<PAGE>
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8 TO REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MCI COMMUNICATIONS CORPORATION
----------------------------------
(Exact name of issuer as specified in its charter)
Delaware 52-0886267
------------------------------- --------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
---------------------------------------
(Address of Principal Executive Offices)
MCI COMMUNICATIONS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
---------------------------------------
(Full title of the plan)
Michael H. Salsbury, Esq.
Executive Vice President and General Counsel
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
---------------------------------------
(Name and address of agent for service)
Telephone number, including area code, of
agent for service: (202) 872-1600
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Obligation Price Fee
- -------------- --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Deferred
Compensation $200,000,000(b) 100% $200,000,000 $60,606.06
Obligations(a)
</TABLE>
- --------------------------------------------------------------------------------
(a) The Deferred Compensation Obligations are unsecured obligations of MCI to
pay deferred compensation in the future in accordance with the terms of the MCI
Communications Corporation Executive Deferred Compensation Plan.
(b) Estimated solely for the purpose of determining the registration fee.
Exhibit Index is located at page 8 of this document.
<PAGE>
PROSPECTUS
MCI COMMUNICATIONS CORPORATION
$200,000,000
DEFERRED COMPENSATION OBLIGATIONS
----------------
MCI COMMUNICATIONS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
----------------
This Prospectus covers a maximum of Two hundred million dollars
($200,000,000) of Deferred Compensation Obligations of MCI Communications
Corporation (the "Company") offered by the Company to executives of the
Company and its subsidiaries through its Executive Deferred Compensation Plan.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE DATE OF THIS PROSPECTUS IS JUNE 19, 1997
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
----------------------------------------
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in this
Registration Statement, except to the extent that any statement or information
contained therein is modified, superseded or replaced by a statement or
information contained in any subsequently filed document incorporated herein
by reference:
(a) The Registrant's Annual Report on Form 10-K for the year ended December
31, 1996.
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 and its Current Report on Form 8-K filed on February 10,
1997.
(c) The description of securities to be registered contained in the
Registration Statement filed pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "1934 Act") relating to the Registrant's
Common Stock, including any amendments or reports filed for the purpose
of updating such description.
(d) All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act, prior to the filing of a
post-effective amendment to the Registration Statement which indicates
that all securities offered hereby have been sold or which deregisters
all such securities remaining unsold; such documents will be deemed to
be incorporated by reference in the Registration Statement from the
date they are filed.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Two hundred million ($200,000,000) Deferred Compensation Obligations (the
"Obligations") registered under this Registration Statement are to be offered
to certain executives of MCI Communications Corporation ("MCI") and its
affiliates pursuant to the Plan. This Plan works in connection with MCI's
Stock Option Plan (the "Stock Option Plan"), Senior Executive Incentive
Compensation Plan and Executive Incentive Compensation Plan ("Incentive
Plans") and allows executives to defer receipt of certain stock and cash
awards granted under the Stock Option Plan and the Incentive Plans. Executives
are permitted under this Plan to defer payment of their cash bonus awards
under the Incentive Plans and receive a grant of incentive stock units
("ISUs") and a 25% matching grant of incentive stock units ("Matching ISUs")
which are issued pursuant to the Stock Option Plan.
<PAGE>
Executives may also elect to defer dividend equivalents and the cash portion
of the merger consideration to be paid in connection with their ISU awards
after the effective time of the "Merger" as contemplated in the Agreement and
Plan of Merger, dated as of November 3, 1996, among British Telecommunications
plc, MCI Communications Corporation and Tadworth Corporation. Earnings on such
amounts will not exceed the deemed investment returns elected by the Executive
based on the portfolio of funds offered from time to time, currently, the
funds offered to employees participating in the MCI ESOP and 401(k) plans.
This portfolio includes an account whose return tracks the performance of MCI
Common Stock.
The Obligations are general unsecured obligations of MCI to pay deferred
compensation in the future according to the Plan from the general assets of
MCI, and rank equally with other unsecured indebtedness of MCI outstanding
from time to time.
The amount of compensation deferred by an Executive is determined by the
Executive's election subject to Plan limitations. Executives, in some cases,
may defer up to 100% of their cash incentive award ("Voluntary Deferred
ISUs"), 100% of their Executive Stock Award, and certain of their dividend
equivalents and the cash portion of the merger consideration to be received
with respect to certain ISUs. Executives may also defer payments under their
Converted ISUs (as defined below).
Under the Plan, certain ISUs which were awarded when the Executive
relinquished restricted stock ("Converted ISUs"), the dividend equivalents and
the cash portion of the merger consideration may be allocated, at the election
of the Executive, among one or more investment funds offered to Executives in
the Plan. Each Executive's Obligation will be adjusted to reflect the investment
performance of the underlying funds, including any appreciation or depreciation.
