MCI COMMUNICATIONS CORP
S-3, 1996-04-18
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>
 
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1996
                                                               FILE NO. 333-
================================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                               ----------------
                                   FORM S-3
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
                               ----------------
MCI COMMUNICATIONS CORPORATION            DELAWARE                  52-0886267
MCI CAPITAL I                             DELAWARE                 APPLIED FOR
MCI CAPITAL II                            DELAWARE                 APPLIED FOR
MCI CAPITAL III                           DELAWARE                 APPLIED FOR
MCI CAPITAL IV                            DELAWARE                 APPLIED FOR
 (EXACT NAME OF REGISTRANT AS   (STATE OR OTHER JURISDICTION    (I.R.S. EMPLOYER
   SPECIFIED IN ITS CHARTER)  OF INCORPORATION OR ORGANIZATION)  IDENTIFICATION
                                                                     NUMBER)
                        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, NAFTALIS,                  SULLIVAN & CROMWELL
        NESSEN, KAMIN & 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. [_]
                        CALCULATION OF REGISTRATION FEE
<TABLE> 
<CAPTION> 
=========================================================================================================
                                                                                PROPOSED
                                                                 PROPOSED        MAXIMUM
 TITLE OF EACH CLASS OF                           AMOUNT         MAXIMUM        AGGREGATE     AMOUNT OF
    SECURITIES TO BE                               TO BE      OFFERING PRICE    OFFERING     REGISTRATION
       REGISTERED                               REGISTERED     PER UNIT(1)      PRICE(1)         FEE
- ---------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>            <C>             <C>
MCI Communications Corporation Junior           
 Subordinated Deferrable Interest       
 Debentures(2)                          
- ---------------------------------------------------------------------------------------------------------
MCI Capital I, II, III and IV Preferred       
 Securities................................. 
- ---------------------------------------------------------------------------------------------------------
MCI Communications Corporation Guarantee  
 with respect to Preferred Securities(3)(4)       
- ---------------------------------------------------------------------------------------------------------
 Total .....................................    $750,000,000(5)    100%      $750,000,000(5)   $258,621
=========================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures will be purchased
    by MCI Capital I, II, III and IV with the proceeds of the sale of the
    Preferred Securities.
(3) No separate consideration will be received for the MCI Communications
    Corporation Guarantee.
(4) This Registration Statement is deemed to cover the rights of holders of
    the Preferred Securities under the Guarantees and certain backup
    undertakings as described herein.
(5) Such amount represents the principal amount of Junior Subordinated
    Deferrable Interest Debentures issued at their principal amount and the
    issue price rather than the principal amount of Junior Subordinated
    Deferrable Interest Debentures issued at an original issue discount. Such
    amount also represents the initial public offering price of the MCI
    Capital I, II, III and IV Preferred Securities. No separate consideration
    will be received for any MCI Communications Corporation Guarantees or MCI
    Communications Corporation Junior Subordinated Deferrable Interest
    Debentures in connection with an issuance of Preferred Securities by MCI
    Capital I, II, III or IV.
                               ----------------
  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.
================================================================================
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS TO   +
+WHICH IT RELATES SHALL CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN  +
+OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN  +
+WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO             +
+REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.    +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                  SUBJECT TO COMPLETION, DATED APRIL 17, 1996
 
               PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED   , 1996
 
                                PREFERRED SECURITIES
 
                                 MCI CAPITAL I
 
             % CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES,
                            SERIES A (QUIPS SM )*
 
              (LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
      GUARANTEED TO THE EXTENT THE ISSUER HAS FUNDS AS SET FORTH HEREIN BY
 
                         MCI COMMUNICATIONS CORPORATION
 
  The     % Cumulative Quarterly Income Preferred Securities, Series A (the
"Series A QUIPS"), offered hereby represent undivided beneficial interests in
the assets of MCI Capital I, a trust formed under the laws of the State of
Delaware (the "Series A Issuer"). MCI Communications Corporation, a Delaware
corporation ("MCI"), will be the owner of all of the beneficial interests
represented by common securities of the Series A Issuer ("Series A Common
Securities"). Wilmington Trust Company
                                                        (Continued on next page)
 
                                  -----------
 
  SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES A QUIPS.
 
                                  -----------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
                                  -----------
 
<TABLE>
<CAPTION>
                                                                    PROCEEDS TO
                                                                    THE SERIES A
                                       INITIAL PUBLIC UNDERWRITING   ISSUER(2)
                                       OFFERING PRICE COMMISSION(1)     (3)
                                       -------------- ------------- ------------
<S>                                    <C>            <C>           <C>
Per Series A QUIPS....................      $              (2)          $
Total (4).............................    $                (2)         $
</TABLE>
- -----
(1) The Series A Issuer and MCI have agreed to indemnify the several
    Underwriters against certain liabilities, including liabilities under the
    Securities Act of 1933. See "Underwriting".
(2) In view of the fact that the proceeds of the sale of the Series A QUIPS
    will be used to purchase the Series A QUIDS, the Underwriting Agreement
    provides that MCI will pay to the Underwriters, as compensation
    ("Underwriters' Compensation") for their arranging the investment therein
    of such proceeds, $       per Series A QUIPS (or $       in the aggregate).
    See "Underwriting".
(3) Expenses of the offering, which are payable by MCI, are estimated to be
    $   .
(4) The Series A Issuer has granted the Underwriters an option exercisable for
    15 days to purchase up to an additional       Series A QUIPS at the initial
    public offering price per Series A QUIPS solely to cover over-allotments,
    if any. If such option is exercised in full, the total initial public
    offering price and proceeds to the Series A Issuer will be $      and
    $     , respectively, and the total Underwriters' Compensation paid by MCI
    for arranging the investment will be $   . See "Underwriting".
 
                                  -----------
 
  The Series A QUIPS offered hereby are offered severally by the Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Series A QUIPS will be ready for delivery in book-entry form only through the
facilities of The Depository Trust Company in New York, New York, on or about
     , 1996, against payment therefor in immediately available funds.

- -----
* QUIPS and QUIDS are servicemarks of Goldman, Sachs & Co.
 
GOLDMAN, SACHS & CO.                                        MERRILL LYNCH & CO.
 
                                  -----------
 
              The date of this Prospectus Supplement is   , 1996.
<PAGE>
 
(Continued from previous page)
 
is the Property Trustee of the Series A Issuer. The Series A Issuer exists for
the sole purpose of issuing the Series A QUIPS and the Series A Common
Securities and investing the proceeds thereof in   % Junior Subordinated
Deferrable Interest Debentures, Series A (the "Series A QUIDS" (SM)), to be
issued by MCI. The Series A QUIPS will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Series A Common Securities. See
"Description of QUIPS--Subordination of Common Securities" in the accompanying
Prospectus.
 
  Holders of the Series A QUIPS will be entitled to receive preferential
cumulative cash distributions accruing from the date of original issuance and
payable quarterly in arrears on the last day of March, June, September and
December of each year, commencing June 30, 1996, at the annual rate of   % of
the liquidation preference of $25 per Series A QUIPS ("Distributions"). MCI
has the right to defer payment of interest on the Series A QUIDS at any time
or from time to time for a period not exceeding 20 consecutive quarters with
respect to each deferral period (each, an "Extension Period"), provided that
no Extension Period may extend beyond the Stated Maturity (as defined herein)
of the Series A QUIDS. Upon the termination of any such Extension Period and
the payment of all amounts then due, MCI may elect to begin a new Extension
Period subject to the requirements set forth herein. If interest payments on
the Series A QUIDS are so deferred, Distributions on the Series A QUIPS will
also be deferred and MCI will not be permitted, subject to certain exceptions
set forth herein, to declare or pay any cash distributions with respect to
MCI's capital stock or debt securities that rank pari passu with or junior to
the Series A QUIDS. During an Extension Period, interest on the Series A QUIDS
will continue to accrue (and the amount of Distributions to which holders of
the Series A QUIPS are entitled will accumulate at the rate of   % per annum,
compounded quarterly) and holders of Series A QUIPS will be required to accrue
interest income for United States federal income tax purposes. See "Certain
Terms of Series A QUIDS--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Original Issue Discount".
 
  MCI has, through the Series A Guarantee, the Trust Agreement, the Series A
QUIDS, the Indenture and the Expense Agreement (each, as defined herein),
taken together, fully, irrevocably and unconditionally guaranteed all of the
Series A Issuer's obligations under the Series A QUIPS. The Series A Guarantee
of MCI guarantees the payment of Distributions and payments on liquidation or
redemption of the Series A QUIPS, but only in each case to the extent of funds
held by the Series A Issuer, as described herein (the "Series A Guarantee").
See "Description of Guarantees" in the accompanying Prospectus. If MCI does
not make interest payments on the Series A QUIDS held by the Series A Issuer,
the Series A Issuer will have insufficient funds to pay Distributions on the
Series A QUIPS. The Series A Guarantee does not cover payment of Distributions
when the Series A Issuer does not have sufficient funds to pay such
Distributions. In such event, the remedy of a holder of Series A QUIPS is to
enforce the rights of the Series A Issuer under the Series A QUIDS held by the
Series A Issuer. The obligations of MCI under the Series A Guarantee and the
Series A QUIDS are subordinate and junior in right of payment to all Senior
Debt (as defined in "Description of QUIDS--Subordination" in the accompanying
Prospectus) of MCI.
 
  The Series A QUIPS are subject to mandatory redemption, in whole or in part,
upon repayment of the Series A QUIDS at maturity or their earlier redemption
in an amount equal to the amount of related Series A QUIDS maturing or being
redeemed at a redemption price equal to the aggregate liquidation preference
of such Series A QUIPS plus accumulated and unpaid Distributions thereon to
the date of redemption. The Series A QUIDS are redeemable prior to maturity at
the option of MCI (i) on or after        , 2001, in whole at any time or in
part from time to time, at a redemption price equal to the accrued and unpaid
interest on the Series A QUIDS so redeemed to the date fixed for redemption,
 
                                      S-2
<PAGE>
 
plus 100% of the principal amount thereof or (ii) at any time, in whole (but
not in part), upon the occurrence and continuation of a Special Event (as
defined herein), at a redemption price equal to the accrued and unpaid
interest on the Series A QUIDS so redeemed to the date fixed for redemption,
plus 100% of the principal amount thereof, in each case subject to the further
conditions described under "Description of QUIDS--Redemption" and "Description
of Corresponding QUIDS--Optional Redemption" in the accompanying Prospectus.
 
  At any time, MCI will have the right to liquidate the Series A Issuer and
cause the Series A QUIDS to be distributed to the holders of the Series A
QUIPS in liquidation of the Series A Issuer. If MCI elects to liquidate the
Series A Issuer and thereby causes the Series A QUIDS to be distributed to
holders of the Series A QUIPS in liquidation of the Series A Issuer, MCI shall
have the right to shorten or extend the maturity of such Series A QUIDS,
provided that it can extend the maturity only if certain conditions are met.
See "Certain Terms of Series A QUIPS--Special Event Redemption or Distribution
of Series A QUIDS".
 
  The Series A QUIDS are subordinate and junior in right of payment to all
Senior Debt of MCI. As of December 31, 1995, MCI had approximately $4 billion
aggregate principal amount of Senior Debt outstanding. The terms of the Series
A QUIDS place no limitation on the amount of Senior Debt that may be incurred
by MCI. MCI is a non-operating holding company and almost all of the operating
assets of MCI and its consolidated subsidiaries are owned by such
subsidiaries. MCI relies primarily on interest and dividends from such
subsidiaries to meet its obligations for payment of principal and interest on
its outstanding debt obligations and corporate expenses. Accordingly, the
Series A QUIDS will be subordinated to all Senior Debt of MCI and effectively
subordinated to all existing and future liabilities of MCI's subsidiaries, and
holders of Series A QUIDS should look only to the assets of MCI for payments
on Series A QUIDS. See "Description of QUIDS--Subordination" in the
accompanying Prospectus.
 
  In the event of the liquidation of the Series A Issuer, the holders of the
Series A QUIPS will be entitled to receive a liquidation preference of $25 per
Series A QUIPS plus accumulated and unpaid Distributions thereon to the date
of payment, which may be in the form of a distribution of such amount in
Series A QUIDS, subject to certain exceptions. See "Description of QUIPS--
Liquidation Distribution Upon Termination" in the accompanying Prospectus.
 
  The Series A Issuer intends to list the Series A QUIPS on the Nasdaq
National Market. If the Series A QUIDS are distributed to the holders of
Series A QUIPS upon the liquidation of the Series A Issuer, MCI will use its
best efforts to list the Series A QUIDS on the Nasdaq National Market or the
New York Stock Exchange or such other stock exchanges, if any, on which the
Series A QUIPS are then listed.
 
  The Series A QUIPS will be represented by global certificates registered in
the name of The Depository Trust Company ("DTC") or its nominee. Beneficial
interests in the Series A QUIPS will be shown on, and transfers thereof will
be effected only through, records maintained by participants in DTC. Except as
described in the accompanying Prospectus, Series A QUIPS in certificated form
will not be issued in exchange for the global certificates. See "Description
of QUIPS--Book-Entry Issuance" in the accompanying Prospectus.
 
                               ----------------
 
  IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
QUIPS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
                                      S-3
<PAGE>
 
  The following information supplements and should be read in conjunction with
the information contained in the accompanying Prospectus. As used herein, (i)
the "Indenture" means the Junior Subordinated Indenture, as amended and
supplemented from time to time, including the First Supplemental Indenture
relating to the Series A QUIDS, between MCI and Wilmington Trust Company, as
trustee (the "Debenture Trustee"), and (ii) the "Trust Agreement" means the
Amended and Restated Trust Agreement among MCI, as Depositor, Wilmington Trust
Company, as Property Trustee (the "Property Trustee") and Delaware Trustee
(the "Delaware Trustee"), and the Administrative Trustees named therein
(collectively, with the Property Trustee and Delaware Trustee, the "Issuer
Trustees"). Each of the other capitalized terms used in this Prospectus
Supplement has the meaning set forth in this Prospectus Supplement or in the
accompanying Prospectus.
 
                                 RISK FACTORS
 
  Prospective purchasers of the Series A QUIPS should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following
matters.
 
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE
SERIES A QUIDS
 
  The obligations of MCI under the Series A Guarantee issued by MCI for the
benefit of the holders of Series A QUIPS are unsecured and rank subordinate
and junior in right of payment to all Senior Debt of MCI. The obligations of
MCI under the Series A QUIDS are subordinate and junior in right of payment to
all such Senior Debt. At December 31, 1995, the Senior Debt of MCI aggregated
approximately $4 billion. MCI is a non-operating holding company and almost
all of the operating assets of MCI and its consolidated subsidiaries are owned
by such subsidiaries. MCI relies primarily on interest and dividends from such
subsidiaries to meet its obligations for payment of principal and interest on
its outstanding debt obligations and corporate expenses. Accordingly, the
Series A QUIDS will be effectively subordinated to all existing and future
liabilities of MCI's subsidiaries, and holders of Series A QUIDS should look
only to the assets of MCI for payments on the Series A QUIDS. None of the
Indenture, the Series A Guarantee or the Trust Agreement places any limitation
on the amount of secured or unsecured debt, including Senior Debt, that may be
incurred by MCI. See "Description of Guarantees--Status of the Guarantees" and
"Description of QUIDS--Subordination" in the accompanying Prospectus.
 
  The ability of the Series A Issuer to pay amounts due on the Series A QUIPS
is solely dependent upon MCI making payments on the Series A QUIDS as and when
required.
 
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
 
  MCI has the right under the Indenture to defer the payment of interest on
the Series A QUIDS at any time or from time to time for a period not exceeding
20 consecutive quarters with respect to each Extension Period, provided that
no Extension Period may extend beyond the Stated Maturity of the Series A
QUIDS. As a consequence of any such election, quarterly Distributions on the
Series A QUIPS by the Series A Issuer will be deferred (and the amount of
Distributions to which holders of the Series A QUIPS are entitled will
continue to accumulate at the rate of   % per annum, compounded quarterly)
during any such Extension Period. During any such Extension Period, MCI may
not, and may not permit any subsidiary of MCI to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of MCI's capital stock or (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities (including other QUIDS) that rank pari passu
with or junior in interest to the Series A QUIDS, or make any guarantee
payments with respect to the foregoing (other than (a) dividends or
distributions in Common Stock of MCI, (b) redemptions or purchases of any
rights pursuant to MCI's Preferred Stock Rights Plan, or any successor to such
Preferred Stock Rights Plan, and the declaration of a dividend of such rights
or the issuance of Preferred Stock under such plans in the
 
                                      S-4
<PAGE>
 
future, (c) payments under any Guarantee, (d) purchases of Common Stock
related to the issuance of Common Stock under any of MCI's benefit plans for
its directors, officers or employees and (e) purchases of Common Stock
required to prevent the loss or secure the renewal or reinstatement of any
government license or franchise held by MCI or any of its subsidiaries). Prior
to the termination of any such Extension Period, MCI may further extend the
interest payment period, provided that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Series A
QUIDS. Upon the termination of any Extension Period and the payment of all
amounts then due, MCI may elect to begin a new Extension Period subject to the
above requirements. See "Certain Terms of Series A QUIPS--Distributions" and
"Certain Terms of Series A QUIDS--Option to Extend Interest Payment Period".
 
  Should an Extension Period occur, a holder of Series A QUIPS will continue
to accrue interest income in respect of its pro rata share of the Series A
QUIDS held by the Series A Issuer for United States federal income tax
purposes. As a result, a holder of Series A QUIPS will include such interest
in gross income for United States federal income tax purposes in advance of
the receipt of cash, and will not receive the cash related to such income from
the Series A Issuer if the holder disposes of the Series A QUIPS prior to the
record date for the payment of Distributions. See "Certain Federal Income Tax
Consequences--Original Issue Discount" and "--Sale or Redemption of Series A
QUIPS".
 
  MCI has no current intention of exercising its right to defer payments of
interest by extending the interest payment period on the Series A QUIDS.
However, should MCI elect to exercise such right in the future, the market
price of the Series A QUIPS is likely to be affected. A holder that disposes
of its Series A QUIPS during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Series A QUIPS. In addition, as a result of the existence of MCI's right to
defer interest payments, the market price of the Series A QUIPS (which
represent preferred undivided beneficial interests in the Series A QUIDS) may
be more volatile than the market prices of other securities on which original
issue discount accrues that are not subject to such deferrals.
 
SPECIAL EVENT REDEMPTION
 
  Upon the occurrence and continuation of a Special Event, as described in
"Description of QUIPS--Redemption or Exchange--Special Event Redemption or
Distribution of Corresponding QUIDS" in the accompanying Prospectus, MCI has
the right to redeem the Series A QUIDS in whole (but not in part) and
therefore cause a mandatory redemption of the Series A QUIPS and Series A
Common Securities at the redemption price within 90 days following the
occurrence of such Special Event.
 
  On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's budget proposal, was released. The Bill
would, among other things, generally deny interest deductions for interest on
an instrument, issued by a corporation, that has a maximum weighted average
maturity of more than 40 years. The Bill would also generally deny interest
deductions for interest on an instrument, issued by a corporation, that has a
maximum term of more than 20 years and that is not shown as indebtedness on
the separate balance sheet of the issuer or, where the instrument is issued to
a related party (other than a corporation), where the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the issuer's consolidated balance sheet. For purposes of determining the
weighted average maturity or the term of an instrument, any right to extend
would be treated as exercised. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If either provision were to apply to the Series A QUIDS, MCI would be
unable to deduct interest on the Series A QUIDS. However, on March 29, 1996,
the Chairmen of the Senate Finance and House Ways
 
                                      S-5
<PAGE>
 
and Means Committees issued a joint statement to the effect that it was their
intention that the effective date of the President's legislative proposals, if
adopted, will be no earlier than the date of appropriate Congressional action.
Under current law, MCI will be able to deduct interest on the Series A QUIDS.
There can be no assurance, however, that current or future legislative
proposals or final legislation will not affect the ability of MCI to deduct
interest on the Series A QUIDS. Such a change could give rise to a Tax Event,
which may permit MCI to cause a redemption of the Series A QUIPS, as described
more fully in the accompanying Prospectus under "Description of QUIPS--
Redemption or Exchange--Special Event Redemption or Distribution of
Corresponding QUIDS".
 
  There can be no assurance as to the market prices for Series A QUIPS or
Series A QUIDS that may be distributed in exchange for Series A QUIPS if a
liquidation of the Series A Issuer occurs. Accordingly, the Series A QUIPS
that an investor may purchase, whether pursuant to the offer made hereby or in
the secondary market, or the Series A QUIDS that a holder of Series A QUIPS
may receive on liquidation of the Series A Issuer, may trade at a discount to
the price that the investor paid to purchase the Series A QUIPS offered
hereby. In addition, because MCI has the right to shorten or extend the
maturity of the Series A QUIDS upon an exchange, there can be no assurance
that MCI will not exercise its option to change the maturity of the Series A
QUIDS upon an exchange. As a result, holders of Series A QUIPS may receive
Series A QUIDS on liquidation of the Series A Issuer and prospective
purchasers of Series A QUIPS are also making an investment decision with
regard to the Series A QUIDS and should carefully review all the information
regarding the Series A QUIDS contained herein. See "Description of the QUIPS--
Redemption or Exchange--Special Event Redemption or Distribution of
Corresponding QUIDS" and "Description of the Corresponding QUIDS--General" in
the accompanying Prospectus.
 
RIGHTS UNDER THE SERIES A GUARANTEE
 
  The Series A Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Wilmington
Trust Company will act as the indenture trustee under the Series A Guarantee
(the "Guarantee Trustee") for the purposes of compliance with the Trust
Indenture Act and will hold the Series A Guarantee for the benefit of the
holders of the Series A QUIPS. Wilmington Trust Company will also act as
Debenture Trustee for the Series A QUIDS and as Property Trustee and Delaware
Trustee under the Trust Agreement. The Series A Guarantee guarantees to the
holders of the Series A QUIPS the following payments, to the extent not paid
by the Series A Issuer: (i) any accumulated and unpaid Distributions required
to be paid on the Series A QUIPS, to the extent that the Series A Issuer has
funds on hand available therefor, (ii) the redemption price with respect to
any Series A QUIPS called for redemption, to the extent that the Series A
Issuer has funds on hand available therefor, and (iii) upon a voluntary or
involuntary dissolution, winding-up or liquidation of the Series A Issuer
(unless the Series A QUIDS are distributed to holders of the Series A QUIPS),
the lesser of (a) the aggregate of the liquidation preference and all accrued
and unpaid Distributions to the date of payment and (b) the amount of assets
of the Series A Issuer remaining available for distribution to holders of the
Series A QUIPS. If MCI were to default on its obligation to pay amounts
payable under the Series A QUIDS, the Series A Issuer would lack funds for the
payment of Distributions or amounts payable on redemption of the Series A
QUIPS or otherwise, and, in such event, holders of the Series A QUIPS would
not be able to rely upon the Series A Guarantee for payment of such amounts.
Instead, holders of the Series A QUIPS would rely on the enforcement by the
Property Trustee of its rights as registered holder of the Series A QUIDS
against MCI pursuant to the terms of the Series A QUIDS. See "Description of
Guarantees" and "Description of Corresponding QUIDS" in the accompanying
Prospectus. The Trust Agreement provides that each holder of Series A QUIPS by
acceptance thereof agrees to the provisions of the Series A Guarantee and the
Indenture.
 
LIMITED VOTING RIGHTS
 
  Holders of Series A QUIPS will generally have limited voting rights relating
only to the modification of the Series A QUIPS and the dissolution, winding-up
or liquidation of the Series A Issuer. Holders of
 
                                      S-6
<PAGE>
 
Series A QUIPS will not be entitled to vote to appoint, remove or replace the
Property Trustee or the Delaware Trustee, which voting rights are vested
exclusively in the holder of the Series A Common Securities except upon the
occurrence of certain events described herein. The Issuer Trustees and MCI may
amend the Trust Agreement without the consent of holders of Series A QUIPS to
ensure that the Series A Issuer will be classified for United States federal
income tax purposes as a grantor trust even if such action adversely affects
the interests of such holders. See "Description of QUIPS--Voting Rights;
Amendment of Each Trust Agreement" and "--Removal of Issuer Trustees" in the
accompanying Prospectus.
 
TRADING CHARACTERISTICS OF SERIES A QUIPS
 
  The Series A Issuer intends to list the Series A QUIPS on the Nasdaq
National Market. The Series A QUIPS may trade at prices that do not fully
reflect the value of accrued but unpaid interest with respect to the
underlying Series A QUIDS. A holder of Series A QUIPS that disposes of its
Series A QUIPS between record dates for payments of Distributions will
nevertheless be required to include accrued but unpaid interest on the Series
A QUIDS through the date of disposition in income as ordinary income and to
add such amount to its adjusted tax basis in the Series A QUIPS disposed of.
Such holder will recognize a capital loss to the extent the selling price
(which may not fully reflect the value of accrued but unpaid interest) is less
than its adjusted tax basis (which will include accrued but unpaid interest).
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences--Sale or Redemption of Series A
QUIPS".
 
CHANGES IN INDUSTRY; COMPETITION; CAPITAL EXPENDITURES
 
  The communications services industry is in the process of substantial
change, providing significant risks to its participants. Evolving and newly
developed technology, emerging significant competition in the market for long-
distance and local telecommunications services, the increasing desire of
customers to have most or all of their various communications needs fulfilled
by one supplier, and the recent enactment of the Telecommunications Act of
1996 (the "Telecommunications Act") are causing companies, including MCI,
which offer services primarily in one part of the communication services
market, to offer, either directly or in alliance with others, new services to
complement their primary services offerings. There can be no assurance that
MCI will be able to compete successfully in offering these new services.
 
  The communications services business is highly competitive and capital
intensive. The primary and most vigorous competitor in MCI's core business of
providing domestic and international long-distance telecommunication services
is the long-distance telecommunications unit of AT&T Corp., which is
substantially larger than MCI. MCI anticipates that, as a result of the
Telecommunications Act, the Regional Bell Operating Companies (the "RBOCs")
will eventually become substantial competitors of MCI for long-distance
telecommunication services, especially in their local regions where they have
long-standing relationships and substantial capital resources. In addition,
MCI competes with Sprint Corporation, other facilities based domestic
telecommunications common carriers and numerous resellers of long-distance
telecommunication services. As the Telecommunications Act is implemented,
companies that operate primarily in a communication services market other than
the long-distance telecommunication services market are likely to compete with
MCI in the long-distance telecommunication services market. Some of these
companies have substantial financial and other resources.
 
  MCI anticipates that it will continue to make substantial capital
expenditures in the future. It also may make acquisitions, some of which may
be significant, and the funding for which may be generated from internally
generated funds, the incurrence of indebtedness, the issuance of equity or a
combination thereof. The incurrence of indebtedness to fund capital
expenditures or acquisitions and/or the assumption of indebtedness in
connection with such acquisitions, which in each case would
 
                                      S-7
<PAGE>
 
be senior to the Series A QUIPS and the Series A QUIDS, could result in a
downgrading of MCI's credit rating, and, as a result, have an adverse effect
upon the market value of the Series A QUIPS and the Series A QUIDS.
 
                                 MCI CAPITAL I
 
  MCI Capital I is a statutory business trust formed under Delaware law
pursuant to (i) the Trust Agreement executed by MCI, as Depositor, Wilmington
Trust Company, as Property Trustee and Delaware Trustee, and the
Administrative Trustees named therein, and (ii) the filing of a certificate of
trust with the Delaware Secretary of State on April 17, 1996. The Series A
Issuer's business and affairs are conducted by the Issuer Trustees: Wilmington
Trust Company, as Property Trustee and Delaware Trustee, and two individual
Administrative Trustees who are employees or officers of or affiliated with
MCI. The Series A Issuer exists for the exclusive purposes of (i) issuing and
selling the Series A QUIPS and Series A Common Securities, (ii) using the
proceeds from the sale of Series A QUIPS and Series A Common Securities to
acquire Series A QUIDS issued by MCI and (iii) engaging in only those other
activities necessary, convenient or incidental thereto. Accordingly, the
Series A QUIDS will be the sole assets of the Series A Issuer, and payments
under the Series A QUIDS will be the sole revenue of the Series A Issuer. All
of the Series A Common Securities will be owned by MCI. The Series A Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Series A QUIPS, except that upon the occurrence and continuance of an
event of default under the Trust Agreement, the rights of MCI as holder of the
Series A Common Securities to payment in respect of Distributions and payments
upon liquidation, redemption or otherwise will be subordinated to the rights
of the holders of the Series A QUIPS. See "Description of QUIPS--Subordination
of Common Securities" in the accompanying Prospectus. MCI will acquire Series
A Common Securities in an aggregate liquidation amount equal to 3% of the
total capital of the Series A Issuer. The Series A Issuer has a term of 55
years, but may terminate earlier as provided in the Trust Agreement. The
principal executive office of the Series A Issuer is 1801 Pennsylvania Avenue,
N.W., Washington, D.C. 20006, Attention: Secretary, and its telephone number
is (202) 872-1600. See "The Issuers" in the accompanying Prospectus.
 
                        MCI COMMUNICATIONS CORPORATION
 
  MCI Communications Corporation ("MCI"), a Delaware corporation organized in
1968, has its principal executive offices at 1801 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006, and its telephone number is (202) 872-1600. MCI is a
registered service mark of MCI Communications Corporation.
 
  MCI and its subsidiaries provide a broad range of communication services,
including long-distance telecommunication services, local and wireless
services and information technology services. The provision of long-distance
telecommunication services is the core business of MCI and its subsidiaries.
Long-distance telecommunication services comprise a wide spectrum of domestic
and international voice and data services, including long-distance telephone
services, data communication services, teleconferencing services and
electronic messaging services. During each of the last three years, more than
90% of the operating revenues and operating income of MCI and its subsidiaries
were derived from its core business. Through its subsidiaries, MCI is the
second largest carrier of long-distance telecommunication services in the
United States and the third largest carrier of international long-distance
telecommunication services in the world.
 
  The communication services industry is in the process of substantial change,
providing significant opportunities and risks to its participants. Evolving
and newly developed technology, emerging significant competition in the market
for long-distance and local telecommunication services, as well as the
increasing desire of customers to have most or all of their various
communication needs fulfilled
 
                                      S-8
<PAGE>
 
by one supplier, are causing companies, including MCI, which offer services
primarily in one part of the communication services market, to offer, either
directly or through alliances with others, new services to complement their
primary services offerings.
 
  MCI expects that this expansion into new services will continue and is
likely to accelerate as a result of the enactment of the Telecommunications
Act in February 1996. Among other things, the Telecommunications Act (i) opens
the local services market, currently dominated by the RBOCs, to competition by
requiring the RBOCs to sell separately their local services and network
elements, such as interconnection and local loops, to their new competitors;
(ii) allows the RBOCs to provide long-distance telecommunication services in
their respective regions once they comply with certain requirements that are
intended to promote competition for local services; and (iii) allows the RBOCs
to offer long-distance telecommunication services outside their respective
regions immediately.
 
  MCI believes that it is positioning itself to capitalize on the
opportunities that should be available in the communication services markets.
MCI's investment in ventures and developing markets will enable it to offer a
variety of local, wireless, information technology and multimedia services.
These services, combined with the continued growth and strength of MCI's core
business, should enable MCI to compete effectively in these markets and
against the RBOCs and any others that seek to enter the long-distance
telecommunication services market.
 
  MCI anticipates that continued substantial capital expenditures will be
required to compete effectively in these markets. Competition from AT&T Corp.,
the RBOCs and others significantly larger than MCI, in financial and other
resources, will be intense. Due to the rapidly changing nature of these
markets and the other factors summarized above, it is not possible to predict
the level of its future success, but MCI believes that it will compete
effectively in providing its services.
 
  MCI's assets consist principally of the stock of and advances to its
subsidiaries. Almost all of the operating assets of MCI and its consolidated
subsidiaries are owned by such subsidiaries and MCI relies primarily on
interest and dividends from such subsidiaries to meet its obligations for
payment of principal and interest on its outstanding debt obligations and
corporate expenses. As of December 31, 1995, MCI had approximately $4 billion
aggregate principal amount of Senior Debt outstanding. The Series A QUIDS will
be effectively subordinated to all existing and future liabilities of MCI's
subsidiaries, and holders of the Series A QUIDS should look only to the assets
of MCI for payments on the Series A QUIDS. Neither the Indenture, the Series A
Guarantee nor the Trust Agreement will place any limitation on the amount of
secured or unsecured debt, including Senior Debt, that may be incurred by MCI.
 
                                      S-9
<PAGE>
 
                      RATIO OF EARNINGS TO FIXED CHARGES
 
  The following table sets forth the ratios of earnings to fixed charges for
MCI and its subsidiaries for the years indicated:
 
<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                        ------------------------
                                                        1995 1994 1993 1992 1991
                                                        ---- ---- ---- ---- ----
<S>                                                     <C>  <C>  <C>  <C>  <C>
Ratio of Earnings to Fixed Charges..................... 3.34 4.82 4.12 3.63 3.37
</TABLE>
 
  For purposes of this ratio, earnings are calculated by adding fixed charges
(excluding capitalized interest) to income before income taxes and
extraordinary item. Fixed charges consist of interest on indebtedness
(including amortization of debt discount and premium) and the portion of
rental expense representative of an interest factor.
 
                                USE OF PROCEEDS
 
  All of the proceeds from the sale of Series A QUIPS will be invested by the
Series A Issuer in Series A QUIDS. MCI intends that the proceeds from the sale
of such Series A QUIDS will be added to its general corporate funds and will
be used for general corporate purposes. Until so utilized, the net proceeds
will be invested in income producing securities.
 
                                     S-10
<PAGE>
 
                                CAPITALIZATION
 
  The following table sets forth the consolidated capitalization of MCI and
its subsidiaries as of December 31, 1995 and as adjusted to give effect to the
consummation of the offering of the Series A QUIPS, without giving effect to
any exercise of the Underwriters' over-allotment option. The following data
should be read in conjunction with the consolidated financial statements and
notes thereto of MCI and its subsidiaries incorporated herein by reference.
 
<TABLE>
<CAPTION>
                                                      AS OF DECEMBER 31, 1995
                                                      -----------------------
                                                                        AS
                                                      ACTUAL         ADJUSTED
                                                      ------         --------  
                                                          (IN MILLIONS)
<S>                                                 <C>            <C>
DEBT (1):
Secured debt:
  Capital lease obligations........................   $   589        $          
  Other secured obligations........................        19                   
                                                      -------        --------   
    Total secured debt.............................       608                   
Unsecured debt:                                                                 
  Senior notes, net................................     1,486                   
  Senior debentures, net...........................       884                   
  Commercial paper and bank credit facility                                     
   borrowings......................................       705                   
  Other unsecured debt.............................       261                   
                                                      -------        --------   
    Total unsecured debt...........................     3,336                   
                                                      -------        --------   
      Total debt...................................   $ 3,944        $          
                                                      =======        ========   
Company Obligated Mandatorily Redeemable Preferred                              
 Securities of Subsidiary Trust Holding Solely                                  
 Parent Junior Subordinated Debentures(2)..........                             
STOCKHOLDERS' EQUITY:                                                           
  Class A common stock, $.10 par value, authorized                              
   500 million shares, issued 136 million shares...   $    14        $          
  Common stock, $.10 par value, authorized 2                                    
   billion shares, issued 593 million shares.......        60                   
  Additional paid in capital.......................     6,405                   
  Retained earnings................................     4,063                   
  Treasury stock, at cost, 43 million shares.......      (940)                  
                                                      -------        --------   
    Total stockholders' equity.....................     9,602                   
                                                      -------        --------   
      Total capitalization.........................   $13,546        $          
                                                      =======        ========   
</TABLE>
- --------
(1) See Note 9 of Notes to Consolidated Financial Statements on pages 22
    through 24 of MCI's 1995 Annual Report to Stockholders, which is included
    in Exhibit 13 to MCI's Annual Report on Form 10-K for the year ended
    December 31, 1995, for additional information concerning MCI's debt and
    capital lease obligations, which are obligations of subsidiaries of MCI
    that are guaranteed by MCI. Interest rates on capital lease obligations,
    on a weighted average basis, approximated 9.0% per annum at December 31,
    1995.
(2) As described herein, all of the assets of the Series A Issuer will be $
    Junior Subordinated Deferrable Interest Debentures, Series A, issued by
    MCI to the Series A Issuer. MCI owns all of the Series A Common Securities
    of the Series A Issuer.
 
                                     S-11
<PAGE>
 
                             ACCOUNTING TREATMENT
 
  For financial reporting purposes, the Series A Issuer will be treated as a
subsidiary of MCI and, accordingly, the accounts of the Series A Issuer will
be included in the consolidated financial statements of MCI. The Series A
QUIPS will be presented as a separate line item in the consolidated balance
sheet of MCI and appropriate disclosures about the Series A QUIPS, the Series
A Guarantee and the Series A QUIDS will be included in the notes to the
consolidated financial statements. For financial reporting purposes, MCI will
record Distributions payable on the Series A QUIPS as an expense.
 
                        SELECTED FINANCIAL INFORMATION
 
  The following selected financial data for the five years ended December 31,
1995 are derived from the consolidated audited financial statements of MCI and
its subsidiaries. The following amounts should be read in conjunction with the
consolidated financial statements and notes thereto of MCI incorporated herein
by reference to MCI's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
 
                        SELECTED FINANCIAL INFORMATION
                    (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,
                                ----------------------------------------------
                                  1995      1994      1993     1992     1991
                                --------  --------  --------  -------  -------
<S>                             <C>       <C>       <C>       <C>      <C>
INCOME STATEMENT DATA:
Revenue........................ $ 15,265  $ 13,338  $ 11,921  $10,562  $ 9,491
Total operating expenses.......  (14,147)  (11,882)  (10,653)  (9,351)  (8,400)
Income from operations.........    1,118     1,456     1,268    1,211    1,091
Equity in income (losses) of
 affiliated companies..........     (187)       (4)       (2)      (2)      (1)
Income before extraordinary
 item..........................      548       795       627      609      551
                                --------  --------  --------  -------  -------
Net income..................... $    548  $    795  $    582  $   609  $   551
                                ========  ========  ========  =======  =======
Earnings applicable to common
 stockholders.................. $    548  $    794  $    581  $   589  $   522
                                ========  ========  ========  =======  =======
Earnings per common and common
 equivalent share.............. $    .80  $   1.32  $   1.04  $  1.11  $  1.00
Cash dividends per share.......      .05       .05       .05      .05      .05
BALANCE SHEET DATA (AT PERIOD
 END):
Gross investment in property
 and equipment................. $ 15,547  $ 13,408  $ 11,618  $10,316  $ 9,684
Total assets...................   19,301    16,366    11,276    9,678    8,834
Long-term debt.................    3,444     2,997     2,366    3,432    3,104
Stockholders' equity...........    9,602     9,004     4,713    3,150    2,959
CASH FLOW DATA:
Cash from operating
 activities.................... $  2,979  $  2,355  $  1,978  $ 1,726  $ 1,271
Capital expenditures for
 property and equipment........    2,866     2,897     1,733    1,272    1,377
Acquisition (disposition) of
 businesses and investment in
 affiliates and News Corp......    2,737       284         8      (22)     --
</TABLE>
 
                                     S-12
<PAGE>
 
                        CERTAIN TERMS OF SERIES A QUIPS
 
GENERAL
 
  The following summary of certain terms and provisions of the Series A QUIPS
supplements the description of the terms and provisions of the QUIPS set forth
in the accompanying Prospectus under the heading "Description of QUIPS", to
which description reference is hereby made. This summary of certain terms and
provisions of the Series A QUIPS does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Trust
Agreement. The form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and accompanying
Prospectus is a part.
 
DISTRIBUTIONS
 
  The Series A QUIPS represent undivided beneficial interests in the assets of
the Series A Issuer, and Distributions on each Series A QUIPS will be payable
at the annual rate of    % of the stated liquidation preference of $25,
payable quarterly in arrears on March 31, June 30, September 30 and December
31 of each year. Distributions will accumulate from    , 1996, the date of
original issuance. The first Distribution payment date for the Series A QUIPS
will be June 30, 1996. The amount of Distributions payable for any period will
be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which Distributions are payable on the Series A QUIPS
is not a Business Day, then payment of the Distributions payable on such date
will be made on the next succeeding day that is a Business Day (and without
any additional Distributions or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the date such payment was
originally payable. See "Description of QUIPS--Distributions" in the
accompanying Prospectus.
 
  So long as no Event of Default under the Indenture has occurred and is
continuing, MCI has the right under the Indenture to defer the payment of
interest on the Series A QUIDS at any time or from time to time for a period
not exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the Stated Maturity of the
Series A QUIDS. As a consequence of any such election, quarterly Distributions
on the Series A QUIPS will be deferred by the Series A Issuer during any such
Extension Period. Distributions to which holders of the Series A QUIPS are
entitled will accumulate additional Distributions thereon at the rate per
annum of    % thereof, compounded quarterly from the relevant payment date for
such Distributions. The term "Distributions" as used herein shall include any
such additional Distributions. During any such Extension Period, MCI may not,
and may not permit any subsidiary of MCI to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of MCI's capital stock or (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem
any debt securities (including other QUIDS) that rank pari passu with or
junior in interest to the Series A QUIDS or make any guarantee payments with
respect to the foregoing (other than (a) dividends or distributions in Common
Stock of MCI, (b) redemptions or purchases of any rights pursuant to MCI's
Preferred Stock Rights Plan, or any successor to such Preferred Stock Rights
Plan, and the declaration of a dividend of such rights or the issuance of
Preferred Stock under such plans in the future, (c) payments under any
Guarantee, (d) purchases of Common Stock related to the issuance of Common
Stock under any of MCI's benefit plans for its directors, officers or
employees and (e) purchases of Common Stock required to prevent the loss or
secure the renewal or reinstatement of any government license or franchise
held by MCI or any of its subsidiaries. Prior to the termination of any such
Extension Period, MCI may further extend the interest payment period, provided
that no Extension Period may exceed 20 consecutive quarters or extend beyond
the Stated Maturity of the Series A QUIDS. Upon the termination of any such
Extension Period and the payment of all amounts then due, MCI may elect to
begin a new Extension Period. See "Certain Terms of the Series A QUIDS--Option
to Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences--Original Issue Discount".
 
                                     S-13
<PAGE>
 
  MCI has no current intention of exercising its right to defer payments of
interest by extending the interest payment period on the Series A QUIDS.
 
REDEMPTION
 
  Upon the repayment or redemption, in whole or in part, of the Series A
QUIDS, whether at Stated Maturity or upon earlier redemption as provided in
the Indenture, the proceeds from such repayment or redemption shall be applied
by the Property Trustee to redeem a Like Amount (as defined in the
accompanying Prospectus) of the Series A QUIPS, upon not less than 30 nor more
than 60 days notice prior to the date fixed for repayment or redemption, at a
redemption price (the "Redemption Price") equal to the aggregate liquidation
preference of such Series A QUIPS plus accumulated and unpaid Distributions
thereon to the date of redemption (the "Redemption Date"). See "Description of
QUIPS--Redemption or Exchange" in the accompanying Prospectus and "Certain
Terms of Series A QUIDS--Redemption".
 
  MCI will have the right to redeem the Series A QUIDS (i) on or after    ,
2001, in whole at any time or in part from time to time, at a redemption price
equal to the accrued and unpaid interest on the Series A QUIDS so redeemed to
the date fixed for redemption, plus 100% of the principal amount thereof or
(ii) at any time, in whole (but not in part), upon the occurrence and
continuation of a Tax Event or an Investment Company Event (each as defined in
the accompanying Prospectus, and as so collectively defined, a "Special
Event"), at a redemption price equal to the accrued and unpaid interest on the
Series A QUIDS so redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof, in each case subject to conditions described under
"Description of QUIDS--Redemption" and "Description of Corresponding QUIDS--
Optional Redemption" in the accompanying Prospectus.
 
SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF SERIES A QUIDS
 
  If a Special Event shall occur and be continuing, MCI will have the right to
redeem the Series A QUIDS in whole (but not in part) and therefore cause a
mandatory redemption of the Series A QUIPS in whole (but not in part) at the
Redemption Price within 90 days following the occurrence of such Special
Event. At any time, MCI will have the right to liquidate the Series A Issuer
and cause the Series A QUIDS to be distributed to the holders of the Series A
QUIPS in liquidation of the Series A Issuer. Under current United States
federal income tax law and interpretations and assuming, as expected, the
Series A Issuer is treated as a grantor trust, a distribution of the Series A
QUIDS should not be a taxable event to holders of the Series A QUIPS. Should
there be a change in law, a change in legal interpretation, a Special Event or
other circumstances, however, the distribution could be a taxable event to
holders of the Series A QUIPS. See "Certain Federal Income Tax Consequences--
Distribution of Series A QUIDS to Holders of Series A QUIPS". If MCI does not
elect either option described above, the Series A QUIPS will remain
outstanding until the repayment of the Series A QUIDS.
 
  If MCI elects to liquidate the Series A Issuer and thereby causes the Series
A QUIDS to be distributed to holders of the Series A QUIPS in liquidation of
the Series A Issuer, MCI shall have the right to shorten or extend the
maturity of such Series A QUIDS, provided that it can extend the maturity only
if certain conditions are met. See "Description of QUIPS--Redemption or
Exchange--Extension of Maturity of Corresponding QUIDS" in the accompanying
Prospectus and "Certain Terms of Series A QUIDS--General".
 
LIQUIDATION VALUE
 
  The amount payable on the Series A QUIPS in the event of any liquidation of
the Series A Issuer is $25 per Series A QUIPS plus accumulated and unpaid
Distributions, which may be in the form of a distribution of such amount in
Series A QUIDS, subject to certain exceptions. See "Description of QUIPS--
Liquidation Distribution Upon Termination" in the accompanying Prospectus.
 
                                     S-14
<PAGE>
 
                        CERTAIN TERMS OF SERIES A QUIDS
 
GENERAL
 
  The following summary of certain terms and provisions of the Series A QUIDS
supplements the description of the terms and provisions of the Corresponding
QUIDS set forth in the accompanying Prospectus under the headings "Description
of QUIDS" and "Description of Corresponding QUIDS", to which description
reference is hereby made. The summary of certain terms and provisions of the
Series A QUIDS set forth below does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the Indenture. The
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus Supplement and accompanying Prospectus is a part.
 
  Concurrently with the issuance of the Series A QUIPS, the Series A Issuer
will invest the proceeds thereof and the consideration paid by MCI for the
Series A Common Securities in the Series A QUIDS issued by MCI. The Series A
QUIDS will bear interest at the annual rate of    % of the principal amount
thereof, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year (each, an "Interest Payment Date"), commencing June
30, 1996, to the person in whose name each Series A QUIDS is registered,
subject to certain exceptions, at the close of business on the Business Day
next preceding such Interest Payment Date. It is anticipated that, until the
liquidation, if any, of the Series A Issuer, each Series A QUIDS will be held
in the name of the Property Trustee in trust for the benefit of the holders of
the Series A QUIPS. The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on the Series A QUIDS is not a
Business Day, then payment of the interest 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
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of    % thereof, compounded quarterly. The term "interest"
as used herein shall include quarterly interest payments, interest on
quarterly interest payments not paid on the applicable Interest Payment Date
and Additional Sums (as defined below), as applicable.
 
  The Series A QUIDS will be issued as a series of QUIDS under the Indenture.
The Series A QUIDS will mature on    , 2026, which date may be extended at any
time at the election of MCI for one or more periods, but in no event to a date
later than      , 2045 (such date, as it may be extended, the "Stated
Maturity"), provided that at the time such election is made and at the time of
extension (i) MCI is not in bankruptcy, otherwise insolvent or in liquidation,
(ii) MCI is not in default in the payment of any interest or principal on the
Series A QUIDS, (iii) the Series A Issuer is not in arrears on payments of
Distributions on the Series A QUIPS and no deferred Distributions are
accumulated, (iv) the Series A QUIDS are rated not less than BBB- by Standard
& Poor's Ratings Services or Baa3 by Moody's Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating organization
and (v) the extended Stated Maturity is no later than the 49th anniversary of
the initial issuance of the Series A QUIPS; provided, however, that, if MCI
exercises its right to liquidate the Series A Issuer and distribute the Series
A QUIDS, effective upon such exercise the Stated Maturity of the Series A
QUIDS may be changed to any date elected by MCI that is (i) no earlier than
the date five years after the initial issuance of the Series A QUIPS and (ii)
no later than the date 30 years (plus an extended term of up to an additional
19 years if the above-referenced conditions are satisfied) after the date of
the initial issuance of the Series A QUIPS.
 
  The Series A QUIDS will be unsecured and will rank junior and be subordinate
in right of payment to all Senior Debt of MCI. See "Description of QUIDS--
Subordination" in the accompanying Prospectus. MCI is a non-operating holding
company and almost all of the operating assets of MCI
 
                                     S-15
<PAGE>
 
and its consolidated subsidiaries are owned by such subsidiaries. MCI relies
primarily on interest and dividends from such subsidiaries to meet its
obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. Accordingly, the Series A QUIDS will be
subordinated to all Senior Debt of MCI and effectively subordinated to all
existing and future liabilities of MCI's subsidiaries, and holders of Series A
QUIDS should look only to the assets of MCI for payments on the Series A
QUIDS. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of MCI, whether under the Indenture or any existing
or other indenture that MCI may enter into in the future or otherwise,
including MCI's Senior and Subordinated Indentures entered into with Citibank,
N.A. and Bankers Trust Company, respectively. See "Description of QUIDS--
Subordination" in the accompanying Prospectus.
 
OPTION TO EXTEND INTEREST PAYMENT PERIOD
 
  MCI has the right under the Indenture at any time during the term of the
Series A QUIDS to defer the payment of interest at any time or from time to
time for a period not exceeding 20 consecutive quarters with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series A QUIDS. At the end of such Extension Period,
MCI must pay all interest then accrued and unpaid (together with interest
thereon at the annual rate of  %, compounded quarterly, to the extent
permitted by applicable law). During an Extension Period, interest will
continue to accrue and holders of Series A QUIDS (or holders of Series A QUIPS
while such series is outstanding) will be required to accrue interest income
for United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Original Issue Discount".
 
  During any such Extension Period, MCI may not, and may not permit any
subsidiary of MCI to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of MCI's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including other QUIDS) that rank pari passu with or junior in interest to the
Series A QUIDS or make any guarantee payments with respect to the foregoing
(other than (a) dividends or distributions in common stock of MCI,
(b) redemptions or purchases of any rights pursuant to MCI's Preferred Stock
Rights Plan, or any successor to such Preferred Stock Rights Plan, and the
declaration of a dividend of such rights or the issuance of Preferred Stock
under such plans in the future, (c) payments under any Guarantee,
(d) purchases of Common Stock related to the issuance of Common Stock under
any of MCI's benefit plans for its directors, officers or employees and (e)
purchases of Common Stock required to prevent the loss or secure the renewal
or reinstatement of any government license or franchise held by MCI or any of
its subsidiaries). Prior to the termination of any such Extension Period, MCI
may further extend the interest payment period, provided that no Extension
Period may exceed 20 consecutive quarters or extend beyond the Stated Maturity
of the Series A QUIDS. Upon the termination of any such Extension Period and
the payment of all amounts then due, MCI may elect to begin a new Extension
Period subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. MCI must give the
Property Trustee, the Administrative Trustees and the Debenture Trustee notice
of its election of such Extension Period at least one Business Day prior to
the earlier of (i) the date the Distributions on the Series A QUIPS would have
been payable except for the election to begin such Extension Period or (ii)
the date the Administrative Trustees are required to give notice to the Nasdaq
National Market or other applicable self-regulatory organization or to holders
of such Series A QUIPS of the record date or the date such Distributions are
payable, but in any event not less than one Business Day prior to such record
date. The Debenture Trustee shall give notice of MCI's election to begin a new
Extension Period to the holders of the Series A QUIPS. See "Description of
QUIDS--Option to Extend Interest Payment Period" in the accompanying
Prospectus.
 
ADDITIONAL SUMS
 
  If the Series A Issuer is required to pay any additional taxes, duties or
other governmental charges ("Additional Sums") as a result of a Tax Event, MCI
will pay as additional amounts on the Series A QUIDS such amounts as shall be
required so that the Distributions payable by the Series A Issuer shall
 
                                     S-16
<PAGE>
 
not be reduced as a result of any such additional taxes, duties or other
governmental charges, subject to the conditions described under "Description
of QUIPS--Redemption or Exchange--Special Event Redemption or Distribution of
Corresponding QUIDS" in the accompanying Prospectus.
 
REDEMPTION
 
  The Series A QUIDS are redeemable prior to maturity at the option of MCI (i)
on or after    , 2001, in whole at any time or in part from time to time, at a
redemption price equal to the accrued and unpaid interest on the Series A
QUIDS so redeemed to the date fixed for redemption, plus 100% of the principal
amount thereof or (ii) at any time in whole (but not in part), upon the
occurrence and continuation of a Special Event, at a redemption price equal to
the accrued and unpaid interest on the Series A QUIDS so redeemed to the date
fixed for redemption, plus 100% of the principal amount thereof, in each case
subject to the further conditions described under "Description of QUIDS--
Redemption" and "Description of Corresponding QUIDS--Optional Redemption" in
the accompanying Prospectus.
 
DISTRIBUTIONS OF SERIES A QUIDS
 
  Under certain circumstances involving the termination of the Series A
Issuer, Series A QUIDS may be distributed to the holders of the Series A QUIPS
in liquidation of the Series A Issuer after satisfaction of liabilities to
creditors of the Series A Issuer as provided by applicable law. If distributed
to holders of Series A QUIPS in liquidation, the Series A QUIDS will initially
be issued in the form of one or more global securities and DTC, or any
successor depositary for the Series A QUIPS, will act as depositary for the
Series A QUIDS. It is anticipated that the depositary arrangements for the
Series A QUIDS would be substantially identical to those in effect for the
Series A QUIPS. If the Series A QUIDS are distributed to the holders of Series
A QUIPS upon the liquidation of the Series A Issuer, MCI will use its best
efforts to list the Series A QUIDS on the Nasdaq National Market or the New
York Stock Exchange or such stock exchanges, if any, on which the Series A
QUIPS are then listed. There can be no assurance as to the market price of any
Series A QUIDS that may be distributed to the holders of Series A QUIPS. For a
description of DTC and the terms of the depositary matters, see "Description
of QUIPS--Book-Entry Issuance" in the accompanying Prospectus.
 
REGISTRATION OF SERIES A QUIDS
 
  A global security shall be exchangeable for Series A QUIDS registered in the
names of persons other than DTC or its nominee only if (i) DTC notifies MCI
that it is unwilling or unable to continue as a depository for such global
security and no successor depository shall have been appointed, or if at any
time DTC ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, at a time when DTC is required to be so
registered to act as such depository, (ii) MCI in its sole discretion
determines that such global security shall be so exchangeable, or (iii) there
shall have occurred and be continuing an Event of Default with respect to such
global security. Any global security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for definitive certificates
registered in such names as DTC shall direct. It is expected that such
instructions will be based upon directions received by DTC from its
Participants (as defined in the accompanying Prospectus) with respect to
ownership of beneficial interests in such global security. In the event that
Series A QUIDS are issued in definitive form, such Series A QUIDS will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
 
  Payments on Series A QUIDS represented by a global security will be made to
DTC, as the depositary for the Series A QUIDS. In the event Series A QUIDS are
issued in definitive form, principal and interest will be payable, the
transfer of the Series A QUIDS will be registrable, and Series A QUIDS will be
exchangeable for Series A QUIDS of other denominations of a like aggregate
principal amount, at the corporate office of the Debenture Trustee in
Wilmington, Delaware, or at the offices of any paying agent or transfer agent
appointed by MCI, provided that payment of interest may be made
 
                                     S-17
<PAGE>
 
at the option of MCI by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Series A QUIDS are issued in
certificated form, the record dates for payment of interest will be the 15th
day of the last month of each calendar quarter. For a description of DTC and
the terms of the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see
"Description of QUIPS--Book-Entry Issuance" in the accompanying Prospectus.
 
                    CERTAIN FEDERAL INCOME TAX CONSEQUENCES
 
  The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Series A QUIPS.
This summary only addresses the tax consequences to a person that acquires
Series A QUIPS on their original issue at their original offering price and
that is (i) an individual citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any state thereof or the District of Columbia or (iii) an estate or trust
the income of which is subject to United States federal income tax regardless
of source (a "United States Person"). This summary does not address all tax
consequences that may be applicable to a United States Person that is a
beneficial owner of Series A QUIPS, nor does it address the tax consequences
to (i) persons that are not United States Persons, (ii) persons that may be
subject to special treatment under United States federal income tax law, such
as banks, insurance companies, thrift institutions, regulated investment
companies, real estate investment trusts, tax-exempt organizations and dealers
in securities or currencies, (iii) persons that will hold Series A QUIPS as
part of a position in a "straddle" or as part of a "hedging," "conversion" or
other integrated investment transaction for federal income tax purposes, (iv)
persons whose functional currency is not the United States dollar or (v)
persons that do not hold Series A QUIPS as capital assets.
 
  The statements of law or legal conclusion set forth in this summary
constitute the opinion of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
special counsel to MCI and the Series A Issuer. This summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
Internal Revenue Service rulings and pronouncements and judicial decisions now
in effect, all of which are subject to change at any time. Such changes may be
applied retroactively in a manner that could cause the tax consequences to
vary substantially from the consequences described below, possibly adversely
affecting a beneficial owner of Series A QUIPS. In particular, legislation has
been proposed that could adversely affect MCI's ability to deduct interest on
the Series A QUIDS, which may in turn permit MCI to cause a redemption of the
Series A QUIPS. See "--Possible Tax Law Changes". The authorities on which
this summary is based are subject to various interpretations and it is
therefore possible that the federal income tax treatment of the purchase,
ownership and disposition of Series A QUIPS may differ from the treatment
described below.
 
  PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A QUIPS, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
 
CLASSIFICATION OF THE SERIES A ISSUER
 
  In connection with the issuance of the Series A QUIPS, Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel will render its opinion to the effect that,
under then current law and assuming compliance with the terms of the Trust
Agreement and certain other documents, and based on certain facts and
assumptions contained in such opinion, the Series A Issuer will be classified
as a grantor trust and not as an association taxable as a corporation for
United States federal income tax purposes. As a result, each beneficial owner
of Series A QUIPS (a "Securityholder") will be treated as owning an undivided
 
                                     S-18
<PAGE>
 
beneficial interest in the Series A QUIDS. Accordingly, each Securityholder
will be required to include in its gross income its pro rata share of the
original issue discount accrued with respect to the Series A QUIDS whether or
not cash is actually distributed to the Securityholders. See "--Original Issue
Discount." No amount included in income with respect to the Series A QUIPS
will be eligible for the dividends-received deduction.
 
ORIGINAL ISSUE DISCOUNT
 
  Under the Indenture, MCI has the right to defer the payment of interest on
the Series A QUIDS at any time from time to time for a period not exceeding 20
consecutive quarters with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Series A QUIDS.
Because of this option, all interest payable on the Series A QUIDS will be
treated as "original issue discount" ("OID") for federal income tax purposes.
Accordingly, a Securityholder will recognize interest income (in the form of
OID) on a daily basis under a constant yield method over the term of the
Series A QUIDS (including during any Extension Period), regardless of the
receipt of cash with respect to the period to which such income is
attributable. (Subsequent uses of the term "interest" in this summary shall
include interest in the form of OID.)
 
  As a result, Securityholders of record during an Extension Period will
include interest in gross income in advance of the receipt of cash, and any
Securityholders who dispose of Series A QUIPS prior to the record date for the
payment of Distributions following such Extension Period will include interest
in gross income but will not receive any cash related thereto from the Series
A Issuer. Any amount of OID included in a Securityholder's gross income
(whether or not during an Extension Period) will increase such
Securityholder's tax basis in its Series A QUIPS, and the amount of
Distributions received by a Securityholder will reduce such Securityholder's
tax basis in its Series A QUIPS.
 
DISTRIBUTION OF SERIES A QUIDS TO HOLDERS OF SERIES A QUIPS
 
  Under current law, a distribution by the Series A Issuer of the Series A
QUIDS as described under the caption "Certain Terms of Series A QUIPS--
Redemption or Exchange--Special Event Redemption or Distribution of
Corresponding QUIDS" will be non-taxable and will result in the Securityholder
receiving directly his pro rata share of the Series A QUIDS previously held
indirectly through the Series A Issuer, with a holding period and aggregate
tax basis equal to the holding period and aggregate tax basis such
Securityholder had in its Series A QUIPS before such distribution. A
Securityholder will accrue interest in respect of Series A QUIDS received from
the Series A Issuer in the manner described above under "--Original Issue
Discount".
 
SALES OR REDEMPTION OF SERIES A QUIPS
 
  Gain or loss will be recognized by a Securityholder on a sale of Series A
QUIPS (including a redemption for cash) in an amount equal to the difference
between the amount realized and the Securityholder's adjusted tax basis in the
Series A QUIPS sold or so redeemed. Gain or loss recognized by a
Securityholder on Series A QUIPS held for more than one year will generally be
taxable as long-term capital gain or loss.
 
  The Series A QUIPS may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying Series A
QUIDS. A Securityholder that disposes of its Series A QUIPS between record
dates for payments of Distributions will nevertheless be required to include
in income as ordinary income accrued but unpaid interest on the Series A QUIDS
through the date of disposition and to add such amount to its adjusted tax
basis in its Series A QUIPS disposed of. Such Securityholder will recognize a
capital loss on the disposition of its Series A QUIPS to the extent the
selling price (which may not fully reflect the value of accrued but unpaid
interest) is less than the Securityholder's adjusted tax basis in the Series A
QUIPS (which will include accrued but unpaid interest). Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for federal income tax purposes.
 
                                     S-19
<PAGE>
 
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
 
  The amount of OID accrued on the Series A QUIPS held of record by United
States Persons (other than corporations and other exempt Securityholders) will
be reported to the Internal Revenue Service. "Backup" withholding at a rate of
31% will apply to payments of interest to non-exempt United States Persons
unless the Securityholder furnishes its taxpayer identification number in the
manner prescribed in applicable Treasury Regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup
withholding and meets certain other conditions.
 
  Payment of the proceeds from the disposition of Series A QUIPS to or through
the United States office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
 
  Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the Internal Revenue Service.
 
POSSIBLE TAX LAW CHANGES
 
  On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's budget proposal, was released. The Bill
would, among other things, generally deny interest deductions for interest on
an instrument, issued by a corporation, that has a maximum weighted average
maturity of more than 40 years. The Bill would also generally deny interest
deductions for interest on an instrument, issued by a corporation, that has a
maximum term of more than 20 years and that is not shown as indebtedness on
the separate balance sheet of the issuer or, where the instrument is issued to
a related party (other than a corporation), where the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the issuer's consolidated balance sheet. For purposes of determining the
weighted average maturity or the term of an instrument, any right to extend
would be treated as exercised. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If either provision were to apply to the Series A QUIDS, MCI would be
unable to deduct interest on the Series A QUIDS. However, on March 29, 1996,
the Chairmen of the Senate Finance and House Ways and Means Committees issued
a joint statement to the effect that it was their intention that the effective
date of the President's legislative proposals, if adopted, will be no earlier
than the date of appropriate Congressional action. Under current law, MCI will
be able to deduct interest on the Series A QUIDS. There can be no assurance,
however, that current or future legislative proposals or final legislation
will not affect the ability of MCI to deduct interest on the Series A QUIDS.
Such a change could give rise to a Tax Event, which may permit MCI to cause a
redemption of the Series A QUIPS, as described more fully in the accompanying
Prospectus under "Description of QUIPS--Redemption or Exchange--Special Event
Redemption or Distribution of Corresponding QUIDS".
 
                                     S-20
<PAGE>
 
                                 UNDERWRITING
 
  Subject to the terms and conditions set forth in the Underwriting Agreement,
MCI and the Series A Issuer have agreed that the Series A Issuer will sell to
each of the Underwriters named below, and each of such Underwriters, for whom
Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated
are acting as representatives, has severally agreed to purchase from the
Series A Issuer the respective number of Series A QUIPS set forth opposite its
name below:
 
<TABLE>
<CAPTION>
                                                                       NUMBER OF
                                                                       SERIES A
  UNDERWRITER                                                            QUIPS
  -----------                                                          ---------
<S>                                                                    <C>
Goldman, Sachs & Co. .................................................
Merrill Lynch, Pierce, Fenner & Smith
     Incorporated.....................................................






                                                                          ---
  Total...............................................................
                                                                          ===
</TABLE>
 
  Subject to the terms and conditions set forth in the Underwriting Agreement,
the Underwriters are committed to take and pay for all such Series A QUIPS
offered hereby, if any are taken.
 
  The Underwriters propose to offer the Series A QUIPS in part directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus Supplement and in part to certain securities dealers at such
price less a concession of $   per Series A QUIPS. The Underwriters may allow,
and such dealers may reallow, a concession not to exceed $   per Series A
QUIPS to certain brokers and dealers. After the Series A QUIPS are released
for sale to the public, the offering price and other selling terms may from
time to time be varied by the representatives.
 
  The Series A Issuer has granted the Underwriters an option exercisable for
15 days after the date of this Prospectus Supplement to purchase up to an
aggregate       additional Series A QUIPS solely to cover over-allotments, if
any. If the Underwriters exercise their over-allotment option, the
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of Series A QUIPS to
be purchased by each of them, as shown in the foregoing table, bears to the
    Series A QUIPS offered.
 
  In view of the fact that the proceeds from the sale of the Series A QUIPS
will be used to purchase the Series A QUIDS issued by MCI, the Underwriting
Agreement provides that MCI will pay as Underwriters' Compensation for the
Underwriters' arranging the investment therein of such proceeds an amount of
$   per Series A QUIPS for the accounts of the several Underwriters.
 
  MCI and the Series A Issuer have agreed that, during the period beginning
from the date of the Underwriting Agreement and continuing to and including
the earlier of (i) the termination of trading restrictions on the Series A
QUIPS, as determined by the Underwriters, or (ii) 30 days after the closing
date, they will not offer, sell, contract to sell or otherwise dispose of any
QUIPS, any other beneficial interests in the assets of the Series A Issuer, or
any preferred securities or any other securities of the Series A Issuer or MCI
which are substantially similar to the Series A QUIPS, including any guarantee
of such securities, or any securities convertible into or exchangeable for or
representing the right to
 
                                     S-21
<PAGE>
 
receive securities, preferred securities or any such substantially similar
securities of either the Series A Issuer or MCI, without the prior written
consent of the representatives, except for the Series A QUIPS offered in
connection with the offering.
 
  Prior to this offering, there has been no public market for the Series A
QUIPS. The Series A Issuer intends to list the Series A QUIPS on the Nasdaq
National Market. The representatives of the Underwriters have advised MCI that
they intend to make a market in the Series A QUIPS prior to commencement of
trading on the Nasdaq National Market, but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Series A QUIPS.
 
  MCI and the Series A Issuer have agreed to indemnify the several
Underwriters against and contribute toward certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
 
  Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to MCI and its affiliates, for which such Underwriters or their
affiliates have received or will receive customary fees and commissions.
 
                                LEGAL OPINIONS
 
  Certain matters of Delaware law relating to the legality of the Series A
QUIPS, the validity of the Trust Agreement and the formation of the Series A
Issuer will be passed upon by Richards, Layton & Finger, special Delaware
Counsel to MCI and the Series A Issuer. The legality of the Series A Guarantee
and the Series A QUIDS will be passed upon for MCI by Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel, and for the Underwriters by Sullivan & Cromwell, New
York, New York. Certain matters relating to United States federal income tax
considerations will be passed upon for MCI by Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel.
 
                                     S-22
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                  SUBJECT TO COMPLETION, DATED APRIL 17, 1996
                                  $750,000,000
 
    MCI COMMUNICATIONS                       MCI CAPITAL I
        CORPORATION                          MCI CAPITAL II
    JUNIOR SUBORDINATED                      MCI CAPITAL III
        DEFERRABLE                           MCI CAPITAL IV
    INTEREST DEBENTURES      PREFERRED SECURITIES GUARANTEED TO THE EXTENT
                              THE ISSUER HAS FUNDS AS SET FORTH HEREIN BY
                                     MCI COMMUNICATIONS CORPORATION
 
  MCI Communications Corporation, a Delaware corporation ("MCI"), may from time
to time offer in one or more series or issuances its junior subordinated
deferrable interest debentures (the "QUIDS"). The QUIDS will be unsecured and
subordinate and junior in right of payment to Senior Debt (as defined in
"Description of QUIDS--Subordination") of MCI. If provided in an accompanying
Prospectus Supplement, MCI will have the right to defer payments of interest on
any series of QUIDS at any time or from time to time for such number of
consecutive interest payment periods (which shall not extend beyond the
maturity of the QUIDS) with respect to each deferral period as may be specified
in such Prospectus Supplement (each, an "Extension Period"). See "Description
of QUIDS--Option to Extend Interest Payments".
 
  MCI Capital I, MCI Capital II, MCI Capital III and MCI Capital IV, each a
trust formed under the laws of the State of Delaware (each, an "Issuer", and
collectively, the "Issuers"), may severally offer, from time to time, preferred
securities (the "QUIPS") representing preferred undivided beneficial interests
in the assets of such Issuer. MCI will be the owner of the common securities
(the "Common Securities") of each Issuer. The payment of periodic cash
distributions ("Distributions") with respect to the QUIPS of each Issuer and
payments on liquidation or redemption with respect to such QUIPS, in each case
to the extent of funds held by such Issuer, are each irrevocably guaranteed by
MCI as described herein (each, a "Guarantee"). See "Description of Guarantees".
The obligations of MCI under each Guarantee will be subordinate and junior in
right of payment to all Senior Debt of MCI. Concurrently with the issuance by
an Issuer of its QUIPS, such Issuer will invest the proceeds thereof and any
contributions made by MCI in respect of MCI's purchase of the Common Securities
in a corresponding series of MCI's QUIDS (the "Corresponding QUIDS") with terms
corresponding to the terms of that Issuer's QUIPS. The Corresponding QUIDS will
be the sole assets of each Issuer, and payments under the Corresponding QUIDS
will be the only revenue of each Issuer. MCI may redeem the Corresponding QUIDS
(and cause the redemption of the related QUIPS) or may terminate each Issuer
and cause the Corresponding QUIDS to be distributed to the holders of QUIPS in
liquidation of their interests in such Issuer. See "Description of QUIPS--
Liquidation Distribution Upon Termination".
 
  Holders of the QUIPS will be entitled to receive preferential cumulative cash
Distributions accumulating from the date of original issuance and payable
periodically as specified in an accompanying Prospectus Supplement. If provided
in an accompanying Prospectus Supplement, MCI will have the right to defer
payments of interest on any series of Corresponding QUIDS at any time or from
time to time for one or more Extension Periods (which shall not extend beyond
the Stated Maturity of the Corresponding QUIDS). If interest payments are so
deferred, Distributions on the corresponding series of QUIPS will also be
deferred, and MCI will not be permitted, subject to certain exceptions set
forth herein, to declare or pay any cash distributions with respect to MCI's
capital stock or debt securities that rank pari passu with or junior to the
Corresponding QUIDS. During an Extension Period, interest on the Corresponding
QUIDS will continue to accrue (and the amount of Distributions to which holders
of the QUIPS are entitled will accumulate at the rate per annum set forth in
the related Prospectus Supplement). See "Description of QUIPS--Distributions".
 
  The QUIDS and QUIPS may be offered in amounts, at prices and on terms to be
determined at the time of offering, provided that the aggregate initial public
offering price of all QUIDS (other than
 
                                                        (Continued on next page)
                                  -----------
THESE SECURITIES  HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE  SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
 AND EXCHANGE  COMMISSION OR ANY  STATE SECURITIES COMMISSION PASSED  UPON THE
  ACCURACY OR  ADEQUACY OF  THIS PROSPECTUS SUPPLEMENT  OR THE  PROSPECTUS TO
  WHICH  IT  RELATES.  ANY  REPRESENTATION  TO THE  CONTRARY  IS  A  CRIMINAL
   OFFENSE.
 
                                  -----------
 
                    The date of this Prospectus is   , 1996.
<PAGE>
 
(Continued from previous page)
 
Corresponding QUIDS) and QUIPS issued pursuant to the Registration Statement
of which this Prospectus forms a part shall not exceed $750,000,000. Certain
specific terms of the QUIDS or QUIPS in respect of which this Prospectus is
being delivered will be described in an accompanying Prospectus Supplement,
including without limitation and where applicable and to the extent not set
forth herein, (a) in the case of QUIDS, the specific designation, aggregate
principal amount, denominations, maturity (including any extension thereof),
interest payment dates, interest rate (which may be fixed or variable) or
method of calculating interest, if any, applicable Extension Period or
interest deferral terms, if any, place or places where principal, premium, if
any, and interest, if any, will be payable, terms of redemption, if any,
sinking fund provisions, if any, terms for conversion or exchange, if any,
into other securities, initial offering or purchase price, methods of
distribution and any other special terms, and (b) in the case of QUIPS, the
identity of the Issuer, specific title, aggregate amount, stated liquidation
preference, number of securities, Distribution rate or method of calculating
such rate, applicable Extension Period or Distribution deferral terms, if any,
place or places where Distributions will be payable, any terms of redemption,
exchange, initial offering or purchase price, methods of distribution and any
other special terms.
 
  The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax considerations relating to the
QUIDS or QUIPS.
 
  The QUIDS and QUIPS may be sold to or through underwriters, through dealers,
remarketing firms or agents or directly to purchasers. See "Plan of
Distribution". The names of any underwriters, dealers, remarketing firms or
agents involved in the sale of QUIDS or QUIPS in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
Prospectus Supplement will state whether the QUIDS or QUIPS will be listed on
any national securities exchange or the Nasdaq National Market. If the QUIDS
or QUIPS are not listed on any national securities exchange or the Nasdaq
National Market, there can be no assurance that there will be a liquid
secondary market for the QUIDS or QUIPS.
 
  This Prospectus may not be used to consummate sales of QUIDS or QUIPS unless
accompanied by a Prospectus Supplement.
 
                               ----------------
 
  NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY MCI, ANY OF THE ISSUERS OR ANY UNDERWRITER, DEALER OR AGENT.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR
IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF OR THEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF MCI SINCE THE DATE HEREOF OR THEREOF. NEITHER THIS PROSPECTUS NOR ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
 
                                       2
<PAGE>
 
                             AVAILABLE INFORMATION
 
  MCI is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by MCI with the Commission pursuant to the informational requirements of
the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at the following Regional Offices
of the Commission: Chicago Regional Office, Suite 1400, Citicorp Center, 14th
Floor, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, 13th Floor, Suite 1300, New York, New York
10048. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549.
 
  MCI and the Issuers have filed with the Commission a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus and the accompanying Prospectus Supplement omit, in accordance with
the rules and regulations of the Commission, certain of the information
contained in the Registration Statement. Reference is hereby made to the
Registration Statement and the exhibits and the financial statements, notes
and schedules filed as a part thereof or incorporated by reference therein for
further information with respect to MCI, the Issuers and the securities
offered hereby. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, where a copy of
such document has been filed as an exhibit to the Registration Statement or
otherwise has been filed with the Commission, reference is made to the copy so
filed. Each such statement is qualified in its entirety by such reference.
 
  No separate financial statements of any Issuer have been included herein.
MCI and the Issuers do not consider that such financial statements would be
material to holders of the QUIPS because each Issuer is a newly formed special
purpose entity, has no operating history or independent operations and is not
engaged in and does not propose to engage in any activity other than holding
as trust assets the Corresponding QUIDS of MCI and issuing the QUIPS and
Common Securities. See "The Issuers", "Description of QUIPS", "Description of
Guarantees" and "Description of Corresponding QUIDS".
 
               INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
 
  MCI's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
previously filed by MCI with the Commission is incorporated by reference in
this Prospectus and shall be deemed to be a part hereof.
 
  Each document filed by MCI with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of any offering of securities made by
this Prospectus shall be deemed to be incorporated herein by reference and to
be a part hereof from the date of filing such document. Any statement
contained herein, or in a document all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of the Registration Statement or this
Prospectus.
 
  MCI will provide without charge to any person to whom a copy of this
Prospectus is delivered, upon written or oral request of such person, a copy
of any and all of the documents that have been or
 
                                       3
<PAGE>
 
may be incorporated by reference herein (other than exhibits to such documents
which are not specifically incorporated by reference into such documents).
Such requests should be directed to the Secretary, MCI Communications
Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006
(telephone: (202) 872-1600).
 
                        MCI COMMUNICATIONS CORPORATION
 
  MCI Communications Corporation ("MCI"), a Delaware corporation organized in
1968, has its principal executive offices at 1801 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006 and its telephone number is (202) 872-1600. MCI is a
registered service mark of MCI Communications Corporation.
 
