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                                                                   EXHIBIT 10.26



                         DSC COMMUNICATIONS CORPORATION

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
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                         DSC COMMUNICATIONS CORPORATION

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


                               Table of Contents

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ARTICLE 1        Introduction                                                                                  2

1.1      Purpose of the Plan, Effective Date                                                                   2
1.2      Plan Administrator, Plan Year                                                                         2
1.3      The Employers                                                                                         2
1.4      Supplements                                                                                           2

ARTICLE 2        Plan Participants                                                                             3

2.1      Participation                                                                                         3
2.2      Notice of Participation                                                                               3
2.3      Cessation of Participation                                                                            3

ARTICLE 3        Retirement Dates, Employment Termination Date                                                 3

3.1      Normal Retirement Date                                                                                3
3.2      Deferred Retirement Date                                                                              4
3.3      Early Retirement Date                                                                                 4
3.4      Disability Retirement Date                                                                            4
3.5      Retirement Date                                                                                       4
3.6      Employment Termination Date                                                                           4

ARTICLE 4        Service, Earnings                                                                             4

4.1      General                                                                                               4
4.2      Benefit Service                                                                                       4
4.3      Leave of Absence                                                                                      5
4.4      Earnings                                                                                              5
4.5      Highest Average Annual Earnings                                                                       5
4.6      Determination of Bases of Benefits                                                                    6


ARTICLE 5        Retirement Income                                                                             6



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5.1      Normal or Deferred Retirement                                                                         6
5.2      Early Retirement                                                                                      6
5.3      Disability Retirement                                                                                 7
5.4      Form of Payment                                                                                       7
5.5      Annuity Commencement Date                                                                             7

ARTICLE 6        Deferred Vested Benefits; Death Before
                 Retirement or Termination                                                                     8

6.1      Deferred Vested Benefit                                                                               8
6.2      Death Before Retirement                                                                               9

ARTICLE 7        Payment of Retirement Income and Other Benefits                                               9

7.1      Normal Form of Payment of Benefits                                                                    9
7.2      Optional Forms of Payment of Benefits                                                                 9
7.3      Rules as to Election and Discontinuance of Optional Forms of Payment of Benefits                      10
7.4      Payment of Small Amounts                                                                              11
7.5      Missing Persons                                                                                       11

ARTICLE 8        Forfeitures                                                                                   11

8.1      Termination for Just Cause                                                                            11
8.2      Restrictive Covenants                                                                                 12
8.3      Loan Offset                                                                                           15

ARTICLE 9        Reemployment                                                                                  15

9.1      Rehired Participant                                                                                   15
9.2      Redetermination of Benefits                                                                           15

ARTICLE 10       General Provisions                                                                            16

10.1     Notices                                                                                               16
10.2     Nonalienation of Plan Benefits                                                                        16
10.3     Payment with Respect to Incapacitated Persons                                                         16
10.4     No Employment or Benefit Guaranty                                                                     16
10.5     Litigation                                                                                            16

10.6     Actuarial Equivalent                                                                                  17
10.7     Evidence                                                                                              17
10.8     Gender and Number                                                                                     17
10.9     Waiver of Notice                                                                                      17
10.10    Applicable Law                                                                                        17
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10.11    Severability                                                                                          17
10.12    Withholding for Taxes                                                                                 17
10.13    Successors                                                                                            17
10.14    Effect on Other Employee Benefit Plans                                                                17
10.15    Gross-Up Payments                                                                                     18

ARTICLE 11       Relating to Plan Administration                                                               18

11.1     Plan Administrator's Duties                                                                           18
11.2     Action by Plan Administrator                                                                          19
11.3     Information Required for Plan Administration                                                          19
11.4     Decision of Plan Administrator Final                                                                  20
11.5     Review of Benefit Determinations                                                                      20
11.6     Interested Plan Administrator                                                                         20
11.7     Indemnification                                                                                       20

ARTICLE 12       No Funding of Plan Benefits                                                                   21

ARTICLE 13       Relating to the Employers                                                                     21

13.1     Action by Employers                                                                                   21
13.2     Additional Employers                                                                                  21

ARTICLE 14       Amendment and Termination                                                                     22

14.1     Amendment                                                                                             22
14.2     Termination                                                                                           22
14.3     Vesting on Termination                                                                                23
</TABLE>







<PAGE>   5

                         DSC COMMUNICATIONS CORPORATION

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


                                   ARTICLE 1

                                  Introduction

                 1.1      Purpose of the Plan, Effective Date.  DSC
Communications Corporation Supplemental Executive Retirement Plan (the "plan")
has been established effective as of July 1, 1997 (the "effective date") by DSC
Communications Corporation (the "company") to provide retirement and other
benefits for certain eligible employees in consideration for each such eligible
employee's agreement to be bound by the restrictive covenants contained in
section 8.2 hereof.  In consideration for the employers' (as defined in section
1.3 below) maintaining this plan for the benefit of the participant and paying
benefits hereunder, the participant agrees to be bound by the restrictive
covenants contained in section 8.2 and further agrees that such restrictive
covenants are reasonable, necessary and enforceable.  The plan is intended to
be a plan that is unfunded and that is maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.