Obligations for Converted ISUs, dividend equivalents and the cash portion of the
merger consideration generally are payable in cash in a year selected by the
Executive which is at least three years from the date of grant and no later than
the year in which the Executive terminates employment. Obligations for Matching
ISUs, Voluntary Deferred ISUs, Executive Stock Awards and other ISUs will be
satisfied generally by the issuance of shares of Common Stock under the Stock
Option Plan registered under a separate Form S-8 File No. 333-23089.
An Executive's right or the right of any Beneficiary to the Obligation
cannot be assigned, alienated, sold, garnished, transferred, pledged or
encumbered except by a written designation of a beneficiary under the Plan, by
a written will, or by the laws of descent and distribution.
The Obligations are not subject to redemption, in whole or in part, prior to
the payment dates specified in Executives' elections unless the Executive's
employment is terminated without cause prior to designated payment date. All
non-vested deferred amounts are subject to forfeiture in the event Executive's
employment is terminated for cause as defined in the Plan. In the event of a
financial hardship, MCI may accelerate and pay all or a part of an Executive's
Obligations or allow an Executive to revoke a deferral election prospectively.
MCI also reserves the right to amend or terminate the Plan at any time,
including an amendment that would accelerate the payment of Obligations.
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
---------------------------------------
The validity of the securities offered hereby has been passed upon for the
Company by Michael H. Salsbury, Esquire, 1801 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006, General Counsel of the Company. At April 30, 1997, Mr.
Salsbury held 341,152 shares of Common Stock of the Company, which includes
340,000 options to purchase shares of Common Stock and incentive stock units.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
The Registrant 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 for its officers and directors of $2,000,000 for the Registrant.
The Registrant's 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
<PAGE>
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or serving another
corporation at the request of the corporation, against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Lack of good faith is not
presumed from a settlement or nolo contendere plea. 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 the Court of Chancery 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). The
determination that the person to be indemnified met the applicable standard of
conduct, if not made by the Court, is made by the board of directors of the
corporation by a majority vote of a quorum consisting of directors not party to
such an action, suit or proceeding or, if a quorum is not obtainable or a
disinterested quorum so directs, by independent legal counsel or by the
stockholders. Expenses may be paid in advance upon the receipt of undertakings
to repay. A corporation may purchase indemnity insurance.
The Registrant 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 the
Registrant's Certificate of Incorporation in the following ways: (i) the
Registrant 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) the Registrant must prove that
the applicable standard of conduct has not been met for indemnification if the
Registrant denies protection to a director; (iii) upon a potential change in
control (as defined in the indemnification agreements) the Registrant 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 trusts); (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 the Registrant may sue an indemnitee for an action is limited to
two years from the date of accrual of such cause of action.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
------------------------------------
Not applicable.
<PAGE>
Item 8. Exhibits.
---------
Exhibit No. Description
----------- -----------
4(a) Restated Certificate of Incorporation of Registrant
(incorporated by reference to Exhibit 3(a) to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994).
4(b) By-laws of Registrant, as amended (incorporated by
reference to Exhibit 3(ii) to Registrant's Form S-3
Registration No. 33-57155).
4(c) MCI Communications Corporation Executive Deferred
Compensation Plan (filed herewith).
5 Opinion of Counsel re Legality.
23(a) Consent of Independent Accountants.
23(b) Consent of Counsel (included in Exhibit 5).
ITEM 9. UNDERTAKINGS.
------------
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "1933 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;
(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;
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above
-------- -------
do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the 1934 Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act and
each filing of the Plan's annual report pursuant to Section 15(d) of the 1934
Act that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the 1933 Act, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Washington, District of Columbia, on this 19th day of June, 1997.
MCI COMMUNICATIONS CORPORATION
By: /s/ Bert C. Roberts, Jr., Chairman
----------------------------------
Bert C. Roberts, Jr., Chairman
Pursuant to the requirements of the 1933 Act, this Registration Statement
has been signed by the following persons in the capacities indicated on this
19th day of June, 1997.
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/ David Case Principal Accounting Officer
- ------------------------------
David Case
/s/ Clifford L. Alexander, Jr. Director
- ------------------------------
Clifford L. Alexander, Jr.