  MCI and its subsidiaries provide a broad range of communication services,
including long-distance telecommunication services, local and wireless
services and information technology services. The provision of long-distance
telecommunication services is the core business of MCI and its subsidiaries.
Long-distance telecommunication services comprise a wide spectrum of domestic
and international voice and data services, including long-distance telephone
services, data communication services, teleconferencing services and
electronic messaging services. During each of the last three years, more than
90% of the operating revenues and operating income of MCI and its subsidiaries
were derived from this core business. Through its subsidiaries MCI is the
second largest carrier of long-distance telecommunication services in the
United States and the third largest carrier of international long-distance
telecommunication services in the world.
 
  The communication services industry is in the process of substantial change,
providing significant opportunities and risks to its participants. Evolving
and newly developed technology, emerging significant competition in the market
for long-distance and local telecommunication services, as well as the
increasing desire of customers to have most or all of their various
communication needs fulfilled by one supplier, are causing companies,
including MCI, which offer services primarily in one part of the communication
services market, to offer, either directly or through alliances with others,
new services to complement their primary services offerings.
 
  MCI expects that this expansion into new services will continue and is
likely to accelerate as a result of the enactment of the Telecommunications
Act of 1996 (the "Telecommunications Act") in February 1996. Among other
things, the Telecommunications Act (i) opens the local services market,
currently dominated by the Regional Bell Operating Companies (the "RBOCs"), to
competition by requiring the RBOCs to sell separately their local services and
network elements, such as interconnection and local loops, to their new
competitors; (ii) allows the RBOCs to provide long-distance telecommunication
services in their respective regions once they comply with certain
requirements that are intended to promote competition for local services; and
(iii) allows the RBOCs to offer long-distance telecommunication services
outside their respective regions immediately.
 
  MCI believes that it is positioning itself to capitalize on the
opportunities that should be available in the communication services markets.
MCI's investment in ventures and developing markets will enable it to offer a
variety of local, wireless, information technology and multimedia services.
These services, combined with the continued growth and strength of MCI's core
business, should enable MCI to compete effectively in these markets and
against the RBOCs and any others that seek to enter the long-distance
telecommunication services market. There can be no assurance, however, that
MCI will be able to do so.
 
  MCI anticipates that continued substantial capital expenditures will be
required to compete effectively in these markets. Competition from AT&T Corp.,
the RBOCs and others significantly larger than MCI, in financial and other
resources, will be intense. Due to the rapidly changing nature of these
markets and the other factors summarized above, it is not possible to predict
the level of its future success, but MCI believes that it will compete
effectively in providing its services.
 
                                       4
<PAGE>
 
  MCI's assets consist principally of the stock of and advances to its
subsidiaries. Almost all of the operating assets of MCI and its consolidated
subsidiaries are owned by such subsidiaries and MCI relies primarily on
interest and dividends from such subsidiaries to meet its obligations for
payment of principal and interest on its outstanding debt obligations and
corporate expenses. As of December 31, 1995, MCI had approximately $4 billion
aggregate principal amount of Senior Debt outstanding. The QUIDS will be
effectively subordinated to all existing and future liabilities of MCI's
subsidiaries, and holders of the QUIDS should look only to the assets of MCI
for payments on the QUIDS. Neither the Indenture, the Guarantees nor the Trust
Agreements will place any limitation on the amount of secured or unsecured
debt, including Senior Debt, that may be incurred by MCI.
 
                                  THE ISSUERS
 
  Each Issuer is a statutory business trust formed under Delaware law pursuant
to (i) a trust agreement executed by MCI, as sponsor of the Issuer, and the
Delaware Trustee (as defined herein) of such Issuer and (ii) the filing of a
certificate of trust with the Delaware Secretary of State. Each trust
agreement will be amended and restated in its entirety (each, as so amended
and restated, a "Trust Agreement") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each Trust Agreement will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Each Issuer
exists for the exclusive purposes of (i) issuing and selling its QUIPS and
Common Securities, (ii) using the proceeds from the sale of such QUIPS and
Common Securities to acquire a corresponding series of Corresponding QUIDS
issued by MCI and (iii) engaging in only those other activities necessary,
convenient or incidental thereto. Accordingly, the Corresponding QUIDS will be
the sole assets of each Issuer, and payments under the Corresponding QUIDS
will be the sole revenue of each Issuer.
 
  All of the Common Securities will be owned by MCI. The Common Securities of
an Issuer will rank pari passu, and payments will be made thereon pro rata,
with the QUIPS of such Issuer, except that upon the occurrence and continuance
of an event of default under a Trust Agreement, the rights of MCI as holder of
the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the QUIPS of such Issuer. See "Description of QUIPS--Subordination
of Common Securities". MCI will acquire Common Securities in an aggregate
liquidation amount equal to not less than 3% of the total capital of each
Issuer.
 
  Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, which will be appointed by MCI as holder of the
Common Securities.
 
  Unless otherwise specified in the applicable Prospectus Supplement, the
trustees shall be Wilmington Trust Company, as the Property Trustee (the
"Property Trustee") and as the Delaware Trustee (the "Delaware Trustee"), and
two individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with MCI (collectively, the "Issuer Trustees").
Wilmington Trust Company, as Property Trustee, will act as sole indenture
trustee under each Trust Agreement for purposes of compliance with the Trust
Indenture Act. Wilmington Trust Company will also act as trustee under the
Guarantees and the Indenture (each as defined herein). See "Description of
Guarantees" and "Description of QUIDS". The holder of the Common Securities,
or the holders of a majority in liquidation preference of the QUIPS if any
event of default under the Trust Agreement has occurred and is continuing,
will be entitled to appoint, remove or replace the Property Trustee and/or the
Delaware Trustee. In no event will the holders of the QUIPS have the right to
vote to appoint, remove or replace the Administrative Trustees; such voting
rights are vested exclusively in the holder of the Common Securities. The
duties and obligations of each Issuer Trustee are governed by the applicable
Trust Agreement. MCI will pay all fees and expenses related to each Issuer and
the offering
 
                                       5
<PAGE>
 
of the QUIPS and will pay, directly or indirectly, all ongoing costs, expenses
and liabilities of each Issuer. The principal executive office of each Issuer
is 1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006, Attention:
Secretary, and its telephone number is (202) 872-1600.
 
                                USE OF PROCEEDS
 
  Except as otherwise set forth in the applicable Prospectus Supplement, MCI
intends to use the proceeds from the sale of its QUIDS (including
Corresponding QUIDS issued to the Issuers in connection with the investment by
the Issuers of all of the proceeds from the sale of QUIPS) for general
corporate purposes.
 
                      RATIO OF EARNINGS TO FIXED CHARGES
 
  The following table sets forth the ratios of earnings to fixed charges for
MCI and its subsidiaries for the years indicated:
 
<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31
                                                        ------------------------
                                                        1995 1994 1993 1992 1991
                                                        ---- ---- ---- ---- ----
<S>                                                     <C>  <C>  <C>  <C>  <C>
Ratio of Earnings to Fixed Charges .................... 3.34 4.82 4.12 3.63 3.37
</TABLE>
 
  For purposes of this ratio, earnings are calculated by adding fixed charges
(excluding capitalized interest) to income before income taxes and
extraordinary item. Fixed charges consist of interest on indebtedness
(including amortization of debt discount and premium) and the portion of
rental expense representative of an interest factor.
 
                             DESCRIPTION OF QUIDS
 
  The QUIDS are to be issued in one or more series under a Junior Subordinated
Indenture, as supplemented from time to time (as so supplemented, the
"Indenture"), between MCI and Wilmington Trust Company, as a trustee (the
"Debenture Trustee"). This summary of certain terms and provisions of the
QUIDS and the Indenture does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the Indenture, the form of which
is filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, and to the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Whenever particular defined terms of the Indenture (as
supplemented or amended from time to time) are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein
by reference.
 
GENERAL
 
  Each series of QUIDS will rank pari passu with all other series of QUIDS,
will be unsecured and subordinate and junior in right of payment to the extent
and in the manner set forth in the Indenture to all Senior Debt (as defined
below) of MCI. See "--Subordination". MCI is a non-operating holding company
and almost all of the operating assets of MCI and its consolidated
subsidiaries are owned by such subsidiaries. MCI relies primarily on interest
and dividends from such subsidiaries to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. Accordingly, the QUIDS will be effectively subordinated to all
existing and future liabilities of MCI's subsidiaries, and holders of QUIDS
should look only to the assets of MCI for payments on the QUIDS. Except as
otherwise provided in the applicable Prospectus Supplement, the Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of
MCI, whether under the Indenture or any existing or other indenture that MCI
may enter into in the future or otherwise, including MCI's Senior and
Subordinated Indentures entered into with Citibank, N.A. and Bankers Trust
Company, respectively. See "--Subordination" and the Prospectus Supplement
relating to any offering of Securities.
 
                                       6
<PAGE>
 
  The QUIDS will be issuable in one or more series pursuant to an indenture
supplemental to the Indenture or a resolution of MCI's board of directors or a
committee thereof.
 
  The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the QUIDS: (1) the title of the QUIDS; (2) any limit
upon the aggregate principal amount of the QUIDS; (3) the date or dates on
which the principal of the QUIDS is payable or the method of determination
thereof; (4) the rate or rates, if any, at which the QUIDS shall bear
interest, the Interest Payment Dates on which any such interest shall be
payable, the right, if any, of MCI to defer or extend an Interest Payment
Date, and the Regular Record Date for any interest payable on any Interest
Payment Date or the method by which any of the foregoing shall be determined;
(5) the place or places where, subject to the terms of the Indenture as
described below under "Payment and Paying Agents", the principal of and
premium, if any, and interest on the QUIDS will be payable and where, subject
to the terms of the Indenture as described below under "Denominations,
Registration and Transfer", the QUIDS may be presented for registration of
transfer or exchange and the place or places where notices and demands to or
upon MCI in respect of the QUIDS and the Indentures may be made ("Place of
Payment"); (6) any period or periods within or date or dates on which, the
price or prices at which and the terms and conditions upon which QUIDS may be
redeemed, in whole or in part, at the option of MCI or a holder thereof; (7)
the obligation or the right, if any, of MCI or a holder thereof to redeem,
purchase or repay the QUIDS and the period or periods within which, the price
or prices at which, the currency or currencies (including currency unit or
units) in which and the other terms and conditions upon which the QUIDS shall
be redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation; (8) the denominations in which any QUIDS shall be issuable if
other than denominations of $25 and any integral multiple thereof; (9) if
other than in U.S. Dollars, the currency or currencies (including currency
unit or units) in which the principal of and premium, if any, and interest, if
any, on the QUIDS shall be payable, or in which the QUIDS shall be
denominated; (10) any additions, modifications or deletions in the Events of
Default or covenants of MCI specified in the Indenture with respect to the
QUIDS; (11) if other than the principal amount thereof, the portion of the
principal amount of QUIDS that shall be payable upon declaration of
acceleration of the maturity thereof; (12) any additions or changes to the
Indenture with respect to a series of QUIDS as shall be necessary to permit or
facilitate the issuance of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (13) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the QUIDS and the manner in which such amounts will be
determined; (14) the terms and conditions relating to the issuance of a
temporary Global Security representing all of the QUIDS of such series and the
exchange of such temporary Global Security for definitive QUIDS of such
series; (15) subject to the terms described under "Global QUIDS", whether the
QUIDS of the series shall be issued in whole or in part in the form of one or
more Global Securities and, in such case, the Depositary for such Global
Securities, which Depositary shall be a clearing agency registered under the
Exchange Act; (16) the appointment of any Paying Agent or Agents; (17) the
terms and conditions of any obligation or right of MCI or a holder to convert
or exchange the QUIDS into QUIPS or other securities; and (18) any other terms
of the QUIDS not inconsistent with the provisions of the Indenture.
 
  QUIDS may be sold at a substantial discount below their stated principal
amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain United States federal income tax
consequences and special considerations applicable to any such QUIDS will be
described in the applicable Prospectus Supplement.
 
  If the purchase price of any of the QUIDS is payable in one or more foreign
currencies or currency units or if any QUIDS are denominated in one or more
foreign currencies or currency units or if the principal of, premium, if any,
or interest, if any, on any QUIDS is payable in one or more foreign currencies
or currency units, the restrictions, elections, certain United States federal
income tax considerations, specific terms and other information with respect
to such issue of QUIDS and such foreign currency or currency units will be set
forth in the applicable Prospectus Supplement.
 
                                       7
<PAGE>
 
  If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of QUIDS, special United States
federal income tax, accounting and other considerations applicable thereto
will be described in the applicable Prospectus Supplement.
 
DENOMINATIONS, REGISTRATION AND TRANSFER
 
  Unless otherwise specified in the applicable Prospectus Supplement, the
QUIDS will be issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. QUIDS of any series
will be exchangeable for other QUIDS of the same issue and series, of any
authorized denominations, of a like aggregate principal amount, of the same
Original Issue Date and Stated Maturity and bearing the same interest rate.
 
  QUIDS may be presented for exchange as provided above, and may be presented
for registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the appropriate Securities Registrar or at the office of any transfer agent
designated by MCI for such purpose with respect to any series of QUIDS and
referred to in the applicable Prospectus Supplement, without service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. MCI will appoint the Debenture Trustee as Securities Registrar
under the Indenture. If the applicable Prospectus Supplement refers to any
transfer agents (in addition to the Securities Registrar) initially designated
by MCI with respect to any series of QUIDS, MCI may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, provided that MCI maintains a
transfer agent in each Place of Payment for such series. MCI may at any time
designate additional transfer agents with respect to any series of QUIDS.
 
  In the event of any redemption, neither MCI nor the Debenture Trustee shall
be required to (i) issue, register the transfer of or exchange QUIDS of any
series during a period beginning at the opening of business 15 days before the
day of selection for redemption of QUIDS of that series and ending at the
close of business on the day of mailing of the relevant notice of redemption
or (ii) transfer or exchange any QUIDS so selected for redemption, except, in
the case of any QUIDS being redeemed in part, any portion thereof not to be
redeemed.
 
GLOBAL QUIDS
 
  The QUIDS of a series may be issued in whole or in part in the form of one
or more Global QUIDS that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such series. Global QUIDS may be issued only in fully registered form and
in either temporary or permanent form. Unless and until it is exchanged in
whole or in part for the individual QUIDS represented thereby, a Global QUIDS
may not be transferred except as a whole by the Depositary for such Global
QUIDS to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor Depositary or any nominee of such successor.
 
  The specific terms of the depositary arrangement with respect to a series of
QUIDS will be described in the Prospectus Supplement relating to such series.
MCI anticipates that the following provisions will generally apply to
depositary arrangements.
 
  Upon the issuance of a Global QUIDS and the deposit of such Global QUIDS
with or on behalf of the Depositary, the Depositary for such Global QUIDS or
its nominee will credit on its book-entry registration and transfer system the
respective principal amounts of the individual QUIDS represented by such
Global QUIDS to the accounts of persons that have accounts with such
Depositary ("Participants"). Such accounts shall be designated by the dealers,
underwriters or agents with respect to such QUIDS or by MCI if such QUIDS are
offered and sold directly by MCI. Ownership of beneficial
 
                                       8
<PAGE>
 
interests in a Global QUIDS will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such Global QUIDS will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests
in a Global QUIDS.
 
  So long as the Depositary for a Global QUIDS, or its nominee, is the
registered owner of such Global QUIDS, such Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the QUIDS
represented by such Global QUIDS for all purposes under the Indenture
governing such QUIDS. Except as provided below, owners of beneficial interests
in a Global QUIDS will not be entitled to have any of the individual QUIDS of
the series represented by such Global QUIDS registered in their names, will
not receive or be entitled to receive physical delivery of any such QUIDS of
such series in definitive form and will not be considered the owners or
holders thereof under the Indenture.
 
  Payments of principal of and premium, if any, and interest on individual
QUIDS represented by a Global QUIDS registered in the name of a Depositary or
its nominee will be made to the Depositary or its nominee, as the case may be,
as the registered owner of the Global QUIDS representing such QUIDS. None of
MCI, the Debenture Trustee, any Paying Agent or the Securities Registrar for
such QUIDS will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global QUIDS representing such QUIDS or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
 
  MCI expects that the Depositary for a series of QUIDS or its nominee, upon
receipt of any payment of principal, premium, if any, or interest in respect
of a permanent Global QUIDS representing any of such QUIDS, immediately will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of such Global QUIDS
representing such QUIDS as shown on the records of such Depositary or its
nominee. MCI also expects that payments by Participants to owners of
beneficial interests in such Global QUIDS held through such Participants will
be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name". Such payments will be the responsibility of such
Participants.
 
  Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of QUIDS is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not
appointed by MCI within 90 days, MCI will issue individual QUIDS of such
series in exchange for the Global QUIDS representing such series of QUIDS. In
addition, MCI may at any time and in its sole discretion, subject to any
limitations described in the Prospectus Supplement relating to such QUIDS,
determine not to have any QUIDS of such series represented by one or more
Global QUIDS and, in such event, will issue individual QUIDS of such series in
exchange for the Global QUIDS representing such series of QUIDS. Further, if
MCI so specifies with respect to the QUIDS of a series, an owner of a
beneficial interest in a Global QUIDS representing QUIDS of such series may,
on terms acceptable to MCI, the Debenture Trustee and the Depositary for such
Global QUIDS, receive individual QUIDS of such series in exchange for such
beneficial interests, subject to any limitations described in the Prospectus
Supplement relating to such QUIDS. In any such instance, an owner of a
beneficial interest in a Global QUIDS will be entitled to physical delivery of
individual QUIDS of the series represented by such Global QUIDS equal in
principal amount to such beneficial interest and to have such QUIDS registered
in its name. Individual QUIDS of such series so issued will be issued in
denominations, unless otherwise specified by MCI, of $25 and integral
multiples thereof.
 
                                       9
<PAGE>
 
PAYMENT AND PAYING AGENTS
 
  Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of and premium, if any, and any interest on QUIDS will be made at
the office of the Debenture Trustee in the City of New York or at the office
of such Paying Agent or Paying Agents as MCI may designate from time to time
in the applicable Prospectus Supplement, except that at the option of MCI
payment of any interest may be made (i) by check mailed to the address of the
Person entitled thereto as such address shall appear in the Securities
Register or (ii) by transfer to an account maintained by the Person entitled
thereto as specified in the Securities Register, provided that proper transfer
instructions have been received by the Regular Record Date. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of any interest on
QUIDS will be made to the Person in whose name such QUIDS is registered at the
close of business on the Regular Record Date for such interest, except in the
case of Defaulted Interest. MCI may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent; however MCI will at all
times be required to maintain a Paying Agent in each Place of Payment for each
series of QUIDS.
 
  Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by MCI in trust, for the payment of the principal of and premium, if any,
or interest on any QUIDS and remaining unclaimed for two years after such
principal and premium, if any, or interest has become due and payable shall,
at the request of MCI, be repaid to MCI and the holder of such QUIDS shall
thereafter look, as a general unsecured creditor, only to MCI for payment
thereof.
 
REDEMPTION
 
  Unless otherwise indicated in the applicable Prospectus Supplement, QUIDS
will not be subject to any sinking fund.
 
  Unless otherwise indicated in the applicable Prospectus Supplement, MCI may,
at its option, redeem the QUIDS of any series in whole at any time or in part
from time to time. QUIDS in denominations larger than $25 may be redeemed in
part but only in integral multiples of $25. Except as otherwise specified in
the applicable Prospectus Supplement, the redemption price for any QUIDS so
redeemed shall equal any accrued and unpaid interest thereon to the redemption
date, plus the principal amount thereof.
 
  Except as otherwise specified in the applicable Prospectus Supplement, if a
Debenture Tax Event (as defined below) in respect of a series of QUIDS shall
occur and be continuing, MCI may, at its option, redeem such series of QUIDS
in whole (but not in part) at any time within 90 days of the occurrence of
such Debenture Tax Event, at a redemption price equal to 100% of the principal
amount of such QUIDS then outstanding plus accrued and unpaid interest to the
date fixed for redemption.
 
  "Debenture Tax Event" means the receipt by MCI 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 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 such pronouncement or
decision is announced on or after the date of issuance of the applicable
series of QUIDS under the Indenture, there is more than an insubstantial risk
that interest payable by MCI on such series of QUIDS is not, or within 90 days
of the date of such opinion, will not be, deductible by MCI, in whole or in
part, for United States federal income tax purposes.
 
  Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of QUIDS to be redeemed at
its registered address. Unless MCI defaults in payment of the redemption
price, on and after the redemption date interest ceases to accrue on such
QUIDS or portions thereof called for redemption.
 
                                      10
<PAGE>
 
 
OPTION TO EXTEND INTEREST PAYMENT DATE
 
  If provided in the applicable Prospectus Supplement, MCI shall have the
right at any time and from time to time during the term of any series of QUIDS
to defer payment of interest for such number of consecutive interest payment
periods as may be specified in the applicable Prospectus Supplement (each, an
"Extension Period"), subject to the terms, conditions and covenants, if any,
specified in such Prospectus Supplement, provided that such Extension Period
may not extend beyond the Stated Maturity of such series of QUIDS. Certain
United States federal income tax consequences and special considerations
applicable to any such QUIDS will be described in the applicable Prospectus
Supplement.
 
  During such Extension Period MCI may not, and may not permit any subsidiary
of MCI to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of MCI's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities that rank pari
passu with or junior in interest to the QUIDS or make any guarantee payments
with respect to the foregoing (other than (a) dividends or distributions in
common stock of MCI, (b) redemptions or purchases of any rights pursuant to
MCI's Preferred Stock Rights Plan, or any successor to such Preferred Stock
Rights Plan, and the declaration of a dividend of such rights or the issuance
of Preferred Stock under such plans in the future, (c) payments under any
Guarantee, (d) purchases of Common Stock related to the issuance of Common
Stock under any of MCI's benefit plans for its directors, officers or
employees and (e) purchases of Common Stock required to prevent the loss or
secure the renewal or reinstatement of any government license or franchise
held by MCI or any of its subsidiaries).
 
MODIFICATION OF INDENTURE
 
  From time to time MCI and the Debenture Trustee may, without the consent of
the holders of any series of QUIDS, amend, waive or supplement the Indenture
for specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies (provided that any such action does not materially
adversely affect the interest of the holders of any series of QUIDS or, in the
case of Corresponding QUIDS, the holders of the corresponding series of QUIPS
so long as they remain outstanding) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting MCI and the Debenture Trustee, with the consent
of the holders of not less than a majority in principal amount of each
outstanding series of QUIDS affected, to modify the Indenture in a manner
affecting the rights of the holders of such series of the QUIDS; provided that
no such modification may, without the consent of the holder of each
outstanding QUIDS so affected, (i) change the stated maturity of any series of
QUIDS, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon (except such extension as is
contemplated hereby) or (ii) reduce the percentage of principal amount of
QUIDS of any series, the holders of which are required to consent to any such
modification of the Indenture, provided that, in the case of Corresponding
QUIDS, so long as any of the related series of QUIPS remain outstanding, no
such modification may be made that adversely affects the holders of such QUIPS
in any material respect, and no termination of the Indenture may occur, and no
waiver of any Debenture Event of Default or compliance with any covenant under
the Indenture may be effective, without the prior consent of the holders of at
least a majority of the aggregate liquidation preference of such QUIPS unless
and until the principal of the Corresponding QUIDS and all accrued and unpaid
interest thereon have been paid in full and certain other conditions are
satisfied.
 
  In addition, MCI and the Debenture Trustee may execute, without the consent
of any holder of QUIDS, any supplemental Indenture for the purpose of creating
any new series of QUIDS.
 
                                      11
<PAGE>
 
DEBENTURE EVENTS OF DEFAULT
 
  The Indenture provides that any one or more of the following described
events with respect to a series of QUIDS that has occurred and is continuing
constitutes a "Debenture Event of Default" with respect to such series of
QUIDS:
 
    (i) failure for 30 days to pay any interest on such series of the QUIDS,
  when due (subject to the deferral of any due date in the case of an
  Extension Period); or
 
    (ii) failure to pay any principal or premium, if any, on such series of
  QUIDS when due whether at maturity, upon redemption by declaration or
  otherwise; or
 
    (iii) failure to observe or perform in any material respect certain other
  covenants contained in the Indenture for 90 days after written notice to
  MCI from the Debenture Trustee or the holders of at least 25% in aggregate
  outstanding principal amount of such series of outstanding QUIDS; or
 
    (iv) certain events in bankruptcy, insolvency or reorganization of MCI.
 
  The holders of a majority in aggregate outstanding principal amount of such
series of QUIDS have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee.
The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of such series of QUIDS may declare the principal
due and payable immediately upon a Debenture Event of Default, and, in the
case of Corresponding QUIDS, should the Debenture Trustee or such holders of
such Corresponding QUIDS fail to make such declaration, the holders of at
least 25% in aggregate liquidation preference of the related series of QUIPS
shall have such right. The holders of a majority in aggregate outstanding
principal amount of such series of QUIDS may annul such declaration and waive
the default if the default (other than the non-payment of the principal of
such series of QUIDS which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee and, in the case of Corresponding QUIDS, should the holders
of such Corresponding QUIDS fail to annul such declaration and waive such
default, the holders of a majority in aggregate liquidation preference of the
related series of QUIPS shall have such right.
 
  The holders of the QUIPS would not be able to exercise directly any remedies
available to the holder of the QUIDS unless the Property Trustee or the
Debenture Trustee, acting for the benefit of the Property Trustee, fails to do
so for 60 days. In such event, the holders of at least 25% in aggregate
liquidation preference of the outstanding QUIPS would have such right to
institute proceedings.
 
  The holders of a majority in aggregate outstanding principal amount of the
QUIDS affected thereby may, on behalf of the holders of all the QUIDS, waive
any past default, except a default in the payment of principal or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding QUIDS and, in the case
of Corresponding QUIDS, should the holders of such Corresponding QUIDS fail to
annul such declaration and waive such default, the holders of a majority in
aggregate liquidation preference of the related series of QUIPS shall have
such right. MCI is required to file annually with the Debenture Trustee a
certificate as to whether or not MCI is in compliance with all the conditions
and covenants applicable to it under the Indenture.
 
  In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding QUIDS, the Property Trustee will have the right to
declare the principal of and the interest on such Corresponding QUIDS and any
other amounts payable under the Indenture, to be forthwith due and payable and
to enforce its other rights as a creditor with respect to such Corresponding
QUIDS.
 
                                      12
<PAGE>
 
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
 
  The Indenture provides that MCI shall not consolidate with or merge into any
other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate
with or merge into MCI or convey, transfer or lease its properties and assets
substantially as an entirety to MCI, unless (i) in case MCI consolidates with
or merges into another Person or conveys, transfers or leases its properties
and assets substantially as an entirety to any Person, the successor Person is
organized under the laws of the United States or any state or the District of
Columbia, and such successor Person expressly assumes MCI's obligations on the
QUIDS issued under the Indenture; (ii) immediately after giving effect
thereto, no Debenture Event of Default, and no event which, after notice or
lapse of time or both, would become a Debenture Event of Default, shall have
happened and be continuing; (iii) in the case of Corresponding QUIDS, such
transaction is permitted under the related Trust Agreement or Guarantee and
does not give rise to any breach or violation of the related Trust Agreement
or Guarantee, and (iv) certain other conditions as prescribed in the Indenture
are met.
 
  The general provisions of the Indenture do not afford holders of the QUIDS
protection in the event of a highly leveraged or other transaction involving
MCI that may adversely affect holders of the QUIDS.
 
SATISFACTION AND DISCHARGE
 
  The Indenture provides that when, among other things, all QUIDS not
previously delivered to the Debenture Trustee for cancellation (i) have become
due and payable or (ii) will become due and payable at their Stated Maturity
within one year, and MCI deposits or causes to be deposited with the Debenture
Trustee trust funds, in trust, for the purpose and in an amount in the
currency or currencies in which the QUIDS are payable sufficient to pay and
discharge the entire indebtedness on the QUIDS not previously delivered to the
Debenture Trustee for cancellation, for the principal and premium, if any, and
interest to the date of the deposit or to the Stated Maturity, as the case may
be, then the Indenture will cease to be of further effect (except as to MCI's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and MCI
will be deemed to have satisfied and discharged the Indenture.
 
CONVERSION OR EXCHANGE
 
  Unless otherwise indicated in the applicable Prospectus Supplement, the
QUIDS of any series may be convertible or exchangeable into QUIPS or other
securities. The specific terms on which QUIDS of any series may be so
converted or exchanged will be set forth in the applicable Prospectus
Supplement. Such terms may include provisions for conversion or exchange,
either mandatory, at the option of the holder, or at the option of MCI, in
which case the number of shares of QUIPS or other securities to be received by
the Holders of QUIDS would be calculated as of a time and in the manner stated
in the applicable Prospectus Supplement.
 
SUBORDINATION
 
  In the Indenture, MCI has covenanted and agreed that any QUIDS issued
thereunder will be subordinate and junior in right of payment to all Senior
Debt to the extent provided in the Indenture. Upon any payment or distribution
of assets to creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors, marshaling of assets
or any bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of MCI, the holders of
Senior Debt will first be entitled to receive payment in full of principal of
and premium, if any, and interest, if any, on such Senior Debt before the
holders of QUIDS or, in the case of Corresponding QUIDS, the Property Trustee
on behalf of the holders, will be entitled to
 
                                      13
<PAGE>
 
receive or retain any payment in respect of the principal of and premium, if
any, or interest, if any, on the QUIDS.
 
  In the event of the acceleration of the maturity of any QUIDS, the holders
of all Senior Debt outstanding at the time of such acceleration will first be
entitled to receive payment in full of all amounts due thereon (including any
amounts due upon acceleration) before the holders of QUIDS will be entitled to
receive or retain any payment in respect of the principal of or premium, if
any, or interest, if any, on the QUIDS.
 
  No payments on account of principal (or premium, if any) or interest, if
any, in respect of the QUIDS may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Debt, or an event
of default with respect to any Senior Debt resulting in the acceleration of
the maturity thereof, or if any judicial proceeding shall be pending with
respect to any such default.
 
  "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 guaranteed or is responsible
or liable, directly or indirectly, as obligor or otherwise.
 
  "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 MCI 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 the Indenture 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 QUIDS or to other Debt which is pari passu with, or
subordinated to, the QUIDS; provided, however, that Senior Debt shall not be
deemed to include (i) any Debt of MCI which when incurred and without respect
to any election under Section 1111 (b) of the Bankruptcy Code, was without
recourse to MCI, (ii) any Debt of MCI to any of its subsidiaries, (iii) Debt
to any employee of MCI, (iv) any liability for taxes, and (v) indebtedness or
monetary obligations to trade creditors or assumed by MCI or any of its
subsidiaries in the ordinary course of business in connection with the
obtaining of materials or services.
 
  MCI is a non-operating holding company and almost all of the operating
assets of MCI and its consolidated subsidiaries are owned by such
subsidiaries. Accordingly, the QUIDS will be effectively subordinated to all
existing and future liabilities of MCI's subsidiaries. Holders of QUIDS should
look only to the assets of MCI for payments of interest and principal and
premium, if any, on the QUIDS.
 
  The Indenture places no limitation on the amount of additional Senior Debt
that may be incurred by MCI. The communications services business is capital
intensive, and MCI anticipates that from time to time it will incur
substantial additional indebtedness constituting Senior Debt.
 
  The Indenture provides that the foregoing subordination provisions, insofar
as they relate to any particular issue of QUIDS, may be changed prior to such
issuance. Any such change would be described in the applicable Prospectus
Supplement.
 
                                      14
<PAGE>
 
GOVERNING LAW
 
  The Indenture and the QUIDS will be governed by and construed in accordance
with the laws of the State of New York.
 
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
 
  The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of QUIDS, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The Debenture Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
 
                             DESCRIPTION OF QUIPS
 
  Pursuant to the terms of the Trust Agreement for each Issuer, the Issuer
Trustees on behalf of such Issuer will issue the QUIPS and the Common
Securities. The QUIPS of a particular issue will represent preferred undivided
beneficial interests in the assets of the related Issuer and the holders
thereof will be entitled to a preference in certain circumstances with respect
to Distributions and amounts payable on redemption or liquidation over the
Common Securities of such Issuer, as well as other benefits as described in
the corresponding Trust Agreement. This summary of certain provisions of the
QUIPS and each Trust Agreement does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all the provisions of
each Trust Agreement, including the definitions therein of certain terms, and
the Trust Indenture Act. Wherever particular defined terms of a Trust
Agreement (as supplemented or amended from time to time) are referred to
herein or in a Prospectus Supplement, such defined terms are incorporated
herein or therein by reference. The form of each Trust Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. Each of the Issuers is a legally separate entity and the assets
of one are not available to satisfy the obligations of any of the others.
 
GENERAL
 
  The QUIPS of an Issuer will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities of that Issuer except as
described under "--Subordination of Common Securities". Legal title to the
Corresponding QUIDS will be held by the Property Trustee in trust for the
benefit of the holders of the related QUIPS and Common Securities. Each
Guarantee Agreement executed by MCI for the benefit of the holders of an
Issuer's QUIPS (each, the "Guarantee") will be a guarantee on a subordinated
basis with respect to the related QUIPS but will not guarantee payment of
Distributions or amounts payable on redemption or liquidation of such QUIPS
when the related Issuer does not have funds on hand available to make such
payments. See "Description of Guarantees".
 
DISTRIBUTIONS
 
  Each Issuer's QUIPS represent preferred undivided beneficial interests in
the assets of such Issuer, and the Distributions on each QUIPS will be payable
at a rate specified in the Prospectus Supplement for such QUIPS. The amount of
Distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months unless otherwise specified in the applicable
Prospectus Supplement. Distributions to which holders of QUIPS are entitled
will accumulate additional Distributions at the rate per annum if and as
specified in the applicable Prospectus Supplement. The term "Distributions" as
used herein includes any such additional Distributions unless otherwise
stated.
 
                                      15
<PAGE>
 
  Distributions on the QUIPS will be cumulative, will accrue from the date of
original issuance and will be payable on such dates as specified in the
applicable Prospectus Supplement. In the event that any date on which
Distributions are payable on the QUIPS is not a Business Day (as defined
below), payment of the Distribution 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 to 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 the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or 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 a day on which the corporate trust
office of the Property Trustee or the Debenture Trustee (as defined herein) is
closed for business.
 
  If provided in the applicable Prospectus Supplement, MCI has the right under
the Indenture, pursuant to which it will issue the Corresponding QUIDS, to
defer the payment of interest at any time or from time to time on any series
of the Corresponding QUIDS for a period which will be specified in such
Prospectus Supplement relating to such series (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity of
such series of QUIDS. As a consequence of any such extension, Distributions on
the corresponding QUIPS would be deferred (but the QUIPS would continue to
accumulate additional Distributions thereon at the rate per annum set forth in
the Prospectus Supplement for such QUIPS) by the Issuer of such QUIPS during
any such Extension Period. During such Extension Period MCI may not, and may
not permit any subsidiary of MCI to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of MCI's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities that rank pari passu with or junior in interest to the
Corresponding QUIDS or make any guarantee payments with respect to the
foregoing (other than (a) dividends or distributions in Common Stock of MCI,
(b) redemptions or purchases of any rights pursuant to MCI's Preferred Stock
Rights Plan, or any successor to such Preferred Stock Rights Plan, and the
declaration of a dividend of such rights or the issuance of Preferred Stock
under such plans in the future, (c) payments under any Guarantee, (d)
purchases of Common Stock related to the issuance of Common Stock under any of
MCI's benefit plans for its directors, officers or employees and (e) purchases
of Common Stock required to prevent the loss or secure the renewal or
reinstatement of any government license or franchise held by MCI or any of its
subsidiaries).
 
  The revenue of each Issuer available for distribution to holders of its
QUIPS will be limited to payments under the Corresponding QUIDS in which the
Issuer will invest the proceeds from the issuance and sale of its QUIPS and
its Common Securities. See "Description of Corresponding QUIDS". If MCI does
not make interest payments on such Corresponding QUIDS, the Property Trustee
will not have funds available to pay Distributions on the related QUIPS. The
payment of Distributions (if and to the extent the Issuer has funds legally
available for the payment of such Distributions and cash sufficient to make
such payments) is guaranteed by MCI on a limited basis as set forth herein
under "Description of Guarantees".
 
  Distributions on the QUIPS will be payable to the holders thereof as they
appear on the register of such Issuer on the relevant record dates, which, as
long as the QUIPS remain in book-entry form, will be one Business Day prior to
the relevant Distribution Date. Subject to any applicable laws and regulations
and the provisions of the applicable Trust Agreement, each such payment will
be made as described under "--Book-Entry Issuance". In the event any QUIPS are
not in book-entry form, the relevant record date for such QUIPS shall be a
date at least 15 days prior to the relevant Distribution Date, as specified in
the applicable Prospectus Supplement.
 
                                      16
<PAGE>
 
REDEMPTION OR EXCHANGE
 
  MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in part,
of any Corresponding QUIDS, whether at maturity or upon earlier redemption as
provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined
below) of the related QUIPS, upon not less than 30 nor more than 60 days
notice, at a redemption price (the "Redemption Price") equal to the aggregate
liquidation preference of such QUIPS plus accumulated and unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related
amount of the premium, if any, paid by MCI upon the concurrent redemption of
such Corresponding QUIDS. See "Description of Corresponding QUIDS--Optional
Redemption". If less than all of any series of Corresponding QUIDS are to be
repaid or redeemed on a Redemption Date, then the proceeds from such repayment
or redemption shall be allocated to the redemption pro rata of the related
QUIPS and the Common Securities. The amount of premium, if any, paid by MCI
upon the redemption of all or any part of any series of any Corresponding
QUIDS to be repaid or redeemed on a Redemption Date shall be allocated to the
redemption pro rata of the related QUIPS and the Common Securities.
 
  MCI will have the right to redeem any series of Corresponding QUIDS (i) in
whole at any time or in part from time to time, subject to the conditions
described under "Description of Corresponding QUIDS--Optional Redemption",
(ii) at any time, in whole (but not in part), upon the occurrence of a Tax
Event or an Investment Company Event (each as defined below, a "Special
Event") and subject to the further conditions described under "Description of
Corresponding QUIDS--Optional Redemption", or (iii) as may be otherwise
specified in the applicable Prospectus Supplement.
 
  SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF CORRESPONDING QUIDS. If a
Special Event in respect of a series of QUIPS and Common Securities shall
occur and be continuing, MCI has the right to redeem the Corresponding QUIDS
in whole (but not in part) and therefore cause a mandatory redemption of such
QUIPS and Common Securities in whole (but not in part) at the Redemption Price
within 90 days following the occurrence of such Special Event. At any time,
MCI has the right to liquidate the related Issuer and cause such Corresponding
QUIDS to be distributed to the holders of such QUIPS and Common Securities in
liquidation of the Issuer. If MCI does not elect either option described
above, the applicable series of QUIPS will remain outstanding and, in the
event a Tax Event has occurred and is continuing, Additional Sums (as defined
below) will be payable on the Corresponding QUIDS.
 
  EXTENSION OF MATURITY OF CORRESPONDING QUIDS. If provided in the applicable
Prospectus Supplement, MCI shall have the right to extend or shorten the
maturity of any series of Corresponding QUIDS at the time that MCI exercises
its right to elect to liquidate the related Issuer and cause such
Corresponding QUIDS to be distributed to the holders of such QUIPS and Common
Securities in liquidation of the Issuer, provided that it can extend the
maturity only if certain conditions specified in the applicable Prospectus
Supplement are met at the time such election is made and at the time of such
extension.
 
  "Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by an Issuer on the
outstanding QUIPS and Common Securities of the Issuer shall not be reduced as
a result of any additional taxes, duties and other governmental charges to
which the Issuer has become subject as a result of a Tax Event.
 
  "Investment Company Event" means the receipt by the applicable Issuer 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 applicable Issuer is or
will be considered an "investment company" that is required to be registered
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), which Change in 1940 Act Law becomes effective on or after the date of
original issuance of the series of QUIPS issued by the applicable Issuer.
 
                                      17
<PAGE>
 
  "Like Amount" means (i) with respect to a redemption of any series of QUIPS,
QUIPS of such series having a Liquidation Amount (as defined below) equal to
that portion of the principal amount of Corresponding QUIDS to be
contemporaneously redeemed in accordance with the Indenture and the proceeds of
which will be used to pay the Redemption Price of such QUIPS, and (ii) with
respect to a distribution of Corresponding QUIDS to holders of any series of
QUIPS in connection with a dissolution or liquidation of the related Issuer,
Corresponding QUIDS having a principal amount equal to the Liquidation Amount
of the QUIPS of the holder to whom such Corresponding QUIDS are distributed.
"Liquidation Amount" means the stated amount of $25 per QUIPS and Common
Security.
 
  "Tax Event" means the receipt by the applicable Issuer 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 such pronouncement or decision is announced
on or after the date of issuance of the QUIPS under the related Trust
Agreement, there is more than an insubstantial risk that (i) the applicable
Issuer is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received or accrued on
the corresponding series of Corresponding QUIDS, (ii) interest payable by MCI
on such series of Corresponding QUIDS is not, or within 90 days of the date of
such opinion, will not be, deductible by MCI, in whole or in part, for United
States federal income tax purposes, or (iii) the applicable Issuer is, or will
be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
 
  After the liquidation date fixed for any distribution of Corresponding QUIDS
for any series of QUIPS (i) such series of QUIPS will no longer be deemed to be
outstanding, (ii) The Depository Trust Company ("DTC") or its nominee, as the
record holder of such series of QUIPS, will receive a registered global
certificate or certificates representing the Corresponding QUIDS to be
delivered upon such distribution and (iii) any certificates representing such
series of QUIPS not held by DTC or its nominee will be deemed to represent the
Corresponding QUIDS having a principal amount equal to the stated liquidation
preference of such series of QUIPS, and bearing accrued and unpaid interest in
an amount equal to the accrued and unpaid Distributions on such series of QUIPS
until such certificates are presented to the Administrative Trustees or their
agent for transfer or reissuance.
 
  There can be no assurance as to the market prices for the QUIPS or the
Corresponding QUIDS that may be distributed in exchange for QUIPS if a
dissolution and liquidation of an Issuer were to occur. Accordingly, the QUIPS
that an investor may purchase, or the Corresponding QUIDS that the investor may
receive on dissolution and liquidation of an Issuer, may trade at a discount to
the price that the investor paid to purchase the QUIPS offered hereby.
 
REDEMPTION PROCEDURES
 
  QUIPS redeemed on each Redemption Date shall be redeemed at the Redemption
Price with the applicable proceeds from the contemporaneous redemption of the
Corresponding QUIDS. Redemptions of the QUIPS shall be made and the Redemption
Price shall be payable on each Redemption Date only to the extent that the
related Issuer has funds on hand available for the payment of such Redemption
Price. See also "--Subordination of Common Securities".
 
  If an Issuer gives a notice of redemption in respect of its QUIPS, then, by
12:00 noon, New York City time, on the Redemption Date, to the extent funds are
available, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of such
QUIPS. See "--Book-Entry Issuance". If such QUIPS are no longer in book-entry
form, the Issuer, to the extent funds are available, will irrevocably deposit
with the paying agent for such QUIPS funds sufficient to
 
                                       18
<PAGE>
 
pay the applicable Redemption Price and will give such paying agent
irrevocable instructions and authority to pay the Redemption Price to the
holders thereof upon surrender of their certificates evidencing such QUIPS.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any QUIPS called for redemption shall be payable to the
holders of such QUIPS 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 the
holders of such QUIPS so called for redemption will cease, except the right of
the holders of such QUIPS to receive the Redemption Price, but without
interest on such Redemption Price, and such QUIPS will cease to be
outstanding. In the event that any date fixed for redemption of QUIPS is not a
Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day which 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 the event that payment of the
Redemption Price in respect of QUIPS called for redemption is improperly
withheld or refused and not paid either by the Issuer or by MCI pursuant to
the Guarantee as described under "Description of Guarantees", Distributions on
such QUIPS will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Issuer for such QUIPS 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.
 
  Subject to applicable law (including, without limitation, United States
federal securities law), MCI or its subsidiaries may at any time and from time
to time purchase outstanding QUIPS by tender, in the open market or by private
agreement.
 
  Payment of the Redemption Price on the QUIPS and any distribution of
Corresponding QUIDS to holders of QUIPS shall be made to the applicable
recordholders thereof as they appear on the register for such QUIPS on the
relevant record date, which shall be one Business Day prior to the relevant
Redemption Date or liquidation date, as applicable; provided, however, that in
the event that any QUIPS are not in book-entry form, the relevant record date
for such QUIPS shall be a date at least 15 days prior to the Redemption Date
or liquidation date, as applicable, as specified in the applicable Prospectus
Supplement.
 
  If less than all of the QUIPS and Common Securities issued by an Issuer are
to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of
such QUIPS and Common Securities to be redeemed shall be allocated pro rata
among the QUIPS and the Common Securities. The particular QUIPS to be redeemed
shall be selected on a pro rata basis not more than 60 days prior to the
Redemption Date by the Property Trustee from the outstanding QUIPS not
previously called for redemption, by such method 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 preference of QUIPS of a denomination larger than
$25. The Property Trustee shall promptly notify the trust registrar in writing
of the QUIPS selected for redemption and, in the case of any QUIPS selected
for partial redemption, the liquidation preference thereof to be redeemed. For
all purposes of each Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of QUIPS shall relate, in the case
of any QUIPS redeemed or to be redeemed only in part, to the portion of the
aggregate liquidation preference of QUIPS which has been or is to be redeemed.
 
  Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of QUIDS to be redeemed at
its registered address. Unless MCI defaults in payment of the Redemption
Price, on and after the Redemption Date interest ceases to accrue on such
QUIDS or portions thereof called for redemption.
 
                                      19
<PAGE>
 
SUBORDINATION OF COMMON SECURITIES
 
  Payment of Distributions on, and the Redemption Price of, each Issuer's
QUIPS and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of such QUIPS and Common Securities; provided, however,
that if on any Distribution Date or Redemption Date a Debenture Event of
Default shall have occurred and be continuing, no payment of any Distribution
on, or Redemption Price of, any of the Issuer's Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition
of such Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the Issuer's outstanding QUIPS
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 of the Issuer's outstanding QUIPS then called for redemption, shall have
been made or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all Distributions on,
or Redemption Price of, the Issuer's QUIPS then due and payable.
 
  In the case of any Event of Default resulting from a Debenture Event of
Default, MCI as holder of such Issuer's Common Securities will be deemed to
have waived any right to act with respect to any such Event of Default under
the applicable Trust Agreement until the effect of all such Events of Default
with respect to such QUIPS have been cured, waived or otherwise eliminated.
Until any such Events of Default under the applicable Trust Agreement with
respect to the QUIPS have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of such QUIPS and
not on behalf of MCI as holder of the Issuer's Common Securities, and only the
holders of such QUIPS will have the right to direct the Property Trustee to
act on their behalf.
 
LIQUIDATION DISTRIBUTION UPON TERMINATION
 
  Pursuant to each Trust Agreement, each Issuer shall automatically terminate
upon expiration of its term and shall be terminated by MCI on the first to
occur of: (i) certain events of bankruptcy, dissolution or liquidation of MCI;
(ii) the distribution of a Like Amount of the Corresponding QUIDS to the
holders of its QUIPS and Common Securities, if MCI, as Depositor, has given
written direction to the Property Trustee to terminate such Issuer within 45
days of such event (which direction is optional and wholly within the
discretion of MCI, as Depositor); (iii) the redemption of all of the Issuer's
QUIPS and Common Securities following a Special Event; (iv) the redemption of
all of the Issuer's QUIPS as described under "Description of QUIPS--Redemption
or Exchange--Mandatory Redemption"; and (v) the entry by a court of competent
jurisdiction of an order for the dissolution of the Issuer.
 
  If an early termination occurs as described in clause (i), (ii), (iii) or
(v) above, the Issuer shall be liquidated by the Issuer Trustees as
expeditiously as the Issuer Trustees determine to be possible by distributing,
after satisfaction of liabilities to creditors of such Issuer as provided by
applicable law, to the holders of such QUIPS and Common Securities a Like
Amount of the Corresponding QUIDS, unless such distribution is determined by
the Property Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of the Issuer available for distribution
to holders, after satisfaction of liabilities to creditors of such Issuer as
provided by applicable law, an amount equal to, in the case of holders of
QUIPS, the aggregate of the liquidation preference plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because such Issuer has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
such Issuer on its QUIPS shall be paid on a pro rata basis. The holder(s) of
such Issuer's Common Securities will be entitled to receive distributions upon
any such liquidation pro rata with the holders of its QUIPS, except that if a
Debenture Event of Default has occurred and is continuing, the QUIPS shall
have a priority over the Common Securities. A supplemental Indenture may
provide that if an early termination occurs as described in clause (v) above,
the Corresponding QUIDS may be subject to optional redemption in whole (but
not in part).
 
 
                                      20
<PAGE>
 
EVENTS OF DEFAULT; NOTICE
 
  Any one of the following events constitutes an "Event of Default" under each
Trust Agreement (an "Event of Default") with respect to the QUIPS issued
thereunder (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):
 
    (i) the occurrence of a Debenture Event of Default under the Indenture
  (see "Description of QUIDS--Debenture Events of Default"); or
 
    (ii) 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
 
    (iii) default by the Property Trustee in the payment of any Redemption
  Price of any QUIPS or Common Security when it becomes due and payable; or
 
    (iv) default in the performance, or breach, in any material respect, of
  any covenant or warranty of the Issuer Trustees in such 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 (ii) or (iii) 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 Issuer
  Trustee or Trustees by the holders of at least 25% in aggregate liquidation
  preference of the outstanding QUIPS of the applicable Issuer, a written
  notice specifying such default or breach and requiring it to be remedied
  and stating that such notice is a "Notice of Default" under such Trust
  Agreement; or
 
    (v) the occurrence of certain events of bankruptcy or insolvency with
  respect to the Property Trustee and the failure by MCI to appoint a
  successor Property Trustee within 60 days thereof.
 
  Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's QUIPS, the
Administrative Trustees and MCI, as Depositor, unless such Event of Default
shall have been cured or waived. MCI, as Depositor, and the Administrative
Trustees are required to file annually with the Property Trustee a certificate
as to whether or not they are in compliance with all the conditions and
covenants applicable to them under each Trust Agreement.
 
  If a Debenture Event of Default has occurred and is continuing, the QUIPS
shall have a preference over the Common Securities upon termination of each
Issuer as described above. See "--Liquidation Distribution Upon Termination".
The existence of an Event of Default does not entitle the holders of QUIPS to
accelerate the maturity thereof.
 
REMOVAL OF ISSUER TRUSTEES
 
  Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by
the holders of a majority in Liquidation Amount of the outstanding QUIPS. In
no event will the holders of the QUIPS have the right to vote to appoint,
remove or replace the Administrative Trustees, which voting rights are vested
exclusively in MCI as the holder of the Common Securities. No resignation or
removal of an Issuer Trustee and no appointment of a successor trustee shall
be effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the applicable Trust Agreement.
 
CO-TRUSTEES AND SEPARATE PROPERTY 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
may at the time be located, MCI, as the holder of the Common Securities,
 
                                      21
<PAGE>
 
and the Administrative Trustees shall have power to appoint one or more
persons either to act as a co-trustee, jointly with the Property Trustee, of
all or any part of such Trust Property, or 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 such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a
Debenture Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make such appointment.
 
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
 
  Any corporation into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person 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 Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such Trustee, shall be the successor of such Trustee under each
Trust Agreement, provided such corporation shall be otherwise qualified and
eligible.
 
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUERS
 
  An Issuer 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 Person, except as
described below. An Issuer may, at the request of MCI, with the consent of the
Administrative Trustees and without the consent of the holders of the QUIPS,
merge with or into, consolidate, amalgamate, 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 such
Issuer with respect to the QUIPS or (b) substitutes for the QUIPS other
securities having substantially the same terms as the QUIPS (the "Successor
Securities") so long as the Successor Securities rank the same as the QUIPS
rank in priority with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) MCI expressly appoints a trustee of such
successor entity possessing the same powers and duties as the Property Trustee
as the holder of the Corresponding QUIDS, (iii) the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which
the QUIPS are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
QUIPS (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 QUIPS
(including any Successor Securities) in any material respect, (vi) such
successor entity has a purpose identical to that of the Issuer, (vii) prior to
such merger, consolidation, amalgamation or replacement, MCI has received an
opinion from independent counsel to the Issuer experienced in such matters 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 QUIPS (including any
Successor Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer nor such successor entity will be required to register as
an investment company under the Investment Company Act, and (viii) MCI or any
permitted successor or assignee 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, an Issuer shall not, except with the consent of
holders of 100% in aggregate liquidation preference of the QUIPS, 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 Issuer or the successor entity
to be classified as other than a grantor trust for United States federal
income tax purposes.
 
                                      22
<PAGE>
 
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
 
  Except as provided below and under "Description of Guarantees--Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the QUIPS will have no voting rights.
 
  Each Trust Agreement may be amended from time to time by MCI and the Issuer
Trustees, without the consent of the holders of the QUIPS (i) to cure any
ambiguity, correct or supplement any provisions in such Trust Agreement that
may be inconsistent with any other provision, or to make any other provisions
with respect to matters or questions arising under such Trust Agreement that
shall not be inconsistent with the other provisions of such Trust Agreement,
or (ii) to modify, eliminate or add to any provisions of such Trust Agreement
to such extent as shall be necessary to ensure that the Issuer will be
classified for United States federal income tax purposes as a grantor trust at
all times that any QUIPS and Common Securities are outstanding or to ensure
that the Issuer will not be required to register as an "investment company"
under the Investment Company Act, provided, however, that in the case of
clause (i), such action shall not adversely affect in any material respect the
interests of any holder of QUIPS or Common Securities, and any amendments of
such Trust Agreement shall become effective when notice thereof is given to
the holders of QUIPS and Common Securities. Each Trust Agreement may be
amended by the Issuer Trustees and MCI with (i) the consent of holders
representing not less than a majority (based upon Liquidation Amounts) of the
outstanding QUIPS and Common Securities and (ii) receipt by the Issuer
Trustees of an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not affect the Issuer's status as a grantor trust for United
States federal income tax purposes or the Issuer's exemption from status of an
"investment company" under the Investment Company Act, provided, further that
without the consent of each holder of QUIPS and Common Securities, such Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the QUIPS and Common Securities or otherwise adversely affect
the amount of any Distribution required to be made in respect of the QUIPS and
Common Securities as of a specified date or (ii) restrict the right of a
holder of QUIPS and Common Securities to institute suit for the enforcement of
any such payment on or after such date.
 
  So long as any Corresponding QUIDS are held by the Property Trustee, the
Issuer 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 Property Trustee with respect to such
Corresponding QUIDS, (ii) waive any past default that is waiveable under
Section 513 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the QUIDS shall be due and payable or
(iv) consent to any amendment, modification or termination of the Indenture or
such Corresponding QUIDS, where such consent shall be required, without, in
each case, obtaining the prior approval of the holders of a majority in
aggregate liquidation preference of all outstanding QUIPS; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Corresponding QUIDS affected thereby, no such consent shall be given
by the Property Trustee without the prior consent of each holder of the
corresponding QUIPS. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the QUIPS except
by subsequent vote of the holders of the QUIPS. The Property Trustee shall
notify each holder of record of the QUIPS of any notice of default with
respect to the Corresponding QUIDS. In addition to obtaining the foregoing
approvals of the holders of the QUIPS, prior to taking any of the foregoing
actions, the Issuer Trustees shall obtain an opinion of counsel experienced in
such matters to the effect that the Issuer will not be classified as a
corporation for United States federal income tax purposes on account of such
action.
 
  Any required approval of holders of QUIPS may be given at a meeting of
holders of QUIPS convened for such purpose or pursuant to written consent. The
Property Trustee will cause a notice of any meeting at which holders of QUIPS
are entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be given to each holder of record of QUIPS in
the manner set forth in the applicable Trust Agreement.
 
                                      23
<PAGE>
 
  No vote or consent of the holders of QUIPS will be required for an Issuer to
redeem and cancel its QUIPS in accordance with the applicable Trust Agreement.
 
  Notwithstanding that holders of QUIPS are entitled to vote or consent under
any of the circumstances described above, any of the QUIPS that are owned by
MCI, the Issuer Trustees or any affiliate of MCI or any Issuer Trustees,
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
 
PAYMENT AND PAYING AGENCY
 
  Payments in respect of the QUIPS shall be made to DTC, which shall credit
the relevant accounts at DTC on the applicable Distribution Dates or, if any
Issuer's QUIPS are not held by DTC, such payments shall be made by check
mailed to the address of the holder entitled thereto as such address shall
appear on the Register. Unless otherwise specified in the applicable
Prospectus Supplement, the paying agent (the "Paying Agent") shall initially
be the Property Trustee and any co-paying agent chosen by the Property Trustee
and acceptable to the Administrative Trustees and MCI. The Paying Agent shall
be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and MCI. In the event that the Property Trustee shall no
longer be the Paying Agent, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and MCI) to act as Paying Agent.
 
BOOK-ENTRY ISSUANCE
 
  DTC will act as securities depositary for all of the QUIPS. The QUIPS will
be issued only as fully-registered securities registered in the name of Cede &
Co. (DTC's nominee). One or more fully-registered global certificates will be
issued for the QUIPS of each Issuer, representing in the aggregate the total
number of such Issuer's QUIPS, and will be deposited with DTC.
 
  DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain custodial relationships with Direct Participants,
either directly or indirectly ("Indirect Participants"). The rules applicable
to DTC and its Participants are on file with the Commission.
 
  Purchases of QUIPS within the DTC system must be made by or through Direct
Participants, which will receive a credit for the QUIPS on DTC's records. The
ownership interest of each actual purchaser of each QUIPS ("Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the
Beneficial Owners purchased QUIPS. Transfers of ownership interests in the
QUIPS are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in QUIPS, except in the
event that use of the book-entry system for the QUIPS of such Issuer is
discontinued.
 
                                      24
<PAGE>
 
  DTC has no knowledge of the actual Beneficial Owners of the QUIPS; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such QUIPS are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
 
  Redemption notices shall be sent to Cede & Co. as the registered holder of
the QUIPS. If less than all of an Issuer's QUIPS are being redeemed, DTC's
current practice is to determine by lot the amount of the interest of each
Direct Participant to be redeemed.
 
  Although voting with respect to the QUIPS is limited to the holders of
record of the QUIPS, in those instances in which a vote is required, neither
DTC nor Cede & Co. will itself consent or vote with respect to QUIPS. Under
its usual procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to
the Property Trustee as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts such QUIPS are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
 
  Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
 
  Distribution payments on the QUIPS will be made by the Property Trustee to
DTC. DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments on
such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participant and not of DTC, the Property Trustee, the
Issuer thereof or MCI, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of Distributions to DTC is the
responsibility of the Property Trustee, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursements of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
 
  DTC may discontinue providing its services as securities depositary with
respect to any of the QUIPS at any time by giving reasonable notice to the
Property Trustee and MCI. In the event that a successor securities depositary
is not obtained, definitive QUIPS certificates representing such QUIPS are
required to be printed and delivered. MCI, at its option, may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary). After a Debenture Event of Default, the holders of a
majority in liquidation preference of QUIPS may determine to discontinue the
system of book-entry transfers through DTC. In any such event, definitive
certificates for such Issuer's QUIPS will be printed and delivered.
 
  The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and MCI believe to be
accurate, but the Issuers and MCI assume no responsibility for the accuracy
thereof. Neither the Issuers nor MCI has any responsibility for the
performance by DTC or its Participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
 
REGISTRAR AND TRANSFER AGENT
 
  Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the QUIPS.
 
  Registration of transfers of QUIPS will be effected without charge by or on
behalf of each Issuer, but upon payment of any tax or other governmental
charges that may be imposed in connection with any transfer or exchange. The
Issuers will not be required to register or cause to be registered the
transfer of their QUIPS after such QUIPS have been called for redemption.
 
                                      25
<PAGE>
 
INFORMATION CONCERNING THE PROPERTY TRUSTEE
 
  The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the Property Trustee is under no obligation to exercise any of the powers
vested in it by the applicable Trust Agreement at the request of any holder of
QUIPS unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
applicable Trust Agreement or is unsure of the application of any provision of
the applicable Trust Agreement, and the matter is not one on which holders of
QUIPS are entitled under such Trust Agreement to vote, then the Property
Trustee shall take such action as is directed by MCI and if not so directed,
shall take such action as it deems advisable and in the best interests of the
holders of the QUIPS and the Common Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
 
MISCELLANEOUS
 
  The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a
corporation for United States federal income tax purposes and so that the
Corresponding QUIDS will be treated as indebtedness of MCI for United States
federal income tax purposes. In this connection, MCI and the Administrative
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of each Issuer or each Trust Agreement, that MCI
and the Administrative Trustees determine in their discretion to be necessary
or desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the related QUIPS.
 
  Holders of the QUIPS have no preemptive or similar rights.
 
  No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
 
                           DESCRIPTION OF GUARANTEES
 
  Each Guarantee will be executed and delivered by MCI concurrently with the
issuance by each Issuer of its QUIPS for the benefit of the holders from time
to time of such QUIPS. Wilmington Trust Company will act as indenture trustee
("Guarantee Trustee") under each Guarantee for the purposes of compliance with
the Trust Indenture Act and each Guarantee will be qualified as an Indenture
under the Trust Indenture Act. This summary of certain provisions of the
Guarantees does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of each Guarantee,
including the definitions therein of certain terms, and the Trust Indenture
Act. The form of the Guarantee has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Reference in
this summary to QUIPS means that Issuer's QUIPS to which a Guarantee relates.
The Guarantee Trustee will hold each Guarantee for the benefit of the holders
of the related Issuer's QUIPS.
 
GENERAL
 
  MCI will irrevocably agree to pay in full on a subordinated basis, to the
extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the QUIPS, as and when due, regardless of any defense, right of
set-off or counterclaim that such Issuer may have or assert other than the
defense of payment. The following payments with respect to the QUIPS, to the
extent not paid by or on behalf of the related Issuer (the "Guarantee
Payments"), will be subject to the Guarantee: (i) any
 
                                      26
<PAGE>
 
accumulated and unpaid Distributions required to be paid on such QUIPS, to the
extent that such Issuer has funds on hand available therefor, (ii) the
Redemption Price with respect to any QUIPS called for redemption to the extent
that such Issuer has funds on hand available therefor, or (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of such Issuer
(unless the Corresponding QUIDS are distributed to holders of such QUIPS), the
lesser of (a) the Liquidation Distribution and (b) the amount of assets of
such Issuer remaining available for distribution to holders of QUIPS. MCI's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by MCI to the holders of the applicable QUIPS or by
causing the Issuer to pay such amounts to such holders.
 
  Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer's obligations under the QUIPS, but will apply only to the
extent that such related Issuer has funds sufficient to make such payments,
and is not a guarantee of collection.
 
  If MCI does not make interest payments on the Corresponding QUIDS held by
the Issuer, the Issuer will not be able to pay Distributions on the QUIPS and
will not have funds legally available therefor. Each Guarantee will rank
subordinate and junior in right of payment to all Senior Debt of MCI. See 
"--Status of the Guarantees". MCI is a non-operating holding company and almost
all of the operating assets of MCI and its consolidated subsidiaries are owned
by such subsidiaries. MCI relies primarily on interest and dividends from such
subsidiaries to meet its obligations for payment of principal and interest on
its outstanding debt obligations and corporate expenses. Accordingly, MCI's
obligations under the Guarantees will be effectively subordinated to all
existing and future liabilities of MCI's subsidiaries, and claimants should
look only to the assets of MCI for payments thereunder. Except as otherwise
provided in the applicable Prospectus Supplement, the Guarantees do not limit
the incurrence or issuance of other secured or unsecured debt of MCI, whether
under the Indenture or any existing or other indenture that MCI may enter into
in the future or otherwise, including MCI's Senior and Subordinated Indentures
entered into with Citibank, N.A. and Bankers Trust Company, respectively.
 
  MCI has, through the applicable Guarantee, the applicable Trust Agreement,
the QUIDS, the Indenture and the Expense Agreement, taken together, fully,
irrevocably and unconditionally guaranteed all of the Issuer's obligations
under the QUIPS. No single document standing alone or operating in conjunction
with fewer than all of the other documents constitutes such guarantee. It is
only the combined operation of these documents that has the effect of
providing a full, irrevocable and unconditional guarantee of the Issuer's
obligations under the QUIPS. See "Relationship Among the QUIPS, the QUIDS and
the Guarantees--General".
 
STATUS OF THE GUARANTEES
 
  Each Guarantee will constitute an unsecured obligation of MCI and will rank
subordinate and junior in right of payment to all Senior Debt.
 
  Each Guarantee will rank pari passu with all other Guarantees issued by MCI.
Each Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related QUIPS.
Each Guarantee will not be discharged except by payment of the Guarantee
Payments in full to the extent not paid by the Issuer or upon distribution to
the holders of the QUIPS of the Corresponding QUIDS. None of the Guarantees
places a limitation on the amount of additional Senior Debt that may be
incurred by MCI. The communication services business is capital intensive and
MCI anticipates that from time to time it will incur substantial additional
indebtedness constituting Senior Debt.
 
 
                                      27
<PAGE>
 
AMENDMENTS AND ASSIGNMENT
 
  Except with respect to any changes which do not materially adversely affect
the rights of holders of the related QUIPS (in which case no vote will be
required), no Guarantee may be amended without the prior approval of the
holders of not less than a majority of the aggregate liquidation preference of
such outstanding QUIPS. The manner of obtaining any such approval will be as
set forth under "Description of the QUIPS--Voting Rights; Amendment of Each
Trust Agreement". All guarantees and agreements contained in each Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
MCI and shall inure to the benefit of the holders of the related QUIPS then
outstanding.
 
EVENTS OF DEFAULT
 
  An event of default under each Guarantee will occur upon the failure of MCI
to perform any of its payment or other obligations thereunder. The holders of
not less than a majority in aggregate Liquidation Amount of the related QUIPS
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
such Guarantee or to direct the exercise of any trust or power conferred upon
the Guarantee Trustee under such Guarantee.
 
  Any holder of the QUIPS may institute a legal proceeding directly against
MCI to enforce its rights under such Guarantee without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other person
or entity.
 
  MCI, as guarantor, is required to file annually with the Guarantee Trustee a
certificate as to whether or not MCI is in compliance with all the conditions
and covenants applicable to it under the Guarantee.
 
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
 
  The Guarantee Trustee, other than during the occurrence and continuance of a
default by MCI in performance of any Guarantee, undertakes to perform only
such duties as are specifically set forth in each Guarantee and, after default
with respect to any Guarantee, must exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any QUIPS unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
 
TERMINATION OF THE GUARANTEE
 
  Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related QUIPS, upon full payment
of the amounts payable upon liquidation of the related Issuer or upon
distribution of Corresponding QUIDS to the holders of the related QUIPS. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the related QUIPS must restore payment of any
sums paid under such QUIPS or such Guarantee.
 
GOVERNING LAW
 
  Each Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
 
THE EXPENSE AGREEMENT
 
  Pursuant to an Expense Agreement entered into by MCI under each Trust
Agreement (the "Expense Agreement"), MCI will irrevocably and unconditionally
guarantee to each person or entity to whom the Issuer becomes indebted or
liable, the full payment of any costs, expenses or liabilities of the Issuer,
other than obligations of the Issuer to pay to the holders of any QUIPS or
other similar interests in the Issuer the amounts due such holders pursuant to
the terms of the QUIPS or such other similar interests, as the case may be.
 
                                      28
<PAGE>
 
                      DESCRIPTION OF CORRESPONDING QUIDS
 
  The Corresponding QUIDS are to be issued in one or more series under the
Indenture with terms corresponding to the terms of the related QUIPS. See
"Description of QUIDS". This summary of certain terms and provisions of, or
relating to, Corresponding QUIDS and the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Indenture, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and to the Trust Indenture
Act. Whenever particular defined terms of the Indenture (as supplemented or
amended from time to time) are referred to herein or in a Prospectus
Supplement, such defined terms are incorporated herein or therein by
reference.
 
GENERAL
 
  Concurrently with the issuance of each Issuer's QUIPS, such Issuer will
invest the proceeds thereof and the consideration paid by MCI for the Common
Securities in a series of Corresponding QUIDS issued by MCI to such Issuer.
Each series of Corresponding QUIDS will be in the principal amount equal to
the aggregate stated Liquidation Amount of the related QUIPS plus MCI's
concurrent investment in the Common Securities and will rank pari passu with
all other series of QUIDS. The Corresponding QUIDS will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Indenture to all Senior Debt of MCI. See "Description of QUIDS--
Subordination" and the Prospectus Supplement relating to any offering of
related QUIPS.
 
OPTIONAL REDEMPTION
 
  Unless otherwise specified in the applicable Prospectus Supplement, MCI may,
at its option, redeem the Corresponding QUIDS of any series in whole at any
time or in part from time to time. Except as otherwise set forth in the
applicable Prospectus Supplement, the redemption price for any Corresponding
QUIDS so redeemed shall be equal to any accrued and unpaid interest thereon to
the date fixed for redemption, plus the principal amount thereof. See
"Description of QUIDS--Redemption".
 
  If a Special Event in respect of an Issuer shall occur and be continuing,
MCI may, at its option, redeem the Corresponding QUIDS at any time within 90
days of the occurrence of such Special Event, in whole but not in part,
subject to the provisions of the Indenture. The redemption price for any
Corresponding QUIDS shall be equal to 100% of the principal amount of such
Corresponding QUIDS then outstanding plus accrued and unpaid interest to the
date fixed for redemption.
 
  For so long as the applicable Issuer is the holder of all the outstanding
series of Corresponding QUIDS, the proceeds of any such redemption will be
used by the Issuer to redeem the corresponding QUIPS in accordance with their
terms. MCI may not redeem a series of Corresponding QUIDS in part unless all
accrued and unpaid interest has been paid in full on all outstanding
Corresponding QUIDS of such series for all interest periods terminating on or
prior to the Redemption Date.
 
CERTAIN COVENANTS OF MCI
 
  MCI will covenant in the Indenture as to each series of Corresponding QUIDS
that if and so long as (i) the Issuer of the related series of QUIPS and
Common Securities is the holder of all such Corresponding QUIDS, (ii) a Tax
Event in respect of such Issuer has occurred and is continuing and (iii) MCI
has elected, and has not revoked such election, to pay Additional Sums in
respect of such QUIPS and Common Securities, MCI will pay to such Issuer such
Additional Sums. MCI will also covenant, as to each series of Corresponding
QUIDS, that it will not, and will not permit any subsidiary of MCI to, (i)
declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of MCI's capital
stock or (ii) make any payment of principal,
 
                                      29
<PAGE>
 
interest or premium, if any, on or repay or repurchase or redeem any debt
securities (including other Corresponding QUIDS) that rank pari passu with or
junior in interest to the Corresponding QUIDS or make any guarantee payments
with respect to the foregoing (other than (a) dividends or distributions in
Common Stock of MCI, (b) redemptions or purchases of any rights pursuant to
MCI's Preferred Stock Rights Plan, or any successor to such Preferred Stock
Rights Plan, and the declaration of a dividend of such rights or the issuance
of Preferred Stock under such plans in the future, (c) payments under any
Guarantee, (d) purchases of Common Stock related to the issuance of Common
Stock under any of MCI's benefit plans for its directors, officers or
employees and (e) purchases of Common Stock required to prevent the loss or
secure the renewal or reinstatement of any government license or franchise
held by MCI or any of its subsidiaries) if at such time (i) there shall have
occurred any event of which MCI has actual knowledge that (a) with the giving
of notice or the lapse of time, or both, would constitute an "Event of
Default" under the Indenture with respect to Corresponding QUIDS of such
series and (b) in respect of which MCI shall not have taken reasonable steps
to cure, (ii) MCI shall be in default with respect to its payment of any
obligations under the related Guarantee or (iii) MCI shall have given notice
of its selection of an Extension Period as provided in the Indenture with
respect to Corresponding QUIDS of such series and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing. MCI will also covenant, as to each series of Corresponding QUIDS,
(i) to maintain directly or indirectly 100% ownership of the Common Securities
of the Issuer to which Corresponding QUIDS have been issued, provided that
certain successors which are permitted pursuant to the Indenture may succeed
to MCI's ownership of the Common Securities, (ii) not to voluntarily
terminate, wind-up or liquidate any Issuer, except (a) in connection with a
distribution of Corresponding QUIDS to the holders of the QUIPS in liquidation
of such Issuer or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the related Trust Agreement, and (iii) to use its
reasonable efforts, consistent with the terms and provisions of the related
Trust Agreement, to cause such Issuer to remain classified as a grantor trust
and not as an association taxable as a corporation for United States federal
income tax purposes.
 
                         RELATIONSHIP AMONG THE QUIPS,
                  THE CORRESPONDING QUIDS AND THE GUARANTEES
 
  As long as payments of interest and other payments are made when due on each
series of Corresponding QUIDS, such payments will be sufficient to cover
Distributions and other payments due on the related QUIPS, primarily because
(i) the aggregate principal amount of each series of Corresponding QUIDS will
be equal to the sum of the aggregate stated liquidation amount of the related
QUIPS and related Common Securities; (ii) the interest rate and interest and
other payment dates on each series of Corresponding QUIDS will match the
Distribution rate and Distribution and other payment dates for the related
QUIPS; (iii) MCI shall pay for all and any costs, expenses and liabilities of
such Issuer except the Issuer's obligations to holders of its QUIPS under such
QUIPS; and (iv) each Trust Agreement further provides that the Issuer will not
engage in any activity that is not consistent with the limited purposes of
such Issuer.
 
  Payments of Distributions and other amounts due on the QUIPS (to the extent
the Issuer has funds available for the payment of such Distributions) are
irrevocably guaranteed by MCI as and to the extent set forth under
"Description of Guarantees". Taken together, MCI's obligations under each
series of QUIDS, the Indenture, the related Trust Agreement, the related
Expense Agreement and the related Guarantee provide a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the related series of QUIPS. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the QUIPS. If and to the extent that MCI does
 
                                      30
<PAGE>
 
not make payments on any series of Corresponding QUIDS, such Issuer will not
pay Distributions or other amounts due on related QUIPS. The Guarantees do not
cover payment of Distributions when the related Issuer does not have
sufficient funds to pay such Distributions. In such event, the remedy of a
holder of a series of QUIPS is to enforce the rights of such Issuer under the
QUIDS held by such Issuer. The obligations of MCI under each Guarantee are
subordinate and junior in right of payment to all Senior Debt of MCI.
 
  Notwithstanding anything to the contrary in the Indenture, MCI has the right
to set-off any payment it is otherwise required to make thereunder with and to
the extent MCI has theretofore made, or is concurrently on the date of such
payment making, a payment under the related Guarantee.
 
  A holder of any related QUIPS may institute a legal proceeding directly
against MCI to enforce its rights under the related Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the related
Issuer or any other person or entity.
 
  Each Issuer's QUIPS evidence a beneficial interest in such Issuer, and each
Issuer exists for the sole purpose of issuing its QUIPS and Common Securities
and investing the proceeds thereof in Corresponding QUIDS. A principal
difference between the rights of a holder of a QUIPS and a holder of a
Corresponding QUIDS is that a holder of a Corresponding QUIDS is entitled to
receive from MCI the principal amount of and interest accrued on Corresponding
QUIDS held, while a holder of QUIPS is entitled to receive Distributions from
such Issuer (or from MCI under the applicable Guarantee) if and to the extent
such Issuer has funds available for the payment of such Distributions.
 
  Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer involving the liquidation of the Corresponding QUIDS, the holders
of the related QUIPS will be entitled to receive, out of assets held by such
Issuer, the Liquidation Distribution in cash. See "Description of QUIPS--
Liquidation Distribution Upon Termination". Upon any voluntary or involuntary
liquidation or bankruptcy of MCI, the Property Trustee, as holder of the
Corresponding QUIDS, would be a subordinated creditor of MCI, subordinated in
right of payment to all Senior Debt, but entitled to receive payment in full
of principal and interest before any stockholders of MCI receive payments or
distributions. Since MCI is the guarantor under each Guarantee and has agreed
to pay for all costs, expenses and liabilities of each Issuer (other than the
Issuer's obligations to the holders of its QUIPS), the positions of a holder
of such QUIPS and a holder of such Corresponding QUIDS relative to other
creditors and to stockholders of MCI in the event of liquidation or bankruptcy
of MCI would be substantially the same.
 
  A default or event of default under any Senior Debt of MCI will not
constitute a default or Event of Default under the Indenture. However, in the
event of payment defaults under, or acceleration of, Senior Debt of MCI, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Corresponding QUIDS until such Senior Debt has been paid in
full or any payment default thereunder has been cured or waived. Failure to
make required payments on any series of Corresponding QUIDS would constitute
an Event of Default under the Indenture.
 
