and withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the Securityholders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held
in the Payment Account shall not be invested by the Property Trustee
pending distribution thereof.
ARTICLE IV
----------
Distributions; Redemption
-------------------------
SECTION 401. Distributions
-------------
(a) Distributions on the Trust Securities shall be cumulative,
and will accumulate whether or not there are funds of the Trust available
for the payment of Distributions. Distributions shall accrue from ________
__, 1996, and, except in the event that the Depositor exercises its right
to defer the payment of interest on the Debentures pursuant to the
Indenture, shall be payable quarterly in
20
<PAGE>
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on June 30, 1996. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, payment of such Distribution shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date (each date on which distributions are
payable in accordance with this Section 401(a) a "Distribution Date").
(b) The Trust Securities represent undivided beneficial
interests in the Trust Property, and, the Distributions on the Trust
Securities shall be payable at a rate of ____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for
any full period shall be computed on the basis of a 360-day year of twelve
30-day months. The amount of Distributions for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year of
twelve 30-day months. The amount of Distributions payable for any period
shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on
the Securities Register for the Trust Securities on the relevant record
date, which shall be one Business Day prior to such Distribution Date;
provided, however, that in the event that the Preferred Securities do not
-------- -------
remain in book-entry-only form, the relevant record date shall be the date
15 days prior to the relevant Distribution Date.
SECTION 402. Redemption
----------
(a) On each Debenture Redemption Date and on the stated
maturity of the Debentures, the Trust will be required to redeem a Like
Amount of Trust Securities at the Redemption Price.
21
<PAGE>
(b) Notice of redemption shall be given by the Property Trustee
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 Trust Securities to
be redeemed, at such Holder's address appearing in the Security Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust
Securities are to be redeemed, the identification and the total
Liquidation Amount of the particular Trust Securities to be
redeemed; and
(v) that on the Redemption Date the Redemption Price
will become due and payable upon each such Trust Security to be
redeemed and that distributions thereon will cease to accrue on and
after said date.
(c) The Trust Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption
Price.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York City
time, on the Redemption Date, subject to Section 402(c), the Property
Trustee will, so long as the Preferred Securities are in book-entry-only
form, irrevocably deposit with the Clearing Agency for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will
give such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the holders thereof. If the Preferred Securities are
no longer in book-entry-only form, the Property Trustee, subject to Section
402(c), will irrevocably deposit with the Paying Agent funds sufficient to
pay the applicable Redemption Price and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price to the
Holders thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for
22
<PAGE>
any Trust Securities called for redemption shall be payable to the Holders
of such Trust Securities as they appear on the Register for the Trust
Securities on the relevant record dates for the related Distribution Dates.
If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of Securityholders
holding Trust Securities so called for redemption will cease, except the
right of such Securityholders to receive the Redemption Price and any
Distribution payable on or prior to the Redemption Date, but without
interest, and such Securities will cease to be outstanding. In the event
that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on
the immediately preceding Business Day, in each case, with the same force
and effect as if made on such date. In the event that payment of the
Redemption Price in respect of any Trust Securities called for redemption
is improperly withheld or refused and not paid either by the Trust or by
the Depositor pursuant to the Guarantee, Distributions on such Trust
Securities will continue to accrue, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust
Securities to the date such Redemption Price is actually paid, in which
case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities
shall be made to the recordholders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall
be one Business Day prior to the relevant Redemption Date; provided,
--------
however, that in the event that the Preferred Securities do not remain in
-------
book-entry-only form, the relevant record date shall be the date fifteen
days prior to the relevant Redemption Date.
(f) Subject to Section 403(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of Trust Securities to be redeemed shall be
allocated on a pro rata basis (based on Liquidation Amounts) among the
Common Securities and the Preferred Securities. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis (based upon
Liquidation Amounts) not more than 60 days prior to the Redemption Date by
the Property Trustee from the Outstanding Preferred Securities not
23
<PAGE>
previously called for redemption, by such method (including, without
limitation, by lot) as the Property Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal
to $25 or an integral multiple of $25 in excess thereof) of the Liquidation
Amount of Preferred Securities of a denomination larger than $25. The
Property Trustee shall promptly notify the Security Registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed. For all purposes of this Trust Agreement,
unless the context otherwise requires, all provisions relating to the
redemption of Preferred Securities shall relate, in the case of any
Preferred Securities redeemed or to be redeemed only in part, to the
portion of the Liquidation Amount of Preferred Securities that has been or
is to be redeemed.
SECTION 403. Subordination of Common Securities
----------------------------------
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 402(f), pro rata among the
Common Securities and the Preferred Securities based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any
-------- -------
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution (including Additional Amounts, if applicable)
on, or Redemption Price of, any Common Security, and no other payment on
account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated
and unpaid Distributions (including Additional Amounts, if applicable) on
all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all
Outstanding Preferred Securities, shall have been made or provided for, and
all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of,
Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Holder of Common
Securities will be deemed to have waived any right to act with respect to
any such Event of Default under this Trust Agreement until the effect of
all such
24
<PAGE>
Events of Default with respect to the Preferred Securities have been cured,
waived or otherwise eliminated. Until any such Event of Default under this
Trust Agreement with respect to the Preferred Securities has been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the Holders of the Preferred Securities and not the Holder of the
Common Securities, and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee to act on their behalf.
SECTION 404. Payment Procedures
------------------
Payments of Distributions (including Additional Amounts, if
applicable) in respect of the Preferred Securities shall be made by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register or, if the Preferred Securities are held by
a Clearing Agency, such Distributions shall be made to the Clearing Agency in
immediately available funds, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable distribution dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Common Securityholder.
SECTION 405. Tax Returns and Reports
-----------------------
The Administrative Trustees shall prepare (or cause to be prepared),
at the Depositor's expense, and file all United States federal, state and
local tax and information returns and reports required to be filed by or in
respect of the Trust. In this regard, the Administrative Trustees shall (a)
prepare and file (or cause to be prepared and filed) the appropriate Internal
Revenue Service Form required to be filed in respect of the Trust in each
taxable year of the Trust and (b) prepare and furnish (or cause to be prepared
and furnished) to each Securityholder the appropriate Internal Revenue Service
form required to be furnished to such Securityholder or the information
required to be provided on such form. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such returns
and reports promptly after such filing or furnishing. The Trustees shall
comply with United States federal withholding and backup withholding tax laws
and information reporting requirements with respect to any payments to
Securityholders under the Trust Securities.
SECTION 406. Payment of Taxes, Duties, Etc. of the Trust.
-------------------------------------------
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes,
25
<PAGE>
duties or governmental charges of whatsoever nature (other than withholding
taxes) imposed on the Trust by the United States or any other taxing
authority.
SECTION 407. Payments under Indenture
------------------------
Any amount payable hereunder to any Holder of Preferred Securities
(and any Owner with respect thereto) shall be reduced by the amount of any
corresponding payment such Holder (and Owner) has directly received pursuant
to Section 508 of the Indenture.
ARTICLE V
---------
Trust Securities Certificates
-----------------------------
SECTION 501. Initial Ownership
-----------------
Upon the formation of the Trust and the contribution by the
Depositor pursuant to Section 203 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Trust.
SECTION 502. The Trust Securities Certificates
---------------------------------
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in
excess thereof, and the Common Securities Certificates shall be issued in
denominations of $25 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by
manual signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefits of
this Trust Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the delivery of such Trust
Securities Certificates or did not hold such offices at the date of delivery
of such Trust Securities Certificates. A transferee of a Trust Securities
Certificate shall become a Securityholder, and shall be entitled to the rights
and subject to the obligations of a Securityholder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's name
pursuant to Sections 504, 511 and 513.
26
<PAGE>
SECTION 503. Execution and Delivery of Trust Securities Certificates
-------------------------------------------------------
At each Time of Delivery, the Administrative Trustees shall cause
Trust Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 204 and 205, to be executed on behalf of the Trust and delivered
to or upon the written order of the Depositor, signed by its chairman of the
board, its president, any executive vice president, senior vice president or
any vice president, treasurer or assistant treasurer or controller without
further corporate action by the Depositor, in authorized denominations.
SECTION 504. Registration of Transfer and Exchange of Preferred Securities
-------------------------------------------------------------
Certificates
------------
The Depositor shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 508, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and
exchanges of Preferred Securities Certificates (the "Securities Register") in
which, the registrar designated by the Depositor (the "Securities Registrar"),
subject to such reasonable regulations as it may prescribe, shall provide for
the registration of Preferred Securities Certificates and Common Securities
Certificates (subject to Section 510 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. The Bank shall be the initial
Securities Registrar.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
508, the Administrative Trustees or any one of them shall execute and deliver,
in the name of the designated transferee or transferees, one or more new
Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount dated the date of execution by such
Administrative Trustee or Trustees. The Securities Registrar shall not be
required to register the transfer of any Preferred Securities that have been
called for redemption. At the option of a Holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 508.
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Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Property Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Preferred Securities Certificates.
SECTION 505. Mutilated, Destroyed, Lost or Stolen Trust Securities
-----------------------------------------------------
Certificates
------------
If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar
shall receive evidence to its satisfaction of the destruction, loss or
theft of any Trust Securities Certificate and (b) there shall be delivered
to the Securities Registrar and the Administrative Trustees such security
or indemnity as may be required by them to save each of them harmless, then
in the absence of notice that such Trust Securities Certificate shall have
been acquired by a bona fide purchaser, the Administrative Trustees, or any
one of them, on behalf of the Trust shall execute and make available for
delivery, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Securities Certificate, a new Trust Securities Certificate
of like class, tenor and denomination. In connection with the issuance of
any new Trust Securities Certificate under this Section, the Administrative
Trustees or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an undivided beneficial interest in the assets of the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Trust
Securities Certificate shall be found at any time.
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SECTION 506. Persons Deemed Securityholders
------------------------------
The Administrative Trustees or the Securities Registrar shall treat
the Person in whose name any Trust Securities Certificate shall be registered
in the Securities Register as the owner of such Trust Securities Certificate
for the purpose of receiving distributions and for all other purposes
whatsoever, and neither the Trustees nor the Securities Registrar shall be
bound by any notice to the contrary.
SECTION 507. Access to List of Securityholders' Names and Addresses
------------------------------------------------------
The Administrative Trustees or the Depositor shall furnish or cause
to be furnished (a) to the Property Trustee, semi-annually on or before
January 15 and July 15 in each year, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent Record Date and (b) to the Property
Trustee, promptly after receipt by any Administrative Trustee or the Depositor
of a request therefor from the Property Trustee in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, in
each case to the extent such information is in the possession or control of
the Administrative Trustees or the Depositor and is not identical to a
previously supplied list or has not otherwise been received by the Property
Trustee in its capacity as Securities Registrar. The rights of
Securityholders to communicate with other Securityholders with respect to
their rights under this Trust Agreement or under the Trust Securities, and the
corresponding rights of the Trustee shall be as provided in the Trust
Indenture Act. Each Holder, by receiving and holding a Trust Securities
Certificate, and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source
from which such information was derived.
SECTION 508. Maintenance of Office or Agency
-------------------------------
The Administrative Trustees shall maintain an office or offices or
agency or agencies where Preferred Securities Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate MCI Communications
Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006,
Attention: Treasurer, as the office for such purposes. The
29
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Administrative Trustees shall give prompt written notice to the Depositor and
to the Securityholders of any change in the location of the Securities
Register or any such office or agency.
SECTION 509. Appointment of Paying Agent.