/s/ Michael H. Bader Director
- ------------------------------
Michael H. Bader
/s/ Richard M. Jones Director
- ------------------------------
Richard M. Jones
<PAGE>
/s/ Gordon S. Macklin Director
- --------------------------
Gordon S. Macklin
/s/ Colin M. Marshall Director
- --------------------------
Colin M. Marshall
/s/ J. Keith Oates Director
- --------------------------
J. Keith Oates
/s/ Richard B. Sayford Director
- --------------------------
Richard B. Sayford
/s/ Gerald H. Taylor Director
- --------------------------
Gerald H. Taylor
/s/ John R. Worthington Director
- --------------------------
John R. Worthington
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
- ----------- ----------- ----------
<S> <C> <C>
4(a) Restated Certificate of Incorporation of Registrant (incorpo-
rated by reference to Exhibit 3(a) to Registrant's Annual
Report on Form 10-K for the year ended December 31,
1994).
4(b) By-laws of Registrant, as amended (incorporated by refer-
ence to Exhibit 3(iii) to Registrant's Form S-3 Registration
No. 33-57155).
4(c) MCI Communications Corporation Executive Deferred
Compensation Plan (filed herewith).
5 Opinion of Counsel re Legality.
23(a) Consent of Independent Accountants.
23(b) Consent of Counsel (included in Exhibit 5).
</TABLE>
<PAGE>
Exhibit 4 (c)
MCI COMMUNICATIONS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
<PAGE>
MCI COMMUNICATIONS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
ARTICLE SECTION PAGE
- ------- ------- ----
<S> <C> <C>
I Purpose and Effective Date.................................. 1
--------------------------
1.01 Title................................................. 1
1.02 Purpose............................................... 1
1.03 Effective Date........................................ 1
II Definitions and Construction of the Plan Document........... 2
-------------------------------------------------
2.01 Beneficiary........................................... 2
2.02 Board................................................. 2
2.03 Committee............................................. 2
2.04 Company............................................... 2
2.05 Compensation.......................................... 2
2.06 Deferral Agreement.................................... 2
2.07 Deferral Compensation................................. 2
2.08 Deferral Year......................................... 2
2.09 Disability............................................ 2
2.10 Election Date......................................... 2
2.11 Executive............................................. 3
2.12 Gender and Number..................................... 3
2.13 Headings.............................................. 3
2.14 Investment Preference................................. 3
2.15 MCI................................................... 3
2.16 MCI Stock............................................. 3
2.17 Merger................................................ 3
2.18 Participant........................................... 3
2.19 Participant Account................................... 3
2.20 Plan Administrator.................................... 3
2.21 Plan Year ............................................ 3
2.22 Termination of Service ............................... 4
III Eligibility and Participation............................... 5
-----------------------------
3.01 Eligibility........................................... 5
3.02 Participation......................................... 5
</TABLE>
<PAGE>
TABLE OF CONTENTS
-----------------
(CONTINUED)
-----------
<TABLE>
<CAPTION>
ARTICLE SECTION PAGE
- --------- ------- ----
<S> <C> <C>
IV Deferral of Compensation.............................. 6
------------------------
4.01 Compensation Deferral.......................... 6
4.02 Deferral Period................................ 6
4.03 Election to Participate........................ 6
4.04 No Deferral Without Agreement.................. 6
4.05 Duration of Deferral Agreement................. 6
V Participant Account and Investment Preferences........ 7
----------------------------------------------
5.01 Participant Account............................ 7
5.02 Reporting...................................... 7
5.03 Investment Preferences......................... 7
5.04 Changes........................................ 7
VI Distribution.......................................... 8
------------
6.01 Distribution of Account Balance................ 8
6.02 Nonforfeitable Right to Account Value.......... 8
6.03 Form of Distribution........................... 8
VII Hardship and Other Distributions...................... 9
--------------------------------
7.01 Hardship....................................... 9
7.02 Other.......................................... 9
7.03 Effect of Distribution......................... 9
VIII Beneficiary........................................... 10
-----------
8.01 Beneficiary Designation........................ 10
8.02 Proper Beneficiary............................. 10
8.03 Minor or Incompetent Beneficiary............... 10
8.04 No Beneficiary Designated...................... 10
</TABLE>
TOC - 2
<PAGE>
TABLE OF CONTENTS
-----------------
(CONTINUED)
-----------
<TABLE>
<CAPTION>
ARTICLE SECTION PAGE
- ------- ------- ----
<S> <C> <C>
IX Administration of the Plan............................ 11
--------------------------
9.01 Finality of Determination..................... 11
9.02 Indemnification and Exculpation............... 11
9.03 Expenses...................................... 11
X Claims Procedure...................................... 12
----------------
10.01 Written Claim................................. 12
10.02 Denied Claim.................................. 12
10.03 Review Procedure.............................. 12
10.04 Committee Review.............................. 12
XI Nature of Company's Obligation........................ 13
------------------------------
11.01 Company's Obligation.......................... 13
11.02 Creditor Status............................... 13
XII Miscellaneous......................................... 14
-------------
12.01 Written Notice................................ 14
12.02 Change of Address............................. 14
12.03 Merger, Consolidation or Acquisition.......... 14
12.04 Amendment and Termination..................... 14
12.05 Non-transferability........................... 14
12.06 Legal Fees.................................... 14
12.07 Applicable Law................................ 15
</TABLE>
TOC - 3
<PAGE>
ARTICLE I
PURPOSE AND EFFECTIVE DATE
--------------------------
1.01 TITLE. This Plan will be known as the MCI Communications
-----
Corporation Executive Deferred Compensation Plan (hereinafter referred to as the
"Plan").