                             PLAN OF DISTRIBUTION
 
  The QUIDS and the QUIPS may be sold in a public offering to or through
underwriters or dealers designated from time to time. MCI and each Issuer may
sell its QUIDS and QUIPS as soon as practicable after effectiveness of the
Registration Statement of which the Prospectus is a part. The names of any
underwriters or dealers involved in the sale of the QUIDS and QUIPS in respect
of which this Prospectus is delivered, the amount or number of QUIDS and QUIPS
to be purchased by any such underwriters and any applicable commissions or
discounts will be set forth in the Prospectus Supplement.
 
 
                                      31
<PAGE>
 
  Underwriters may offer and sell QUIDS and QUIPS at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. In connection with the sale of QUIPS, underwriters may be
deemed to have received compensation from MCI and/or the applicable Issuer in
the form of underwriting discounts or commissions and may also receive
commissions. Underwriters may sell QUIDS and QUIPS to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters.
 
  Any underwriting compensation paid by MCI and/or the applicable Issuer to
underwriters in connection with the offering of QUIDS and QUIPS, and any
discounts, concessions or commissions allowed by such underwriters to
participating dealers, will be described in a Prospectus Supplement.
Underwriters and dealers participating in the distribution of QUIDS and QUIPS
may be deemed to be underwriters, and any discounts and commissions received
by them and any profit realized by them on resale of such QUIDS and QUIPS may
be deemed to be underwriting discounts and commissions, under the Securities
Act. Underwriters and dealers may be entitled, under agreement with MCI and
the applicable Issuer, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by MCI for certain expenses.
 
  In connection with the offering of the QUIPS of any Issuer, such Issuer may
grant to the underwriters an option to purchase additional QUIPS to cover
over-allotments, if any, at the initial public offering price (with an
additional underwriting commission), as may be set forth in the accompanying
Prospectus Supplement. If such Issuer grants any over-allotment option, the
terms of such over-allotment option will be set forth in the Prospectus
Supplement for such QUIPS.
 
  Underwriters and dealers may engage in transactions with, or perform
services for, MCI and/or the applicable Issuer and/or any of their affiliates
in the ordinary course of business.
 
  The QUIDS and the QUIPS will be new issues of securities and will have no
established trading market. Any underwriters to whom QUIDS and QUIPS are sold
for public offering and sale may make a market in such QUIDS and QUIPS, but
such underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. Such QUIDS and QUIPS may or may not
be listed on a national securities exchange or the Nasdaq National Market, as
set forth in the applicable Prospectus Supplement. No assurance can be given
as to the liquidity of or the existence of trading markets for any QUIDS or
QUIPS.
 
                                LEGAL OPINIONS
 
  Unless otherwise set forth in the applicable Prospectus Supplement, certain
matters of Delaware law relating to the legality of the QUIPS, the validity of
the Trust Agreements and the formation of the Issuers will be passed upon by
Richards, Layton & Finger, special Delaware counsel to MCI and the Issuers.
The legality of the Guarantees and QUIDS will be passed upon for MCI by
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, New York, New York, and for
the Underwriters by Sullivan & Cromwell, New York, New York. Certain matters
relating to United States federal income tax considerations will be passed
upon for MCI by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel.
 
                                    EXPERTS
 
  The audited consolidated financial statements of MCI and subsidiaries
incorporated herein by reference to MCI's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
 
                                      32
<PAGE>
 
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 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PRO-
SPECTUS SUPPLEMENT AND THE PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECUTS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MCI
COMMUNICATIONS CORPORATION SINCE THE DATE HEREOF OR THAT THE INFORMATION CON-
TAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
 
                                  -----------
 
                   TABLE OF CONTENTS
                 PROSPECTUS SUPPLEMENT
 
<TABLE>
<CAPTION>
                                              PAGE
                                              ----
<S>                                           <C>
Risk Factors................................   S-4
MCI Capital I...............................   S-8
MCI Communications Corporation..............   S-8
Ratio of Earnings to Fixed Charges..........  S-10
Use of Proceeds.............................  S-10
Capitalization..............................  S-11
Accounting Treatment........................  S-12
Selected Financial Information..............  S-12
Certain Terms of Series A QUIPS.............  S-13
Certain Terms of Series A QUIDS.............  S-15
Certain Federal Income Tax Consequences.....  S-18
Underwriting................................  S-21
Legal Opinions..............................  S-22
                       
                   PROSPECTUS
Available Information......................     3
Incorporation of Certain Information by
 Reference..................................    3
MCI Communications Corporation..............    4
The Issuers.................................    5
Use of Proceeds.............................    6
Ratio of Earnings to Fixed Charges..........    6
Description of QUIDS........................    6
Description of QUIPS........................   15
Description of Guarantees...................   26
Description of Corresponding QUIDS..........   29
Relationship Among the QUIPS, the 
 Corresponding QUIDS and the Guarantees.....   30
Plan of Distribution........................   31
Legal Opinions..............................   32
Experts.....................................   32
</TABLE>
 
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                                 PREFERRED SECURITIES
 
                                 MCI CAPITAL I
 
 
                              % CUMULATIVE QUARTERLY
                         INCOME PREFERRED SECURITIES,
                              SERIES A (QUIPS SM)
 
                         GUARANTEED TO THE EXTENT THE
                         ISSUER HAS FUNDS AS SET FORTH
                                   HEREIN BY
 
                              MCI COMMUNICATIONS
                                  CORPORATION
 
                                  -----------
 
                                    [LOGO]
 
 
                                  -----------
 
                             GOLDMAN, SACHS & CO.
 
                              MERRILL LYNCH & CO.
 
 
                      REPRESENTATIVES OF THE UNDERWRITERS
 
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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......................................    *
   (c) Legal fees and expenses.........................................    *
   (d) Accounting fees and expenses....................................    *
   (e) Blue Sky fees and expenses......................................    *
   (f) Nasdaq National Market Listing Fee..............................    *
   (g) Rating Agency Fees..............................................    *
   (h) Trustees' Fees..................................................    *
   (i) Other...........................................................    *
                                                                       --------
       Total.......................................................... $   *
                                                                       ========
</TABLE>
- --------
* To be completed by Amendment.
 
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 (Agreements for MCI
        Capital I, MCI Capital II, MCI Capital III and MCI Capital IV are
        substantially identical except for names and dates).
  4.11  Form of Preferred Security Certificate for MCI Capital I, MCI Capital
        II, MCI Capital III and MCI Capital IV (included as Exhibit E of
        Exhibit 4.10 hereto).
  4.12  Form of Guarantee Agreement (Agreements in respect of MCI Capital I,
        MCI Capital II, MCI Capital III and MCI Capital IV are substantially
        identical except for names and dates).
  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, Nessen, Kamin & 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, Nessen, Kamin & 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 Annual Report on Form
        10-K for the fiscal year ended December 31, 1995.)
 23.01  Consent of Price Waterhouse LLP.
 23.02  Consent of Kramer, Levin, Naftalis, Nessen, Kamin & 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, Nessen, Kamin & Frankel (included
        in Exhibit 8.01 hereto).
</TABLE>
 
                                     II-3
<PAGE>
 
<TABLE>
 <C>   <S>
 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>
- --------
* To be filed by amendment.
 
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
Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference
in the Registration Statement.
 
                                     II-4
<PAGE>
 
  (2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
 
  (3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
 
  (4) 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.
 
  (5) 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.
 
                                     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 APRIL 17, 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 APRIL 17, 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 APRIL 17, 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 (Agreements for 
         MCI Capital I, MCI Capital II, MCI Capital III and MCI Capital
         IV are substantially identical except for names and dates)...
  4.11   Form of Preferred Security Certificate for MCI Capital
         I, MCI Capital II, MCI Capital III and MCI Capital IV 
         (included as Exhibit E of Exhibit 4.10 hereto)...............
  4.12   Form of Guarantee Agreement (Agreements in respect of MCI 
         Capital I, MCI Capital II, MCI Capital III and MCI Capital IV 
         are substantially identical except for names and dates)......
  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, Nessen, Kamin & 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, Nessen, Kamin & 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 
         Annual Report on Form 10-K for the fiscal year ended 
         December 31, 1995)...........................................
 23.01   Consent of Price Waterhouse LLP..............................
 23.02   Consent of Kramer, Levin, Naftalis, Nessen, Kamin & 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, Nessen, Kamin &
         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.............................................
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
 EXHIBIT                                                                  PAGE
 NUMBER                           DESCRIPTION                            NUMBER
 -------                          -----------                            ------
 <C>     <S>                                                             <C>
 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>
- --------
* To be filed by amendment.

<PAGE>
 


                                                            __________ __, 1996

                                 MCI CAPITAL I
                                MCI CAPITAL II
                                MCI CAPITAL III
                                MCI CAPITAL IV

               CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES
                (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
            GUARANTEED TO THE EXTENT SET FORTH IN THE GUARANTEE BY
                        MCI COMMUNICATIONS CORPORATION


                    UNDERWRITING AGREEMENT BASIC PROVISIONS
                    ---------------------------------------


          From time to time MCI Capital I, MCI Capital II, MCI Capital III or
MCI Capital IV, each a statutory business trust formed under the laws of the
State of Delaware (each a "Trust" and collectively, the "Trusts"), and MCI
Communications Corporation, a Delaware corporation, as depositor of each trust
and as guarantor (the "Guarantor"), propose to issue and sell certain of its
preferred securities (the "Securities") representing undivided beneficial
interests in the assets of the Designated Trust, guaranteed by the Guarantor to
the extent set forth in the guarantee agreement (the "Guarantee Agreement")
identified in the Terms Agreement (as defined below).

          The Trusts and the Guarantor propose to enter into one or more Terms
Agreements (each a "Terms Agreement") in the form of Annex I hereto, with such
additions and deletions as the parties thereto may determine, and, subject to
the terms and conditions stated herein and therein, which shall provide that the
Trust identified in the applicable Terms Agreement (such Trust being the
"Designated Trust" with respect to such Terms Agreement) shall issue and sell
the Securities to the firms named in Schedule I to the applicable Terms
Agreement (such firms constituting the "Underwriters" with respect to such Terms
Agreement and the securities specified therein).

          The Securities specified in such Terms Agreement are referred to as
the "Firm Designated Securities" with respect to such Terms Agreement.  If
specified in such Terms Agreement, the Designated Trust may grant the
Underwriters the right to purchase at their election an additional number of
Securities, specified as provided in such Terms Agreement as provided in Section
2(b) hereof (the "Optional Designated Securities").  The Firm Designated
Securities and any Optional Designated Securities are collectively called the
"Designated Securities."  The proceeds of the sale of the Designated Securities
and of common securities of the Trust
<PAGE>
 
(the "Common Securities") sold to the Guarantor are to be invested in junior
subordinated deferrable interest debentures of the Guarantor (the "Subordinated
Debentures"), to be issued pursuant to a junior subordinated indenture to be
dated as of ___________ __, 1996 (the "Indenture") between the Guarantor and
Wilmington Trust Company, as trustee.  The Designated Securities may be
exchangeable into Subordinated Debentures, as specified in Schedule II to such
Terms Agreement.  Pursuant to the Guarantee Agreement identified in the Terms
Agreement relating to any particular issuance of Designated Securities, the
Designated Securities will be guaranteed by the Guarantor to the extent set
forth in such Terms Agreement (the "Guarantee").

          The terms and rights of any particular issuance of Designated
Securities shall be as specified in the Terms Agreement relating thereto and in
or pursuant to the amended and restated trust agreement (the "Trust Agreement")
identified in such Terms Agreement.

          Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Terms Agreement
relating thereto will act as representatives (the "Representatives").  The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to Underwriters who act without any firm being designated
as their representative.  These Underwriting Agreement basic provisions (this
"Agreement") shall not be construed as an obligation of any Trust to sell any of
the Securities or as an obligation of any of the Underwriters to purchase any of
the Securities.  The obligation of any Trust to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Terms Agreement with respect to the
Designated Securities specified therein.  Each Terms Agreement shall specify the
aggregate number of the Firm Designated Securities, the maximum number of
Optional Designated Securities, if any, the initial public offering price of
such Firm and Optional Designated Securities or the manner of determining such
price, the terms of the Designated Securities, including the terms on which and
terms of the securities into which the Designated Securities will be
exchangeable, the purchase price to the Underwriters of such Designated
Securities, the names of the Underwriters of such Designated Securities, the
names of the Representatives of such Underwriters, the number of such Designated
Securities to be purchased by each Underwriter and the commission, if any,
payable to the Underwriters with respect thereto and shall set forth the

                                       2
<PAGE>
 
date, time and manner of delivery of such Firm and Optional Designated
Securities, if any, and payment therefor.  The Terms Agreement shall also
specify (to the extent not set forth in the registration statement and
prospectus with respect thereto) the terms of such Designated Securities.  A
Terms Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted.  The obligations of the Underwriters under each
Terms Agreement shall be several and not joint.

SECTION 1.  Representations and Warranties.
            ------------------------------ 

          Each of the Trusts and the Guarantor, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that:

          (i)  Due Organization and Qualification.  Each Trust has been duly
               ----------------------------------                           
     organized and is validly existing as a business trust in good standing
     under the laws of the State of Delaware, with power and authority to own,
     lease and operate its properties and conduct its business as described in
     the Prospectus; the Guarantor has been duly incorporated and is validly
     existing as a corporation in good standing under the laws of Delaware, with
     corporate power and authority to own, lease and operate its properties and
     conduct its business as described in the Prospectus; and the Guarantor is
     duly qualified as a foreign corporation to transact business and is in good
     standing in each jurisdiction in which such qualification is required,
     whether by reason of the ownership or leasing of property or the conduct of
     business, except where the failure to so qualify or be in good standing
     would not have a material adverse effect on the condition, financial or
     otherwise, or the earnings or business affairs of the Guarantor and its
     subsidiaries considered as one enterprise.

         (ii)  Subsidiaries.  Each subsidiary of the Guarantor which is a
               ------------                                              
     significant subsidiary (each, a "Significant Subsidiary"), as defined in
     Rule 405 of Regulation C of the regulations promulgated under the
     Securities Act of 1933, as amended (the "1933 Act"), has been duly
     incorporated and is validly existing as a corporation in good standing
     under the laws of the jurisdiction of its incorporation, has corporate
     power and authority to own, lease and operate its properties and to conduct
     its business as described in the

                                       3
<PAGE>
 
     Prospectus, and is duly qualified as a foreign corporation to transact
     business and is in good standing in each jurisdiction in which such
     qualification is required, whether by reason of the ownership or leasing of
     property or the conduct of business, except where the failure to so qualify
     or be in good standing would not have a material adverse effect on the
     condition, financial or otherwise, or the earnings or business affairs of
     the Guarantor and its subsidiaries considered as one enterprise; all the
     outstanding beneficial interests in the Designated Trust have been duly and
     validly authorized and issued, are fully paid and non-assessable and
     conform to the descriptions thereof contained in the Prospectus; and all of
     the issued and outstanding capital stock of each Significant Subsidiary has
     been duly authorized and validly issued, is fully paid and non-assessable
     and all such shares owned by the Guarantor, directly or through
     subsidiaries, are owned free and clear of any security interest, mortgage,
     pledge, lien, encumbrance, claim or security (except for any  lien or
     encumbrance permitted pursuant to Article VI of the Revolving Credit
     Agreement, dated as of July 8, 1994, among the Guarantor and Bank of
     America National Trust and Savings Association, as agent for the financial
     institutions party thereto, Articles X and XII of the indenture, dated as
     of February 17, 1995, between the Guarantor and Citibank, N.A. and Articles
     X and XIII of the indenture, dated as of October 15, 1989, between the
     Guarantor and Bankers Trust Company, as trustee).

        (iii)  Registration Statement and Prospectus.  A registration statement
               -------------------------------------                           
     on Form S-3 (File No. 333-......) in respect of the Securities, the
     Subordinated Debentures and the Guarantees has been filed with the
     Securities and Exchange Commission (the "Commission"); such registration
     statement and any post-effective amendment thereto, each in the form
     heretofore delivered or to be delivered to the Representatives and,
     excluding exhibits to such registration statement, but including all
     documents incorporated by reference in the prospectus included therein, to
     the Representatives for each of the other Underwriters has been declared
     effective by the Commission in such form; no other document with respect to
     such registration statement or document incorporated by reference therein
     has heretofore been filed, or transmitted for filing, with the Commission
     (other than prospectuses filed pursuant to Rule 424(b) of the rules and
     regulations of the Commission under the 1933 Act (the "1933 Act
     Regulations"), each in the form heretofore delivered to

                                       4
<PAGE>
 
     the Representatives); no stop order suspending the effectiveness of such
     registration statement has been issued and no proceeding for that purpose
     has been initiated or threatened by the Commission (any preliminary
     prospectus included in such registration statement or filed with the
     Commission pursuant to Rule 424(a) under the 1933 Act is hereinafter called
     a "Preliminary Prospectus"; the various parts of such registration
     statement, including (i) the information contained in the form of final
     prospectus filed with the Commission pursuant to Rule 424(b) under the 1933
     Act in accordance with Section 3(a) hereof and deemed by virtue of Rule
     430A under the 1933 Act to be part of the registration statement at the
     time it was declared effective and (ii) all exhibits thereto and the
     documents incorporated by reference in the prospectus contained in the
     registration statement at the time such part of the registration statement
     became effective but excluding Forms T-1, each as amended at the time such
     part of the registration statement became effective, are hereinafter
     collectively called the "Registration Statement"; the prospectus relating
     to the Securities, the Subordinated Debentures and the Guarantees, in the
     form in which it has most recently been filed, or transmitted for filing,
     with the Commission on or prior to the date of the applicable Terms
     Agreement, is hereinafter called the "Prospectus"; any reference herein to
     any Preliminary Prospectus or the Prospectus shall be deemed to refer to
     and include the documents incorporated by reference therein pursuant to the
     applicable form under the 1933 Act, as of the date of such Preliminary
     Prospectus or Prospectus, as the case may be; any reference to any
     amendment or supplement to any Preliminary Prospectus or the Prospectus
     shall be deemed to refer to and include any documents filed after the date
     of such Preliminary Prospectus or Prospectus, as the case may be, under the
     Securities Exchange Act of 1934, as amended (the "1934 Act"), and
     incorporated by reference in such Preliminary Prospectus or Prospectus, as
     the case may be; any reference to any amendment to the Registration
     Statement shall be deemed to refer to and include any annual report of the
     Guarantor filed pursuant to Section 13(a) or 15(d) of the 1934 Act after
     the effective date of the Registration Statement that is incorporated by
     reference in the Registration Statement; and any reference to the
     Prospectus as amended or supplemented shall be deemed to refer to the
     Prospectus as amended or supplemented in relation to the applicable
     Designated Securities in the form in which it is filed with the Commission
     pursuant to Rule

                                       5
<PAGE>
 
     424(b) under the 1933 Act in accordance with Section 3(a) hereof, including
     any documents incorporated by reference therein as of the date of such
     filing); and the Registration Statement and the Prospectus conform, and any
     further amendments or supplements to the Registration Statement or the
     Prospectus will conform, in all material respects to the requirements of
     the 1933 Act and the Trust Indenture Act of 1939, as amended (the "1939
     Act"), and the rules and regulations of the Commission thereunder and do
     not and will not, as of the applicable effective date as to the
     Registration Statement and any amendment thereto and as of the applicable
     filing date as to the Prospectus and any amendment or supplement thereto,
     contain an untrue statement of a material fact or omit to state a material
     fact required to be stated therein or necessary to make the statements
     therein not misleading.

         (iv)  Incorporated Documents.  The documents incorporated by reference
               ----------------------                                          
     in the Prospectus, when they became effective or were filed with the
     Commission, as the case may be, conformed in all material respects to the
     requirements of the 1933 Act or the 1934 Act, as applicable, and the rules
     and regulations of the Commission promulgated thereunder (the "1934 Act
     Regulations"), and none of such documents contained an untrue statement of
     a material fact or omitted to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading; and any
     further documents so filed and incorporated by reference in the Prospectus
     or any further amendment or supplement thereto, when such documents become
     effective or are filed with the Commission, as the case may be, will
     conform in all material respects to the requirements of the 1933 Act or the
     1934 Act, as applicable, and the 1934 Act Regulations and will not contain
     an untrue statement of a material fact or omit to state a material fact
     required to be stated therein or necessary to make the statements therein
     not misleading.

          (v)  Accountants.  The accountants who certified the financial
               -----------                                              
     statements of the Guarantor and its subsidiaries included in or
     incorporated by reference in the Prospectus are independent public
     accountants as required by the 1933 Act and the 1933 Regulations.

         (vi)  Financial Statements.  The financial statements of the Guarantor
               --------------------                                            
     and its consolidated subsidiaries included or incorporated by reference in

                                       6
<PAGE>
 
     the Registration Statement and the Prospectus present fairly in all
     material respects the consolidated financial position of the Guarantor and
     its consolidated subsidiaries as of the dates indicated and the
     consolidated results of their operations for the periods specified; and,
     except as stated therein, said financial statements have been prepared in
     conformity with generally accepted accounting principles in the United
     States applied on a consistent basis.

        (vii)  Material Changes.  Since the respective date as of which
               ----------------                                        
     information is given in the Registration Statement and the Prospectus,
     except as otherwise stated therein or contemplated thereby, there has not
     been any change in the capital stock or long-term debt of the Guarantor or
     any of its subsidiaries or any material adverse change in the condition,
     financial or otherwise, or in the earnings or business affairs of the
     Guarantor and its subsidiaries, considered as one business enterprise,
     whether or not arising in the normal course of business.

       (viii)  No Defaults.  Neither the Guarantor nor any of its subsidiaries
               -----------                                                    
     is in violation of its charter or in default in the performance or
     observance of any material obligation, agreement, covenant or condition
     contained in any contract, indenture, mortgage, loan agreement, note, lease
     or other instrument to which it is a party or by which it or any of them or
     their properties is bound, except where such violation or default would not
     have a material adverse effect on the condition, financial or otherwise, or
     in the earnings or business affairs of the Guarantor and its subsidiaries
     considered as one enterprise; and the execution and delivery of any
     applicable Terms Agreement to which this Agreement is attached and forms a
     part thereof and the consummation of the transactions contemplated herein
     and therein have been duly authorized by all necessary corporate action and
     do not conflict with or constitute a breach of, or default under, or result
     in the creation or imposition or violation of any lien, charge or
     encumbrance upon any property or assets of the Guarantor or any of its
     subsidiaries pursuant to, (A) the charter or by-laws of the Guarantor, (B)
     any law, administrative regulation or administrative or court order or
     decree applicable to the Guarantor, (C) any contract, indenture, mortgage,
     loan agreement, note, lease or other instrument to which the Guarantor or
     any such subsidiary is a party or by which it or any of them is bound or to
     which any of the property or assets of the

                                       7
<PAGE>
 
     Guarantor or any such subsidiary is subject, where such conflict, breach or
     default, or lien, charge or encumbrance has a material adverse effect on
     the condition, financial or otherwise, or the earnings or business affairs
     of the Guarantor and its subsidiaries considered as one enterprise.

         (ix)  Legal Proceedings; Contracts.  Except as set forth or
               ----------------------------                         
     incorporated by reference in the Prospectus, there is no action, suit or
     proceeding before or by any court or governmental agency or body, domestic
     or foreign, now pending, or, to the knowledge of the Guarantor, threatened
     against or affecting the Guarantor or any of its subsidiaries, which might,
     in the opinion of the Guarantor, result in any material adverse change in
     the condition, financial or otherwise, or in the earnings or business
     affairs of the Guarantor and its subsidiaries considered as one enterprise,
     or might materially and adversely affect the properties or assets thereof
     or might materially and adversely affect the consummation of the
     transactions contemplated by the applicable Terms Agreement to which this
     Agreement is attached and forms a part or the Guarantor Agreements (as
     defined below); and there are no contracts or documents of the Guarantor or
     any of its subsidiaries which are required to be filed as exhibits to the
     Registration Statement by the Act or by the 1933 Act Regulations which have
     not been so filed or incorporated by reference as exhibits thereto.

          (x)  No Authorization, Approval or Consent Required.  No
               ----------------------------------------------     
     authorization, approval, consent, order or decree of any court or
     governmental authority is necessary in connection with the issuance and
     sale of the Securities and the Common Securities by any applicable Trust,
     the purchase of the Subordinated Debentures by the such Trust, the issuance
     of the Guarantees or the Subordinated Debentures or the consummation by
     such Trust or the Guarantor of the transactions contemplated by any Terms
     Agreement to which this Agreement is attached and forms a part thereof, any
     Over-allotment Option (as defined in Section 2(b) hereof), or any Guarantor
     Agreement, except such as have been, or will have been, prior to each Time
     of Delivery (as defined in Section 2(c) hereof), obtained under the 1933
     Act and the 1939 Act and such consents, approvals, authorizations,
     registrations or qualifications as may be required under state securities
     or Blue Sky laws.

                                       8
<PAGE>
 
         (xi)  Regulatory Certificates, Authorities and Permits.  The Guarantor
               ------------------------------------------------                
     and its subsidiaries possess such certificates, authorities or permits
     issued by the appropriate state, federal or foreign regulatory agencies or
     bodies necessary to conduct the business now operated by them, except where
     the failure to possess such certificates, authorities or permits would not
     have a material adverse effect on the condition, financial or otherwise, or
     the earnings or business affairs of the Guarantor and its subsidiaries
     considered as one enterprise; and neither the Guarantor nor any of its
     subsidiaries has received any notice of proceedings relating to the
     revocation or modification of any such certificate, authority or permit
     which, singly or in the aggregate, if the subject of an unfavorable
     decision, ruling or finding, would materially and adversely affect the
     condition, financial or otherwise, or the earnings or business affairs of
     the Guarantor and its subsidiaries considered as one enterprise.

        (xii)  Authorization and Validity of the Securities. The Securities have
               --------------------------------------------                     
     been duly and validly authorized, and, when the Firm Designated Securities
     are issued and delivered pursuant to the Terms Agreement to which this
     Agreement is attached and forms a part thereof with respect to such
     Designated Securities and, in the case of any Optional Designated
     Securities, pursuant to Over-allotment Options with respect to such
     Securities, such Designated Securities will be duly and validly issued and
     fully paid and non-assessable beneficial interests in the Designated Trust
     entitled to the benefits provided by the applicable Trust Agreement, which
     will be substantially in the form filed as an exhibit to the Registration
     Statement; and the Securities conform to the description thereof contained
     in the Registration Statement and the Designated Securities will conform to
     the description thereof contained in the Prospectus as amended or
     supplemented with respect to such Designated Securities.

       (xiii)  Limitation of Personal Liability.  The holders of the Securities
               --------------------------------                                
     (the "Securityholders") will 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.

        (xiv)  Authorization and Validity of the Common Securities. The Common
               ---------------------------------------------------            
     Securities of each Trust have been duly authorized on behalf of each such
     Trust by

                                       9
<PAGE>
 
     the depositor thereof and upon delivery by each such Trust to the Guarantor
     against payment therefor as set forth in the Trust Agreement, will be duly
     and validly issued and non-assessable beneficial interests in such Trust
     and will conform to the description thereof contained in the Prospectus;
     the issuance of the Common Securities is not subject to preemptive or other
     similar rights; the Common Securities conform to the description thereof
     contained in the Registration Statement; and at each Time of Delivery, all
     of the issued and outstanding Common Securities of each Designated Trust
     will be directly owned by the Guarantor free and clear of any security
     interest, mortgage, pledge, lien, encumbrance, claim or equity.

         (xv)  Authorization and Validity of the Subordinated Debentures and the
               -----------------------------------------------------------------
     Guarantees. The Subordinated Debentures have been duly authorized and, when
     ----------                                                                 
     issued and delivered pursuant to the Indenture, will have been duly
     executed, authenticated, issued and delivered and will constitute valid and
     legally binding obligations of the Guarantor entitled to the benefits of
     the Indenture, which will be substantially in the form filed as an exhibit
     to the Registration Statement; the Guarantees have been duly authorized
     and, when issued and delivered pursuant to each Guarantee Agreement, will
     have been duly issued and delivered and will constitute valid and legally
     binding obligations of the Guarantor entitled to the benefits of the
     applicable Guarantee Agreement, which will be substantially in the form
     filed as an exhibit to the Registration Statement; the Indenture, the Trust
     Agreements and the Guarantee Agreements (the "Guarantor Agreements") have
     been duly authorized and duly qualified under the 1939 Act and, when
     executed and delivered by the Guarantor and, in the case of each Guarantee
     Agreement, by the Guarantee Trustee (as defined in the Guarantee
     Agreement), in the case of each Trust Agreement, by the Trustees (as
     defined in the Trust Agreement) and, in the case of the Indenture, by the
     trustee named therein (the "Debenture Trustee"), will constitute valid and
     legally binding instruments, enforceable in accordance with their
     respective terms, subject, as to enforcement, to bankruptcy, insolvency,
     reorganization and other laws of general applicability relating to or
     affecting creditors' rights and to general equity principles; and the
     Guarantees, the Subordinated Debentures and the Guarantor Agreements will
     conform to the descriptions thereof in the Prospectus.

                                       10
<PAGE>
 
        (xvi)  No Conflicts With Respect to the Securities. The issue and sale
               -------------------------------------------                    
     of the Securities by each Trust, the compliance by each Trust with all of
     the provisions of any Terms Agreement to which this Agreement is attached
     and forms a part thereof and each Over-allotment Option, if any, the
     Designated Securities and each Trust Agreement, the execution, delivery and
     performance by each Trust of the Trust Agreement and the consummation of
     the transactions contemplated herein and therein will not conflict with or
     constitute a breach of, or default under, or result in the creation or
     imposition or violation of any lien, charge or encumbrance upon any
     property or assets of such Trust pursuant to, (A) the Trust Agreement of
     such Trust, (B) any law, administrative regulation or administrative or
     court order or decree applicable to such Trust, (C) any contract,
     indenture, mortgage, loan agreement, note, lease or other instrument to
     which such Trust is a party or by which such Trust is bound or to which any
     of the property or assets of such Trust is subject, where such conflict,
     breach or default, or lien, charge or encumbrance has a material adverse
     effect on the condition, financial or otherwise, or the earnings or
     business affairs of such Trust.

       (xvii)  No Conflicts With Respect to the Guarantees and the Subordinated
               ----------------------------------------------------------------
     Debentures.  The issuance by the Guarantor of the Guarantees and the
     ----------                                                          
     Subordinated Debentures, the compliance by the Guarantor with all of the
     provisions of any Terms Agreement to which this Agreement is attached and
     forms a part and each Over-allotment Option, if any, the Guarantees, the
     Subordinated Debentures and the Guarantor Agreements, the execution,
     delivery and performance by the Guarantor of the Guarantor Agreements and
     the consummation of the transactions contemplated herein and therein will
     not conflict with or constitute a breach of, or default under, or result in
     the creation or imposition or violation of any lien, charge or encumbrance
     upon any property or assets of the Guarantor or any of its subsidiaries
     pursuant to, (A) the charter or by-laws of the Guarantor, (B) any law,
     administrative regulation or administrative or court order or decree
     applicable to the Guarantor, (C) any contract, indenture, mortgage, loan
     agreement, note, lease or other instrument to which the Guarantor or any
     such subsidiary is a party or by which it or any of them is bound or to
     which any of the property or assets of the Guarantor or any such subsidiary
     is subject, where such conflict, breach or default, or lien, charge or
     encumbrance has a material adverse effect on the

                                       11
<PAGE>
 
     condition, financial or otherwise, or the earnings or business affairs of
     the Guarantor and its subsidiaries considered as one enterprise.

       (xviii)  1940 Act.  None of any Trust or the Guarantor is and, after
                --------                                                   
     giving effect to the offering and sale of the Securities, will be, an
     "investment company" or an entity "controlled" by an "investment company",
     as such terms are defined in the Investment Company Act of 1940, as amended
     (the "1940 Act").

       (xix)  Authorization of this Agreement and the Terms Agreement.  The
              -------------------------------------------------------      
     Terms Agreement to which this Agreement is attached and forms a part
     thereof, as of the date of such Terms Agreement, will have been duly
     authorized, executed and delivered by the Guarantor and the Designated
     Trust.

         (xx)  Doing Business With Cuba.  The Guarantor and its affiliates have
               ------------------------                                        
     complied, and as of the date of any Terms Agreement to which this Agreement
     is attached and forms a part will comply, with all of the provisions of
     Section 517.075, Florida Statutes, and all rules and regulations
     promulgated thereunder, relating to Issuers doing business in Cuba.

SECTION 2.  Purchase and Sale.
            ----------------- 

          (a)  Upon the execution of the Terms Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
the Firm Designated Securities, the several Underwriters propose to offer the
Firm Designated Securities for sale upon the terms and conditions set forth in
the Prospectus as amended or supplemented.

          (b)  The Designated Trust may specify in the Terms Agreement
applicable to any Designated Securities that the Designated Trust thereby grants
to the Underwriters the right (an "Overallotment Option") to purchase at their
election up to the number of Optional Designated Securities set forth in such
Terms Agreement, on the terms set forth in the paragraph above, for the sole
purpose of covering over-allotments in the sale of the Firm Designated
Securities.  Any such election to purchase Optional Designated Securities may be
exercised by written notice from the Representatives to the Designated Trust and
the Guarantor, given within a period specified in the Terms Agreement, setting
forth the aggregate number of Optional Designated Securities to be purchased and
the date on which such Optional Designated Securities are to be delivered, as

                                       12
<PAGE>
 
determined by the Representatives but in no event earlier than the First Time of
Delivery (as defined in Section 2(c) hereof) or, unless the Representatives, the
Designated Trust and the Guarantor otherwise agree in writing, earlier than or
later than the respective number of business days after the date of such notice
set forth in such Terms Agreement.

          The number of Optional Designated Securities to be added to the number
of Firm Designated Securities to be purchased by each Underwriter as set forth
in Schedule I to the Terms Agreement applicable to such Designated Securities
shall be, in each case, the number of Optional Designated Securities which the
Designated Trust and the Guarantor have been advised by the Representatives have
been attributed to such Underwriter; provided that, if the Designated Trust and
the Guarantor have not been so advised, the number of Optional Designated
Securities to be so added shall be, in each case, that proportion of Optional
Designated Securities which the number of Firm Designated Securities to be
purchased by such Underwriter under such Terms Agreement bears to the aggregate
number of Firm Designated Securities (rounded as the Representatives may
determine to the nearest 100 securities).  The total number of Designated
Securities to be purchased by all the Underwriters pursuant to such Terms
Agreement shall be the aggregate number of Firm Designated Securities set forth
in Schedule I to such Terms Agreement plus the aggregate number of Optional
Designated Securities which the Underwriters elect to purchase.

          (c)  Certificates for the Firm Designated Securities and the Optional
Designated Securities to be purchased by each Underwriter pursuant to the Terms
Agreement relating thereto, in the form specified in such Terms Agreement, and
in such authorized denominations and registered in such names as the
Representatives may request upon at least forty-eight hours' prior notice to the
Designated Trust and the Guarantor, shall be delivered by or on behalf of the
Designated Trust to the Representatives for the account of such Underwriter,
against payment by such Underwriter or on its behalf of the purchase price
therefor by certified or official bank check or checks, payable to the order of
the Designated Trust in the funds specified in such Terms Agreement, (i) with
respect to the Firm Designated Securities, all in the manner and at the place
and time and date specified in such Terms Agreement or at such other place and
time and date as the Representatives, the Designated Trust and the Guarantor may
agree upon in writing, such time and date being herein called the "First Time of
Delivery" and (ii) with respect to the Optional Designated Securities, if any,
in the manner and at the time and date specified by the Representatives in the
written

                                       13
<PAGE>
 
notice given by the Representatives of the Underwriters' election to purchase
such Optional Designated Securities, or at such other time and date as the
Representatives, the Designated Trust and the Guarantor may agree upon in
writing, such time and date, if not the First Time of Delivery, herein called
the "Second Time of Delivery".  Each such time and date for delivery is herein
called a "Time of Delivery".

SECTION 3.  Covenants of Each Trust and the Guarantor.
            ----------------------------------------- 

          Each Trust and the Guarantor, jointly and severally, agrees with each
of the Underwriters of any Designated Securities:

          (a)  Preparation of Prospectus Supplement.  To prepare the Prospectus
               ------------------------------------                            
     as amended and supplemented in relation to the applicable Designated
     Securities in a form approved by the Representatives and to file such
     Prospectus pursuant to Rule 424(b) under the 1933 Act not later than the
     Commission's close of business on the second business day following the
     execution and delivery of the Terms Agreement relating to the applicable
     Designated Securities or, if applicable, such earlier time as may be
     required by Rule 424(b); to make no further amendment or any supplement to
     the Registration Statement or Prospectus as amended or supplemented after
     the date of the Terms Agreement relating to such Securities and prior to
     any Time of Delivery for such Securities which shall be disapproved by the
     Representatives for such Securities promptly after reasonable notice
     thereof; and, in the event of the issuance of any such stop order or of any
     such order preventing or suspending the use of any prospectus relating to
     the Securities or suspending any qualification, promptly to use its best
     efforts to obtain the withdrawal of such order.

          (b)  Notice of Certain Events.  To advise the Representatives promptly
               ------------------------                                         
     of any such amendment or supplement after any Time of Delivery for such
     Securities and furnish the Representatives with copies thereof; and for so
     long as the delivery of a prospectus is required in connection with the
     offering or sale of such Securities, to advise the Representatives,
     promptly after it receives notice thereof, (i) of the time when any
     amendment to the Registration Statement has been filed or becomes effective
     or any supplement to the Prospectus or any amended Prospectus has been
     filed with the Commission, (ii) of the issuance by the Commission of any
     stop

                                       14
<PAGE>
 
     order or of any order preventing or suspending the use of any prospectus
     relating to the Securities, (iii) of the suspension of the qualification of
     such Securities or the Subordinated Debentures issuable upon exchange of
     the Securities for offering or sale in any jurisdiction, (iv) of the
     initiation or threatening of any proceeding for any such purpose, or (v) of
     any request by the Commission for the amending or supplementing of the
     Registration Statement or Prospectus or for additional information.

          (c)  Copies of Registration Statement and Prospectus.  To furnish the
               -----------------------------------------------                 
     Underwriters with copies of the Prospectus as amended or supplemented in
     such quantities as the Representatives may from time to time reasonably
     request.

          (d)  Revisions of Prospectus -- Material Changes. If the delivery of a
               -------------------------------------------                      
     prospectus is required at any time in connection with the offering or sale
     of the Securities or the Subordinated Debentures issuable upon exchange of
     the Securities and if at such time any event shall have occurred as a
     result of which the Prospectus as then amended or supplemented would
     include an untrue statement of a material fact or omit to state any
     material fact necessary in order to make the statements therein, in the
     light of the circumstances under which they were made when such Prospectus
     is delivered, not misleading, or, if for any other reason it shall be
     necessary during such same period to amend or supplement the Prospectus or
     to file under the 1934 Act any document incorporated by reference in the
     Prospectus in order to comply with the 1933 Act, the 1934 Act or the 1939
     Act, to notify the Representatives and upon their request to file such
     document and to prepare and furnish without charge to each Underwriter and
     to any dealer in securities as many copies as the Representatives may from
     time to time reasonably request of an amended Prospectus or a supplement to
     the Prospectus which will correct such statement or omission or effect such
     compliance.

          (e)  Earnings Statement.  To make generally available to its security
               ------------------                                              
     holders as soon as practicable, but in any event not later than eighteen
     months after the effective date of the Registration Statement (as defined
     in Rule 158(c) under the 1933 Act), an earnings statement of the Guarantor
     and its subsidiaries (which need not be audited) complying with Section
     11(a) of the 1933 Act and the 1933 Act Rules

                                       15
<PAGE>
 
     and Regulations (including, at the option of the Guarantor, Rule 158).

          (f)  Blue Sky Qualifications.  Promptly from time to time to take such
               -----------------------                                          
     action as the Representatives may reasonably request to qualify such
     Securities or the Subordinated Debentures issuable upon exchange of the
     Securities for offering and sale under the securities laws of such
     jurisdictions as the Representatives may request and to comply with such
     laws so as to permit the continuance of sales and dealings therein in such
     jurisdictions for as long as may be necessary to complete the distribution
     of such Securities, provided that in connection therewith neither the
     Designated Trust nor the Guarantor shall be required to qualify as a
     foreign corporation or to file a general consent to service of process in
     any jurisdiction.

          (g)  1934 Act Filings.  To file promptly all reports and any
               ----------------                                       
     definitive proxy or information statements required to be filed by the
     Guarantor with the Commission pursuant to Sections 13(a), 13(c), 14 or
     15(d) of the 1934 Act for so long as the delivery of a prospectus is
     required in connection with the offering or sale of such Securities.

          (h)  Stand-Off Agreement.  During the period beginning from the date
               -------------------                                            
     of the Terms Agreement for such Designated Securities and continuing to and
     including the later of (i) the termination of trading restrictions for such
     Designated Securities, as notified to the Designated Trust and the
     Guarantor by the Representatives and (ii) 30 days after the last Time of
     Delivery for such Designated Securities, not to offer, sell, contract to
     sell or otherwise dispose of, except as provided hereunder, any Securities,
     any other beneficial interests in the assets of the Designated Trust, or
     any preferred securities or any other securities of the Designated Trust or
     the Guarantor, as the case may be, that are substantially similar to such
     Designated Securities (including any guarantee of such securities) or any
     securities that are convertible into or exchangeable for, or that represent
     the right to receive securities, preferred securities or any such
     substantially similar securities of either the Designated Trust or the
     Guarantor without the prior written consent of the Representatives.

          (i)  Issuance of Guarantee.  In the case of the Guarantor, to issue
               ---------------------                                         
     the Guarantee concurrently with the

                                       16
<PAGE>
 
     issue and sale of the Securities as contemplated herein or in the Terms
     Agreement.

          (j)  Listing of Securities.  To list for quotation the Securities on
               ---------------------                                          
     the National Association of Securities Dealers Automated Quotations
     National Market ("Nasdaq National Market").

SECTION 4.  Payment of Expenses.
            ------------------- 

          The Guarantor covenants and agrees with the several Underwriters that
it will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Guarantor's counsel and accountants in connection with the
registration of the Securities, the Guarantees and the Subordinated Debentures
under the 1933 Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, any
Terms Agreement, any Guarantor Agreement, the Securities and the Subordinated
Debentures, any Blue Sky Memorandum, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities, the Guarantees and the Subordinated
Debentures for offering and sale under state securities laws as provided in
Section 3(f) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey(s); (iv) any fees charged by securities rating services for
rating the Securities and the Subordinated Debentures; (v) any filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, any required reviews by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities and the issuance of the
Guarantees and the Subordinated Debentures; (vi) the cost of preparing the
Securities and the Subordinated Debentures; (vii) the fees and expenses of any
Trustee, Debenture Trustee and Guarantee Trustee, and any agent of any trustee
and the fees and disbursements of counsel for any trustee in connection with any
Trust Agreement, Indenture, Guarantee and the Securities; (viii) the cost of
qualifying the Securities with The Depository Trust Company; (ix) any fees and
expenses in connection with listing the Securities and the Subordinated
Debentures and the cost of registering the Securities under Section 12 of the
1934 Act; and (x) all

                                       17
<PAGE>
 
other costs and expenses incident to the performance of its obligations
hereunder and under any Over-allotment Options which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 6 and 8 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities by them, and
any advertising expenses connected with any offers they may make.

SECTION 5.  Conditions of the Underwriters' Obligations.
            ------------------------------------------- 

          The obligations of the Underwriters of any Designated Securities under
the Terms Agreement relating to such Designated Securities shall be subject, in
the discretion of the Representatives, to the condition that all representations
and warranties and other statements of the Designated Trust and the Guarantor in
or incorporated by reference in the Terms Agreement relating to such Designated
Securities are, at and as of each Time of Delivery for such Designated
Securities, true and correct, the condition that the Designated Trust and the
Guarantor shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:

          (a)  The Prospectus and the Registration Statement.  The Prospectus as
               ---------------------------------------------                    
     amended or supplemented in relation to such Designated Securities shall
     have been filed with the Commission pursuant to Rule 424(b) within the
     applicable time period prescribed for such filing by the 1933 Act Rules and
     Regulations and in accordance with Section 3(a) hereof; no stop order
     suspending the effectiveness of the Registration Statement or any part
     thereof shall have been issued and no proceeding for that purpose shall
     have been initiated or threatened by the Commission; and all requests for
     additional information on the part of the Commission shall have been
     complied with to the Representatives' reasonable satisfaction.

          (b)  Opinion of Underwriters' Counsel.  Counsel for the Underwriters
               --------------------------------                               
     shall have furnished to the Representatives such opinion or opinions, dated
     each Time of Delivery for such Designated Securities, with respect to the
     incorporation of the Guarantor and the formation of the Designated Trust,
     the validity of the Designated Securities, the Subordinated Debentures, the
     Guarantee, the Registration Statement, the Prospectus as amended or
     supplemented, as well as such other related matters as the Representatives
     may reasonably request, and such counsel shall have received such

                                       18
<PAGE>
 
     papers and information as they may reasonably request to enable them to
     pass upon such matters.

          (c)  Opinion of Guarantor Counsel.  Kramer, Levin, Naftalis, Nessen,
               ----------------------------                                   
     Kamin & Frankel, as special counsel for the Designated Trust and the
     Guarantor, shall have furnished to the Representatives their written
     opinions, dated each Time of Delivery for such Designated Securities,
     respectively, in form and substance satisfactory to the Representatives, to
     the effect that:

               (i)  The Guarantor has been duly incorporated and is validly
          existing as a corporation in good standing under the laws of the State
          of Delaware.

              (ii)  The Guarantor has the corporate power and authority to own,
          lease and operate its properties and conduct its business as described
          in the Prospectus.

             (iii)  The Designated Securities have been duly authorized by the
          depositor on behalf of the Designated Trust, are duly and validly
          issued and non-assessable beneficial interests in the Designated Trust
          and are entitled to the benefits provided by the Trust Agreement.

              (iv)  This Agreement and the Terms Agreement with respect to the
          Designated Securities have been duly authorized, executed and
          delivered by the Designated Trust and the Guarantor.

               (v)  Each of the Guarantor Agreements has been duly authorized,
          executed and delivered by the Guarantor and (assuming each of the
          Guarantor Agreements has been duly authorized, executed and delivered
          by the applicable Trustee thereunder) constitutes a valid and binding
          agreement of the Guarantor, enforceable against it in accordance with
          its terms, except in each case that (A) enforceability thereof may be
          limited by bankruptcy, insolvency, reorganization, moratorium or other
          laws affecting creditors' rights generally and by general principles
          of equity and (B) the remedy of specific performance and injunctive
          and other forms of equitable relief are subject to certain equitable
          defenses and to the discretion of the court before which any
          proceeding therefor may be brought.

                                       19
<PAGE>
 
              (vi)  The issue and sale of the Designated Securities being
          delivered at such Time of Delivery and the compliance by the
          Designated Trust with all of the Terms Agreement to which this
          Agreement is attached and forms a part, the Designated Securities and
          the Trust Agreement with respect to the Designated Securities, the
          purchase by the Designated Trust of the Subordinated Debentures and
          the consummation of the transactions herein and therein contemplated
          will not result in any violation of the provisions of the Certificate
          of Trust or Trust Agreement of the Designated Trust.

              (vii)  The Subordinated Debentures, in the form certified by the
          Guarantor to be true and correct copies, are in the forms prescribed
          in or pursuant to the Indenture, have been duly validly authorized by
          the Guarantor by all necessary corporate action and, when completed,
          executed and authenticated as specified in or pursuant to the
          Indenture and issued and delivered upon exchange of the Securities
          will be valid and binding obligations of the Guarantor, enforceable
          against it in accordance with their terms, except in each case that
          (A) enforceability thereof may be limited by bankruptcy, insolvency,
          reorganization, moratorium or other laws affecting creditors' rights
          generally and by general principles of equity and (B) the remedy of
          specific performance and injunctive and other forms of equitable
          relief are subject to certain equitable defenses and to the discretion
          of the court before which any proceeding therefor may be brought.

             (viii)  The Guarantee has been duly authorized and, when issued and
          delivered pursuant to the Terms Agreement to which this Agreement is
          attached and forms a part, will have been duly executed, issued and
          delivered and will be a valid and binding obligation of the Guarantor,
          enforceable against it in accordance with its terms, except in each
          case that (A) enforceability thereof may be limited by bankruptcy,
          insolvency, reorganization, moratorium or other laws affecting
          creditors' rights generally and by general principles of equity and
          (B) the remedy of specific performance and injunctive and other forms
          of equitable relief are subject to certain equitable defenses and to
          the discretion of the

                                       20
<PAGE>
 
          court before which any proceeding therefor may be brought.

              (ix)  The statements set forth in the Prospectus under the caption
          "Description of QUIDS", "Description of QUIPS", "Description of
          Guarantees", "Description of Corresponding QUIDS", "Relationship Among
          the QUIPS, the Corresponding QUIDS and the Guarantees" and "Plan of
          Distribution" insofar as they purport to summarize certain provisions
          of documents specifically referred to therein, are accurate summaries
          of such provisions in all material respects.

               (x)  The Indenture, each of the Trust Agreement and each of the
          Guarantees is qualified under the 1939 Act.

              (xi)  The Registration Statement is effective under the 1933 Act
          and, to the best of such counsel's knowledge, no stop order suspending
          the effectiveness of the Registration Statement has been issued under
          the 1933 Act or proceedings therefor initiated or threatened by the
          Commission.

             (xii)  At the time the Registration Statement became effective,
          the Registration Statement (other than the financial statements and
          notes thereto and related schedules and other financial data included
          or incorporated by reference therein or omitted therefrom and the
          Statements of Eligibility of the Trustees on Form T-1) complied as to
          form in all material respects with the requirements of the 1933 Act,
          the 1939 Act and the regulations promulgated under each of those Acts.

            (xiii)  No authorization, approval, consent, order or decree of any
          United States or Delaware court or governmental authority or agency is
          necessary in connection with the issue and sale of the Designated
          Securities being delivered at such Time of Delivery or the issuance of
          the Guarantee and the Subordinated Debentures or the consummation by
          the Designated Trust or the Guarantor of the transactions contemplated
          by the Terms Agreement to which this Agreement is attached and forms a
          part and the Guarantor Agreements, except such as may be required
          under the 1933 Act, the 1939 Act, the regulations

                                       21
<PAGE>
 
          promulgated under each of those Acts or state securities or Blue Sky
          laws.

             (xiv)  The issuance by the Guarantor of the Guarantee and the
          Subordinated Debentures, the compliance by the Guarantor with all of
          the provisions of the Terms Agreement to which this Agreement is
          attached and forms a part and the Guarantor Agreements, the execution,
          delivery and performance by the Guarantor of the Terms Agreement to
          which this Agreement is attached and forms a part and the Guarantor
          Agreements and the consummation of the transactions herein and therein
          contemplated will not result in any violation of the provisions of the
          Guarantor's Certificate of Incorporation or By-laws.

              (xv)  Each document filed pursuant to the 1934 Act and
          incorporated by reference in the Prospectus (other than the financial
          statements and notes thereto and related schedules and other financial
          data included or incorporated by reference therein or omitted
          therefrom) complied when filed as to form in all material respects
          with the 1934 Act and the 1934 Act Regulations thereunder.

             (xvi)  Neither the Designated Trust nor the Guarantor is an
          "investment company" or an entity "controlled" by an "investment
          company", as such terms are defined in the 1940 Act.

          (d)  Opinion of Michael H. Salsbury, Esq., Executive Vice President 
               --------------------------------------------------------------
     and General Counsel.  Michael H. Salsbury, Esq., Executive Vice President 
     -------------------                                                       
     and General Counsel of the Guarantor, shall have furnished to the
     Representatives his written opinions, dated each Time of Delivery for such
     Designated Securities, respectively, in form and substance satisfactory to
     the Representatives, to the effect that:

               (i)  To the best of such counsel's knowledge, the Guarantor is
          duly qualified as a foreign corporation to transact business and is in
          good standing in each jurisdiction in which such qualification is
          required, except where the failure to so qualify or be in good
          standing would not have a material adverse effect on the Guarantor and
          its subsidiaries considered as one enterprise.

                                       22
<PAGE>
 
              (ii)  Each Significant Subsidiary of the Guarantor has been duly
          incorporated and is validly existing as a corporation in good standing
          under the laws of the jurisdiction of its incorporation, has the
          corporate power and authority to own, lease and operate its properties
          and conduct its business as described in the Prospectus, and, to the
          best of such counsel's knowledge, is duly qualified as a foreign
          corporation to transact business and is in good standing in each
          jurisdiction in which such qualification is required, except where the
          failure to so qualify or be in good standing would not have a material
          adverse effect on the Guarantor and its subsidiaries considered as one
          enterprise; all of the issued and outstanding capital stock of each
          Significant Subsidiary has been duly authorized and validly issued and
          is fully paid and non-assessable, and all of such capital stock owned
          by the Guarantor, directly or through subsidiaries, is owned free and
          clear of any mortgage, pledge, lien, encumbrance, claim or equity
          (except for any lien or encumbrance permitted pursuant to Article VI
          of the Revolving Credit Agreement, dated as of July 8, 1994, among the
          Guarantor and Bank of America National Trust and Savings Association,
          as agent for the financial institutions party thereto, Articles X and
          XII of the Senior Indenture, Article X of the Subordinated Indenture
          and Article XIII of the indenture, dated as of October 15, 1989,
          between the Guarantor and Bankers Trust Guarantor, as trustee).

             (iii)  To the best of such counsel's knowledge, there are no legal
          or governmental proceedings pending or threatened which are required
          to be disclosed in the Prospectus, other than those disclosed therein,
          and all pending legal or governmental proceedings to which the
          Guarantor or any subsidiary is a party or of which any of their
          property is the subject which are not described in the Prospectus,
          including ordinary routine litigation incidental to the business, are,
          in the aggregate, not material to the Guarantor and its subsidiaries
          considered as one enterprise.

              (iv)  To the best of such counsel's knowledge, there are no
          contracts, indentures, mortgages, loan agreements, notes, leases or
          other

                                       23
<PAGE>
 
          instruments or documents required to be described or referred to in
          the Registration Statement or to be filed as exhibits thereto other
          than those described or referred to therein or filed or incorporated
          by reference as exhibits thereto, the descriptions thereof or
          references thereto are correct in all material respects, and no
          default exists in the due performance or observance by the Guarantor
          of any material obligation, agreement, covenant or condition contained
          in any contract, indenture, mortgage, loan agreement, note, lease or
          other instrument so described, referred to, filed or incorporated by
          reference which would have a material adverse effect on the Guarantor
          and its subsidiaries considered as one enterprise.

               (v)  The issue and sale of the Designated Securities being
          delivered at such Time of Delivery and the compliance by the
          Designated Trust with all of the provisions of the Terms Agreement to
          which this Agreement is attached and forms a part, the Designated
          Securities and the Trust Agreement with respect to the Designated
          Securities, the purchase by the Designated Trust of the Subordinated
          Debentures and the consummation of the transactions herein and therein
          contemplated will not conflict with or constitute a breach of, or
          default under, or result in the creation or imposition of any lien,
          charge or encumbrance upon any material property or assets of the
          Designated Trust pursuant to, any material contract, indenture,
          mortgage, loan agreement, note, lease or other instrument known to
          such counsel and to which such Designated Trust is a party or by which
          it or any of them is bound or to which any of the material property or
          assets of such Designated Trust is subject, or any material United
          States or Delaware law, administrative regulation or administrative or
          court order or decree known to such counsel to be applicable to such
          Designated Trust of any United States or Delaware court or
          governmental agency, authority or body or any arbitrator having
          jurisdiction over such Designated Trust.

              (vi)  The issuance by the Guarantor of the Guarantee and the
          Subordinated Debentures, the compliance by the Guarantor with all of
          the provisions of the Terms Agreement to which this Agreement is
          attached and forms a part and the Guarantor Agreements, the execution,
          delivery and

                                       24
<PAGE>
 
          performance by the Guarantor of the Guarantor Agreements and the
          consummation of the transactions herein and therein contemplated will
          not conflict with or constitute a breach of, or default under, or
          result in the creation or imposition of any lien, charge or
          encumbrance upon any material property or assets of the Guarantor or
          any of its subsidiaries pursuant to, any material contract, indenture,
          mortgage, loan agreement, note, lease or other instrument known to
          such counsel and to which the Guarantor or any of its subsidiaries is
          a party or by which it or any of them is bound or to which any of the
          material property or assets of the Guarantor or any of its
          subsidiaries is subject, or any material United States or Delaware
          law, administrative regulation or administrative or court order or
          decree known to such counsel to be applicable to the Guarantor of any
          United States or Delaware court or governmental agency, authority or
          body or any arbitrator having jurisdiction over the Guarantor.

          (e)  Opinion of Counsel to the Guarantor Relating to the
               ---------------------------------------------------
     Communications Act.  Michael H. Salsbury, Esq., Executive Vice President 
     ------------------                                                       
     and General Counsel of the Guarantor or other counsel to the Guarantor
     satisfactory to the Underwriters, shall have furnished to the
     Representatives his written opinions, dated each Time of Delivery for such
     Designated Securities, respectively, in form and substance satisfactory to
     the Representatives, to the effect that:

               (i)  Nothing in the Communications Act of 1934, as amended, or
          the Telecommunications Act of 1996 (collectively, the "Communications
          Act") prevents, impairs, limits or otherwise adversely affects (A) the
          due and valid authorization, execution and delivery of the Securities,
          the Subordinated Debentures, the Guarantees or the Guarantor
          Agreements, (B) the valid and binding nature or enforceability of any
          of the provisions of the Securities, the Subordinated Debentures, the
          Guarantees or the Guarantor Agreements, (C) any holder of Designed
          Securities from being entitled to the benefits of any Trust Agreement
          or the Guarantee Agreement, or (D) the holder of any Subordinated
          Debentures from being entitled to the benefits of the Indenture.

                                       25
<PAGE>
 
              (ii)  To the best of such counsel's knowledge, there are no legal
          or governmental proceedings pending or threatened under the
          Communications Act which are required to be disclosed in the
          Prospectus, other than those disclosed therein, and all pending legal
          or governmental proceedings under the Communications Act to which the
          Guarantor or any subsidiary is a party or of which any of their
          property is the subject which are not described in the Prospectus,
          including ordinary routine litigation incidental to the business, are,
          in the aggregate, not material to the Guarantor and its subsidiaries
          considered as one enterprise.

             (iii)  Insofar as such relates to the Communications Act, no
          authorization, approval, consent, order or decree of any court or
          governmental authority or agency is necessary in connection with the
          sale of the Designated Securities or the issuance of the Subordinated
          Debentures and the Guarantees; and, to the best of such counsel's
          knowledge, the execution and delivery of any Terms Agreement to which
          this Agreement is attached and forms a part and the Guarantor
          Agreements and the consummation of the transactions contemplated
          herein and therein do not conflict with, violate or result in the
          creation or imposition of any lien, charge or encumbrance upon any
          material property or assets of the Guarantor or any of its
          subsidiaries pursuant to the Communications Act or any administrative
          regulations thereunder.

          (f)  Opinion of Special Delaware Counsel to the Designated Trust.
               -----------------------------------------------------------  
     Richards, Layton & Finger, special Delaware Counsel to the Designated Trust
     and the Guarantor, shall have furnished to you, the Guarantor and the
     Designated Trust their written opinion, dated the respective Time of
     Delivery, in form and substance satisfactory to you, to the effect that

               (i)  The Designated Trust has been duly created and is validly
          existing in good standing as a business trust under the Delaware
          Business Trust Act, and all filings required under the laws of the
          State of Delaware with respect to the creation and valid existence of
          the Designated Trust as a business trust have been made.

                                       26
<PAGE>
 
              (ii)  Under the Delaware Business Trust Act and the Trust
          Agreement, the Designated Trust has the power and authority to own
          property and conduct its business, all as described in the Prospectus.

             (iii)  The Trust Agreement constitutes a valid and legally binding
          obligation of the Guarantor and the Trustees, enforceable against the
          Guarantor and the Trustees, in accordance with its terms, subject, as
          to enforcement, to bankruptcy, insolvency, fraudulent transfer,
          reorganization, moratorium and similar laws of general applicability
          relating to or affecting creditors' rights and to general equity
          principles.

              (iv)  Under the Delaware Business Trust Act and the Trust
          Agreement, the Designated Trust has the power and authority to (a)
          execute and deliver, and to perform its obligations under the
          Underwriting Agreement and the Terms Agreement and (b) issue and
          perform its obligations under the Designated Securities and the Common
          Securities.

               (v)  Under the Delaware Business Trust Act and the Trust
          Agreement, the execution and delivery by the Designated Trust of the
          Underwriting Agreement and the Terms Agreement, and the performance by
          the Designated Trust of its obligations thereunder, have been duly
          authorized by all necessary action on the part of the Designated
          Trust.

              (vi)  The Designated Securities have been duly authorized by the
          Trust Agreement and are duly and validly issued and, subject to the
          qualifications set forth herein, fully paid and non-assessable
          beneficial interests in the Designated Trust and are entitled to the
          benefits provided by the Trust Agreement; the Securityholders, as
          beneficial owners of the Designated Trust, will 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; provided that such counsel
          may note that the Securityholders may be obligated, pursuant to the
          Trust Agreement, to (a) provide indemnity and/or security in
          connection with and pay taxes or governmental charges arising from
          transfers or exchanges of Securities Certificates and the issuance of
          replacement

                                       27
<PAGE>
 
          Securities Certificates and (b) provide security and indemnity in
          connection with requests of or directions to the Property Trustee (as
          defined in the Trust Agreement) to exercise its rights and remedies
          under the Trust Agreement.

             (vii)  The Common Securities have been duly authorized by the Trust
          Agreement and are validly issued and represent beneficial interests in
          the Designated Trust.

            (viii)  Under the Delaware Business Trust Act and the Trust
          Agreement, the issuance of the Designated Securities and the Common
          Securities is not subject to preemptive rights.

              (ix)  The issuance and sale by the Designated Trust of Designated
          Securities and the Common Securities, the execution, delivery and
          performance by the Designated Trust of the Underwriting Agreement and
          the Terms Agreement, the consummation by the Designated Trust of the
          transactions contemplated thereby and compliance by the Designated
          Trust with its obligations thereunder will not violate (a) any of the
          provisions of the Certificate of Trust of the Designated Trust or the
          Trust Agreement, or (b) any applicable Delaware law or administrative
          regulation.

               (x)  Assuming that the Designated Trust derives no income from or
          connected with services provided within the State of Delaware and has
          no assets, activities (other than maintaining the Delaware Trustee and
          the filing of documents with the Secretary of State of the State of
          Delaware) or employees in the State of Delaware, no authorization,
          approval, consent or order of any Delaware court or governmental
          authority or agency is required to be obtained by the Designated Trust
          solely in connection with the issuance and sale of the Designated
          Securities and the Common Securities (In rendering the opinion
          expressed in this paragraph (x), such counsel need express no opinion
          concerning the securities laws of the State of Delaware.).

              (xi)  Assuming that the Designated Trust derives no income from or
          connected with services provided within the State of Delaware and has
          no assets, activities (other than maintaining the

                                       28
<PAGE>
 
          Delaware Trustee and the filing of documents with the Secretary of
          State of the State of Delaware) or employees in the State of Delaware,
          the Securityholders (other than those holders of the Securities who
          reside or are domiciled in the State of Delaware) will have no
          liability for income taxes imposed by the State of Delaware solely as
          a result of their participation in the Designated Trust, and the
          Designated Trust will not be liable for any income tax imposed by the
          State of Delaware.

          (g)  Opinion of Tax Counsel to the Designated Trust.  Kramer, Levin,
               ----------------------------------------------                 
     Naftalis, Nessen, Kamin & Frankel, as tax counsel for the Designated Trust
     and the Guarantor, shall have furnished to you their written opinion, dated
     the respective Time of Delivery, in form and substance satisfactory to you,
     to the effect that such firm confirms its opinion set forth in the
     Prospectus under the caption "Certain Federal Income Tax Consequences".

          (h)  Rule 10b-5 Opinion.  In giving their opinions required by
               ------------------                                       
     subsection (c), (d) and (e) of this Section 5, Kramer, Levin, Naftalis,
     Nessen, Kamin and Frankel, Michael H. Salsbury, Esq. and counsel rendering
     the opinions required by subsection (e) (as to any matters under the
     Communications Act) shall each additionally state that, although they do
     not assume any responsibility for the accuracy, completeness or fairness of
     the statements contained in the Registration Statement or the Prospectus,
     except for those referred to in the opinion in subsection (ix) of Section
     5(c), they have no reason to believe that, as of its effective date, the
     Registration Statement (other than the financial statements and notes
     thereto and related schedules and other financial data included or
     incorporated by reference therein or omitted therefrom and the Statements
     of Eligibility of the Trustees on Form T-1, as to which counsel need not
     comment) or any further amendment thereto made by the Designated Trust or
     the Guarantor prior to such Time of Delivery contained an untrue statement
     of a material fact or omitted to state a material fact required to be
     stated therein or necessary to make the statements therein not misleading
     or that, as of its date, the Prospectus as amended or supplemented or any
     further amendment or supplement thereto made by the Designated Trust or the
     Guarantor prior to such Time of Delivery (other than the financial
     statements and notes thereto and related schedules and other financial data
     included

                                       29
<PAGE>
 
     or incorporated by reference therein or omitted therefrom, as to which
     counsel need not comment) contained an untrue statement of a material fact
     or omitted to state a material fact necessary to make the statements
     therein, in the light of the circumstances under which they were made, not
     misleading or that, as of such Time of Delivery, the Registration Statement
     (other than the financial statements and notes thereto and related
     schedules and other financial data included or incorporated by reference
     therein or omitted therefrom and the Statements of Eligibility of the
     Trustees on Form T-1, as to which counsel need not comment) contains an
     untrue statement of a material fact or omits to state a material fact
     necessary to make the statements therein, in the light of the circumstances
     under which they were made, not misleading.

          (i)  Comfort Letter.  On the date of the Terms Agreement for such
               --------------                                              
     Designated Securities at a time prior to the execution of the Terms
     Agreement with respect to the Designated Securities and at each Time of
     Delivery for such Designated Securities, the independent accountants of the
     Guarantor who have certified the financial statements of the Guarantor and
     its subsidiaries included or incorporated by reference in the Registration
     Statement shall have furnished to the Representatives a letter, dated the
     effective date of the Registration Statement or the date of the most recent
     report filed with the Commission containing financial statements and
     incorporated by reference in the Registration Statement, if the date of
     such report is later than such effective date, and a letter dated such Time
     of Delivery, respectively, to the effect set forth in Annex II hereto, and
     with respect to such letter dated such Time of Delivery, as to such other
     matters as the Representatives may reasonably request and in form and
     substance satisfactory to the Representatives.

          (j)  No Material Adverse Change With Respect to Guarantor.  Since the
               ----------------------------------------------------            
     date of the applicable Terms Agreement or since the respective dates as of
     which information is given in the Registration Statement and the
     Prospectus, there shall have been no change in the capital stock or long-
     term debt of the Guarantor or any of its subsidiaries or any material
     adverse change in the condition, financial or otherwise, or in the
     earnings, business affairs or business prospects of the Guarantor and its
     subsidiaries considered as one enterprise, whether or not arising in the
     ordinary

                                       30
<PAGE>
 
     course of business, the effect of which is in the judgment of the
     Representatives so material and adverse as to make it impracticable or
     inadvisable to proceed with the public offering or the delivery of the
     Designated Securities on the terms and in the manner contemplated in the
     Prospectus as amended relating to the Designated Securities.

          (k)  No Downgrade.  On or after the date of the Terms Agreement
               ------------                                              
     relating to the Designated Securities the rating assigned by any nationally
     recognized securities rating agency to any debt securities or preferred
     stock of the Guarantor as of the date of any applicable Terms Agreement
     shall not have been lowered since that date of such Terms Agreement or no
     such rating agency shall have publicly announced that it has placed any
     debt securities of the Guarantor on what is commonly termed a "watch list"
     for possible downgrading.

          (l)  No Material Adverse Change With Respect to Markets.  On or after
               --------------------------------------------------              
     the date of the Terms Agreement relating to the Designated Securities there
     shall not have occurred any of the following: (i) any material adverse
     change in the financial markets in the United States or any outbreak or
     escalation of hostilities or other national or international calamity or
     crisis, the effect of which shall be such as to make it, in the reasonable
     judgment of the Representative, impracticable to market the Designated
     Securities or enforce contracts for the sale of the Designated Securities,
     (ii) trading in any securities of the Guarantor shall have been suspended
     by the Commission, the Nasdaq National Market or a national securities
     exchange, (iii) trading generally on either the New York Stock Exchange or
     the Nasdaq National Market shall have been fixed, or maximum ranges for
     prices for securities shall have been required, by either of said exchanges
     or by order of the Commission or any other governmental authority, or (iv)
     a banking moratorium shall have been declared by either Federal or New York
     authorities.

          (m)  Listing of Securities.  The Designated Securities at each Time of
               ---------------------                                            
     Delivery shall have been duly listed for quotation on Nasdaq National
     Market.

          (n)  Closing Deliveries.  The Designated Trust and the Guarantor shall
               ------------------                                               
     have furnished or caused to be furnished to the Representatives at each
     Time of Delivery for the Designated Securities certificates of

                                       31
<PAGE>
 
     officers of the Designated Trust and the Guarantor satisfactory to the
     Representatives as to the accuracy of the representations and warranties of
     the Designated Trust and the Guarantor herein at and as of such Time of
     Delivery, as to the performance by the Designated Trust and the Guarantor
     of all of its obligations hereunder to be performed at or prior to such
     Time of Delivery, as to the matters set forth in subsections (a) and (j) of
     this Section and as to such other matters as the Representatives may
     reasonably request.

SECTION 6.  Indemnification and Contribution.
            -------------------------------- 

          (a)  The Designated Trust and the Guarantor, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that neither the Designated Trust nor
the Guarantor shall be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Designated Trust by any
Underwriter of Designated Securities through the Representatives expressly for
use in the Prospectus as amended or supplemented relating to such Securities.

          (b)  Each Underwriter will indemnify and hold harmless the Designated
Trust and the Guarantor against any losses, claims, damages or liabilities to
which the Designated Trust may become subject, under the 1933 Act or

                                       32
<PAGE>
 
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus as
amended or supplemented and any other prospectus relating to the Securities, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Designated Trust and
the Guarantor by such Underwriter through the Representatives expressly for use
therein; and will reimburse the Designated Trust and the Guarantor for any legal
or other expenses reasonably incurred by the Designated Trust in connection with
investigating or defending any such action or claim as such expenses are
incurred.

          (c)  Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify such indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party otherwise than under such subsection.  In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense

                                       33
<PAGE>
 
thereof other than reasonable costs of investigation.  No indemnifying party
shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include any statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any indemnified
party.

          (d)  If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Designated Trust and the Guarantor on the one
hand and the Underwriters of the Designated Securities on the other from the
offering of the Designated Securities to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Designated Trust and the Guarantor on the one hand and the
Underwriters of the Designated Securities on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations.  The relative benefits received by the Designated
Trust and the Guarantor on the one hand and such Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from such
offering (before deducting expenses) received by the Designated Trust and the
Guarantor bear to the total underwriting discounts and commissions received by
such Underwriters.  The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission

                                       34
<PAGE>
 
or alleged omission to state a material fact relates to information supplied by
the Designated Trust and the Guarantor on the one hand or such Underwriters on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.  The Designated
Trust, the Guarantor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d).  The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim.  Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the applicable Designated
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.  No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.  The obligations of the Underwriters of Designated Securities
in this subsection (d) to contribute are several in proportion to their
respective underwriting obligations with respect to such Securities and not
joint.

          (e)  The obligations of the Designated Trust and the Guarantor under
this Section 6 shall be in addition to any liability which the Designated Trust
and the Guarantor may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the 1933 Act; and the obligations of the Underwriters under this
Section 6 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Designated Trust and the
Guarantor and to each person, if any, who controls the Designated Trust and the
Guarantor within the meaning of the 1933 Act.

                                       35
<PAGE>
 
SECTION 7.  Representations, Warranties and Agreements to Survive Delivery.
            -------------------------------------------------------------- 

          The respective indemnities, agreements, representations, warranties
and other statements of the Designated Trust or the Guarantor and the several
Underwriters, as set forth in any Terms Agreement to which this Agreement is
attached and forms a part or made by or on behalf of them, respectively,
pursuant to any Terms Agreement to which this Agreement is attached and forms a
part, shall remain in full force and effect, regardless of any investigation (or
any statement as to the results thereof) made by or on behalf of any Underwriter
or any controlling person of any Underwriter, or the Designated Trust or the
Guarantor, or any officer or director or controlling person of the Designated
Trust or the Guarantor, and shall survive delivery of and payment for the
Securities.

SECTION 8.  Termination of Agreement.
            ------------------------ 

          If any Terms Agreement or Over-allotment Option shall be terminated
pursuant to Section 9 hereof, neither the Designated Trust nor the Guarantor
shall then be under any liability to any Underwriter with respect to the Firm
Designated Securities or Optional Designated Securities with respect to which
such Terms Agreement shall have been terminated except as provided in Sections 4
and 6 hereof; but, if for any other reason, Designated Securities are not
delivered by or on behalf of the Designated Trust or the Guarantor as provided
herein, the Guarantor will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Designated Trust or the
Guarantor shall then be under no further liability to any Underwriter with
respect to such Designated Securities except as provided in Sections 4 and 6
hereof.

SECTION 9.  Default by One or More of the Underwriters.
            ------------------------------------------ 

          If one or more of the Underwriters participating in an offering of
Firm Designated Securities or Optional Designated Securities shall fail at the
applicable Time of Delivery to purchase such Securities which it or they are
obligated to purchase hereunder and under the applicable Terms Agreement (the
"Defaulted Securities"), then the Representatives shall have the right, within
the first 24 hours thereafter, to make arrangements for one or more of

                                       36
<PAGE>
 
the non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; if, within such first 24 hour period,
the Representatives are unable to make arrangements for the purchase of all of
the Defaulted Securities, then the Designated Trust shall have the right, within
the next 24 hours thereafter, to make arrangements for any other underwriter(s)
reasonably satisfactory to the non-defaulting Underwriters to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; if, however, after such 48 hours
neither the Representatives nor the Designated Trust shall have completed such
arrangements for the purchase of all of the Defaulted Securities, then:

          (a)  if the aggregate principal amount of Defaulted Securities does
     not exceed 10% of the aggregate principal amount of Firm Designated
     Securities or the Optional Designated Securities, as the case may be, to be
     purchased pursuant to such Terms Agreement, the non-defaulting Underwriters
     named in such Terms Agreement shall be obligated to purchase the full
     amount thereof in the proportions that their respective underwriting
     obligations bear to the underwriting obligations of all non-defaulting
     Underwriters, or

          (b)  if the aggregate principal amount of Defaulted Securities exceeds
     10% of the aggregate principal amount of Firm Designated Securities or the
     Optional Designated Securities, as the case may be, to be purchased
     pursuant to such Terms Agreement, the applicable Terms Agreement shall
     terminate without liability on the part of any non-defaulting Underwriter.

          No action taken pursuant to this Section 9 shall relieve any
defaulting Underwriter from liability in respect of its default under this
Agreement and the applicable Terms Agreement.

          In the event of any such default by any Underwriter or Underwriters as
set forth in this Section 9, either the Representatives or the Designated Trust
shall have the right to postpone the applicable Time of Delivery for a period
not exceed seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.

                                       37
<PAGE>
 
SECTION 10.  Notices.
             ------- 

          In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Terms Agreement.

          All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Terms Agreement; and if to the Designated Trust or the Guarantor shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Designated Trust or the Guarantor, respectively, set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to an
Underwriter pursuant to Section 6(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Designated Trust and the Guarantor by the
Representatives upon request.  Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.

SECTION 11.  Parties.
             ------- 

          This Agreement and each Terms Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, each Designated Trust, the
Guarantor and, to the extent provided in Sections 6 and 7 hereof, the officers
and directors of each Designated Trust, the Guarantor and each person who
controls any Designated Trust or the Guarantor or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any such Terms Agreement.  No purchaser of any of the Securities
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.

SECTION 12.  Time of the Essence; Business Day.
             --------------------------------- 

          Time shall be of the essence of each Terms Agreement.  As used herein,
the term "business day" shall

                                       38
<PAGE>
 
mean any day when the Commission's office in Washington, D.C. is open for
business.

SECTION 13.  Governing Law.
             ------------- 

          Each Terms Agreement to which this Agreement is attached and forms a
part shall be governed by and construed in accordance with the laws of the State
of New York.