---------------------------
The Paying Agent shall make distributions to Securityholders from
the Payment Account and shall report the amounts of such distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the distributions referred to above. The Administrative Trustees
may revoke such power and remove the Paying Agent if such Trustees determine
in their sole discretion that the Paying Agent shall have failed to perform
its obligations under this Trust Agreement in any material respect. The
Paying Agent shall initially be the Bank, and any co-paying agent chosen by
the Bank and acceptable to the Administrative Trustees and the Depositor. Any
Person acting as Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Administrative Trustees, the Property
Trustee and the Depositor. In the event that the Bank shall no longer be the
Paying Agent or a successor Paying Agent shall resign or its authority to act
be revoked, the Administrative Trustees shall appoint a successor that is
acceptable to the Property Trustee and the Depositor to act as Paying Agent
(which shall be a bank or trust company). The Administrative Trustees shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Administrative Trustees to execute and deliver to the Trustees an
instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Securityholders in trust for the benefit of the Securityholders
entitled thereto until such sums shall be paid to such Securityholders. The
Paying Agent shall return all unclaimed funds to the Property Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Property Trustee. The provisions of Sections 801, 803 and
806 shall apply to the Bank also in its role as Paying Agent, for so long as
the Bank shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
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SECTION 510. Ownership of Common Securities by Depositor.
-------------------------------------------
At each Time of Delivery, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities. To the fullest
extent permitted by law, other than a transfer in connection with a
consolidation or merger of the Depositor into another corporation, or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 801 of the
Indenture, any attempted transfer of the Common Securities shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".
SECTION 511. Book-Entry Preferred Securities Certificates; Common Securities
---------------------------------------------------------------
Certificate.
-----------
(a) The Preferred Securities Certificates, upon original
issuance, will be issued in the form of a typewritten Preferred Securities
Certificate or Certificates representing Book-Entry Preferred Securities
Certificates, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Preferred Securities
Certificate or Certificates shall initially be registered on the Securities
Register in the name of Cede & Co., the nominee of the initial Clearing
Agency, and no beneficial owner will receive a Definitive Preferred
Securities Certificate representing such beneficial owner's interest in
such Preferred Securities, except as provided in Section 513. Unless and
until Definitive Preferred Securities Certificates have been issued to
beneficial owners pursuant to Section 513:
(i) the provisions of this Section 511(a) shall be in full
force and effect;
(ii) the Securities Registrar and the Trustees shall be
entitled to deal with the Clearing Agency for all purposes of this Trust
Agreement relating to the Book-Entry Preferred Securities Certificates
(including the payment of the Liquidation Amount of and Distributions on
the Book-Entry Preferred Securities and the giving of instructions or
directions to Owners of Book-Entry Preferred Securities) as the sole
Holder of Book-Entry Preferred Securities and shall have no obligations
to the Owners thereof;
(iii) to the extent that the provisions of this Section 511
conflict with any other provisions of this
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Trust Agreement, the provisions of this Section 511 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
between such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement, unless
and until Definitive Preferred Securities Certificates are issued
pursuant to Section 513, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments on the Preferred Securities to such Clearing Agency
Participants.
(b) A single Common Securities Certificate representing the
Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
SECTION 512. Notices to Clearing Agency.
--------------------------
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
513, the Trustees shall give all such notices and communications specified
herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION 513. Definitive Preferred Securities Certificates.
--------------------------------------------
If (a) the Depositor advises the Trustees in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Preferred Securities Certificates, and
the Depositor is unable to locate a qualified successor, (b) the Depositor at
its option advises the Trustees in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (c) after the occurrence of
a Debenture Event of Default, Owners of Preferred Securities Certificates
representing beneficial interests aggregating at least a majority of the
Liquidation Amount advise the Property Trustee in writing that the
continuation of a book-entry system through the Clearing Agency is no longer
in the best interest of the Owners of Preferred Securities Certificates, then
the Property Trustee shall notify the Clearing Agency and the Clearing Agency
shall notify all Owners of Preferred Securities Certificates and the other
Trustees of the
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occurrence of any such event and of the availability of the Definitive
Preferred Securities Certificates to Owners of such class or classes, as
applicable, requesting the same. Upon surrender to the Property Trustee of the
typewritten Preferred Securities Certificate or Certificates representing the
Book-Entry Preferred Securities Certificates by the Clearing Agency,
accompanied by registration instructions, the Administrative Trustees, or any
one of them, shall execute the Definitive Preferred Securities Certificates in
accordance with the instructions of the Clearing Agency. Neither the
Securities Registrar nor the Trustees shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Preferred Securities Certificates, the Trustees shall recognize the Holders of
the Definitive Preferred Securities Certificates as Securityholders. The
Definitive Preferred Securities Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
SECTION 514. Rights of Securityholders.
-------------------------
(a) The legal title to the Trust Property is vested exclusively in
the Property Trustee (in its capacity as such) in accordance with Section 209,
and the Securityholders shall not have any right or title therein other than
the undivided beneficial interest in the assets of the Trust conferred by
their Trust Securities and they shall have no right to call for any partition
or division of property, profits or rights of the Trust except as described
below. The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Securityholders against payment of the purchase price therefor
will be fully paid and nonassessable by the Trust. The Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders
of not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least 25% in
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<PAGE>
Liquidation Amount of the Preferred Securities then Outstanding shall have
such right by a notice in writing to the Depositor and the Debenture Trustee;
and upon any such declaration such principal amount of and the accrued
interest on all of the Debentures shall become immediately due and payable,
provided that the payment of principal and interest on such Debentures shall
remain subordinated to the extent provided in the Indenture.
(c) For so long as any Preferred Securities remain Outstanding, to
the fullest extent permitted by law and subject to the terms of this Trust
Agreement, if, upon a Debenture Event of Default specified in Section 501(1)
or 501(2) of the Indenture, any Holder of Preferred Securities shall have the
right to directly institute a proceeding for enforcement of payment to such
Holder of the principal amount of or interest on the Debentures having a
principal amount equal to the Liquidation Amount of the Preferred Securities
of such Holder (a "Direct Action"). In connection with such Direct Action,
the rights of the Holders of the Common Securities will be subrogated to the
rights of any Holder of the Preferred Securities to the extent of any payment
made by the Depositor to such Holder of Preferred Securities in such Direct
Action. Except as set forth in this Section 514(c), the Holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures or assert directly any other rights in respect
of the Debentures.
ARTICLE VI
-----------
Acts of Securityholders; Meetings; Voting
-----------------------------------------
SECTION 601. Limitations on Voting Rights
----------------------------
(a) Except as provided in this Section, in Sections 810 and
1002 and in the Indenture and as otherwise required by law, no Holder of
Preferred Securities shall have any right to vote or in any manner
otherwise control the administration, operation and management of the Trust
or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as
partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee,
the Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with
respect to such Debentures, (ii) waive any past default
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<PAGE>
which is waiveable under Section 513 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation Amount of all
Outstanding Preferred Securities; provided, however, that where a consent
-------- -------
under the Indenture would require the consent of each Holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each Holder of Preferred Securities.
The Trustees shall not revoke any action previously authorized or approved
by a vote of the Holders of Preferred Securities, except by a subsequent
vote of the Holders of Preferred Securities. The Property Trustee shall
notify all Holders of the Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the
Preferred Securities, prior to taking any of the foregoing actions, the
Trustees shall, at the expense of the Depositor, obtain an Opinion of
Counsel experienced in such matters to the effect that the Trust will not
be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than pursuant to the terms of this Trust
Agreement, then the Holders of Outstanding Preferred Securities as a class
will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of the Holders
of at least a majority in Liquidation Amount of the Outstanding Preferred
Securities. No amendment to this Trust Agreement may be made if, as a
result of such amendment, the Trust would be classified as an association
taxable as a corporation for United States federal income tax purposes.
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SECTION 602. Notice of Meetings.
------------------
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be
so considered whether or not stated in the notice of the meeting. Any
adjourned meeting may be held as adjourned without further notice.
SECTION 603. Meetings of Preferred Securityholders.
-------------------------------------
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Preferred Securityholders
of record of 25% of the Preferred Securities (based upon their Liquidation
Amount) and the Administrative Trustees or the Property Trustee may, at any
time in their discretion, call a meeting of Preferred Securityholders to vote
on any matters as to which Preferred Securityholders are entitled to vote.
Preferred Securityholders of record of 50% of the Outstanding
Preferred Securities (based upon their Liquidation Amount), present in person
or by proxy, shall constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding
more than a majority of the Preferred Securities (based upon their Liquidation
Amount) held by the Preferred Securityholders of record present, either in
person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 604. Voting Rights
-------------
Securityholders shall be entitled to one vote for each $25 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
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<PAGE>
SECTION 605. Proxies, etc.
-------------
At any meeting of Securityholders, any Securityholder entitled to
vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Administrative
Trustees, or with such other officer or agent of the Trust as the
Administrative Trustees may direct, for verification prior to the time at
which such vote shall be taken. Pursuant to a resolution of the Property
Trustee, proxies may be solicited in the name of the Property Trustee or one
or more officers of the Property Trustee. Only Securityholders of record
shall be entitled to vote. When Trust Securities are held jointly by several
persons, any one of them may vote at any meeting in person or by proxy in
respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. No proxy shall be valid more than three years
after its date of execution.
SECTION 606. Securityholder Action by Written Consent.
----------------------------------------
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their Liquidation Amount) entitled to
vote in respect of such action (or such larger proportion thereof as shall be
required by any express provision of this Trust Agreement) shall consent to
the action in writing.
SECTION 607. Record Date for Voting and Other Purposes
-----------------------------------------
For the purposes of determining the Securityholders who are entitled
to notice of and to vote at any meeting or by written consent, or to
participate in any distribution on the Trust Securities in respect of which a
record date is not otherwise provided for in this Trust Agreement, or for the
purpose of any other action, the Administrative Trustees may from time to time
fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of a distribution or other action, as the case
may be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
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SECTION 608. Acts of Securityholders
-----------------------
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Trust Agreement to be
given, made or taken by Securityholders or Owners may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders or Owners in person or by an agent duly appointed in
writing; and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to an
Administrative Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Securityholders or Owners signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Trust
Agreement and (subject to Section 801) conclusive in favor of the Trustees, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which any Trustee receiving the same
deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Securityholder of any Trust Security shall bind
every future Securityholder of the same Trust Security and the Securityholder
of every Trust Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustees or the Trust in reliance thereon, whether
or not notation of such action is made upon such Trust Security.
38
<PAGE>
Without limiting the foregoing, a Securityholder entitled hereunder
to take any action hereunder with regard to any particular Trust Security may
do so with regard to all or any part of the Liquidation Amount of such Trust
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such
liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
A Securityholder may institute a legal proceeding directly against
the Depositor under the Guarantee to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee (as
defined in the Guarantee), the Trust or any person or entity.
SECTION 609. Inspection of Records
---------------------
Upon reasonable notice to the Administrative Trustees and the
Property Trustee, the records of the Trust shall be open to inspection by
Securityholders during normal business hours for any purpose reasonably
related to such Securityholder's interest as a Securityholder.
ARTICLE VII
Representations and Warranties
------------------------------
SECTION 701. Representations and Warranties of the Bank, the Property
--------------------------------------------------------
Trustee and the Delaware Trustee.