1.02 PURPOSE. The purpose of the Plan is to permit MCI executives to
-------
defer the receipt of cash incentive awards or compensation related to awards
under the MCI Communications Corporation Stock Option Plan. This Plan
constitutes an unfunded plan of deferred compensation limited to a select group
of management or highly compensated employees. As such, the Plan will be
exempt from Parts 2, 3, and 4 of Title I of the Employee Retirement Income
Security Act of 1974, as amended.
1.03 EFFECTIVE DATE. The effective date of this Plan is November 1,
--------------
1996.
<PAGE>
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT
-------------------------------------------------
2.01 BENEFICIARY. "Beneficiary" means the person designated pursuant
-----------
to Section 8.01 to receive any benefits under this Plan.
2.02 BOARD. "Board" means the board of directors of MCI.
-----
2.03 COMMITTEE. "Committee" means the Compensation Committee of the
---------
Board.
2.04 COMPANY. "Company" means MCI Communications Corporation or any of
-------
its subsidiaries.
2.05 COMPENSATION. "Compensation" means an incentive stock unit under
------------
the MCI Communications Corporation Stock Option Plan or the award of cash under
the MCI Executive Incentive Compensation Plan and the MCI Senior Executive
Incentive Compensation Plan, which if not deferred as provided in this Plan
would be taxable to an Executive upon payment due to vesting of such an award.
In order for compensation to be eligible for deferral under this Plan, it must
have otherwise been taxable by the United States.
2.06 DEFERRAL AGREEMENT. "Deferral Agreement" means the written form
------------------
prescribed by the Committee and submitted to the Plan Administrator by the
relevant Election Date pursuant to which the Participant elects to defer a
specific percentage of Compensation otherwise payable subsequent to the date of
such Agreement. The Deferral Agreement will be effective only when acknowledged
by the Company.
2.07 DEFERRED COMPENSATION. "Deferred Compensation" means the portion
---------------------
of a Participant's Compensation that has been deferred pursuant to the Plan.
2.08 DEFERRAL YEAR. "Deferral Year" means a Plan Year for which a
-------------
Participant has an operative Deferral Agreement.
2.09 DISABILITY. "Disability" means a disability falling within the
----------
definition of "totally disabled" or conceptually similar words as set forth in
MCI's group long-term disability plan, as from time to time in effect.
2.10 ELECTION DATE. "Election Date" means the date by which an
-------------
Executive must submit a valid Deferral Agreement to the Plan Administrator in
order to defer Compensation. The applicable Election Dates are as follows: (a)
30 days after adoption of the Plan for Executives who are eligible to
participate at the time the Plan is adopted, or (b) any date established by the
- 2 -
<PAGE>
Company as set forth in the appropriate Deferral Agreement, but no later than
one year prior to the date on which an award would otherwise have been payable,
or (c) the election date specified in the Deferral Agreement for special awards
related to the Merger.
2.11 EXECUTIVE. "Executive" means an employee of the Company who is
---------
designated by the Committee as eligible to participate in the Plan and who is a
management or highly compensated employee.
2.12 GENDER AND NUMBER. Wherever the context so requires, masculine
-----------------
pronouns include the feminine and singular words will include the plural.
2.13 HEADINGS. Headings of the Articles of this Plan and Sections are
--------
included for ease of reference only and are not to be used for the purpose of
construing any portion or provision of this Plan document.
2.14 INVESTMENT PREFERENCE. "Investment Preference" means the
---------------------
investment option or options selected by the Participant from those designated
by the Committee to determine the Company's obligation upon payment of the
Deferred Compensation; provided that the Committee may prior to the Merger,
limit the Investment Preference for any award or group of awards to MCI Stock.
2.15 MCI. "MCI" means MCI Communications Corporation.
---
2.16 MCI STOCK. "MCI Stock" means MCI Communications Corporation
---------
Common Stock, par value $.10 per share.
2.17 MERGER. "Merger" means the Agreement and Plan of Merger dated as
------
of November 3, 1996 among British Telecommunications plc, MCI and Tadworth
Corporation.
2.18 PARTICIPANT. "Participant" means an Executive who has deferred a
-----------
portion of Compensation pursuant to the terms of this Plan, and whose account
balance has not yet been fully distributed.