SECTION 14.  Counterparts.
             ------------ 

          Each Terms Agreement may be executed by any one or more of the parties
hereto and thereto in any number of counterparts, each of which shall be deemed
to be an original, but all such respective counterparts shall together
constitute one and the same instrument.

                                       39
<PAGE>
 
                                                                         ANNEX I
                                TERMS AGREEMENT
                                ---------------


Goldman, Sachs & Co.,
[Name(s) of Co-Representative(s),]
   As Representatives of the several
    Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.

                                                                          , 19..
Ladies and Gentlemen:

      MCI Capital I, a statutory business trust formed under the laws of the
State of Delaware (the "Designated Trust") and MCI Communications Corporation, a
Delaware corporation (the "Guarantor"), propose, subject to the terms and
conditions stated herein and in the Underwriting Agreement Basic Provisions (the
"Underwriting Agreement Basic Provisions") of the Designated Trust, MCI Capital
II, MCI Capital III, MCI Capital IV and the Guarantor to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") the Securities
specified in Schedule II hereto (the "Designated Securities" consisting of Firm
Designated Securities and any Optional Designated Securities the Underwriters
may elect to purchase).  The Designated Securities are exchangeable into debt
securities of the Guarantor (the "Subordinated Debentures"), as specified in
Schedule II to this Agreement.  The Designated Securities will be guaranteed by
the Guarantor to the extent set forth in this Agreement with respect to such
Designated Securities (the "Guarantee").  Each of the provisions of the
Underwriting Agreement Basic Provisions is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Terms Agreement, except that each
representation and warranty which refers to the Prospectus in Section 1 of the
Underwriting Agreement Basic Provisions shall be deemed to be a representation
or warranty as of the date of the Underwriting Agreement Basic Provisions in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Terms Agreement in relation to the Prospectus as
amended or supplemented relating to the Designated Securities which are the
subject of this Terms Agreement.  Each reference to the
<PAGE>
 
Representatives herein and in the provisions of the Underwriting Agreement Basic
Provisions so incorporated by reference shall be deemed to refer to you.  Unless
otherwise defined herein, terms defined in the Underwriting Agreement Basic
Provisions are used herein as therein defined.  The Representatives designated
to act on behalf of the Representatives and on behalf of each of the
Underwriters of the Designated Securities pursuant to Section 10 of the
Underwriting Agreement Basic Provisions and the address of the Representatives
referred to in such Section 10 are set forth in Schedule II hereto.

      An amendment to the Registration Statement or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.

      Subject to the terms and conditions set forth herein and in the
Underwriting Agreement Basic Provisions incorporated herein by reference, (a)
the Designated Trust agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Designated Trust, at the time and place and at the purchase price to the
Underwriters set forth in Schedule II hereto, the number of Firm Designated
Securities set forth opposite the name of such Underwriter in Schedule I hereto
and, (b) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Designated Securities, as provided below, the
Designated Trust agrees to issue and sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Designated Trust at the purchase price to the Underwriters set forth in Schedule
II hereto that portion of the number of Optional Designated Securities as to
which such election shall have been exercised.

      The Designated Trust hereby grants to each of the Underwriters the right
to purchase at their election up to the number of Optional Designated Securities
set forth opposite the name of such Underwriter in Schedule I hereto on the
terms referred to in the paragraph above for the sole purpose of covering over-
allotments in the sale of the Firm Designated Securities.  Any such election to
purchase Optional Designated Securities may be exercised by written notice from
the Representatives to the Designated Trust and the Guarantor given within a
period of 30 calendar days after the date of this Terms Agreement, setting forth
the aggregate number of Optional Designated Securities to be purchased and the
date on which such Optional Designated
<PAGE>
 
Securities are to be delivered, as determined by the Representatives, but in no
event earlier than the First Time of Delivery or, unless the Representatives and
the Designated Trust otherwise agree in writing, no earlier than two or later
than ten business days after the date of such notice.

      If the foregoing is in accordance with your understanding, please sign and
return to us [six] counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement Basic Provisions
incorporated herein by reference, shall constitute a binding agreement between
each of the Underwriters and the Designated Trust and the Guarantor.  It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is or will be pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Designated Trust and the Guarantor for examination, upon
<PAGE>
 
request, but without warranty on the part of the Representatives as to the
authority of the signers thereof.

                                   Very truly yours,

                                   MCI COMMUNICATIONS CORPORATION


                                   By:  _______________________________
                                      Name:
                                      Title:

                                   MCI CAPITAL I
                                   By: MCI Communications Corporation,
                                        as Depositor


                                   By:  _______________________________
                                      Name:
                                      Title:

Accepted as of the date hereof:

Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]
As Representatives of the Underwriters
  Named in Schedule I hereto


By:  _________________________________
              (Goldman, Sachs & Co.)

On behalf of each of the Underwriters
<PAGE>
 
                                   SCHEDULE I

<TABLE>
<CAPTION>
                                                               MAXIMUM
                                                                NUMBER
                                                                  OF
                                                  NUMBER OF    OPTIONAL
                                                    FIRM      DESIGNATED
                                                 DESIGNATED   SECURITIES
                                                 SECURITIES     WHICH
                                                    TO BE       MAY BE
                                                    -----
             UNDERWRITER                          PURCHASED   PURCHASED
             -----------                          ---------   --------- 
<S>                                               <C>         <C> 
Goldman, Sachs & Co. ........................
[Name(s) of Co-Representative(s)] ...........
[Names of other Underwriters] ...............
Total
</TABLE>

                                       1
<PAGE>
 
                                  SCHEDULE II


DESIGNATED TRUST:

     MCI Capital __

TITLE OF DESIGNATED SECURITIES:

     ____% Cumulative Quarterly Income Preferred Securities, Series __ 
     ("QUIPS")

AGGREGATE PRINCIPAL AMOUNT:

     Aggregate principal amount of Designated
     Securities: $_____________

PRICE TO PUBLIC:

     100% of the principal amount of the Designated Securities

PURCHASE PRICE BY UNDERWRITERS:

     _______% of the principal amount of the Designated Securities

UNDERWRITERS' COMPENSATION:

     $______ per Designated Security

SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:

     New York Clearing House same-day funds

ACCOUNTANTS' LETTER TO BE DELIVERED ON DATE OF TERMS AGREEMENT:

     Yes.

TRUST AGREEMENT:

     Amended and Restated Trust Agreement dated as of ________ __, ____, between
     the Guarantor and the Trustees named therein

INDENTURE:

     Indenture dated as of ________ __, 1996, between the Guarantor and
     Wilmington Trust Company, as Debenture Trustee and Supplemental Indenture
     No. __ dated as of

                                       2
<PAGE>
 
     ________ __, ____, between the Guarantor and the Debenture Trustee
     (collectively the "Indenture")

GUARANTEE:

     Guarantee Agreement dated as of ________ __, ____, between Guarantor and
     Wilmington Trust Company, as Guarantee Trustee

MATURITY:

     ________ __, ____

INTEREST RATE:

     ____%

INTEREST PAYMENT DATES:

     March 31, June 30, September 30 and December 31

EXTENSION PERIOD:

     [20 quarters]

REDEMPTION PROVISIONS:

     [The redemption provisions set forth in Section 402 of the Trust Agreement
     shall apply to the Designated Securities.]

SINKING FUND PROVISIONS:

     [No sinking fund provisions.]

TIME OF DELIVERY:

     10:00 a.m., New York City time
     ________ __, ____

CLOSING LOCATION:

     Sullivan & Cromwell
     125 Broad Street
     New York, New York 10004

NAMES AND ADDRESSES OF REPRESENTATIVES:

     Goldman, Sachs & Co.
     85 Broad Street
     New York, New York 10004

                                       3
<PAGE>
 
                                                                        ANNEX II

     Pursuant to Section 5(i) of the Underwriting Agreement Basic Provisions,
the accountants shall furnish letters to the Underwriters to the effect that:

          (i)    They are independent certified public accountants with respect
     to the Designated Trust and the Guarantor and its subsidiaries within the
     meaning of the 1933 Act and the 1933 Act Rules and Regulations;

          (ii)   In their opinion, the financial statements and any
     supplementary financial information and schedules (and, if applicable,
     financial forecasts and/or pro forma financial information) examined by
     them and included or incorporated by reference in the Registration
     Statement or the Prospectus comply as to form in all material respects with
     the applicable accounting requirements of the 1933 Act or the 1934 Act, as
     applicable, and the related published rules and regulations thereunder;
     and, if applicable, they have made a review in accordance with standards
     established by the American Institute of Certified Public Accountants of
     the consolidated interim financial statements, selected financial data, pro
     forma financial information, financial forecasts and/or condensed financial
     statements derived from audited financial statements of the Guarantor for
     the periods specified in such letter, as indicated in their reports
     thereon, copies of which have been separately furnished to the
     representatives of the Underwriters (the "Representatives");

          (iii)  They have made a review in accordance with standards
     established by the American Institute of Certified Public Accountants of
     the unaudited condensed consolidated statements of income, consolidated
     balance sheets and consolidated statements of cash flows included in the
     Prospectus and/or included in the Guarantor's quarterly reports on Form 10-
     Q incorporated by reference into the Prospectus as indicated in their
     reports thereon copies of which have been separately furnished to the
     Representatives; and on the basis of specified procedures including
     inquiries of officials of the Guarantor who have responsibility for
     financial and accounting matters regarding whether the unaudited condensed
     consolidated financial statements referred to in paragraph (vi)(A)(i) below
     comply as to form in all material respects with the applicable accounting
     requirements of the 1933 Act and the 1934 Act and the 1934 Act Rules and
     Regulations, nothing came to their
<PAGE>
 
     attention that caused them to believe that the unaudited condensed
     consolidated financial statements do not comply as to form in all material
     respects with the applicable accounting requirements of the 1933 Act and
     the 1934 Act and the 1934 Act Rules and Regulations;

          (iv)   The unaudited selected financial information with respect to
     the consolidated results of operations and financial position of the
     Guarantor for the five most recent fiscal years included in the Prospectus
     and included or incorporated by reference in Item 6 of the Guarantor's
     Annual Report on Form 10-K for the most recent fiscal year agrees with the
     corresponding amounts (after restatement where applicable) in the audited
     consolidated financial statements for such five fiscal years which were
     included or incorporated by reference in the Guarantor's Annual Reports on
     Form 10-K for such fiscal years;

          (v)    They have compared the information in the Prospectus under
     selected captions with the disclosure requirements of Regulation S-K and on
     the basis of limited procedures specified in such letter nothing came to
     their attention as a result of the foregoing procedures that caused them to
     believe that this information does not conform in all material respects
     with the disclosure requirements of items 301, 302, 402 and 503(d),
     respectively, of Regulation S-K;

          (vi)   On the basis of limited procedures, not constituting an
     examination in accordance with generally accepted auditing standards,
     consisting of a reading of the unaudited financial statements and other
     information referred to below, a reading of the latest available interim
     financial statements of the Guarantor and its subsidiaries, inspection of
     the minute books of the Guarantor and its subsidiaries since the date of
     the latest audited financial statements included or incorporated by
     reference in the Prospectus, inquiries of officials of the Guarantor and
     its subsidiaries responsible for financial and accounting matters and such
     other inquiries and procedures as may be specified in such letter, nothing
     came to their attention that caused them to believe that:

         (A)     (i) the unaudited condensed consolidated statements of income,
     consolidated balance sheets and consolidated statements of cash flows
     included in the Prospectus and/or included or incorporated by reference in
     the Guarantor's Quarterly Reports on Form 10-Q

                                       2
<PAGE>
 
     incorporated by reference in the Prospectus do not comply as to form in all
     material respects with the applicable accounting requirements of the 1934
     Act and the 1934 Act Rules and Regulations, or (ii) any material
     modifications should be made to the unaudited condensed consolidated
     statements of income, consolidated balance sheets and consolidated
     statements of cash flows included in the Prospectus or included in the
     Guarantor's Quarterly Reports on Form 10-Q incorporated by reference in the
     Prospectus, for them to be in conformity with generally accepted accounting
     principles;

          (B)  any other unaudited income statement data and balance sheet items
     included in the Prospectus do not agree with the corresponding items in the
     unaudited consolidated financial statements from which such data and items
     were derived, and any such unaudited data and items were not determined on
     a basis substantially consistent with the basis for the corresponding
     amounts in the audited consolidated financial statements included or
     incorporated by reference in the Guarantor's Annual Report on Form 10-K for
     the most recent fiscal year;

          (C)  the unaudited financial statements which were not included in the
     Prospectus but from which were derived the unaudited condensed financial
     statements referred to in clause (A) and any unaudited income statement
     data and balance sheet items included in the Prospectus and referred to in
     Clause (B) were not determined on a basis substantially consistent with the
     basis for the audited financial statements included or incorporated by
     reference in the Guarantor's Annual Report on Form 10-K for the most recent
     fiscal year;

          (D)  any unaudited pro forma consolidated condensed financial
     statements included or incorporated by reference in the Prospectus do not
     comply as to form in all material respects with the applicable accounting
     requirements of the 1933 Act and the 1933 Act Rules and Regulations
     thereunder or the pro forma adjustments have not been properly applied to
     the historical amounts in the compilation of those statements;

          (E)  as of a specified date not more than five days prior to the date
     of such letter, there have been any changes in the consolidated capital
     stock (other than issuances of capital stock upon exercise of options and
     stock appreciation rights, upon earn-outs of performance shares and upon
     conversions of

                                       3
<PAGE>
 
     convertible securities, in each case which were outstanding on the date of
     the latest balance sheet included or incorporated by reference in the
     Prospectus) or any increase in the consolidated long-term debt of the
     Guarantor and its subsidiaries, or any decreases in consolidated net
     current assets or stockholders' equity or other items specified by the
     Representatives, or any increases in any items specified by the
     Representatives, in each case as compared with amounts shown in the latest
     balance sheet included or incorporated by reference in the Prospectus,
     except in each case for changes, increases or decreases which the
     Prospectus discloses have occurred or may occur or which are described in
     such letter; and

          (F)  for the period from the date of the latest financial statements
     included or incorporated by reference in the Prospectus to the specified
     date referred to in Clause (E) there were any decreases in consolidated net
     revenues or operating profit or the total or per share amounts of
     consolidated net income or other items specified by the Representatives, or
     any increases in any items specified by the Representatives, in each case
     as compared with the comparable period of the preceding year and with any
     other period of corresponding length specified by the Representatives,
     except in each case for increases or decreases which the Prospectus
     discloses have occurred or may occur or which are described in such letter;
     and

          (vii)  In addition to the examination referred to in their report(s)
     included or incorporated by reference in the Prospectus and the limited
     procedures, inspection of minute books, inquiries and other procedures
     referred to in paragraphs (iii) and (vi) above, they have carried out
     certain specified procedures, not constituting an examination in accordance
     with generally accepted auditing standards, with respect to certain
     amounts, percentages and financial information specified by the
     Representatives which are derived from the general accounting records of
     the Guarantor and its subsidiaries, which appear in the Prospectus
     (excluding documents incorporated by reference), or in Part II of, or in
     exhibits and schedules to, the Registration Statement specified by the
     Representatives or in documents incorporated by reference in the Prospectus
     specified by the Representatives, and have compared certain of such
     amounts, percentages and financial information with the

                                       4
<PAGE>
 
     accounting records of the Guarantor and its subsidiaries and have found
     them to be in agreement.

     All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement Basic Provisions as of the date of the
letter delivered on the date of the Terms Agreement for purposes of such letter
and to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Securities for purposes of the letter delivered at the Time of Delivery for such
Designated Securities.

                                       5

<PAGE>
 


================================================================================






                        MCI COMMUNICATIONS CORPORATION

                                      to

                           WILMINGTON TRUST COMPANY

                                    Trustee





                         JUNIOR SUBORDINATED INDENTURE

                         Dated as of ________ __, 1996




================================================================================
<PAGE>
 
                        MCI COMMUNICATIONS CORPORATION

               Reconciliation and tie between the Trust Indenture Act of 1939
(including cross-references to provisions of Sections 310 to and including 317
which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended
by the Trust Reform Act of 1990, are a part of and govern the Indenture whether
or not physically contained therein) and the Junior Subordinated Indenture,
dated as of ________ __, 1996.

<TABLE> 
<CAPTION> 
Trust Indenture
Act Section                                           Indenture Section
<S>                                                   <C>
(S) 310 (a)(1), (2) and (5) ....................................... 609
        (a)(3) ......................................... Not Applicable
        (a)(4) ......................................... Not Applicable
        (b) ....................................................... 608
         .......................................................... 610
        (c) ............................................ Not Applicable
(S) 311 (a) .................................................... 613(a)
        (b) .................................................... 613(b)
        (b)(2) .............................................. 703(a)(2)
         .................................................... 703(a)(2)
(S) 312 (a) ....................................................... 701
         ....................................................... 702(a)
        (b) .................................................... 702(b)
        (c) .................................................... 702(c)
(S) 313 (a) .................................................... 703(a)
        (b) .................................................... 703(b)
        (c) ............................................ 703(a), 703(b)
        (d) .................................................... 703(c)
(S) 314 (a)(1), (2) and (3) ....................................... 704
        (a)(4) ................................................... 1006
        (b) ............................................ Not Applicable
        (c)(1) .................................................... 102
        (c)(2) .................................................... 102
        (c)(3) ......................................... Not Applicable
        (d) ............................................ Not Applicable
        (e) ....................................................... 102
        (f) ............................................ Not Applicable
(S) 315 (a) .................................................... 601(a)
        (b)........................................................ 602
         .................................................... 703(a)(6)
        (c) .................................................... 601(b)
        (d) .................................................... 601(c)
        (d)(1) .............................................. 601(a)(1)
        (d)(2) .............................................. 601(c)(2)
        (d)(3) .............................................. 601(c)(3)
        (e) ....................................................... 514
(S) 316 (a) ....................................................... 101
</TABLE> 
<PAGE>
 
<TABLE> 
<S>                                                      <C> 
        (a)(1)(A) ................................................. 512
        (a)(1)(B) ................................................. 513
        (a)(2) ......................................... Not Applicable
        (b) ....................................................... 508
        (c) .................................................... 104(f)
(S) 317 (a)(1) .................................................... 503
        (a)(2) .................................................... 504
        (b) ...................................................... 1003
(S) 318 (a) ....................................................... 107
</TABLE>

Note:   This reconciliation and tie shall not, for any purpose, be deemed to be
        a part of the Junior Subordinated Indenture.

                                      -2-
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION> 
                                  ARTICLE ONE
            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
            -------------------------------------------------------
<S>             <C>                                                <C> 
SECTION 101.    Definitions......................................... 1
SECTION 102.    Compliance Certificate and Opinions.................11
SECTION 103.    Forms of Documents Delivered to Trustee.............12
SECTION 104.    Acts of Holders.....................................13
SECTION 105.    Notices, Etc. to Trustee and Company................15
SECTION 106.    Notice to Holders; Waiver...........................15
SECTION 107.    Conflict With Trust Indenture Act...................15
SECTION 108.    Effect of Headings and Table of Contents............16
SECTION 109.    Successors and Assigns..............................16
SECTION 110.    Separability Clause.................................16
SECTION 111.    Benefits of Indenture...............................16
SECTION 112.    Governing Law.......................................16
SECTION 113.    Non-Business Days...................................16
<CAPTION> 
                                  ARTICLE TWO
                                SECURITY FORMS
                                --------------
<S>             <C>                                                <C> 
SECTION 201.    Forms Generally.....................................17
SECTION 202.    Form of Face of Security............................18
SECTION 203.    Form of Reverse of Security.........................22
SECTION 204.    Additional Provisions Required in Global Security...26
SECTION 205.    Form of Trustee's Certificate of Authentication.....26
<CAPTION> 
                                 ARTICLE THREE
                                THE SECURITIES
                                --------------
<S>             <C>                                                <C> 
SECTION 301.    Title and Terms.....................................26
SECTION 302.    Denominations.......................................30
SECTION 303.    Execution, Authentication, Delivery and Dating......30
SECTION 304.    Temporary Securities................................32
SECTION 305.    Registration, Transfer and Exchange.................33
SECTION 306.    Mutilated, Destroyed, Lost and Stolen Securities....35
SECTION 307.    Payment of Interest; Interest Rights Preserved......36
SECTION 308.    Persons Deemed Owners...............................38
SECTION 309.    Cancellation........................................38
SECTION 310.    Computation of Interest.............................38
</TABLE> 

                                      -i-
<PAGE>
 
<TABLE> 
<S>             <C>                                                 <C> 
SECTION 311.    Deferrals of Interest Payment Dates................ 38
SECTION 312.    Right of Set-Off................................... 40
SECTION 313.    Agreed Tax Treatment............................... 40
SECTION 314.    Extension of Stated Maturity; Adjustment            
                of Stated Upon an Exchange......................... 40
SECTION 315.    CUSIP Numbers...................................... 41
<CAPTION>                                                           
                                 ARTICLE FOUR                       
                          SATISFACTION AND DISCHARGE                
                          --------------------------                
<S>             <C>                                                <C> 
SECTION 401.    Satisfaction and Discharge of Indenture............ 41
SECTION 402.    Application of Trust Money......................... 42
SECTION 403.    Satisfaction, Discharge and Defeasance of           
                Securities of Any Series........................... 43
<CAPTION>                                                           
                                 ARTICLE FIVE                       
                                   REMEDIES                         
                                   --------                         
<S>             <C>                                                <C> 
SECTION 501.    Events of Default.................................. 44
SECTION 502.    Acceleration of Maturity; Rescission and Annulment. 46
SECTION 503.    Collection of Indebtedness and Suits for            
                Enforcement by Trustee............................. 48
SECTION 504.    Trustee May File Proofs of Claim................... 49
SECTION 505.    Trustee May Enforce Claim Without Possession of     
                Securities......................................... 50
SECTION 506.    Application of Money Collected..................... 50
SECTION 507.    Limitation on Suits................................ 51
SECTION 508.    Unconditional Right of Holders to Receive   
                Principal, Premium and Interest.................... 52
SECTION 509.    Restoration of Rights and Remedies................. 52
SECTION 510.    Rights and Remedies Cumulative..................... 52
SECTION 511.    Delay or Omission Not Waiver....................... 53
SECTION 512.    Control by Holders................................. 53
SECTION 513.    Waiver of Past Defaults............................ 54
SECTION 514.    Undertaking for Costs.............................. 54
SECTION 515.    Waiver of Usuary, Stay or Extension Laws........... 55
<CAPTION>                                                           
                                  ARTICLE SIX                       
                                  THE TRUSTEE                       
                                  -----------                       
<S>             <C>                                                <C> 
SECTION 601.    Certain Duties and Responsibilities................ 55
SECTION 602.    Notice of Defaults................................. 57
SECTION 603.    Certain Rights of Trustee.......................... 57
</TABLE> 

                                     -ii-
<PAGE>
 
<TABLE> 
<S>             <C>                                                <C> 
SECTION 604.    Not Responsible for Recitals or Issuance of
                Securities..........................................58
SECTION 605.    May Hold Securities.................................59
SECTION 606.    Money Held in Trust.................................59
SECTION 607.    Compensation and Reimbursement......................59
SECTION 608.    Disqualification; Conflicting Interests.............60
SECTION 609.    Corporate Trustee Required; Eligibility.............60
SECTION 610.    Resignation and Removal; Appointment of Successor...61
SECTION 611.    Acceptance of Appointment by Successor..............63
SECTION 612.    Merger, Conversion, Consolidation or Succession to
                Business............................................64
SECTION 613.    Preferential Collection of Claims Against Company...65
SECTION 614.    Appointment of Authenticating Agent.................65
<CAPTION> 
                                 ARTICLE SEVEN
               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
               -------------------------------------------------
<S>             <C>                                                <C> 
SECTION 701.    Company to Furnish Trustee Names and Addresses of
                Holders.............................................67
SECTION 702.    Preservation of Information, Communications to
                Holders.............................................67
SECTION 703.    Reports by Trustee..................................68
SECTION 704.    Reports by Company..................................68
<CAPTION> 
                                 ARTICLE EIGHT
             CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
             ----------------------------------------------------
<S>             <C>                                                <C> 
SECTION 801.    Company May Consolidate, Etc., Only on Certain
                Terms...............................................69
SECTION 802.    Successor Corporation Substituted...................70
<CAPTION> 
                                  ARTICLE NINE
                            SUPPLEMENTAL INDENTURES
                            -----------------------
<S>             <C>                                                <C> 
SECTION 901.    Supplemental Indentures Without Consent of Holders..71
SECTION 902.    Supplemental Indentures with Consent of Holders.....72
SECTION 903.    Execution of Supplemental Indentures................74
SECTION 904.    Effect of Supplemental Indentures...................74
SECTION 905.    Conformity with Trust Indenture Act.................75
SECTION 906.    Reference in Securities to Supplemental Indentures..75
</TABLE> 

                                     -iii-
<PAGE>
 
<TABLE> 
<CAPTION> 
                                  ARTICLE TEN
                                   COVENANTS
                                   ---------
<S>             <C>                                                <C> 
SECTION 1001.   Payment of Principal, Premium and Interest..........75
SECTION 1002.   Maintenance of Office or Agency.....................75
SECTION 1003.   Money for Security Payments to be Held in Trust.....76
SECTION 1004.   Payment of Taxes and Other Claims...................78
SECTION 1005.   Statement as to Compliance..........................78
SECTION 1006.   Waiver of Certain Covenants.........................78
SECTION 1007.   Additional Sums.....................................79
SECTION 1008.   Additional Covenants................................80
<CAPTION> 
                                ARTICLE ELEVEN
                           REDEMPTION OF SECURITIES
                           ------------------------
<S>             <C>                                                <C> 
SECTION 1101.   Applicability of This Article.......................81
SECTION 1102.   Election to Redeem; Notice to Trustee...............81
SECTION 1103.   Selection of Securities to be Redeemed..............81
SECTION 1104.   Notice of Redemption................................82
SECTION 1105.   Deposit of Redemption Price.........................83
SECTION 1106.   Payment of Securities Called for Redemption.........83
SECTION 1107.   Company's Right of Redemption.......................84
<CAPTION> 
                                ARTICLE TWELVE
                                 SINKING FUNDS
                                 -------------
<S>             <C>                                                <C> 
SECTION 1201.   Applicability of Article............................85
SECTION 1202.   Satisfaction of Sinking Fund Payments with
                Securities..........................................85
SECTION 1203.   Redemption of Securities for Sinking Fund...........86
<CAPTION> 
                               ARTICLE THIRTEEN
                         SUBORDINATION OF SECURITIES
                         ---------------------------
<S>             <C>                                                <C> 
SECTION 1301.   Securities Subordinate to Senior Debt...............88
SECTION 1302.   Payment Over of Proceeds Upon Dissolution, Etc......88
SECTION 1303.   Prior Payment to Senior Debt Upon Acceleration of
                Securities..........................................90
SECTION 1304.   No Payment When Senior Debt in Default..............91
SECTION 1305.   Payment Permitted If No Default.....................91
SECTION 1306.   Subrogation to Rights of Holders of Senior Debt.....92
</TABLE> 

                                     -iv-
<PAGE>
 
<TABLE> 
<S>             <C>                                                <C> 
SECTION 1307.   Provisions Solely to Define Relative Rights.........93
SECTION 1308.   Trustee to Effectuate Subordination.................93
SECTION 1309.   No Waiver of Subordination Provisions...............93
SECTION 1310.   Notice to Trustee...................................94
SECTION 1311.   Reliance on Judicial Order or Certificate of
                Liquidating Agent...................................94
SECTION 1312.   Trustee Not Fiduciary for Holders of Senior Debt....95
SECTION 1313.   Rights of Trustee as Holder of Senior Debt;
                Preservation of Trustee's Rights....................95
SECTION 1314.   Article Applicable to Paying Agents.................95
SECTION 1315.   Certain Conversions or Exchanges Deemed Payment.....95
</TABLE>

Annex A  --     Form of Trust Agreement

Annex B  --     Form of Amended and Restated Trust Agreement

Annex C  --     Form of Guarantee Agreement

                                      -v-
<PAGE>
 
          JUNIOR SUBORDINATED INDENTURE, dated as of ________ __, 1996 between
MCI COMMUNICATIONS CORPORATION, a Delaware corporation (hereinafter called the
"Company") having its principal office at 1801 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006, and Wilmington Trust Company, a Delaware banking
corporation duly organized and existing under the laws of the State of
Delaware, as Trustee (hereinafter called the "Trustee").

                            RECITALS OF THE COMPANY

          The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including, without limitation,
Securities issued to evidence loans made to the Company of the proceeds from the
issuance from time to time by one or more business trusts (each an "MCI Trust",
and collectively, the "MCI Trusts") of preferred trust interests in such Trusts
(the "Preferred Securities") and common interests in such Trusts (the "Common
Securities"), and to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered.

          All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.

          NOW THEREFORE, THIS INDENTURE WITNESSETH:

          For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:


                                  ARTICLE ONE
            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
            -------------------------------------------------------

SECTION 101.   Definitions.
               -----------

          For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE>
 
          (1)  the terms defined in this Article have the meanings assigned to
     them in this Article and include the plural as well as the singular;

          (2)  all other terms used herein which are defined in the Trust
     Indenture Act, either directly or by reference therein, have the meanings
     assigned to them therein;

          (3)  all accounting terms not otherwise defined herein have the
     meanings assigned to them in accordance with generally accepted accounting
     principles, and the term "generally accepted accounting principles" with
     respect to any computation required or permitted hereunder shall mean such
     accounting principles which are generally accepted at the date or time of
     such computation; and

          (4)  the words "herein", "hereof" and "hereunder" and other words of
     similar import refer to this Indenture as a whole and not to any particular
     Article, Section or other subdivision.

          Certain terms, used principally in Article Six, are defined in that
Article.

          "Act", when used with respect to any Holder, has the meaning specified
           ---    
in Section 104.

          "Additional Interest" means the interest, if any, that shall accrue on
           -------------------      
any interest on the Securities of any series that is in arrears for more than
one interest payment period or not paid during any Extension Period, which in
either case shall accrue at the rate per annum specified or determined as
specified in such Security.

          "Additional Sums" has the meaning specified in Section 1007.
           ---------------                                            

          "Additional Taxes" means the sum of any additional taxes, duties and
           ----------------  
other governmental charges to which an MCI Trust has become subject from time to
time as a result of a Tax Event.

          "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
                                    --------  -------                          
Company shall not be deemed to include any MCI Trust 

                                      -2-
<PAGE>
 
to which Securities have been issued.  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.

          "Authenticating Agent" means any Person authorized by the Trustee
           --------------------  
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.

          "Board of Directors" means either the board of directors of the
           ------------------  
Company or any committee of that board duly authorized to act hereunder.

          "Board Resolution" means a copy of a resolution certified by the
           ----------------
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board 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 Trustee.

          "Business Day" means any day other than a Saturday or Sunday or 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 a day on which the Corporate Trust
Office of the Trustee, or, with respect to the Securities of a series issued to
an MCI Trust, the principal office of the Property Trustee under the related
Trust Agreement, is closed for business.

          "Commission" means the Securities and Exchange Commission, as from
           ----------
time to time constituted, created under the Securities Exchange Act of 1934, or
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.

          "Common Securities" has the meaning specified in the first recital of
           -----------------
this Indenture.

          "Company" means the Person named as the "Company" in the first
           -------
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable 

                                      -3-
<PAGE>
 
provisions of this Indenture, and thereafter "Company" shall mean such successor
Person.

          "Company Request" and "Company Order" mean, respectively, the written
           ---------------       -------------                                 
request or order signed in the name of the Company by its Chairman of the Board,
its Vice Chairman, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.

          "Corporate Trust Office" means the principal office of the Trustee at
           ----------------------      
which at any particular time its corporate trust business shall be administered.

          "Corporation" includes corporations, associations, companies and
           -----------
business trusts.

          "Current Value" has the meaning specified in Section 1107.
           -------------                                            

          "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 guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.

          "Defaulted Interest" has the meaning specified in Section 307.
           ------------------                                           

          "Depositary" means, with respect to the Securities of any series
           ----------
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated 

                                      -4-
<PAGE>
 
as Depositary by the Company pursuant to Section 301 with respect to such series
(or any successor thereto).

          "Dollar" means the currency of the United States of America as at the
           ------
time of payment is legal tender for the payment of public and private debts.

          "Event of Default" unless otherwise specified in the supplemental
           ----------------
indenture creating a series of Securities, has the meaning specified in Article
Five.

          "Extension Period" has the meaning specified in Section 311.
           ----------------                                           

          "Foreign Currency" means any currency issued by the government of one
           ----------------
or more countries other than the United States of America or by any recognized
confederation or association of such governments.

          "Global Security" means a Security in the form prescribed in Section
           ---------------
204 evidencing all or part of a series of Securities, issued to the Depositary
or its nominee for such series, and registered in the name of such Depositary or
its nominee.

          "Government Obligations" means, with respect to the Securities of any
           ----------------------                                              
series, securities which are (i) direct obligations of the United States of
America or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed by the United States of America and which,
in either case, are full faith and credit obligations of the United States of
America and are not callable or redeemable at the option of the issuer thereof
and shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of such depository receipt; provided that (except as
                                                  --------                
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the Government Obligation or the specific payment
of interest on or principal of the Government Obligation evidenced by such
depository receipt.

                                      -5-
<PAGE>
 
          "Holder" means a Person in whose name a Security is registered in the
           ------                                                              
Securities Register.

          "Junior Subordinated Payment" has the meaning specified in Section
           ---------------------------
1302.

          "Indenture" means this instrument as originally executed or as it may
           ---------
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of each particular series of Securities established
as contemplated by Section 301.

          "Interest Payment Date" means as to each series of Securities the
           ---------------------
Stated Maturity of an installment of interest on such Securities.

          "Interest Rate" means the rate of interest specified or determined as
           -------------                                                       
specified in each Security as being the rate of interest payable on such
Security.

          "Investment Company Event" means, in respect of an MCI Trust, the
           ------------------------
receipt by an MCI 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"),
such MCI 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
of such MCI Trust.

          "Lien" means any mortgage, pledge, lien, security interest or other
           ----                                                              
encumbrance.

          "Maturity", when used with respect to any Security, means the date on
           --------
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.

          "MCI Guarantee" means the guarantee by the Company of distributions on
           -------------
the Preferred Securities of an MCI Trust to the extent provided in the Guarantee
Agreement, substantially in the form attached hereto as Annex C, or
substantially in such form as may be specified as 

                                      -6-
<PAGE>
 
contemplated by Section 301 with respect to the Securities of any series, in
each case as amended from time to time.

          "MCI Trust" has the meaning specified in the first recital of this
           ---------                                                        
Indenture.

          "1940 Act" means the Investment Company Act of 1940, as amended.
           --------                                                       

          "Notice of Default" has the meaning specified in Section 501(3).
           -----------------                                              

          "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 Company, and delivered to the Trustee.

          "Opinion of Counsel" means a written opinion of counsel, who may be
           ------------------
counsel for the Company.

          "Original Issue Date" means the date of issuance specified as such in
           -------------------
each Security.

          "Original Issue Discount Security" means any security which provides
           --------------------------------
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.

          "Outstanding" means, as of the date of determination, all Securities
           -----------                                                        
theretofore authenticated and delivered under this Indenture, except:

          (i)  Securities theretofore canceled by the Trustee or delivered to
     the Trustee for cancellation;

         (ii)  Securities for whose payment money in the necessary amount has
     been theretofore deposited with the Trustee or any Paying Agent in trust
     for the Holders of such Securities; and

        (iii)  Securities in substitution for or in lieu of which other
     Securities have been authenticated and delivered or which have been paid
     pursuant to Section 306, unless proof satisfactory to the Trustee is
     presented that any such Securities are held by Holders in whose hands such
     Securities are valid, binding and legal obligations of the Company;

                                      -7-
<PAGE>
 
provided, however, that in determining whether the Holders of the requisite
- --------  -------                                                          
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor. Upon request of the Trustee, the
Company shall furnish to the Trustee promptly an Officers' Certificate listing
and identifying all Securities, if any, known by the Company to be owned or held
by or for the account of the Company, or any other obligor on the Securities or
any Affiliate of the Company or such obligor, and, subject to the provisions of
Section 601, the Trustee shall be entitled to accept such Officers' Certificate
as conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of any such
determination.

     "Paying Agent" means the Trustee or any Person authorized by the Company to
      ------------
pay the principal of or interest on any Securities on behalf of the Company.

     "Person" means any individual, corporation, partnership, joint venture,
      ------
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

     "Place of Payment" means, with respect to the Securities of any series, the
      ----------------
place or places where the principal of (and premium, if any) and interest on the
Securities of such series are payable pursuant to Section 301 or 311.

     "Predecessor Security" of any particular Security means every previous
      --------------------                                                 
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any security
authenticated and delivered under Section 306 in lieu of a

                                      -8-
<PAGE>
 
lost, destroyed or stolen Security shall be deemed to evidence the same debt as
the lost, destroyed or stolen Security.

     "Preferred Securities" has the meaning specified in the first recital of
      --------------------
this Indenture.

     "Proceeding" has the meaning specified in Section 1302.
      ----------                                            

     "Property Trustee" means, in respect of any MCI Trust, the commercial bank
      ----------------
or trust company identified as the "Property Trustee" in the related Trust
Agreement, solely in its capacity as Property Trustee of such MCI Trust under
such Trust Agreement and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as
therein provided.

     "Redemption Date", when used with respect to any Security to be redeemed,
      ---------------
means the date fixed for such redemption by or pursuant to this Indenture.

     "Regular Record Date" for the interest payable on any Interest Payment Date
      -------------------
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 301 with respect to Securities of a series, the date which
is fifteen days next preceding such Interest Payment Date (whether or not a
Business Day).

     "Responsible Officer" when used with respect to the Trustee means any
      -------------------                                                 
officer of the Trustee assigned by the Trustee from time to time to administer
its corporate trust matters.

     "Securities" or "Security" means any debt securities or debt security, as
      ----------      --------
the case may be, authenticated and delivered under this Indenture.

     "Securities Register" and "Securities Registrar" have the respective
      -------------------       --------------------                     
meanings specified in Section 305.

     "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 Company 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 Indenture or thereafter
incurred, unless, in the

                                      -9-
<PAGE>
 
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 Securities or to other Debt which is pari passu with, or
subordinated to, the Securities, provided, however, that Senior Debt shall not
                                 --------  ------- 
be deemed to include (a) any Debt of the Company 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 Company, (b) any Debt of the Company to any of
its Subsidiaries, (c) Debt to any employee of the Company, (d) any liability for
taxes, (e) Debt or other monetary obligations to trade creditors created or
assumed by the Company or any of its Subsidiaries in the ordinary course of
business in connection with the obtaining of goods, materials or services and
(f) the Securities.

     "Special Event" means a Tax Event or an Investment Company Event.
      -------------                                                   

     "Special Record Date" for the payment of any Defaulted Interest means a
      -------------------
date fixed by the Trustee pursuant to Section 307.

     "Stated Maturity" when used with respect to any Security or any installment
      ---------------
of principal thereof or interest thereon means the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of interest is due and payable.

     "Subsidiary" means any corporation of which at the time of determination
      ----------
the Company and/or one or more Subsidiaries owns or controls directly or
indirectly more than 50% of the outstanding shares of voting stock. For purposes
of this definition, "voting stock" means stock which has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.

     "Tax Event" means the receipt by an MCI 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 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 affecting taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change

                                      -10-
<PAGE>
 
is effective or such pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities of such MCI Trust, there is more than an
insubstantial risk that (i) the MCI Trust is, or will be within 90 days of the
date thereof, subject to United States Federal income tax with respect to income
received or accrued on the corresponding series of Securities, (ii) interest
payable by the Company on the corresponding series of Securities is not, or
within 90 days of the date thereof, will not be, deductible, in whole or in
part, for United States Federal income tax purposes or (iii) the MCI Trust is,
or will be within 90 days of the date thereof, subject to more than a de minimis
                                                                      -- -------
amount of other taxes, duties or other governmental charges.

     "Trust Agreement" means the Trust Agreement substantially in the form
      ---------------                                                     
attached hereto as Annex A, as amended by the form of Amended and Restated Trust
Agreement substantially in the form attached hereto as Annex B, or substantially
in such form as may be specified as contemplated by Section 301 with respect to
the Securities of any series, in each case as amended from time to time.

     "Trustee" means the Person named as the "Trustee" in the first paragraph of
      -------
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.

     "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
      -------------------                                                  
(S)(S) 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 905.

     "Vice President" when used with respect to the Company, means any vice
      --------------                                                       
president, whether or not designated by a number or a word or words added before
or after the title "vice president."

SECTION 102.   Compliance Certificate and Opinions.
               -----------------------------------

          Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent

                                      -11-
<PAGE>
 
(including covenants, compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent (including covenants compliance with which
constitute a condition precedent), if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.

          Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 1006) shall include:

          (1)  a statement that each individual signing such certificate or
     opinion has read such covenant or condition and the definitions herein
     relating thereto;

          (2)  a brief statement as to the nature and scope of the examination
     or investigation upon which the statements or opinions contained in such
     certificate or opinion are based;

          (3)  a statement that, in the opinion of each such individual, he has
     made such examination or investigation as is necessary to enable him to
     express an informed opinion as to whether or not such covenant or condition
     has been complied with; and

          (4)  a statement as to whether, in the opinion of each such
     individual, such condition or covenant has been complied with.

SECTION 103.   Forms of Documents Delivered to Trustee.
               --------------------------------------- 

          In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

                                      -12-
<PAGE>
 
          Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous.  Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.

          Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 104.   Acts of Holders.
               --------------- 

          (a)  Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company.  Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
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 Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Company and any agent of the Trustee or the Company, if made
in the manner provided in this Section.

          (b)  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 the certificate of any notary public or other officer authorized

                                      -13-
<PAGE>
 
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 Person acting in other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.

          (c)  The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.

          (d)  The ownership of Securities shall be proved by the Securities
Register.

          (e)  Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.

          (f)  The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to take any action under
this Indenture by vote or consent.  Except as otherwise provided herein, such
record date shall be the later of 30 days prior to the first solicitation of
such consent or vote or the date of the most recent list of Securityholders
furnished to the Trustee pursuant to Section 701 prior to such solicitation.  If
a record date is fixed, those persons who were Securityholders at such record
date (or their duly designated proxies), and only those persons, shall be
entitled to take such action by vote or consent or to revoke any vote or consent
previously given, whether or not such persons continue to be Holders after such
record date, provided, however, that unless such vote or consent is obtained
             --------  -------
from the Holders (or their duly designated proxies) of the requisite principal
amount of Outstanding Securities prior to the date which is the 120th day after
such record date, any such vote or consent previously given shall automatically
and without further action by any Holder be canceled and of no further effect.

                                      -14-
<PAGE>
 
SECTION 105.   Notices, Etc. to Trustee and Company.
               ------------------------------------ 

          Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

          (1)  the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust office, or

          (2)  the Company by the Trustee or by any Holder shall be sufficient
for every purpose (except as otherwise provided in Section 501 hereof) hereunder
if in writing and mailed, first class, postage prepaid, to the Company addressed
to it at the address of its principal office specified in the first paragraph of
this instrument or at any other address previously furnished in writing to the
Trustee by the Company.

SECTION 106.   Notice to Holders; Waiver.
               ------------------------- 

          Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice.  In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.  Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice.  Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.

SECTION 107.   Conflict With Trust Indenture Act.
               --------------------------------- 

          If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the Trust
Indenture Act 

                                      -15-
<PAGE>
 
through operation of Section 318(c) thereof, such imposed duties shall control.

SECTION 108.   Effect of Headings and Table of Contents.
               ---------------------------------------- 

          The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 109.   Successors and Assigns.
               ---------------------- 

          All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.

SECTION 110.   Separability Clause.
               ------------------- 

          In case any provision in this Indenture or in the Securities 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.

SECTION 111.   Benefits of Indenture.
               --------------------- 

          Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto, any Paying Agent and
their successors and assigns and the Holders of the Securities, any benefit or
any legal or equitable right, remedy or claim under this Indenture.

SECTION 112.   Governing Law.
               -------------

          This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York.

SECTION 113.   Non-Business Days.
               -----------------

          In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or the Securities)
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until the next succeeding Business Day, in each 

                                      -16-
<PAGE>
 
case with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity, except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day.


                                  ARTICLE TWO
                                SECURITY FORMS
                                --------------

SECTION 201.   Forms Generally.
               --------------- 

          The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article, or
in such other form or forms as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with applicable tax laws or the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such securities, as evidenced by their execution of the
Securities.  If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 with respect to the authentication and
delivery of such Securities.

          The Trustee's certificates of authentication shall be substantially in
the form set forth in this Article.

          The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.

                                      -17-
<PAGE>
 
SECTION 202.   Form of Face of Security.
               ------------------------ 

          If the Security is an Original Issue Discount Security, insert -- This
Security was issued with original issue discount for United States Federal
income tax purposes.  For further information, please contact [name and title of
a representative of the Company], 1801 Pennsylvania Avenue, N.W., Washington,
D.C. 20006, [telephone number of a representative of the Company].

                        MCI COMMUNICATIONS CORPORATION
                              (Title of Security)

No. __________                                                    $_____________

                                                                  CUSIP ________


          MCI COMMUNICATIONS CORPORATION, a corporation organized and existing
under the laws of Delaware (hereinafter called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _______________, assigns, the
principal sum of _____________ Dollars on ______ __, ____[; provided, that the
                                                            -------- 
Company may (i) change the maturity date upon the occurrence of an exchange of
the Securities for the Preferred Securities subject to certain conditions set
forth in Section 314 of the Indenture, which extended maturity date shall in no
case be earlier than ______ __, ____ or later than _______ __, ____ and (ii)
extend the maturity date subject to certain conditions specified in Section 314
of the Indenture, which extended maturity date shall in no case be later than
_______ __, ____], to pay interest on said principal sum from ______, ___ or
from the most recent interest payment date (each such date, an "Interest Payment
Date") on which interest has been paid or duly provided for, [monthly]
[quarterly] [semi-annually] [if applicable, insert-(subject to deferral as set
forth herein)] in arrears on [insert applicable Interest Payment Dates] of each
year, commencing ______, ___, at the rate of ___% per annum, until the principal
hereof shall have become due and payable, [if applicable, insert- plus
Additional Interest, if any,] until the principal hereof is paid or duly
provided for or made available for payment [if applicable, insert- and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the rate of ___% per annum, compounded [monthly] [quarterly]

                                      -18-
<PAGE>
 
[annually].  The amount of interest payable for any period will be computed on
the basis of [twelve 30-day months] and a [360-day] year.  In the event that any
date on which interest is payable on this Security is not a Business Day, then a
payment of the interest payable on such date will be made on the next succeeding
day which 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, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. A "Business Day" shall mean any
                                                   ------------
day other than 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 a day on
which the Corporate Trust Office of the Trustee [if applicable, insert-, or the
principal office of the Property Trustee under the Trust Agreement hereinafter
referred to for MCI Capital __,] is closed for business. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities, as defined
in the Indenture) is registered at the close of business on the Regular Record
Date for such interest installment, which shall be the [[insert Regular Record
Dates] (whether or not a Business Day)] [close of business on the Business Day]
next preceding such Interest Payment Date.  Any such interest installment not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.

          [If applicable, insert- The Company shall have the right at any time
during the term of this Security, from time to time, to extend the interest
payment period of such Security for up to __ consecutive [months] [quarters]
with respect to each deferral period (each an "Extension Period"), during which
                                               ----------------                
periods the Company shall have the 

                                      -19-
<PAGE>
 
right to make partial payments of interest on any Interest Payment Date, and at
the end of which the Company shall pay all interest then accrued and unpaid
(together with Additional Interest thereon to the extent permitted by applicable
law); provided that during any such Extension Period, the Company will not, and
      --------                               
will not permit any Subsidiary of the Company to (i) declare or pay any
dividends or distributions or redeem, purchase, acquire or make a liquidation
payment with respect to, any of the Company's outstanding capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt security that rank pari passu with or junior in
                                                 ---- -----
interest to this Security or make any guarantee payments with respect to the
foregoing (other than (a) dividends or distributions in common stock of the
Company, (b) redemptions or purchases of any rights pursuant to the Company's
Preferred Stock Rights Plan, or any successor to such Preferred Stock Rights
Plan, and the declaration of a dividend of such rights in the future, and (c)
payments under any MCI Guarantee (as defined in the Indenture)). Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period together with all 
                         --------
such previous and further extensions of such Extension Period, shall not exceed
__ consecutive [months] [quarters] or extend beyond the Maturity of this
Security.  Upon the termination of any such Extension Period and upon the
payment of all accrued and unpaid interest and any Additional Interest then due,
the Company may select a new Extension Period, subject to the above
requirements.  No interest shall be due and payable during an Extension Period
except at the end thereof.  The Company shall give the Holder of this Security
and the Trustee notice of its selection of an Extension Period at least one
Business Day prior to the Interest Payment Date [if applicable, insert- the
earlier of (i) the date the Distributions on the Preferred Securities are
payable or (ii) the date the Administrative Trustees are required to give notice
to the New York Stock Exchange or other applicable self-regulatory organization
or to holders of such Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date.

          Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for 

                                      -20-
<PAGE>
 
payment of public and private debts [if applicable, insert-; provided, however,
                                                             --------  -------
that at the option of the Company payment of interest may be made (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Securities Register or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated by the
Person entitled thereto as specified in the Securities Register].

          The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto.  Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.  Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Debt, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

          Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be 

                                      -21-
<PAGE>
 
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                             MCI COMMUNICATIONS CORPORATION


                                             By:__________________________
                                                [President or Vice President]

Attest:


- ----------------------------------
[Secretary or Assistant Secretary]


SECTION 203.   Form of Reverse of Security.
               --------------------------- 

          This Security is one of a duly authorized issue of securities of the
Company, (herein called the "Securities"), issued and to be issued in one or
                             ----------                                     
more series under a Junior Subordinated Indenture, dated as of ________ __, 1996
(herein called the "Indenture"), between the Company and Wilmington Trust
                    ---------                                            
Company, as Trustee (herein called the "Trustee", which term includes any
                                        -------                          
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.  This Security is
one of the series designated on the face hereof[, limited in aggregate principal
amount to $___________].

          All terms used in this Security that are defined in the Indenture [if
applicable, insert- or in the Trust Agreement, dated _________ __, ____, as
amended (the "Trust Agreement"), among MCI Communications Corporation as
Depositor, and the Trustees named therein, for MCI Capital __,] shall have the
meanings assigned to them in the Indenture [if applicable, insert- or the Trust
Agreement, as the case may be].

                                      -22-
<PAGE>
 
          [If applicable, insert- At any time on or after _________ __, ____,
the Company may, at its option, subject to the terms and conditions of Article
Eleven of the Indenture, redeem this Security on any Interest Payment date with
respect thereto in whole at any time or in part from time to time, without
premium or penalty, at a redemption price equal to 100% of the principal amount
thereof plus the accrued and unpaid interest [if applicable, insert-, including
Additional Interest, if any,] to the date fixed for redemption.

          [If applicable, insert- If a Special Event in respect of an MCI Trust
shall occur and be continuing, the Company may, at its option, redeem the
corresponding series of Securities on any Interest Payment Date falling within
90 days of the occurrence of such Special Event, in whole but not in part,
subject to the provisions of Section 1107 and the other provisions of Article
Eleven of the Indenture.  The redemption price for any Security so redeemed
shall be equal to 100% of the principal amount thereof plus accrued and unpaid
interest, including Additional Interest, if any, to the date fixed for
redemption.]

          In the event of redemption of this Security in part only, a new
Security or Securities of this series for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.

          [If the Security is not an Original Issue Discount Security, - If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner, with the effect and subject to the conditions
provided in the Indenture.]

          [If the Security is an Original Issue Discount Security, - If an Event
of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.  Such amounts shall be equal to [- insert
formula for determining the amount].  Upon payment (i) of the amount of
principal so declared due and payable and (ii) of interest on any overdue
principal and overdue interest (in each case to the extent that the payment of
such interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and interest, if any, on the
Securities of this series shall terminate.]

                                      -23-
<PAGE>
 
          The Indenture contains provisions for satisfaction, discharge and
defeasance at any time of the entire indebtedness of this Security upon
compliance by the Company with certain conditions set forth in the Indenture.

          The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities of
each series at the time Outstanding of each series to be affected.  The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences.  Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

          As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
the Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
                                                                 --------      
in the case of the Securities of a series issued to an MCI Trust, if upon an
Event of Default, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series fail to declare the
principal of all the Securities of that series to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
corresponding series of Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any such
declaration such principal amount (or 

                                      -24-
<PAGE>
 
specified amount) of and the accrued interest (including any Additional
Interest) on all the Securities of such series shall become immediately due and
payable, provided that the payment of principal and interest (including any 
         --------                    
Additional Interest) on such Securities shall remain subordinated to the extent
provided in Article Thirteen of the Indenture.

          No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.

          As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained under Section 1002 of
the Indenture duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.  No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

          Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

          The Securities of this series are issuable only in registered form
without coupons in denominations of $____ and any integral multiple thereof.  As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of such series of a different authorized denomination, as
requested by the Holder surrendering the same.

                                      -25-
<PAGE>
 
          [If applicable, insert- The Company and, by its acceptance of this
Security or a beneficial interest therein, the Holder of, and any Person that
acquires a beneficial interest in, this Security agree that for United States
Federal, state and local tax purposes it is intended that this Security
constitute indebtedness.]

          THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.

SECTION 204.   Additional Provisions Required in Global Security.
               ------------------------------------------------- 

          Any Global Security issued hereunder shall, in addition to the
provisions contained in Sections 202 and 203 bear a legend in substantially the
following form:

          "This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary.  This Security is exchangeable for Securities
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture and may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary."

SECTION 205.   Form of Trustee's Certificate of Authentication.
               ----------------------------------------------- 

          This is one of the Securities referred to in the within mentioned
Indenture.

                                                  _________________________
                                                  as Trustee

                                                  By:  ____________________
                                                       Authorized officer

                                      -26-
<PAGE>
 
                                 ARTICLE THREE
                                THE SECURITIES
                                --------------

SECTION 301.   Title and Terms.
               --------------- 

          The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.

          The Securities may be issued in one or more series.  There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of a series:

          (a)  the title of the securities of such series, which shall
     distinguish the Securities of the series from all other Securities;

          (b)  the limit, if any, upon the aggregate principal amount of the
     Securities of such series which may be authenticated and delivered under
     this Indenture (except for Securities authenticated and delivered upon
     registration of transfer of, or in exchange for, or in lieu of, other
     Securities of the series pursuant to Section 304, 305, 306, 906 or 1106);
     provided, however, that the authorized aggregate principal amount of such 
     --------  -------                     
     series may be increased above such amount by a Board Resolution to such
     effect;

          (c)  the Stated Maturity or Maturities on which the principal of the
     Securities of such series is payable or the method of determination
     thereof;

          (d)  the rate or rates, if any, at which the Securities of such series
     shall bear interest, if any, the rate or rates and extent to which
     Additional Interest, if any, shall be payable in respect of any Securities
     of such series, the Interest Payment Dates on which such interest shall be
     payable, the right, pursuant to Section 311 or as otherwise set forth
     therein, of the Company to defer or extend an Interest Payment Date, and
     the Regular Record Date for the interest payable on any Interest Payment
     Date or the method by which any of the foregoing shall be determined;

          (e)  the place or places where the principal of (and premium, if any)
     and interest on the Securities of

                                      -27-
<PAGE>
 
     such series shall be payable, the place or places where the Securities of
     such series may be presented for registration of transfer or exchange, and
     the place or places where notices and demands to or upon the Company in
     respect of the Securities of such series may be made;

          (f)  the period or periods within or the date or dates on which, if
     any, the price or prices at which and the terms and conditions upon which
     the Securities of such series may be redeemed, in whole or in part, at the
     option of the Company;

          (g)  the obligation or the right, if any, of the Company to redeem,
     repay or purchase the Securities of such series pursuant to any sinking
     fund, amortization or analogous provisions or at the option of a Holder
     thereof and the period or periods within which, the price or prices at
     which, the currency or currencies (including currency unit or units) in
     which and the other terms and conditions upon which Securities of the
     series shall be redeemed, repaid or purchased, in whole or in part,
     pursuant to such obligation;

          (h)  the denominations in which any Securities of such series shall be
     issuable, if other than denominations of $25 and any integral multiple
     thereof;

          (i)  if other than Dollars, the currency or currencies (including
     currency unit or units) in which the principal of (and premium, if any) and
     interest, if any, on the Securities of the series shall be payable, or in
     which the Securities of the series shall be denominated;

          (j)  the additions, modifications or deletions, if any, in the Events
     of Default or covenants of the Company set forth herein with respect to the
     Securities of such series;

          (k)  if other than the principal amount thereof, the portion of the
     principal amount of Securities of such series that shall be payable upon
     declaration of acceleration of the Maturity thereof;

          (l)  the additions or changes, if any, to this Indenture with respect
     to the Securities of such series as shall be necessary to permit or
     facilitate the issuance of the Securities of such series in bearer

                                      -28-
<PAGE>
 
     form, registrable or not registrable as to principal, and with or without
     interest coupons;

          (m)  any index or indices used to determine the amount of payments of
     principal of and premium, if any, on the Securities of such series or the
     manner in which such amounts will be determined;

          (n)  the issuance of a temporary Global Security representing all of
     the Securities of such series and exchange of such temporary Global
     Security for definitive Securities of such series;

          (o)  whether the Securities of the series shall be issued in whole or
     in part in the form of one or more Global Securities and, in such case, the
     Depositary for such Global Securities, which Depositary shall be a clearing
     agency registered under the Securities Exchange Act of 1934, as amended;

          (p)  the appointment of any Paying Agent or Agents for the Securities
     of such series;

          (q)  the terms of any right to convert or exchange Securities of such
     series into any other securities or property of the Company, and the
     additions or changes, if any, to this Indenture with respect to the
     Securities of such series to permit or facilitate such conversion or
     exchange;

          (r)  the form or forms of the Trust Agreement, Amended and Restated
     Trust Agreement and Guarantee Agreement, if different from the forms
     attached hereto as Annexes A, B and C, respectively;

          (s)  the relative degree, if any, to which the Securities of the
     series shall be senior to or be subordinated to other series of Securities
     in right of payment, whether such other series of Securities are
     Outstanding or not; and

          (t)  any other terms of the Securities of such series (which terms
     shall not be inconsistent with the provisions of this Indenture).

          All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided herein or in
or pursuant to such Board 

                                      -29-
<PAGE>
 
Resolution and set forth in such Officers' Certificate or in any such indenture
supplemental hereto.

          If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

SECTION 302.   Denominations.
               -------------

          The Securities of each series shall be in registered form without
coupons and shall be issuable in denominations of $25 and any integral multiple
thereof, unless otherwise specified as contemplated by Section 301.

SECTION 303.   Execution, Authentication, Delivery and Dating.
               ----------------------------------------------

          The Securities shall be executed on behalf of the Company by its
President or one of its Vice Presidents under its corporate seal reproduced or
impressed thereon and attested by its Secretary or one of its Assistant
Secretaries.  The signature of any of these officers on the Securities may be
manual or facsimile.

          Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.  At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities executed by the Company to the Trustee for authentication.
Securities may be authenticated on original issuance from time to time and
delivered pursuant to such procedures acceptable to the Trustee ("Procedures")
as may be specified from time to time by Company Order.  Procedures may
authorize authentication and delivery pursuant to oral instructions of the
Company or a duly authorized agent, which instructions shall be promptly
confirmed in writing.

          Prior to the delivery of a Security in any such form to the Trustee
for authentication, the Company shall deliver to the Trustee the following:

                                      -30-
<PAGE>
 
          (a)  A Company Order requesting the Trustee's authentication and
     delivery of all or a portion of the Securities of such series, and if less
     than all, setting forth procedures for such authentication;

          (b)  The Board Resolution by or pursuant to which such form of
     Security has been approved, and the Board Resolution, if any, by or
     pursuant to which the terms of the Securities of such series have been
     approved, and, if pursuant to a Board Resolution, an Officers' Certificate
     describing the action taken;

          (c)  An Officers' Certificate dated the date such certificate is
     delivered to the Trustee, stating that all conditions precedent provided
     for in this Indenture relating to the authentication and delivery of
     Securities in such form and with such terms have been complied with; and

          (d)  An Opinion of Counsel stating that (i) the form of such
     Securities has been duly authorized and approved in conformity with the
     provisions of this Indenture; (ii) the terms of such Securities have been
     duly authorized and determined in conformity with the provisions of this
     Indenture, or, if such terms are to be determined pursuant to Procedures,
     when so determined such terms shall have been duly authorized and
     determined in conformity with the provisions of this Indenture; and (iii)
     Securities in such form when completed by appropriate insertions and
     executed and delivered by the Company to the Trustee for authentication in
     accordance with this Indenture, authenticated and delivered by the Trustee
     in accordance with this Indenture within the authorization as to aggregate
     principal amount established from time to time by the Board of Directors
     and sold in the manner specified in such opinion of Counsel, will be the
     legal, valid and binding obligations of the Company entitled to the
     benefits of this Indenture, subject to applicable bankruptcy,
     reorganization, insolvency and similar laws generally affecting creditors'
     rights, to general equitable principles except as enforcement thereof may
     be limited by (A) requirements that a claim with respect to any Securities
     denominated other than in Dollars (or a Foreign Currency or currency unit
     judgment in respect of such claim) be converted into Dollars at a rate of
     exchange prevailing on a date determined pursuant to applicable law or (B)
     governmental authority to limit, delay or prohibit

                                      -31-
<PAGE>
 
     the making of payments in Foreign Currencies or currency units or payments
     outside the United States and subject to such other qualifications as such
     counsel shall conclude do not materially affect the rights of Holders of
     such Securities;

provided, however, that the Trustee shall be entitled to receive the documents
- --------  -------                                                             
referred to in Clauses (b), (c) and (d) above only at or prior to the first
request of the Company to the Trustee to authenticate Securities of such series.

          Each Security shall be dated the date of its authentication.

          No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder.

SECTION 304.   Temporary Securities.
               -------------------- 

          Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor of the definitive Securities of such series in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as evidenced
by their execution of such Securities.

          If temporary Securities of any series are issued, the Company will
cause definitive Securities of such series to be prepared without unreasonable
delay.  After the preparation of definitive Securities, the temporary Securities
shall be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder.  Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in 

                                      -32-
<PAGE>
 
exchange therefor a like principal amount of definitive Securities of the same
series of authorized denominations having the same Original Issue Date and
Stated Maturity and having the same terms as such temporary Securities.  Until
so exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.

SECTION 305.   Registration, Transfer and Exchange.
               -----------------------------------

          The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities.  Such register is herein sometimes referred to as
the "Securities Register."  The Trustee is hereby appointed "Securities
Registrar" for the purpose of registering Securities and transfers of Securities
as herein provided.

          Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated for that purpose the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series of any authorized denominations, of a like aggregate principal amount, of
the same original Issue Date and Stated Maturity and having the same terms.

          At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms, upon surrender of the Securities to be exchanged at
such office or agency.  Whenever any securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.

          All Securities issued upon any transfer or exchange of Securities
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.

          Every Security presented or surrendered for transfer or exchange shall
(if so required by the Company or the Securities Registrar) be duly endorsed, or
be 

                                      -33-
<PAGE>
 
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.

          No service charge shall be made to a Holder for any transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities.

          Notwithstanding any of the foregoing, any Global Security of a series
shall be exchangeable pursuant to this Section 305 for Securities registered in
the names of Persons other than the Depositary for such Security or its nominee
only if (i) such Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Security or if at any time such
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, (ii) the Company executes and delivers to the
Trustee a Company Order that such Global Security shall be so exchangeable or
(iii) there shall have occurred and be continuing an Event of Default with
respect to the Securities of such series.  Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
Securities registered in such names as such Depositary shall direct.

          Notwithstanding any other provision in this Indenture, a Global
Security may not be transferred except as a whole by the Depositary with respect
to such Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary.

          Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article Eleven and
ending at the close of business on the day of mailing of notice of redemption or
(b) to transfer or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.

                                      -34-
<PAGE>
 
SECTION 306.   Mutilated, Destroyed, Lost and Stolen Securities.
               ------------------------------------------------

          If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Company or the Trustee to
save each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same issue
and series of like tenor and principal amount, having the same Original Issue
Date and Stated Maturity and bearing the same Interest Rate as such mutilated
Security, and bearing a number not contemporaneously outstanding.

          If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
issuing Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same issue and series of like tenor and
principal amount, having the same Original Issue Date and Stated Maturity and
bearing the same Interest Rate as such destroyed, lost or stolen Security, and
bearing a number not contemporaneously outstanding.

          In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

          Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

          Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.

                                      -35-
<PAGE>
 
          The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307.   Payment of Interest; Interest Rights Preserved.
               ----------------------------------------------

          Interest on any Security of any series which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date, shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities of such series, except that, unless
otherwise provided in the Securities of such series, interest payable on the
Stated Maturity of a Security shall be paid to the Person to whom principal is
paid.  The initial payment of interest on any Security of any series which is
issued between a Regular Record Date and the related Interest Payment Date shall
be payable as provided in such Security or in the Board Resolution pursuant to
Section 301 with respect to the related series of Securities.

          Any interest on any Security which is payable, but is not timely paid
or duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:

          (1)  The Company may elect to make payment of any Defaulted Interest
     to the Persons in whose names the Securities of such series in respect of
     which interest is in default (or their respective Predecessor Securities)
     are registered at the close of business on a Special Record Date for the
     payment of such Defaulted Interest, which shall be fixed in the following
     manner.  The Company shall notify the Trustee in writing of the amount of
     Defaulted Interest proposed to be paid on each Security and the date of the
     proposed payment, and at the same time the Company shall deposit with the
     Trustee an amount of money equal to the aggregate amount proposed to be
     paid in respect of such Defaulted Interest or shall make arrangements
     satisfactory to the Trustee for such deposit prior to the date of the
     proposed payment, such money when deposited to be held

                                      -36-
<PAGE>
 
     in trust for the benefit of the Persons entitled to such Defaulted Interest
     as in this Clause provided.  Thereupon the Trustee shall fix a Special
     Record Date for the payment of such Defaulted Interest which shall be not
     more than 15 days and not less than 10 days prior to the date of the
     proposed payment and not less than 10 days after the receipt by the Trustee
     of the notice of the proposed payment.  The Trustee shall promptly notify
     the Company of such Special Record Date and, in the name and at the expense
     of the Company, shall cause notice of the proposed payment of such
     Defaulted Interest and the Special Record Date therefor to be mailed, first
     class, postage prepaid, to each Holder of a Security of such series at the
     address of such Holder as it appears in the Securities Register not less
     than 10 days prior to such Special Record Date.  The Trustee may, in its
     discretion, in the name and at the expense of the Company, cause a similar
     notice to be published at least once in a newspaper, customarily published
     in the English language on each Business Day and of general circulation in
     the Borough of Manhattan, The City of New York, but such publication shall
     not be a condition precedent to the establishment of such Special Record
     Date.  Notice of the proposed payment of such Defaulted Interest and the
     Special Record Date therefor having been mailed as aforesaid, such
     Defaulted Interest shall be paid to the Persons in whose names the
     Securities of such series (or their respective Predecessor Securities) are
     registered on such Special Record Date and shall no longer be payable
     pursuant to the following Clause (2).

          (2)  The Company may make payment of any Defaulted Interest in any
     other lawful manner not inconsistent with the requirements of any
     securities exchange on which the Securities of the series in respect of
     which interest is in default may be listed and, upon such notice as may be
     required by such exchange (or by the Trustee if the Securities are not
     listed), if, after notice given by the Company to the Trustee of the
     proposed payment pursuant to this Clause, such payment shall be deemed
     practicable by the Trustee.

          Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.

                                      -37-
<PAGE>
 
SECTION 308.   Persons Deemed Owners.
               --------------------- 

          The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Section 307) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.

SECTION 309.   Cancellation.
               ------------ 

          All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities and Securities surrendered
directly to the Trustee for any such purpose shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee.  No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture.  All canceled
Securities shall be destroyed by the Trustee and the Trustee shall deliver to
the Company a certificate of such destruction.

SECTION 310.   Computation of Interest.
               ----------------------- 

          Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.

SECTION 311.   Deferrals of Interest Payment Dates.
               ----------------------------------- 

          If specified as contemplated by Section 301 with respect to the
Securities of a particular series, the Company shall have the right, at any time
during the term of such series, from time to time to extend the interest payment
period for such Securities for such period or periods as may be specified as
contemplated by Section 301 (each, an "Extension Period") during which periods
                                       ----------------                       
the Company shall have the right to make partial payments of 

                                      -38-
<PAGE>
 
interest on any Interest Payment Date, and at the end of such Extension Period
the Company shall pay all interest then accrued and unpaid thereon (together
with Additional Interest thereon, if any, at the rate specified for the
Securities of such series to the extent permitted by applicable law), provided,
                                                                      --------
however, that during any such Extension Period, the Company shall not, and shall
- -------
cause any Subsidiary not to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock, or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities that rank pari passu with or junior in interest to the Securities of
                     ---- -----
such series or make any guarantee payments with respect to the foregoing (other
than (a) dividends or distributions in common stock of the Company (b)
redemptions or purchases of any rights pursuant to the Company's Preferred Stock
Rights Plan, or any successor to such Rights Plan, and the declaration of a
dividend of such rights in the future, and (c) payments under any MCI
Guarantee). Prior to the termination of any such Extension Period, the Company
may further extend the interest payment period, provided that such Extension
                                                --------
Period together with all such previous and further extensions of such Extension
Period shall not exceed the period or periods so specified or extend beyond the
Maturity of such Securities. Upon termination of any Extension Period and upon
the payment of all accrued and unpaid interest and any Additional Interest then
due, the Company may select a new Extension Period, subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company shall give the Holders of the Securities
of such series and the Trustee notice of its selection of such Extension Period
at least one Business Day prior to the Interest Payment Date or, with respect to
the Securities of a series issued to an MCI Trust, prior to the earlier of (i)
the date the Distributions on the Preferred Securities of such MCI Trust are
payable or (ii) the date the Administrative Trustees of such MCI Trust are
required to give notice to the New York Stock Exchange or other applicable self-
regulatory organization or to holders of such Preferred Securities of the record
date or the date such Distributions are payable, but in any event not less than
one Business Day prior to such record date.

          The Trustee shall promptly give notice of the Company's selection of
such Extension Period to the Holders of the outstanding Securities of such
series.

                                      -39-
<PAGE>
 
SECTION 312.   Right of Set-Off.
               ---------------- 

          With respect to the Securities of a series issued to an MCI Trust,
notwithstanding anything to the contrary in the Indenture, the Company shall
have the right to set-off any payment it is otherwise required to make
thereunder in respect of any such Security to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the MCI Guarantee relating to such Security.

SECTION 313.   Agreed Tax Treatment.
               -------------------- 

          Each Security issued hereunder shall provide that the Company and, by
its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree that
for United States Federal, state and local tax purposes it is intended that such
Security constitute indebtedness.

SECTION 314.   Extension of Stated Maturity; Adjustment of Stated Maturity Upon
               ----------------------------------------------------------------
               an Exchange.
               ----------- 

          If specified as contemplated by Section 301 with respect to the
Securities of a particular series, the Company shall have the right to (i)
change the maturity date upon the occurrence of an exchange of the Securities of
a particular series for Preferred Securities subject to the conditions set forth
below and (ii) not more than one year or less than one month prior to the
initial Stated Maturity, change the maturity date, subject to the conditions
below.  The following conditions must be satisfied at the time the Company
elects to extend the stated maturity and upon the issuance of the Securities
after an exchange: (i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation, (ii) the Company is not in default in the payment of any
interest or principal under this Indenture, (iii) the Company has made timely
payments on the Securities for the immediately preceding [six (6)] quarters
without deferrals or extensions of the interest payment period, (iv) the
applicable MCI Trust is not in arrears on payments of distributions on the
Preferred Securities, (v) the Securities are rated not less than BBB- or better
by Standard & Poor's Ratings Services or Baa3 or better by Moody's Investors
Service, Inc. or the equivalent by any other nationally recognized statistical
rating organization, and (vi) the extended Stated Maturity is no later than the
49th anniversary of the issuance of the Preferred Securities.

                                      -40-
<PAGE>
 
SECTION 315.   CUSIP Numbers.
               ------------- 

          The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
                                           --------                         
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.


                                 ARTICLE FOUR
                          SATISFACTION AND DISCHARGE
                          --------------------------

SECTION 401.   Satisfaction and Discharge of Indenture.
               --------------------------------------- 

          This Indenture shall cease to be of further effect (except as to (i)
any surviving rights of transfer, substitution and exchange of Securities, (ii)
rights hereunder of Holders to receive payments of principal of (and premium, if
any) and interest on the Securities and other rights, duties and obligations of
the Holders as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights and obligations of the Trustee
hereunder), and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when

          (1)  either

          (A)  all Securities theretofore authenticated and delivered (other
     than (i) Securities which have been destroyed, lost or stolen and which
     have been replaced or paid as provided in Section 306 and (ii) Securities
     for whose payment money has theretofore been deposited in trust or
     segregated and held in trust by the Company and thereafter repaid to the
     Company or discharged from such trust, as provided in Section 1003) have
     been delivered to the Trustee for cancellation; or

          (B)  all such Securities not theretofore delivered to the Trustee for
     cancellation

               (i)  have become due and payable, or

                                      -41-
<PAGE>
 
               (ii)  will become due and payable at their Stated Maturity within
          one year of the date of deposit, and the Company, in the case of (i)
          or (ii) above, has deposited or caused to be deposited with the
          Trustee as trust funds in trust for such purpose an amount in the
          currency or currencies in which the Securities of such series are
          payable sufficient to pay and discharge the entire indebtedness on
          such Securities not theretofore delivered to the Trustee for
          cancellation, for principal (and premium, if any) and interest
          (including any Additional Interest) to the date of such deposit (in
          the case of Securities which have become due and payable) or to the
          Stated Maturity;

          (2)  the Company has paid or caused to be paid all other sums payable
     hereunder by the Company; and

          (3)  the Company has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel each stating that all conditions precedent herein
     provided for relating to the satisfaction and discharge of this Indenture
     have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

SECTION 402.   Application of Trust Money.
               -------------------------- 

          Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 or money or Government
Obligations deposited with the Trustee pursuant to Section 403, or received by
the Trustee in respect of Government Obligations deposited with the Trustee
pursuant to Section 403, shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money or
obligations have been deposited with or received by the Trustee; provided,
                                                                 -------- 
however, such moneys need not be 
- -------                                                                   

                                      -42-
<PAGE>
 
segregated from other funds except to the extent required by law.

SECTION 403.   Satisfaction, Discharge and Defeasance of Securities of Any 
               ----------------------------------------------------------- 
               Series.
               ------

          Unless otherwise provided in the Board Resolution adopted pursuant to
Section 301 establishing the terms of the Securities of any series, the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
Outstanding Securities of any such series and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of such indebtedness, when

          (1)  with respect to all Outstanding Securities of such series,

          (A)  the Company has irrevocably deposited or caused to be irrevocably
     deposited with the Trustee as trust funds in trust for such purpose an
     amount sufficient to pay and discharge the entire indebtedness on all
     Outstanding Securities of such series for principal (and premium, if any)
     and interest (including any Additional Interest) to the Stated Maturity or
     any Redemption Date as contemplated by the penultimate paragraph of this
     Section 403, as the case may be; or

          (B)  the Company has irrevocably deposited or caused to be irrevocably
     deposited with the Trustee as obligations in trust for such purpose an
     amount of Government Obligations as will, in the written opinion of
     independent public accountants delivered to the Trustee, together with
     predetermined and certain income to accrue thereon, without consideration
     of any reinvestment thereof, be sufficient to pay and discharge when due
     the entire indebtedness on all Outstanding Securities of such series for
     principal (and premium, if any) and interest (including any Additional
     Interest) to the Stated Maturity or any Redemption Date as contemplated by
     the penultimate paragraph of this Section 403, as the case may be; and

          (2)  the Company has paid or caused to be paid all other sums payable
     with respect to the Outstanding Securities of such series; and

          (3)  the Company has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each 

                                      -43-
<PAGE>
 
     stating that all conditions precedent herein provided for relating to the
     satisfaction and discharge of the entire indebtedness on all Outstanding
     Securities of any such series have been complied with.

          Any deposits with the Trustee referred to in Section 403(1) above
shall be irrevocable and shall be made under the terms of an escrow trust
agreement in form and substance reasonably satisfactory to the Trustee.  If any
Outstanding Securities of such series are to be redeemed prior to their Stated
Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory sinking fund requirement, the applicable escrow
trust agreement shall provide therefor and the Company shall make such
arrangements as are satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company.  If
the Securities of such series are not to become due and payable at their Stated
Maturity or upon call for redemption within one year of the date of deposit,
then the Company shall give, not later than the date of such deposit, notice of
such deposit to the Holders of Securities of such series.