                 1.2      Plan Administrator, Plan Year.  The plan is
administered by the Executive Plan Committee of the company.  The plan is
administered on the basis of a plan year (the "plan year") which for the
initial plan year is the short plan year beginning on the effective date and
ending on December 31, 1997 and thereafter is the twelve-month period beginning
each year on January 1 and ending on the next following December 31.  Article
11 describes certain specific powers, duties and responsibilities of the plan
administrator with respect to the administration of the plan.

                 1.3      The Employers.  With the consent of the company, the
plan may be adopted in accordance with the provisions of section 13.2 by any
subsidiary of the company for the benefit of its eligible employees.  For this
purpose, a "subsidiary" means any corporation more than 50 percent of the
voting stock of which is directly or indirectly owned by the company.  The
company and its subsidiaries that adopt the plan are referred to herein
collectively as the "employers" and individually as an "employer."  The term
"DSC Companies" includes the employers and all subsidiaries that have not
adopted the plan (and each such corporation is sometimes referred to herein
individually as a "DSC Company").

                 1.4      Supplements.  From time to time supplements may by
amendment be attached to and form a part of this plan.  Such supplements may
modify or supplement the provisions of the plan as they apply to particular
groups of employees or groups of participants, shall specify the persons
affected by such supplements and shall supersede the other provisions of the
plan to the extent necessary to eliminate inconsistencies between the plan
provisions and the provisions of such supplements.





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                                   ARTICLE 2

                               Plan Participants

                 2.1      Participation.  As of the effective date and each
January 1 thereafter, the Nominating Committee of the company may recommend to
the plan administrator and the plan administrator may select eligible employees
of the employers to accrue benefits under the plan and thereby to become
participants in the plan.  "Eligible employees" means those employees who are
management or highly compensated employees.  The Nominating Committee and the
plan administrator shall consider such factors as they consider pertinent in
recommending for selection and in selecting eligible employees to participate
in the plan.

                 2.2      Notice of Participation.  Each employee will be
notified of the date he becomes a plan participant.

                 2.3      Cessation of Participation.

                 (a)      Subject to Article 9, an employee of an employer who
becomes a participant in the plan in accordance with section 2.1 above shall
cease to participate in the plan on his employment termination date (as defined
in section 3.6) provided he has no vested interest in a plan benefit on such
date or on any date that his vested accrued benefit is distributed in a lump
sum payment.

                 (b)      It is the intent of the company that the plan be
exempt from Parts 2, 3, and 4 of Subtitle B of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), as an unfunded
plan that is maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management of highly compensated
employees (the "ERISA exemption").  Notwithstanding anything to the contrary in
this Article 2 or in any other provision of the plan, the plan administrator
may in its sole discretion exclude any one or more employees from eligibility
to participate or from participation in the plan, may exclude any participant
from continued participation in the plan, and may take any further action it
considers necessary or appropriate if the plan administrator reasonably
determines in good faith that such exclusion or further action is necessary in
order for the plan to qualify for, or to continue to qualify for, the ERISA
exemption.


                                   ARTICLE 3

                 Retirement Dates, Employment Termination Date

                 3.1      Normal Retirement Date.  A participant's "normal
retirement date" will be the first day of the calendar month next following the
month in which he attains age 65 years ("normal retirement age").





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                 3.2      Deferred Retirement Date.  A participant's "deferred
retirement date" will be the first day of the calendar month next following the
date of his retirement from the employ of all of the DSC Companies after his
normal retirement date.

                 3.3      Early Retirement Date.  A participant's "early
retirement date" will be the first day of the calendar month next following the
date of his retirement from the employ of all of the DSC Companies before his
normal retirement date but after (i) he has attained age 55 and (ii) the sum of
his years of benefit service and attained age equals 70 or more.

                 3.4      Disability Retirement Date.  A participant's
"disability retirement date" will be the first day of the calendar month next
following the date of his retirement from the employ of all of the DSC
Companies before his normal and early retirement dates and after he has both
incurred a disability and completed five years of benefit service.  For
purposes of the plan, a participant will be considered to have incurred a
disability if he qualifies for and is or will be receiving benefits under his
employer's long term disability income plan.  For the purpose of determining
the duration of a participant's disability, the plan administrator from time to
time may require that a participant qualifies for and is receiving disability
benefits under a long-term disability income plan maintained by the DSC
Companies.

                 3.5      Retirement Date.  Reference to the "retirement date"
of a participant who retires under the plan means his normal retirement date,
if his retirement occurs on that date, but otherwise means his deferred
retirement date, his early retirement date or his disability retirement date,
whichever applies in his case.

                 3.6      Employment Termination Date.  Reference to the
"employment termination date" of a participant whose employment with all of the
DSC Companies terminates before he qualifies for retirement on a retirement
date means the date his employment with all of the DSC Companies is terminated.