2.19 PARTICIPANT ACCOUNT. A "Participant Account" means the book
-------------------
account established by the Company for a Participant, to which Deferred
Compensation and deemed investment results are credited.
2.20 PLAN ADMINISTRATOR. "Plan Administrator" means the Chief Human
------------------
Resources Officer of MCI.
2.21 PLAN YEAR. The "Plan Year" means the twelve month period
---------
commencing January 1 and ending December 31.
- 3 -
<PAGE>
2.22 TERMINATION OF SERVICE. "Termination of Service" or similar
----------------------
expression means the termination of the Participant's employment with the
Company or any corporation within the controlled group of corporations with the
Company.
- 4 -
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.01 ELIGIBILITY. Eligibility for participation in this Plan will be
-----------
determined by the Committee, in its sole discretion, but all Participants must
be Executives who receive awards of incentive stock units under the MCI
Communications Corporation Stock Option Plan.
3.02 PARTICIPATION. An Executive, after having been selected for
-------------
participation by the Committee, shall, as a condition to deferring Compensation,
complete a duly executed Deferral Agreement and return it to the Plan
Administrator.
- 5 -
<PAGE>
ARTICLE IV
DEFERRALS OF COMPENSATION
-------------------------
4.01 COMPENSATION DEFERRAL. Each Executive may, by submitting a Deferral
---------------------
Agreement, on or before the relevant Election Date have all or a portion of his
or her Compensation deferred in accordance with the terms and conditions of this
Plan.
4.02 DEFERRAL PERIOD. A Participant may make an election to defer
---------------
Compensation for a minimum of three calendar years from the date that an award
would otherwise have been payable but no later than the period ending with the
date of the Participant's Termination of Service. The Participant will be given
two additional opportunities to further defer a deferred award for the minimum
period of three years, which further deferral elections must be made at least
one year prior to the date the deferred award was originally due to be paid.
Pursuant to rules established by the Company, the Participant may specify the
time of distribution; provided, however that Compensation may not be deferred
beyond the later of termination of employment. All such elections will be made
on the applicable Deferral Agreement.
4.03 ELECTION TO PARTICIPATE. An Executive desiring to participate in the
-----------------------
Plan must submit a written Deferral Agreement to the Plan Administrator by the
applicable Election Date. Deferral Agreements filed by the applicable Election
Date as provided in Section 2.10 will cause Compensation related to cash
incentive or stock related awards to be deferred in accordance with such
Agreement.
4.04 NO DEFERRAL WITHOUT AGREEMENT. A Participant who has not submitted a
-----------------------------
valid Deferral Agreement to the Plan Administrator by the relevant Election Date
may not defer any Compensation under this Plan for the awards to be granted in
the applicable Deferral Year.
4.05 DURATION OF DEFERRAL AGREEMENT. Participants may not revoke a
------------------------------
Deferral Agreement except as may be permitted by Section 7.01.
- 6 -
<PAGE>
ARTICLE V
PARTICIPANT ACCOUNT AND INVESTMENT PREFERENCES
----------------------------------------------
5.01 PARTICIPANT ACCOUNT. Compensation amounts deferred by a Participant
-------------------
under a written Deferral Agreement and deemed investment results will be
credited to a Participant's Account.
5.02 REPORTING. The Company will provide each Participant with an annual
---------
Account Statement and a Tax Statement for his/her Deferral Account detailing the
transactions relating to the Participant's Account, investment performance and
balances.
5.03 INVESTMENT PREFERENCES. The Company will honor the Participant's
----------------------
Investment Preferences in establishing a basis for the investment results on a
Participant Account. However, the Company is under no obligation to invest any
of the amounts credited to any Participant Account in any particular asset or
form of asset. The Participant agrees on behalf of him/herself and her/his
designated Beneficiary that the value of his/her Participant Account at any
point in time will equal the value determined as if the Company had invested all
amounts credited to his or her Participant Account as indicated in his or her
Investment Preference in the applicable Designation of Investment Preference
Form(s).
5.04 CHANGES. Changes in Investment Preference may be made as of the first
-------
day of the month following the month in which the form is received by the Plan
Administrator and will apply to future deferred amounts as well as deemed
account balances. If a Participant is an officer subject to Section 16 of the
Securities and Exchange Act of 1934, as amended, and if the Investment
Preference change is subject to the provisions of such Section 16, then to the
extent required to qualify for exemption from such provisions, then, no election
regarding Investment Preference will be given effect unless made at least six
(6) months after a prior opposite way election under the Plan or in any other
plan sponsored by the Company. Any changes in Investment Preferences will apply
only to vested awards. No Investment Preference will be taken into account with
respect to an award until the first trading day following the date the award
vests.