          Upon the satisfaction of the conditions set forth in this Section 403
with respect to all the Outstanding Securities of any series, the terms and
conditions of such series, including the terms and conditions with respect
thereto set forth in this Indenture, shall no longer be binding upon, or
applicable to, the Company; provided, that the Company shall not be discharged
                            --------                                          
from any payment obligations in respect of Securities of such series which are
deemed not to be Outstanding under clause (iii) of the definition thereof if
such obligations continue to be valid obligations of the Company under
applicable law.


                                 ARTICLE FIVE
                                   REMEDIES
                                   --------

SECTION 501.   Events of Default.
               ----------------- 

          "Event of Default", wherever used herein with respect to the
Securities of any series, 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):

                                      -44-
<PAGE>
 
          (1)  default in the payment of any interest upon any Security of that
     series, including any Additional Interest in respect thereof, when it
     becomes due and payable, and continuance of such default for a period of 30
     days (subject to the deferral of any due date in the case of an Extension
     Period); or

          (2)  default in the payment of the principal of (or premium, if any,
     on) any Security of that series at its Maturity; or

          (3)  default in the performance, or breach, of any covenant or
     warranty of the Company in this Indenture (other than a covenant or
     warranty a default in whose performance or whose breach is elsewhere in
     this Section specifically dealt with), and continuance of such default or
     breach for a period of 90 days after there has been given, by registered or
     certified mail, to the Company by the Trustee or to the Company and the
     Trustee by the Holders of at least 25% in principal amount of the
     Outstanding Securities of that series a written notice specifying such
     default or breach and requiring it to be remedied; or

          (4)  the entry of a decree or order by a court having jurisdiction in
     the premises adjudging the Company a bankrupt or insolvent, or approving as
     properly filed a petition seeking reorganization, arrangement, adjustment
     or composition of or in respect of the Company 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 the Company 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

          (5)  the institution by the Company 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 other similar official) of the Company or of any substantial part of
     its property, 

                                      -45-
<PAGE>
 
     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 the Company in furtherance of any such
     action; or

          (6)  any other Event of Default with respect to Securities of that
     series.

SECTION 502.   Acceleration of Maturity; Rescission and Annulment.
               -------------------------------------------------- 

          If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all the Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders),
provided that, in the case of the Securities of a series issued to an MCI Trust,
- --------                                                                        
if upon an Event of Default, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series fail to declare
the principal of all the Securities of that series to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
corresponding series of Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any such
declaration such principal amount (or specified amount) of and the accrued
interest (including any Additional Interest) on all the Securities of such
series shall become immediately due and payable, provided that the payment of
                                                 --------                    
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article Thirteen.

          At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:

                                      -46-
<PAGE>
 
          (1)  the Company has paid or deposited with the Trustee a sum
     sufficient to pay

          (A)  all overdue installments of interest (including any Additional
     Interest) on all Securities of that series,

          (B)  the principal of (and premium, if any, on) any Securities of that
     series which have become due otherwise than by such declaration of
     acceleration and interest thereon at the rate borne by the Securities,

          (C)  to the extent that payment of such interest is lawful, interest
     upon overdue installments of interest at the rate borne by the Securities,
     and

          (D)  all sums paid or advanced by the Trustee hereunder and the
     reasonable compensation, expenses, disbursements and advances of the
     Trustee, its agents and counsel; and

          (2)  all Events of Default with respect to Securities of that series,
     other than the non-payment of the principal of Securities of that series
     which has become due solely by such acceleration, have been cured or waived
     as provided in Section 513.

          No such rescission shall affect any subsequent default or impair any
right consequent thereon.

          Upon receipt by the Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, with respect to Securities of
a series all or part of which is represented by a Global Security, a record date
shall be established for determining Holders of Outstanding Securities of such
series entitled to join in such notice, which record date shall be at the close
of business on the day the Trustee receives such notice.  The Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to join in such notice, whether or not such Holders remain Holders
after such record date; provided, that, unless such declaration of acceleration,
                        --------                                                
or rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect.  Nothing in 

                                      -47-
<PAGE>
 
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice which has been canceled pursuant to the proviso to
                                                                      -------
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 502.

SECTION 503.   Collection of Indebtedness and Suits for Enforcement by Trustee.
               --------------------------------------------------------------- 

          The Company covenants that if:

          (1)  default is made in the payment of any installment of interest
     (including any Additional Interest) on any Security when such interest
     becomes due and payable and such default continues for a period of 30 days,
     or

          (2)  default is made in the payment of the principal of (and premium,
     if any, on) any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal, including any sinking fund payment or analogous
obligations (and premium, if any) and interest (including any Additional
Interest), including, to the extent that payment of such interest shall be
lawful, interest on any overdue principal (and premium if any) and on any
overdue installments of interest (including any Additional Interest) at the rate
borne by the Securities; and, in addition thereto, all amounts owing the Trustee
under Section 607.

          If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.

          If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in 

                                      -48-
<PAGE>
 
its discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.

SECTION 504.   Trustee May File Proofs of Claim.
               -------------------------------- 

          In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,

          (a)  the Trustee (irrespective of whether the principal of the
     Securities of any series shall then be due and payable as therein expressed
     or by declaration or otherwise and irrespective of whether the Trustee
     shall have made any demand on the Company for the payment of overdue
     principal (and premium, if any) or interest (including any Additional
     Interest)) shall be entitled and empowered, by intervention in such
     proceeding or otherwise,

               (i)  to file and prove a claim for the whole amount of principal
          (and premium, if any) and interest (including any Additional Interest)
          owing and unpaid in respect to the Securities and to file such other
          papers or documents as may be necessary or advisable and to take any
          and all actions as are authorized under the Trust Indenture Act in
          order to have the claims of the Holders and any predecessor to the
          Trustee under Section 607 and of the Holders allowed in any such
          judicial proceedings; and

               (ii)  and in particular, the Trustee shall be authorized to
          collect and receive any moneys or other property payable or
          deliverable on any such claims and to distribute the same in
          accordance with Section 506; and

          (b)  any custodian, receiver, assignee, trustee, liquidator,
     sequestrator (or other similar official) in any such judicial proceeding is
     hereby authorized by each Holder to make such payments to the Trustee for

                                      -49-
<PAGE>
 
     distribution in accordance with Section 506, and in the event that the
     Trustee shall consent to the making of such payments directly to the
     Holders, to pay to the Trustee any amount due to it and any predecessor
     Trustee under Section 607.

          Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
                                                           --------  ------- 
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.

SECTION 505.   Trustee May Enforce Claim Without Possession of Securities.
               ---------------------------------------------------------- 

          All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of all the amounts owing the Trustee and any
predecessor Trustee under Section 607, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

SECTION 506.   Application of Money Collected.
               ------------------------------ 

          Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:

          FIRST:  To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 607;

                                      -50-
<PAGE>
 
          SECOND:  To the payment of the amounts then due and unpaid upon such
series of Securities for principal (and premium, if any) and interest (including
any Additional Interest), in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such series of Securities for
principal (and premium, if any) and interest (including any Additional
Interest), respectively; and

          THIRD:  The balance, if any, to the Person or Persons entitled
thereto.

SECTION 507.   Limitation on Suits.
               ------------------- 

          No Holder of any Securities of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture
or for the appointment of a receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless:

          (1)  such Holder has previously given written notice to the Trustee of
     a continuing Event of Default with respect to the Securities of that
     series;

          (2)  the Holders of not less than 25% in principal amount of the
     Outstanding Securities of that series shall have made written request to
     the Trustee to institute proceedings in respect of such Event of Default in
     its own name as Trustee hereunder;

          (3)  such Holder or Holders have offered to the Trustee reasonable
     indemnity against the costs, expenses and liabilities to be incurred in
     compliance with such request;

          (4)  the Trustee for 60 days after its receipt of such notice, request
     and offer of indemnity has failed to institute any such proceeding; and

          (5)  no direction inconsistent with such written request has been
     given to the Trustee during such 60-day period by the Holders of a majority
     in principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this 

                                      -51-
<PAGE>
 
Indenture to affect, disturb or prejudice the rights of any other Holders of
Securities, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.

SECTION 508.   Unconditional Right of Holders to Receive Principal, Premium and
               ----------------------------------------------------------------
               Interest.
               -------- 

          Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest (including any Additional Interest) on such Security on the respective
Stated Maturities expressed in such Security and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.  In the case of Securities of a series issued to an
MCI Trust, any holder of the corresponding series of Preferred Securities shall
have the right to institute suit on behalf of the respective MCI Trust for the
enforcement of any such payment to such trust.

SECTION 509.   Restoration of Rights and Remedies.
               ---------------------------------- 

          If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

SECTION 510.   Rights and Remedies Cumulative.
               ------------------------------

          Except as otherwise provided in the last paragraph of Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise.  The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the 

                                      -52-
<PAGE>
 
concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511.   Delay or Omission Not Waiver.
               ---------------------------- 

          Except as otherwise provided in the last paragraph of Section 306, no
delay or omission of the Trustee or of any Holder of any Security to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.

          Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.

SECTION 512.   Control by Holders.
               ------------------ 

          The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that:
                           --------      

          (1)  such direction shall not be in conflict with any rule of law or
     with this Indenture,

          (2)  the Trustee may take any other action deemed proper by the
     Trustee which is not inconsistent with such direction, and

          (3)  subject to the provisions of Section 601, the Trustee shall have
     the right to decline to follow such direction if the Trustee in good faith
     shall, by a Responsible Officer or Officers of the Trustee, determine that
     the proceeding so directed would be unjustly prejudicial to the Holders not
     joining in any such direction or would involve the Trustee in personal
     liability.

          Upon receipt by the Trustee of any written notice directing the time,
method or place of conducting any such proceeding or exercising any such trust
or power, with respect to Securities of a series all or part of which is
represented by a Global Security, a record date shall be established for
determining Holders of Outstanding Securities of such series entitled to join in
such notice, 

                                      -53-
<PAGE>
 
which record date shall be at the close of business on the day the Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date;
provided, that, unless the Holders of a majority in principal amount of the
- --------                                                                   
Outstanding Securities of such series shall have joined in such notice prior to
the day which is 90 days after such record date, such notice shall automatically
and without further action by any Holder be canceled and of no further effect.
Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from
giving, after expiration of such 90-day period, a new notice identical to a
notice which has been canceled pursuant to the proviso to the preceding
                                               -------                 
sentence, in which event a new record date shall be established pursuant to the
provisions of this Section 512.

SECTION 513.   Waiver of Past Defaults.
               ----------------------- 

          The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default:

          (1)  in the payment of the principal of (or premium, if any) or
     interest (including any Additional Interest) on any Security of such
     series, or

          (2)  in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.

          Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 514.   Undertaking for Costs.
               --------------------- 

          All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, 

                                      -54-
<PAGE>
 
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities of any series, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security on or after the
respective Stated Maturities expressed in such Security.

SECTION 515.   Waiver of Usuary, Stay or Extension Laws.
               ---------------------------------------- 

          The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.


                                  ARTICLE SIX
                                  THE TRUSTEE
                                  -----------

SECTION 601.   Certain Duties and Responsibilities.
               ----------------------------------- 

          (a)  Except during the continuance of an Event of Default,

          (1)  the Trustee undertakes to perform such duties and only such
     duties as are specifically set forth in this Indenture, and no implied
     covenants or obligations shall be read into this Indenture against the
     Trustee; and

          (2)  in the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions ex-

                                      -55-
<PAGE>
 
     pressed therein, upon certificates or opinions furnished to the Trustee and
     conforming to the requirements of this Indenture; but in the case of any
     such certificates or opinions which by any provisions hereof are
     specifically required to be furnished to the Trustee, the Trustee shall be
     under a duty to examine the same to determine whether or not they conform
     to the requirements of this Indenture.

          (b)  In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.

          (c)  No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that

          (1)  this Subsection shall not be construed to limit the effect of
     Subsection (a) of this Section;

          (2)  the Trustee shall not be liable for any error of judgment made in
     good faith by a Responsible Officer, unless it shall be proved that the
     Trustee was negligent in ascertaining the pertinent facts; and

          (3)  the 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 Holders pursuant to Section 512 relating to the time, method and place
     of conducting any proceeding for any remedy available to the Trustee, or
     exercising any trust or power conferred upon the Trustee, under this
     Indenture with respect to the Securities of such series.

          (d)  No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

          (e)  Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or 

                                      -56-
<PAGE>
 
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.

SECTION 602.   Notice of Defaults.
               ------------------

          Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Securities
Register, notice of such default hereunder known to the Trustee, unless such
default shall have been cured or waived; provided, however, that, except in the
                                         --------  -------                     
case of a default in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security of such series, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of Securities of
such series; and provided, further, that, in the case of any default of the
                 --------  -------                                         
character specified in Section 501(3), no such notice to Holders of Securities
of such series shall be given until at least 30 days after the occurrence
thereof.  For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.

SECTION 603.   Certain Rights of Trustee.
               ------------------------- 

          Subject to the provisions of Section 601:

          (a)  the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
Security 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)  any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;

                                      -57-
<PAGE>
 
          (c)  whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;

          (d)  the Trustee may consult with counsel and the advice of such
counsel or any Opinion of 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;

          (e)  the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;

          (f)  the 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, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and

          (g)  the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.

SECTION 604.   Not Responsible for Recitals or Issuance of Securities.
               ------------------------------------------------------ 

          The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities.  The Trustee shall not be accountable for the
use or 

                                      -58-
<PAGE>
 
application by the Company of the Securities or the proceeds thereof.

SECTION 605.   May Hold Securities.
               -------------------

          The Trustee, any Paying Agent, Securities Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Paying Agent, Securities Registrar or such other agent.

SECTION 606.   Money Held in Trust.
               ------------------- 

          Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law.  The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.

SECTION 607.   Compensation and Reimbursement.
               ------------------------------ 

          The Company agrees

          (1)  to pay to the Trustee from time to time reasonable compensation
     for all services rendered by it hereunder in such amounts as the Company
     and the Trustee shall agree from time to time (which compensation shall not
     be limited by any provision of law in regard to the compensation of a
     trustee of an express trust);

          (2)  to reimburse the Trustee upon its request for all reasonable
     expenses, disbursements and advances incurred or made by the Trustee in
     accordance with any provision of this Indenture (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

          (3)  to indemnify the Trustee for, and to hold it harmless against,
     any loss, liability or expense (including the reasonable compensation and
     the expenses and disbursements of its agents and counsel) incurred without
     negligence or bad faith, arising out of or in connection with the
     acceptance or administration of this trust or the performance of its duties
     hereunder, 

                                      -59-
<PAGE>
 
     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. This indemnification shall survive the
     termination of this Agreement.

          To secure the Company's payment obligations in this Section, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee.  Such lien
shall survive the satisfaction and discharge of this Indenture.

          When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 501(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Reform Act of 1978 or a successor statute.

SECTION 608.   Disqualification; Conflicting Interests.
               --------------------------------------- 

          The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act.  Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of Section 310(b) of the Trust
Indenture Act.

SECTION 609.   Corporate Trustee Required; Eligibility.
               --------------------------------------- 

          There shall at all times be a Trustee hereunder which shall be

          (a)  a corporation organized and doing business under the laws of the
     United States of America or of any State, Territory or the District of
     Columbia, authorized under such laws to exercise corporate trust powers and
     subject to supervision or examination by Federal, State, Territorial or
     District of Columbia authority, or

          (b)  a corporation or other Person organized and doing business under
     the laws of a foreign government that is permitted to act as Trustee
     pursuant to a rule, regulation or order of the Commission, authorized under
     such laws to exercise corporate trust powers, and subject to supervision or
     examination by authority of such foreign government or a political
     subdivision 

                                      -60-
<PAGE>
 
     thereof substantially equivalent to supervision or examination applicable
     to United States institutional trustees,

in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority.  If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purpose of this Section, 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.  If at any time the Trustee
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.  Neither the Company nor any Person directly or indirectly
controlling, controlled by or under common control with the Company shall serve
as Trustee for the Securities of any series issued hereunder.

SECTION 610.   Resignation and Removal; Appointment of Successor.
               ------------------------------------------------- 

          (a)  No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.

          (b)  The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company.  If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.

          (c)  The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.

          (d)  If at any time:

          (1)  the Trustee shall fail to comply with Section 608 after written
     request therefor by the Company

                                      -61-
<PAGE>
 
     or by any Holder who has been a bona fide Holder of a Security for at least
     six months, or

          (2)  the Trustee shall cease to be eligible under Section 609 and
     shall fail to resign after written request therefor by the Company or by
     any such Holder, or

          (3)  the Trustee shall become incapable of acting or shall be adjudged
     a bankrupt or insolvent or a receiver of the Trustee or of its property
     shall be appointed or any public officer shall take charge or control of
     the Trustee or of its property or affairs for the purpose of
     rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

          (e)  If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee with respect to the
Securities of that or those series.  If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment, become
the successor Trustee with respect to the Securities of such series and
supersede the successor Trustee appointed by the Company.  If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Security
for at least six months may, subject to Section 514, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.

                                      -62-
<PAGE>
 
          (f)  The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid, to
the Holders of Securities of such series as their names and addresses appear in
the Securities Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.

SECTION 611.   Acceptance of Appointment by Successor.
               -------------------------------------- 

          (a)  In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company 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 Company 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
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.

          (b)  In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and

                                      -63-
<PAGE>
 
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each 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 with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.

          (c)  Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) or (b) of this Section, as the case may be.

          (d)  No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.

SECTION 612.   Merger, Conversion, Consolidation or Succession to Business.
               ----------------------------------------------------------- 

          Any corporation into which the 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 the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the 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.  In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by 

                                      -64-
<PAGE>
 
merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.

SECTION 613.   Preferential Collection of Claims Against Company.
               ------------------------------------------------- 

          If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

SECTION 614.   Appointment of Authenticating Agent.
               ----------------------------------- 

          The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof,
and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder.  Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, or of any State, Territory or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority.  If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report 

                                      -65-
<PAGE>
 
of condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.

          Any corporation into which an Authenticating Agent 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 Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.

          An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company.  The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company.  Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve.  Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section.

          The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.

          If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:

                                      -66-
<PAGE>
 
          This is one of the Securities referred to in the within mentioned
Indenture.

                                          ____________________________
                                         
                                         
                                          ____________________________
                                          As Trustee
                                         
                                          By:   ______________________
                                                As Authenticating Agent
                                         
                                          By:   ______________________
                                                Authorized Officer


                                 ARTICLE SEVEN
               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
               -------------------------------------------------

SECTION 700.   Company to Furnish Trustee Names and Addresses of Holders.
               --------------------------------------------------------- 

          The Company will furnish or cause to be furnished to the Trustee.

          (a)  semi-annually, not more than 15 days after January 15 and July
15, a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of such January 1 and July 1, and

          (b)  at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished,excluding from any such list names and addresses received by the
Trustee in its capacity as Securities Registrar.

SECTION 701.   Preservation of Information, Communications to Holders.
               ------------------------------------------------------ 

          (a)  The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar.  The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

                                      -67-
<PAGE>
 
          (b)  The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.

          (c)  Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.

SECTION 702.  Reports by Trustee.
              ------------------- 

          (a)  The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.

          (b)  Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted no later than July 15 in each calendar
year, commencing with the first July 15 after the first issuance of Securities
under this Indenture.

          (c)  A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange or
self-regulatory organization upon which the Securities are listed and also with
the Commission. The Company will notify the Trustee whenever the Securities are
listed on any stock exchange or self-regulatory organization.

SECTION 703.  Reports by Company.
              ------------------- 

          The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
                                                             --------         
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
shall be filed with the Trustee within 15 days after the same is required to be
filed with the Commission.  Notwithstanding that the Company may not be required
to remain subject to the reporting requirements of Section 13 or 15(d) 

                                      -68-
<PAGE>
 
of the Securities Exchange Act of 1934, the Company shall continue to file with
the Commission and provide the Trustee and Holders with the annual reports and
the information, documents and other reports which are specified in Sections 13
and 15(d) of the Securities Exchange Act of 1934. The Company also shall comply
with the other provisions of Trust Indenture Act Section 314(a).


                                 ARTICLE EIGHT
             CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
             ----------------------------------------------------

SECTION 801.  Company May Consolidate, Etc., Only on Certain Terms.
              ----------------------------------------------------

          The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, and no Person shall consolidate with or merge into
the Company or convey, transfer or lease its properties and assets substantially
as an entirety to the Company, unless:

          (1)  in case the Company shall consolidate with or merge into another
     corporation or convey, transfer or lease its properties and assets
     substantially as an entirety to any Person, the corporation formed by such
     consolidation or into which the Company is merged or the Person which
     acquires by conveyance or transfer, or which leases, the properties and
     assets of the Company substantially as an entirety shall be a corporation
     organized and existing under the laws of the United States of America or
     any State or the District of Columbia, and shall expressly assume, by an
     indenture supplemental hereto, executed and delivered to the Trustee, in
     form satisfactory to the Trustee, the due and punctual payment of the
     principal of (and premium, if any) and interest (including any Additional
     Interest) on all the Securities and the performance of every covenant of
     this Indenture on the part of the Company to be performed or observed;

          (2)  immediately after giving effect to such transaction, no Event of
     Default, and no event which, after notice or lapse of time, or both, would
     become an Event of Default, shall have happened and be continuing;

          (3)  in the case of the Securities of a series issued to an MCI Trust,
     such consolidation, merger, 

                                      -69-
<PAGE>
 
     conveyance, transfer or lease is permitted under the related Trust
     Agreement and MCI Guarantee and does not give rise to any breach or
     violation of the related Trust Agreement or MCI Guarantee; and

          (4)  the Company has delivered to the Trustee an Officers' Certificate
     and an opinion of Counsel each stating that such consolidation, merger,
     conveyance, transfer or lease and any such supplemental indenture complies
     with this Article and that all conditions precedent herein provided for
     relating to such transaction have been complied with; and the Trustee,
     subject to Section 601, may rely upon such Officers' Certificate and
     opinion of Counsel as conclusive evidence that such transaction complies
     with this Section 801.

SECTION 802.  Successor Corporation Substituted.
              ---------------------------------

          Upon any consolidation or merger by the Company with or into any other
corporation, or any conveyance, transfer or lease by the Company of its
properties and assets substantially as an entirety to any Person in accordance
with Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein; and in the event of
any such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.

          Such successor corporation may cause to be signed, and may issue
either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee; and, upon the order of such successor
corporation instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication
pursuant to such provisions and any Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions.  All the 

                                      -70-
<PAGE>
 
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities had
been issued at the date of the execution hereof.

          In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form may be made in the Securities thereafter to
be issued as may be appropriate.


                                 ARTICLE NINE
                            SUPPLEMENTAL INDENTURES
                            -----------------------

SECTION 901.  Supplemental Indentures Without Consent of Holders.
              --------------------------------------------------

          Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

          (1)  to evidence the succession of another Person to the Company, and
     the assumption by any such successor of the covenants of the Company herein
     and in the Securities contained; or

          (2)  to convey, transfer, assign, mortgage or pledge any property to
     or with the Trustee or to surrender any right or power herein conferred
     upon the Company; or

          (3)  to establish the form or terms of Securities of any series as
     permitted by Sections 201 or 301; or

          (4)  to add to the covenants of the Company for the benefit of the
     Holders of all or any series of Securities (and if such covenants are to be
     for the benefit of less than all series of Securities, stating that such
     covenants are expressly being included solely for the benefit of such
     series) or to surrender any right or power herein conferred upon the
     Company; or

          (5)  to add any additional Events of Default; or

                                      -71-
<PAGE>
 
          (6)  to change or eliminate any of the provisions of this Indenture,
     provided that any such change or elimination shall become effective only
     --------
     when there is no Security Outstanding of any series created prior to the
     execution of such supplemental indenture which is entitled to the benefit
     of such provision; or

          (7)  to cure any ambiguity, to 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 Indenture, provided that such action pursuant to this clause (7)
                           --------
     shall not materially adversely affect the interest of the Holders of
     Securities of any series or, in the case of the Securities of a series
     issued to an MCI Trust and for so long as any of the corresponding series
     of Preferred Securities shall remain outstanding, the holders of such
     Preferred Securities; or

          (8)  to evidence and provide for the acceptance of appointment
     hereunder by a successor Trustee with respect to the Securities of one or
     more series and to add to or change any of the provisions of this Indenture
     as shall be necessary to provide for or facilitate the administration of
     the trusts hereunder by more than one Trustee, pursuant to the requirements
     of Section 611(b); or

          (9)  to comply with the requirements of the Commission in order to
     effect or maintain the qualification of this Indenture under the Trust
     Indenture Act.

SECTION 902.  Supplemental Indentures with Consent of Holders.
              -----------------------------------------------

          With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
                                                           --------  ------- 
that no such supplemental 

                                      -72-
<PAGE>
 
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,

          (1)  except to the extent permitted by Section 311 or as otherwise
     specified as contemplated by Section 301 with respect to the extension of
     the interest payment period of the Securities of any series, change the
     Stated Maturity of the principal of, or any instalment of interest
     (including any Additional Interest) on, any Security, or reduce the
     principal amount thereof or the rate of interest thereon or reduce any
     premium payable upon the redemption thereof, or reduce the amount of
     principal of an Original Issue Discount Security that would be due and
     payable upon a declaration of acceleration of the Maturity thereof pursuant
     to Section 502, or change the place of payment where, or the coin or
     currency in which, any Security or interest thereon is payable, or impair
     the right to institute suit for the enforcement of any such payment on or
     after the Stated Maturity thereof (or, in the case of redemption, on or
     after the date fixed for redemption thereof), or

          (2)  reduce the percentage in principal amount of the Outstanding
     Securities of any series, the consent of whose Holders is required for any
     such supplemental indenture, or the consent of whose Holders is required
     for any waiver (of compliance with certain provisions of this Indenture or
     certain defaults hereunder and their consequences) provided for in this
     Indenture, or

          (3)  modify any of the provisions of this Section, Section 513 or
     Section 1006, except to increase any such percentage or to provide that
     certain other provisions of this Indenture cannot be modified or waived
     without the consent of the Holder of each Security affected thereby; or

          (4)  modify the provisions in Article Thirteen of this Indenture with
     respect to the subordination of Outstanding Securities of any series in a
     manner adverse to the Holders thereof;

provided that, in the case of the Securities of a series issued to an MCI Trust,
- --------                                                                        
so long as any of the corresponding series of Preferred Securities remains
outstanding, no such amendment shall be made that adversely affects the holders
of such Preferred Securities, and no termination of this Indenture shall occur,
and no waiver of any Event of Default 

                                      -73-
<PAGE>
 
or compliance with any covenant under this Indenture shall be effective, without
the prior consent of the holders of at least a majority of the aggregate
liquidation preference of such Preferred Securities then outstanding unless and
until the principal (and premium, if any) of the Securities of such series and
all accrued and unpaid interest (including any Additional Interest) thereon have
been paid in full.

          A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

          It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

SECTION 903.  Execution of Supplemental Indentures.
              ------------------------------------

          In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent have been complied with.  The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.

SECTION 904.  Effect of Supplemental Indentures.
              ---------------------------------

          Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

                                      -74-
<PAGE>
 
SECTION 905.  Conformity with Trust Indenture Act.
              -----------------------------------

          Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 906.  Reference in Securities to Supplemental Indentures.
              --------------------------------------------------

          Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture.  If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.


                                  ARTICLE TEN
                                   COVENANTS
                                   ---------

SECTION 1001.  Payment of Principal, Premium and Interest.
               ------------------------------------------- 

          The Company covenants and agrees for the benefit of each series of
securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of such Securities and this Indenture.

SECTION 1002.  Maintenance of Office or Agency.
               -------------------------------

          The Company will maintain in each Place of Payment for any series, an
office or agency where Securities of that series may be presented or surrendered
for payment and an office or agency where Securities may be surrendered for
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served.  The Company
initially appoints the Trustee, acting through its Corporate Trust Office, as
its agent for said purposes.  The Company will give prompt written notice to the
Trustee of any change in the location of any such office or agency.  If at any
time the Company shall fail to maintain such office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made 

                                      -75-
<PAGE>
 
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.

          The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all of such purposes, and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
- --------  -------                                                            
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities of any series for such purposes.  The Company
will give prompt written notice to the Trustee of any such designation and any
change in the location of any such office or agency.

SECTION 1003.  Money for Security Payments to be Held in Trust.
               -----------------------------------------------

          If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.

          Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any) or interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal and premium (if any) or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its failure so to act.

          The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:

          (1)  hold all sums held by it for the payment of the principal of (and
     premium, if any) or interest on 

                                      -76-
<PAGE>
 
     Securities in trust for the benefit of the Persons entitled thereto until
     such sums shall be paid to such Persons or otherwise disposed of as herein
     provided;

          (2)  give the Trustee notice of any default by the Company (or any
     other obligor upon the Securities) in the making of any payment of
     principal (and premium, if any) or interest;

          (3)  at any time during the continuance of any such default, upon the
     written request of the Trustee, forthwith pay to the Trustee all sums so
     held in trust by such Paying Agent; and

          (4)  comply with the provisions of the Trust Indenture Act applicable
     to it as a Paying Agent.

          The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by the Company or any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.

          Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall (unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request to the Company,
or (if then held by the Company) shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
       --------  -------                                                     
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in 

                                      -77-
<PAGE>
 
the Borough of Manhattan, The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid the Company.

SECTION 1004.  Payment of Taxes and Other Claims.
               ---------------------------------

          The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
                                                                      -------- 
however, that the Company shall not be required to pay or discharge or cause to
- -------                                                                        
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.

SECTION 1005.  Statement as to Compliance.
               --------------------------

          The Company shall deliver to the Trustee, within 120 days after the
end of each calendar year of the Company ending after the date hereof, an
Officers' Certificate covering the preceding calendar year, stating whether or
not to the best knowledge of the signers thereof the Company is in default in
the performance, observance or fulfillment of or compliance with any of the
terms, provisions, covenants and conditions of this Indenture, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.  For the purpose of this
Section 1005, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture.

SECTION 1006.  Waiver of Certain Covenants.
               --------------------------- 

          The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 1004 or as specified as contemplated
by Section 301 with respect to the Securities of any series, if before or after
the time for such compliance the Holders of at least a majority in principal
amount of the Outstanding Securities of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such 

                                      -78-
<PAGE>
 
waiver shall extend to or affect such covenant or condition except to the extent
so expressly waived, and, until such waiver shall become effective, the
obligations of the company in respect of any such covenant or condition shall
remain in full force and effect.

SECTION 1007.  Additional Sums.
               ---------------

          In the case of the Securities of a series issued to an MCI Trust,
except as otherwise specified as contemplated by Section 301, in the event that
(i) an MCI Trust is the Holder of all of the Outstanding Securities of such
series, (ii) a Tax Event in respect of such MCI Trust shall have occurred and be
continuing and (iii) the Company shall not have (i) redeemed the Securities of
such series pursuant to Section 1107(b) or (ii) terminated such MCI Trust
pursuant to Section 902(b) of the related Trust Agreement, the Company shall pay
to such MCI Trust (and its permitted successors or assigns under the related
Trust Agreement) for so long as such MCI Trust (or its permitted successor or
assignee) is the registered holder of any Securities of such series, such
additional amounts as may be necessary in order that the amount of distributions
(including any Additional Amounts (as defined in the Trust Agreement)) then due
and payable by such MCI Trust on the related Preferred Securities and Common
Securities that at any time remain outstanding in accordance with the terms
thereof shall not be reduced as a result of any Additional Taxes (the
"Additional Sums"); provided that, if this Indenture has not been qualified
 ---------------    --------                                               
under the Trust Indenture Act, the Company shall be required to pay such
Additional Sums until this Indenture is so qualified.  Whenever in this
Indenture or the Securities there is a reference in any context to the payment
of principal of or interest on the Securities, such mention shall be deemed to
include mention of the payments of the Additional Sums provided for in this
paragraph to the extent that, in such context, Additional Sums are, were or
would be payable in respect thereof pursuant to the provisions of this paragraph
and express mention of the payment of Additional Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Sums in those
provisions hereof where such express mention is not made, provided, however,
                                                          --------          
that the extension of an interest payment period pursuant to Section 311 or the
Securities shall not extend the payment of any Additional Sums that may be due
and payable during such interest payment period.

                                      -79-
<PAGE>
 
SECTION 1008.  Additional Covenants.
               --------------------

          The Company covenants and agrees with each Holder of Securities of a
series issued to an MCI Trust that it will not, and it will not permit any
Subsidiary of the Company to, (a) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any shares of the Company's capital stock, or (b) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities that rank pari passu with or junior to the Securities of such series
                     ---- -----                                                
or make any guarantee payments with respect to the foregoing (other than (a)
dividends or distributions in common stock of the Company, (b) redemptions or
purchases of any rights pursuant to the Company's Preferred Stock Rights Plan,
or any successor to such Rights Plan, and the declaration of a dividend of such
rights in the future, and (c) payments under any MCI Guarantee) if at such time
(i) there shall have occurred any event of which the Company has actual
knowledge that (a) with the giving of notice or the lapse of time or both, would
constitute an Event of Default hereunder and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (ii) the Company shall be in
default with respect to its payment of any obligations under the related MCI
Guarantee or (iii) the Company shall have given notice of its selection of an
Extension Period as provided herein and shall not have rescinded such notice, or
such period, or any extension thereof, shall be continuing.

          The Company also covenants with each Holder of Securities of a series
issued to an MCI Trust (i) to maintain directly or indirectly 100% ownership of
the Common Securities of such MCI Trust; provided, however, that any permitted
                                         --------  -------                    
successor of the Company hereunder may succeed to the Company's ownership of
such Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate
such MCI Trust, except (a) in connection with a distribution of the Securities
of such series to the holders of Preferred Securities in liquidation of such MCI
Trust or (b) in connection with certain mergers, consolidations or amalgamations
permitted by the related Trust Agreement and (iii) to use its reasonable
efforts, consistent with the terms and provisions of such Trust Agreement, to
cause such MCI Trust to remain a business trust and not to be classified as an
association taxable as a corporation for United States Federal income tax
purposes.

                                      -80-
<PAGE>
 
                                ARTICLE ELEVEN
                           REDEMPTION OF SECURITIES
                           ------------------------

SECTION 1101.  Applicability of This Article.
               -----------------------------

          Redemption of Securities (whether by operation of a sinking fund or
otherwise) as permitted or required by any form of Security issued pursuant to
this Indenture shall be made in accordance with such form of Security and this
Article; provided, however, that if any provision of any such form of Security
         --------  -------                                                    
shall conflict with any provision of this Article, the provision of such form of
Security shall govern.  Except as otherwise set forth in the form of Security
for such series, each Security shall be subject to partial redemption only in
the amount of $25 or, in the case of the Securities of a series issued to an MCI
Trust, $25, or integral multiples thereof.


SECTION 1102.  Election to Redeem; Notice to Trustee.
               -------------------------------------

          The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution.  In case of any redemption at
the election of the Company of less than all of the Securities of any particular
series and having the same terms, the Company shall, not less than 30 nor more
than 60 days prior to the date fixed for redemption (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such date and of
the principal amount of Securities of that series to be redeemed.  In the case
of any redemption of Securities prior to the expiration of any restriction on
such redemption provided in the terms of such Securities, the Company shall
furnish the Trustee with an Officers' Certificate and an Opinion of Counsel
evidencing compliance with such restriction.

SECTION 1103.  Selection of Securities to be Redeemed.
               --------------------------------------

          If less than all the Securities of any series are to be redeemed
(unless all the Securities of such series and of a specified tenor are to be
redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal 

                                      -81-
<PAGE>
 
amount of any Security of such series, provided that the unredeemed portion of
                                       --------   
the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such
Security. If less than all the Securities of such series and of a specified
tenor are to be redeemed (unless such redemption affects only a single
Security), the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.

          The Trustee shall promptly notify the Company in writing of the
Securities selected for partial redemption and the principal amount thereof to
be redeemed.  For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.  If the Company shall so direct, Securities registered in the name of
the Company, any Affiliate or any Subsidiary thereof shall not be included in
the Securities selected for redemption.

SECTION 1104.  Notice of Redemption.
               --------------------- 

          Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the date fixed for redemption, to each Holder of
Securities to be redeemed, at the address of such Holder as it appears in the
Securities Register.

          With respect to Securities of each series to be redeemed, each notice
of redemption shall state:

          (a)  the date fixed for redemption for Securities of such series;

          (b)  the redemption price at which Securities of such series are to be
redeemed;

          (c)  if less than all Outstanding Securities of such particular series
and having the same terms are to be redeemed, the identification (and, in the
case of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;

                                      -82-
<PAGE>
 
          (d)  that on the date fixed for redemption, the redemption price at
which such Securities are to be redeemed will become due and payable upon each
such Security or portion thereof, and that interest thereon, if any, shall cease
to accrue on and after said date;

          (e)  the place or places where such Securities are to be surrendered
for payment of the redemption price at which such Securities are to be redeemed;
and

          (f)  that the redemption is for a sinking fund, if such is the case.

          Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable.  The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice.  In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.

SECTION 1105.  Deposit of Redemption Price.
               ---------------------------

          Prior to the redemption date specified in the notice of redemption
given as provided in Section 1104, the Company will deposit with the Trustee or
with one or more paying agents an amount of money sufficient to redeem on the
redemption date all the Securities so called for redemption at the applicable
redemption price.

SECTION 1106.  Payment of Securities Called for Redemption.
               -------------------------------------------

          If any notice of redemption has been given as provided in Section
1104, the Securities or portion of Securities with respect to which such notice
has been given shall become due and payable on the date and at the place or
places stated in such notice at the applicable redemption price.  On
presentation and surrender of such Securities at a place of payment in said
notice specified, the said securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable redemption price.

          Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall 

                                      -83-
<PAGE>
 
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new Security or Securities of the same series, of authorized denominations, in
aggregate principal amount equal to the unredeemed portion of the Security so
presented and having the same Original Issue Date, Stated Maturity and terms. If
a Global Security is so surrendered, such new Security will also be a new Global
Security.

          If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.

SECTION 1107.  Company's Right of Redemption.
               -----------------------------

          (a)  Unless otherwise specified as contemplated by Section 301 with
respect to the Securities of a particular series and notwithstanding any
additional redemption rights that may be so specified, the Company may, at its
option, redeem the Securities of any series on any Interest Payment Date with
respect thereto after their date of issuance in whole at any time or in part
from time to time, subject to the provisions of this clause (a) and the other
provisions of this Article Eleven.  Unless otherwise specified as contemplated
by Section 301 with respect to the Securities of a particular series, the
redemption price for any Security so redeemed pursuant to this clause (a) shall
be equal to 100% of the principal amount of such Securities plus any accrued and
unpaid interest, including any Additional Interest, to the date fixed for
redemption.  The Company shall not redeem the Securities in part unless all
accrued and unpaid interest (including any Additional Interest) has been paid in
full on all Securities Outstanding for all interest periods terminating on or
prior to the date fixed for redemption.

          (b)  In the case of the Securities of a series issued to an MCI Trust,
except as otherwise specified as contemplated by Section 301, if a Special Event
in respect of such MCI Trust shall occur and be continuing, the Company may, at
its option, redeem the Securities of such series on any Interest Payment Date
falling within 90 days of the occurrence of such Special Event, in whole but not
in part, subject to the provisions of this clause (b) and the other provisions
of this Article Eleven.  The redemption price for any Security so redeemed
pursuant to this clause (b) shall be equal to 100% of the principal amount of
such Securities 

                                      -84-
<PAGE>
 
then Outstanding plus accrued and unpaid interest, including any Additional
Interest, to the date fixed for redemption.


                                ARTICLE TWELVE
                                 SINKING FUNDS
                                 -------------

SECTION 1201.  Applicability of Article.
               ------------------------

          The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.

          The minimum amount of any sinking fund payment provided for by the
terms of any Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any sinking fund payment in excess of such minimum
amount which is permitted to be made by the terms of such Securities of any
series is herein referred to as an "optional sinking fund payment".  If provided
for by the terms of any Securities of any series, the cash amount of any sinking
fund payment may be subject to reduction as provided in Section 1202.  Each
sinking fund payment shall be applied to the redemption of Securities of any
series as provided for by the terms of such Securities.

SECTION 1202.  Satisfaction of Sinking Fund Payments with Securities.
               -----------------------------------------------------

          In lieu of making all or any part of a mandatory sinking fund payment
with respect to any Securities of a series in cash, the Company may at its
option, at any time no more than 16 months and no less than 30 days prior to the
date on which such sinking fund payment is due, deliver to the Trustee
Securities of such series (together with the unmatured Coupons, if any,
appertaining thereto) theretofore purchased or otherwise acquired by the
Company, except Securities of such series that have been redeemed through the
application of mandatory or optional sinking fund payments pursuant to the terms
of the Securities of such series, accompanied by a Company Order instructing the
Trustee to credit such obligations and stating that the Securities of such
series were originally issued by the Company by way of bona fide sale or other
negotiation for value; provided that the Securities to be so credited have not
                       --------                                               
been previously so credited.  The Securities to be so credited shall be received
and credited for such purpose by the Trustee at the redemption price for such
Securities, as 

                                      -85-
<PAGE>
 
specified in the Securities so to be redeemed, for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.

SECTION 1203.  Redemption of Securities for Sinking Fund.
               -----------------------------------------

          Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which the
Securities of such series are payable (except as provided pursuant to Section
301) and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 1202 and will also deliver to the
Trustee any Securities to be so delivered.  Such Certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date.  In the case of the failure of the Company
to deliver such Certificate (or, as required by this Indenture, the Securities
and coupons, if any, specified in such Certificate), the sinking fund payment
due on the succeeding sinking fund payment date for such series shall be paid
entirely in cash and shall be sufficient to redeem the principal amount of the
Securities of such series subject to a mandatory sinking fund payment without
the right to deliver or credit securities as provided in Section 1202 and
without the right to make the optional sinking fund payment with respect to such
series at such time.

          Any sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made with
respect to the Securities of any particular series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent) on
the sinking fund payment date on which such payment is made (or, if such payment
is made before a sinking fund payment date, on the sinking fund payment date
immediately following the date of such payment) to the redemption of Securities
of such series at the redemption price specified in such Securities with respect
to the sinking fund.  Any sinking fund moneys not so applied or allocated by the
Trustee (or by the Company if the Company is acting as its own Paying Agent,
segregated and held in trust as provided in Section 1003) for such series and

                                      -86-
<PAGE>
 
together with such payment (or such amount so segregated) shall be applied in
accordance with the provisions of this Section 1203.  Any and all sinking fund
moneys with respect to the Securities of any particular series held by the
Trustee (or if the Company is acting as its own Paying Agent, segregated and
held in trust as provided in Section 1003) on the last sinking fund payment date
with respect to Securities of such series and not held for the payment or
redemption of particular Securities of such series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent),
together with other moneys, if necessary, to be deposited (or segregated)
sufficient for the purpose, to the payment of the principal of the Securities of
such series at Maturity.  The Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104.  Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Section 1106.  On or before each sinking fund
payment date, the Company shall pay to the Trustee (or, if the Company is acting
as its own Paying Agent, the Company shall segregate and hold in trust as
provided in Section 1003) in cash a sum in the currency in which Securities of
such series are payable (except as provided pursuant to Section 301) equal to
the principal and any interest accrued to the redemption date for Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 1203.

          Neither the Trustee nor the Company shall redeem any Securities of a
series with sinking fund moneys or mail any notice of redemption of Securities
of such series by operation of the sinking fund for such series during the
continuance of a default in payment of interest, if any, on any Securities of
such series or of any Event of Default (other than an Event of Default occurring
as a consequence of this paragraph) with respect to the securities of such
series, except that if the notice of redemption shall have been provided in
accordance with the provisions hereof, the Trustee (or the Company if the
Company is then acting as its own Paying Agent) shall redeem such Securities if
cash sufficient for that purpose shall be deposited with the Trustee (or
segregated by the Company) for that purpose in accordance with the terms of this
Article Twelve.  Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such default or Event of Default shall 

                                      -87-
<PAGE>
 
occur and any moneys thereafter paid into such sinking fund shall, during the
continuance of such default or Event of Default, be held as security for the
payment of the Securities and coupons, if any, of such series; provided,
                                                               --------  
however, that in case such default or Event of Default shall have been cured or
- -------              
waived herein, such moneys shall thereafter be applied on the next sinking fund
payment date for the Securities of such series on which such moneys may be
applied pursuant to the provisions of this Section 1203.


                               ARTICLE THIRTEEN
                          SUBORDINATION OF SECURITIES
                          ---------------------------

SECTION 1301.  Securities Subordinate to Senior Debt.
               -------------------------------------

          The Company covenants and agrees, and each Holder of a Security, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
amounts then due and payable in respect of all Senior Debt.

SECTION 1302.  Payment Over of Proceeds Upon Dissolution, Etc.
               ---------------------------------------------- 

          In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), then the holders of Senior Debt shall
be entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt, or provision shall be made for such
payment in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, before the Holders of the Securities are entitled to
receive or retain any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution which may
be payable or deliverable by reason of the payment of any other Debt of the
Company (including any series of the Securities) subordinated to the payment of
the Securities, such payment or distribution being hereinafter referred to as a
"Junior Subordinated Payment"), on account of principal of (or premium, if any)
or interest (including any Additional Interest) on the 

                                      -88-
<PAGE>
 
Securities or on account of the purchase or other acquisition of Securities by
the Company or any Subsidiary and to that end the holders of Senior Debt shall
be entitled to receive, for application to the payment thereof, any payment or
distribution of any kind of character, whether in cash, property or securities,
including any Junior Subordinated Payment, which may be payable or deliverable
in respect of the Securities in any such Proceeding.

          In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, before all Senior Debt is paid in full or payment thereof is provided
for in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, and if such fact shall, at or prior to the time of such
payment or distribution, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment or distribution shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.

          For purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which securities are subordinated in
right of payment to all then outstanding Senior Debt to substantially the same
extent as the Securities are so subordinated as provided in this Article.  The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person upon the terms and conditions set forth in Article Eight shall not be
deemed a Proceeding for the purposes of this Section if the Person formed by
such consolidation or into which the Company is merged or the 

                                      -89-
<PAGE>
 
Person which acquires by sale such properties and assets as an entirety, as the
case may be, shall, as a part of such consolidation, merger, or sale comply with
the conditions set forth in Article Eight.

SECTION 1303.  Prior Payment to Senior Debt Upon Acceleration of Securities.
               ------------------------------------------------------------

          In the event that any Securities are declared due and payable before
their Maturity, then and in such event the holders of the Senior Debt
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Debt (including any amounts due upon acceleration), or provision shall be
made for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, before the Holders of the Securities
are entitled to receive any payment or distribution of any kind or character,
whether in cash, properties or securities (including any Junior Subordinated
Payment) by the Company on account of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Securities or on account of
the purchase or other acquisition of Securities by the Company or any
Subsidiary; provided, however, that nothing in this Section shall prevent the
            --------  -------                                                
satisfaction of any sinking fund payment in accordance with this Indenture or as
otherwise specified as contemplated by Section 301 for the Securities of any
series by delivering and crediting pursuant to Section 1202 or as otherwise
specified as contemplated by Section 301 for the Securities of any series
Securities which have been acquired (upon redemption or otherwise) prior to such
declaration of acceleration.

          In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.

          The provisions of this Section shall not apply to any payment with
respect to which Section 1302 would be applicable.

                                      -90-
<PAGE>
 
SECTION 1304.  No Payment When Senior Debt in Default.
               --------------------------------------

          (a)  In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior Debt, or
in the event that any event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in such Senior Debt
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, unless and until such event of default
shall have been cured or waived or shall have ceased to exist and such
acceleration shall have been rescinded or annulled, or (b) in the event any
judicial proceeding shall be pending with respect to any such default in payment
or such event or default, then no payment or distribution of any kind or
character, whether in cash, properties or securities (including any Junior
Subordinated Payment) shall be made by the Company on account of principal of
(or premium, if any) or interest (including any Additional Interest), if any, on
the Securities or on account of the purchase or other acquisition of Securities
by the Company or any Subsidiary; provided, however, that nothing in this
                                  --------  -------                      
Section shall prevent the satisfaction of any sinking fund payment in accordance
with this Indenture or as otherwise specified as contemplated by Section 301 for
the Securities of any series by delivering and crediting pursuant to Section
1202 or as otherwise specified as contemplated by Section 301 for the Securities
of any series Securities which have been acquired (upon redemption or otherwise)
prior to such default in payment or event of default.

          In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.

          The provisions of this Section shall not apply to any payment with
respect to which Section 1302 would be applicable.

SECTION 1305.  Payment Permitted If No Default.
               -------------------------------

          Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of

                                      -91-
<PAGE>
 
any Proceeding referred to in Section 1302 or under the conditions described in
Sections 1303 and 1304, from making payments at any time of principal of (and
premium, if any) or interest on the Securities, or (b) the application by the
Trustee of any money or Government Obligations deposited with it hereunder to
the payment of or on account of the principal of (and premium, if any) or
interest (including any Additional Interest) on the Securities or the retention
of such payment by the Holders, if, at the time of such application by the
Trustee, it did not have knowledge that such payment would have been prohibited
by the provisions of this Article.

SECTION 1306.  Subrogation to Rights of Holders of Senior Debt.
               ----------------------------------------------- 

          Subject to the payment in full of all Senior Debt, or the provision
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, the Holders of the Securities shall
be subrogated to the extent of the payments or distributions made to the holders
of such Senior Debt pursuant to the provisions of this Article (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to Senior Debt of the Company to substantially the same
extent as the Securities are subordinated to the Senior Debt and is entitled to
like rights of subrogation by reason of any payments or distributions made to
holders of such Senior Debt) to the rights of the holders of such Senior Debt to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt until the principal of (and premium, if any) and interest on
the Securities shall be paid in full.  For purposes of such subrogation or
assignment, no payments or distributions to the holders of the Senior Debt of
any cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt.

                                      -92-
<PAGE>
 
SECTION 1307.  Provisions Solely to Define Relative Rights.
               -------------------------------------------

          The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Debt on the other hand.  Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Debt; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture including, without limitation, filing and voting claims in any
Proceeding, subject to the rights, if any, under this Article of the holders of
Senior Debt to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.

SECTION 1308.  Trustee to Effectuate Subordination.
               ----------------------------------- 

          Each Holder of a Security by his or her acceptance thereof authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination provided
in this Article and appoints the Trustee his or her attorney-in-fact for any and
all such purposes.

SECTION 1309.  No Waiver of Subordination Provisions.
               -------------------------------------

          No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or be
otherwise charged with.

                                      -93-
<PAGE>
 
SECTION 1310.  Notice to Trustee.
               ----------------- 

          The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities.  Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee, agent or representative
therefor (whether or not the facts contained in such notice are true); provided,
                                                                       -------- 
however, that if the Trustee shall not have received the notice provided for in
- -------                                                                        
this Section at least two Business Days prior to the date upon which by the
terms hereof any monies may become payable for any purpose (including, without
limitation, the payment of the principal of (and premium, if any) or interest
(including any Additional Interest) on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such monies and to apply the same to the purpose for which
they were received and shall not be affected by any notice to the contrary which
may be received by it within two Business Days prior to such date.

SECTION 1311.  Reliance on Judicial Order or Certificate of Liquidating Agent.
               --------------------------------------------------------------

          Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Article Six, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.

                                      -94-
<PAGE>
 
SECTION 1312.  Trustee Not Fiduciary for Holders of Senior Debt.
               ------------------------------------------------

          The Trustee, in its capacity as trustee under this Indenture, shall
not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Debt shall be
entitled by virtue of this Article or otherwise.

SECTION 1313.  Rights of Trustee as Holder of Senior Debt; Preservation of
               -----------------------------------------------------------
               Trustee's Rights.
               ----------------

          The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.

SECTION 1314.  Article Applicable to Paying Agents.
               -----------------------------------

          In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.

SECTION 1315.  Certain Conversions or Exchanges Deemed Payment.
               -----------------------------------------------

          For the purposes of this Article only, (a) the issuance and delivery
of junior securities upon conversion or exchange of Securities shall not be
deemed to constitute a payment or distribution on account of the principal of
(or premium, if any) or interest (including any Additional Interest) on
Securities or on account of the purchase or other acquisition of Securities, and
(b) the payment, issuance or delivery of cash, property or securities (other
than junior securities) upon conversion or exchange of a Security shall be
deemed to constitute payment on account of the principal of such security.  For
the purposes of this Section, the term "junior securities" means (i) shares of
any stock of any class of the Company and (ii) securities of 

                                      -95-
<PAGE>
 
the Company which are subordinated in right of payment to all Senior Debt which
may be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article.

                                 *   *   *   *

          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.

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.


                                   MCI COMMUNICATIONS CORPORATION

     
                                   By:___________________________

Attest:


____________________________
 


                                   WILMINGTON TRUST COMPANY, as 
                                   Trustee


                                   By:_____________________________

                                      -96-
<PAGE>
 
State of                :
                        :   ss.
County of               :


          On the _____ day of _________, ___ before me personally came
__________, to me known, who being duly sworn, did depose and say that he/she is
______ of MCI Communications Corporation, one of the corporations described in
and which executed the foregoing instrument; that the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.



                                                  ____________________________ 
                                                  Notary Public
                                                  My Commission Expires:


State of           :
                   :    ss.
County of          :


          On the _____ day of _______, ____ before me personally came
__________, to me known, who being duly sworn, did depose and say that he/she is
_________ of The Wilmington Trust Company, a Delaware banking corporation,
described in and which executed the foregoing instrument; that he knows the seal
of said association; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
association, and that he signed his name thereto by like authority.


                                                  ____________________________  
                                                  Notary Public
                                                  My Commission Expires:
                      

                                      -97-

<PAGE>
 
                           CERTIFICATE OF TRUST OF
                                MCI CAPITAL I

          
          THIS Certificate of Trust of MCI Capital I (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. Section 3801 
                                                -------
et seq.).
- ------

          1.    Name. The name of the business trust formed hereby is MCI
                ----
Capital I.

          2.    Delaware Trustee. The name and business address of the trustee
                ----------------
of the Trust in the State of Delaware is 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: /S/ Donald G. MacKelcan
                                              ----------------------------
                                           Name:  Donald G. MacKelcan
                                           Title: Assistant Vice President

<PAGE>
 
                                TRUST AGREEMENT
                                ---------------


          This TRUST AGREEMENT, dated as of April,__ 1996, between MCI
Communications Corporation, a Delaware corporation, as "Depositor" and
Wilmington Trust Company, a Delaware banking corporation as "Trustee".  The
Depositor and the Trustee hereby agree as follows:

          

          1.   The trust created hereby shall be known as MCI Capital I, in
which name the Trustee, or the Depositor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.

          2.   The Depositor hereby assigns, transfers, conveys and sets over to
the Trustee the sum of $10. The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it will hold the trust estate in
trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S) 3801 et seq. (the "Business Trust Act"), and
                      -------          ------
that this document constitutes the governing instrument of the Trust. The
Trustee is hereby authorized and directed to execute and file a certi ficate of
trust with the Delaware Secretary of State in accord ance with the provisions of
the Business Trust Act.

          3.   The Depositor and the Trustee will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as Exhibit 4.10 to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustee shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such
<PAGE>
 
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.

          4.   The Depositor and the Trustee hereby authorize and direct the
Depositor, as the sponsor of the Trust, (I)  to file with the Securities and
                                         -                                  
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act
            -                                                       
Registration Statement"), including any pre-effective or post-effective
amendments to such 1933 Act Registration Statement (including the prospectus and
the exhibits contained therein), relating to the registration under the
Securities Act of 1933, as amended, of the Preferred Securities of the Trust and
certain other securities and (b) a Registration Statement on Form 8-A (the "1934
                              -                                                 
Act Registration Statement") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under Section 12 of the Securities Exchange Act of 1934, as amended;
                                                                              
(ii) to file with one or more national securities exchange (each, an "Exchange")
 --                                                                             
or U.C. the National Association of Securities Dealers ("NASD") and execute on
behalf of the Trust a listing application or applications and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be listed
on any such Exchange or the NASD's Nasdaq National Market ("NASDAQ"); (iii) to
                                                                       ---    
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of process and
other papers and documents as the Depositor, on behalf of the Trust, may deem
necessary or desirable to register the Preferred Securities under the securities
or "Blue Sky" laws; (iv) to execute on behalf of the Trust such Underwriting
                     --                                                     
Agreements with one or more underwriters relating to the offering of the
Preferred Securities as the Depositor, on behalf of the Trust, may deem
necessary or desirable.  In the event that any filing referred to in clauses
(i), (ii) and (iii) above is required by the rules and regulations of the
Commission, any Exchange, the NASD or state securities or Blue Sky laws, to be
executed on behalf of the Trust by a Trustee, the Depositor and any Trustee
appointed pursuant to Section 6 hereof are hereby authorized to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing.

          5.   This Trust Agreement may be executed in one or more counterparts.
<PAGE>
 
          6.   The number of Trustees initially shall be one (1)and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustee may resign upon thirty days' prior notice to the Depositor.

          7.   This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).


                    [Remainder of Page Intentionally Blank]
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.

                                              MCI COMMUNICATIONS CORPORATION,
                                              as Depositor



                                              By:______________________________
                                                 Name:
                                                 Title:


                                              WILMINGTON TRUST COMPANY,
                                              as Trustee


                                              By:_______________________________
                                                 Name:
                                                 Title:

<PAGE>
 
                           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. Section 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 is 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: /S/ Donald G. MacKelcan
                                              ----------------------------
                                           Name:  Donald G. MacKelcan
                                           Title: Assistant Vice President

<PAGE>
 
                                TRUST AGREEMENT
                                ---------------


          This TRUST AGREEMENT, dated as of April,__ 1996, between MCI
Communications Corporation, a Delaware corporation, as "Depositor" and
Wilmington Trust Company, a Delaware banking corporation as "Trustee".  The
Depositor and the Trustee hereby agree as follows:

          


          1.   The trust created hereby shall be known as MCI Capital II, in
which name the Trustee, or the Depositor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.

          2.   The Depositor hereby assigns, transfers, conveys and sets over to
the Trustee the sum of $10. The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it will hold the trust estate in
trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S) 3801 et seq. (the "Business Trust Act"), and
                      -------          -- ---
that this document constitutes the governing instrument of the Trust. The
Trustee is hereby authorized and directed to execute and file a certi ficate of
trust with the Delaware Secretary of State in accord ance with the provisions of
the Business Trust Act.

          3.   The Depositor and the Trustee will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as Exhibit 4.10 to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustee shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such
<PAGE>
 
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.

          4.   The Depositor and the Trustee hereby authorize and direct the
Depositor, as the sponsor of the Trust, (I)  to file with the Securities and
                                         -                                  
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act
            -                                                       
Registration Statement"), including any pre-effective or post-effective
amendments to such 1933 Act Registration Statement (including the prospectus and
the exhibits contained therein), relating to the registration under the
Securities Act of 1933, as amended, of the Preferred Securities of the Trust and
certain other securities and (b) a Registration Statement on Form 8-A (the "1934
                              -                                                 
Act Registration Statement") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under Section 12 of the Securities Exchange Act of 1934, as amended;
                                                                              
(ii) to file with one or more national securities exchange (each, an "Exchange")
- ---                                                                             
or U.C. the National Association of Securities Dealers ("NASD") and execute on
behalf of the Trust a listing application or applications and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be listed
on any such Exchange or the NASD's Nasdaq National Market ("NASDAQ"); (iii) to
                                                                       ---    
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of process and
other papers and documents as the Depositor, on behalf of the Trust, may deem
necessary or desirable to register the Preferred Securities under the securities
or "Blue Sky" laws; (iv) to execute on behalf of the Trust such Underwriting
                     --                                                     
Agreements with one or more underwriters relating to the offering of the
Preferred Securities as the Depositor, on behalf of the Trust, may deem
necessary or desirable.  In the event that any filing referred to in clauses
(i), (ii) and (iii) above is required by the rules and regulations of the
Commission, any Exchange, the NASD or state securities or Blue Sky laws, to be
executed on behalf of the Trust by a Trustee, the Depositor and any Trustee
appointed pursuant to Section 6 hereof are hereby authorized to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing.

          5.   This Trust Agreement may be executed in one or more counterparts.
<PAGE>
 
          6.   The number of Trustees initially shall be one (1)and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustee may resign upon thirty days' prior notice to the Depositor.

          7.   This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).


                    [Remainder of Page Intentionally Blank]
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.


                                             MCI COMMUNICATIONS CORPORATION,
                                             as Depositor



                                             By:____________________________
                                                Name:
                                                Title:


                                             WILMINGTON TRUST COMPANY,
                                             as Trustee


                                             By:_____________________________
                                                Name:
                                                Title:

<PAGE>
 
                           CERTIFICATE OF TRUST OF
                               MCI CAPITAL III

          
          THIS Certificate of Trust of MCI Capital III (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. Section 3801 
                                                -------
et seq.).
- ------

          1.    Name. The name of the business trust formed hereby is MCI
                ----
Capital III.

          2.    Delaware Trustee. The name and business address of the trustee
                ----------------
of the Trust in the State of Delaware is 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: /S/ Donald G. MacKelcan
                                              ----------------------------
                                           Name:  Donald G. MacKelcan
                                           Title: Assistant Vice President

<PAGE>
 
                                TRUST AGREEMENT
                                ---------------


          This TRUST AGREEMENT, dated as of April,__ 1996, between MCI
Communications Corporation, a Delaware corporation, as "Depositor" and
Wilmington Trust Company, a Delaware banking corporation as "Trustee".  The
Depositor and the Trustee hereby agree as follows:

          1.  The trust created hereby shall be known as MCI Capital III, in
which name the Trustee, or the Depositor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.

          2.  The Depositor hereby assigns, transfers, conveys and sets over to
the Trustee the sum of $10.  The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate.  The Trustee hereby declares that it will hold the trust estate in
trust for the Depositor.  It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S) 3801 et seq. (the "Business Trust Act"), and
                      -------          -- ---                                 
that this document constitutes the governing instrument of the Trust.  The
Trustee is hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in accordance with the provisions
of the Business Trust Act.

          3.  The Depositor and the Trustee will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as Exhibit 4.10 to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustee shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such
<PAGE>
 
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.

          4.  The Depositor and the Trustee hereby authorize and direct the
Depositor, as the sponsor of the Trust, (I)  to file with the Securities and
                                         -                                  
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act
            -                                                       
Registration Statement"), including any pre-effective or post-effective
amendments to such 1933 Act Registration Statement (including the prospectus and
the exhibits contained therein), relating to the registration under the
Securities Act of 1933, as amended, of the Preferred Securities of the Trust and
certain other securities and (b) a Registration Statement on Form 8-A (the "1934
                              -                                                 
Act Registration Statement") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under Section 12 of the Securities Exchange Act of 1934, as amended;
                                                                              
(ii) to file with one or more national securities exchange (each, an "Exchange")
 --                                                                             
or U.C. the National Association of Securities Dealers ("NASD") and execute on
behalf of the Trust a listing application or applications and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be listed
on any such Exchange or the NASD's Nasdaq National Market ("NASDAQ"); (iii) to
                                                                       ---    
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of process and
other papers and documents as the Depositor, on behalf of the Trust, may deem
necessary or desirable to register the Preferred Securities under the securities
or "Blue Sky" laws; (iv) to execute on behalf of the Trust such Underwriting
                     --                                                     
Agreements with one or more underwriters relating to the offering of the
Preferred Securities as the Depositor, on behalf of the Trust, may deem
necessary or desirable.  In the event that any filing referred to in clauses
(i), (ii) and (iii) above is required by the rules and regulations of the
Commission, any Exchange, the NASD or state securities or Blue Sky laws, to be
executed on behalf of the Trust by a Trustee, the Depositor and any Trustee
appointed pursuant to Section 6 hereof are hereby authorized to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing.

          5.  This Trust Agreement may be executed in one or more counterparts.
<PAGE>
 
          6.  The number of Trustees initially shall be one (1) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustee may resign upon thirty days' prior notice to the Depositor.

          7.  This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).


                    [Remainder of Page Intentionally Blank]
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.

                                    MCI COMMUNICATIONS CORPORATION,
                                    as Depositor



                                    By:____________________________
                                       Name:
                                       Title:


                                    WILMINGTON TRUST COMPANY,
                                    as Trustee


                                    By:_____________________________
                                       Name:
                                       Title:

<PAGE>
 
                           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. Section 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 is 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: /S/ Donald G. MacKelcan
                                              ----------------------------
                                           Name:  Donald G. MacKelcan
                                           Title: Assistant Vice President

<PAGE>
 
                                TRUST AGREEMENT
                                ---------------


          This TRUST AGREEMENT, dated as of April,__ 1996, between MCI
Communications Corporation, a Delaware corporation, as "Depositor" and
Wilmington Trust Company, a Delaware banking corporation as "Trustee".  The
Depositor and the Trustee hereby agree as follows:

          1.  The trust created hereby shall be known as MCI Capital IV, in
which name the Trustee, or the Depositor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.

          2.  The Depositor hereby assigns, transfers, conveys and sets over to
the Trustee the sum of $10.  The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate.  The Trustee hereby declares that it will hold the trust estate in
trust for the Depositor.  It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S) 3801 et seq. (the "Business Trust Act"), and
                      -------          -- ---                                 
that this document constitutes the governing instrument of the Trust.  The
Trustee is hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in accordance with the provisions
of the Business Trust Act.

          3.  The Depositor and the Trustee will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as Exhibit 4.10 to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustee shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such
<PAGE>
 
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.

          4.  The Depositor and the Trustee hereby authorize and direct the
Depositor, as the sponsor of the Trust, (I)  to file with the Securities and
                                         -                                  
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act
            -                                                       
Registration Statement"), including any pre-effective or post-effective
amendments to such 1933 Act Registration Statement (including the prospectus and
the exhibits contained therein), relating to the registration under the
Securities Act of 1933, as amended, of the Preferred Securities of the Trust and
certain other securities and (b) a Registration Statement on Form 8-A (the "1934
                              -                                                 
Act Registration Statement") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under Section 12 of the Securities Exchange Act of 1934, as amended;
                                                                              
(ii) to file with one or more national securities exchange (each, an "Exchange")
- ---                                                                             
or U.C. the National Association of Securities Dealers ("NASD") and execute on
behalf of the Trust a listing application or applications and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be listed
on any such Exchange or the NASD's Nasdaq National Market ("NASDAQ"); (iii) to
                                                                       ---    
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of process and
other papers and documents as the Depositor, on behalf of the Trust, may deem
necessary or desirable to register the Preferred Securities under the securities
or "Blue Sky" laws; (iv) to execute on behalf of the Trust such Underwriting
                     --                                                     
Agreements with one or more underwriters relating to the offering of the
Preferred Securities as the Depositor, on behalf of the Trust, may deem
necessary or desirable.  In the event that any filing referred to in clauses
(i), (ii) and (iii) above is required by the rules and regulations of the
Commission, any Exchange, the NASD or state securities or Blue Sky laws, to be
executed on behalf of the Trust by a Trustee, the Depositor and any Trustee
appointed pursuant to Section 6 hereof are hereby authorized to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing.

          5.  This Trust Agreement may be executed in one or more counterparts.
<PAGE>
 
          6.  The number of Trustees initially shall be one (1) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustee may resign upon thirty days' prior notice to the Depositor.

          7.  This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).


                    [Remainder of Page Intentionally Blank]
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.

                                    MCI COMMUNICATIONS CORPORATION,
                                    as Depositor



                                    By:____________________________
                                       Name:
                                       Title:


                                    WILMINGTON TRUST COMPANY,
                                    as Trustee


                                    By:_____________________________
                                       Name:
                                       Title:

<PAGE>
 


================================================================================
                                                                        EX 4.10




                             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 I





================================================================================
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------

                                                                          Page

                                   ARTICLE I
                                 DEFINED TERMS
<TABLE>
<CAPTION>
     <S>           <C>                                                    <C>
     SECTION 101.  Definitions..........................................     2

                                   ARTICLE II
                           ESTABLISHMENT OF THE TRUST

     SECTION 201.   Name................................................    12
     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.   Subscription and Purchase of Debentures;               
                    Issuance of the Common Securities...................    14
     SECTION 206.   Declaration of Trust................................    14
     SECTION 207.   Authorization to Enter into Certain Transactions....    14
     SECTION 208.   Assets of Trust.....................................    19
     SECTION 209.   Title to Trust Property.............................    19

                                  ARTICLE III
                                PAYMENT ACCOUNT

     SECTION 301.   Payment Account.....................................    19

                                  ARTICLE IV
                           DISTRIBUTIONS; REDEMPTION
 
     SECTION 402.   Redemption..........................................    21
     SECTION 403.   Subordination of Common Securities..................    23
     SECTION 404.   Payment Procedures..................................    24
     SECTION 405.   Tax Returns and Reports.............................    24
     SECTION 406.   Payment of Taxes, Duties, Etc. of the Trust.........    25
     SECTION 407.   Payments under Indenture............................    25

                                   ARTICLE V
                         TRUST SECURITIES CERTIFICATES

     SECTION 501.   Initial Ownership...................................    25
     SECTION 502.   The Trust Securities Certificates...................    25
</TABLE>

                                      -i-
<PAGE>
 
<TABLE> 
     <S>            <C>                                                     <C> 
     SECTION 503.   Delivery of Trust Securities Certificates...........    26 
     SECTION 504.   Registration of Transfer and Exchange of Preferred         
                    Securities Certificates.............................    26 
     SECTION 505.   Mutilated, Destroyed, Lost or Stolen Trust               
                    Securities Certificates.............................    27 
     SECTION 506.   Persons Deemed Securityholders......................    28 
     SECTION 507.   Access to List of Securityholders' Names and               
                    Addresses...........................................    28 
     SECTION 508.   Maintenance of Office or Agency.....................    29 
     SECTION 509.   Appointment of Paying Agent.........................    29 
     SECTION 510.   Ownership of Common Securities by Depositor.........    30 
     SECTION 511.   Book-Entry Preferred Securities Certificates;              
                    Common Securities Certificate.......................    30  
     SECTION 512.   Notices to Clearing Agency..........................    31 
     SECTION 513.   Definitive Preferred Securities Certificates........    31 
     SECTION 514.   Rights of Securityholders...........................    32 

                                   ARTICLE VI
                   ACTS OF SECURITYHOLDERS; MEETINGS; VOTING

     SECTION 601.   Limitations on Voting Rights........................    33
     SECTION 602.   Notice of Meetings..................................    34
     SECTION 603.   Meetings of Preferred Securityholders...............    34
     SECTION 604.   Voting Rights.......................................    35
     SECTION 605.   Proxies, etc........................................    35
     SECTION 606.   Securityholder Action by Written Consent............    35
     SECTION 607.   Record Date for Voting and Other Purposes...........    36
     SECTION 608.   Acts of Securityholders.............................    36
     SECTION 609.   Inspection of Records...............................    37

                                  ARTICLE VII
                        REPRESENTATIONS AND WARRANTIES

     SECTION 701.   Representations and Warranties of the Bank, the     
                    Property Trustee and the Delaware Trustee...........    38
     SECTION 702.   Representations and Warranties of Depositor.........    40
</TABLE> 

                                     -ii-
<PAGE>
 
<TABLE>
<CAPTION>
                                 ARTICLE VIII
                                 THE TRUSTEES
     <S>            <C>                                                     <C>
     SECTION 801.   Certain Duties and Responsibilities.................    40
     SECTION 802.   Notice of Defaults..................................    42
     SECTION 803.   Certain Rights of Property Trustee..................    42
     SECTION 804.   Not Responsible for Recitals or Issuance                  
                    of Securities.......................................    45
     SECTION 805.   May Hold Securities.................................    45
     SECTION 806.   Compensation; Indemnity; Fees.......................    45
     SECTION 807.   Corporate Property Trustee Required; Eligibility          
                    of Trustees.........................................    46
     SECTION 808.   Conflicting Interests...............................    46
     SECTION 809.   Co-Trustees and Separate Trustee....................    47
     SECTION 810.   Resignation and Removal; Appointment of Successor...    49
     SECTION 811.   Acceptance of Appointment by Successor..............    51
     SECTION 812.   Merger, Conversion, Consolidation or Succession           
                    to Business.........................................    52
     SECTION 813.   Preferential Collection of Claims Against                 
                    Depositor or Trust..................................    52
     SECTION 814.   Reports by Property Trustee.........................    53
     SECTION 815.   Reports to the Property Trustee.....................    53
     SECTION 816.   Evidence of Compliance with Conditions Precedent....    54
     SECTION 817.   Number of Trustees..................................    54
     SECTION 818.   Delegation of Power.................................    54

                                  ARTICLE IX
                      TERMINATION, LIQUIDATION AND MERGER

     SECTION 901.   Termination Upon Expiration Date....................    55
     SECTION 902.   Early Termination...................................    55
     SECTION 903.   Termination.........................................    55
     SECTION 904.   Liquidation.........................................    56
     SECTION 905.   Mergers, Consolidations, Amalgamations or             
                    Replacements of the Trust...........................    58

                                   ARTICLE X
                           MISCELLANEOUS PROVISIONS

     SECTION 1001.  Limitation of Rights of Securityholders.............    59  
     SECTION 1002.  Amendment...........................................    59  
     SECTION 1003.  Separability........................................    61  
     SECTION 1004.  GOVERNING LAW.......................................    61  
     SECTION 1005.  Payments Due on Non-Business Day....................    61  
     SECTION 1006.  Successors..........................................    61  
</TABLE>

                                     -iii-
<PAGE>
 
<TABLE> 
     <S>            <C>                                                     <C> 
     SECTION 1007.  Headings............................................    62
     SECTION 1008.  Reports, Notices and Demands........................    62 
     SECTION 1009.  Agreement Not to Petition...........................    63
     SECTION 1010.  Trust Indenture Act; Conflict with Trust Indenture       
                    Act.................................................    63 
     SECTION 1011.  ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE      
                    AND INDENTURE.......................................    64 
</TABLE> 

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>
 
                                 MCI Capital I

             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                                                    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>
 
          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) __________________, an individual, and
                                ---                                        
__________________, 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 __, 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 __, 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 party 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 Deben tures
for such period.

          "Administrative Trustee" means each of __________________ and
__________________, each solely in his capacity as Administrative Trustee of the
Trust formed and continued hereunder and not in his 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,
"control" when used with respect to any

                                      -2-
<PAGE>
 
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, adjudi
     cation 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 reorgan ization 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 Certificates, 
sub stantially 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 Se curities 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 (as defined in the
           ------------                                                     
Underwriting Agreement), 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

                                      -4-
<PAGE>
 
Commission is not existing and performing the duties now 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 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 in
                              -                                             
certificated, fully registered form 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 Delaware Trustee of the Trust formed and continued
hereunder

                                      -5-
<PAGE>
 
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 whose performance or breach 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 10% in Liquidation Amount 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.
           ---------------                                           

          "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 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") to the effect that 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 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.

                                      -7-
<PAGE>
 
          "Liquidation Amount" means the stated amount of $25 per Trust
           ------------------                                          
Security.

          "Liquidation Date" means each 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, but not an
employee of any thereof, and who shall be acceptable to the Property Trustee.

                                      -8-
<PAGE>
 
          "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 Administrative
     Trustees or delivered to the Administrative Trustees 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 505;

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.

          "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

                                      -9-
<PAGE>
 
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 Section 401.

          "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.

          "Redemption Price" means, with respect to any Trust Security, the
           ----------------                                                
Liquidation Amount of such Trust

                                      -10-
<PAGE>
 
Security, plus accumulated and unpaid Distributions to the date of redemption,
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.
           ----------------                                                  

          "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
affecting taxation, 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 such 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 thereof, 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 thereof, will not be, deductible, 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 thereof, subject to more than a de minimis amount of other
taxes, duties, assessments or other governmental charges.

          "Trust" means the Delaware business trust created and continued hereby
           -----                                                                
and identified on the cover page to this Trust Agreement.

                                      -11-
<PAGE>
 
          "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) any cash on deposit in,
           --------------         -                   -                         
or owing to, the Payment Account and (c) 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 Underwriting Agreement, dated as of
           ----------------------                                               
________ __, 1996, among the Trust, the Depositor and the Underwriters named
therein.


                                  ARTICLE II
                          ESTABLISHMENT OF THE TRUST
                          --------------------------

SECTION 201.   Name.
               ---- 

          The Trust created and continued hereby shall be known as "MCI Capital
I," 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

                                      -12-
<PAGE>
 
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, 1105 N. Market Street, Wilmington, 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. Con temporaneously 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
therein Preferred Securities Certificates, registered in the name of the nominee
of the initial Clearing Agency, in an aggregate amount of __________ Preferred
Securities having an aggregate Liquidation Amount of $___________, against
receipt of the aggregate purchase price of such Preferred Securities of
$___________, which amount the Administrative Trustees shall promptly deliver to
the Property Trustee.