---------------------------------
The Bank, the Property Trustee and the Delaware Trustee, each
severally on behalf of and as to itself, hereby represents and warrants for
the benefit of the Depositor and the Securityholders that:
(a) the Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware;
(b) the Bank has full corporate power, authority and legal
right to execute, deliver and perform its
39
<PAGE>
obligations under this Trust Agreement and has taken all necessary action
to authorize the execution, delivery and performance by it of this Trust
Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Bank and constitutes the valid and legally binding
agreement of the Bank enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(d) the execution, delivery and performance by the Bank of this
Trust Agreement has been duly authorized by all necessary corporate or
other action on the part of the Bank, the Property Trustee and the
Delaware Trustee and does not require any approval of stockholders of the
Bank and such execution, delivery and performance will not (i) violate
the Bank's charter or by-laws, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Property Trustee, the Bank or the Delaware
Trustee is a party or by which it is bound, or (iii) violate any law,
governmental rule or regulation of the United States or the State of
Delaware, as the case may be, governing the banking or trust powers of
the Bank, the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property
Trustee, the Bank or the Delaware Trustee;
(e) neither the authorization, execution or delivery by the
Bank of this Trust Agreement nor the consummation of any of the
transactions by the Bank, the Property Trustee or the Delaware Trustee
(as appropriate in context) contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or
the taking of any other action with respect to any governmental authority
or agency under any existing federal law governing the banking or trust
powers of the Bank, the Property Trustee or the Delaware Trustee, as the
case may be, under the laws of the United States or the State of
Delaware;
40
<PAGE>
(f) there are no proceedings pending or, to the best of each of
the Bank's, the Property Trustee's and the Delaware Trustee's knowledge,
threatened against or affecting the Bank, the Property Trustee or the
Delaware Trustee in any court or before any governmental authority,
agency or arbitration board or tribunal which, individually or in the
aggregate, would materially and adversely affect the Trust or would
question the right, power and authority of the Bank, the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
SECTION 702. Representations and Warranties of Depositor.
-------------------------------------------
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at each Time of
Delivery on behalf of the Trust have been duly authorized and will have
been duly and validly executed, issued and delivered by the Trustees
pursuant to the terms and provisions of, and in accordance with the
requirements of, this Trust Agreement and the Securityholders will be, as
of such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Trust (or the Trustees on behalf of the Trust) under the laws of
the State of Delaware or any political subdivision thereof in connection
with the execution, delivery and performance by the Bank, the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust
Agreement.
ARTICLE VIII
------------
The Trustees
------------
SECTION 801. Certain Duties and Responsibilities
-----------------------------------
(a) The duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee,
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of
this Trust Agreement shall require the Trustees to expend or risk their own
funds or otherwise incur any financial liability in the performance of any
of their duties hereunder, or in the exercise of any of their rights or
powers, if they shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability
41
<PAGE>
is not reasonably assured to it. Whether or not therein expressly so
provided, every provision of this Trust Agreement relating to the conduct
or affecting the liability of or affording protection to the Trustees shall
be subject to the provisions of this Section. Nothing in this Trust
Agreement shall be construed to release the Property Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct. To the extent that, at law or in equity, an
Administrative Trustee has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to the Securityholders, such
Administrative Trustee shall not be liable to the Trust or to any
Securityholder for such Trustee's good faith reliance on the provisions of
this Trust Agreement. The provisions of this Trust Agreement, to the extent
that they restrict the duties and liabilities of the Administrative
Trustees otherwise existing at law or in equity, are agreed by the
Depositor and the Securityholders to replace such other duties and
liabilities of the Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent
in respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Property Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Securityholder, by its acceptance of a Trust Security,
agrees that it will look solely to the revenue and proceeds from the Trust
Property to the extent legally available for distribution to it as herein
provided and that the Trustees are not personally liable to it for any
amount distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 801(b) does not
limit the liability of the Trustees expressly set forth elsewhere in this
Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except
that:
(i) the Property Trustee shall not be liable for any error
of judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
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(ii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a majority
in Liquidation Amount of the Trust Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Payment Account shall be to deal with such Property in a similar manner
as the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Depositor, and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the Payment
Account maintained by the Property Trustee pursuant to Section 301 and
except to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Depositor
with their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for the default or misconduct of the
Administrative Trustees or the Depositor.
SECTION 802. Certain Notices.
----------------
Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
such Event of Default to the Securityholders, the Administrative Trustees and
the Depositor, unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Administrative Trustee shall
transmit, in the manner and to the extent provided in Section 1008, notice of
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such exercise to the Securityholders and the Property Trustee, unless such
exercise shall have been revoked.
SECTION 803. Certain Rights of Property Trustee.
-----------------------------------
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in
acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement
the Property Trustee is required to decide between alternative courses of
action or (ii) in construing any of the provisions of this Trust
Agreement the Property Trustee finds the same ambiguous or inconsistent
with any other provisions contained herein or (iii) the Property Trustee
is unsure of the application of any provision of this Trust Agreement,
then, except as to any matter as to which the Preferred Securityholders
are entitled to vote under the terms of this Trust Agreement, the
Property Trustee shall deliver a notice to the Depositor requesting
written instructions of the Depositor as to the course of action to be
taken and the Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall be instructed in
writing to take, or to refrain from taking, by the Depositor; provided,
--------
however, that if the Property Trustee does not receive such instructions
-------
of the Depositor within ten Business Days after it has delivered such
notice, or such reasonably shorter period of time set forth in such
notice (which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Trust Agreement as it
shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its
own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust
44
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Agreement shall be sufficiently evidenced by an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established
before undertaking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Depositor or the Administrative
Trustees;
(e) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel (which
counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon and in accordance with such advice; the Property Trustee shall
have the right at any time to seek instructions concerning the
administration of this Trust Agreement from any court of competent
jurisdiction;
(g) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Agreement
at the request or direction of any of the Securityholders pursuant to
this Trust Agreement, unless such Securityholders shall have offered to
the Property Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, note or other evidence of
indebtedness or other paper or document, unless requested in writing to
do so by one or more Securityholders, but the Property Trustee may make
such
45
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further inquiry or investigation into such facts or matters as it
may see fit;
(i) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall
--------
be responsible for its own negligence or recklessness with respect to
selection of any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder the Property Trustee (i) may request instructions from the
Holders of the Trust Securities which instructions may only be given by
the Holders of the same proportion in Liquidation Amount of the Trust
Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action,
(ii) may refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be protected
in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this Trust
Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property
Trustee shall be construed to be a duty.
SECTION 804. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Trust, and the Trustees
do not assume any responsibility for their correctness. The Trustees shall
not be
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accountable for the use or application by the Depositor of the proceeds
of the Debentures.
SECTION 805. May Hold Securities.
-------------------
Except as provided in the definition of the term "Outstanding" in
Article I, any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 808 and 813, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such
other agent.
SECTION 806. Compensation; Indemnity; Fees.
-----------------------------
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees in accordance
with any provision of this Trust Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify each of the Trustees or any predecessor
Trustee for, and to hold the Trustees harmless against, any loss, damage,
claims, liability, penalty or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
No Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 806.
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SECTION 807. Corporate Property Trustee Required; Eligibility of
---------------------------------------------------
Trustees
--------
(a) There shall at all times be a Property Trustee hereunder
with respect to the Trust Securities. The Property Trustee shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $50,000,000. If any
such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the
Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at least 21
years of age or a legal entity that shall act through one or more persons
authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be (i)
a natural person who is at least 21 years of age and a resident of the
State of Delaware or (ii) a legal entity with its principal place of
business in the State of Delaware and that otherwise meets the requirements
of applicable Delaware law that shall act through one or more persons
authorized to bind such entity.
SECTION 808. Conflicting Interests.
---------------------
If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and
this Trust Agreement.
SECTION 809. Co-Trustees and Separate Trustee.
--------------------------------
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property
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may at the time be located, the Depositor and the Administrative Trustees,
by agreed action of the majority of such Trustees, shall have power to
appoint, and upon the written request of the Administrative Trustees, the
Depositor shall for such purpose join with the Administrative Trustees in the
execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If
the Depositor does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power to
make such appointment. Any co-trustee or separate trustee appointed pursuant
to this Section shall either be (i) a natural person who is at least 21 years
of age and a resident of the United States or (ii) a legal entity with its
principal place of business in the United States that shall act through one or
more persons authorized to bind such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and
delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed and delivered and
all rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustees specified
hereunder, shall be exercised, solely by such Trustees and not by such
co-trustee or separate trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Property Trustee in respect of any property
covered by such appointment
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shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act is to be
performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or
separate trustee.
(c) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case a Debenture Event of
Default has occurred and is continuing, the Property Trustee shall have
power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Depositor. Upon the
written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner provided in
this Section.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee or any other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 810. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
No resignation or removal of any Trustee (the "Relevant Trustee")
and no appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 811.
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Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time with respect to the Trust Securities by giving written
notice thereof to the Securityholders. If the instrument of acceptance by the
successor Trustee required by Section 811 shall not have been delivered to the
Relevant Trustee within 30 days after the giving of such notice of
resignation, the Relevant Trustee may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor
Relevant Trustee with respect to the Trust Securities.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee
may be removed by the Common Securityholder at any time.
If any Trustee shall resign, be removed or become incapable of
acting as Trustee, or if a vacancy shall occur in the office of any Trustee
for any cause, at a time when no Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder, by Act of the Common
Securityholder delivered to the retiring Trustee, shall promptly appoint a
successor Trustee or Trustees with respect to the Trust Securities and the
Trust, and the successor Trustee shall comply with the applicable requirements
of Section 811. If the Property Trustee or the Delaware Trustee shall resign,
be removed or become incapable of continuing to act as the Property Trustee or
the Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and be continuing, the Preferred Securityholders,
by Act of the Securityholders of a majority in Liquidation Amount of the
Preferred Securities then Outstanding delivered to the retiring Relevant
Trustee, shall promptly appoint a successor Relevant Trustee or Trustees with
respect to the Trust Securities and the Trust, and such successor Trustee
shall comply with the applicable requirements of Section 811. If an
Administrative Trustee shall resign, be removed or become incapable of acting
as Administrative Trustee, at a time when a Debenture Event of Default shall
have occurred and be continuing, the Common Securityholder, by Act of the
Common Securityholder delivered to the Administrative Trustee, shall promptly
appoint a successor Administrative
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Trustee or Administrative Trustees with respect to the Trust Securities and
the Trust, and such successor Administrative Trustee or Administrative
Trustees shall comply with the applicable requirements of Section 811. If no
successor Relevant Trustee with respect to the Trust Securities shall have
been so appointed by the Common Securityholder or the Preferred
Securityholders and accepted appointment in the manner required by Section
811, any Securityholder who has been a Securityholder of Trust Securities for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of
a successor Relevant Trustee with respect to the Trust Securities.
The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give notice
to the Depositor. Each notice shall include the name of the successor
Relevant Trustee and the address of its Corporate Trust Office if it is the
Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who
is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence
or incapacity may be filled by (a) the unanimous act of remaining
Administrative Trustees if there are at least two of them or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies
the eligibility requirement for Administrative Trustees set forth in Section
807).
SECTION 811. Acceptance of Appointment by Successor.
--------------------------------------
In case of the appointment hereunder of a successor Trustee such
successor Trustee so appointed shall execute, acknowledge and deliver to the
Trust and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Depositor or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and if the Property Trustee is the
resigning Trustee shall duly assign,
52
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transfer and deliver to the successor Trustee all property and money held by
such retiring Property Trustee hereunder.
In case of the appointment hereunder of a successor Relevant Trustee
with respect to the Trust Securities and the Trust, the retiring Relevant
Trustee and each successor Relevant Trustee with respect to the Trust
Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Relevant Trustee, it being understood that nothing herein or in such amendment
shall constitute such Relevant Trustees co-trustees of the same trust and that
each such Relevant Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Relevant Trustee and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Relevant
Trustee with respect to the Trust Securities and the Trust; but, on request of
the Trust or any successor Relevant Trustee such retiring Relevant Trustee
shall duly assign, transfer and deliver to such successor Relevant Trustee all
Trust Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
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SECTION 812. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Property Trustee or the Delaware
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which such Relevant Trustee shall be a party, or any corporation succeeding to
all or substantially all the corporate trust business of such Relevant
Trustee, shall be the successor of such Relevant Trustee hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
SECTION 813. Preferential Collection of Claims Against Depositor or Trust.