- 7 -
<PAGE>
ARTICLE VI
DISTRIBUTION
------------
6.01 DISTRIBUTION OF ACCOUNT BALANCE. Distribution of the value of the
-------------------------------
Participant's Account will be in a lump sum determined at the end of the
Deferral Period(s) described in Section 4.02, and paid within sixty (60) days or
as soon as administratively practicable after the end of the Deferral Period(s).
6.02 NONFORFEITABLE RIGHT TO ACCOUNT VALUE. The Participant or Beneficiary
-------------------------------------
will have a right to the vested value of a Participant's Account attributable to
Deferred Compensation as adjusted for deemed investment results under the Plan.
If a Participant's employment is terminated for "Cause," the Participant will
forfeit the non-vested portion of his or her Account. "Cause" means, cause as
defined in the Participant's employment agreement (if defined therein), or if
applicable to such Participant, the Executive Severance Program, or with respect
to any other Participant or if not defined in the Participant's employment
agreement:
(a) a deliberate and material act or omission by the Participant with
respect to the Participant's duties and responsibilities with MCI that results
in demonstrable harm to MCI, which act or omission is (A) either the product of
willful malfeasance or gross neglect, (B) committed in bad faith or without a
reasonable belief that such act or omission is in, or not contrary to, the best
interests of MCI and (C) not remedied within 30 days after receipt of written
notice from MCI specifying such breach, or
(b) the participant's plea of guilty or nolo contendere to, or non
appealable conviction of, a felony, which conviction or plea causes material
damage to the reputation or financial position of MCI.
The Committee will have the sole and complete discretion to determine
whether or not termination of employment has occurred for Cause.
6.03 FORM OF DISTRIBUTION. All distributions of a Participant's Account
--------------------
will be made in cash or in MCI Stock (or the common stock of a successor) in the
case of awards that are not eligible to have their value determined by other
Investment Preferences.
- 8 -
<PAGE>
ARTICLE VII
HARDSHIP AND OTHER DISTRIBUTIONS
--------------------------------
7.01 HARDSHIP. At the sole discretion of the Committee and at the request
--------
of a Participant before the end of the Deferral Period(s) described in Section
4.02, the Committee may (a) accelerate and pay all or part of the value of a
Participant's Account due under this Plan, or (b) allow the Participant to
reduce or revoke his/her Deferral Agreement prospectively. Accelerated
distributions or discontinuance of deferrals may be allowed only in the event of
a financial emergency beyond the Participant's control due to unforeseeable
circumstances and only if disallowance of a distribution would create a severe
hardship for the Participant. An accelerated distribution must be limited to
only that amount necessary to relieve the financial emergency.
7.02 OTHER. In the event of the Participant's death, distribution will be
-----
made as soon as practicable after the Committee has notice of the Participant's
death. In the event of Participant's Disability, any Deferral Agreement remains
in effect.
7.03 EFFECT OF DISTRIBUTION. A hardship distribution under this Section is
----------------------
in lieu of that portion of the amounts that would have been paid otherwise
pursuant to this Plan and the applicable Deferral Agreements.
- 9 -
<PAGE>
ARTICLE VIII
BENEFICIARY
-----------
8.01 BENEFICIARY DESIGNATION. A Participant may designate one or more
-----------------------
Beneficiaries to receive benefits under the Plan upon his or her death by
completing the appropriate space on the Beneficiary Designation Form. A
Participant will have the right to change the Beneficiary by submitting to the
Plan Administrator a Change of Beneficiary form. The designation of a
Beneficiary will apply to the Participant's entire account balance rather than
individual deferral elections. The Participant must inform the Plan
Administrator of any changes in his/her designated Beneficiary's address, name
or telephone number.
8.02 PROPER BENEFICIARY. In the event that the identity of the proper
------------------
Beneficiary is unclear or disputed, the Company will have the right to withhold
such payments until the matter is finally adjudicated. However, any payment
made by the Company, in good faith and in accordance with this Plan, will fully
discharge the Company from all further obligations with respect to that payment.
8.03 MINOR OR INCOMPETENT BENEFICIARY. In making any payments to or for
--------------------------------
the benefit of any minor or an incompetent Beneficiary, the Company, in its sole
and absolute discretion, may make a distribution to a legal or natural guardian
or other relative of a minor or court appointed committee of such incompetent.
Or, it may make a payment to any adult with whom the minor or incompetent
temporarily or permanently resides. The receipt by a guardian, committee,
relative or other person will be a complete discharge to the Company. Neither
the Committee nor the Company nor the Plan Administrator will have any
responsibility to see to the proper application of any payments so made.