                                      -13-
<PAGE>
 
SECTION 205.   Subscription and Purchase of Debentures; Issuance of the Common
               ---------------------------------------------------------------
               Securities.
               ---------- 

          Contemporaneously with the execution and delivery of this Trust
Agreement, the Administrative Trustees, 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 $___________.
Contemporaneously therewith, 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 the sum of
$__________.

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

                                      -14-
<PAGE>
 
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 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 securities exchange or exchanges 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;

                                      -15-
<PAGE>
 
               (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

               (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;

                                      -16-
<PAGE>
 
               (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 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)  subject to 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

                                      -17-
<PAGE>
 
(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)  to prepare for filing by the Trust with the Commission and to
     execute on behalf of the Trust a registration statement on the appropriate
     form in relation to the Preferred Securities, including any amendments
     thereto;

         (ii)  to determine the States in which to take appropriate action to
     qualify or register for sale all or part of the Preferred Securities and to
     do any and all such acts, other than actions which must be taken by or on
     behalf of the Trust, and advise the Trustees of actions they must take on
     behalf of the Trust, and prepare for execution and filing 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)  to prepare for filing by the Trust and to execute on behalf of
     the Trust 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)  to prepare for filing by the Trust with the Commission and to
     execute on behalf of the Trust 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)  to negotiate the terms of, and execute and deliver, the
     Underwriting Agreement providing for the sale of the Preferred Securities;
     and

                                      -18-
<PAGE>
 
         (vi)  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.

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

                                      -19-
<PAGE>
 
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 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 extend the
interest payment period for the Debentures pursuant to the Indenture, shall be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, commencing on _____ __, 1996. If any date on which Distributions
are 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 which 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, as a prac tical matter, 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 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

                                      -20-
<PAGE>
 
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.

          (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 De bentures.  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

                                      -21-
<PAGE>
 
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 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 Security holders to receive the Redemption Price, 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 which 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.

                                      -22-
<PAGE>
 
          (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 fifteenth day prior to the Redemption Date.

          (f)  If less than all the Outstanding Trust Se curities 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 previously called for redemption, by such method 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 pro visions
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 which 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 pro rata based on the Liquidation Amount of the Trust
Securities; provided, however, that if on any Distribution Date or Redemption
            --------  -------                                                
Date 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

                                      -23-
<PAGE>
 
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 Redemption Price of, Preferred Securities then due and
payable.

          (b)  In the case of the occurrence of any 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 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 have 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 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

                                      -24-
<PAGE>
 
or 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, reports and schedules 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 (as defined in
the Indenture), the Property Trustee shall promptly pay any taxes, 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

                                      -25-
<PAGE>
 
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 Section 504.

SECTION 503.   Delivery of Trust Securities Certificates.
               ----------------------------------------- 

          On the Closing Date, 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 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 Securities Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 508, a Securities Register in which,
subject to such reason able regulations as it may prescribe, the Securities
Registrar 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

                                      -26-
<PAGE>
 
more new Preferred Securities Certificates in authorized de nominations 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.

          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 Administrative Trustees 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 Administrative Trustees in accordance with their 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 satis faction 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

                                      -27-
<PAGE>
 
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.

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.

                                      -28-
<PAGE>
 
SECTION 508.   Maintenance of Office or Agency.
               ------------------------------- 

          The Administrative Trustees shall maintain in The City of New York, 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 the
[____________________, _______________, New York, New York _____], as its
principal corporate trust office for such purposes.  The Property Trustee 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

                                      -29-
<PAGE>
 
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.

SECTION 510.   Ownership of Common Securities by Depositor.
               ------------------------------------------- 

          On the Closing Date and on each other date provided for in Section
205, the Depositor shall acquire and retain beneficial and record ownership of
the Common Securities.  To the fullest extent permitted by law, 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 principal of and interest on the Book-Entry Preferred Securities
     and the giving of instructions or directions to Owners of Book-Entry

                                      -30-
<PAGE>
 
     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 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

                                      -31-
<PAGE>
 
majority of the Liquidation Amount advise the Clearing Agency 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 Clearing Agency shall notify all Owners of Preferred Securities Certificates
and the Trustees of the 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
Administrative Trustees 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.
               ------------------------- 

          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.

                                      -32-
<PAGE>
 
                                  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 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
Preferred Securities, except by a subsequent vote of the 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 or partnership for United States
Federal income tax purposes on account of such action.

                                      -33-
<PAGE>
 
          (c)  If any proposed amendment to the Trust Agree ment 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.

SECTION 602.   Notice of Meetings.
               ------------------ 

          Notice of all meetings of the Preferred Security holders, 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 the which Preferred Securityholders are entitled to vote.

          Preferred Securityholders of record of 50% of the 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

                                      -34-
<PAGE>
 
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.

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.

                                      -35-
<PAGE>
 
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, 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 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.

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.

                                      -36-
<PAGE>
 
          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.

          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.

                                      -37-
<PAGE>
 
                                  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 State] 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 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

                                      -38-
<PAGE>
 
     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;

          (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 on the Closing Date 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

                                      -39-
<PAGE>
 
     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 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 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

                                      -40-
<PAGE>
 
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;

          (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

                                      -41-
<PAGE>
 
     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.   Notice of Defaults.
               ------------------ 

          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 extend the interest payment period for the
Debentures pursuant to the Indenture, the Administrative Trustee shall transmit,
in the manner and to the extent provided in Section 1008, notice of 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 in 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

                                      -42-
<PAGE>
 
     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 Agreement shall be sufficiently
     evidenced by an Officer's 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
     Officer's 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 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, such
     counsel may be counsel to the  Depositor or any of its Affiliates, and may
     include any of its employees; the Property Trustee shall have the right at
     any time to seek instructions concerning the

                                      -43-
<PAGE>
 
     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 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 here under 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

                                      -44-
<PAGE>
 
     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 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

                                      -45-
<PAGE>
 
     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.

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

                                      -46-
<PAGE>
 
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 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 bond such entity.

                                      -47-
<PAGE>
 
          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 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 an Event of Default under the Indenture
     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

                                      -48-
<PAGE>
 
     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.

          Any 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

                                      -49-
<PAGE>
 
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 retiring 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 is 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 shall appoint a successor or Administrative Trustees.
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

                                      -50-
<PAGE>
 
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, 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

                                      -51-
<PAGE>
 
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.

SECTION 812.   Merger, Conversion, Consolidation or 
               ------------------------------------
               Succession to Business.
               ----------------------

          Any corporation into which the Property Trustee, the Delaware Trustee
or any Administrative 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).

                                      -52-
<PAGE>
 
SECTION 814.   Reports by Property Trustee.
               --------------------------- 

          (a)  Within 60 days after December 31 of each year commencing with
December 31, 1996 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

        (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 or self regulatory organization upon which the Trust
Securities are listed, 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.

                                      -53-
<PAGE>
 
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.

          (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.

                                      -54-
<PAGE>
 
          (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 MERGER
                      -----------------------------------

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.

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 occurrence of a Special Event; provided, that written
                                                  --------              
     direction is given to the Property Trustee from the Depositor within 45
     days of such Special Event (which direction is optional and wholly within
     the discretion of the Depositor) to redeem the Preferred Securities and
     terminate the Trust in accordance with Section 402;

          (c)  the redemption of all of the Preferred Securities; and

          (d)  an order for dissolution of the Trust shall have been entered 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
                    -                                             

                                      -55-
<PAGE>
 
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 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

                                      -56-
<PAGE>
 
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 exchange as the Preferred
Securities are then listed, (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
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments or interest or principal will be
made to holders of Trust Securities Certificates with respect to such
Debentures), and (iv) all rights of Securityholders holding Trust Securities
                  --                                                        
will cease, except the right of such 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 accrued 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

                                      -57-
<PAGE>
 
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 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 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 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, if any, (iv) such merger, consolidation,
                                     --                             
amalgamation or replacement 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 or
                                  -                                             
replacement 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 or
               ---                                                       
replacement, the Depositor has received an Opinion of Counsel to the effect that
(a) such merger, consolidation, amalgamation or replacement does not adversely
 -                                                                            
affect the rights, preferences and privileges of

                                      -58-
<PAGE>
 
the holders of the Preferred Securities (including any Successor Securities) in
any material respect, and (b) following such merger, consolidation, amalgamation
                           -                                                    
or replacement, 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, or be
replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for United States Federal
income tax purposes.


                                   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 or therein which
may be inconsistent with any other provision herein or therein, 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

                                      -59-
<PAGE>
 
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 Trust 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.

          (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.

          (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.

                                      -60-
<PAGE>
 
          (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 Officer's
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.

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
which is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day which is a Business Day (except as
otherwise provided in Section 401(a)), 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.

                                      -61-
<PAGE>
 
 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 Communication
Corporation, 1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006, Attention:
_________________, facsimile no.: (202) ___-____.  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, 1105
 -                                                                        
Market Street, Wilmington, Delaware, Attention:  Corporate Trust Department; (b)
                                                                              - 
with respect to the Delaware Trustee, to Wilmington Trust Company, 1105 Market
Street, Wilmington, Delaware, 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 I."  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.

                                      -62-
<PAGE>
 
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.

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 to be 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.

                                      -63-
<PAGE>
 
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.

                                      -64-
<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    

                                      -65-
<PAGE>
 
                                                                       EXHIBIT A

                            CERTIFICATE OF TRUST

                                      OF

                                 MCI CAPITAL I


          THIS CERTIFICATE OF TRUST of MCI Capital I (the "Trust"), dated April
__, 1996, is being duly executed and filed by the undersigned, as trustees, 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 being formed hereby is MCI
               ----
Capital I.

          2.   Delaware Trustee. The name and business address of the trustee of
               ----------------
the Trust with a principal place of business in the State of Delaware are
Wilmington Trust Company, 1105 Market Street, Wilmington, Delaware, Attention:
Corporate Trust Department.

          3.   Effective Date. This Certificate of Trust shall be effective as
               --------------
of its filing.

          IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, have executed this Certificate of Trust as of the date first above
written.


                                           WILMINGTON TRUST COMPANY,
                                           as Trustee


                                           By_________________________
                                             Name:
                                             Title:

                                      -1-
<PAGE>
 
                                                                       EXHIBIT B

                                                             _________ ___, ____



The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York  10041-0099.

Attention:________________________
          General Counsel's Office


Re:  MCI Capital I ____% Flex Cumulative Quarterly
     ---------------------------------------------
     Income Preferred Securities
     ---------------------------     

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 I ___% Flex Cumulative Quarterly Income Preferred Securities, Series A
(the "Preferred Securities"), of MCI Capital I, 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 to the extent the Issuer has funds
available for the payment thereof, and payments due upon liquidation of Issuer
or redemption of the Preferred Securities 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

                                      -1-
<PAGE>
 
(individually and collectively, the "Global Certificate") 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,

                                      -2-
<PAGE>
 
registered or certified mail, overnight delivery) in a 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-

                                      -3-
<PAGE>
 
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 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 I ___% Flex Cumulative Quarterly Income Preferred Securities".

          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

                                      -4-
<PAGE>
 
          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:  (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
cirumstances, 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,

                                      -5-
<PAGE>
 
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.

                                      -6-
<PAGE>
 
          Nothing herein shall be deemed to require the Transfer Agent and
Registrar to advance funds on behalf of MCI Capital I.

                                           Very truly yours,

                                           MCI CAPITAL I
                                           (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

                                      -7-
<PAGE>
 
                                                                       EXHIBIT C


                     THIS CERTIFICATE IS NOT TRANSFERABLE


Certificate Number                       Number of Common Securities
     C-1

                   Certificate Evidencing Common Securities

                                      of

                                 MCI Capital I

                            ___% Common Securities
                 (liquidation amount $25 per Common Security)

          MCI Capital I, 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 I


                         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 I, 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 ____% Flex
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 or, 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.


                                  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.
                         ------- 

          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 I
          c/o Wilmington Trust Company
          1105 Market Street
          Wilmington, Delaware

                                      -3-
<PAGE>
 
          Facsimile No.: (302) 651-8882
          Attention: Corporate Trust Department

          MCI Communications Corporation
          1801 Pennsylvania Avenue, N.W.
          Washington, D.C.  20006
          Facsimile No.: (202)___-____
          Attention: _________________

          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 I


                                        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 I 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 I

___% Flex Cumulative Quarterly Income Preferred Securities,
                                   Series A
                (liquidation amount $25 per Preferred Security)


          MCI Capital I, 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 ____% Flex 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 I



                                   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)

                                      -4-

<PAGE>
 
________________________________________________________________________________




                              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
                               -----------------

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
                                   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..................................................... 12

                                   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..................................................... 14
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.......................................... 16
SECTION 506.   Subrogation................................................... 17
SECTION 507.   Independent Obligations....................................... 17
</TABLE>

                                      -i-
<PAGE>
 
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
                                   ARTICLE VI
                          COVENANTS AND SUBORDINATION

SECTION 601.   Subordination................................................. 17
SECTION 602.   Pari Passu Guarantees......................................... 17

                                  ARTICLE VII
                                  TERMINATION

SECTION 701.   Termination................................................... 18

                                  ARTICLE VIII
                                 MISCELLANEOUS

SECTION 801.   Successors and Assigns........................................ 18
SECTION 802.   Amendments.................................................... 18
SECTION 803.   Notices....................................................... 19
SECTION 804.   Benefit....................................................... 20
SECTION 805.   Interpretation................................................ 20
SECTION 806.   GOVERNING LAW................................................. 21
</TABLE>

                                      -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 I, 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 ____% Flex 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
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, 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, (ii) the re demption price, including all accrued and unpaid
Distribu tions 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, 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 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 Company, (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.
               -------------------------------- 

          Within 60 days after July 1 of each year, 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 Guarantee Trustee

                                      -6-
<PAGE>
 
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, by vote, 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;

                                      -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 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.

                                      -11-
<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.

                                      -13-
<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

                                      -14-
<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,

                                      -15-
<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

                                      -16-
<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-

                                      -17-
<PAGE>
 
tor on behalf of the holders of Preferred Securities issued by MCI Capital II,
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

                                      -18-
<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 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) ___-____
               Attention: Treasurer

          (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 as the Guarantee Trustee on behalf of the Issuer may give
     notice to the Holders:

               MCI Capital I
               c/o MCI Communications Corporation
               1801 Pennsylvania Avenue, N.W.
               Washington, D.C.  20006

               Facsimile No:  (202) ___-____
               Attention:  Treasurer

               with a copy to:

               Wilmington Trust Company
               1105 Market Street
               Wilmington, Delaware
               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

                                      -19-
<PAGE>
 
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;

          (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.

                                      -20-
<PAGE>
 
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.

                                      -21-
<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:

                                      -22-

<PAGE>






          ===========================================================




                        MCI COMMUNICATIONS CORPORATION

                                      to

                     WILMINGTON TRUST COMPANY, as Trustee

                       _________________________________

                          SUPPLEMENTAL INDENTURE No. 1

                       Dated as of ___________ __, 1996

                       _________________________________

           ____% Junior Subordinated Deferrable Interest Debentures
                                   Series A

                                 $___________




          ===========================================================
<PAGE>
 
                        MCI COMMUNICATIONS CORPORATION


                          SUPPLEMENTAL INDENTURE No. 1

                                  $___________

           ____% Junior Subordinated Deferrable Interest Debentures
                                   Series A


          SUPPLEMENTAL INDENTURE No. 1, dated as of ________ __, 1996, between
MCI COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee (the
"Trustee").


                                    Recitals
                                    --------


          The Company has heretofore executed and delivered to the Trustee a
Junior Subordinated Indenture, dated as of ________ __, 1996 (the "Indenture"),
providing for the issuance from time to time of series of the Company's
Securities .

          Section 301 of the Indenture provides for various matters with respect
to any series of Securities issued under the Indenture to be established in an
indenture supplemental to the Indenture.

          Section 901(3) of the Indenture provides for the Company and the
Trustee to enter into an indenture supple mental to the Indenture to establish
the form or terms of Securities of any series as provided by Sections 201 and
301 of the Indenture.

          For and in consideration of the premises and the issuance of the
series of Securities provided for herein, it is mutually covenanted and agreed,
for the equal and proportionate benefit of the Holders of the Securities of such
series, as follows:


                                   ARTICLE 1

                       Relation to Indenture; Definitions

          Section 1.1.    This Supplemental Indenture No. 1 constitutes an
integral part of the Indenture.
<PAGE>
 
          Section 1.2.  For all purposes of this Supplemental Indenture No. 1:

          (1)  Capitalized terms used herein without definition shall have the
     meanings specified in the Indenture or in the Amended and Restated Trust
     Agreement, dated as of ________ __, 1996, among the Company, as Depositor,
     Wilmington Trust Company, as Property Trustee and Delaware Trustee, and the
     Administrative Trustees named therein, as the case may be;

          (2)  All references herein to Articles and Sections, unless otherwise
     specified, refer to the corresponding Articles and Sections of this
     Supplemental Indenture No. 1; and

          (3)  The terms "herein", "hereof", "hereunder" and other words of
     similar import refer to this Supplemental Indenture No. 1.


                                   ARTICLE 2

                           The Series of Securities

          Section 2.1.    Title of the Securities.  There shall be a series of
                          -----------------------                             
Securities designated the "____% Junior Subordinated Deferrable Interest
Debentures, Series A" (the "Securities").

          Section 2.2.    Limitation on Aggregate Principal Amount; Date of
                          -------------------------------------------------
Securities.  The aggregate principal amount of the Securities shall be limited
- ----------                                                                    
to $___________; provided, however, that the authorized aggregate principal
                 --------  -------                                         
amount of the Securities may be increased above such amount by a Board
Resolution to such effect.  Each Security shall be dated the date of its
authentication.

          Section 2.3.    Principal Payment Date.  The principal amount of the
                          ----------------------                                
Securities Outstanding (together with any accrued and unpaid interest (including
any Additional Interest) thereon) shall be payable in a single installment on
________ __, 2026; provided, that the Company may (i) change the maturity date
                   --------                                                   
upon the occurrence of an exchange of the Securities for the Preferred
Securities subject to certain conditions set forth in Section 314 of the
Indenture, which extended maturity date shall in no case be earlier than ______
__, 2001 or later than _______ __, 2045 and (ii) extend the maturity date
subject to certain conditions specified in Section 314 of the Indenture, which

                                      -2-
<PAGE>
 
extended maturity date shall in no case be later than _______ __, 2045.

          Section 2.4.    Interest and Interest Rates.  The rate of interest on
                          ---------------------------                          
each Security shall be ____% per annum, accruing from ________ __, 1996 and,
subject to Section 2.5, interest shall be payable, quarterly in arrears, on
March 31, June 30, September 30 and December 31 of each year (each such date, an
"Interest Payment Date"), commencing June 30, 1996. The rate of any Additional
Interest that shall accrue on each Security shall be at the same rate per annum.
The amount of interest payable for any period shall be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on a Security is not a Business Day, then a payment of the
interest payable on such date will be made on the next succeeding day which 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, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable. The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest
installment, which shall be the close of business on the Business Day next
preceding such Interest Payment Date. The interest so payable on any Security
which is not punctually paid or duly provided for on any Interest Payment Date
shall forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name such Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or self regulatory organization on which the Securities may be listed, and upon
such notice as may be required by such exchange or organization, all as more
fully provided in the Indenture.

          Section 2.5.    Extension of Interest Payment Period.  (a)  The 
                          ------------------------------------                  
Company shall have the right, at any time during the term of the Securities,
from time to time, to extend the interest payment period on the Securities for
up to 20 consecutive quarters with respect to each deferred period (each, an
"Extension Period") during which periods

                                      -3-
<PAGE>
 
the Company shall have the right to make partial payments of interest on any
Interest Payment Date, and at the end of such Extension Period the Company shall
pay all interest then accrued and unpaid thereon (together with Additional
Interest thereon, if any, at the annual rate of ____% to the extent permitted by
applicable law), provided, however, that during any such Extension Period, the
                 --------  -------                                            
Company shall not, and shall cause any Subsidiary not to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities that rank pari passu with or junior in
                                                   ---- -----                  
interest to the Securities or make any guarantee payments with respect to the
foregoing (other than (a) dividends or distributions in common stock of the
Company, (b) redemptions or purchases of any rights pursuant to the Company's
Preferred Stock Rights Plan, or any successor to such Preferred Stock Rights
Plan, and the declaration of a dividend of such rights in the future, and (c)
payments under any MCI Guarantee). Prior to the termination of any such
Extension Period, the Company may further extend the interest payment period,
provided that such Extension Period together with all such previous and further
- --------                                                                       
extensions of such Extension Period shall not exceed 20 consecutive quarters or
extend beyond the Maturity of the Securities.  Upon termination of any such
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due, the Company may select a new Extension Period,
subject to the above requirements.  No interest shall be due and payable during
an Extension Period, except at the end thereof.  The Company shall give the
Holders of the Securities and the Property Trustee, the Administrative Trustees
and the Trustee notice of its selection of such Extension Period at least one
Business Day prior to the earlier of (i) the date the Distributions on the
Preferred Securities are payable or (ii) the date the Administrative Trustees
are required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of such Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date.  The Trustee shall
promptly give notice of the Company's selection of such Extension Period to the
holders of the outstanding Preferred Securities.

          Section 2.6.    Place of Payment.  The Place of Payment where the
                       ----------------                                 
Securities may be presented or surrendered for payment, where the Securities may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities

                                      -4-
<PAGE>
 
and the Indenture may be served shall be the Corporate Trust Office of the
Trustee.

          Section 2.7.    Redemption.  At any time on or after _______ __, 2001,
                          ----------   
the Company may, at its option, subject to the terms and conditions of Article
Eleven of the Indenture, redeem the Securities on any Interest Payment Date with
respect thereto in whole at any time or in part from time to time, without
premium or penalty, at a redemption price equal to 100% of the principal amount
thereof plus the accrued and unpaid interest, including Additional Interest, if
any, to the date fixed for redemption.

          If a Special Event in respect of MCI Capital I shall occur and be
continuing, the Company may, at its option, redeem the Securities on any
Interest Payment Date falling within 90 days of the occurrence of such Special
Event, in whole but not in part, subject to the provisions of Article Eleven of
the Indenture.  The redemption price for any Security so redeemed shall be equal
to 100% of the principal amount thereof plus accrued and unpaid interest,
including Additional Interest, if any, to the date fixed for redemption.

          Section 2.8.    Exchange.  At any time, the Company may terminate MCI
                          --------                                             
Capital I and cause the Securities to be distributed to Holders of the Preferred
Securities in liquidation of MCI Capital I.

          Section 2.9.    Denomination.  The Securities shall be in registered 
                          ------------    
form without coupons and shall be issuable in denominations of $25 and integral
multiples thereof.

          Section 2.10.   Currency.  Principal and interest on the Securities 
                          -------- 
shall be payable in Dollars.

          Section 2.11.   Form of Securities.  The Securities shall be
                          ------------------                          
substantially in the form attached as Exhibit A hereto.

          Section 2.12.   Securities Registrar and Paying Agent.  The Trustee 
                          ------------------------------------- 
shall initially serve as Securities Registrar and Paying Agent.

          Section 2.13.   Sinking Fund Obligations.  The Company has no
                          ------------------------ 
obligation to redeem or purchase any Securities pursuant to any sinking fund or
analogous requirement or upon the happening of a specified event or at the
option of a Holder thereof.

                                      -5-
<PAGE>
 
                                   ARTICLE 3

                           Miscellaneous Provisions

          Section 3.1.  The Indenture, as supplemented and amended by this
Supplemental Indenture No. 1, is in all respects hereby adopted, ratified and
confirmed.

          Section 3.2.  This Supplemental Indenture No. 1 may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

          SECTION 3.3.  THIS SUPPLEMENTAL INDENTURE NO. 1 AND EACH SECURITY
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

                                      -6-
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 1 to be duly executed, as of the day and year first written above.


                                        MCI COMMUNICATIONS CORPORATION



                                        By: _______________________
                                            Name:
                                            Title:



Attest: _______________________________



                                        WILMINGTON TRUST COMPANY, as
                                                  Trustee



                                        By: _______________________
                                            Name:
                                            Title:

                                      -7-
<PAGE>
 
                                                                       Exhibit A
                                                                       ---------

                          [FORM OF FACE OF SECURITY]


                        MCI COMMUNICATIONS CORPORATION

           ____% Junior Subordinated Deferrable Interest Debentures
                                   Series A


No. __________                                                    $_____________

                                                                  CUSIP ________

          MCI COMMUNICATIONS CORPORATION, a corporation organized and existing
under the laws of Delaware (hereinafter called the "Company", which term
                                                    -------             
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _______________, or registered
assigns, the principal sum of __________________ Dollars on ________ __, 2026;
provided, that the Company may (i) change the maturity date upon the occurrence
- --------                                                                       
of an exchange of the Securities for the Preferred Securities subject to certain
conditions set forth in Section 314 of the Indenture, which extended maturity
date shall in no case be earlier than ______ __, 2001 or later than _______ __,
2045 and (ii) extend the maturity date subject to certain conditions specified
in Section 314 of the Indenture, which extended maturity date shall in no case
be later than _______ __, 2045, to pay interest on said principal sum from
________ __, 1996 or from the most recent interest payment date (each such date,
an "Interest Payment Date") on which interest has been paid or duly provided
    ---------------------                                                   
for, quarterly (subject to deferral as set forth herein) in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing June 30, 1996, at
the rate of ____% per annum, until the principal hereof shall have become due
and payable, plus Additional Interest, if any, until the principal hereof is
paid or duly provided for or made available for payment and on any overdue
principal and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the rate of ____% per annum, compounded quarterly.  The amount of
interest payable for any period will be computed on the basis of twelve 30-day
months and a 360-day year.  In the event that any date on which interest is
payable on this Security is not a Business Day, then a payment of the interest
payable on such date will be made on the next succeeding day which 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
<PAGE>
 
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable.  A "Business Day" shall mean any
                                                    ------------                
day other than 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 a day on
which the Corporate Trust Office of the Trustee or the principal office of the
Property Trustee under the Trust Agreement hereinafter referred to for MCI
Capital I, is closed for business. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Security (or
one or more Predecessor Securities, as defined in the Indenture) is registered
at the close of business on the Regular Record Date for such interest
installment, which shall be the close of business on the Business Day next
preceding such Interest Payment Date. Any such interest installment not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.

          The Company shall have the right at any time during the term of this
Security, from time to time, to extend the interest payment period of such
Security for up to 20 consecutive quarters with respect to each deferral period
(each an "Extension Period"), during which periods the Company shall have the
          ----------------                                                   
right to make partial payments of interest on any Interest Payment Date, and at
the end of which the Company shall pay all interest then accrued and unpaid
(together with Additional Interest thereon to the extent permitted by applicable
law); provided that during any such Extension Period, the Company will not, and
      --------                                                                 
will not permit any Subsidiary of the Company to (i) declare or pay any
dividends or distributions or redeem, purchase, acquire or make a liquidation
payment with respect to, any of the Company's outstanding capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt security that rank pari passu with or junior in
                                                 ---- -----                  
interest to this Security or make any guarantee payments with respect to the
foregoing (other

                                      -2-
<PAGE>
 
than (a) dividends or distributions in common stock of the Company, (b)
redemptions or purchases of any rights pursuant to the Company's Preferred Stock
Rights Plan, or any successor to such Preferred Stock Rights Plan, and the
declaration of a dividend of such rights in the future, and (c) payments under
any MCI Guarantee (as defined in the Indenture)). Prior to the termination of
any such Extension Period, the Company may further extend the interest payment
period, provided that such Extension Period together with all such previous and
        --------                                                               
further extensions of such Extension Period, shall not exceed 20 consecutive
quarters or extend beyond the Maturity of this Security. Upon the termination of
any such Extension Period and upon the payment of all accrued and unpaid
interest and any Additional Interest then due, the Company may select a new
Extension Period, subject to the above requirements. No interest shall be due
and payable during an Extension Period except at the end thereof. The Company
shall give the Holder of this Security and the Trustee notice of its selection
of an Extension Period at least one Business Day prior to the earlier of (i) the
date the Distributions on the Preferred Securities are payable or (ii) the date
the Administrative Trustees are required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to holders of such
Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than one Business Day prior to such record
date.

          Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
               --------  -------                                              
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register or (ii) by wire
transfer in immediately available funds at such place and to such account as may
be designated by the Person entitled thereto as specified in the Securities
Register.

          The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto.  Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his

                                      -3-
<PAGE>
 
attorney-in-fact for any and all such purposes.  Each Holder hereof, by his
acceptance hereof, waives all notice of the acceptance of the subordination
provisions contained herein and in the Indenture by each holder of Senior Debt,
whether now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.

          Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                        MCI COMMUNICATIONS CORPORATION


                                        By:__________________________
                                           [President or Vice President]

Attest:


__________________________________
[Secretary or Assistant Secretary]

                                      -4-
<PAGE>
 
                         [FORM OF REVERSE OF SECURITY]

          This Security is one of a duly authorized issue of securities of the
Company, (herein called the "Securities"), issued and to be issued in one or
                             ----------                                     
more series under a Junior Subordinated Indenture, dated as of ________ __, 1996
(herein called the "Indenture"), between the Company and Wilmington Trust
                    ---------                                            
Company, as Trustee (herein called the "Trustee", which term includes any
                                        -------                          
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof, limited in aggregate principal
amount to $___________.

          All terms used in this Security that are defined in the Indenture or
in the Amended and Restated Trust Agreement, dated as of ________ __, 1996 (the
"Trust Agreement"), among MCI COMMUNICATIONS CORPORATION, as Depositor, and the
- ------ ---------                                                               
Trustees named therein, for MCI Capital I, shall have the meanings assigned to
them in the Indenture or the Trust Agreement, as the case may be.

          At any time on or after ________ __, 2001, the Company may, at its
option, subject to the terms and conditions of Article Eleven of the Indenture,
redeem this Security on any Interest Payment Date with respect thereto in whole
at any time or in part from time to time, without premium or penalty, at a
redemption price equal to 100% of the principal amount thereof plus the accrued
and unpaid interest, including Additional Interest, if any, to the date fixed
for redemption.

          If a Special Event in respect of MCI Capital I shall occur and be
continuing, the Company may, at its option, redeem this Security on any Interest
Payment Date falling within 90 days of the occurrence of such Special Event, in
whole but not in part, subject to the provisions of Section 1107 and the other
provisions of Article Eleven of the Indenture.  The redemption price for any
Security so redeemed shall be equal to 100% of the principal amount thereof plus
accrued and unpaid interest, including Additional Interest, if any, to the date
fixed for redemption.

          In the event of redemption of this Security in part only, a new
Security or Securities of this series for

                                      -5-
<PAGE>
 
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.

          If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.

          The Indenture contains provisions for satisfaction, discharge and
defeasance at any time of the entire indebtedness of this Security upon
compliance by the Company with certain conditions set forth in the Indenture.

          The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities of
each series at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

          As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
the Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
                                                                 --------      
in the case of the Securities of a series issued to an MCI Trust, if upon an
Event of Default, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series fail to declare the

                                      -6-
<PAGE>
 
principal of all the Securities of that series to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
corresponding series of Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any such
declaration such principal amount (or specified amount) of and the accrued
interest (including any Additional Interest) on all the Securities of such
series shall become immediately due and payable, provided that the payment of
                                                 --------                    
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article Thirteen of the
Indenture.

          No reference herein to the Indenture and no pro vision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.

          As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained under Section 1002 of
the Indenture duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees. No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

          Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

          The Securities of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of such series of a

                                      -7-
<PAGE>
 
different authorized denomination, as requested by the Holder surrendering the
same.

          The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.

          THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.

                                      -8-

<PAGE>
 
                      CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus 
constituting part of this Registration Statement on Form S-3 of our report dated
January 29, 1996, which appears on page 29 of the 1995 Annual Report to 
Stockholders of MCI Communications Corporation, which is incorporated by 
reference in MCI Communications Corporation's Annual Report on Form 10-K for the
year ended December 31, 1995. We also consent to the incorporation by reference 
of our report on the Financial Statement Schedule, which appears on page 30 of 
such Annual Report on Form 10-K. We also consent to the reference to us under 
the heading "Experts" in such Prospectus.




PRICE WATERHOUSE LLP


Washington, D.C.
April 17, 1996


<PAGE>
 
                                                 Registration No.
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM T-1

        STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X
                  ---

                           WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


       Delaware                                          51-0055023
(State of incorporation)                    (I.R.S. employer identification no.)

                              Rodney Square North
                           1100 North Market Street
                          Wilmington, Delaware  19890
                   (Address of principal executive offices)

                              Myfanwy P. Bonilla
                    Asst. Vice President and Trust Counsel
                           Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                (302) 651-8914
           (Name, address and telephone number of agent for service)


                        MCI COMMUNICATIONS CORPORATION
              (Exact name of obligor as specified in its charter)

 
       Delaware                                          52-0886267
(State of incorporation                     (I.R.S. employer identification no.)
     or formation)

    1801 Pennsylvania Avenue, N.W.
          Washington, D.C.                                      20006
(Address of principal executive offices)                      (Zip Code)

<PAGE>
 
          ___ % Junior Subordinated Deferrable Interest Debentures of
                        MCI Communications Corporation
                      (Title of the indenture securities)

================================================================================

                                       2
<PAGE>
 
ITEM 1.   GENERAL INFORMATION.

          Furnish the following information as to the trustee:

     (a)  Name and address of each examining or supervising authority
          to which it is subject.

          Federal Deposit Insurance Co.      State Bank Commissioner
          Five Penn Center                   Dover, Delaware
          Suite #2901
          Philadelphia, PA

     (b)  Whether it is authorized to exercise corporate trust powers.

          The trustee is authorized to exercise corporate trust powers.

ITEM 2.  AFFILIATIONS WITH THE OBLIGOR.

              If the obligor is an affiliate of the trustee, describe each
         affiliation:

              Based upon an examination of the books and records of the trustee
              and upon information furnished by the obligor, the obligor is not
              an affiliate of the trustee.

ITEM 3.  LIST OF EXHIBITS.

              List below all exhibits filed as part of this Statement of
         Eligibility and Qualification.

         A.   Copy of the Charter of Wilmington Trust Company, which
              includes the certificate of authority of Wilmington
              Trust Company to commence business and the authorization of
              Wilmington Trust Company to exercise corporate trust
              powers.
         B.   Copy of By-Laws of Wilmington Trust Company.
         C.   Consent of Wilmington Trust Company required by Section 321(b)
              of Trust Indenture Act.
         D.   Copy of most recent Report of Condition of Wilmington
              Trust Company.

         Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                 WILMINGTON TRUST COMPANY


Attest:/s/ Lloyd O. Martin             By:/s/ David P. Fontello
       -------------------                ---------------------

                                       3
<PAGE>
 
       Assistant Secretary             Name: David P. Fontello
                                       Title:  Vice President

                                       4
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                          AS EXISTING ON MAY 9, 1987

<PAGE>
 
                                AMENDED CHARTER

                                      OR

                             ACT OF INCORPORATION

                                      OF

                           WILMINGTON TRUST COMPANY

      WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

     SECOND: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.

<PAGE>
 
     THIRD: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1)  To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common seal, and alter the seal at
          pleasure, to hold, purchase, convey, mortgage or otherwise deal in
          real and personal estate and property, and to appoint such officers
          and agents as the business of the Corporation shall require, to make
          by-laws not inconsistent with the Constitution or laws of the United
          States or of this State, to discount bills, notes or other evidences
          of debt, to receive deposits of money, or securities for money, to buy
          gold and silver bullion and foreign coins, to buy and sell bills of
          exchange, and generally to use, exercise and enjoy all the powers,
          rights, privileges and franchises incident to a corporation which are
          proper or necessary for the transaction of the business of the
          Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate
          or interests therein, and to guarantee the holder of such property,
          real or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.

                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any
          contract or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee,
          trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
          executor, administrator,

                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the receiving,
          holding, managing, and disposing of any and all estates and property,
          real, personal or mixed, and to be appointed as such trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, guardian or bailee by any persons, corporations, court,
          officer, or authority, in the State of Delaware or elsewhere; and
          whenever this Corporation is so appointed by any person, corporation,
          court, officer or authority such trustee, trustee in bankruptcy,
          receiver, assignee, assignee in bankruptcy, executor, administrator,
          guardian, bailee, or in any other trust capacity, it shall not be
          required to give bond with surety, but its capital stock shall be
          taken and held as security for the performance of the duties devolving
          upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages,
          debentures, shares of capital stock, and other securities,
          obligations, contracts and evidences of indebtedness, of any private,
          public or municipal corporation within and without the State of
          Delaware, or of the Government of the United States, or of any state,
          territory, colony, or possession thereof, or of any foreign government
          or country; to receive, collect, receipt for, and dispose of interest,
          dividends and income upon and from any of the bonds, mortgages,
          debentures, notes, shares of capital stock, securities, obligations,
          contracts, evidences of indebtedness and other property held and owned
          by it, and to exercise in respect of all such bonds, mortgages,
          debentures, notes, shares of capital stock, securities, obligations,
          contracts, evidences of indebtedness and other property, any and all
          the rights, powers and privileges of individual owners thereof,
          including the right to vote thereon; to invest and deal in and with

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and
          to undertake the whole or any part of  the assets and liabilities of
          any person, firm, association or corporation, and to pay for the same
          in cash, stock of this Corporation, bonds or otherwise; to hold or in
          any manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3)  To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any manner whatever dispose of
          property, real, personal or mixed, wherever situated.

          (4)  To enter into, make, perform and carry out contracts of every
          kind with any person, firm, association or corporation, and, without
          limit as to

                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount, execute and issue
          promissory notes, drafts, bills of exchange, warrants, bonds,
          debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     FOURTH: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if

                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether  such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject
          to redemption, and the redemption price or prices and the time or
          times at which, and the terms and conditions on which, Preferred Stock
          of such

                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase
          account, if any, to be provided for the Preferred Stock of such
          series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     FOURTH, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article FOURTH), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation,

                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article FOURTH, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or

                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article FOURTH and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article FOURTH that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     FIFTH: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the

                                       10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting.  Any vacancies in the
     Board of Directors for any reason, and any newly created directorships
     resulting from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to

                                       11
<PAGE>
 
     vote for the election of directors. Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders. Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     SIXTH: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     SEVENTH: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.

                                       12
<PAGE>
 
     EIGHTH: - This Act shall be deemed and taken to be a private Act.

     NINTH: - This Corporation is to have perpetual existence.

     TENTH: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     ELEVENTH: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     TWELFTH: - The Corporation may transact business in any part of the world.

     THIRTEENTH: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     FOURTEENTH: - Meetings of the Directors may be held outside of the State of
     Delaware at such places as may be from time to time designated by the
     Board, and the Directors may keep the books of the Company outside of the
     State of Delaware at such places as may be from time to time designated by
     them.

     FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article FIFTEENTH:

                                       13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any
          Subsidiary (as hereinafter defined) with or into (i) any Interested
          Stockholder (as hereinafter defined) or (ii) any other corporation
          (whether or not itself an Interested Stockholder), which, after such
          merger or consolidation, would be an Affiliate (as hereinafter
          defined) of an Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value of $1,000,000 or
          more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary
          (in one transaction or a series of related transactions) of any
          securities of the Corporation or any Subsidiary to any Interested
          Stockholder or any Affiliate of any Interested Stockholder in exchange
          for cash, securities or other property (or a combination thereof)
          having an aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least  two-thirds of the
outstanding shares of capital stock of the

                                       14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               FIFTEENTH shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article FIFTEENTH shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article FIFTEENTH:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which

                                       15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares deemed owned
     through application of paragraph (3) above but shall not include any other
     Voting Shares which may be issuable pursuant to any agreement, or upon
     exercise of conversion rights, warrants or options or otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a

                                       16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.

          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article FIFTEENTH on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article FIFTEENTH shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     SIXTEENTH:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
     SIXTEENTH of this Charter or Act of Incorporation.

SEVENTEENTH: (a)  a Director of this Corporation shall not be liable to the
Corporation or its stockholders for

                                       17
<PAGE>
 
monetary damages for breach of fiduciary duty as a Director, except to the
extent such exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or may hereafter
be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."

                                       18
<PAGE>
 
               I ___________________________________________

               _________________ Secretary of WILMINGTON TRUST COMPANY, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of WILMINGTON TRUST COMPANY,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of WILMINGTON TRUST COMPANY.

               Date __________________


                                       _______________________________________
                                       Secretary

                                       
<PAGE>
 
                                   EXHIBIT B

                                    BY-LAWS


                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                       AS EXISTING ON FEBRUARY 21, 1991

<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                            STOCKHOLDERS' MEETINGS


      Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

      Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

      Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

      Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                   ARTICLE II
                                   DIRECTORS

      Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

      Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.

                                       
<PAGE>
 
      Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

      Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

      Section 5.  Regular meetings of the Board of Directors shall be held on
the third Thursday of each month at the principal office of the Company, or at
such other place and time as may be designated by the Board of Directors, the
Chairman of the Board, or the President.

      Section 6.  Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.

      Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

      Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

      Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

      Section 10.  The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person.  The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person,

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

      Section 11.  The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.

      Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.

                                       3
<PAGE>
 
                                  ARTICLE III
                                  COMMITTEES


      Section I.  Executive Committee

          (A)  The Executive Committee shall be composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.

          (B)  The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.

          (C)  The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a week in each week the
Board is not regularly scheduled to meet.  A majority of its members shall be
necessary to constitute a quorum for the transaction of business.  Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

          (D)  Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.

          (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

          (F)  In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is

                                       4
<PAGE>
 
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be empowered to
exercise all of the powers reserved to the Trust Committee under Article III
Section 2 hereof. In the event of the unavailability, at such time, of a minimum
of two members of such Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and management of the
affairs and business of the Company in accordance with the foregoing provisions
of this Section. This By-Law shall be subject to implementation by Resolutions
of the Board of Directors presently existing or hereafter passed from time to
time for that purpose, and any provisions of these By-Laws(other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary Resolutions shall be
suspended during such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its affairs and
business under all of the other provisions of these By-Laws.

      Section 2.  Trust Committee
 
          (A)  The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.

          (B)  The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.

          (C)  The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a month.  A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.  Special meetings of the Trust Committee may be held at any time when
a quorum is present.

          (D)  Minutes of each meeting of the Trust Committee shall be kept
and promptly submitted to the Board of

                                       5
<PAGE>
 
Directors.
 
          (E)  The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.

      Section 3.  Audit Committee

          (A)  The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.

          (B)  The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

          (C)  The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.

      Section 4.  Compensation Committee

          (A)  The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.

          (B)  The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

          (C)  Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.

      Section 5.  Associate Directors

          (A)  Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.

          (B)  An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote.  An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

      Section 6.  Absence or Disqualification of Any Member of a
                  Committee
 
          (A)  In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.


                                   ARTICLE IV
                                    OFFICERS

      Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of

                                       7
<PAGE>
 
the Company.

      Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

      Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

      Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

      Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

      Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

      Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

      There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

      Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

      There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

      Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

      Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.


                                   ARTICLE V
                         STOCK AND STOCK CERTIFICATES

                                       9
<PAGE>
 
      Section 1.  Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

      Section 2.  Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed.  Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

      Section 3.  The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                   ARTICLE VI
                                      SEAL

      Section 1.  The corporate seal of the Company shall be in the following
form:

               Between two concentric circles the words
               "Wilmington Trust Company" within the inner

                                       10
<PAGE>
 
               circle the words "Wilmington, Delaware."

                                       11
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

      Section 1.  The fiscal year of the Company shall be the calendar year.


                                  ARTICLE VIII
                    EXECUTION OF INSTRUMENTS OF THE COMPANY

      Section 1.  The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                   ARTICLE IX
              COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

      Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors

                                       12
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.

                                       13
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

      Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

          (B)  The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
                                                --------  -------          
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

          (C)  If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been received by the Corporation the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim.  In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification of payment of expenses under
applicable law.

          (D)  The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such

                                       14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

          (E)  Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.

                                       15
<PAGE>
 
                                   ARTICLE XI
                           AMENDMENTS TO THE BY-LAWS

      Section 1.  These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.



                    I, . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .

                     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                    Assistant Secretary

                                       16
<PAGE>
 
                                                           EXHIBIT C



                             SECTION 321(B) CONSENT


      Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                                       WILMINGTON TRUST COMPANY


Dated: April 15, 1996                  By:  /s/ David P. Fontello
                                           --------------------------
                                           Name: David P. Fontello
                                           Title: Vice President

                                       
<PAGE>
 
                                  EXHIBIT "D"



                                    NOTICE


This form is intended to assist state nonmember banks and savings banks with
state publication requirements.  It has not been approved by any state banking
authorities.  Refer to your appropriate state banking authorities for your state
publication requirements.

 
 
R E P O R T  O F  C O N D I T I O N
 
Consolidating domestic subsidiaries of the
 
           WILMINGTON TRUST COMPANY           of           WILMINGTON
- --------------------------------------------      ------------------------------
                 Name of Bank                                 City
 
in the State of DELAWARE, at the close of business on December 31, 1995.
                --------

<TABLE> 
<CAPTION> 

ASSETS
                                                               Thousands of dollars
<S>                                                                       <C>
Cash and balances due from depository institutions:
      Noninterest-bearing balances and currency and coins...............    242,765
      Interest-bearing balances.........................................          0
Held-to-maturity securities.............................................    448,091
Available-for-sale securities...........................................    873,294
Federal funds sold......................................................          0
Securities purchased under agreements to resell.........................     78,866
Loans and lease financing receivables:
      Loans and leases, net of unearned income........... 3,441,294
      LESS:  Allowance for loan and lease losses.........    47,663
      LESS:  Allocated transfer risk reserve.............         0
      Loans and leases, net of unearned income, allowance, and reserve..  3,393,631
Assets held in trading accounts.........................................          0
Premises and fixed assets (including capitalized leases)................     74,915
Other real estate owned.................................................     13,084
Investments in unconsolidated subsidiaries and associated companies.....        171
Customers' liability to this bank on acceptances outstanding............          0
Intangible assets.......................................................      4,526
Other assets............................................................    108,197
Total assets............................................................  5,237,540
 

                                                             CONTINUED ON NEXT PAGE
</TABLE>

                                       
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES
<S>                                                                       <C>
Deposits:
In domestic offices.....................................................  3,456,791
      Noninterest-bearing...............................    743,460
      Interest-bearing..................................  2,713,331
Federal funds purchased.................................................     84,855
Securities sold under agreements to repurchase..........................    158,903
Demand notes issued to the U.S. Treasury................................     29,389
Trading liabilities.....................................................          0
Other borrowed money:
      With original maturity of one year or less........................    960,000
      With original maturity of more than one year......................     28,000
Mortgage indebtedness and obligations under capitalized leases..........      1,887
Bank's liability on acceptances executed and outstanding................          0
Subordinated notes and debentures.......................................          0
Other liabilities.......................................................    100,981
Total liabilities.......................................................  4,820,806
Limited-life preferred stock and related surplus........................          0
 
 
 
EQUITY CAPITAL
 
Perpetual preferred stock and related surplus...........................          0
Common Stock............................................................        500
Surplus.................................................................     62,118
Undivided profits and capital reserves..................................    349,963
Net unrealized holding gains (losses) on available-for-sale securities..      4,153
Total equity capital....................................................    416,734
Total liabilities, limited-life preferred stock, and equity capital.....  5,237,540
</TABLE>

                                       2

<PAGE>
 
                                                   Registration No.
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                    FORM T-1

         STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)  X
                  ---

                            WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


         Delaware                                         51-0055023
(State of incorporation)                    (I.R.S. employer identification no.)

                              Rodney Square North
                            1100 North Market Street
                          Wilmington, Delaware  19890
                    (Address of principal executive offices)

                               Myfanwy P. Bonilla
                     Asst. Vice President and Trust Counsel
                            Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                 (302) 651-8914
           (Name, address and telephone number of agent for service)


                         MCI COMMUNICATIONS CORPORATION


              (Exact name of obligor as specified in its charter)

                                        
      Delaware                                           52-0886267
(State of incorporation                     (I.R.S. employer identification no.)
    or formation)

   1801 Pennsylvania Avenue, N.W.
           Washington, D.C.                                20006
(Address of principal executive offices)                 (Zip Code)
<PAGE>
  
         Guarantee of Cumulative Quarterly Income Preferred Securities
               of MCI Capital I by MCI Communications Corporation
                      (Title of the indenture securities)

===============================================================================

                                       2
<PAGE>
   
ITEM 1.    GENERAL INFORMATION.
- --------   --------------------

           Furnish the following information as to the trustee:

      (a)  Name and address of each examining or supervising authority to
           which it is subject.

           Federal Deposit Insurance Co.      State Bank Commissioner
           Five Penn Center                   Dover, Delaware
           Suite #2901
           Philadelphia, PA

      (b)  Whether it is authorized to exercise corporate trust powers.

           The trustee is authorized to exercise corporate trust powers.

ITEM 2.  AFFILIATIONS WITH THE OBLIGOR.

           If the obligor is an affiliate of the trustee, describe each
      affiliation:

           Based upon an examination of the books and records of the trustee and
           upon information furnished by the obligor, the obligor is not an
           affiliate of the trustee.

ITEM 3.  LIST OF EXHIBITS.

           List below all exhibits filed as part of this Statement of
      Eligibility and Qualification.

      A.   Copy of the Charter of Wilmington Trust Company, which
           includes the certificate of authority of Wilmington
           Trust Company to commence business and the authorization of
           Wilmington Trust Company to exercise corporate trust
           powers.
      B.   Copy of By-Laws of Wilmington Trust Company.
      C.   Consent of Wilmington Trust Company required by Section 321(b) of
           Trust Indenture Act.
      D.   Copy of most recent Report of Condition of Wilmington
           Trust Company.

      Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                   WILMINGTON TRUST COMPANY


Attest: /s/ Lloyd O. Martin              By: /s/ David P. Fontello
        -------------------                  ---------------------         

                                       3
<PAGE>
   
Assistant Secretary                      Name: David P. Fontello
                                         Title:  Vice President



                                       1
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                            Wilmington Trust Company

                              Wilmington, Delaware

                           As existing on May 9, 1987


<PAGE>
 
                                Amended Charter

                                       or

                              Act of Incorporation

                                       of

                            Wilmington Trust Company

      Wilmington Trust Company, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "Wilmington Trust Company" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     First: - The name of this corporation is Wilmington Trust Company.

     Second: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is Wilmington Trust Company whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.
<PAGE>
 
     Third: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1)  To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common seal, and alter the seal at
          pleasure, to hold, purchase, convey, mortgage or otherwise deal in
          real and personal estate and property, and to appoint such officers
          and agents as the business of the Corporation shall require, to make
          by-laws not inconsistent with the Constitution or laws of the United
          States or of this State, to discount bills, notes or other evidences
          of debt, to receive deposits of money, or securities for money, to buy
          gold and silver bullion and foreign coins, to buy and sell bills of
          exchange, and generally to use, exercise and enjoy all the powers,
          rights, privileges and franchises incident to a corporation which are
          proper or necessary for the transaction of the business of the
          Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate or
          interests therein, and to guarantee the holder of such property, real
          or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.

                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any contract
          or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator,

                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the receiving,
          holding, managing, and disposing of any and all estates and property,
          real, personal or mixed, and to be appointed as such trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, guardian or bailee by any persons, corporations, court,
          officer, or authority, in the State of Delaware or elsewhere; and
          whenever this Corporation is so appointed by any person, corporation,
          court, officer or authority such trustee, trustee in bankruptcy,
          receiver, assignee, assignee in bankruptcy, executor, administrator,
          guardian, bailee, or in any other trust capacity, it shall not be
          required to give bond with surety, but its capital stock shall be
          taken and held as security for the performance of the duties devolving
          upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages, debentures,
          shares of capital stock, and other securities, obligations, contracts
          and evidences of indebtedness, of any private, public or municipal
          corporation within and without the State of Delaware, or of the
          Government of the United States, or of any state, territory, colony,
          or possession thereof, or of any foreign government or country; to
          receive, collect, receipt for, and dispose of interest, dividends and
          income upon and from any of the bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property held and owned by it, and to
          exercise in respect of all such bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property, any and all the rights, powers and
          privileges of individual owners thereof, including the right to vote
          thereon; to invest and deal in and with

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and to
          undertake the whole or any part of  the assets and liabilities of any
          person, firm, association or corporation, and to pay for the same in
          cash, stock of this Corporation, bonds or otherwise; to hold or in any
          manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3) To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any manner whatever dispose of
          property, real, personal or mixed, wherever situated.

          (4)  To enter into, make, perform and carry out contracts of every
          kind with any person, firm, association or corporation, and, without
          limit as to

                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount, execute and issue
          promissory notes, drafts, bills of exchange, warrants, bonds,
          debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     Fourth: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if

                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether  such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject to
          redemption, and the redemption price or prices and the time or times
          at which, and the terms and conditions on which, Preferred Stock of
          such

                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase account,
          if any, to be provided for the Preferred Stock of such series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article Fourth), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article Fourth), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     Fourth, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article Fourth), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation,

                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article Fourth, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or

                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article Fourth and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article Fourth that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     Fifth: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the

                                      10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting.  Any vacancies in the
     Board of Directors for any reason, and any newly created directorships
     resulting from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to

                                      11
<PAGE>
 
     vote for the election of directors. Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders. Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     Sixth: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     Seventh: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.


                                      12
<PAGE>
 
     Eighth: - This Act shall be deemed and taken to be a private Act.

     Ninth: - This Corporation is to have perpetual existence.

     Tenth: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     Eleventh: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     Twelfth: - The Corporation may transact business in any part of the world.

     Thirteenth: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     Fourteenth: - Meetings of the Directors may be held outside
     of the State of Delaware at such places as may be from time to time
     designated by the Board, and the Directors may keep the books of the
     Company outside of the State of Delaware at such places as may be from time
     to time designated by them.

     Fifteenth: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article Fifteenth:


                                      13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any Subsidiary
          (as hereinafter defined) with or into (i) any Interested Stockholder
          (as hereinafter defined) or (ii) any other corporation (whether or not
          itself an Interested Stockholder), which, after such merger or
          consolidation, would be an Affiliate (as hereinafter defined) of an
          Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value
          of $1,000,000 or more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary (in
          one transaction or a series of related transactions) of any securities
          of the Corporation or any Subsidiary to any Interested Stockholder or
          any Affiliate of any Interested Stockholder in exchange for cash,
          securities or other property (or a combination thereof) having an
          aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least  two-thirds of the
outstanding shares of capital stock of the

                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               Fifteenth shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article Fifteenth shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article Fifteenth:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which

                                      15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares
     deemed owned through application of paragraph (3) above but shall not
     include any other Voting Shares which may be issuable pursuant to any
     agreement, or upon exercise of conversion rights, warrants or options or
     otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a


                                      16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.

          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article Fifteenth on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article Fifteenth shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     Sixteenth:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or
     Sixteenth of this Charter or Act of Incorporation.

     Seventeenth: (a)  a Director of this Corporation shall not be liable to the
     Corporation or its stockholders for

                                      17
<PAGE>
 
     monetary damages for breach of fiduciary duty as a Director, except to the
     extent such exemption from liability or limitation thereof is not permitted
     under the Delaware General Corporation Laws as the same exists or may
     hereafter be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."



                                      18
<PAGE>
 
               I ___________________________________________

               _________________ Secretary of Wilmington Trust Company, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of Wilmington Trust Company,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of Wilmington Trust Company.

               Date __________________


                         _______________________________________
                         Secretary
<PAGE>
 
                                   EXHIBIT B

                                    BY-LAWS


                            WILMINGTON TRUST COMPANY

                              WILMINGTON, DELAWARE

                        As existing on February 21, 1991
<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                             Stockholders' Meetings


     Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

     Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

     Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

     Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                   ARTICLE II
                                   Directors

     Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

     Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
<PAGE>
 
     Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

     Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

     Section 5.  Regular meetings of the Board of Directors shall
be held on the third Thursday of each month at the principal office of the
Company, or at such other place and time as may be designated by the Board of
Directors, the Chairman of the Board, or the President.

     Section 6.  Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

     Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

     Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

     Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

     Section 10.  The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person.  The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person,

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

     Section 11.  The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

     Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.




                                       3
<PAGE>
 
                                  ARTICLE III
                                   Committees


     Section I.  Executive Committee

          (A)  The Executive Committee shall be composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.

          (B)  The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.

          (C)  The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a week in each week the
Board is not regularly scheduled to meet.  A majority of its members shall be
necessary to constitute a quorum for the transaction of business.  Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

          (D)  Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.

          (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

          (F)  In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is


                                       4
<PAGE>
 
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be empowered to
exercise all of the powers reserved to the Trust Committee under Article III
Section 2 hereof. In the event of the unavailability, at such time, of a minimum
of two members of such Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and management of the
affairs and business of the Company in accordance with the foregoing provisions
of this Section. This By-Law shall be subject to implementation by Resolutions
of the Board of Directors presently existing or hereafter passed from time to
time for that purpose, and any provisions of these By-Laws(other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary Resolutions shall be
suspended during such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its affairs and
business under all of the other provisions of these By-Laws.

     Section 2.  Trust Committee
 
          (A)  The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.

          (B)  The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.

          (C)  The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a month.  A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.  Special meetings of the Trust Committee may be held at any time when
a quorum is present.

          (D)  Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of



                                       5
<PAGE>
 
Directors.

          (E)  The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.

     Section 3.  Audit Committee

          (A)  The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.

          (B) The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

          (C)  The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.

     Section 4.  Compensation Committee

          (A)  The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.

          (B)  The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

          (C)  Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.

     Section 5.  Associate Directors

          (A)  Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.

          (B)  An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote.  An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

     Section 6.  Absence or Disqualification of Any Member of a
                 Committee

          (A) In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.


                                   ARTICLE IV
                                    Officers

     Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of


                                       7
<PAGE>
 
the Company.

     Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

     Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

     Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

     Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

     Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

     Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

     There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

     Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

     There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

     Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

     Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

                                 ARTICLE V
                          Stock and Stock Certificates

                                       9
<PAGE>
 
          Section 1.  Shares of stock shall be transferrable on the
books of the Company and a transfer book shall be kept in which all transfers of
stock shall be recorded.

          Section 2.  Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed.  Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

          Section 3.  The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                   ARTICLE VI
                                      Seal

          Section 1.  The corporate seal of the Company shall be in the
following form:

                 Between two concentric circles the words
                 "Wilmington Trust Company" within the inner



                                      10

<PAGE>
     
                 circle the words "Wilmington, Delaware."






                                      11
<PAGE>
 
                                  ARTICLE VII
                                  Fiscal Year

     Section 1.  The fiscal year of the Company shall be the calendar year.


                                  ARTICLE VIII
                    Execution of Instruments of the Company

     Section 1.  The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                   ARTICLE IX
              Compensation of Directors and Members of Committees

     Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors

                                      12
<PAGE>
 
may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.





                                      13
<PAGE>
 
                                   ARTICLE X
                                Indemnification

     Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

          (B)  The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
                                                --------  -------          
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

          (C)  If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been received by the Corporation the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim.  In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification of payment of expenses under
applicable law.

          (D)  The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such


                                      14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

          (E)  Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.


                                      15
<PAGE>
 
                                   ARTICLE XI
                           Amendments to the By-Laws

          Section 1.  These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.



                    I, . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 

                       . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                    Assistant Secretary



                                      16
<PAGE>
 
                                                            EXHIBIT C



                             Section 321(b) Consent


     Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                              WILMINGTON TRUST COMPANY


Dated: April 15, 1996               By:  /s/ David P. Fontello
                                        --------------------------
                                        Name: David P. Fontello
                                        Title: Vice President
<PAGE>
 
                                  EXHIBIT "D"



                                     NOTICE


          This form is intended to assist state nonmember banks and savings
          banks with state publication requirements.  It has not been approved
          by any state banking authorities.  Refer to your appropriate state
          banking authorities for your state publication requirements.


R E P O R T    O F     C O N D I T I O N


Consolidating domestic subsidiaries of the
 
           WILMINGTON TRUST COMPANY          of            WILMINGTON
- --------------------------------------------    -------------------------------
                 Name of Bank                                 City


in the State of DELAWARE, at the close of business on December 31, 1995.
                --------

ASSETS

<TABLE>
<CAPTION>                                                            
                                                               Thousands of dollars
<S>                                                  <C>                  <C>
Cash and balances due from depository institutions:
      Noninterest-bearing balances and currency
        and coins.......................................................    242,765
      Interest-bearing balances.........................................          0
Held-to-maturity securities.............................................    448,091
Available-for-sale securities...........................................    873,294
Federal funds sold......................................................          0
Securities purchased under agreements to resell.........................     78,866
Loans and lease financing receivables:
      Loans and leases, net of unearned income...... 3,441,294
      LESS:  Allowance for loan and lease losses....    47,663
      LESS:  Allocated transfer risk reserve........         0
      Loans and leases, net of unearned income,
        allowance, and reserve..........................................  3,393,631
Assets held in trading accounts.........................................          0
Premises and fixed assets (including capitalized
  leases)...............................................................     74,915
Other real estate owned.................................................     13,084
Investments in unconsolidated subsidiaries and
  associated companies..................................................        171
Customers' liability to this bank on acceptances
  outstanding...........................................................          0
Intangible assets.......................................................      4,526
Other assets............................................................    108,197
Total assets............................................................  5,237,540
 
</TABLE>

                                                          CONTINUED ON NEXT PAGE
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES
<S>                                                  <C>                  <C>
 
Deposits:
In domestic offices.....................................................  3,456,791
      Noninterest-bearing..........................    743,460
      Interest-bearing.............................  2,713,331
Federal funds purchased.................................................     84,855
Securities sold under agreements to repurchase..........................    158,903
Demand notes issued to the U.S. Treasury................................     29,389
Trading liabilities.....................................................          0
Other borrowed money:...................................................    ///////
      With original maturity of one year or less........................    960,000
      With original maturity of more than one year......................     28,000
Mortgage indebtedness and obligations under
  capitalized leases....................................................      1,887
Bank's liability on acceptances executed and
  outstanding...........................................................          0
Subordinated notes and debentures.......................................          0
Other liabilities.......................................................    100,981
Total liabilities.......................................................  4,820,806
Limited-life preferred stock and related surplus........................          0
 
 
 
EQUITY CAPITAL
 
Perpetual preferred stock and related surplus...........................          0
Common Stock............................................................        500
Surplus.................................................................     62,118
Undivided profits and capital reserves..................................    349,963
Net unrealized holding gains (losses) on available-
  for-sale securities...................................................      4,153
Total equity capital....................................................    416,734
Total liabilities, limited-life preferred stock,
  and equity capital....................................................  5,237,540
</TABLE>

                                       2

<PAGE>
 
                                          Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM T-1

        STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X
                  ---

                           WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


        Delaware                                         51-0055023
(State of incorporation)                 (I.R.S. employer identification no.)

                              Rodney Square North
                           1100 North Market Street
                          Wilmington, Delaware  19890
                   (Address of principal executive offices)

                              Myfanwy P. Bonilla
                    Asst. Vice President and Trust Counsel
                           Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                (302) 651-8914
           (Name, address and telephone number of agent for service)


                                 MCI CAPITAL I


              (Exact name of obligor as specified in its charter)

 
        Delaware                                 Applied For
(State of incorporation            (I.R.S. employer identification no.)
     or formation)

    1801 Pennsylvania Avenue, N.W.
          Washington, D.C.                               20006
(Address of principal executive offices)            (Zip Code)
<PAGE>
 
          ____ % Cumulative Quarterly Income Preferred Securities of
                                 MCI Capital I
                      (Title of the indenture securities)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                       2
<PAGE>
 
ITEM 1.   GENERAL INFORMATION.

          Furnish the following information as to the trustee:

     (a)  Name and address of each examining or supervising authority to which
          it is subject.

          Federal Deposit Insurance Co.      State Bank Commissioner
          Five Penn Center                   Dover, Delaware
          Suite #2901
          Philadelphia, PA

     (b)  Whether it is authorized to exercise corporate trust powers.

          The trustee is authorized to exercise corporate trust powers.

ITEM 2.   AFFILIATIONS WITH THE OBLIGOR.

          If the obligor is an affiliate of the trustee, describe each
     affiliation:

          Based upon an examination of the books and records of the trustee and
          upon information furnished by the obligor, the obligor is not an
          affiliate of the trustee.

ITEM 3.   LIST OF EXHIBITS.

          List below all exhibits filed as part of this Statement of Eligibility
     and Qualification.

     A.   Copy of the Charter of Wilmington Trust Company, which includes the
          certificate of authority of Wilmington Trust Company to commence
          business and the authorization of Wilmington Trust Company to exercise
          corporate trust powers.
     B.   Copy of By-Laws of Wilmington Trust Company.
     C.   Consent of Wilmington Trust Company required by Section 321(b) of
          Trust Indenture Act.
     D.   Copy of most recent Report of Condition of Wilmington Trust Company.

     Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                       WILMINGTON TRUST COMPANY


Attest:/s/ Lloyd O. Martin                   By:/s/ David P. Fontello
       -------------------                      ------------------------- 

                                       3
<PAGE>
 
Assistant Secretary                          Name:  David P. Fontello
                                             Title:  Vice President

                                       4
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                          AS EXISTING ON MAY 9, 1987
<PAGE>
 
                                AMENDED CHARTER

                                      OR

                             ACT OF INCORPORATION

                                      OF

                           WILMINGTON TRUST COMPANY

     WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

     SECOND: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.
<PAGE>
 
     THIRD: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1)  To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common seal, and alter the seal at
          pleasure, to hold, purchase, convey, mortgage or otherwise deal in
          real and personal estate and property, and to appoint such officers
          and agents as the business of the Corporation shall require, to make
          by-laws not inconsistent with the Constitution or laws of the United
          States or of this State, to discount bills, notes or other evidences
          of debt, to receive deposits of money, or securities for money, to buy
          gold and silver bullion and foreign coins, to buy and sell bills of
          exchange, and generally to use, exercise and enjoy all the powers,
          rights, privileges and franchises incident to a corporation which are
          proper or necessary for the transaction of the business of the
          Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate or
          interests therein, and to guarantee the holder of such property, real
          or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.

                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any contract
          or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator,

                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the receiving,
          holding, managing, and disposing of any and all estates and property,
          real, personal or mixed, and to be appointed as such trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, guardian or bailee by any persons, corporations, court,
          officer, or authority, in the State of Delaware or elsewhere; and
          whenever this Corporation is so appointed by any person, corporation,
          court, officer or authority such trustee, trustee in bankruptcy,
          receiver, assignee, assignee in bankruptcy, executor, administrator,
          guardian, bailee, or in any other trust capacity, it shall not be
          required to give bond with surety, but its capital stock shall be
          taken and held as security for the performance of the duties devolving
          upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages, debentures,
          shares of capital stock, and other securities, obligations, contracts
          and evidences of indebtedness, of any private, public or municipal
          corporation within and without the State of Delaware, or of the
          Government of the United States, or of any state, territory, colony,
          or possession thereof, or of any foreign government or country; to
          receive, collect, receipt for, and dispose of interest, dividends and
          income upon and from any of the bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property held and owned by it, and to
          exercise in respect of all such bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property, any and all the rights, powers and
          privileges of individual owners thereof, including the right to vote
          thereon; to invest and deal in and with

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and to
          undertake the whole or any part of the assets and liabilities of any
          person, firm, association or corporation, and to pay for the same in
          cash, stock of this Corporation, bonds or otherwise; to hold or in any
          manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3)  To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any manner whatever dispose of
          property, real, personal or mixed, wherever situated.

          (4)  To enter into, make, perform and carry out contracts of every
          kind with any person, firm, association or corporation, and, without
          limit as to
                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount, execute and issue
          promissory notes, drafts, bills of exchange, warrants, bonds,
          debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     FOURTH: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if 

                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject to
          redemption, and the redemption price or prices and the time or times
          at which, and the terms and conditions on which, Preferred Stock of
          such 

                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase account,
          if any, to be provided for the Preferred Stock of such series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     FOURTH, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article FOURTH), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation, 

                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article FOURTH, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or

                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article FOURTH and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article FOURTH that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     FIFTH: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the 

                                      10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting. Any vacancies in the Board
     of Directors for any reason, and any newly created directorships resulting
     from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to 

                                      11
<PAGE>
 
     vote for the election of directors. Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders. Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     SIXTH: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     SEVENTH: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.

                                      12
<PAGE>
 
     EIGHTH: - This Act shall be deemed and taken to be a private Act.

     NINTH: - This Corporation is to have perpetual existence.

     TENTH: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     ELEVENTH: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     TWELFTH: - The Corporation may transact business in any part of the world.

     THIRTEENTH: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     FOURTEENTH: - Meetings of the Directors may be held outside
     of the State of Delaware at such places as may be from time to time
     designated by the Board, and the Directors may keep the books of the
     Company outside of the State of Delaware at such places as may be from time
     to time designated by them.

     FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article FIFTEENTH:

                                      13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any Subsidiary
          (as hereinafter defined) with or into (i) any Interested Stockholder
          (as hereinafter defined) or (ii) any other corporation (whether or not
          itself an Interested Stockholder), which, after such merger or
          consolidation, would be an Affiliate (as hereinafter defined) of an
          Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value of $1,000,000 or
          more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary (in
          one transaction or a series of related transactions) of any securities
          of the Corporation or any Subsidiary to any Interested Stockholder or
          any Affiliate of any Interested Stockholder in exchange for cash,
          securities or other property (or a combination thereof) having an
          aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the 

                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares").  Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               FIFTEENTH shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article FIFTEENTH shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article FIFTEENTH:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which 

                                      15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares deemed owned
     through application of paragraph (3) above but shall not include any other
     Voting Shares which may be issuable pursuant to any agreement, or upon
     exercise of conversion rights, warrants or options or otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a 

                                      16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.


          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article FIFTEENTH on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article FIFTEENTH shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     SIXTEENTH:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
     SIXTEENTH of this Charter or Act of Incorporation.

     SEVENTEENTH: (a)  a Director of this Corporation shall not be liable to the
     Corporation or its stockholders for 

                                      17
<PAGE>
 
     monetary damages for breach of fiduciary duty as a Director, except to the
     extent such exemption from liability or limitation thereof is not permitted
     under the Delaware General Corporation Laws as the same exists or may
     hereafter be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."

                                      18
<PAGE>
 
               I ___________________________________________

               _________________ Secretary of WILMINGTON TRUST COMPANY, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of WILMINGTON TRUST COMPANY,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of WILMINGTON TRUST COMPANY.

               Date __________________


                         _______________________________________
                         Secretary
<PAGE>
 
                                   EXHIBIT B

                                    BY-LAWS



                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                       AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                            STOCKHOLDERS' MEETINGS


     Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

     Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

     Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

     Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                  ARTICLE II
                                   DIRECTORS

     Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

     Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
<PAGE>
 
     Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

     Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

     Section 5.  Regular meetings of the Board of Directors shall be held on the
third Thursday of each month at the principal office of the Company, or at such
other place and time as may be designated by the Board of Directors, the
Chairman of the Board, or the President.

     Section 6.  Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

     Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

     Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

     Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

     Section 10.  The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person.  The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, 

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

     Section 11.  The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

     Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.

                                       3
<PAGE>
 
                                  ARTICLE III
                                  COMMITTEES


     Section I.  Executive Committee

                 (A)  The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.

                 (B)  The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.

                 (C)  The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at least once a week in each week
the Board is not regularly scheduled to meet. A majority of its members shall be
necessary to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

                 (D)  Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.

                 (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

                 (F)  In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is

                                       4
<PAGE>
 
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be empowered to
exercise all of the powers reserved to the Trust Committee under Article III
Section 2 hereof. In the event of the unavailability, at such time, of a minimum
of two members of such Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and management of the
affairs and business of the Company in accordance with the foregoing provisions
of this Section.  This By-Law shall be subject to implementation by Resolutions
of the Board of Directors presently existing or hereafter passed from time to
time for that purpose, and any provisions of these By-Laws(other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary Resolutions shall be
suspended during such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its affairs and
business under all of the other provisions of these By-Laws.

     Section 2.  Trust Committee
 
                 (A)  The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.

                 (B)  The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.

                 (C)  The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority of
its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when a
quorum is present.

                 (D)  Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of 

                                       5
<PAGE>
 
Directors.
 
                 (E)  The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

     Section 3.  Audit Committee

                 (A)  The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.

                 (B)  The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

                 (C)  The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.

     Section 4.  Compensation Committee

                 (A)  The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.

                 (B)  The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall 

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

                 (C)  Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.

     Section 5.  Associate Directors

                 (A)  Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.

                 (B)  An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

     Section 6.  Absence or Disqualification of Any Member of a Committee

                 (A)  In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.


                                  ARTICLE IV
                                   OFFICERS

     Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of 

                                       7
<PAGE>
 
the Company.

     Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

     Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

     Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

     Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

     Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of 

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

     Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

     There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

     Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

     There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

     Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

     Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.


                                   ARTICLE V
                         STOCK AND STOCK CERTIFICATES

                                       9
<PAGE>
 
          Section 1.  Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

          Section 2.  Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

          Section 3.  The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                  ARTICLE VI
                                     SEAL

      Section 1.  The corporate seal of the Company shall be in the following
form:

                 Between two concentric circles the words
                 "Wilmington Trust Company" within the inner

                                      10
<PAGE>
 
                 circle the words "Wilmington, Delaware."

                                      11
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

     Section 1.  The fiscal year of the Company shall be the calendar year.


                                 ARTICLE VIII
                    EXECUTION OF INSTRUMENTS OF THE COMPANY

     Section 1.  The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                  ARTICLE IX
              COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

     Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors 

                                      12
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.

                                      13
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

     Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

                 (B)  The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
                                                              --------  -------
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

                 (C)  If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.

                 (D)  The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such 

                                      14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

                 (E)  Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.

                                      15
<PAGE>
 
                                  ARTICLE XI
                           AMENDMENTS TO THE BY-LAWS

          Section 1.  These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.



                    I, .........................................................
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date .......................................................

                      ..........................................................
                    Assistant Secretary

                                      16
<PAGE>
 
                                                                       EXHIBIT C



                            SECTION 321(B) CONSENT


     Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                                        WILMINGTON TRUST COMPANY


Dated: April 15, 1996                   By:  /s/ David P. Fontello
                                            --------------------------
                                             Name: David P. Fontello
                                             Title: Vice President
<PAGE>
 
                                  EXHIBIT "D"



                                    NOTICE


          This form is intended to assist state nonmember banks and savings
          banks with state publication requirements.  It has not been approved
          by any state banking authorities. Refer to your appropriate state
          banking authorities for your state publication requirements.


R E P O R T    O F    C O N D I T I O N

Consolidating domestic subsidiaries of the
 
     WILMINGTON TRUST COMPANY         of  WILMINGTON
- --------------------------------------  --------------
       Name of Bank              


                City
 
in the State of DELAWARE , at the close of business on December 31, 1995.
               -----------

<TABLE>
<CAPTION>
ASSETS
                                                                                                    Thousands of dollars
Cash and balances due from depository institutions:

<S>                                                                                                 <C>
     Noninterest-bearing balances and currency and coins........................................................ 242,765
     Interest-bearing balances......................................................................................   0
Held-to-maturity securities..................................................................................... 448,091
Available-for-sale securities................................................................................... 873,294
Federal funds sold..................................................................................................   0
Securities purchased under agreements to resell.................................................................. 78,866
Loans and lease financing receivables:
     Loans and leases, net of unearned income............. 3,441,294
     LESS:  Allowance for loan and lease losses..........    47,663
     LESS:  Allocated transfer risk reserve..................   0
     Loans and leases, net of unearned income, allowance, and reserve......................................... 3,393,631
Assets held in trading accounts.....................................................................................   0
Premises and fixed assets (including capitalized leases)......................................................... 74,915
Other real estate owned.......................................................................................... 13,084
Investments in unconsolidated subsidiaries and associated companies................................................. 171
Customers' liability to this bank on acceptances outstanding........................................................   0
Intangible assets................................................................................................. 4,526
Other assets.................................................................................................... 108,197
Total assets.................................................................................................. 5,237,540
</TABLE>

                                                          CONTINUED ON NEXT PAGE
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES
<S>
Deposits:                                                                                                      <C> 
In domestic offices........................................................................................... 3,456,791
      Noninterest-bearing...............  743,460
      Interest-bearing................. 2,713,331
Federal funds purchased.......................................................................................... 84,855
Securities sold under agreements to repurchase.................................................................. 158,903
Demand notes issued to the U.S. Treasury......................................................................... 29,389
Trading liabilities.................................................................................................   0
Other borrowed money:........................................................................................... ///////
      With original maturity of one year or less................................................................ 960,000
      With original maturity of more than one year............................................................... 28,000
Mortgage indebtedness and obligations under capitalized leases.................................................... 1,887
Bank's liability on acceptances executed and outstanding............................................................   0
Subordinated notes and debentures...................................................................................   0
Other liabilities............................................................................................... 100,981
Total liabilities............................................................................................. 4,820,806
Limited-life preferred stock and related surplus....................................................................   0



EQUITY CAPITAL

Perpetual preferred stock and related surplus.......................................................................   0
Common Stock........................................................................................................ 500
Surplus.......................................................................................................... 62,118
Undivided profits and capital reserves.......................................................................... 349,963
Net unrealized holding gains (losses) on available-for-sale securities............................................ 4,153
Total equity capital............................................................................................ 416,734
Total liabilities, limited-life preferred stock, and equity capital........................................... 5,237,540
</TABLE>

                                       2

<PAGE>
 
                                          Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM T-1

        STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X
                  ---

                           WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


        Delaware                                         51-0055023
(State of incorporation)                 (I.R.S. employer identification no.)