------------------------------------------------------------
If and when the Property Trustee or the Delaware Trustee shall be or
become a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 814. Reports by Property Trustee.
---------------------------
(a) Not later than July 15 of each year commencing with July 15,
1997, the Property Trustee shall transmit to all Securityholders in accordance
with Section 1008, and to the Depositor, a brief report dated as of such
December 31 with respect to:
(i) its eligibility under Section 807 or, in lieu thereof,
if to the best of its knowledge it has continued to be eligible under
said Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the twelve-month
period (or, in the case of the initial report, the period since the
Closing Date) ending with such December 31 or, if the Property Trustee
has not complied in any material respect with such obligations, a
description of such noncompliance; and
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(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties hereunder
which it has not previously reported and which in its opinion materially
affects the Trust Securities.
(b) In addition, the Property Trustee shall transmit to
Securityholders such reports concerning the Property Trustee and its actions
under this Trust Agreement as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each national
securities exchange, the Nasdaq National Market or such other interdealer
quotation system or self-regulatory organization upon which the Trust
Securities are listed or traded, with the Commission and with the Depositor.
SECTION 815. Reports to the Property Trustee.
-------------------------------
The Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 816. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Depositor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the
form of an Officers' Certificate.
SECTION 817. Number of Trustees.
------------------
(a) The number of Trustees shall be four, provided that the Holder
of all of the Common Securities by written instrument may increase or decrease
the number of Administrative Trustees. The Property Trustee and the Delaware
Trustee may be the same person.
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(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 817(a),
or if the number of Trustees is increased pursuant to Section 817(a), a
vacancy shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 810.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not
operate to annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 810, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Trust Agreement.
SECTION 818. Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 207(a), including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing.
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to the Depositor the doing of such
things and the execution of such instruments either in the name of the Trust
or the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited
by applicable law or contrary to the provisions of the Trust, as set forth
herein.
ARTICLE IX
Termination, Liquidation and Merger18.
-------------------------------------
SECTION 901. Termination Upon Expiration Date.
-------------------------------
Unless earlier terminated, the Trust shall automatically terminate
on _________ __, 2051 (the "Expiration Date"), following the distribution of
the Trust Property in accordance with Section 904.
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SECTION 902. Early Termination.
-----------------
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from the
Depositor at any time (which direction is optional and wholly within the
discretion of the Depositor) to terminate the Trust and distribute the
Debentures in exchange for the Preferred Securities;
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all of the Debentures; and
(d) the entry of an order for dissolution of the Trust by a
court of competent jurisdiction.
SECTION 903. Termination.
-----------
The respective obligations and responsibilities of the Trustees and
the Trust created and continued hereby shall terminate upon the latest to
occur of the following: (a) the distribution by the Property Trustee to
Securityholders upon the liquidation of the Trust pursuant to Section 904, or
upon the redemption of all of the Trust Securities pursuant to Section 402, of
all amounts required to be distributed hereunder upon the final payment of the
Trust Securities; (b) the payment of any expenses owed by the Trust; and (c)
the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to the
Trust or the Securityholders.
SECTION 904. Liquidation.
-----------
(a) If an Early Termination Event specified in clause (a), (b)
or (d) of Section 902 occurs or upon the Expiration Date, the Trust shall
be liquidated by the Trustees as expeditiously as the Trustees determine to
be possible by distributing, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, to each Securityholder a Like
Amount of Debentures, subject to Section 904(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage
prepaid, mailed not later than 30 nor more than 60 days prior to the
Liquidation Date to each Holder of Trust Securities at such
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Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
--------------------------
(ii) state that from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Debentures,
or if Section 904(d) applies receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to
effect the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures
will be issued to holders of Trust Securities Certificates, upon surrender
of such certificates to the Administrative Trustees or their agent for
exchange, (iii) the Depositor shall use its reasonable efforts to have the
Debentures listed on the New York Stock Exchange or on such other stock
exchange, interdealer quotation system or self-regulatory organization as
the Preferred Securities are then listed or traded, (iv) any Trust
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures, accruing interest at the rate
provided for in the Debentures from the last Distribution Date on which a
Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made to holders
of Trust Securities Certificates with respect to such Debentures), and (v)
all rights of Securityholders holding Trust Securities will cease, except
the right of such
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Securityholders to receive Debentures upon surrender of Trust Securities
Certificates.
(d) In the event that, notwithstanding the other provisions of
this Section 904, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the
Debentures in the manner provided herein is determined by the Property
Trustee not to be practical, the Trust Property shall be liquidated, and
the Trust shall be dissolved, wound-up or terminated, by the Property
Trustee in such manner as the Property Trustee determines. In such event,
on the date of the dissolution, winding-up or other termination of the
Trust, Securityholders will be entitled to receive out of the assets of the
Trust available for distribution to Securityholders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an
amount equal to the Liquidation Amount per Trust Security plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being
the "Liquidation Distribution"). If, upon any such dissolution, winding-up
or termination, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be
paid on a pro rata basis (based upon Liquidation Amounts). The holder of
the Common Securities will be entitled to receive Liquidation Distributions
upon any such dissolution, winding-up or termination pro rata (determined
as aforesaid) with Holders of Preferred Securities, except that, if a
Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities.
SECTION 905. Mergers, Consolidations, Amalgamations or Replacements of
---------------------------------------------------------
the Trust.
---------
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the
Preferred Securities, the Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the
laws of any state; provided, that (i) such successor entity either (a)
--------
expressly assumes all of the obligations of the Trust with respect to the
Preferred
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Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Preferred Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Depositor
expressly appoints a trustee of such successor entity possessing the same
powers and duties as the Property Trustee as the holder of the Debentures,
(iii) the Successor Securities are listed or traded, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities
are then listed or traded, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of
Counsel to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (viii)
the Depositor owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding
the foregoing, the Trust shall not, except with the consent of holders of 100%
in Liquidation Amount of the Preferred Securities, consolidate, amalgamate,
merge with or into, be replaced by or convey, transfer or lease its properties
and assets substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity to be classified as other
than a grantor trust for United States federal income tax purposes.
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ARTICLE X
---------
Miscellaneous Provisions
------------------------
SECTION 1001. Limitation of Rights of Securityholders.
---------------------------------------
The death or incapacity of any person having an interest, beneficial
or otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such person or
any Securityholder for such person, to claim an accounting, take any action or
bring any proceeding in any court for a partition or winding-up of the
arrangements contemplated hereby, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.
SECTION 1002. Amendment.
---------
(a) This Trust Agreement may be amended from time to time by
the Trustees and the Depositor, without the consent of any Securityholders,
(i) to cure any ambiguity, correct or supplement any provision herein which
may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of
this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that
the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Trust Securities are outstanding
or to ensure that the Trust will not be required to register as an
investment company under the 1940 Act; provided, however, that in the case
-------- -------
of clause (i), such action shall not adversely affect in any material
respect the interests of any Securityholder, and any amendments of this
Trust Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 1002(c) hereof, any provision
of this Trust Agreement may be amended by the Trustees and the Depositor
with (i) the consent of Securityholders representing not less than a
majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust for United States federal income tax purposes or
the Trust's exemption from status of an investment company under the 1940
Act.
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(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Securityholder
(such consent being obtained in accordance with Section 603 or 606 hereof),
this Trust Agreement may not be amended to (i) change the amount or timing
of any Distribution on the Trust Securities or otherwise adversely affect
the amount of any Distribution required to be made in respect of the Trust
Securities as of a specified date or (ii) restrict the right of a
Securityholder to institute suit for the enforcement of any such payment on
or after such date; notwithstanding any other provision herein, without the
unanimous consent of the Securityholders (such consent being obtained in
accordance with Section 603 or 606 hereof), this paragraph (c) of this
Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this
Trust Agreement which would cause the Trust to fail or cease to qualify for
the exemption from status of an investment company under the 1940 Act or
fail or cease to be classified as a grantor trust for United States federal
income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor, this Trust Agreement may
not be amended in a manner which imposes any additional obligation on the
Depositor.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrative Trustees shall promptly provide to the Depositor a
copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall
be required to enter into any amendment to this Trust Agreement which
affects its own rights, duties or immunities under this Trust Agreement.
The Property Trustee shall be entitled to receive an Opinion of Counsel and
an Officers' Certificate stating that any amendment to this Trust Agreement
is in compliance with this Trust Agreement.
SECTION 1003 Separability.
------------
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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SECTION 1004. GOVERNING LAW.
-------------
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
SECTION 1005. Payments Due on Non-Business Day.
--------------------------------
If the date fixed for any payment on any Trust Security shall be a
day that is not a Business Day, then such payment need not be made on such
date but may be made on the next succeeding day that is a Business Day (except
as otherwise provided in Sections 401(a) and 402(d)), with the same force and
effect as though made on the date fixed for such payment, and no interest
shall accrue thereon for the period after such date.
SECTION 1006 Successors.
----------
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Trust or the Relevant Trustee,
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article Eight of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
SECTION 1007. Headings.
--------
The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.
SECTION 1008. Reports, Notices and Demands.
----------------------------
Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon any Securityholder or the Depositor may be given or served
in writing by deposit thereof, first-class postage prepaid, in the United
States mail, hand delivery or facsimile transmission, in each case, addressed,
(a) in the case of a Preferred Securityholder, to such Preferred
Securityholder as such Securityholder's name and address may appear on the
Securities Register; and (b) in the case of the Common Securityholder or the
Depositor, to MCI Communications Corporation, 1801 Pennsylvania Avenue, N.W.,
Washington,
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<PAGE>
D.C. 20006, Attention: Treasurer, facsimile no.: (202) 887-2198.
Any notice to Preferred Securityholders shall also be given to such owners as
have, within two years preceding the giving of such notice, filed their names
and addresses with the Property Trustee for that purpose. Such notice, demand
or other communication to or upon a Securityholder shall be deemed to have
been sufficiently given or made, for all purposes, upon hand delivery, mailing
or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given
in writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee to Wilmington Trust
Company, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Department; (b) with respect to the Delaware Trustee, to
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware
19890, Attention: Corporate Trust Department; and (c) with respect to the
Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention: Administrative Trustees of MCI Capital IV." Such
notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Trust or the Property Trustee.
SECTION 1009. Agreement Not to Petition.
-------------------------
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 1009, the
Property Trustee agrees, for the benefit of Securityholders, that at the
expense of the Depositor, it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor
against the Trust or the commencement of such action and raise the defense
that the Depositor has agreed in writing not to take such action and should be
stopped and precluded therefrom and such other defenses, if any, as counsel
for the Trustee or the Trust may assert. The provisions of this Section 1009
shall survive the termination of this Trust Agreement.
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<PAGE>
SECTION 1010. Trust Indenture Act; Conflict with Trust Indenture Act.
------------------------------------------------------
(a) This Trust Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Trust Agreement
and shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this
Trust Agreement by any of the provisions of the Trust Indenture Act, such
required provision shall control. If any provision of this Trust Agreement
modifies or excludes any provision of the Trust Indenture Act which may be
so modified or excluded, the latter provision shall be deemed to apply to
this Trust Agreement as so modified or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
-----------------------------------------------------
INDENTURE.