8.04 NO BENEFICIARY DESIGNATED. If no Beneficiary has been designated, if
-------------------------
the Beneficiary cannot be found, or if the Beneficiary fails to survive the
Participant or fails to take the benefits, the Participant's Account will be
paid to the alternate Beneficiary or, if none, to the Participant's estate.
- 10 -
<PAGE>
ARTICLE IX
ADMINISTRATION OF THE PLAN
--------------------------
9.01 FINALITY OF DETERMINATION. Subject to the Plan, the Committee shall,
-------------------------
from time to time, establish rules, forms and procedures for the administration
of the Plan. Except as herein otherwise expressly provided, the Committee will
have the exclusive right to interpret the Plan and to decide any and all matters
arising thereunder or in connection with the administration of the Plan, and it
will endeavor to act, whether by general rules or by particular decisions, so as
not to discriminate in favor of or against any person.
9.02 INDEMNIFICATION AND EXCULPATION. The Company will indemnify and hold
-------------------------------
harmless each member of the Committee and the Plan Administrator against any and
all expenses and liabilities arising out of membership on the Committee or
fulfilling the duties of Plan Administrator. Expenses against which a member of
the Committee or the Plan Administrator will be indemnified hereunder will
include, without limitation, the amount of any settlement or judgment, costs,
counsel fees, and related charges reasonably incurred in connection with a claim
asserted, or a proceeding brought or settlement thereof. The foregoing right of
indemnification will be in addition to any other rights to which any such member
of the Committee or Plan Administrator may be entitled as a matter of law.
9.03 EXPENSES. The expenses of administering the Plan will be borne by the
--------
Company.
- 11 -
<PAGE>
ARTICLE X
CLAIMS PROCEDURE
----------------
10.01 WRITTEN CLAIM. Benefits will be paid in accordance with the
-------------
provisions of this Plan. The Participant, or a Beneficiary or any other person
claiming through the Participant may make a written claim under this Plan. This
written claim must be mailed or delivered to the Plan Administrator. Such claim
will be reviewed by the Plan Administrator or a delegate.
10.02 DENIED CLAIM. If the claim is denied, in full or in part, the Plan
------------
Administrator will provide a written notice within ninety (90) days setting
forth the specific reasons for denial, and any additional material or
information necessary to perfect the claim, and an explanation of why such
material or information is necessary, and appropriate information and
explanation of the steps to be taken if a review of the denial is desired.
10.03 REVIEW PROCEDURE. If the claim is denied and a review is desired,
----------------
the Participant (or Beneficiary) must notify the Plan Administrator in writing
within sixty (60) days after receipt of the written notice of denial. In
requesting a review, the Participant or Beneficiary may request a review of the
Plan Document or other pertinent documents created under this Plan, may submit
any written issues and comments, may request an extension of time for such
written submission of issues and comments, and may request that a hearing be
held, but the decision to hold a hearing will be within the sole discretion of
the Committee.
10.04 COMMITTEE REVIEW. The decision on the review of the denied claim
----------------
will be rendered by the Committee within sixty (60) days after the receipt of
the request for review (if no hearing is held) or within sixty (60) days after
the hearing if one is held. The decision will be written and will state the
specific reasons for the decision including reference to specific provisions of
this Plan on which the decision is based.
- 12 -
<PAGE>
ARTICLE XI
NATURE OF COMPANY'S OBLIGATION
------------------------------
11.01 COMPANY'S OBLIGATION. The Company's obligations under this Plan
--------------------
will be an unfunded and unsecured promise to pay. The Company will not be
obligated under any circumstances to fund its financial obligations under this
Plan.
11.02 CREDITOR STATUS. Any assets which the Company may set aside to help
---------------
cover its financial liabilities hereunder are and must remain subject to the
claims of its creditors. The Participant's relationship to the Company under
this Agreement will be only that of a general unsecured creditor, and this
Agreement (including any action taken pursuant hereto) will not, in and of
itself, create or be construed to create a trust or fiduciary relationship of
any kind between the Company and the Participant, his or her Beneficiary or
other person, or a security interest of any kind in any property of the Company
in favor of the Participant or any other person. The arrangement created by
this Plan is intended to be unfunded and no trust, security, escrow, or similar
account will be required to be established for the purposes of payment
hereunder. However, the Company may in its discretion establish a "rabbi trust"
(or other arrangement having equivalent taxation characteristics under the
Internal Revenue Code or applicable regulations or rulings) to hold assets,
subject to the claims of the Company's creditors in the event of insolvency for
the purpose of making payments hereunder. If the Company establishes such a
trust, amounts paid therefrom will discharge the obligations of the Company
hereunder to the extent of the payments so made.