                              Rodney Square North
                           1100 North Market Street
                          Wilmington, Delaware  19890
                   (Address of principal executive offices)

                              Myfanwy P. Bonilla
                    Asst. Vice President and Trust Counsel
                           Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                (302) 651-8914
           (Name, address and telephone number of agent for service)


                                MCI CAPITAL II


              (Exact name of obligor as specified in its charter)

 
        Delaware                                 Applied For
(State of incorporation            (I.R.S. employer identification no.)
     or formation)

     1801 Pennsylvania Avenue, N.W.
           Washington, D.C.                             20006
(Address of principal executive offices)              (Zip Code)
<PAGE>
 
          ____ % Cumulative Quarterly Income Preferred Securities of
                                MCI Capital II
                      (Title of the indenture securities)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                       2
<PAGE>
 
ITEM 1.   GENERAL INFORMATION.

          Furnish the following information as to the trustee:

     (a)  Name and address of each examining or supervising authority to which
          it is subject.

          Federal Deposit Insurance Co.      State Bank Commissioner
          Five Penn Center                   Dover, Delaware
          Suite #2901
          Philadelphia, PA

     (b)  Whether it is authorized to exercise corporate trust powers.

          The trustee is authorized to exercise corporate trust powers.

ITEM 2.   AFFILIATIONS WITH THE OBLIGOR.

          If the obligor is an affiliate of the trustee, describe each
     affiliation:

          Based upon an examination of the books and records of the trustee and
          upon information furnished by the obligor, the obligor is not an
          affiliate of the trustee.

ITEM 3.   LIST OF EXHIBITS.

          List below all exhibits filed as part of this Statement of Eligibility
     and Qualification.

     A.   Copy of the Charter of Wilmington Trust Company, which includes the
          certificate of authority of Wilmington Trust Company to commence
          business and the authorization of Wilmington Trust Company to exercise
          corporate trust powers.
     B.   Copy of By-Laws of Wilmington Trust Company.
     C.   Consent of Wilmington Trust Company required by Section 321(b) of
          Trust Indenture Act.
     D.   Copy of most recent Report of Condition of Wilmington Trust Company.

     Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                   WILMINGTON TRUST COMPANY


Attest:/s/ Lloyd O. Martin               By: /s/ David P. Fontello
       -------------------                  -------------------------   

                                       3
<PAGE>
 
Assistant Secretary                      Name:  David P. Fontello
                                         Title:  Vice President

                                       4
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                          AS EXISTING ON MAY 9, 1987
<PAGE>
 
                                AMENDED CHARTER

                                      OR

                             ACT OF INCORPORATION

                                      OF

                           WILMINGTON TRUST COMPANY

     WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

     SECOND: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.
<PAGE>
 
     THIRD: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1)  To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common seal, and alter the seal at
          pleasure, to hold, purchase, convey, mortgage or otherwise deal in
          real and personal estate and property, and to appoint such officers
          and agents as the business of the Corporation shall require, to make
          by-laws not inconsistent with the Constitution or laws of the United
          States or of this State, to discount bills, notes or other evidences
          of debt, to receive deposits of money, or securities for money, to buy
          gold and silver bullion and foreign coins, to buy and sell bills of
          exchange, and generally to use, exercise and enjoy all the powers,
          rights, privileges and franchises incident to a corporation which are
          proper or necessary for the transaction of the business of the
          Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate or
          interests therein, and to guarantee the holder of such property, real
          or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.

                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any contract
          or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator,
                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the receiving,
          holding, managing, and disposing of any and all estates and property,
          real, personal or mixed, and to be appointed as such trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, guardian or bailee by any persons, corporations, court,
          officer, or authority, in the State of Delaware or elsewhere; and
          whenever this Corporation is so appointed by any person, corporation,
          court, officer or authority such trustee, trustee in bankruptcy,
          receiver, assignee, assignee in bankruptcy, executor, administrator,
          guardian, bailee, or in any other trust capacity, it shall not be
          required to give bond with surety, but its capital stock shall be
          taken and held as security for the performance of the duties devolving
          upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages, debentures,
          shares of capital stock, and other securities, obligations, contracts
          and evidences of indebtedness, of any private, public or municipal
          corporation within and without the State of Delaware, or of the
          Government of the United States, or of any state, territory, colony,
          or possession thereof, or of any foreign government or country; to
          receive, collect, receipt for, and dispose of interest, dividends and
          income upon and from any of the bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property held and owned by it, and to
          exercise in respect of all such bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property, any and all the rights, powers and
          privileges of individual owners thereof, including the right to vote
          thereon; to invest and deal in and with

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and to
          undertake the whole or any part of the assets and liabilities of any
          person, firm, association or corporation, and to pay for the same in
          cash, stock of this Corporation, bonds or otherwise; to hold or in any
          manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3)  To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any manner whatever dispose of
          property, real, personal or mixed, wherever situated.

          (4) To enter into, make, perform and carry out contracts of every kind
          with any person, firm, association or corporation, and, without limit
          as to 

                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount, execute and
          issue promissory notes, drafts, bills of exchange, warrants, bonds,
          debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     FOURTH: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if 

                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject to
          redemption, and the redemption price or prices and the time or times
          at which, and the terms and conditions on which, Preferred Stock of
          such 

                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase account,
          if any, to be provided for the Preferred Stock of such series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     FOURTH, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article FOURTH), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation, 

                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article FOURTH, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or

                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article FOURTH and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article FOURTH that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     FIFTH: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the 

                                      10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting. Any vacancies in the Board
     of Directors for any reason, and any newly created directorships resulting
     from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to 

                                      11
<PAGE>
 
     vote for the election of directors.  Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders.  Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     SIXTH: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     SEVENTH: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.

                                      12
<PAGE>
 
     EIGHTH: - This Act shall be deemed and taken to be a private Act.

     NINTH: - This Corporation is to have perpetual existence.

     TENTH: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     ELEVENTH: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     TWELFTH: - The Corporation may transact business in any part of the world.

     THIRTEENTH: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     FOURTEENTH: - Meetings of the Directors may be held outside

     of the State of Delaware at such places as may be from time to time
     designated by the Board, and the Directors may keep the books of the
     Company outside of the State of Delaware at such places as may be from time
     to time designated by them.

     FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article FIFTEENTH:

                                      13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any Subsidiary
          (as hereinafter defined) with or into (i) any Interested Stockholder
          (as hereinafter defined) or (ii) any other corporation (whether or not
          itself an Interested Stockholder), which, after such merger or
          consolidation, would be an Affiliate (as hereinafter defined) of an
          Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value of $1,000,000 or
          more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary (in
          one transaction or a series of related transactions) of any securities
          of the Corporation or any Subsidiary to any Interested Stockholder or
          any Affiliate of any Interested Stockholder in exchange for cash,
          securities or other property (or a combination thereof) having an
          aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the 

                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               FIFTEENTH shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article FIFTEENTH shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article FIFTEENTH:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which 

                                      15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares
     deemed owned through application of paragraph (3) above but shall not
     include any other Voting Shares which may be issuable pursuant to any
     agreement, or upon exercise of conversion rights, warrants or options or
     otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a 

                                      16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.

          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article FIFTEENTH on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article FIFTEENTH shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     SIXTEENTH:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
     SIXTEENTH of this Charter or Act of Incorporation.

     SEVENTEENTH: (a)  a Director of this Corporation shall not be liable to the
     Corporation or its stockholders for 

                                      17
<PAGE>
 
     monetary damages for breach of fiduciary duty as a Director, except to the
     extent such exemption from liability or limitation thereof is not permitted
     under the Delaware General Corporation Laws as the same exists or may
     hereafter be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."

                                      18
<PAGE>
 
               I ___________________________________________

               _________________ Secretary of WILMINGTON TRUST COMPANY, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of WILMINGTON TRUST COMPANY,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of WILMINGTON TRUST COMPANY.

               Date __________________


                         _______________________________________
                         Secretary
<PAGE>
 
                                   EXHIBIT B

                                    BY-LAWS


                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                       AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                            STOCKHOLDERS' MEETINGS


     Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

     Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

     Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

     Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                  ARTICLE II
                                   DIRECTORS

     Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

     Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
<PAGE>
 
     Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

     Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

     Section 5.  Regular meetings of the Board of Directors shall be held on the
third Thursday of each month at the principal office of the Company, or at such
other place and time as may be designated by the Board of Directors, the
Chairman of the Board, or the President.

     Section 6.  Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

     Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

     Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

     Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

     Section 10.  The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person.  The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, 

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

     Section 11.  The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

     Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.

                                       3
<PAGE>
 
                                  ARTICLE III
                                  COMMITTEES


     Section I.  Executive Committee

                 (A)  The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.

                 (B)  The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.

                 (C)  The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at least once a week in each week
the Board is not regularly scheduled to meet.  A majority of its members shall
be necessary to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

                 (D)  Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.

                 (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

                 (F)  In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as

                                       4
<PAGE>
 
constituted immediately prior to such disaster shall constitute a quorum of that
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the provisions of Article III of these By-Laws; and
if less than three members of the Trust Committee is constituted immediately
prior to such disaster shall be available for the transaction of its business,
such Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the event
of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section.  This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws(other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive Committee
acting under this section that it shall be to the advantage of the Company to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-Laws.

     Section 2.  Trust Committee
 
                 (A)  The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.

                 (B)  The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.

                 (C)  The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority of
its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when a
quorum is present.

                 (D)  Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of 

                                       5
<PAGE>
 
Directors.
 
                 (E)  The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

     Section 3.  Audit Committee

                 (A)  The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.

                 (B)  The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

                 (C)  The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.

     Section 4.  Compensation Committee

                 (A)  The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.

                 (B)  The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall 

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

                 (C)  Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.

     Section 5.  Associate Directors

                 (A)  Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.

                 (B)  An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote.  An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

     Section 6.  Absence or Disqualification of Any Member of a Committee

                 (A)  In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.


                                  ARTICLE IV
                                   OFFICERS

     Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of 

                                       7
<PAGE>
 
the Company.

     Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

     Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

     Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

     Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

     Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of 

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

     Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

     There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

     Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

     There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

     Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

     Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

                                   ARTICLE V
                         STOCK AND STOCK CERTIFICATES

                                       9
<PAGE>
 
          Section 1.  Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

          Section 2.  Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

          Section 3.  The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                  ARTICLE VI
                                     SEAL

     Section 1.  The corporate seal of the Company shall be in the following
form:

                 Between two concentric circles the words
                 "Wilmington Trust Company" within the inner

                                      10
<PAGE>
 
                 circle the words "Wilmington, Delaware."

                                      11
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

     Section 1.  The fiscal year of the Company shall be the calendar year.


                                 ARTICLE VIII
                    EXECUTION OF INSTRUMENTS OF THE COMPANY

     Section 1.  The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                  ARTICLE IX
              COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

     Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors 

                                      12
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.

                                      13
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

     Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

                 (B)  The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
                                                              --------  -------
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

                 (C)  If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.

                 (D)  The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such

                                      14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

                 (E)  Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.

                                      15
<PAGE>
 
                                  ARTICLE XI
                           AMENDMENTS TO THE BY-LAWS

     Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.



                    I, .........................................................
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date .......................................................

                     ...........................................................
                    Assistant Secretary

                                      16
<PAGE>
 
                                                                       EXHIBIT C



                            SECTION 321(B) CONSENT


     Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                                        WILMINGTON TRUST COMPANY


Dated: April 15, 1996                   By:  /s/ David P. Fontello
                                            --------------------------
                                            Name: David P. Fontello
                                            Title: Vice President
<PAGE>
 
                                  EXHIBIT "D"



                                    NOTICE


          This form is intended to assist state nonmember banks and savings
          banks with state publication requirements.  It has not been approved
          by any state banking authorities. Refer to your appropriate state
          banking authorities for your state publication requirements.

R E P O R T    O F    C O N D I T I O N
 
Consolidating domestic subsidiaries of the
 
     WILMINGTON TRUST COMPANY         of  WILMINGTON
- --------------------------------------  ---------------
       Name of Bank                 


                City
 
in the State of DELAWARE , at the close of business on December 31, 1995.
               ----------
<TABLE>
<CAPTION>
ASSETS
                                                                                         Thousands of dollars

<S>                                                                                      <C>
Cash and balances due from depository institutions:
     Noninterest-bearing balances and currency and coins............................................. 242,765
     Interest-bearing balances............................................................................  0
Held-to-maturity securities.......................................................................... 448,091
Available-for-sale securities........................................................................ 873,294
Federal funds sold........................................................................................  0
Securities purchased under agreements to resell....................................................... 78,866
Loans and lease financing receivables:
     Loans and leases, net of unearned income....... 3,441,294                                     
     LESS:  Allowance for loan and lease losses.....    47,663                                     
     LESS:  Allocated transfer risk reserve.......        0                                        
     Loans and leases, net of unearned income, allowance, and reserve.............................. 3,393,631
Assets held in trading accounts...........................................................................  0
Premises and fixed assets (including capitalized leases).............................................. 74,915
Other real estate owned............................................................................... 13,084
Investments in unconsolidated subsidiaries and associated companies...................................... 171
Customers' liability to this bank on acceptances outstanding..............................................  0
Intangible assets...................................................................................... 4,526
Other assets......................................................................................... 108,197
Total assets....................................................................................... 5,237,540
</TABLE>

                                                          CONTINUED ON NEXT PAGE
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES

<S>                                                                                                 <C>
Deposits:
In domestic offices................................................................................ 3,456,791
     Noninterest-bearing............. 743,460
     Interest-bearing.............. 2,713,331
Federal funds purchased............................................................................... 84,855
Securities sold under agreements to repurchase....................................................... 158,903
Demand notes issued to the U.S. Treasury.............................................................. 29,389
Trading liabilities.......................................................................................  0
Other borrowed money:................................................................................ ///////
     With original maturity of one year or less...................................................... 960,000
     With original maturity of more than one year..................................................... 28,000
Mortgage indebtedness and obligations under capitalized leases......................................... 1,887
Bank's liability on acceptances executed and outstanding..................................................  0
Subordinated notes and debentures.........................................................................  0
Other liabilities.................................................................................... 100,981
Total liabilities.................................................................................. 4,820,806
Limited-life preferred stock and related surplus..........................................................  0


EQUITY CAPITAL

Perpetual preferred stock and related surplus.............................................................  0
Common Stock............................................................................................. 500
Surplus............................................................................................... 62,118
Undivided profits and capital reserves............................................................... 349,963
Net unrealized holding gains (losses) on available-for-sale securities................................. 4,153
Total equity capital................................................................................. 416,734
Total liabilities, limited-life preferred stock, and equity capital................................ 5,237,540
</TABLE>

                                       2

<PAGE>
 
                                                                Registration No.
================================================================================

                    SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM T-1

       STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X 
                  ---

                          WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


        Delaware                                         51-0055023
(State of incorporation)                 (I.R.S. employer identification no.)

                              Rodney Square North
                           1100 North Market Street
                          Wilmington, Delaware  19890
                   (Address of principal executive offices)

                              Myfanwy P. Bonilla
                    Asst. Vice President and Trust Counsel
                           Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                (302) 651-8914
           (Name, address and telephone number of agent for service)


                        MCI COMMUNICATIONS CORPORATION


              (Exact name of obligor as specified in its charter)

                                                         
        Delaware                                     52-0886267
(State of incorporation                (I.R.S. employer identification no.)
     or formation)

    1801 Pennsylvania Avenue, N.W.
          Washington, D.C.                                  20006
(Address of principal executive offices)                 (Zip Code)
<PAGE>
 
     Guarantee of Cumulative Quarterly Income Preferred Securities
              of MCI Capital II by MCI Communications Corporation
                      (Title of the indenture securities)
                                                                               
================================================================================
<PAGE>
 
ITEM 1.      GENERAL INFORMATION.

             Furnish the following information as to the trustee:

        (a)  Name and address of each examining or supervising authority to 
             which it is subject.

             Federal Deposit Insurance Co.      State Bank Commissioner
             Five Penn Center                   Dover, Delaware
             Suite #2901
             Philadelphia, PA

        (b)  Whether it is authorized to exercise corporate trust powers.

             The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

             If the obligor is an affiliate of the trustee, describe each
        affiliation:

             Based upon an examination of the books and records of the trustee 
             and upon information furnished by the obligor, the obligor is not 
             an affiliate of the trustee.

ITEM 3.  LIST OF EXHIBITS.

             List below all exhibits filed as part of this Statement of
        Eligibility and Qualification.

        A.   Copy of the Charter of Wilmington Trust Company, which             
             includes the certificate of authority of Wilmington              
             Trust Company to commence business and the authorization           
             of Wilmington Trust Company to exercise corporate trust            
             powers.
        B.   Copy of By-Laws of Wilmington Trust Company.
        C.   Consent of Wilmington Trust Company required by Section 321(b)     
             of Trust Indenture Act.
        D.   Copy of most recent Report of Condition of Wilmington              
             Trust Company.

        Pursuant to the requirements of the Trust Indenture Act of 1939, the 
trustee, Wilmington Trust Company, a corporation organized and existing under 
the laws of Delaware, has duly caused this Statement of Eligibility to be 
signed on its behalf by the undersigned, thereunto duly authorized, all in the 
City of Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                   WILMINGTON TRUST COMPANY


Attest: /s/ Lloyd O. Martin               By: /s/ David P. Fontello 
        -------------------                   ---------------------

                                       3
<PAGE>
 
        Assistant Secretary               Name: David P. Fontello    
                                          Title:  Vice President

                                       1
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                          AS EXISTING ON MAY 9, 1987
<PAGE>
 
                              AMENDED CHARTER

                                    OR

                           ACT OF INCORPORATION

                                    OF

                         WILMINGTON TRUST COMPANY

      WILMINGTON TRUST COMPANY, originally incorporated by an Act of the 
General Assembly of the State of Delaware, entitled "An Act to Incorporate the 
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the 
name of which company was changed to "WILMINGTON TRUST COMPANY" by an 
amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, 
and the Charter or Act of Incorporation of which company has been from time to 
time amended and changed by merger agreements pursuant to the corporation law 
for state banks and trust companies of the State of Delaware, does hereby alter 
and amend its Charter or Act of Incorporation so that the same as so altered 
and amended shall in its entirety read as follows:

      FIRST: - The name of this corporation is WILMINGTON TRUST 
      COMPANY.

      SECOND: - The location of its principal office in the State of 
      Delaware is at Rodney Square North, in the City of Wilmington, County of 
      New Castle; the name of its resident agent is WILMINGTON TRUST 
      COMPANY whose address is Rodney Square North, in said City.  In 
      addition to such principal office, the said corporation maintains and 
      operates branch offices in the City of Newark, New Castle County, 
      Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, 
      New Castle County, Delaware, at Greenville, New Castle County Delaware, 
      and at Milford Cross Roads, New Castle County, Delaware, and shall be 
      empowered to open, maintain and operate branch offices at Ninth and 
      Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market 
      Street, all in the City of Wilmington, New Castle County, Delaware, and 
      such other branch offices or places of business as may be authorized from 
      time to time by the agency or agencies of the government of the State of 
      Delaware empowered to confer such authority.
<PAGE>
 
      THIRD: - (a) The nature of the business and the objects and purposes 
      proposed to be transacted, promoted or carried on by this Corporation are 
      to do any or all of the things herein mentioned as fully and to the same 
      extent as natural persons might or could do and in any part of the world, 
      viz.:

            (1)  To sue and be sued, complain and defend in any Court of law or 
            equity and to make and use a common seal, and alter the seal at
            pleasure, to hold, purchase, convey, mortgage or otherwise deal in
            real and personal estate and property, and to appoint such officers
            and agents as the business of the Corporation shall require, to make
            by-laws not inconsistent with the Constitution or laws of the United
            States or of this State, to discount bills, notes or other evidences
            of debt, to receive deposits of money, or securities for money, to
            buy gold and silver bullion and foreign coins, to buy and sell bills
            of exchange, and generally to use, exercise and enjoy all the
            powers, rights, privileges and franchises incident to a corporation
            which are proper or necessary for the transaction of the business of
            the Corporation hereby created.

            (2)  To insure titles to real and personal property, or any estate 
            or interests therein, and to guarantee the holder of such property, 
            real or personal, against any claim or claims, adverse to his 
            interest therein, and to prepare and give certificates of title for 
            any lands or premises in the State of Delaware, or elsewhere.

            (3)  To act as factor, agent, broker or attorney in the receipt, 
            collection, custody, investment and management of funds, and the 
            purchase, sale, management and disposal of property of all 
            descriptions, and to prepare and execute all papers which may be 
            necessary or proper in such business.

            (4)  To prepare and draw agreements, contracts, deeds, leases, 
            conveyances, mortgages, bonds and legal papers of every 
            description, and to carry on the business of conveyancing in all 
            its branches.

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<PAGE>
 
            (5)  To receive upon deposit for safekeeping money, jewelry, plate, 
            deeds, bonds and any and all other personal property of every sort 
            and kind, from executors, administrators, guardians, public 
            officers, courts, receivers, assignees, trustees, and from all 
            fiduciaries, and from all other persons and individuals, and from 
            all corporations whether state, municipal, corporate or private, 
            and to rent boxes, safes, vaults and other receptacles for such 
            property.

            (6)  To act as agent or otherwise for the purpose of registering, 
            issuing, certificating, countersigning, transferring or 
            underwriting the stock, bonds or other obligations of any 
            corporation, association, state or municipality, and may receive 
            and manage any sinking fund therefor on such terms as may be agreed 
            upon between the two parties, and in like manner may act as 
            Treasurer of any corporation or municipality.

            (7)  To act as Trustee under any deed of trust, mortgage, bond or 
            other instrument issued by any state, municipality, body politic, 
            corporation, association or person, either alone or in conjunction 
            with any other person or persons, corporation or corporations.

            (8)  To guarantee the validity, performance or effect of any 
            contract or agreement, and the fidelity of persons holding places 
            of responsibility or trust; to become surety for any person, or 
            persons, for the faithful performance of any trust, office, duty, 
            contract or agreement, either by itself or in conjunction with any 
            other person, or persons, corporation, or corporations, or in like 
            manner become surety upon any bond, recognizance, obligation, 
            judgment, suit, order, or decree to be entered in any court of 
            record within the State of Delaware or elsewhere, or which may now 
            or hereafter be required by any law, judge, officer or court in the 
            State of Delaware or elsewhere.

            (9)  To act by any and every method of appointment as trustee, 
            trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, 
            executor, administrator, 

                                       3
<PAGE>
 
            guardian, bailee, or in any other trust capacity in the receiving,
            holding, managing, and disposing of any and all estates and
            property, real, personal or mixed, and to be appointed as such
            trustee, trustee in bankruptcy, receiver, assignee, assignee in
            bankruptcy, executor, administrator, guardian or bailee by any
            persons, corporations, court, officer, or authority, in the State of
            Delaware or elsewhere; and whenever this Corporation is so appointed
            by any person, corporation, court, officer or authority such
            trustee, trustee in bankruptcy, receiver, assignee, assignee in
            bankruptcy, executor, administrator, guardian, bailee, or in any
            other trust capacity, it shall not be required to give bond with
            surety, but its capital stock shall be taken and held as security
            for the performance of the duties devolving upon it by such
            appointment.

            (10)  And for its care, management and trouble, and the exercise of 
            any of its powers hereby given, or for the performance of any of 
            the duties which it may undertake or be called upon to perform, or 
            for the assumption of any responsibility the said Corporation may 
            be entitled to receive a proper compensation.

            (11)  To purchase, receive, hold and own bonds, mortgages, 
            debentures, shares of capital stock, and other securities, 
            obligations, contracts and evidences of indebtedness, of any 
            private, public or municipal corporation within and without the
            State of Delaware, or of the Government of the United States, or of
            any state, territory, colony, or possession thereof, or of any
            foreign government or country; to receive, collect, receipt for, and
            dispose of interest, dividends and income upon and from any of the
            bonds, mortgages, debentures, notes, shares of capital stock,
            securities, obligations, contracts, evidences of indebtedness and
            other property held and owned by it, and to exercise in respect of
            all such bonds, mortgages, debentures, notes, shares of capital
            stock, securities, obligations, contracts, evidences of indebtedness
            and other property, any and all the rights, powers and privileges of
            individual owners thereof, including the right to vote thereon; to
            invest and deal in and with 

                                       4
<PAGE>
 
            any of the moneys of the Corporation upon such securities and in
            such manner as it may think fit and proper, and from time to time to
            vary or realize such investments; to issue bonds and secure the same
            by pledges or deeds of trust or mortgages of or upon the whole or
            any part of the property held or owned by the Corporation, and to
            sell and pledge such bonds, as and when the Board of Directors shall
            determine, and in the promotion of its said corporate business of
            investment and to the extent authorized by law, to lease, purchase,
            hold, sell, assign, transfer, pledge, mortgage and convey real and
            personal property of any name and nature and any estate or interest
            therein.

      (b)  In furtherance of, and not in limitation, of the powers conferred by 
      the laws of the State of Delaware, it is hereby expressly provided that 
      the said Corporation shall also have the following powers:

            (1)  To do any or all of the things herein set forth, to the same 
            extent as natural persons might or could do, and in any part of the 
            world.

            (2)  To acquire the good will, rights, property and franchises and 
            to undertake the whole or any part of  the assets and liabilities 
            of any person, firm, association or corporation, and to pay for the 
            same in cash, stock of this Corporation, bonds or otherwise; to 
            hold or in any manner to dispose of the whole or any part of the 
            property so purchased; to conduct in any lawful manner the whole or 
            any part of any business so acquired, and to exercise all the 
            powers necessary or convenient in and about the conduct and 
            management of such business.

            (3) To take, hold, own, deal in, mortgage or otherwise lien, and to
            lease, sell, exchange, transfer, or in any manner whatever dispose
            of property, real, personal or mixed, wherever situated.

            (4)  To enter into, make, perform and carry out contracts of every 
            kind with any person, firm, association or corporation, and, 
            without limit as to

                                      5 
<PAGE>
 
            amount, to draw, make, accept, endorse, discount, execute and issue
            promissory notes, drafts, bills of exchange, warrants, bonds,
            debentures, and other negotiable or transferable instruments.

            (5)  To have one or more offices, to carry on all or any of its 
            operations and businesses, without restriction to the same extent 
            as natural persons might or could do, to purchase or otherwise 
            acquire, to hold, own, to mortgage, sell, convey or otherwise 
            dispose of, real and personal property, of every class and 
            description, in any State, District, Territory or Colony of the 
            United States, and in any foreign country or place.

            (6)  It is the intention that the objects, purposes and powers 
            specified and clauses contained in this paragraph shall (except 
            where otherwise expressed in said paragraph) be nowise limited or 
            restricted by reference to or inference from the terms of any other 
            clause of this or any other paragraph in this charter, but that the 
            objects, purposes and powers specified in each of the clauses of 
            this paragraph shall be regarded as independent objects, purposes 
            and powers.

      FOURTH: - (a)  The total number of shares of all classes of stock 
      which the Corporation shall have authority to issue is forty-one million 
      (41,000,000) shares, consisting of:

            (1)  One million (1,000,000) shares of Preferred stock, par value 
            $10.00 per share (hereinafter referred to as "Preferred Stock"); 
            and

            (2)  Forty million (40,000,000) shares of Common Stock, par value 
            $1.00 per share (hereinafter referred to as "Common Stock").

      (b)  Shares of Preferred Stock may be issued from time to time in one or 
      more series as may from time to time be determined by the Board of 
      Directors each of said series to be distinctly designated.  All shares of 
      any one series of Preferred Stock shall be alike in every particular, 
      except that there may be different dates from which dividends, if 

                                       6
<PAGE>
 
      any, thereon shall be cumulative, if made cumulative. The voting powers
      and the preferences and relative, participating, optional and other
      special rights of each such series, and the qualifications, limitations or
      restrictions thereof, if any, may differ from those of any and all other
      series at any time outstanding; and, subject to the provisions of
      subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
      Directors of the Corporation is hereby expressly granted authority to fix
      by resolution or resolutions adopted prior to the issuance of any shares
      of a particular series of Preferred Stock, the voting powers and the
      designations, preferences and relative, optional and other special rights,
      and the qualifications, limitations and restrictions of such series,
      including, but without limiting the generality of the foregoing, the
      following:

            (1)  The distinctive designation of, and the number of shares of 
            Preferred Stock which shall constitute such series, which number 
            may be increased (except where otherwise provided by the Board of 
            Directors) or decreased (but not below the number of shares thereof 
            then outstanding) from time to time by like action of the Board of 
            Directors;

            (2)  The rate and times at which, and the terms and conditions on 
            which, dividends, if any, on Preferred Stock of such series shall 
            be paid, the extent of the preference or relation, if any, of such 
            dividends to the dividends payable on any other class or classes, 
            or series of the same or other class of stock and whether  such 
            dividends shall be cumulative or non-cumulative;

            (3)  The right, if any, of the holders of Preferred Stock of such 
            series to convert the same into or exchange the same for, shares of 
            any other class or classes or of any series of the same or any 
            other class or classes of stock of the Corporation and the terms 
            and conditions of such conversion or exchange;

            (4)  Whether or not Preferred Stock of such series shall be subject 
            to redemption, and the redemption price or prices and the time or 
            times at which, and the terms and conditions on which, Preferred 
            Stock of such 

                                       7
<PAGE>
 
            series may be redeemed.

            (5)  The rights, if any, of the holders of Preferred Stock of such 
            series upon the voluntary or involuntary liquidation, merger, 
            consolidation, distribution or sale of assets, dissolution or 
            winding-up, of the Corporation.

            (6)  The terms of the sinking fund or redemption or purchase 
            account, if any, to be provided for the Preferred Stock of such 
            series; and

            (7)  The voting powers, if any, of the holders of such series of 
            Preferred Stock which may, without limiting the generality of the 
            foregoing include the right, voting as a series or by itself or 
            together with other series of Preferred Stock or all series of 
            Preferred Stock as a class, to elect one or more directors of the 
            Corporation if there shall have been a default in the payment of 
            dividends on any one or more series of Preferred Stock or under 
            such circumstances and on such conditions as the Board of Directors 
            may determine.

      (c)  (1)  After the requirements with respect to preferential dividends 
      on the Preferred Stock (fixed in accordance with the provisions of 
      section (b) of this Article FOURTH), if any, shall have been met and 
      after the Corporation shall have complied with all the requirements, if 
      any, with respect to the setting aside of sums as sinking funds or 
      redemption or purchase accounts (fixed in accordance with the provisions 
      of section (b) of this Article FOURTH), and subject further to any 
      conditions which may be fixed in accordance with the provisions of 
      section (b) of this Article FOURTH, then and not otherwise the 
      holders of Common Stock shall be entitled to receive such dividends as 
      may be declared from time to time by the Board of Directors.

            (2)  After distribution in full of the preferential amount, if any, 
            (fixed in accordance with the provisions of section (b) of this 
            Article FOURTH), to be distributed to the holders of Preferred 
            Stock in the event of voluntary or involuntary liquidation, 

                                       8
<PAGE>
 
            distribution or sale of assets, dissolution or winding-up, of the 
            Corporation, the holders of the Common Stock shall be entitled to 
            receive all of the remaining assets of the Corporation, tangible 
            and intangible, of whatever kind available for distribution to 
            stockholders ratably in proportion to the number of shares of 
            Common Stock held by them respectively.

            (3)  Except as may otherwise be required by law or by the 
            provisions of such resolution or resolutions as may be adopted by 
            the Board of Directors pursuant to section (b) of this Article 
            FOURTH, each holder of Common Stock shall have one vote in 
            respect of each share of Common Stock held on all matters voted 
            upon by the stockholders.

  (d)  No holder of any of the shares of any class or series of stock or of 
      options, warrants or other rights to purchase shares of any class or 
      series of stock or of other securities of the Corporation shall have any 
      preemptive right to purchase or subscribe for any unissued stock of any
      class or series or any additional shares of any class or series to be 
      issued by reason of any increase of the authorized capital stock of the 
      Corporation of any class or series, or bonds, certificates of 
      indebtedness, debentures or other securities convertible into or 
      exchangeable for stock of the Corporation of any class or series, or 
      carrying any right to purchase stock of any class or series, but any such 
      unissued stock, additional authorized issue of shares of any class or 
      series of stock or securities convertible into or exchangeable for stock, 
      or carrying any right to purchase stock, may be issued and disposed of 
      pursuant to resolution of the Board of Directors to such persons, firms, 
      corporations or associations, whether such holders or others, and upon 
      such terms as may be deemed advisable by the Board of Directors in the 
      exercise of its sole discretion.

      (e)  The relative powers, preferences and rights of each series of 
      Preferred Stock in relation to the relative powers, preferences and 
      rights of each other series of Preferred Stock shall, in each case, be as 
      fixed from time to time by the Board of Directors in the resolution or 

                                       9
<PAGE>
 
      resolutions adopted pursuant to authority granted in section (b) of this 
      Article FOURTH and the consent, by class or series vote or otherwise, 
      of the holders of such of the series of Preferred Stock as are from time 
      to time outstanding shall not be required for the issuance by the Board 
      of Directors of any other series of Preferred Stock whether or not the 
      powers, preferences and rights of such other series shall be fixed by the 
      Board of Directors as senior to, or on a parity with, the powers, 
      preferences and rights of such outstanding series, or any of them; 
      provided, however, that the Board of Directors may provide in the 
      resolution or resolutions as to any series of Preferred Stock adopted 
      pursuant to section (b) of this Article FOURTH that the consent of 
      the holders of a majority (or such greater proportion as shall be therein 
      fixed) of the outstanding shares of such series voting thereon shall be 
      required for the issuance of any or all other series of Preferred Stock.

      (f)  Subject to the provisions of section (e), shares of any series of 
      Preferred Stock may be issued from time to time as the Board of Directors 
      of the Corporation shall determine and on such terms and for such 
      consideration as shall be fixed by the Board of Directors.

      (g)  Shares of Common Stock may be issued from time to time as the Board 
      of Directors of the Corporation shall determine and on such terms and for 
      such consideration as shall be fixed by the Board of Directors.

       (h)  The authorized amount of shares of Common Stock and of Preferred 
      Stock may, without a class or series vote, be increased or decreased from 
      time to time by the affirmative vote of the holders of a majority of the 
      stock of the Corporation entitled to vote thereon.

      FIFTH: - (a)  The business and affairs of the Corporation shall be 
      conducted and managed by a Board of Directors.  The number of directors 
      constituting the entire Board shall be not less than five nor more than 
      twenty-five as fixed from time to time by vote of a majority of the whole 
      Board, provided, however, that the number of directors shall not be 
      reduced so as to shorten the term of any director at the 

                                      10
<PAGE>
 
      time in office, and provided further, that the number of directors
      constituting the whole Board shall be twenty-four until otherwise fixed by
      a majority of the whole Board.

      (b)  The Board of Directors shall be divided into three classes, as 
      nearly equal in number as the then total number of directors constituting 
      the whole Board permits, with the term of office of one class expiring 
      each year.  At the annual meeting of stockholders in 1982, directors of 
      the first class shall be elected to hold office for a term expiring at 
      the next succeeding annual meeting, directors of the second class shall 
      be elected to hold office for a term expiring at the second succeeding 
      annual meeting and directors of the third class shall be elected to hold 
      office for a term expiring at the third succeeding annual meeting.  Any 
      vacancies in the Board of Directors for any reason, and any newly created 
      directorships resulting from any increase in the directors, may be filled 
      by the Board of Directors, acting by a majority of the directors then in 
      office, although less than a quorum, and any directors so chosen shall 
      hold office until the next annual election of directors.  At such 
      election, the stockholders shall elect a successor to such director to 
      hold office until the next election of the class for which such director 
      shall have been chosen and until his successor shall be elected and 
      qualified.  No decrease in the number of directors shall shorten the term 
      of any incumbent director.

      (c)  Notwithstanding any other provisions of this Charter or Act of 
      Incorporation or the By-Laws of the Corporation (and notwithstanding the 
      fact that some lesser percentage may be specified by law, this Charter or 
      Act of Incorporation or the By-Laws of the Corporation), any director or 
      the entire Board of Directors of the Corporation may be removed at any 
      time without cause, but only by the affirmative vote of the holders of 
      two-thirds or more of the outstanding shares of capital stock of the 
      Corporation entitled to vote generally in the election of directors 
      (considered for this purpose as one class) cast at a meeting of the 
      stockholders called for that purpose.

      (d)  Nominations for the election of directors may be made by the Board 
      of Directors or by any stockholder entitled to 

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<PAGE>
 
      vote for the election of directors. Such nominations shall be made by
      notice in writing, delivered or mailed by first class United States mail,
      postage prepaid, to the Secretary of the Corporation not less than 14 days
      nor more than 50 days prior to any meeting of the stockholders called for
      the election of directors; provided, however, that if less than 21 days'
      notice of the meeting is given to stockholders, such written notice shall
      be delivered or mailed, as prescribed, to the Secretary of the Corporation
      not later than the close of the seventh day following the day on which
      notice of the meeting was mailed to stockholders. Notice of nominations
      which are proposed by the Board of Directors shall be given by the
      Chairman on behalf of the Board.

      (e)  Each notice under subsection (d) shall set forth (i) the name, age, 
      business address and, if known, residence address of each nominee 
      proposed in such notice, (ii) the principal occupation or employment of 
      such nominee and (iii) the number of shares of stock of the Corporation 
      which are beneficially owned by each such nominee.

      (f)  The Chairman of the meeting may, if the facts warrant, determine and 
      declare to the meeting that a nomination was not made in accordance with 
      the foregoing procedure, and if he should so determine, he shall so 
      declare to the meeting and the defective nomination shall be disregarded.

      (g)  No action required to be taken or which may be taken at any annual 
      or special meeting of stockholders of the Corporation may be taken 
      without a meeting, and the power of stockholders to consent in writing, 
      without a meeting, to the taking of any action is specifically denied.

      SIXTH: - The Directors shall choose such officers, agent and servants 
      as may be provided in the By-Laws as they may from time to time find 
      necessary or proper.

      SEVENTH: - The Corporation hereby created is hereby given the same 
      powers, rights and privileges as may be conferred upon corporations 
      organized under the Act entitled "An Act Providing a General Corporation 
      Law", approved March 10, 1899, as from time to time amended.

                                      12
<PAGE>
 
      EIGHTH: - This Act shall be deemed and taken to be a private Act.

      NINTH: - This Corporation is to have perpetual existence.

      TENTH: - The Board of Directors, by resolution passed by a majority 
      of the whole Board, may designate any of their number to constitute an 
      Executive Committee, which Committee, to the extent provided in said 
      resolution, or in the By-Laws of the Company, shall have and may exercise 
      all of the powers of the Board of Directors in the management of the 
      business and affairs of the Corporation, and shall have power to 
      authorize the seal of the Corporation to be affixed to all papers which 
      may require it.

      ELEVENTH: - The private property of the stockholders shall not be 
      liable for the payment of corporate debts to any extent whatever.

      TWELFTH: - The Corporation may transact business in any part of the 
      world.

      THIRTEENTH: - The Board of Directors of the Corporation is expressly 
      authorized to make, alter or repeal the By-Laws of the Corporation by a 
      vote of the majority of the entire Board.  The stockholders may make, 
      alter or repeal any By-Law whether or not adopted by them, provided 
      however, that any such additional By-Laws, alterations or repeal may be 
      adopted only by the affirmative vote of the holders of two-thirds or more 
      of the outstanding shares of capital stock of the Corporation entitled to 
      vote generally in the election of directors (considered for this purpose 
      as one class).

      FOURTEENTH: - Meetings of the Directors may be held outside 
      of the State of Delaware at such places as may be from time to time 
      designated by the Board, and the Directors may keep the books of the 
      Company outside of the State of Delaware at such places as may be from 
      time to time designated by them.

      FIFTEENTH: - (a) In addition to any affirmative vote required by law, 
      and except as otherwise expressly provided in sections (b) and (c) of 
      this Article FIFTEENTH:

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<PAGE>
 
            (A)  any merger or consolidation of the Corporation or any 
            Subsidiary (as hereinafter defined) with or into (i) any Interested 
            Stockholder (as hereinafter defined) or (ii) any other corporation 
            (whether or not itself an Interested Stockholder), which, after 
            such merger or consolidation, would be an Affiliate (as hereinafter 
            defined) of an Interested Stockholder, or

            (B)  any sale, lease, exchange, mortgage, pledge, transfer or other 
            disposition (in one transaction or a series of related 
            transactions) to or with any Interested Stockholder or any 
            Affiliate of any Interested Stockholder of any assets of the 
            Corporation or any Subsidiary having an aggregate fair market value
            of $1,000,000 or more, or

            (C)  the issuance or transfer by the Corporation or any Subsidiary 
            (in one transaction or a series of related transactions) of any 
            securities of the Corporation or any Subsidiary to any Interested 
            Stockholder or any Affiliate of any Interested Stockholder in 
            exchange for cash, securities or other property (or a combination 
            thereof) having an aggregate fair market value of $1,000,000 or 
            more, or

            (D)  the adoption of any plan or proposal for the liquidation or 
            dissolution of the Corporation, or

            (E)  any reclassification of securities (including any reverse 
            stock split), or recapitalization of the Corporation, or any merger 
            or consolidation of the Corporation with any of its Subsidiaries or 
            any similar transaction (whether or not with or into or otherwise 
            involving an Interested Stockholder) which has the effect, directly 
            or indirectly, of increasing the proportionate share of the 
            outstanding shares of any class of equity or convertible securities 
            of the Corporation or any Subsidiary which is directly or 
            indirectly owned by any Interested Stockholder, or any Affiliate of 
            any Interested Stockholder,

shall require the affirmative vote of the holders of at least  two-thirds of 
the outstanding shares of capital stock of the 

                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

                  (2)  The term "business combination" as used in this Article 
                  FIFTEENTH shall mean any transaction which is referred to 
                  any one or more of clauses (A) through (E) of paragraph 1 of 
                  the section (a).

            (b)  The provisions of section (a) of this Article FIFTEENTH 
            shall not be applicable to any particular business combination and 
            such business combination shall require only such affirmative vote 
            as is required by law and any other provisions of the Charter or 
            Act of Incorporation of By-Laws if such business combination has 
            been approved by a majority of the whole Board.  

            (c)  For the purposes of this Article FIFTEENTH:
                                                           

      (1)  A "person" shall mean any individual firm, corporation or other 
      entity.

      (2)  "Interested Stockholder" shall mean, in respect of any business 
      combination, any person (other than the Corporation or any Subsidiary) 
      who or which as of the record date for the determination of stockholders 
      entitled to notice of and to vote on such business combination, or 
      immediately prior to the consummation of any such transaction:

            (A)  is the beneficial owner, directly or indirectly, of more than 
            10% of the Voting Shares, or

            (B)  is an Affiliate of the Corporation and at any time within two 
            years prior thereto was the beneficial owner, directly or 
            indirectly, of not less than 10% of the then outstanding voting 
            Shares, or

            (C)  is an assignee of or has otherwise succeeded in any share of 
            capital stock of the Corporation which 

                                      15
<PAGE>
 
            were at any time within two years prior thereto beneficially owned
            by any Interested Stockholder, and such assignment or succession
            shall have occurred in the course of a transaction or series of
            transactions not involving a public offering within the meaning of
            the Securities Act of 1933.

      (3)  A person shall be the "beneficial owner" of any Voting Shares:

            (A)  which such person or any of its Affiliates and Associates (as 
            hereafter defined) beneficially own, directly or indirectly, or

            (B)  which such person or any of its Affiliates or Associates has 
            (i) the right to acquire (whether such right is exercisable 
            immediately or only after the passage of time), pursuant to any 
            agreement, arrangement or understanding or upon the exercise of 
            conversion rights, exchange rights, warrants or options, or 
            otherwise, or (ii) the right to vote pursuant to any agreement, 
            arrangement or understanding, or

            (C)  which are beneficially owned, directly or indirectly, by any 
            other person with which such first mentioned person or any of its 
            Affiliates or Associates has any agreement, arrangement or 
            understanding for the purpose of acquiring, holding, voting or 
            disposing of any shares of capital stock of the Corporation.  

      (4)  The outstanding Voting Shares shall include shares
      deemed owned through application of paragraph (3) above but shall not 
      include any other Voting Shares which may be issuable pursuant to any 
      agreement, or upon exercise of conversion rights, warrants or options or 
      otherwise.

      (5)  "Affiliate" and "Associate" shall have the respective meanings given 
      those terms in Rule 12b-2 of the General Rules and Regulations under the 
      Securities Exchange Act of 1934, as in effect on December 31, 1981.

      (6)  "Subsidiary" shall mean any corporation of which a 

                                      16
<PAGE>
 
      majority of any class of equity security (as defined in Rule 3a11-1 of the
      General Rules and Regulations under the Securities Exchange Act of 1934,
      as in effect in December 31, 1981) is owned, directly or indirectly, by
      the Corporation; provided, however, that for the purposes of the
      definition of Investment Stockholder set forth in paragraph (2) of this
      section (c), the term "Subsidiary" shall mean only a corporation of which
      a majority of each class of equity security is owned, directly or
      indirectly, by the Corporation.

            (d)  majority of the directors shall have the power and duty to 
            determine for the purposes of this Article FIFTEENTH on the 
            basis of information known to them, (1) the number of Voting Shares 
            beneficially owned by any person (2) whether a person is an 
            Affiliate or Associate of another, (3) whether a person has an 
            agreement, arrangement or understanding with another as to the 
            matters referred to in paragraph (3) of section (c), or (4) whether 
            the assets subject to any business combination or the consideration 
            received for the issuance or transfer of securities by the 
            Corporation, or any Subsidiary has an aggregate fair market value 
            of $1,00,000 or more.

            (e)  Nothing contained in this Article FIFTEENTH shall be 
            construed to relieve any Interested Stockholder from any fiduciary 
            obligation imposed by law.

      SIXTEENTH:   Notwithstanding any other provision of this Charter or 
      Act of Incorporation or the By-Laws of the Corporation (and in addition 
      to any other vote that may be required by law, this Charter or Act of 
      Incorporation by the By-Laws), the affirmative vote of the holders of at 
      least two-thirds of the outstanding shares of the capital stock of the 
      Corporation entitled to vote generally in the election of directors 
      (considered for this purpose as one class) shall be required to amend, 
      alter or repeal any provision of Articles FIFTH, THIRTEENTH, 
      FIFTEENTH or SIXTEENTH of this Charter or Act of Incorporation.

      SEVENTEENTH: (a)  a Director of this Corporation shall not be liable 
      to the Corporation or its stockholders for 

                                      17
<PAGE>
 
      monetary damages for breach of fiduciary duty as a Director, except to the
      extent such exemption from liability or limitation thereof is not
      permitted under the Delaware General Corporation Laws as the same exists
      or may hereafter be amended.

            (b)  Any repeal or modification of the foregoing paragraph shall 
            not adversely affect any right or protection of a Director of the 
            Corporation existing hereunder with respect to any act or omission 
            occurring prior to the time of such repeal or modification."

                                      18
<PAGE>
 
                  I ___________________________________________

                  _________________ Secretary of WILMINGTON TRUST COMPANY, 
                  do hereby certify that the foregoing is a true and correct 
                  copy of the Charter or Act of Incorporation of WILMINGTON 
                  TRUST COMPANY, as heretofore amended and changed from time 
                  to time, copies of which, certified by the Secretary of the 
                  State of Delaware, are on file in the office of WILMINGTON 
                  TRUST COMPANY.

                  Date __________________


                              _______________________________________
                              Secretary 
<PAGE>
 
                                 EXHIBIT B

                                  BY-LAWS
                                         
                                                    

                          WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                       AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
 
                    BY-LAWS OF WILMINGTON TRUST COMPANY


                                  ARTICLE I
                            STOCKHOLDERS' MEETINGS


      Section 1.  The Annual Meeting of Stockholders shall be held on the third 
Thursday in April each year at the principal office at the Company or at such 
other date, time, or place as may be designated by resolution by the Board of 
Directors.

      Section 2.  Special meetings of all stockholders may be called at any 
time by the Board of Directors, the Chairman of the Board or the President.

      Section 3.  Notice of all meetings of the stockholders shall be given by 
mailing to each stockholder at least ten (10 days before said meeting, at his 
last known address, a written or printed notice fixing the time and place of 
such meeting.

      Section 4.  A majority in the amount of the capital stock of the Company 
issued and outstanding on the record date, as herein determined, shall 
constitute a quorum at all meetings of stockholders for the transaction of any 
business, but the holders of a small number of shares may adjourn, from time to 
time, without further notice, until a quorum is secured.  At each annual or 
special meeting of stockholders, each stockholder shall be entitled to one 
vote, either in person or by proxy, for each shares of stock registered in the 
stockholder's name on the books of the Company on the record date for any such 
meeting as determined herein.


                                ARTICLE II
                                 DIRECTORS

      Section 1.  The number and classification of the Board of Directors shall 
be as set forth in the Charter of the Bank.

      Section 2.  No person who has attained the age of seventy-two (72) years 
shall be nominated for election to the Board of Directors of the Company, 
provided, however, that this limitation shall not apply to any person who was 
serving as director of the Company on September 16, 1971.
<PAGE>
 
      Section 3.  The class of Directors so elected shall hold office for three 
years or until their successors are elected and qualified.

      Section 4.  The affairs and business of the Company shall be managed and 
conducted by the Board of Directors.

      Section 5. Regular meetings of the Board of Directors shall be held on the
third Thursday of each month at the principal office of the Company, or at such
other place and time as may be designated by the Board of Directors, the
Chairman of the Board, or the President.

      Section 6.  Special meetings of the Board of Directors may be called at 
any time by the Chairman of the Board of Directors or by the President, and 
shall be called upon the written request of a majority of the directors.

      Section 7.  A majority of the directors elected and qualified shall be 
necessary to constitute a quorum for the transaction of business at any meeting 
of the Board of Directors.

      Section 8.  Written notice shall be sent by mail to each director of any 
special meeting of the Board of Directors, and of any change in the time or 
place of any regular meeting, stating the time and place of such meeting, which 
shall be mailed not less than two days before the time of holding such meeting.

      Section 9.  In the event of the death, resignation, removal, inability to 
act, or disqualification of any director, the Board of Directors, although less 
than a quorum, shall have the right to elect the successor who shall hold 
office for the remainder of the full term of the class of directors in which 
the vacancy occurred, and until such director's successor shall have been duly 
elected and qualified.

      Section 10.  The Board of Directors at its first meeting after its 
election by the stockholders shall appoint an Executive Committee, a Trust 
Committee, an Audit Committee and a Compensation Committee, and shall elect 
from its own members a Chairman of the Board of Directors and a President who 
may be the same person.  The Board of Directors shall also elect at such 
meeting a Secretary and a Treasurer, who may be the same person, 

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

      Section 11.  The Board of Directors may at any time remove, with or 
without cause, any member of any Committee appointed by it or any associate 
director or officer elected by it and may appoint or elect his successor.

      Section 12.  The Board of Directors may designate an officer to be in 
charge of such of the departments or division of the Company as it may deem 
advisable.


                                       3
<PAGE>
 
                                  ARTICLE III
                                  COMMITTEES


      Section I.  Executive Committee

                    (A)  The Executive Committee shall be composed of not more 
than nine members who shall be selected by the Board of Directors from its own 
members and who shall hold office during the pleasure of the Board.

                    (B)  The Executive Committee shall have all the powers of 
the Board of Directors when it is not in session to transact all business for 
and in behalf of the Company that may be brought before it.

                    (C)  The Executive Committee shall meet at the principal 
office of the Company or elsewhere in its discretion at least once a week in 
each week the Board is not regularly scheduled to meet.  A majority of its 
members shall be necessary to constitute a quorum for the transaction of 
business.  Special meetings of the Executive Committee may be held at any time 
when a quorum is present.

                    (D)  Minutes of each meeting of the Executive Committee 
shall be kept and submitted to the Board of Directors at its next meeting.

                    (E)  The Executive Committee shall advise and superintend 
all investments that may be made of the funds of the Company, and shall direct 
the disposal of the same, in accordance with such rules and regulations as the 
Board of Directors from time to time make.

                    (F)  In the event of a state of disaster of sufficient 
severity to prevent the conduct and management of the affairs and business of 
the Company by its directors and officers as contemplated by these By-Laws any 
two available members of the Executive Committee as constituted immediately 
prior to such disaster shall constitute a quorum of that Committee for the full 
conduct and management of the affairs and business of the Company in accordance 
with the provisions of Article III of these By-Laws; and if less than three 
members of the Trust Committee is 

                                       4
<PAGE>
 
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be empowered to
exercise all of the powers reserved to the Trust Committee under Article III
Section 2 hereof. In the event of the unavailability, at such time, of a minimum
of two members of such Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and management of the
affairs and business of the Company in accordance with the foregoing provisions
of this Section. This By-Law shall be subject to implementation by Resolutions
of the Board of Directors presently existing or hereafter passed from time to
time for that purpose, and any provisions of these By-Laws(other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary Resolutions shall be
suspended during such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its affairs and
business under all of the other provisions of these By-Laws.

      Section 2.  Trust Committee
      
                    (A)  The Trust Committee shall be composed of not more than 
thirteen members who shall be selected by the Board of Directors, a majority of 
whom shall be members of the Board of Directors and who shall hold office 
during the pleasure of the Board.

                    (B)  The Trust Committee shall have general supervision 
over the Trust Department and the investment of trust funds, in all matters, 
however, being subject to the approval of the Board of Directors.

                    (C)  The Trust Committee shall meet at the principal office 
of the Company or elsewhere in its discretion at least once a month.  A 
majority of its members shall be necessary to constitute a quorum for the 
transaction of business.  Special meetings of the Trust Committee may be held 
at any time when a quorum is present.

                    (D)  Minutes of each meeting of the Trust Committee shall 
be kept and promptly submitted to the Board of 

                                       5
<PAGE>
 
Directors.
            
                    (E)  The Trust Committee shall have the power to appoint 
Committees and/or designate officers or employees of the Company to whom 
supervision over the investment of trust funds may be delegated when the Trust 
Committee is not in session.

      Section 3.  Audit Committee

                    (A)  The Audit Committee shall be composed of five members 
who shall be selected by the Board of Directors from its own members, none of 
whom shall be an officer of the Company, and shall hold office at the pleasure 
of the Board.

                    (B)  The Audit Committee shall have general supervision 
over the Audit Division in all matters however subject to the approval of the 
Board of Directors; it shall consider all matters brought to its attention by 
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.

                    (C)  The Audit Committee shall meet whenever and wherever 
the majority of its members shall deem it to be proper for the transaction of 
its business, and a majority of its Committee shall constitute a quorum.

      Section 4.  Compensation Committee

                    (A)  The Compensation Committee shall be composed of not 
more than five (5) members who shall be selected by the Board of Directors from 
its own members who are not officers of the Company and who shall hold office 
during the pleasure of the Board.  

                    (B)  The Compensation Committee shall in general advise 
upon all matters of policy concerning the Company brought to its attention by 
the management and from time to time review the management of the Company, 
major organizational matters, including salaries and employee benefits and 
specifically shall 

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

                    (C)  Meetings of the Compensation Committee may be called 
at any time by the Chairman of the Compensation Committee, the Chairman of the 
Board of Directors, or the President of the Company.

      Section 5.  Associate Directors

                    (A)  Any person who has served as a director may be elected 
by the Board of Directors as an associate director, to serve during the 
pleasure of the Board.

                    (B)  An associate director shall be entitled to attend all 
directors meetings and participate in the discussion of all matters brought to 
the Board, with the exception that he would have no right to vote.  An 
associate director will be eligible for appointment to Committees of the 
Company, with the exception of the Executive Committee, Audit Committee and 
Compensation Committee, which must be comprised solely of active directors.

      Section 6.  Absence or Disqualification of Any Member of a
                  Committee

                    (A)  In the absence or disqualification of any member of 
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.


                                  ARTICLE IV
                                   OFFICERS

      Section 1.  The Chairman of the Board of Directors shall preside at all 
meetings of the Board and shall have such further authority and powers and 
shall perform such duties as the Board of Directors may from time to time 
confer and direct.  He shall also exercise such powers and perform such duties 
as may from time to time be agreed upon between himself and the President of 

                                       7
<PAGE>
 
the Company.

      Section 2.  The President shall have the powers and duties pertaining to 
the office of the President conferred or imposed upon him by statute or 
assigned to him by the Board of Directors in the absence of the Chairman of the 
Board the President shall have the powers and duties of the Chairman of the 
Board.

      Section 3.  The Chairman of the Board of Directors or the President as 
designated by the Board of Directors, shall carry into effect all legal 
directions of the Executive Committee and of the Board of Directors, and shall 
at all times exercise general supervision over the interest, affairs and 
operations of the Company and perform all duties incident to his office.

      Section 4.  There may be one or more Vice Presidents, however denominated 
by the Board of Directors, who may at any time perform all the duties of the 
Chairman of the Board of Directors and/or the President and such other powers 
and duties as may from time to time be assigned to them by the Board of 
Directors, the Executive Committee, the Chairman of the Board or the President 
and by the officer in charge of the department or division to which they are 
assigned.

      Section 5.  The Secretary shall attend to the giving of notice of 
meetings of the stockholders and the Board of Directors, as well as the 
Committees thereof, to the keeping of accurate minutes of all such meetings and 
to recording the same in the minute books of the Company.  In addition to the 
other notice requirements of these By-Laws and as may be practicable under the 
circumstances, all such notices shall be in writing and mailed well in advance 
of the scheduled date of any other meeting.  He shall have custody of the 
corporate seal and shall affix the same to any documents requiring such 
corporate seal and to attest the same.

      Section 6.  The Treasurer shall have general supervision over all assets 
and liabilities of the Company.  He shall be custodian of and responsible for 
all monies, funds and valuables of the Company and for the keeping of proper 
records of the evidence of property or indebtedness and of all the transactions 
of the Company.  He shall have general supervision of the expenditures of the 
Company and shall report to the Board of 

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

      Section 7.  There may be a Controller who shall exercise general 
supervision over the internal operations of the Company, including accounting, 
and shall render to the Board of Directors at appropriate times a report 
relating to the general condition and internal operations of the Company.

      There may be one or more subordinate accounting or controller officers 
however denominated, who may perform the duties of the Controller and such 
duties as may be prescribed by the Controller.

      Section 8.  The officer designated by the Board of Directors to be in 
charge of the Audit Division of the Company with such title as the Board of 
Directors shall prescribe, shall report to and be directly responsible only to 
the Board of Directors.

      There shall be an Auditor and there may be one or more Audit Officers, 
however denominated, who may perform all the duties of the Auditor and such 
duties as may be prescribed by the officer in charge of the Audit Division.

      Section 9.  There may be one or more officers, subordinate in rank to all 
Vice Presidents with such functional titles as shall be determined from time to 
time by the Board of Directors, who shall ex officio hold the office Assistant 
Secretary of this Company and who may perform such duties as may be prescribed 
by the officer in charge of the department or division to whom they are 
assigned.  

      Section 10.  The powers and duties of all other officers of the Company 
shall be those usually pertaining to their respective offices, subject to the 
direction of the Board of Directors, the Executive Committee, Chairman of the 
Board of Directors or the President and the officer in charge of the department 
or division to which they are assigned.

                                   ARTICLE V
                         STOCK AND STOCK CERTIFICATES

                                       9
<PAGE>
 
      Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

      Section 2.  Certificate of stock shall bear the signature of the 
President or any Vice President, however denominated by the Board of Directors 
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and 
the seal of the corporation shall be engraved thereon.  Each certificate shall 
recite that the stock represented thereby is transferrable only upon the books 
of the Company by the holder thereof or his attorney, upon surrender of the 
certificate properly endorsed.  Any certificate of stock surrendered to the 
Company shall be cancelled at the time of transfer, and before a new 
certificate or certificates shall be issued in lieu thereof.  Duplicate 
certificates of stock shall be issued only upon giving such security as may be 
satisfactory to the Board of Directors or the Executive Committee.

      Section 3.  The Board of Directors of the Company is authorized to fix in 
advance a record date for the determination of the stockholders entitled to 
notice of, and to vote at, any meeting of stockholders and any adjournment 
thereof, or entitled to receive payment of any dividend, or to any allotment or 
rights, or to exercise any rights in respect of any change, conversion or 
exchange of capital stock, or in connection with obtaining the consent of 
stockholders for any purpose, which record date shall not be more than 60 nor 
less than 10 days proceeding the date of any meeting of stockholders or the 
date for the payment of any dividend, or the date for the allotment of rights, 
or the date when any change or conversion or exchange of capital stock shall go 
into effect, or a date in connection with obtaining such consent.


                                  ARTICLE VI
                                     SEAL

      Section 1.  The corporate seal of the Company shall be in the following 
form:

                    Between two concentric circles the words
                    "Wilmington Trust Company" within the inner

                                      10
<PAGE>
 
                    circle the words "Wilmington, Delaware."

                                      11
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

      Section 1.  The fiscal year of the Company shall be the calendar year.


                                ARTICLE VIII
                EXECUTION OF INSTRUMENTS OF THE COMPANY

      Section 1.  The Chairman of the Board, the President or any Vice 
President, however denominated by the Board of Directors, shall have full power 
and authority to enter into, make, sign, execute, acknowledge and/or deliver 
and the Secretary or any Assistant Secretary shall have full power and 
authority to attest and affix the corporate seal of the Company to any and all 
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, 
mortgages and all other instruments incident to the business of this Company or 
in acting as executor, administrator, guardian, trustee, agent or in any other 
fiduciary or representative capacity by any and every method of appointment or 
by whatever person, corporation, court officer or authority in the State of 
Delaware, or elsewhere, without any specific authority, ratification, approval 
or confirmation by the Board of Directors or the Executive Committee, and any 
and all such instruments shall have the same force and validity as although 
expressly authorized by the Board of Directors and/or the Executive Committee.


                                 ARTICLE IX
          COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

      Section 1.  Directors and associate directors of the Company, other than 
salaried officers of the Company, shall be paid such reasonable honoraria or 
fees for attending meetings of the Board of Directors as the Board of Directors 
may from time to time determine.  Directors and associate directors who serve 
as members of committees, other than salaried employees of the Company, shall 
be paid such reasonable honoraria or fees for services as members of committees 
as the Board of Directors shall from time to time determine and directors and 
associate directors 

                                      12
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.

                                      13
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

      Section 1.  (A)  The Corporation shall indemnify and hold harmless, to 
the fullest extent permitted by applicable law as it presently exists or may 
hereafter be amended, any person who was or is made or is threatened to be made 
a party or is otherwise involved in any action, suit or proceeding, whether 
civil, criminal, administrative or investigative (a "proceeding") by reason of 
the fact that he, or a person for whom he is the legal representative, is or 
was a director, officer, employee or agent of the Corporation or is or was 
serving at the request of the Corporation as a director, officer, employee, 
fiduciary or agent of another corporation or of a partnership, joint venture, 
trust, enterprise or non-profit entity, including service with respect to 
employee benefit plans, against all liability and loss suffered and expenses 
reasonably incurred by such person.  The Corporation shall indemnify a person 
in connection with a proceeding initiated by such person only if the proceeding 
was authorized by the Board of Directors of the Corporation.

                    (B)  The Corporation shall pay the expenses incurred in 
defending any proceeding in advance of its final disposition, provided, 
                                                              --------
however, that the payment of expenses incurred by a Director officer in his 
- -------
capacity as a Director or officer in advance of the final disposition of the 
proceeding shall be made only upon receipt of an undertaking by the Director or 
officer to repay all amounts advanced if it should be ultimately determined 
that the Director or officer is not entitled to be indemnified under this 
Article or otherwise.

                    (C)  If a claim for indemnification or payment of expenses, 
under this Article X is not paid in full within ninety days after a written 
claim therefor has been received by the Corporation the claimant may file suit 
to recover the unpaid amount of such claim and, if successful in whole or in 
part, shall be entitled to be paid the expense of prosecuting such claim.  In 
any such action the Corporation shall have the burden of proving that the 
claimant was not entitled to the requested indemnification of payment of 
expenses under applicable law.

                    (D)  The rights conferred on any person by this Article X 
shall not be exclusive of any other rights which such 

                                      14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

                    (E)  Any repeal or modification of the foregoing provisions 
of this Article X shall not adversely affect any right or protection hereunder 
of any person in respect of any act or omission occurring prior to the time of 
such repeal or modification. 

                                      15
<PAGE>
 
                                ARTICLE XI
                         AMENDMENTS TO THE BY-LAWS

      Section 1.  These By-Laws may be altered, amended or repealed, in whole 
or in part, and any new By-Law or By-Laws adopted at any regular or special 
meeting of the Board of Directors by a vote of the majority of all the members 
of the Board of Directors then in office.  




                        I, ...................................................
                        Assistant Secretary of Wilmington Trust Company, do 
                        hereby certify that the foregoing is a true and correct 
                        copy of the By-Laws of the Wilmington Trust Company.  


                        Date..................................................

                        ......................................................
                        Assistant Secretary

                                      16
<PAGE>
 
                                                              EXHIBIT C




                          SECTION 321(B) CONSENT


      Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as 
amended, Wilmington Trust Company hereby consents that reports of examinations 
by Federal, State, Territorial or District authorities may be furnished by such 
authorities to the Securities and Exchange Commission upon requests therefor.



                                    WILMINGTON TRUST COMPANY


Dated: April 15, 1996               By:  /s/ David P. Fontello         
                                        --------------------------
                                        Name: David P. Fontello   
                                        Title: Vice President
<PAGE>
 
                                EXHIBIT "D"



                                  NOTICE


This form is intended to assist state nonmember banks and savings banks with 
state publication requirements.  It has not been approved by any state banking 
authorities.  Refer to your appropriate state banking authorities for your 
state publication requirements.



R E P O R T   O F   C O N D I T I O N

Consolidating domestic subsidiaries of the

           WILMINGTON TRUST COMPANY            of     WILMINGTON     
- ----------------------------------------------    -------------------
                Name of Bank                            City

in the State of   DELAWARE  , at the close of business on December 31, 1995.
                ------------


ASSETS
                                                          Thousands of dollars
Cash and balances due from depository institutions:
        Noninterest-bearing balances and currency and coins............242,765
        Interest-bearing balances..........................................  0
Held-to-maturity securities..........................................  448,091
Available-for-sale securities..........................................873,294
Federal funds sold.......................................................    0
Securities purchased under agreements to resell........................ 78,866
Loans and lease financing receivables:
        Loans and leases, net of unearned income. . . . . . . 3,441,294
        LESS:  Allowance for loan and lease losses. . . . . .    47,663
        LESS:  Allocated transfer risk reserve. . . . . . . .         0
        Loans and leases, net of unearned income, allowance, and 
         reserve.....................................................3,393,631
Assets held in trading accounts..............................................0
Premises and fixed assets (including capitalized leases)................74,915
Other real estate owned.................................................13,084
Investments in unconsolidated subsidiaries and associated companies....... 171
Customers' liability to this bank on acceptances outstanding.................0
Intangible assets........................................................4,526
Other assets...........................................................108,197
Total assets.........................................................5,237,540



                                                        CONTINUED ON NEXT PAGE
<PAGE>
 
LIABILITIES

Deposits:
In domestic offices..................................................3,456,791
        Noninterest-bearing . . . . . . . .     743,460
        Interest-bearing. . . . . . . . . .   2,713,331
Federal funds purchased................................................ 84,855
Securities sold under agreements to repurchase.........................158,903
Demand notes issued to the U.S. Treasury................................29,389
Trading liabilities..........................................................0
Other borrowed money:..................................................///////
        With original maturity of one year or less.....................960,000
        With original maturity of more than one year....................28,000
Mortgage indebtedness and obligations under capitalized leases...........1,887
Bank's liability on acceptances executed and outstanding.....................0
Subordinated notes and debentures............................................0
Other liabilities..................................................... 100,981
Total liabilities....................................................4,820,806
Limited-life preferred stock and related surplus.............................0



EQUITY CAPITAL

Perpetual preferred stock and related surplus................................0
Common Stock...............................................................500
Surplus.................................................................62,118
Undivided profits and capital reserves.................................349,963
Net unrealized holding gains (losses) on available-for-sale
 securities............................................................. 4,153
Total equity capital...................................................416,734
Total liabilities, limited-life preferred stock, and equity capital..5,237,540

                                       2

<PAGE>
 
                                                                   Exhibit 25.06

                                  Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM T-1

        STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X
                  ---

                           WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


      Delaware                                         51-0055023
(State of incorporation)                 (I.R.S. employer identification no.)

                              Rodney Square North
                           1100 North Market Street
                          Wilmington, Delaware  19890
                   (Address of principal executive offices)

                              Myfanwy P. Bonilla
                    Asst. Vice President and Trust Counsel
                           Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                (302) 651-8914
           (Name, address and telephone number of agent for service)


                        MCI COMMUNICATIONS CORPORATION


              (Exact name of obligor as specified in its charter)

 
      Delaware                                     52-0886267
(State of incorporation            (I.R.S. employer identification no.)
    or formation)

   1801 Pennsylvania Avenue, N.W.
        Washington, D.C.                                  20006
(Address of principal executive offices)               (Zip Code)


<PAGE>
 
         Guarantee of Cumulative Quarterly Income Preferred Securities
             of MCI Capital III by MCI Communications Corporation
                      (Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                      2 
<PAGE>
 
ITEM 1.   GENERAL INFORMATION.

          Furnish the following information as to the trustee:

     (a)  Name and address of each examining or supervising authority to which
          it is subject.

          Federal Deposit Insurance Co.      State Bank Commissioner
          Five Penn Center                   Dover, Delaware
          Suite #2901
          Philadelphia, PA

     (b)  Whether it is authorized to exercise corporate trust powers.

          The trustee is authorized to exercise corporate trust powers.

ITEM 2.   AFFILIATIONS WITH THE OBLIGOR.

          If the obligor is an affiliate of the trustee, describe each
     affiliation:

          Based upon an examination of the books and records of the trustee and
          upon information furnished by the obligor, the obligor is not an
          affiliate of the trustee.

ITEM 3.   LIST OF EXHIBITS.

          List below all exhibits filed as part of this Statement of Eligibility
     and Qualification.

     A.   Copy of the Charter of Wilmington Trust Company, which includes the
          certificate of authority of Wilmington Trust Company to commence
          business and the authorization of Wilmington Trust Company to exercise
          corporate trust powers.
     B.   Copy of By-Laws of Wilmington Trust Company.
     C.   Consent of Wilmington Trust Company required by Section 321(b) of
          Trust Indenture Act.
     D.   Copy of most recent Report of Condition of Wilmington Trust Company.

     Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                   WILMINGTON TRUST COMPANY


Attest:/s/ Lloyd O. Martin               By: /s/ David P. Fontello
       -------------------                  -------------------------   

                                       3
<PAGE>
 
Assistant Secretary                      Name:  David P. Fontello
                                         Title:  Vice President

                                       1
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                          AS EXISTING ON MAY 9, 1987
<PAGE>
 
                                AMENDED CHARTER

                                      OR

                             ACT OF INCORPORATION

                                      OF

                           WILMINGTON TRUST COMPANY

     WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

     SECOND: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.
<PAGE>
 
     THIRD: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1)  To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common seal, and alter the seal at
          pleasure, to hold, purchase, convey, mortgage or otherwise deal in
          real and personal estate and property, and to appoint such officers
          and agents as the business of the Corporation shall require, to make
          by-laws not inconsistent with the Constitution or laws of the United
          States or of this State, to discount bills, notes or other evidences
          of debt, to receive deposits of money, or securities for money, to buy
          gold and silver bullion and foreign coins, to buy and sell bills of
          exchange, and generally to use, exercise and enjoy all the powers,
          rights, privileges and franchises incident to a corporation which are
          proper or necessary for the transaction of the business of the
          Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate or
          interests therein, and to guarantee the holder of such property, real
          or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.

                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any contract
          or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator,
                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the receiving,
          holding, managing, and disposing of any and all estates and property,
          real, personal or mixed, and to be appointed as such trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, guardian or bailee by any persons, corporations, court,
          officer, or authority, in the State of Delaware or elsewhere; and
          whenever this Corporation is so appointed by any person, corporation,
          court, officer or authority such trustee, trustee in bankruptcy,
          receiver, assignee, assignee in bankruptcy, executor, administrator,
          guardian, bailee, or in any other trust capacity, it shall not be
          required to give bond with surety, but its capital stock shall be
          taken and held as security for the performance of the duties devolving
          upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages, debentures,
          shares of capital stock, and other securities, obligations, contracts
          and evidences of indebtedness, of any private, public or municipal
          corporation within and without the State of Delaware, or of the
          Government of the United States, or of any state, territory, colony,
          or possession thereof, or of any foreign government or country; to
          receive, collect, receipt for, and dispose of interest, dividends and
          income upon and from any of the bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property held and owned by it, and to
          exercise in respect of all such bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property, any and all the rights, powers and
          privileges of individual owners thereof, including the right to vote
          thereon; to invest and deal in and with

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and to
          undertake the whole or any part of the assets and liabilities of any
          person, firm, association or corporation, and to pay for the same in
          cash, stock of this Corporation, bonds or otherwise; to hold or in any
          manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3)  To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any manner whatever dispose of
          property, real, personal or mixed, wherever situated.

          (4) To enter into, make, perform and carry out contracts of every kind
          with any person, firm, association or corporation, and, without limit
          as to 

                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount, execute and
          issue promissory notes, drafts, bills of exchange, warrants, bonds,
          debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     FOURTH: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if 

                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject to
          redemption, and the redemption price or prices and the time or times
          at which, and the terms and conditions on which, Preferred Stock of
          such 

                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase account,
          if any, to be provided for the Preferred Stock of such series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     FOURTH, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article FOURTH), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation, 

                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article FOURTH, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or

                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article FOURTH and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article FOURTH that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     FIFTH: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the 

                                      10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting. Any vacancies in the Board
     of Directors for any reason, and any newly created directorships resulting
     from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to 

                                      11
<PAGE>
 
     vote for the election of directors.  Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders.  Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     SIXTH: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     SEVENTH: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.

                                      12
<PAGE>
 
     EIGHTH: - This Act shall be deemed and taken to be a private Act.

     NINTH: - This Corporation is to have perpetual existence.

     TENTH: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     ELEVENTH: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     TWELFTH: - The Corporation may transact business in any part of the world.

     THIRTEENTH: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     FOURTEENTH: - Meetings of the Directors may be held outside

     of the State of Delaware at such places as may be from time to time
     designated by the Board, and the Directors may keep the books of the
     Company outside of the State of Delaware at such places as may be from time
     to time designated by them.

     FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article FIFTEENTH:

                                      13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any Subsidiary
          (as hereinafter defined) with or into (i) any Interested Stockholder
          (as hereinafter defined) or (ii) any other corporation (whether or not
          itself an Interested Stockholder), which, after such merger or
          consolidation, would be an Affiliate (as hereinafter defined) of an
          Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value of $1,000,000 or
          more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary (in
          one transaction or a series of related transactions) of any securities
          of the Corporation or any Subsidiary to any Interested Stockholder or
          any Affiliate of any Interested Stockholder in exchange for cash,
          securities or other property (or a combination thereof) having an
          aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the 

                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               FIFTEENTH shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article FIFTEENTH shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article FIFTEENTH:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which 

                                      15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares
     deemed owned through application of paragraph (3) above but shall not
     include any other Voting Shares which may be issuable pursuant to any
     agreement, or upon exercise of conversion rights, warrants or options or
     otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a 

                                      16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.

          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article FIFTEENTH on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article FIFTEENTH shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     SIXTEENTH:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
     SIXTEENTH of this Charter or Act of Incorporation.

     SEVENTEENTH: (a)  a Director of this Corporation shall not be liable to the
     Corporation or its stockholders for 

                                      17
<PAGE>
 
     monetary damages for breach of fiduciary duty as a Director, except to the
     extent such exemption from liability or limitation thereof is not permitted
     under the Delaware General Corporation Laws as the same exists or may
     hereafter be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."