---------
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT
ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE
AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
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MCI COMMUNICATIONS CORPORATION
By: _________________________
Name:
Title:
WILMINGTON TRUST COMPANY
as Property Trustee
and Delaware Trustee
By: _______________________
Name:
Title:
By: _________________________
as Administrative Trustee
By: _________________________
as Administrative Trustee
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<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
MCI CAPITAL IV
THIS Certificate of Trust of MCI Capital IV (the "Trust"), dated as
of April 17, 1996, is being duly executed and filed by Wilmington Trust
Company, a Delaware banking corporation, as trustee, to form a business trust
under the Delaware Business Trust Act (12 Del. C. (S) 3801 et seq.).
1. Name. The name of the business trust formed hereby is MCI
----
Capital IV.
2. Delaware Trustee. The name and business address of the trustee
----------------
of the Trust in the State of Delaware are Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective
--------------
upon filing with the Secretary of State.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
as trustee
By_________________________
Name: Donald G. MacKelcan
Title: Assistant Vice President
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<PAGE>
EXHIBIT B
_________ ___, 1996
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099.
Attention:________________________
General Counsel's Office
Re: MCI Capital IV ____% Cumulative Quarterly Income Preferred Securities,
----------------------------------------------------------------------
Series A
--------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the MCI
Capital IV ___% Cumulative Quarterly Income Preferred Securities, Series A (the
"Preferred Securities"), of MCI Capital IV, a Delaware business trust (the
"Issuer"), formed pursuant to a Trust Agreement between MCI Communications
Corporation ("MCI") and Wilmington Trust Company, as Trustee. The payment of
distributions on the Preferred Securities and payments due upon liquidation of
Issuer or redemption of the Preferred Securities, to the extent the Issuer has
funds available for the payment thereof, are guaranteed by MCI to the extent set
forth in a Guarantee Agreement dated ________ __, 1996 by MCI with respect to
the Preferred Securities. MCI and the Issuer propose to sell the Preferred
Securities to certain Underwriters (the "Underwriters") pursuant to an
Underwriting Agreement dated _________ __, 1996 by and among the Underwriters,
the Issuer and MCI, and the Underwriters wish to take delivery of the Preferred
Securities through DTC. Wilmington Trust Company is acting as transfer agent and
registrar with respect to the Preferred Securities (the "Transfer Agent and
Registrar").
To induce DTC to accept the Preferred Securities as eligible for deposit at
DTC, and to act in accordance with DTC's rules with respect to the Preferred
Securities, the Issuer, the Transfer Agent and Registrar and DTC agree among
each other as follows:
1. Prior to the closing of the sale of the Preferred Securities to the
Underwriters, which is expected to occur on or about ________ __, 1996, there
shall be deposited with DTC one or more global certificates (individually and
collectively, the "Global Certificate")
1
<PAGE>
registered in the name of DTC's Preferred Securities nominee, Cede & Co.,
representing an aggregate of __________ Preferred Securities and bearing the
following legend:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for the
voting by holders of the Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event at least 5
business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Preferred Securities is required; and (c) the date any required notice is to be
mailed by or on behalf of the Issuer to holders of Preferred Securities or
published by or on behalf of the Issuer (whether by mail or publication, the
"Publication Date"). Such notice shall be sent to DTC by a secure means
(e.g., legible telecopy, registered or certified mail, overnight delivery) in a
2
<PAGE>
timely manner designed to assure that such notice is in DTC's possession no
later than the close of business on the business day before the Publication
Date. The Issuer or the Transfer Agent and Registrar will forward such notice
either in a separate secure transmission for each CUSIP number or in a secure
transmission of multiple CUSIP numbers (if applicable) that includes a manifest
or list of each CUSIP number submitted in that transmission. (The party sending
such notice shall have a method to verify subsequently the use of such means and
the timeliness Of such notice.) The Publication Date shall be not less than 30
calendar days nor more than 60 calendar days prior to the payment of any such
distribution or any such offering or issuance of rights with respect to the
Preferred Securities. After establishing the amount of payment to be made on the
Preferred Securities, the Issuer or the Transfer Agent and Registrar will notify
DTC's Dividend Department of such payment 5 business days prior to payment date.
Notices to DTC's Dividend Department by telecopy shall be sent to (212) 709-
1723. Such notices by mail or by any other means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's receipt
of such telecopy by telephoning the Dividend Department at (212) 709-1270.
5. In the event of a redemption by the Issuer of the Preferred
Securities, notice specifying the terms of the redemption and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC not less than 30 calendar days prior to such event by a secure
means in the manner set forth in paragraph 4. Such redemption notice shall be
sent to DTC's Call Notification Department at (516) 227-4164 or (516) 227-4190,
and receipt of such notice shall be confirmed by telephoning (516) 227-4070.
Notice by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Preferred Securities,
notice specifying the terms of the
3
<PAGE>
tender and the Publication Date of such notice shall be sent by the Issuer or
the Transfer Agent and Registrar to DTC by a secure means and in a timely manner
as described in paragraph 4. Notices to DTC pursuant to this paragraph and
notices of other corporate actions (including mandatory tenders, exchanges and
capital changes), shall be sent, unless notification to another department is
expressly provided for herein, by telecopy to DTC's Reorganization Department at
(212) 709-1093 or (212) 709-1094 and receipt of such notice shall be confirmed
by telephoning (212) 709-6884, or by mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Preferred Securities and the accompanying designation
of the Preferred Securities, which, as of the date of this letter, is "MCI
Capital IV ___% Cumulative Quarterly Income Preferred Securities, Series A".
8. Distribution payments or other cash payments with respect to the
Preferred Securities evidenced by the Global Certificate shall be received by
Cede & Co., as nominee of DTC, or its registered assigns in next day funds on
each payment date (or in accordance with existing arrangements between the
Issuer or the Transfer Agent and Registrar and DTC). Such payments shall be
made payable to the order of Cede & Co., and shall be addressed as follows:
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
9. DTC may by prior written notice direct the Issuer and the Transfer
Agent and Registrar to use any other telecopy number or address of DTC as the
number or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
- -
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Preferred Securities outstanding evidenced by the Global
Certificate, DTC, in its discretion:
4
<PAGE>
(a) may request the Issuer or the Transfer Agent and Registrar to issue and
countersign a new Global Certificate; or (b) may make an appropriate notation on
the Global Certificate indicating the date and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Preferred Securities at any time by giving at least 90 days'
prior written notice to the Issuer and the Transfer Agent and Registrar (at
which time DTC will confirm with the Issuer or the Transfer Agent and Registrar
the aggregate number of Preferred Securities deposited with it) and discharging
its responsibilities with respect thereto under applicable law. Under such
circumstances, the Issuer may determine to make alternative arrangements for
book-entry settlement for the Preferred Securities, make available one or more
separate global certificates evidencing Preferred Securities to any Participant
having Preferred Securities credited to its DTC account, or issue definitive
Preferred Securities to the beneficial holders thereof, and in any such case,
DTC agrees to cooperate fully with the Issuer and the Transfer Agent and
Registrar and to return the Global Certificate, duly endorsed for transfer as
directed by the Issuer or the Transfer Agent and Registrar, together with any
other documents of transfer reasonably requested by the Issuer or the Transfer
Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of
Preferred Securities shall be able to obtain definitive Preferred Securities,
the Issuer or the Transfer Agent and Registrar shall notify DTC of the
availability of certificates. In such event, the Issuer or the Transfer Agent
and Registrar shall issue, transfer and exchange certificates in appropriate
amounts, as required by DTC and others, and DTC agrees to cooperate fully with
the Issuer and the Transfer Agent and Registrar and to return the Global
Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
5
<PAGE>
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of MCI Capital IV.
Very truly yours,
MCI CAPITAL IV
(As Issuer)
By:______________________
Administrative Trustee
By___________________________
Name:
Title:
_____________________________
(As Transfer Agent and Registrar)
By___________________________
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By__________________________
Authorized Officer
6
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
C-1
Certificate Evidencing Common Securities
of
MCI Capital IV
___% Common Securities
(liquidation amount $25 per Common Security)
MCI Capital IV, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that MCI Communications
Corporation (the "Holder") is the registered owner of ____________________
____________________ (________) common securities of the Trust representing
undivided beneficial interests in the assets of the Trust and designated the
____% Common Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). In accordance with Section 510 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof shall be void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of _________ __, 1996, as the same may be amended from time to time (the
"Trust Agreement") including the designation of the terms of the Common
Securities as set forth therein. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
1
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ______ day of ________, ____.
MCI CAPITAL IV
By___________________________
Name:
Administrative Trustee
2
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of ____________ __ 1996, between MCI Communications
Corporation, a Delaware corporation ("MCI"), and MCI Capital IV, a Delaware
business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Debentures from MCI and to issue and sell ____%
Cumulative Quarterly Income Preferred Securities (the "Preferred Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Trust dated as of
________ __, 1996 as the same may be amended from time to time (the "Trust
Agreement");
WHEREAS, MCI will directly or indirectly own all of the Common Securities
of Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase MCI hereby agrees shall benefit MCI and
which purchase MCI acknowledges will be made in reliance upon the execution and
delivery of this Agreement, MCI and Trust hereby agree as follows:
ARTICLE I
Section 1.1. Guarantee by MCI.
----------------
Subject to the terms and conditions hereof, MCI hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This Agreement is
1
<PAGE>
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
Section 1.2. Term of Agreement.
-----------------
This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Preferred Securities (whether upon redemption,
liquidation, exchange or otherwise) and (b) the date on which there are no
Beneficiaries remaining; provided, however, that this Agreement shall continue
-------- -------
to be effective or shall be reinstated, as the case may be, if at any time any
holder of Preferred Securities or any Beneficiary must restore payment of any
sums paid under the Preferred Securities, under any Obligation, under the
Guarantee Agreement dated the date hereof by MCI and Wilmington Trust Company as
guarantee trustee or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.3. Waiver of Notice.
----------------
MCI hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and MCI hereby waives presentment,
demand for payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.4. No Impairment.
-------------
The obligations, covenants, agreements and duties of MCI under this
Agreement shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the
Obligations or any action on the part of the Trust granting indulgence or
extension of any kind; or
2
<PAGE>
(c) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, MCI with respect to the happening of any of the foregoing.
Section 1.5. Enforcement.
-----------
A Beneficiary may enforce this Agreement directly against MCI and MCI
waives any right or remedy to require that any action be brought against the
Trust or any other person or entity before proceeding against MCI.
Section 1.6. Subrogation.
-----------
MCI shall be subrogated to all (if any) rights of the Trust in respect of
any amounts paid to the Beneficiaries by MCI under this Agreement; provided,
--------
however, that MCI shall not (except to the extent required by mandatory
- -------
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Agreement, if, at the
time of any such payment, any amounts are due and unpaid under this Agreement.
ARTICLE II
Section 2.1. Binding Effect.
--------------
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of MCI and shall
inure to the benefit of the Beneficiaries.
Section 2.2. Amendment.
---------
So long as there remains any Beneficiary or any Preferred Securities of any
series are outstanding, this Agreement shall not be modified or amended in any
manner adverse to such Beneficiary or to the holders of the Preferred
Securities.
Section 2.3. Notices.
-------
3
<PAGE>
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or by registered
or certified mail, addressed as follows (and if so given, shall be deemed given
when mailed or upon receipt of an answer-back, if sent by telex):
MCI Capital IV
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware
Facsimile No.: (302) 651-8882
Attention: Corporate Trust Department
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2198
Attention: Treasurer
Section 2.4 This agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
THIS AGREEMENT is executed as of the day and year first above written.
MCI COMMUNICATIONS CORPORATION
By:_________________________
Name:
Title:
MCI CAPITAL IV
By:_________________________
Name:
Administrative Trustee
4
<PAGE>
EXHIBIT E
IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depository or its nominee only in the
limited circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to MCI Capital IV or
its agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
P-
CUSIP NO.