- 13 -
<PAGE>
ARTICLE XII
MISCELLANEOUS
-------------
12.01 WRITTEN NOTICE. Any notice which will be or may be given under the
--------------
Plan or a Deferral Agreement will be in writing and will be mailed by United
States mail, postage prepaid. If notice is to be given to the Plan
Administrator, such notice will be addressed to MCI at 1801 Pennsylvania Ave.,
N.W., Washington, DC 20006, marked for the attention of the Chief Human
Resources Officer of MCI or if notice to a Participant, addressed to the address
shown on such Participant's Deferral Agreement.
12.02 CHANGE OF ADDRESS. Any party may, from time to time, change the
-----------------
address to which notices will be mailed by giving written notice of such new
address.
12.03 MERGER, CONSOLIDATION OR ACQUISITION. The Plan will be binding upon
------------------------------------
the Company, its assignees, and any successor company which will succeed to
substantially all of its assets and business through merger, acquisition or
consolidation, and upon a Participant, a Beneficiary, assigns, heirs, executors
and administrators.
12.04 AMENDMENT AND TERMINATION. MCI retains the sole and unilateral
-------------------------
right to terminate, amend, modify, or supplement this Plan, in whole or part, at
any time. However, no MCI action under this right will reduce the Account of
any Participant or Beneficiary, or accelerate the payment thereof, without the
express written consent of the Participant or pursuant to Section 7.01.
12.05 NON-TRANSFERABILITY. No sale, transfer, alienation, assignment,
-------------------
pledge, collateralization or attachment of any benefits under this Plan will be
valid or recognized by the Company. Neither the Participant, spouse, or
designated Beneficiary will have any power to hypothecate, mortgage, commute,
modify, or otherwise encumber in advance any of the benefits payable hereunder,
nor will any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony maintenance owed by the Participant or Beneficiary, or
be transferable by operation of law in the event of bankruptcy, insolvency, or
otherwise.
12.06 LEGAL FEES. All reasonable legal fees incurred by any Participant
----------
(or former Participant) to successfully enforce valid rights under this Plan
will be paid by the Company in addition to sums due under this Plan.
- 14 -
<PAGE>
12.07 APPLICABLE LAW. This Plan will be governed by the laws of the state
--------------
of New York without regard to its choice of law provisions, to the extent the
federal laws do not apply.
IN WITNESS WHEREOF, MCI has caused this instrument to be executed by its duly
authorized officer on this 16th day of June, 1997, effective as of the first
day of November, 1996.
MCI COMMUNICATIONS CORPORATION
BY /s/ Bert C. Roberts, Jr.
--------------------------
BERT C. ROBERTS, JR.
CHAIRMAN OF THE BOARD
ATTEST:
BY /s/ C. Bolton-Smith, Jr.
---------------------------------
C. BOLTON-SMITH, JR.
VICE PRESIDENT AND SECRETARY
- 15 -
<PAGE>
Exhibit 5
June 19, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
Reference is made to the Registration Statement on Form S-8 to be filed by MCI
Communications Corporation ("MCI"), a Delaware corporation, with the Securities
and Exchange Commission relating to $200,000,000.00 of Deferred Compensation
Obligations (the "Obligations") which will represent unsecured obligations of
MCI to pay deferred compensation in the future according to the MCI
Communications Corporation Executive Deferred Compensation Plan (the "Plan").
I have examined all such records of MCI and all such agreements, certificates of
public officials and such other documents as I have deemed relevant and
necessary as a basis for the opinions hereinafter expressed. Based on such
examination, I am of the opinion that when the Obligations are issued in the
manner provided in the Plan, the Obligations will be valid and binding
obligations of MCI, enforceable against MCI in accordance with their terms,
except as the same may be limited by bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity.
I am Executive Vice President and General Counsel of MCI. As of April 30, 1997,
I held 341,152 shares of MCI Common Stock, which includes 340,000 options to
purchase MCI Common Stock and incentive stock units.
I hereby consent to the use of this opinion as an Exhibit to the above-mentioned
Registration Statement.
Very truly yours,
/s/ Michael H. Salsbury
- -----------------------
Michael H. Salsbury
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of MCI Communications Corporation ("MCI") of our report
dated January 27, 1997, which appears on page 30 of MCI's Annual Report to
Stockholders included in Exhibit 13 to MCI's Current Report on for 8-K dated
February 10, 1997 ("Current Report"), which is incorporated by reference in
MCI's Annual Report on Form 10-K for the year ended December 31, 1996. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, which is included as Exhibit 99(c) to the Current Report,
which is incorporated by reference in MCI's Annual Report on Form 10-K for the
year ended December 31, 1996.
PRICE WATERHOUSE LLP
Washington, D.C.
June 19, 1997