                                      18
<PAGE>
 
               I ___________________________________________

               _________________ Secretary of WILMINGTON TRUST COMPANY, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of WILMINGTON TRUST COMPANY,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of WILMINGTON TRUST COMPANY.

               Date __________________


                         _______________________________________
                         Secretary
<PAGE>
 
                                   EXHIBIT B

                                    BY-LAWS


                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                       AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                            STOCKHOLDERS' MEETINGS


     Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

     Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

     Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

     Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                  ARTICLE II
                                   DIRECTORS

     Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

     Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
<PAGE>
 
     Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

     Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

     Section 5.  Regular meetings of the Board of Directors shall be held on the
third Thursday of each month at the principal office of the Company, or at such
other place and time as may be designated by the Board of Directors, the
Chairman of the Board, or the President.

     Section 6.  Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

     Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

     Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

     Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

     Section 10.  The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person.  The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, 

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

     Section 11.  The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

     Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.

                                       3
<PAGE>
 
                                  ARTICLE III
                                  COMMITTEES


     Section I.  Executive Committee

                 (A)  The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.

                 (B)  The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.

                 (C)  The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at least once a week in each week
the Board is not regularly scheduled to meet.  A majority of its members shall
be necessary to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

                 (D)  Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.

                 (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

                 (F)  In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as

                                       4
<PAGE>
 
constituted immediately prior to such disaster shall constitute a quorum of that
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the provisions of Article III of these By-Laws; and
if less than three members of the Trust Committee is constituted immediately
prior to such disaster shall be available for the transaction of its business,
such Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the event
of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section.  This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws(other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive Committee
acting under this section that it shall be to the advantage of the Company to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-Laws.

     Section 2.  Trust Committee
 
                 (A)  The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.

                 (B)  The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.

                 (C)  The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority of
its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when a
quorum is present.

                 (D)  Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of 

                                       5
<PAGE>
 
Directors.
 
                 (E)  The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

     Section 3.  Audit Committee

                 (A)  The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.

                 (B)  The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

                 (C)  The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.

     Section 4.  Compensation Committee

                 (A)  The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.

                 (B)  The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall 

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

                 (C)  Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.

     Section 5.  Associate Directors

                 (A)  Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.

                 (B)  An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote.  An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

     Section 6.  Absence or Disqualification of Any Member of a Committee

                 (A)  In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.


                                  ARTICLE IV
                                   OFFICERS

     Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of 

                                       7
<PAGE>
 
the Company.

     Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

     Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

     Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

     Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

     Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of 

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

     Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

     There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

     Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

     There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

     Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

     Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

                                   ARTICLE V
                         STOCK AND STOCK CERTIFICATES

                                       9
<PAGE>
 
          Section 1.  Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

          Section 2.  Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

          Section 3.  The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                  ARTICLE VI
                                     SEAL

     Section 1.  The corporate seal of the Company shall be in the following
form:

                 Between two concentric circles the words
                 "Wilmington Trust Company" within the inner

                                      10
<PAGE>
 
                 circle the words "Wilmington, Delaware."

                                      11
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

     Section 1.  The fiscal year of the Company shall be the calendar year.


                                 ARTICLE VIII
                    EXECUTION OF INSTRUMENTS OF THE COMPANY

     Section 1.  The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                  ARTICLE IX
              COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

     Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors 

                                      12
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.

                                      13
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

     Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

                 (B)  The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
                                                              --------  -------
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

                 (C)  If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.

                 (D)  The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such

                                      14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

                 (E)  Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.

                                      15
<PAGE>
 
                                  ARTICLE XI
                           AMENDMENTS TO THE BY-LAWS

     Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.



                    I, .........................................................
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date .......................................................

                     ...........................................................
                    Assistant Secretary

                                      16
<PAGE>
 
                                                                       EXHIBIT C



                            SECTION 321(B) CONSENT


     Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                                        WILMINGTON TRUST COMPANY


Dated: April 15, 1996                   By:  /s/ David P. Fontello
                                            --------------------------
                                            Name: David P. Fontello
                                            Title: Vice President
<PAGE>
 
                                  EXHIBIT "D"



                                    NOTICE


          This form is intended to assist state nonmember banks and savings
          banks with state publication requirements.  It has not been approved
          by any state banking authorities. Refer to your appropriate state
          banking authorities for your state publication requirements.

R E P O R T    O F    C O N D I T I O N
 
Consolidating domestic subsidiaries of the
 
     WILMINGTON TRUST COMPANY         of  WILMINGTON
- --------------------------------------  ---------------
       Name of Bank                 


                City
 
in the State of DELAWARE , at the close of business on December 31, 1995.
               ----------
<TABLE>
<CAPTION>
ASSETS
                                                                                         Thousands of dollars

<S>                                                                                      <C>
Cash and balances due from depository institutions:
     Noninterest-bearing balances and currency and coins............................................. 242,765
     Interest-bearing balances............................................................................  0
Held-to-maturity securities.......................................................................... 448,091
Available-for-sale securities........................................................................ 873,294
Federal funds sold........................................................................................  0
Securities purchased under agreements to resell....................................................... 78,866
Loans and lease financing receivables:
     Loans and leases, net of unearned income....... 3,441,294                                     
     LESS:  Allowance for loan and lease losses.....    47,663                                     
     LESS:  Allocated transfer risk reserve.......        0                                        
     Loans and leases, net of unearned income, allowance, and reserve.............................. 3,393,631
Assets held in trading accounts...........................................................................  0
Premises and fixed assets (including capitalized leases).............................................. 74,915
Other real estate owned............................................................................... 13,084
Investments in unconsolidated subsidiaries and associated companies...................................... 171
Customers' liability to this bank on acceptances outstanding..............................................  0
Intangible assets...................................................................................... 4,526
Other assets......................................................................................... 108,197
Total assets....................................................................................... 5,237,540
</TABLE>

                                                          CONTINUED ON NEXT PAGE
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES

<S>                                                                                                 <C>
Deposits:
In domestic offices................................................................................ 3,456,791
     Noninterest-bearing............. 743,460
     Interest-bearing.............. 2,713,331
Federal funds purchased............................................................................... 84,855
Securities sold under agreements to repurchase....................................................... 158,903
Demand notes issued to the U.S. Treasury.............................................................. 29,389
Trading liabilities.......................................................................................  0
Other borrowed money:................................................................................ ///////
     With original maturity of one year or less...................................................... 960,000
     With original maturity of more than one year..................................................... 28,000
Mortgage indebtedness and obligations under capitalized leases......................................... 1,887
Bank's liability on acceptances executed and outstanding..................................................  0
Subordinated notes and debentures.........................................................................  0
Other liabilities.................................................................................... 100,981
Total liabilities.................................................................................. 4,820,806
Limited-life preferred stock and related surplus..........................................................  0


EQUITY CAPITAL

Perpetual preferred stock and related surplus.............................................................  0
Common Stock............................................................................................. 500
Surplus............................................................................................... 62,118
Undivided profits and capital reserves............................................................... 349,963
Net unrealized holding gains (losses) on available-for-sale securities................................. 4,153
Total equity capital................................................................................. 416,734
Total liabilities, limited-life preferred stock, and equity capital................................ 5,237,540
</TABLE>

                                       2

<PAGE>
 
                                          Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM T-1

        STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X
                  ---

                           WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


        Delaware                                         51-0055023
(State of incorporation)                 (I.R.S. employer identification no.)

                              Rodney Square North
                           1100 North Market Street
                          Wilmington, Delaware  19890
                   (Address of principal executive offices)

                              Myfanwy P. Bonilla
                    Asst. Vice President and Trust Counsel
                           Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                (302) 651-8914
           (Name, address and telephone number of agent for service)


                                MCI CAPITAL III


              (Exact name of obligor as specified in its charter)

 
        Delaware                                 Applied For
(State of incorporation            (I.R.S. employer identification no.)
     or formation)

     1801 Pennsylvania Avenue, N.W.
           Washington, D.C.                             20006
(Address of principal executive offices)              (Zip Code)
<PAGE>
 
          ____ % Cumulative Quarterly Income Preferred Securities of
                                MCI Capital III
                      (Title of the indenture securities)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                       2
<PAGE>
 
ITEM 1.   GENERAL INFORMATION.

          Furnish the following information as to the trustee:

     (a)  Name and address of each examining or supervising authority to which
          it is subject.

          Federal Deposit Insurance Co.      State Bank Commissioner
          Five Penn Center                   Dover, Delaware
          Suite #2901
          Philadelphia, PA

     (b)  Whether it is authorized to exercise corporate trust powers.

          The trustee is authorized to exercise corporate trust powers.

ITEM 2.   AFFILIATIONS WITH THE OBLIGOR.

          If the obligor is an affiliate of the trustee, describe each
     affiliation:

          Based upon an examination of the books and records of the trustee and
          upon information furnished by the obligor, the obligor is not an
          affiliate of the trustee.

ITEM 3.   LIST OF EXHIBITS.

          List below all exhibits filed as part of this Statement of Eligibility
     and Qualification.

     A.   Copy of the Charter of Wilmington Trust Company, which includes the
          certificate of authority of Wilmington Trust Company to commence
          business and the authorization of Wilmington Trust Company to exercise
          corporate trust powers.
     B.   Copy of By-Laws of Wilmington Trust Company.
     C.   Consent of Wilmington Trust Company required by Section 321(b) of
          Trust Indenture Act.
     D.   Copy of most recent Report of Condition of Wilmington Trust Company.

     Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                   WILMINGTON TRUST COMPANY


Attest:/s/ Lloyd O. Martin               By: /s/ David P. Fontello
       -------------------                  -------------------------   

                                       3
<PAGE>
 
Assistant Secretary                      Name:  David P. Fontello
                                         Title:  Vice President

                                       4
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                          AS EXISTING ON MAY 9, 1987
<PAGE>
 
                                AMENDED CHARTER

                                      OR

                             ACT OF INCORPORATION

                                      OF

                           WILMINGTON TRUST COMPANY

     WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

     SECOND: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.
<PAGE>
 
     THIRD: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1)  To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common seal, and alter the seal at
          pleasure, to hold, purchase, convey, mortgage or otherwise deal in
          real and personal estate and property, and to appoint such officers
          and agents as the business of the Corporation shall require, to make
          by-laws not inconsistent with the Constitution or laws of the United
          States or of this State, to discount bills, notes or other evidences
          of debt, to receive deposits of money, or securities for money, to buy
          gold and silver bullion and foreign coins, to buy and sell bills of
          exchange, and generally to use, exercise and enjoy all the powers,
          rights, privileges and franchises incident to a corporation which are
          proper or necessary for the transaction of the business of the
          Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate or
          interests therein, and to guarantee the holder of such property, real
          or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.

                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any contract
          or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator,
                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the receiving,
          holding, managing, and disposing of any and all estates and property,
          real, personal or mixed, and to be appointed as such trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, guardian or bailee by any persons, corporations, court,
          officer, or authority, in the State of Delaware or elsewhere; and
          whenever this Corporation is so appointed by any person, corporation,
          court, officer or authority such trustee, trustee in bankruptcy,
          receiver, assignee, assignee in bankruptcy, executor, administrator,
          guardian, bailee, or in any other trust capacity, it shall not be
          required to give bond with surety, but its capital stock shall be
          taken and held as security for the performance of the duties devolving
          upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages, debentures,
          shares of capital stock, and other securities, obligations, contracts
          and evidences of indebtedness, of any private, public or municipal
          corporation within and without the State of Delaware, or of the
          Government of the United States, or of any state, territory, colony,
          or possession thereof, or of any foreign government or country; to
          receive, collect, receipt for, and dispose of interest, dividends and
          income upon and from any of the bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property held and owned by it, and to
          exercise in respect of all such bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property, any and all the rights, powers and
          privileges of individual owners thereof, including the right to vote
          thereon; to invest and deal in and with

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and to
          undertake the whole or any part of the assets and liabilities of any
          person, firm, association or corporation, and to pay for the same in
          cash, stock of this Corporation, bonds or otherwise; to hold or in any
          manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3)  To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any manner whatever dispose of
          property, real, personal or mixed, wherever situated.

          (4) To enter into, make, perform and carry out contracts of every kind
          with any person, firm, association or corporation, and, without limit
          as to 

                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount, execute and
          issue promissory notes, drafts, bills of exchange, warrants, bonds,
          debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     FOURTH: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if 

                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject to
          redemption, and the redemption price or prices and the time or times
          at which, and the terms and conditions on which, Preferred Stock of
          such 

                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase account,
          if any, to be provided for the Preferred Stock of such series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     FOURTH, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article FOURTH), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation, 

                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article FOURTH, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or

                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article FOURTH and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article FOURTH that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     FIFTH: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the 

                                      10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting. Any vacancies in the Board
     of Directors for any reason, and any newly created directorships resulting
     from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to 

                                      11
<PAGE>
 
     vote for the election of directors.  Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders.  Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     SIXTH: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     SEVENTH: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.

                                      12
<PAGE>
 
     EIGHTH: - This Act shall be deemed and taken to be a private Act.

     NINTH: - This Corporation is to have perpetual existence.

     TENTH: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     ELEVENTH: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     TWELFTH: - The Corporation may transact business in any part of the world.

     THIRTEENTH: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     FOURTEENTH: - Meetings of the Directors may be held outside

     of the State of Delaware at such places as may be from time to time
     designated by the Board, and the Directors may keep the books of the
     Company outside of the State of Delaware at such places as may be from time
     to time designated by them.

     FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article FIFTEENTH:

                                      13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any Subsidiary
          (as hereinafter defined) with or into (i) any Interested Stockholder
          (as hereinafter defined) or (ii) any other corporation (whether or not
          itself an Interested Stockholder), which, after such merger or
          consolidation, would be an Affiliate (as hereinafter defined) of an
          Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value of $1,000,000 or
          more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary (in
          one transaction or a series of related transactions) of any securities
          of the Corporation or any Subsidiary to any Interested Stockholder or
          any Affiliate of any Interested Stockholder in exchange for cash,
          securities or other property (or a combination thereof) having an
          aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the 

                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               FIFTEENTH shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article FIFTEENTH shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article FIFTEENTH:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which 

                                      15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares
     deemed owned through application of paragraph (3) above but shall not
     include any other Voting Shares which may be issuable pursuant to any
     agreement, or upon exercise of conversion rights, warrants or options or
     otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a 

                                      16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.

          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article FIFTEENTH on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article FIFTEENTH shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     SIXTEENTH:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
     SIXTEENTH of this Charter or Act of Incorporation.

     SEVENTEENTH: (a)  a Director of this Corporation shall not be liable to the
     Corporation or its stockholders for 

                                      17
<PAGE>
 
     monetary damages for breach of fiduciary duty as a Director, except to the
     extent such exemption from liability or limitation thereof is not permitted
     under the Delaware General Corporation Laws as the same exists or may
     hereafter be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."

                                      18
<PAGE>
 
               I ___________________________________________

               _________________ Secretary of WILMINGTON TRUST COMPANY, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of WILMINGTON TRUST COMPANY,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of WILMINGTON TRUST COMPANY.

               Date __________________


                         _______________________________________
                         Secretary
<PAGE>
 
                                   EXHIBIT B

                                    BY-LAWS


                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                       AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                            STOCKHOLDERS' MEETINGS


     Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

     Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

     Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

     Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                  ARTICLE II
                                   DIRECTORS

     Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

     Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
<PAGE>
 
     Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

     Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

     Section 5.  Regular meetings of the Board of Directors shall be held on the
third Thursday of each month at the principal office of the Company, or at such
other place and time as may be designated by the Board of Directors, the
Chairman of the Board, or the President.

     Section 6.  Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

     Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

     Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

     Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

     Section 10.  The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person.  The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, 

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

     Section 11.  The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

     Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.

                                       3
<PAGE>
 
                                  ARTICLE III
                                  COMMITTEES


     Section I.  Executive Committee

                 (A)  The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.

                 (B)  The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.

                 (C)  The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at least once a week in each week
the Board is not regularly scheduled to meet.  A majority of its members shall
be necessary to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

                 (D)  Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.

                 (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

                 (F)  In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as

                                       4
<PAGE>
 
constituted immediately prior to such disaster shall constitute a quorum of that
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the provisions of Article III of these By-Laws; and
if less than three members of the Trust Committee is constituted immediately
prior to such disaster shall be available for the transaction of its business,
such Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the event
of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section.  This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws(other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive Committee
acting under this section that it shall be to the advantage of the Company to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-Laws.

     Section 2.  Trust Committee
 
                 (A)  The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.

                 (B)  The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.

                 (C)  The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at least once a month. A majority of
its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Trust Committee may be held at any time when a
quorum is present.

                 (D)  Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of 

                                       5
<PAGE>
 
Directors.
 
                 (E)  The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

     Section 3.  Audit Committee

                 (A)  The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.

                 (B)  The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

                 (C)  The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.

     Section 4.  Compensation Committee

                 (A)  The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.

                 (B)  The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall 

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

                 (C)  Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.

     Section 5.  Associate Directors

                 (A)  Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.

                 (B)  An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote.  An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

     Section 6.  Absence or Disqualification of Any Member of a Committee

                 (A)  In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.


                                  ARTICLE IV
                                   OFFICERS

     Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of 

                                       7
<PAGE>
 
the Company.

     Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

     Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

     Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

     Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

     Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of 

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

     Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

     There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

     Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

     There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

     Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

     Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

                                   ARTICLE V
                         STOCK AND STOCK CERTIFICATES

                                       9
<PAGE>
 
          Section 1.  Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

          Section 2.  Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

          Section 3.  The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                  ARTICLE VI
                                     SEAL

     Section 1.  The corporate seal of the Company shall be in the following
form:

                 Between two concentric circles the words
                 "Wilmington Trust Company" within the inner

                                      10
<PAGE>
 
                 circle the words "Wilmington, Delaware."

                                      11
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

     Section 1.  The fiscal year of the Company shall be the calendar year.


                                 ARTICLE VIII
                    EXECUTION OF INSTRUMENTS OF THE COMPANY

     Section 1.  The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                  ARTICLE IX
              COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

     Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors 

                                      12
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.

                                      13
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

     Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

                 (B)  The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
                                                              --------  -------
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

                 (C)  If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.

                 (D)  The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such

                                      14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

                 (E)  Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.

                                      15
<PAGE>
 
                                  ARTICLE XI
                           AMENDMENTS TO THE BY-LAWS

     Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.



                    I, .........................................................
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date .......................................................

                     ...........................................................
                    Assistant Secretary

                                      16
<PAGE>
 
                                                                       EXHIBIT C



                            SECTION 321(B) CONSENT


     Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                                        WILMINGTON TRUST COMPANY


Dated: April 15, 1996                   By:  /s/ David P. Fontello
                                            --------------------------
                                            Name: David P. Fontello
                                            Title: Vice President
<PAGE>
 
                                  EXHIBIT "D"



                                    NOTICE


          This form is intended to assist state nonmember banks and savings
          banks with state publication requirements.  It has not been approved
          by any state banking authorities. Refer to your appropriate state
          banking authorities for your state publication requirements.

R E P O R T    O F    C O N D I T I O N
 
Consolidating domestic subsidiaries of the
 
     WILMINGTON TRUST COMPANY         of  WILMINGTON
- --------------------------------------  ---------------
       Name of Bank                 


                City
 
in the State of DELAWARE , at the close of business on December 31, 1995.
               ----------
<TABLE>
<CAPTION>
ASSETS
                                                                                         Thousands of dollars

<S>                                                                                      <C>
Cash and balances due from depository institutions:
     Noninterest-bearing balances and currency and coins............................................. 242,765
     Interest-bearing balances............................................................................  0
Held-to-maturity securities.......................................................................... 448,091
Available-for-sale securities........................................................................ 873,294
Federal funds sold........................................................................................  0
Securities purchased under agreements to resell....................................................... 78,866
Loans and lease financing receivables:
     Loans and leases, net of unearned income....... 3,441,294                                     
     LESS:  Allowance for loan and lease losses.....    47,663                                     
     LESS:  Allocated transfer risk reserve.......        0                                        
     Loans and leases, net of unearned income, allowance, and reserve.............................. 3,393,631
Assets held in trading accounts...........................................................................  0
Premises and fixed assets (including capitalized leases).............................................. 74,915
Other real estate owned............................................................................... 13,084
Investments in unconsolidated subsidiaries and associated companies...................................... 171
Customers' liability to this bank on acceptances outstanding..............................................  0
Intangible assets...................................................................................... 4,526
Other assets......................................................................................... 108,197
Total assets....................................................................................... 5,237,540
</TABLE>

                                                          CONTINUED ON NEXT PAGE
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES

<S>                                                                                                 <C>
Deposits:
In domestic offices................................................................................ 3,456,791
     Noninterest-bearing............. 743,460
     Interest-bearing.............. 2,713,331
Federal funds purchased............................................................................... 84,855
Securities sold under agreements to repurchase....................................................... 158,903
Demand notes issued to the U.S. Treasury.............................................................. 29,389
Trading liabilities.......................................................................................  0
Other borrowed money:................................................................................ ///////
     With original maturity of one year or less...................................................... 960,000
     With original maturity of more than one year..................................................... 28,000
Mortgage indebtedness and obligations under capitalized leases......................................... 1,887
Bank's liability on acceptances executed and outstanding..................................................  0
Subordinated notes and debentures.........................................................................  0
Other liabilities.................................................................................... 100,981
Total liabilities.................................................................................. 4,820,806
Limited-life preferred stock and related surplus..........................................................  0


EQUITY CAPITAL

Perpetual preferred stock and related surplus.............................................................  0
Common Stock............................................................................................. 500
Surplus............................................................................................... 62,118
Undivided profits and capital reserves............................................................... 349,963
Net unrealized holding gains (losses) on available-for-sale securities................................. 4,153
Total equity capital................................................................................. 416,734
Total liabilities, limited-life preferred stock, and equity capital................................ 5,237,540
</TABLE>

                                       2

<PAGE>
 
                                                   Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM T-1

        STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X
                  ---

                            WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


      Delaware                                         51-0055023
(State of incorporation)                 (I.R.S. employer identification no.)

                              Rodney Square North
                            1100 North Market Street
                          Wilmington, Delaware  19890
                    (Address of principal executive offices)

                               Myfanwy P. Bonilla
                     Asst. Vice President and Trust Counsel
                            Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                 (302) 651-8914
           (Name, address and telephone number of agent for service)


                         MCI COMMUNICATIONS CORPORATION


              (Exact name of obligor as specified in its charter)

                                        
      Delaware                                     52-0886267
(State of incorporation            (I.R.S. employer identification no.)
    or formation)

   1801 Pennsylvania Avenue, N.W.
        Washington, D.C.                                   20006
(Address of principal executive offices)                 (Zip Code)


         Guarantee of Cumulative Quarterly Income Preferred Securities
              of MCI Capital IV by MCI Communications Corporation
                      (Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
 
ITEM 1.    GENERAL INFORMATION.
- --------   --------------------

           Furnish the following information as to the trustee:

      (a)  Name and address of each examining or supervising authority to which
           it is subject.

           Federal Deposit Insurance Co.      State Bank Commissioner
           Five Penn Center                   Dover, Delaware
           Suite #2901
           Philadelphia, PA

      (b)  Whether it is authorized to exercise corporate trust powers.

           The trustee is authorized to exercise corporate trust powers.

ITEM 2.  AFFILIATIONS WITH THE OBLIGOR.

           If the obligor is an affiliate of the trustee, describe each
      affiliation:

           Based upon an examination of the books and records of the trustee and
           upon information furnished by the obligor, the obligor is not an
           affiliate of the trustee.

ITEM 3.  LIST OF EXHIBITS.

           List below all exhibits filed as part of this Statement of
      Eligibility and Qualification.

      A.   Copy of the Charter of Wilmington Trust Company, which
           includes the certificate of authority of Wilmington
           Trust Company to commence business and the authorization of
           Wilmington Trust Company to exercise corporate trust
           powers.
      B.   Copy of By-Laws of Wilmington Trust Company.
      C.   Consent of Wilmington Trust Company required by Section 321(b) of
           Trust Indenture Act.
      D.   Copy of most recent Report of Condition of Wilmington
           Trust Company.

      Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                   WILMINGTON TRUST COMPANY


Attest:/s/ Lloyd O. Martin               By:/s/ David P. Fontello
       -------------------                  --------------------- 
Assistant Secretary                      Name: David P. Fontello
                                         Title:  Vice President

                                       2
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                            WILMINGTON TRUST COMPANY

                              WILMINGTON, DELAWARE

                           AS EXISTING ON MAY 9, 1987
<PAGE>
 
                                AMENDED CHARTER

                                       OR

                              ACT OF INCORPORATION

                                       OF

                            WILMINGTON TRUST COMPANY

      WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

     SECOND: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.
<PAGE>
 
     THIRD: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1) To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common seal, and alter the seal at
          pleasure, to hold, purchase, convey, mortgage or otherwise deal in
          real and personal estate and property, and to appoint such officers
          and agents as the business of the Corporation shall require, to make
          by-laws not inconsistent with the Constitution or laws of the United
          States or of this State, to discount bills, notes or other evidences
          of debt, to receive deposits of money, or securities for money, to buy
          gold and silver bullion and foreign coins, to buy and sell bills of
          exchange, and generally to use, exercise and enjoy all the powers,
          rights, privileges and franchises incident to a corporation which are
          proper or necessary for the transaction of the business of the
          Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate or
          interests therein, and to guarantee the holder of such property, real
          or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.

                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any contract
          or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, 

                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the
          receiving, holding, managing, and disposing of any and all estates and
          property, real, personal or mixed, and to be appointed as such
          trustee, trustee in bankruptcy, receiver, assignee, assignee in
          bankruptcy, executor, administrator, guardian or bailee by any
          persons, corporations, court, officer, or authority, in the State of
          Delaware or elsewhere; and whenever this Corporation is so appointed
          by any person, corporation, court, officer or authority such trustee,
          trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
          executor, administrator, guardian, bailee, or in any other trust
          capacity, it shall not be required to give bond with surety, but its
          capital stock shall be taken and held as security for the performance
          of the duties devolving upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages, debentures,
          shares of capital stock, and other securities, obligations, contracts
          and evidences of indebtedness, of any private, public or municipal
          corporation within and without the State of Delaware, or of the
          Government of the United States, or of any state, territory, colony,
          or possession thereof, or of any foreign government or country; to
          receive, collect, receipt for, and dispose of interest, dividends and
          income upon and from any of the bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property held and owned by it, and to
          exercise in respect of all such bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property, any and all the rights, powers and
          privileges of individual owners thereof, including the right to vote
          thereon; to invest and deal in and with 

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and to
          undertake the whole or any part of  the assets and liabilities of any
          person, firm, association or corporation, and to pay for the same in
          cash, stock of this Corporation, bonds or otherwise; to hold or in any
          manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3)  To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any manner whatever dispose of
          property, real, personal or mixed, wherever situated.

          (4)  To enter into, make, perform and carry out contracts of every
          kind with any person, firm, association or corporation, and, without
          limit as to 

                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount,  execute
          and issue promissory notes, drafts, bills of exchange, warrants,
          bonds, debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     FOURTH: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if 

                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether  such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject to
          redemption, and the redemption price or prices and the time or times
          at which, and the terms and conditions on which, Preferred Stock of
          such 

                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase account,
          if any, to be provided for the Preferred Stock of such series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     FOURTH, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article FOURTH), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation, 

                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article FOURTH, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or

                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article FOURTH and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article FOURTH that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     FIFTH: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the 

                                      10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting.  Any vacancies in the
     Board of Directors for any reason, and any newly created directorships
     resulting from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for
     that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to 

                                      11
<PAGE>
 
     vote for the election of directors. Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders. Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     SIXTH: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     SEVENTH: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.

                                      12
<PAGE>
 
     EIGHTH: - This Act shall be deemed and taken to be a private Act.

     NINTH: - This Corporation is to have perpetual existence.

     TENTH: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     ELEVENTH: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     TWELFTH: - The Corporation may transact business in any part of the world.

     THIRTEENTH: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     FOURTEENTH: - Meetings of the Directors may be held outside
     of the State of Delaware at such places as may be from time to time
     designated by the Board, and the Directors may keep the books of the
     Company outside of the State of Delaware at such places as may be from time
     to time designated by them.

     FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article FIFTEENTH:

                                      13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any Subsidiary
          (as hereinafter defined) with or into (i) any Interested Stockholder
          (as hereinafter defined) or (ii) any other corporation (whether or not
          itself an Interested Stockholder), which, after such merger or
          consolidation, would be an Affiliate (as hereinafter defined) of an
          Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value
          of $1,000,000 or more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary (in
          one transaction or a series of related transactions) of any securities
          of the Corporation or any Subsidiary to any Interested Stockholder or
          any Affiliate of any Interested Stockholder in exchange for cash,
          securities or other property (or a combination thereof) having an
          aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the 

                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               FIFTEENTH shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article FIFTEENTH shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article FIFTEENTH:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which 

                                      15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares
     deemed owned through application of paragraph (3) above but shall not
     include any other Voting Shares which may be issuable pursuant to any
     agreement, or upon exercise of conversion rights, warrants or options or
     otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a 

                                      16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.

          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article FIFTEENTH on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article FIFTEENTH shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     SIXTEENTH:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
     SIXTEENTH of this Charter or Act of Incorporation.

     SEVENTEENTH: (a)  a Director of this Corporation shall not be liable to the
     Corporation or its stockholders for 

                                      17
<PAGE>
 
     monetary damages for breach of fiduciary duty as a Director, except to the
     extent such exemption from liability or limitation thereof is not permitted
     under the Delaware General Corporation Laws as the same exists or may
     hereafter be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."

                                      18
<PAGE>
 
               I ___________________________________________

               _________________ Secretary of WILMINGTON TRUST COMPANY, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of WILMINGTON TRUST COMPANY,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of WILMINGTON TRUST COMPANY.

               Date __________________


                         _______________________________________
                         Secretary
<PAGE>
 
                                   EXHIBIT B

                                    BY-LAWS

                            WILMINGTON TRUST COMPANY

                              WILMINGTON, DELAWARE

                        AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                             STOCKHOLDERS' MEETINGS


     Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

     Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

     Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

     Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                   ARTICLE II
                                   DIRECTORS

     Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

     Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
<PAGE>
 
     Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

     Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

     Section 5.  Regular meetings of the Board of Directors shall
be held on the third Thursday of each month at the principal office of the
Company, or at such other place and time as may be designated by the Board of
Directors, the Chairman of the Board, or the President.

     Section 6.  Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

     Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

     Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

     Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

     Section 10.  The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person.  The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, 

                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

     Section 11.  The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

     Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.

                                       3
<PAGE>
 
                                  ARTICLE III
                                   COMMITTEES


     Section I.  Executive Committee

          (A)  The Executive Committee shall be composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.

          (B)  The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.

          (C)  The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a week in each week the
Board is not regularly scheduled to meet.  A majority of its members shall be
necessary to constitute a quorum for the transaction of business.  Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

          (D)  Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.

          (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

          (F)  In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is 

                                       4
<PAGE>
 
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be empowered to
exercise all of the powers reserved to the Trust Committee under Article III
Section 2 hereof. In the event of the unavailability, at such time, of a minimum
of two members of such Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and management of the
affairs and business of the Company in accordance with the foregoing provisions
of this Section. This By-Law shall be subject to implementation by Resolutions
of the Board of Directors presently existing or hereafter passed from time to
time for that purpose, and any provisions of these By-Laws(other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary Resolutions shall be
suspended during such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its affairs and
business under all of the other provisions of these By-Laws.

     Section 2.  Trust Committee
 
          (A)  The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.

          (B)  The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.

          (C)  The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a month.  A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.  Special meetings of the Trust Committee may be held at any time when
a quorum is present.

          (D) Minutes of each meeting of the Trust Committee shall be kept and
promptly submitted to the Board of

                                       5
<PAGE>
 
Directors.
 
          (E)  The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.

     Section 3.  Audit Committee

          (A)  The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.

          (B)  The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

          (C)  The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.

     Section 4.  Compensation Committee

          (A)  The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.

          (B)  The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall 

                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

          (C)  Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.

     Section 5.  Associate Directors

          (A)  Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.

          (B)  An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote.  An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

     Section 6.  Absence or Disqualification of Any Member of a
                 Committee

          (A)  In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.


                                   ARTICLE IV
                                    OFFICERS

     Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of 

                                       7
<PAGE>
 
the Company.


     Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

     Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

     Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

     Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

     Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of 

                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

     Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

     There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

     Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

     There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

     Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

     Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

                                 ARTICLE V
                          STOCK AND STOCK CERTIFICATES

                                       9
<PAGE>
 
          Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

          Section 2.  Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed.  Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

          Section 3.  The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                   ARTICLE VI
                                      SEAL

          Section 1. The corporate seal of the Company shall be in the following
form:

                 Between two concentric circles the words
                 "Wilmington Trust Company" within the inner
                 circle the words "Wilmington, Delaware."

                                      10
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

     Section 1.  The fiscal year of the Company shall be the calendar year.


                                  ARTICLE VIII
                    EXECUTION OF INSTRUMENTS OF THE COMPANY

     Section 1.  The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                   ARTICLE IX
              COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

     Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors 

                                      11
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.

                                      12
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

     Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

          (B)  The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
                                                --------  -------          
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

          (C)  If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been received by the Corporation the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim.  In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification of payment of expenses under
applicable law.

          (D)  The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such 

                                      13
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

          (E)  Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.

                                      14
<PAGE>
 
                                   ARTICLE XI
                           AMENDMENTS TO THE BY-LAWS

          Section 1.  These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.



                    I, .....................................................
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date ...................................................

                    ........................................................
                                  Assistant Secretary

                                      15
<PAGE>
 
                                                            EXHIBIT C



                             SECTION 321(B) CONSENT


     Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                              WILMINGTON TRUST COMPANY


Dated: April 15, 1996               By:  /s/ David P. Fontello
                                        --------------------------
                                    Name: David P. Fontello
                                    Title: Vice President
<PAGE>
 
                                                                     EXHIBIT "D"



                                     NOTICE


          This form is intended to assist state nonmember banks and savings
          banks with state publication requirements.  It has not been approved
          by any state banking authorities.  Refer to your appropriate state
          banking authorities for your state publication requirements.

 
REPORT OF CONDITION
 
Consolidating domestic subsidiaries of the
 
    WILMINGTON TRUST COMPANY      of      WILMINGTON
- ------------------------------------------------------
          Name of Bank                 

                          City
 
in the State of  DELAWARE, at the close of business on December 31, 1995.
                ----------


<TABLE> 
<CAPTION> 

ASSETS
                                                                      Thousands of dollars
<S>                                                                       <C>
Cash and balances due from depository institutions:
      Noninterest-bearing balances and currency and coins...............    242,765
      Interest-bearing balances.........................................          0
Held-to-maturity securities.............................................    448,091
Available-for-sale securities...........................................    873,294
Federal funds sold......................................................          0
Securities purchased under agreements to resell.........................     78,866
Loans and lease financing receivables:
      Loans and leases, net of unearned income............   3,441,294
      LESS:  Allowance for loan and lease losses..........      47,663
      LESS:  Allocated transfer risk reserve..............           0
      Loans and leases, net of unearned income, allowance, and reserve..  3,393,631
Assets held in trading accounts.........................................          0
Premises and fixed assets (including capitalized leases)................     74,915
Other real estate owned.................................................     13,084
Investments in unconsolidated subsidiaries and associated companies.....      . 171
Customers' liability to this bank on acceptances outstanding............          0
Intangible assets.......................................................      4,526
Other assets............................................................    108,197
Total assets............................................................  5,237,540
 
</TABLE>

                                                          CONTINUED ON NEXT PAGE
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES
<S>                                                                       <C>
Deposits:
In domestic offices.....................................................  3,456,791
      Noninterest-bearing...................      743,460
      Interest-bearing......................    2,713,331
Federal funds purchased.................................................     84,855
Securities sold under agreements to repurchase..........................    158,903
Demand notes issued to the U.S. Treasury................................     29,389
Trading liabilities.....................................................          0
Other borrowed money:...................................................    ///////
      With original maturity of one year or less........................    960,000
      With original maturity of more than one year......................     28,000
Mortgage indebtedness and obligations under capitalized leases..........      1,887
Bank's liability on acceptances executed and outstanding................          0
Subordinated notes and debentures.......................................          0
Other liabilities.......................................................    100,981
Total liabilities.......................................................  4,820,806
Limited-life preferred stock and related surplus........................          0

 
EQUITY CAPITAL
 
Perpetual preferred stock and related surplus...........................          0
Common Stock............................................................        500
Surplus.................................................................     62,118
Undivided profits and capital reserves..................................    349,963
Net unrealized holding gains (losses) on available-for-sale securities..      4,153
Total equity capital....................................................    416,734
Total liabilities, limited-life preferred stock, and equity capital.....  5,237,540
</TABLE>

                                       2

<PAGE>
 
                                                    Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM T-1

        STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)  X
                  ---

                            WILMINGTON TRUST COMPANY
              (Exact name of trustee as specified in its charter)


      Delaware                                         51-0055023
(State of incorporation)                 (I.R.S. employer identification no.)

                              Rodney Square North
                            1100 North Market Street
                          Wilmington, Delaware  19890
                    (Address of principal executive offices)

                               Myfanwy P. Bonilla
                     Asst. Vice President and Trust Counsel
                            Wilmington Trust Company
                              Rodney Square North
                          Wilmington, Delaware  19890
                                 (302) 651-8914
           (Name, address and telephone number of agent for service)


                                 MCI CAPITAL IV


              (Exact name of obligor as specified in its charter)

                                        
      Delaware                                         Applied For
(State of incorporation                    (I.R.S. employer identification no.)
    or formation)

     1801 Pennsylvania Avenue, N.W.
           Washington, D.C.                                        20006
(Address of principal executive offices)                        (Zip Code)
<PAGE>
 
          ____ % Cumulative Quarterly Income Preferred Securities of 
                                MCI Capital IV 
                      (Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------



                                       2
<PAGE>
 
ITEM 1.    GENERAL INFORMATION.
- --------   --------------------

           Furnish the following information as to the trustee:

      (a)  Name and address of each examining or supervising authority to
           which it is subject.

           Federal Deposit Insurance Co.      State Bank Commissioner
           Five Penn Center                   Dover, Delaware
           Suite #2901
           Philadelphia, PA

      (b)  Whether it is authorized to exercise corporate trust powers.

           The trustee is authorized to exercise corporate trust powers.

ITEM 2.  AFFILIATIONS WITH THE OBLIGOR.

           If the obligor is an affiliate of the trustee, describe each
      affiliation:

           Based upon an examination of the books and records of the trustee and
           upon information furnished by the obligor, the obligor is not an
           affiliate of the trustee.

ITEM 3.  LIST OF EXHIBITS.

           List below all exhibits filed as part of this Statement of
      Eligibility and Qualification.

      A.   Copy of the Charter of Wilmington Trust Company, which
           includes the certificate of authority of Wilmington
           Trust Company to commence business and the authorization of
           Wilmington Trust Company to exercise corporate trust
           powers.
      B.   Copy of By-Laws of Wilmington Trust Company.
      C.   Consent of Wilmington Trust Company required by Section 321(b) of
           Trust Indenture Act.
      D.   Copy of most recent Report of Condition of Wilmington
           Trust Company.

      Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 15th day of April, 1996.

[SEAL]                                   WILMINGTON TRUST COMPANY


Attest:/s/ Lloyd O. Martin               By:/s/ David P. Fontello
       -------------------                  -------------------------       

                                       3
<PAGE>
 
       Assistant Secretary               Name:  David P. Fontello
                                         Title: Vice President


                                       1
<PAGE>
 
                                   EXHIBIT A

                                AMENDED CHARTER

                           WILMINGTON TRUST COMPANY

                             WILMINGTON, DELAWARE

                          AS EXISTING ON MAY 9, 1987

<PAGE>
 
                                AMENDED CHARTER

                                       OR

                              ACT OF INCORPORATION

                                       OF

                            WILMINGTON TRUST COMPANY

      WILMINGTON TRUST COMPANY, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:

     FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

     SECOND: - The location of its principal office in the State of Delaware is
     at Rodney Square North, in the City of Wilmington, County of New Castle;
     the name of its resident agent is WILMINGTON TRUST COMPANY whose address is
     Rodney Square North, in said City.  In addition to such principal office,
     the said corporation maintains and operates branch offices in the City of
     Newark, New Castle County, Delaware, the Town of Newport, New Castle
     County, Delaware, at Claymont, New Castle County, Delaware, at Greenville,
     New Castle County Delaware, and at Milford Cross Roads, New Castle County,
     Delaware, and shall be empowered to open, maintain and operate branch
     offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market
     Street, and 3605 Market Street, all in the City of Wilmington, New Castle
     County, Delaware, and such other branch offices or places of business as
     may be authorized from time to time by the agency or agencies of the
     government of the State of Delaware empowered to confer such authority.

<PAGE>
 
     THIRD: - (a) The nature of the business and the objects and purposes
     proposed to be transacted, promoted or carried on by this Corporation are
     to do any or all of the things herein mentioned as fully and to the same
     extent as natural persons might or could do and in any part of the world,
     viz.:

          (1)  To sue and be sued, complain and defend in any Court of law or
          equity and to make and use a common
          seal, and alter the seal at pleasure, to hold, purchase, convey,
          mortgage or otherwise deal in real and personal estate and property,
          and to appoint such officers and agents as the business of the
          Corporation shall require, to make by-laws not inconsistent with the
          Constitution or laws of the United States or of this State, to
          discount bills, notes or other evidences of debt, to receive deposits
          of money, or securities for money, to buy gold and silver bullion and
          foreign coins, to buy and sell bills of exchange, and generally to
          use, exercise and enjoy all the powers, rights, privileges and
          franchises incident to a corporation which are proper or necessary for
          the transaction of the business of the Corporation hereby created.

          (2)  To insure titles to real and personal property, or any estate or
          interests therein, and to guarantee the holder of such property, real
          or personal, against any claim or claims, adverse to his interest
          therein, and to prepare and give certificates of title for any lands
          or premises in the State of Delaware, or elsewhere.

          (3)  To act as factor, agent, broker or attorney in the receipt,
          collection, custody, investment and management of funds, and the
          purchase, sale, management and disposal of property of all
          descriptions, and to prepare and execute all papers which may be
          necessary or proper in such business.

          (4)  To prepare and draw agreements, contracts, deeds, leases,
          conveyances, mortgages, bonds and legal papers of every description,
          and to carry on the business of conveyancing in all its branches.


                                       2
<PAGE>
 
          (5)  To receive upon deposit for safekeeping money, jewelry, plate,
          deeds, bonds and any and all other personal property of every sort and
          kind, from executors, administrators, guardians, public officers,
          courts, receivers, assignees, trustees, and from all fiduciaries, and
          from all other persons and individuals, and from all corporations
          whether state, municipal, corporate or private, and to rent boxes,
          safes, vaults and other receptacles for such property.

          (6)  To act as agent or otherwise for the purpose of registering,
          issuing, certificating, countersigning, transferring or underwriting
          the stock, bonds or other obligations of any corporation, association,
          state or municipality, and may receive and manage any sinking fund
          therefor on such terms as may be agreed upon between the two parties,
          and in like manner may act as Treasurer of any corporation or
          municipality.

          (7)  To act as Trustee under any deed of trust, mortgage, bond or
          other instrument issued by any state, municipality, body politic,
          corporation, association or person, either alone or in conjunction
          with any other person or persons, corporation or corporations.

          (8)  To guarantee the validity, performance or effect of any contract
          or agreement, and the fidelity of persons holding places of
          responsibility or trust; to become surety for any person, or persons,
          for the faithful performance of any trust, office, duty, contract or
          agreement, either by itself or in conjunction with any other person,
          or persons, corporation, or corporations, or in like manner become
          surety upon any bond, recognizance, obligation, judgment, suit, order,
          or decree to be entered in any court of record within the State of
          Delaware or elsewhere, or which may now or hereafter be required by
          any law, judge, officer or court in the State of Delaware or
          elsewhere.

          (9)  To act by any and every method of appointment as trustee, trustee
          in bankruptcy, receiver, assignee, assignee in bankruptcy, executor,
          administrator, 


                                       3
<PAGE>
 
          guardian, bailee, or in any other trust capacity in the
          receiving, holding, managing, and disposing of any and all estates and
          property, real, personal or mixed, and to be appointed as such
          trustee, trustee in bankruptcy, receiver, assignee, assignee in
          bankruptcy, executor, administrator, guardian or bailee by any
          persons, corporations, court, officer, or authority, in the State of
          Delaware or elsewhere; and whenever this Corporation is so appointed
          by any person, corporation, court, officer or authority such trustee,
          trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
          executor, administrator, guardian, bailee, or in any other trust
          capacity, it shall not be required to give bond with surety, but its
          capital stock shall be taken and held as security for the performance
          of the duties devolving upon it by such appointment.

          (10)  And for its care, management and trouble, and the exercise of
          any of its powers hereby given, or for the performance of any of the
          duties which it may undertake or be called upon to perform, or for the
          assumption of any responsibility the said Corporation may be entitled
          to receive a proper compensation.

          (11)  To purchase, receive, hold and own bonds, mortgages, debentures,
          shares of capital stock, and other securities, obligations, contracts
          and evidences of indebtedness, of any private, public or municipal
          corporation within and without the State of Delaware, or of the
          Government of the United States, or of any state, territory, colony,
          or possession thereof, or of any foreign government or country; to
          receive, collect, receipt for, and dispose of interest, dividends and
          income upon and from any of the bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property held and owned by it, and to
          exercise in respect of all such bonds, mortgages, debentures, notes,
          shares of capital stock, securities, obligations, contracts, evidences
          of indebtedness and other property, any and all the rights, powers and
          privileges of individual owners thereof, including the right to vote
          thereon; to invest and deal in and with 

                                       4
<PAGE>
 
          any of the moneys of the Corporation upon such securities and in such
          manner as it may think fit and proper, and from time to time to vary
          or realize such investments; to issue bonds and secure the same by
          pledges or deeds of trust or mortgages of or upon the whole or any
          part of the property held or owned by the Corporation, and to sell and
          pledge such bonds, as and when the Board of Directors shall determine,
          and in the promotion of its said corporate business of investment and
          to the extent authorized by law, to lease, purchase, hold, sell,
          assign, transfer, pledge, mortgage and convey real and personal
          property of any name and nature and any estate or interest therein.

     (b)  In furtherance of, and not in limitation, of the powers conferred by
     the laws of the State of Delaware, it is hereby expressly provided that the
     said Corporation shall also have the following powers:

          (1)  To do any or all of the things herein set forth, to the same
          extent as natural persons might or could do, and in any part of the
          world.

          (2)  To acquire the good will, rights, property and franchises and to
          undertake the whole or any part of  the assets and liabilities of any
          person, firm, association or corporation, and to pay for the same in
          cash, stock of this Corporation, bonds or otherwise; to hold or in any
          manner to dispose of the whole or any part of the property so
          purchased; to conduct in any lawful manner the whole or any part of
          any business so acquired, and to exercise all the powers necessary or
          convenient in and about the conduct and management of such business.

          (3)  To take, hold, own, deal in, mortgage or otherwise lien, and to
          lease, sell, exchange, transfer, or in any
          manner whatever dispose of property, real, personal or mixed, wherever
          situated.

          (4)  To enter into, make, perform and carry out contracts of every
          kind with any person, firm, association or corporation, and, without
          limit as to 


                                       5
<PAGE>
 
          amount, to draw, make, accept, endorse, discount, execute and issue
          promissory notes, drafts, bills of exchange, warrants, bonds,
          debentures, and other negotiable or transferable instruments.

          (5)  To have one or more offices, to carry on all or any of its
          operations and businesses, without restriction to the same extent as
          natural persons might or could do, to purchase or otherwise acquire,
          to hold, own, to mortgage, sell, convey or otherwise dispose of, real
          and personal property, of every class and description, in any State,
          District, Territory or Colony of the United States, and in any foreign
          country or place.

          (6)  It is the intention that the objects, purposes and powers
          specified and clauses contained in this paragraph shall (except where
          otherwise expressed in said paragraph) be nowise limited or restricted
          by reference to or inference from the terms of any other clause of
          this or any other paragraph in this charter, but that the objects,
          purposes and powers specified in each of the clauses of this paragraph
          shall be regarded as independent objects, purposes and powers.

     FOURTH: - (a)  The total number of shares of all classes of stock which the
     Corporation shall have authority to issue is forty-one million (41,000,000)
     shares, consisting of:

          (1)  One million (1,000,000) shares of Preferred stock, par value
          $10.00 per share (hereinafter referred to as "Preferred Stock"); and

          (2)  Forty million (40,000,000) shares of Common Stock, par value
          $1.00 per share (hereinafter referred to as "Common Stock").

     (b)  Shares of Preferred Stock may be issued from time to time in one or
     more series as may from time to time be determined by the Board of
     Directors each of said series to be distinctly designated.  All shares of
     any one series of Preferred Stock shall be alike in every particular,
     except that there may be different dates from which dividends, if 


                                       6
<PAGE>
 
     any, thereon shall be cumulative, if made cumulative. The voting powers and
     the preferences and relative, participating, optional and other special
     rights of each such series, and the qualifications, limitations or
     restrictions thereof, if any, may differ from those of any and all other
     series at any time outstanding; and, subject to the provisions of
     subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
     Directors of the Corporation is hereby expressly granted authority to fix
     by resolution or resolutions adopted prior to the issuance of any shares of
     a particular series of Preferred Stock, the voting powers and the
     designations, preferences and relative, optional and other special rights,
     and the qualifications, limitations and restrictions of such series,
     including, but without limiting the generality of the foregoing, the
     following:

          (1)  The distinctive designation of, and the number of shares of
          Preferred Stock which shall constitute such series, which number may
          be increased (except where otherwise provided by the Board of
          Directors) or decreased (but not below the number of shares thereof
          then outstanding) from time to time by like action of the Board of
          Directors;

          (2)  The rate and times at which, and the terms and conditions on
          which, dividends, if any, on Preferred Stock of such series shall be
          paid, the extent of the preference or relation, if any, of such
          dividends to the dividends payable on any other class or classes, or
          series of the same or other class of stock and whether  such dividends
          shall be cumulative or non-cumulative;

          (3)  The right, if any, of the holders of Preferred Stock of such
          series to convert the same into or exchange the same for, shares of
          any other class or classes or of any series of the same or any other
          class or classes of stock of the Corporation and the terms and
          conditions of such conversion or exchange;

          (4)  Whether or not Preferred Stock of such series shall be subject to
          redemption, and the redemption price or prices and the time or times
          at which, and the terms and conditions on which, Preferred Stock of
          such 


                                       7
<PAGE>
 
          series may be redeemed.

          (5)  The rights, if any, of the holders of Preferred Stock of such
          series upon the voluntary or involuntary liquidation, merger,
          consolidation, distribution or sale of assets, dissolution or winding-
          up, of the Corporation.

          (6)  The terms of the sinking fund or redemption or purchase account,
          if any, to be provided for the Preferred Stock of such series; and

          (7)  The voting powers, if any, of the holders of such series of
          Preferred Stock which may, without limiting the generality of the
          foregoing include the right, voting as a series or by itself or
          together with other series of Preferred Stock or all series of
          Preferred Stock as a class, to elect one or more directors of the
          Corporation if there shall have been a default in the payment of
          dividends on any one or more series of Preferred Stock or under such
          circumstances and on such conditions as the Board of Directors may
          determine.

     (c)  (1)  After the requirements with respect to preferential dividends on
     the Preferred Stock (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), if any, shall have been met and after the
     Corporation shall have complied with all the requirements, if any, with
     respect to the setting aside of sums as sinking funds or redemption or
     purchase accounts (fixed in accordance with the provisions of section (b)
     of this Article FOURTH), and subject further to any conditions which may be
     fixed in accordance with the provisions of section (b) of this Article
     FOURTH, then and not otherwise the holders of Common Stock shall be
     entitled to receive such dividends as may be declared from time to time by
     the Board of Directors.

          (2)  After distribution in full of the preferential amount, if any,
          (fixed in accordance with the provisions of section (b) of this
          Article FOURTH), to be distributed to the holders of Preferred Stock
          in the event of voluntary or involuntary liquidation, 


                                       8
<PAGE>
 
          distribution or sale of assets, dissolution or winding-up, of the
          Corporation, the holders of the Common Stock shall be entitled to
          receive all of the remaining assets of the Corporation, tangible and
          intangible, of whatever kind available for distribution to
          stockholders ratably in proportion to the number of shares of Common
          Stock held by them respectively.

          (3)  Except as may otherwise be required by law or by the provisions
          of such resolution or resolutions as may be adopted by the Board of
          Directors pursuant to section (b) of this Article FOURTH, each holder
          of Common Stock shall have one vote in respect of each share of Common
          Stock held on all matters voted upon by the stockholders.

     (d)  No holder of any of the shares of any class or series of stock or of
     options, warrants or other rights to purchase shares of any class or series
     of stock or of other securities of the Corporation shall have any
     preemptive right to purchase or subscribe for any unissued stock of any
     class or series or any additional shares of any class or series to be
     issued by reason of any increase of the authorized capital stock of the
     Corporation of any class or series, or bonds, certificates of indebtedness,
     debentures or other securities convertible into or exchangeable for stock
     of the Corporation of any class or series, or carrying any right to
     purchase stock of any class or series, but any such unissued stock,
     additional authorized issue of shares of any class or series of stock or
     securities convertible into or exchangeable for stock, or carrying any
     right to purchase stock, may be issued and disposed of pursuant to
     resolution of the Board of Directors to such persons, firms, corporations
     or associations, whether such holders or others, and upon such terms as may
     be deemed advisable by the Board of Directors in the exercise of its sole
     discretion.

     (e)  The relative powers, preferences and rights of each series of
     Preferred Stock in relation to the relative powers, preferences and rights
     of each other series of Preferred Stock shall, in each case, be as fixed
     from time to time by the Board of Directors in the resolution or


                                       9
<PAGE>
 
     resolutions adopted pursuant to authority granted in section (b) of this
     Article FOURTH and the consent, by class or series vote or otherwise, of
     the holders of such of the series of Preferred Stock as are from time to
     time outstanding shall not be required for the issuance by the Board of
     Directors of any other series of Preferred Stock whether or not the powers,
     preferences and rights of such other series shall be fixed by the Board of
     Directors as senior to, or on a parity with, the powers, preferences and
     rights of such outstanding series, or any of them; provided, however, that
     the Board of Directors may provide in the resolution or resolutions as to
     any series of Preferred Stock adopted pursuant to section (b) of this
     Article FOURTH that the consent of the holders of a majority (or such
     greater proportion as shall be therein fixed) of the outstanding shares of
     such series voting thereon shall be required for the issuance of any or all
     other series of Preferred Stock.

     (f)  Subject to the provisions of section (e), shares of any series of
     Preferred Stock may be issued from time to time as the Board of Directors
     of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (g)  Shares of Common Stock may be issued from time to time as the Board of
     Directors of the Corporation shall determine and on such terms and for such
     consideration as shall be fixed by the Board of Directors.

     (h)  The authorized amount of shares of Common Stock and of Preferred Stock
     may, without a class or series vote, be increased or decreased from time to
     time by the affirmative vote of the holders of a majority of the stock of
     the Corporation entitled to vote thereon.

     FIFTH: - (a)  The business and affairs of the Corporation shall be
     conducted and managed by a Board of Directors.  The number of directors
     constituting the entire Board shall be not less than five nor more than
     twenty-five as fixed from time to time by vote of a majority of the whole
     Board, provided, however, that the number of directors shall not be reduced
     so as to shorten the term of any director at the 


                                      10
<PAGE>
 
     time in office, and provided further, that the number of directors
     constituting the whole Board shall be twenty-four until otherwise fixed by
     a majority of the whole Board.

     (b)  The Board of Directors shall be divided into three classes, as nearly
     equal in number as the then total number of directors constituting the
     whole Board permits, with the term of office of one class expiring each
     year.  At the annual meeting of stockholders in 1982, directors of the
     first class shall be elected to hold office for a term expiring at the next
     succeeding annual meeting, directors of the second class shall be elected
     to hold office for a term expiring at the second succeeding annual meeting
     and directors of the third class shall be elected to hold office for a term
     expiring at the third succeeding annual meeting.  Any vacancies in the
     Board of Directors for any reason, and any newly created directorships
     resulting from any increase in the directors, may be filled by the Board of
     Directors, acting by a majority of the directors then in office, although
     less than a quorum, and any directors so chosen shall hold office until the
     next annual election of directors.  At such election, the stockholders
     shall elect a successor to such director to hold office until the next
     election of the class for which such director shall have been chosen and
     until his successor shall be elected and qualified.  No decrease in the
     number of directors shall shorten the term of any incumbent director.

     (c)  Notwithstanding any other provisions of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and notwithstanding the
     fact that some lesser percentage may be specified by law, this Charter or
     Act of Incorporation or the By-Laws of the Corporation), any director or
     the entire Board of Directors of the Corporation may be removed at any time
     without cause, but only by the affirmative vote of the holders of two-
     thirds or more of the outstanding shares of capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) cast at a meeting of the
     stockholders called for
     that purpose.

     (d)  Nominations for the election of directors may be made by the Board of
     Directors or by any stockholder entitled to 


                                      11
<PAGE>
 
     vote for the election of directors. Such nominations shall be made by
     notice in writing, delivered or mailed by first class United States mail,
     postage prepaid, to the Secretary of the Corporation not less than 14 days
     nor more than 50 days prior to any meeting of the stockholders called for
     the election of directors; provided, however, that if less than 21 days'
     notice of the meeting is given to stockholders, such written notice shall
     be delivered or mailed, as prescribed, to the Secretary of the Corporation
     not later than the close of the seventh day following the day on which
     notice of the meeting was mailed to stockholders. Notice of nominations
     which are proposed by the Board of Directors shall be given by the Chairman
     on behalf of the Board.

     (e)  Each notice under subsection (d) shall set forth (i) the name, age,
     business address and, if known, residence address of each nominee proposed
     in such notice, (ii) the principal occupation or employment of such nominee
     and (iii) the number of shares of stock of the Corporation which are
     beneficially owned by each such nominee.

     (f)  The Chairman of the meeting may, if the facts warrant, determine and
     declare to the meeting that a nomination was not made in accordance with
     the foregoing procedure, and if he should so determine, he shall so declare
     to the meeting and the defective nomination shall be disregarded.

     (g)  No action required to be taken or which may be taken at any annual or
     special meeting of stockholders of the Corporation may be taken without a
     meeting, and the power of stockholders to consent in writing, without a
     meeting, to the taking of any action is specifically denied.

     SIXTH: - The Directors shall choose such officers, agent and servants as
     may be provided in the By-Laws as they may from time to time find necessary
     or proper.

     SEVENTH: - The Corporation hereby created is hereby given the same powers,
     rights and privileges as may be conferred upon corporations organized under
     the Act entitled "An Act Providing a General Corporation Law", approved
     March 10, 1899, as from time to time amended.


                                      12
<PAGE>
 
     EIGHTH: - This Act shall be deemed and taken to be a private Act.

     NINTH: - This Corporation is to have perpetual existence.

     TENTH: - The Board of Directors, by resolution passed by a majority of the
     whole Board, may designate any of their number to constitute an Executive
     Committee, which Committee, to the extent provided in said resolution, or
     in the By-Laws of the Company, shall have and may exercise all of the
     powers of the Board of Directors in the management of the business and
     affairs of the Corporation, and shall have power to authorize the seal of
     the Corporation to be affixed to all papers which may require it.

     ELEVENTH: - The private property of the stockholders shall not be liable
     for the payment of corporate debts to any extent whatever.

     TWELFTH: - The Corporation may transact business in any part of the world.

     THIRTEENTH: - The Board of Directors of the Corporation is expressly
     authorized to make, alter or repeal the By-Laws of the Corporation by a
     vote of the majority of the entire Board.  The stockholders may make, alter
     or repeal any By-Law whether or not adopted by them, provided however, that
     any such additional By-Laws, alterations or repeal may be adopted only by
     the affirmative vote of the holders of two-thirds or more of the
     outstanding shares of capital stock of the Corporation entitled to vote
     generally in the election of directors (considered for this purpose as one
     class).

     FOURTEENTH: - Meetings of the Directors may be held outside

     of the State of Delaware at such places as may be from time to time
     designated by the Board, and the Directors may keep the books of the
     Company outside of the State of Delaware at such places as may be from time
     to time designated by them.

     FIFTEENTH: - (a) In addition to any affirmative vote required by law, and
     except as otherwise expressly provided in sections (b) and (c) of this
     Article FIFTEENTH:


                                      13
<PAGE>
 
          (A)  any merger or consolidation of the Corporation or any Subsidiary
          (as hereinafter defined) with or into (i) any Interested Stockholder
          (as hereinafter defined) or (ii) any other corporation (whether or not
          itself an Interested Stockholder), which, after such merger or
          consolidation, would be an Affiliate (as hereinafter defined) of an
          Interested Stockholder, or

          (B)  any sale, lease, exchange, mortgage, pledge, transfer or other
          disposition (in one transaction or a series of related transactions)
          to or with any Interested Stockholder or any Affiliate of any
          Interested Stockholder of any assets of the Corporation or any
          Subsidiary having an aggregate fair market value
          of $1,000,000 or more, or

          (C)  the issuance or transfer by the Corporation or any Subsidiary (in
          one transaction or a series of related transactions) of any securities
          of the Corporation or any Subsidiary to any Interested Stockholder or
          any Affiliate of any Interested Stockholder in exchange for cash,
          securities or other property (or a combination thereof) having an
          aggregate fair market value of $1,000,000 or more, or

          (D)  the adoption of any plan or proposal for the liquidation or
          dissolution of the Corporation, or

          (E)  any reclassification of securities (including any reverse stock
          split), or recapitalization of the Corporation, or any merger or
          consolidation of the Corporation with any of its Subsidiaries or any
          similar transaction (whether or not with or into or otherwise
          involving an Interested Stockholder) which has the effect, directly or
          indirectly, of increasing the proportionate share of the outstanding
          shares of any class of equity or convertible securities of the
          Corporation or any Subsidiary which is directly or indirectly owned by
          any Interested Stockholder, or any Affiliate of any Interested
          Stockholder,

shall require the affirmative vote of the holders of at least  two-thirds of the
outstanding shares of capital stock of the 


                                      14
<PAGE>
 
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article FIFTEENTH as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.

               (2)  The term "business combination" as used in this Article
               FIFTEENTH shall mean any transaction which is referred to any one
               or more of clauses (A) through (E) of paragraph 1 of the section
               (a).

          (b)  The provisions of section (a) of this Article FIFTEENTH shall not
          be applicable to any particular business combination and such business
          combination shall require only such affirmative vote as is required by
          law and any other provisions of the Charter or Act of Incorporation of
          By-Laws if such business combination has been approved by a majority
          of the whole Board.

          (c)  For the purposes of this Article FIFTEENTH:

     (1)  A "person" shall mean any individual firm, corporation or other
     entity.

     (2)  "Interested Stockholder" shall mean, in respect of any business
     combination, any person (other than the Corporation or any Subsidiary) who
     or which as of the record date for the determination of stockholders
     entitled to notice of and to vote on such business combination, or
     immediately prior to the consummation of any such transaction:

          (A)  is the beneficial owner, directly or indirectly, of more than 10%
          of the Voting Shares, or

          (B)  is an Affiliate of the Corporation and at any time within two
          years prior thereto was the beneficial owner, directly or indirectly,
          of not less than 10% of the then outstanding voting Shares, or

          (C)  is an assignee of or has otherwise succeeded in any share of
          capital stock of the Corporation which 


                                      15
<PAGE>
 
          were at any time within two years prior thereto beneficially owned by
          any Interested Stockholder, and such assignment or succession shall
          have occurred in the course of a transaction or series of transactions
          not involving a public offering within the meaning of the Securities
          Act of 1933.

     (3)  A person shall be the "beneficial owner" of any Voting Shares:

          (A)  which such person or any of its Affiliates and Associates (as
          hereafter defined) beneficially own, directly or indirectly, or

          (B)  which such person or any of its Affiliates or Associates has (i)
          the right to acquire (whether such right is exercisable immediately or
          only after the passage of time), pursuant to any agreement,
          arrangement or understanding or upon the exercise of conversion
          rights, exchange rights, warrants or options, or otherwise, or (ii)
          the right to vote pursuant to any agreement, arrangement or
          understanding, or

          (C)  which are beneficially owned, directly or indirectly, by any
          other person with which such first mentioned person or any of its
          Affiliates or Associates has any agreement, arrangement or
          understanding for the purpose of acquiring, holding, voting or
          disposing of any shares of capital stock of the Corporation.

     (4)  The outstanding Voting Shares shall include shares
          deemed owned through application of paragraph (3) above but shall not
          include any other Voting Shares which may be issuable pursuant to any
          agreement, or upon exercise of conversion rights, warrants or options
          or otherwise.

     (5)  "Affiliate" and "Associate" shall have the respective meanings given
     those terms in Rule 12b-2 of the General Rules and Regulations under the
     Securities Exchange Act of 1934, as in effect on December 31, 1981.

     (6)  "Subsidiary" shall mean any corporation of which a 


                                      16
<PAGE>
 
     majority of any class of equity security (as defined in Rule 3a11-1 of the
     General Rules and Regulations under the Securities Exchange Act of 1934, as
     in effect in December 31, 1981) is owned, directly or indirectly, by the
     Corporation; provided, however, that for the purposes of the definition of
     Investment Stockholder set forth in paragraph (2) of this section (c), the
     term "Subsidiary" shall mean only a corporation of which a majority of each
     class of equity security is owned, directly or indirectly, by the
     Corporation.

          (d)  majority of the directors shall have the power and duty to
          determine for the purposes of this Article FIFTEENTH on the basis of
          information known to them, (1) the number of Voting Shares
          beneficially owned by any person (2) whether a person is an Affiliate
          or Associate of another, (3) whether a person has an agreement,
          arrangement or understanding with another as to the matters referred
          to in paragraph (3) of section (c), or (4) whether the assets subject
          to any business combination or the consideration received for the
          issuance or transfer of securities by the Corporation, or any
          Subsidiary has an aggregate fair market value of $1,00,000 or more.

          (e)  Nothing contained in this Article FIFTEENTH shall be construed to
          relieve any Interested Stockholder from any fiduciary obligation
          imposed by law.

     SIXTEENTH:   Notwithstanding any other provision of this Charter or Act of
     Incorporation or the By-Laws of the Corporation (and in addition to any
     other vote that may be required by law, this Charter or Act of
     Incorporation by the By-Laws), the affirmative vote of the holders of at
     least two-thirds of the outstanding shares of the capital stock of the
     Corporation entitled to vote generally in the election of directors
     (considered for this purpose as one class) shall be required to amend,
     alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or
     SIXTEENTH of this Charter or Act of Incorporation.

     SEVENTEENTH: (a)  a Director of this Corporation shall not be liable to the
     Corporation or its stockholders for 


                                      17
<PAGE>
 
     monetary damages for breach of fiduciary duty as a Director, except to the
     extent such exemption from liability or limitation thereof is not permitted
     under the Delaware General Corporation Laws as the same exists or may
     hereafter be amended.

          (b)  Any repeal or modification of the foregoing paragraph shall not
          adversely affect any right or protection of a Director of the
          Corporation existing hereunder with respect to any act or omission
          occurring prior to the time of such repeal or modification."

                                      18
<PAGE>
 
               I ___________________________________________________________

               _________________ Secretary of WILMINGTON TRUST COMPANY, do
               hereby certify that the foregoing is a true and correct copy of
               the Charter or Act of Incorporation of WILMINGTON TRUST COMPANY,
               as heretofore amended and changed from time to time, copies of
               which, certified by the Secretary of the State of Delaware, are
               on file in the office of WILMINGTON TRUST COMPANY.

               Date __________________


                                      _______________________________________
                                      Secretary
<PAGE>
     
                                   EXHIBIT B

                                    BY-LAWS

                            WILMINGTON TRUST COMPANY

                              WILMINGTON, DELAWARE

                        AS EXISTING ON FEBRUARY 21, 1991
<PAGE>
 
                      BY-LAWS OF WILMINGTON TRUST COMPANY


                                   ARTICLE I
                             STOCKHOLDERS' MEETINGS


     Section 1.  The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.

     Section 2.  Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.

     Section 3.  Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

     Section 4.  A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.


                                   ARTICLE II
                                   DIRECTORS

     Section 1.  The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.

     Section 2.  No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.

   
<PAGE>
 
     Section 3.  The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.

     Section 4.  The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

     Section 5. Regular meetings of the Board of Directors shall be held on the
third Thursday of each month at the principal office of the Company, or at such
other place and time as may be designated by the Board of Directors, the
Chairman of the Board, or the President.

     Section 6.  Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.

     Section 7.  A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

     Section 8.  Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

     Section 9.  In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

     Section 10.  The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person.  The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, 


                                       2
<PAGE>
 
may appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect at such
meeting one or more Associate Directors.

     Section 11.  The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.

     Section 12.  The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.


                                       3
<PAGE>
 
                                  ARTICLE III
                                   COMMITTEES


     Section I.  Executive Committee

          (A)  The Executive Committee shall be composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.

          (B)  The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.

          (C)  The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a week in each week the
Board is not regularly scheduled to meet.  A majority of its members shall be
necessary to constitute a quorum for the transaction of business.  Special
meetings of the Executive Committee may be held at any time when a quorum is
present.

          (D)  Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.

          (E)  The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

          (F)  In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is 


                                       4
<PAGE>
 
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be empowered to
exercise all of the powers reserved to the Trust Committee under Article III
Section 2 hereof. In the event of the unavailability, at such time, of a minimum
of two members of such Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and management of the
affairs and business of the Company in accordance with the foregoing provisions
of this Section. This By-Law shall be subject to implementation by Resolutions
of the Board of Directors presently existing or hereafter passed from time to
time for that purpose, and any provisions of these By-Laws(other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary Resolutions shall be
suspended during such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its affairs and
business under all of the other provisions of these By-Laws.

     Section 2.  Trust Committee
 
          (A)  The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.

          (B)  The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.

          (C)  The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at least once a month.  A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.  Special meetings of the Trust Committee may be held at any time when
a quorum is present.

          (D) Minutes of each meeting of the Trust Committee shall be kept and
promptly submitted to the Board of


                                       5
<PAGE>
 
Directors.
 
          (E)  The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.

     Section 3.  Audit Committee

          (A)  The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.

          (B)  The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

          (C)  The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.

     Section 4.  Compensation Committee

          (A)  The Compensation Committee shall be composed of not more than
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.

          (B)  The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall 


                                       6
<PAGE>
 
administer the Executive Incentive Compensation Plan.

          (C)  Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.

     Section 5.  Associate Directors

          (A)  Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.

          (B)  An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote.  An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

     Section 6.  Absence or Disqualification of Any Member of a
                 Committee

          (A)  In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.


                                   ARTICLE IV
                                    OFFICERS

     Section 1.  The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct.  He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of 


                                       7
<PAGE>
 
the Company.

     Section 2.  The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

     Section 3.  The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

     Section 4.  There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.

     Section 5.  The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company.  In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting.  He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

     Section 6.  The Treasurer shall have general supervision over all assets
and liabilities of the Company.  He shall be custodian of and responsible for
all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company.  He shall have general supervision of the expenditures of the
Company and shall report to the Board of 


                                       8
<PAGE>
 
Directors at each regular meeting of the condition of the Company, and perform
such other duties as may be assigned to him from time to time by the Board of
Directors of the Executive Committee.

     Section 7.  There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.

     There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

     Section 8.  The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

     There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

     Section 9.  There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.

     Section 10.  The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

                                   ARTICLE V
                         STOCK AND STOCK CERTIFICATES


                                       9
<PAGE>
 
     Section 1.  Shares of stock shall be transferrable on the
books of the Company and a transfer book shall be kept in which all transfers of
stock shall be recorded.

          Section 2.  Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon.  Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed.  Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof.  Duplicate certificates of
stock shall be issued only upon giving such security as may be satisfactory to
the Board of Directors or the Executive Committee.

          Section 3.  The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.


                                   ARTICLE VI
                                      SEAL

          Section 1. The corporate seal of the Company shall be in the following
form:

                 Between two concentric circles the words
                 "Wilmington Trust Company" within the inner


                                      10
<PAGE>
   
                 circle the words "Wilmington, Delaware."


                                      11
<PAGE>
 
                                  ARTICLE VII
                                  FISCAL YEAR

     Section 1.  The fiscal year of the Company shall be the calendar year.


                                  ARTICLE VIII
                    EXECUTION OF INSTRUMENTS OF THE COMPANY

     Section 1.  The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.


                                   ARTICLE IX
              COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

     Section 1.  Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors 


                                      12
<PAGE>
 
may be employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for such special
services so performed reasonable compensation as may be determined by the Board
of Directors.


                                      13
<PAGE>
 
                                   ARTICLE X
                                INDEMNIFICATION

     Section 1.  (A)  The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

          (B)  The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

          (C)  If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been received by the Corporation the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim.  In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification of payment of expenses under
applicable law.

          (D)  The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such 


                                      14
<PAGE>
 
person may have or hereafter acquire under any statute, provision of the Charter
or Act of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

          (E)  Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.


                                      15
<PAGE>
 
                                   ARTICLE XI
                           AMENDMENTS TO THE BY-LAWS

          Section 1.  These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.



                    I,
                    Assistant Secretary of Wilmington Trust Company, do hereby
                    certify that the foregoing is a true and correct copy of the
                    By-Laws of the Wilmington Trust Company.


                    Date .....................................................

                    ..........................................................
                    Assistant Secretary


                                      16
<PAGE>
 
                                                                       EXHIBIT C



                             SECTION 321(B) CONSENT


     Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended,
Wilmington Trust Company hereby consents that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.



                                    WILMINGTON TRUST COMPANY


Dated: April 15, 1996               By:  /s/ David P. Fontello
                                        --------------------------
                                        Name: David P. Fontello
                                        Title: Vice President
<PAGE>
 
                                  EXHIBIT "D"



                                     NOTICE


     This form is intended to assist state nonmember banks and savings
     banks with state publication requirements.  It has not been approved
     by any state banking authorities.  Refer to your appropriate state
     banking authorities for your state publication requirements.

 
R E P O R T   O F   C O N D I T I O N
 
Consolidating domestic subsidiaries of the
 
         WILMINGTON TRUST COMPANY           of  WILMINGTON
- --------------------------------------------    ----------
               Name of Bank                         City
 
in the State of DELAWARE, at the close of business on December 31, 1995.
                ---------
<TABLE> 
<CAPTION> 

ASSETS
                                                               Thousands of dollars
Cash and balances due from depository institutions:
<S>                                                                       <C>
      Noninterest-bearing balances and currency and coins...............    242,765
      Interest-bearing balances.........................................          0
Held-to-maturity securities.............................................    448,091
Available-for-sale securities...........................................    873,294
Federal funds sold......................................................          0
Securities purchased under agreements to resell.........................     78,866
Loans and lease financing receivables:
      Loans and leases, net of unearned income............. 3,441,294
      LESS:  Allowance for loan and lease losses...........    47,663
      LESS:  Allocated transfer risk reserve...............         0
      Loans and leases, net of unearned income, allowance, and reserve..  3,393,631
Assets held in trading accounts.........................................          0
Premises and fixed assets (including capitalized leases)................     74,915
Other real estate owned.................................................     13,084
Investments in unconsolidated subsidiaries and associated companies.....        171
Customers' liability to this bank on acceptances outstanding............          0
Intangible assets.......................................................      4,526
Other assets............................................................    108,197
Total assets............................................................  5,237,540
 
</TABLE>
 
                                                          CONTINUED ON NEXT PAGE
<PAGE>
 
<TABLE>
<CAPTION>
LIABILITIES
<S>                                                                       <C>
Deposits:
In domestic offices.....................................................  3,456,791
      Noninterest-bearing.................................    743,460
      Interest-bearing....................................  2,713,331
Federal funds purchased.................................................     84,855
Securities sold under agreements to repurchase..........................    158,903
Demand notes issued to the U.S. Treasury................................     29,389
Trading liabilities.....................................................          0
Other borrowed money:...................................................    ///////
      With original maturity of one year or less........................    960,000
      With original maturity of more than one year......................     28,000
Mortgage indebtedness and obligations under capitalized leases..........      1,887
Bank's liability on acceptances executed and outstanding................          0
Subordinated notes and debentures.......................................          0
Other liabilities.......................................................    100,981
Total liabilities.......................................................  4,820,806
Limited-life preferred stock and related surplus........................          0
 
 
 
EQUITY CAPITAL
 
Perpetual preferred stock and related surplus...........................          0
Common Stock............................................................        500
Surplus.................................................................     62,118
Undivided profits and capital reserves..................................    349,963
Net unrealized holding gains (losses) on available-for-sale securities..      4,153
Total equity capital....................................................    416,734
Total liabilities, limited-life preferred stock, and equity capital.....  5,237,540
</TABLE>


                                       2


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