Certificate Evidencing Preferred Securities
of
MCI Capital IV
___% Cumulative Quarterly Income Preferred Securities,
Series A
(liquidation amount $25 per Preferred Security)
MCI Capital IV, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that ____________________ (the
"Holder") is the registered owner of ______ (______) preferred securities of the
Trust representing an undivided beneficial interest in the assets of the Trust
and designated the MCI Capital I ____% Cumulative Quarterly Income Preferred
Securities, Series A (liquidation amount $25 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are
1
<PAGE>
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 504 of the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of ________ __, 1996, as the same
may be amended from time to time (the "Trust Agreement") including the
designation of the terms of Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered into by
MCI Communications Corporation, a Delaware corporation, and Wilmington Trust
Company, as guarantee trustee, dated as of ________ __, 1996 (the "Guarantee"),
to the extent provided therein. The Trust will furnish a copy of the Trust
Agreement and the Guarantee to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
2
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ___________ day of __________, ____.
MCI CAPITAL IV
By:______________________________
Name:
Administrative Trustee
3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:_____________
Signature:___________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature(s) Guaranteed:
- -------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
4
<PAGE>
Exhibit 4.12
S&C Draft of May 14, 1996
- -------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Between
MCI Communications Corporation
(as Guarantor)
and
Wilmington Trust Company
(as Trustee)
dated as of
_______ __, 1996
<PAGE>
CROSS-REFERENCE TABLE/*/
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- --------------------- ----------------
<S> <C>
310(a) .................. 401(a)
310(b) .................. 401(c), 208
310(c) .................. Inapplicable
311(a) .................. 202(b)
311(b) .................. 202(b)
311(c) .................. Inapplicable
312(a) .................. 202(a)
312(b) .................. 202(b)
313 .................. 203
314(a) .................. 204
314(b) .................. Inapplicable
314(c) .................. 205
314(d) .................. Inapplicable
314(e) .................. 101, 205, 302
314(f) .................. 201, 302
315(a) .................. 301(d)
315(b) .................. 207
315(c) .................. 301
315(d) .................. 301(d)
316(a) .................. 101, 206, 504
316(b) .................. 503
316(c) .................. 802
317(a) .................. Inapplicable
317(b) .................. Inapplicable
318(a) .................. 201(b)
318(b) .................. 201
318(c) .................. 201(a)
</TABLE>
- ------------------
/*/This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 101. Definitions......................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 201. Trust Indenture Act; Application.................... 6
SECTION 202. List of Holders..................................... 6
SECTION 203. Reports by the Guarantee Trustee.................... 6
SECTION 204. Periodic Reports to Guarantee Trustee............... 7
SECTION 205. Evidence of Compliance with Conditions
Precedent........................................... 7
SECTION 206. Events of Default; Waiver........................... 7
SECTION 207. Event of Default; Notice............................ 7
SECTION 208. Conflicting Interests............................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 301. Powers and Duties of the Guarantee
Trustee............................................. 8
SECTION 302. Certain Rights of Guarantee Trustee................. 10
SECTION 303. Indemnity........................................... 13
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 401. Guarantee Trustee; Eligibility......................... 13
SECTION 402. Appointment, Removal and Resignation
of the Guarantee Trustee............................... 14
ARTICLE V
GUARANTEE
SECTION 501. Guarantee.............................................. 15
SECTION 502. Waiver of Notice and Demand............................ 15
SECTION 503. Obligations Not Affected............................... 15
SECTION 504. Rights of Holders...................................... 16
SECTION 505. Guarantee of Payment................................... 17
SECTION 506. Subrogation............................................ 17
SECTION 507. Independent Obligations................................ 17
-i-
<PAGE>
ARTICLE VI
COVENANTS AND SUBORDINATION
Page
----
SECTION 601. Subordination............................... 18
SECTION 602. Pari Passu Guarantees....................... 18
ARTICLE VII
TERMINATION
SECTION 701. Termination................................. 18
ARTICLE VIII
MISCELLANEOUS
SECTION 801. Successors and Assigns 18
SECTION 802. Amendments................................. 19
SECTION 803. Notices.................................... 19
SECTION 804. Benefit.................................... 20
SECTION 805. Interpretation............................. 20
SECTION 806. GOVERNING LAW.............................. 21
-ii-
<PAGE>
GUARANTEE AGREEMENT
-------------------
This GUARANTEE AGREEMENT, dated as of _______ __, 1996, is executed and
delivered by MCI Communications Corporation, a Delaware corporation (the
"Guarantor"), and Wilmington Trust Company, a Delaware banking corporation
organized under the laws of the State of Delaware, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of MCI Capital II, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of ________ __, 1996 among the Issuer Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing __________ of its ____% Cumulative Quarterly Income Preferred
Securities, Series A (liquidation preference $25 per preferred security) (the
"Preferred Securities") representing preferred undivided beneficial interests in
the assets of the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 101. Definitions.
-----------
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date
hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however, that an Affiliate of the
-------- -------
Guarantor shall not be deemed to include the Issuer. For the purposes of this
definition, "control" when used with respect to any specified Person means the
-------
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
----------- ----------
correlative to the foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has
-2-
<PAGE>
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
-------- -------
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Preferred Securities,
to the extent the Issuer shall have funds on hand available therefor at such
time, (ii) the redemption price, including all accrued and unpaid Distributions
to the date of redemption (the "Redemption Price"), with respect to the
Preferred Securities called for redemption by the Issuer to the extent the
Issuer shall have funds on hand available therefor at such time, and (iii) upon
a voluntary or involuntary termination, winding-up or liquidation of the Issuer,
unless Debentures are distributed to the Holders, the lesser of (a) the
aggregate of the liquidation preference of $25 per Preferred Security plus
accrued and unpaid Distributions on the Preferred Securities to the date of
payment to the extent the Issuer shall have funds on hand available to make such
payment at such time and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Preferred Securities; provided, however, that in determining
-------- -------
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor
or the Guarantee Trustee.
-3-
<PAGE>
"Indenture" means the Junior Subordinated Indenture dated as of ______ __,
1996, as supplemented and amended between the Guarantor and Wilmington Trust
Company, as trustee.
"List of Holders" has the meaning specified in Section 202(a).
"Majority in liquidation preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the liquidation preference of all then
outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman and Chief Executive Officer, President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Controller, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
-4-
<PAGE>
"Responsible Officer" means, with respect to the Guarantee Trustee,
any Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer of the Corporate
Trust Department of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Guarantor whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Guarantee or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Guarantee or to other Debt which is pari
passu with, or subordinated to, the Guarantee; provided, however, that Senior
-------- -------
Debt shall not be deemed to include (a) any Debt of the Guarantor which when
incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Reform Act of 1978, was without recourse to the Guarantor, (b) any
Debt of the Guarantor to any of its Subsidiaries, (c) Debt to any employee of
the Guarantor, (d) any liability for taxes, (e) Debt or other monetary
obligations to trade creditors created or assumed by the Guarantor or any of its
Subsidiaries in the ordinary course of business in connection with the obtaining
of goods, materials or services and (f) Debt issued under the Indenture and (g)
the Guarantee.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 401.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
-5-
<PAGE>
ARTICLE II
TRUST INDENTURE ACT
SECTION 201. Trust Indenture Act; Application.
--------------------------------
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 202. List of Holders.
---------------
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, on or before January 15 and July 15 of
each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as
of a date not more than 15 days prior to the delivery thereof, and (b) at
such other times as the Guarantee Trustee may request in writing, within 30
days after the receipt by the Guarantor of any such request, a List of
Holders as of a date not more than 15 days prior to the time such list is
furnished, in each case to the extent such information is in the possession
or control of the Guarantor and is not identical to a previously supplied
list of Holders or has not otherwise been received by the Guarantee Trustee
in its capacity as such. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture
Act.
SECTION 203. Reports by the Guarantee Trustee.
--------------------------------
Not later than July 15 of each year, commencing July 15, 1997, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The
-6-
<PAGE>
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 204. Periodic Reports to Guarantee Trustee.
-------------------------------------
The Guarantor shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information,
if any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 205. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 206. Events of Default; Waiver.
-------------------------
The Holders of a Majority in liquidation preference of the Preferred
Securities may, on behalf of the Holders, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent therefrom.
SECTION 207. Event of Default; Notice.
------------------------
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to
the Holders, notices of all Events of Default known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice, provided, that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the Board of
-7-
<PAGE>
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration of
the Trust Agreement shall have obtained written notice, of such Event of
Default.
SECTION 208. Conflicting Interests.
---------------------
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 301. Powers and Duties of the Guarantee Trustee.
------------------------------------------
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising
his or her rights pursuant to Section 504(iv) or to a Successor Guarantee
Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of
its appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall
-8-
<PAGE>
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
206), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of any
such certificates or opinions that by any provision hereof or of
the Trust Indenture Act are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform
to the requirements of this Guarantee Agreement;
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<PAGE>
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation preference of the Preferred Securities
relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any
trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 302. Certain Rights of Guarantee Trustee.
-----------------------------------
(a) Subject to the provisions of Section 301:
(i) The Guarantee Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document reasonably believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be
-10-
<PAGE>
sufficiently evidenced by an Officers' Certificate unless otherwise
prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate which, upon
receipt of such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the written advice or opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable person in the
position of the Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including
such reasonable advances as may be requested by the Guarantee Trustee;
provided that, nothing contained in this Section 302(a)(v) shall be
taken to relieve the Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Guarantee Agreement.
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<PAGE>
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (C) shall be protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with
such power and authority.
SECTION 303. Indemnity.
---------
The Guarantor agrees to indemnify the Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad
-12-
<PAGE>
faith on the part of the Guarantee Trustee, arising out of or in connection with
the acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 401. Guarantee Trustee; Eligibility.
------------------------------
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(c) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 401(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
402(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
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<PAGE>
SECTION 402. Appointment, Removal and Resignation of the Guarantee Trustee.
-------------------------------------------------------------
(a) Subject to Section 402(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until
a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Guarantee Trustee and delivered to the
Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 402 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court
of competent jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 501. Guarantee.
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a
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<PAGE>
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 502. Waiver of Notice and Demand.
---------------------------
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 503. Obligations Not Affected.
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership,
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<PAGE>
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or
other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 503 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 504. Rights of Holders.
-----------------
The Guarantor expressly acknowledges that: (i) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation preference of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
or any other Person.
SECTION 505. Guarantee of Payment.
--------------------
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
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<PAGE>
paid by the Issuer) or upon distribution of Debentures to Holders as provided in
the Trust Agreement.
SECTION 506. Subrogation.
-----------
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 501; provided, however, that the
-------- -------
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 507. Independent Obligations.
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 503 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 601. Subordination.
-------------
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
Senior Debt of the Guarantor.
SECTION 602. Pari Passu Guarantees.
---------------------
This Guarantee Agreement shall rank pari passu with any similar
Guarantee Agreements issued by the Guaran-
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<PAGE>
tor on behalf of the holders of Preferred Securities issued by MCI Capital I,
MCI Capital III and MCI Capital IV.
ARTICLE VII
TERMINATION
SECTION 701. Termination.
-----------
This Guarantee Agreement shall terminate
and be of no further force and effect upon (i) full payment of the Redemption
Price of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment of
the amounts payable in accordance with the Trust Agreement upon liquidation of
the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 801. Successors and Assigns.
----------------------
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article Eight of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder.
SECTION 802. Amendments.
----------
Except with respect to any changes which do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in liquidation
preference of all the outstanding Preferred Securities. The provisions of
Article VI
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<PAGE>
of the Trust Agreement concerning meetings of the Holders shall apply to the
giving of such approval.
SECTION 803. Notices.
-------
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address, facsimile number or to the attention of such other
Person as the Guarantor may give notice of to the Holders:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2198
Attention: Treasurer
with a copy to:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2047
Attention: General Counsel
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such
other address, facsimile number or to the attention of such other Person as
the Guarantee Trustee on behalf of the Issuer may give notice to the
Holders:
MCI Capital II
c/o MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No: (202) 887-2198
Attention: Treasurer
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<PAGE>
with a copy to:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Facsimile No.: (302) 651-8882
Attention: Corporate Trust Department
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 804. Benefit.
-------
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
SECTION 805. Interpretation.
--------------
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 101;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
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<PAGE>
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 806. GOVERNING LAW.
-------------
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
MCI COMMUNICATIONS CORPORATION
By: ________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, as
Guarantee Trustee
By: _______________________________________
Name:
Title:
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<PAGE>
Exhibit 4.12
S&C Draft of May 14, 1996
- -------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Between
MCI Communications Corporation
(as Guarantor)
and
Wilmington Trust Company
(as Trustee)
dated as of
_______ __, 1996
<PAGE>
CROSS-REFERENCE TABLE/*/
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- --------------------- ----------------
<S> <C>
310(a) .................. 401(a)
310(b) .................. 401(c), 208
310(c) .................. Inapplicable
311(a) .................. 202(b)
311(b) .................. 202(b)
311(c) .................. Inapplicable
312(a) .................. 202(a)
312(b) .................. 202(b)
313 .................. 203
314(a) .................. 204
314(b) .................. Inapplicable
314(c) .................. 205
314(d) .................. Inapplicable
314(e) .................. 101, 205, 302
314(f) .................. 201, 302
315(a) .................. 301(d)
315(b) .................. 207
315(c) .................. 301
315(d) .................. 301(d)
316(a) .................. 101, 206, 504
316(b) .................. 503
316(c) .................. 802
317(a) .................. Inapplicable
317(b) .................. Inapplicable
318(a) .................. 201(b)
318(b) .................. 201
318(c) .................. 201(a)
</TABLE>
- ------------------
/*/This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 101. Definitions......................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 201. Trust Indenture Act; Application.................... 6
SECTION 202. List of Holders..................................... 6
SECTION 203. Reports by the Guarantee Trustee.................... 6
SECTION 204. Periodic Reports to Guarantee Trustee............... 7
SECTION 205. Evidence of Compliance with Conditions
Precedent........................................... 7
SECTION 206. Events of Default; Waiver........................... 7
SECTION 207. Event of Default; Notice............................ 7
SECTION 208. Conflicting Interests............................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 301. Powers and Duties of the Guarantee
Trustee............................................. 8
SECTION 302. Certain Rights of Guarantee Trustee................. 10
SECTION 303. Indemnity........................................... 13
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 401. Guarantee Trustee; Eligibility......................... 13
SECTION 402. Appointment, Removal and Resignation
of the Guarantee Trustee............................... 14
ARTICLE V
GUARANTEE
SECTION 501. Guarantee.............................................. 15
SECTION 502. Waiver of Notice and Demand............................ 15
SECTION 503. Obligations Not Affected............................... 15
SECTION 504. Rights of Holders...................................... 16
SECTION 505. Guarantee of Payment................................... 17
SECTION 506. Subrogation............................................ 17
SECTION 507. Independent Obligations................................ 17
-i-
<PAGE>
ARTICLE VI
COVENANTS AND SUBORDINATION
Page
----
SECTION 601. Subordination............................... 18
SECTION 602. Pari Passu Guarantees....................... 18
ARTICLE VII
TERMINATION
SECTION 701. Termination................................. 18
ARTICLE VIII
MISCELLANEOUS
SECTION 801. Successors and Assigns 18
SECTION 802. Amendments................................. 19
SECTION 803. Notices.................................... 19
SECTION 804. Benefit.................................... 20
SECTION 805. Interpretation............................. 20
SECTION 806. GOVERNING LAW.............................. 21
-ii-
<PAGE>
GUARANTEE AGREEMENT
-------------------
This GUARANTEE AGREEMENT, dated as of _______ __, 1996, is executed and
delivered by MCI Communications Corporation, a Delaware corporation (the
"Guarantor"), and Wilmington Trust Company, a Delaware banking corporation
organized under the laws of the State of Delaware, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of MCI Capital III, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of ________ __, 1996 among the Issuer Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing __________ of its ____% Cumulative Quarterly Income Preferred
Securities, Series A (liquidation preference $25 per preferred security) (the
"Preferred Securities") representing preferred undivided beneficial interests in
the assets of the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 101. Definitions.
-----------
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date
hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however, that an Affiliate of the
-------- -------
Guarantor shall not be deemed to include the Issuer. For the purposes of this
definition, "control" when used with respect to any specified Person means the
-------
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
----------- ----------
correlative to the foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has
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<PAGE>
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
-------- -------
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Preferred Securities,
to the extent the Issuer shall have funds on hand available therefor at such
time, (ii) the redemption price, including all accrued and unpaid Distributions
to the date of redemption (the "Redemption Price"), with respect to the
Preferred Securities called for redemption by the Issuer to the extent the
Issuer shall have funds on hand available therefor at such time, and (iii) upon
a voluntary or involuntary termination, winding-up or liquidation of the Issuer,
unless Debentures are distributed to the Holders, the lesser of (a) the
aggregate of the liquidation preference of $25 per Preferred Security plus
accrued and unpaid Distributions on the Preferred Securities to the date of
payment to the extent the Issuer shall have funds on hand available to make such
payment at such time and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Preferred Securities; provided, however, that in determining
-------- -------
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor
or the Guarantee Trustee.
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"Indenture" means the Junior Subordinated Indenture dated as of ______ __,
1996, as supplemented and amended between the Guarantor and Wilmington Trust
Company, as trustee.
"List of Holders" has the meaning specified in Section 202(a).
"Majority in liquidation preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the liquidation preference of all then
outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman and Chief Executive Officer, President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Controller, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
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<PAGE>
"Responsible Officer" means, with respect to the Guarantee Trustee,
any Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer of the Corporate
Trust Department of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Guarantor whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Guarantee or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Guarantee or to other Debt which is pari
passu with, or subordinated to, the Guarantee; provided, however, that Senior
-------- -------
Debt shall not be deemed to include (a) any Debt of the Guarantor which when
incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Reform Act of 1978, was without recourse to the Guarantor, (b) any
Debt of the Guarantor to any of its Subsidiaries, (c) Debt to any employee of
the Guarantor, (d) any liability for taxes, (e) Debt or other monetary
obligations to trade creditors created or assumed by the Guarantor or any of its
Subsidiaries in the ordinary course of business in connection with the obtaining
of goods, materials or services and (f) Debt issued under the Indenture and (g)
the Guarantee.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 401.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 201. Trust Indenture Act; Application.
--------------------------------
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 202. List of Holders.
---------------
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, on or before January 15 and July 15 of
each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as
of a date not more than 15 days prior to the delivery thereof, and (b) at
such other times as the Guarantee Trustee may request in writing, within 30
days after the receipt by the Guarantor of any such request, a List of
Holders as of a date not more than 15 days prior to the time such list is
furnished, in each case to the extent such information is in the possession
or control of the Guarantor and is not identical to a previously supplied
list of Holders or has not otherwise been received by the Guarantee Trustee
in its capacity as such. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture
Act.
SECTION 203. Reports by the Guarantee Trustee.
--------------------------------
Not later than July 15 of each year, commencing July 15, 1997, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The
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Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 204. Periodic Reports to Guarantee Trustee.
-------------------------------------
The Guarantor shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information,
if any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 205. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 206. Events of Default; Waiver.
-------------------------
The Holders of a Majority in liquidation preference of the Preferred
Securities may, on behalf of the Holders, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent therefrom.
SECTION 207. Event of Default; Notice.
------------------------
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to
the Holders, notices of all Events of Default known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice, provided, that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the Board of
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<PAGE>
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration of
the Trust Agreement shall have obtained written notice, of such Event of
Default.
SECTION 208. Conflicting Interests.
---------------------
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 301. Powers and Duties of the Guarantee Trustee.
------------------------------------------
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising
his or her rights pursuant to Section 504(iv) or to a Successor Guarantee
Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of
its appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall
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undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
206), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of any
such certificates or opinions that by any provision hereof or of
the Trust Indenture Act are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform
to the requirements of this Guarantee Agreement;
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(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation preference of the Preferred Securities
relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any
trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 302. Certain Rights of Guarantee Trustee.
-----------------------------------
(a) Subject to the provisions of Section 301:
(i) The Guarantee Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document reasonably believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be
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<PAGE>
sufficiently evidenced by an Officers' Certificate unless otherwise
prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate which, upon
receipt of such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the written advice or opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable person in the
position of the Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including
such reasonable advances as may be requested by the Guarantee Trustee;
provided that, nothing contained in this Section 302(a)(v) shall be
taken to relieve the Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Guarantee Agreement.
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<PAGE>
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (C) shall be protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with
such power and authority.
SECTION 303. Indemnity.
---------
The Guarantor agrees to indemnify the Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad
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faith on the part of the Guarantee Trustee, arising out of or in connection with
the acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 401. Guarantee Trustee; Eligibility.
------------------------------
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(c) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 401(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
402(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
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SECTION 402. Appointment, Removal and Resignation of the Guarantee Trustee.
-------------------------------------------------------------
(a) Subject to Section 402(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until
a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Guarantee Trustee and delivered to the
Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 402 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court
of competent jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 501. Guarantee.
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a
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Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 502. Waiver of Notice and Demand.
---------------------------
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 503. Obligations Not Affected.
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership,
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insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or
other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 503 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 504. Rights of Holders.
-----------------
The Guarantor expressly acknowledges that: (i) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation preference of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
or any other Person.
SECTION 505. Guarantee of Payment.
--------------------
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
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paid by the Issuer) or upon distribution of Debentures to Holders as provided in
the Trust Agreement.
SECTION 506. Subrogation.
-----------
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 501; provided, however, that the
-------- -------
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 507. Independent Obligations.
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 503 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 601. Subordination.
-------------
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
Senior Debt of the Guarantor.
SECTION 602. Pari Passu Guarantees.
---------------------
This Guarantee Agreement shall rank pari passu with any similar
Guarantee Agreements issued by the Guaran-
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<PAGE>
tor on behalf of the holders of Preferred Securities issued by MCI Capital I,
MCI Capital II and MCI Capital IV.
ARTICLE VII
TERMINATION
SECTION 701. Termination.
-----------
This Guarantee Agreement shall terminate
and be of no further force and effect upon (i) full payment of the Redemption
Price of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment of
the amounts payable in accordance with the Trust Agreement upon liquidation of
the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 801. Successors and Assigns.
----------------------
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article Eight of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder.
SECTION 802. Amendments.
----------
Except with respect to any changes which do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in liquidation
preference of all the outstanding Preferred Securities. The provisions of
Article VI
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<PAGE>
of the Trust Agreement concerning meetings of the Holders shall apply to the
giving of such approval.
SECTION 803. Notices.
-------
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address, facsimile number or to the attention of such other
Person as the Guarantor may give notice of to the Holders:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2198
Attention: Treasurer
with a copy to:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2047
Attention: General Counsel
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such
other address, facsimile number or to the attention of such other Person as
the Guarantee Trustee on behalf of the Issuer may give notice to the
Holders:
MCI Capital III
c/o MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No: (202) 887-2198
Attention: Treasurer
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<PAGE>
with a copy to:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Facsimile No.: (302) 651-8882
Attention: Corporate Trust Department
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 804. Benefit.
-------
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
SECTION 805. Interpretation.
--------------
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 101;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
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<PAGE>
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 806. GOVERNING LAW.
-------------
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
MCI COMMUNICATIONS CORPORATION
By: ________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, as
Guarantee Trustee
By: _______________________________________
Name:
Title:
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<PAGE>
Exhibit 4.12
S&C Draft of May 14, 1996
- -------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Between
MCI Communications Corporation
(as Guarantor)
and
Wilmington Trust Company
(as Trustee)
dated as of
_______ __, 1996
<PAGE>
CROSS-REFERENCE TABLE/*/
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- --------------------- ----------------
<S> <C>
310(a) .................. 401(a)
310(b) .................. 401(c), 208
310(c) .................. Inapplicable
311(a) .................. 202(b)
311(b) .................. 202(b)
311(c) .................. Inapplicable
312(a) .................. 202(a)
312(b) .................. 202(b)
313 .................. 203
314(a) .................. 204
314(b) .................. Inapplicable
314(c) .................. 205
314(d) .................. Inapplicable
314(e) .................. 101, 205, 302
314(f) .................. 201, 302
315(a) .................. 301(d)
315(b) .................. 207
315(c) .................. 301
315(d) .................. 301(d)
316(a) .................. 101, 206, 504
316(b) .................. 503
316(c) .................. 802
317(a) .................. Inapplicable
317(b) .................. Inapplicable
318(a) .................. 201(b)
318(b) .................. 201
318(c) .................. 201(a)
</TABLE>
- ------------------
/*/This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 101. Definitions......................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 201. Trust Indenture Act; Application.................... 6
SECTION 202. List of Holders..................................... 6
SECTION 203. Reports by the Guarantee Trustee.................... 6
SECTION 204. Periodic Reports to Guarantee Trustee............... 7
SECTION 205. Evidence of Compliance with Conditions
Precedent........................................... 7
SECTION 206. Events of Default; Waiver........................... 7
SECTION 207. Event of Default; Notice............................ 7
SECTION 208. Conflicting Interests............................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 301. Powers and Duties of the Guarantee
Trustee............................................. 8
SECTION 302. Certain Rights of Guarantee Trustee................. 10
SECTION 303. Indemnity........................................... 13
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 401. Guarantee Trustee; Eligibility......................... 13
SECTION 402. Appointment, Removal and Resignation
of the Guarantee Trustee............................... 14
ARTICLE V
GUARANTEE
SECTION 501. Guarantee.............................................. 15
SECTION 502. Waiver of Notice and Demand............................ 15
SECTION 503. Obligations Not Affected............................... 15
SECTION 504. Rights of Holders...................................... 16
SECTION 505. Guarantee of Payment................................... 17
SECTION 506. Subrogation............................................ 17
SECTION 507. Independent Obligations................................ 17
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<PAGE>
ARTICLE VI
COVENANTS AND SUBORDINATION
Page
----
SECTION 601. Subordination............................... 18
SECTION 602. Pari Passu Guarantees....................... 18
ARTICLE VII
TERMINATION
SECTION 701. Termination................................. 18
ARTICLE VIII
MISCELLANEOUS
SECTION 801. Successors and Assigns 18
SECTION 802. Amendments................................. 19
SECTION 803. Notices.................................... 19
SECTION 804. Benefit.................................... 20
SECTION 805. Interpretation............................. 20
SECTION 806. GOVERNING LAW.............................. 21
-ii-
<PAGE>
GUARANTEE AGREEMENT
-------------------
This GUARANTEE AGREEMENT, dated as of _______ __, 1996, is executed and
delivered by MCI Communications Corporation, a Delaware corporation (the
"Guarantor"), and Wilmington Trust Company, a Delaware banking corporation
organized under the laws of the State of Delaware, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of MCI Capital IV, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of ________ __, 1996 among the Issuer Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing __________ of its ____% Cumulative Quarterly Income Preferred
Securities, Series A (liquidation preference $25 per preferred security) (the
"Preferred Securities") representing preferred undivided beneficial interests in
the assets of the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 101. Definitions.
-----------
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date
hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however, that an Affiliate of the
-------- -------
Guarantor shall not be deemed to include the Issuer. For the purposes of this
definition, "control" when used with respect to any specified Person means the
-------
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
----------- ----------
correlative to the foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has
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<PAGE>
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
-------- -------
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Preferred Securities,
to the extent the Issuer shall have funds on hand available therefor at such
time, (ii) the redemption price, including all accrued and unpaid Distributions
to the date of redemption (the "Redemption Price"), with respect to the
Preferred Securities called for redemption by the Issuer to the extent the
Issuer shall have funds on hand available therefor at such time, and (iii) upon
a voluntary or involuntary termination, winding-up or liquidation of the Issuer,
unless Debentures are distributed to the Holders, the lesser of (a) the
aggregate of the liquidation preference of $25 per Preferred Security plus
accrued and unpaid Distributions on the Preferred Securities to the date of
payment to the extent the Issuer shall have funds on hand available to make such
payment at such time and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Preferred Securities; provided, however, that in determining
-------- -------
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor
or the Guarantee Trustee.
-3-
<PAGE>
"Indenture" means the Junior Subordinated Indenture dated as of ______ __,
1996, as supplemented and amended between the Guarantor and Wilmington Trust
Company, as trustee.
"List of Holders" has the meaning specified in Section 202(a).
"Majority in liquidation preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the liquidation preference of all then
outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman and Chief Executive Officer, President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Controller, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
-4-
<PAGE>
"Responsible Officer" means, with respect to the Guarantee Trustee,
any Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer of the Corporate
Trust Department of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Guarantor whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Guarantee or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Guarantee or to other Debt which is pari
passu with, or subordinated to, the Guarantee; provided, however, that Senior
-------- -------
Debt shall not be deemed to include (a) any Debt of the Guarantor which when
incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Reform Act of 1978, was without recourse to the Guarantor, (b) any
Debt of the Guarantor to any of its Subsidiaries, (c) Debt to any employee of
the Guarantor, (d) any liability for taxes, (e) Debt or other monetary
obligations to trade creditors created or assumed by the Guarantor or any of its
Subsidiaries in the ordinary course of business in connection with the obtaining
of goods, materials or services and (f) Debt issued under the Indenture and (g)
the Guarantee.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 401.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
-5-
<PAGE>
ARTICLE II
TRUST INDENTURE ACT
SECTION 201. Trust Indenture Act; Application.
--------------------------------
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 202. List of Holders.
---------------
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, on or before January 15 and July 15 of
each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as
of a date not more than 15 days prior to the delivery thereof, and (b) at
such other times as the Guarantee Trustee may request in writing, within 30
days after the receipt by the Guarantor of any such request, a List of
Holders as of a date not more than 15 days prior to the time such list is
furnished, in each case to the extent such information is in the possession
or control of the Guarantor and is not identical to a previously supplied
list of Holders or has not otherwise been received by the Guarantee Trustee
in its capacity as such. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture
Act.
SECTION 203. Reports by the Guarantee Trustee.
--------------------------------
Not later than July 15 of each year, commencing July 15, 1997, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The
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<PAGE>
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 204. Periodic Reports to Guarantee Trustee.
-------------------------------------
The Guarantor shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information,
if any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 205. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 206. Events of Default; Waiver.
-------------------------
The Holders of a Majority in liquidation preference of the Preferred
Securities may, on behalf of the Holders, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent therefrom.
SECTION 207. Event of Default; Notice.
------------------------
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to
the Holders, notices of all Events of Default known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice, provided, that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the Board of
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<PAGE>
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration of
the Trust Agreement shall have obtained written notice, of such Event of
Default.
SECTION 208. Conflicting Interests.
---------------------
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 301. Powers and Duties of the Guarantee Trustee.
------------------------------------------
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising
his or her rights pursuant to Section 504(iv) or to a Successor Guarantee
Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of
its appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall
-8-
<PAGE>
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
206), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of any
such certificates or opinions that by any provision hereof or of
the Trust Indenture Act are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform
to the requirements of this Guarantee Agreement;
-9-
<PAGE>
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation preference of the Preferred Securities
relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any
trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 302. Certain Rights of Guarantee Trustee.
-----------------------------------
(a) Subject to the provisions of Section 301:
(i) The Guarantee Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document reasonably believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be
-10-
<PAGE>
sufficiently evidenced by an Officers' Certificate unless otherwise
prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate which, upon
receipt of such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the written advice or opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable person in the
position of the Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including
such reasonable advances as may be requested by the Guarantee Trustee;
provided that, nothing contained in this Section 302(a)(v) shall be
taken to relieve the Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Guarantee Agreement.
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(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (C) shall be protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with
such power and authority.
SECTION 303. Indemnity.
---------
The Guarantor agrees to indemnify the Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad
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faith on the part of the Guarantee Trustee, arising out of or in connection with
the acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 401. Guarantee Trustee; Eligibility.
------------------------------
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(c) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 401(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
402(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
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SECTION 402. Appointment, Removal and Resignation of the Guarantee Trustee.
-------------------------------------------------------------
(a) Subject to Section 402(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until
a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Guarantee Trustee and delivered to the
Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 402 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court
of competent jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 501. Guarantee.
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a
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Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 502. Waiver of Notice and Demand.
---------------------------
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 503. Obligations Not Affected.
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership,
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insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or
other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 503 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 504. Rights of Holders.
-----------------
The Guarantor expressly acknowledges that: (i) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation preference of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
or any other Person.
SECTION 505. Guarantee of Payment.
--------------------
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
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paid by the Issuer) or upon distribution of Debentures to Holders as provided in
the Trust Agreement.
SECTION 506. Subrogation.
-----------
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 501; provided, however, that the
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Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 507. Independent Obligations.
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 503 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 601. Subordination.
-------------
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
Senior Debt of the Guarantor.
SECTION 602. Pari Passu Guarantees.
---------------------
This Guarantee Agreement shall rank pari passu with any similar
Guarantee Agreements issued by the Guaran-
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tor on behalf of the holders of Preferred Securities issued by MCI Capital I,
MCI Capital II and MCI Capital III.
ARTICLE VII
TERMINATION
SECTION 701. Termination.
-----------
This Guarantee Agreement shall terminate
and be of no further force and effect upon (i) full payment of the Redemption
Price of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment of
the amounts payable in accordance with the Trust Agreement upon liquidation of
the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 801. Successors and Assigns.
----------------------
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article Eight of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder.
SECTION 802. Amendments.
----------
Except with respect to any changes which do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in liquidation
preference of all the outstanding Preferred Securities. The provisions of
Article VI
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of the Trust Agreement concerning meetings of the Holders shall apply to the
giving of such approval.
SECTION 803. Notices.
-------
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address, facsimile number or to the attention of such other
Person as the Guarantor may give notice of to the Holders:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2198
Attention: Treasurer
with a copy to:
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 887-2047
Attention: General Counsel
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such
other address, facsimile number or to the attention of such other Person as
the Guarantee Trustee on behalf of the Issuer may give notice to the
Holders:
MCI Capital IV
c/o MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Facsimile No: (202) 887-2198
Attention: Treasurer
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with a copy to:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Facsimile No.: (302) 651-8882
Attention: Corporate Trust Department
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 804. Benefit.
-------
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
SECTION 805. Interpretation.
--------------
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 101;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
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(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 806. GOVERNING LAW.
-------------
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
MCI COMMUNICATIONS CORPORATION
By: ________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, as
Guarantee Trustee
By: _______________________________________
Name:
Title:
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