                                   ARTICLE 4

                               Service, Earnings

                 4.1      General.  A participant's eligibility for, and amount
of, benefits payable under the plan will be based on his benefit service and
highest average annual earnings, as determined in accordance with the following
provisions of this Article 4, Article 9 and any applicable supplement to this
plan.

                 4.2      Benefit Service.  Subject to the provisions of
Article 9, a participant's "benefit service" means the total of the period or
periods of benefit service granted to him.  Each participant shall be granted
one- twelfth of a year of benefit service for each full or partial calendar
month of his employment by the employers commencing with his date of hire and
ending with his date of termination of employment or retirement as an employee
of an employer.  Determinations of benefit service shall be subject to the
following:





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                 (a)      If a participant had a period or periods of
employment with a DSC Company that has not adopted the plan such period or
periods of employment with such DSC Company will be disregarded in determining
his benefit service unless and to the extent specified otherwise by the
company.

                 (b)      A period of concurrent employment with two or more
employers will be considered as employment with only one of them during that
period.

                 (c)      Unless otherwise specified by the company, an
employee's employment with a predecessor company will be disregarded in
determining his benefit service if the employee is transferred to employment
with an employer or the predecessor company becomes an employer and if the
employee becomes a participant.  A "predecessor company" means any corporation
or other entity the stock, assets or business of which was acquired by an
employer after the effective date, whether by merger, consolidation, purchase
of assets or otherwise, and any predecessor thereto designated by the company.

                 (d)      Separate periods of an employee's employment with an
employer shall be aggregated for purposes of determining his benefit service.

                 (e)      A leave of absence (as defined in section 4.3) will
not interrupt continuity of employment for purposes of the plan.

                 4.3      Leave of Absence.  A "leave of absence" as used in
the plan means:

                 (a)      A leave of absence required by law or granted by an
employer on account of service in military or governmental branches described
in any applicable statute granting reemployment rights to employees who enter
such branches, or any other military or governmental branch designated by the
company.

                 (b)      Any other absence from active employment with a DSC
Company that is approved and not treated by it as a termination of employment.

                 4.4      Earnings.  For purposes of the plan, a participant's
"earnings" for a calendar year means his base salary for such calendar year
plus the greater of (i)Ethe bonuses paid to him during such calendar year (but
excluding any award under the DSC Long-Term Incentive Plan) or (ii)Ethe
commissions paid to him during such calendar year; provided such amounts are
paid to him for services rendered to the employers as an employee; and provided
further such amounts shall include any portion that is not includible in
taxable income because of a deferral election under this or any other plan,
program or arrangement maintained or contributed to by an employer.  Earnings
shall not include any award paid under the DSC Long-Term Incentive Plan or any
portion of any such award deferred under any other plan, program or arrangement
maintained or contributed to by an employer.

                 4.5      Highest Average Annual Earnings.  The "highest
average annual earnings" of a participant shall be the average annual earnings
paid to the participant during the





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three calendar years for which his earnings were highest during his period of
employment as an employee of an employer.  Such average shall be computed by
dividing the total of the participant's earnings for such three calendar years
by the number of years in such three calendar years for which he had earnings;
provided if such three calendar years includes a period of the participant's
disability (as defined in section 3.4 above) and the participant is eligible to
retire on a disability retirement date, the participant's earnings for such
period of disability shall be considered to be the earnings the participant
would have received for such period had he worked his normal work schedule (as
in effect immediately preceding his disability) during such period, received
base salary therefore at the rate of his base salary in effect immediately
preceding the period of his disability and terminated employment on the earlier
of his annuity commencement date (as defined in section 5.5) or his disability
recovery date (as defined in section 5.3).

                 4.6      Determination of Bases of Benefits.  A participant's
benefit service, earnings, highest average annual earnings, and any other
factor relating to benefits payable to him under the plan shall be determined
by the plan administrator pursuant to the foregoing provisions of this Article
4, Article 9 and any supplement to the plan on the basis of the records of the
employers and on the basis of reasonable estimates where such records are not
sufficient to provide all required data and information.


                                   ARTICLE 5

                               Retirement Income

                 5.1      Normal or Deferred Retirement.  Subject to the
conditions and limitations of the plan, if a participant retires on his normal
retirement date or a deferred retirement date he will be entitled to a monthly
retirement income for life or for a period of ten years, whichever is longer,
commencing on (or as soon as reasonably practicable after) his retirement date,
and each payment of such monthly retirement income shall be in an amount equal
to one-twelfth of sixty percent of his highest average annual earnings
multiplied by a fraction, the numerator of which is his number of full and
fractional years of benefit service (not in excess of fifteen years) and the
denominator of which is fifteen.  A participant must give the plan
administrator at least 60 days advance written notice of his retirement date in
order to have his benefit commencement processed timely.

                 5.2      Early Retirement.  Subject to the conditions and
limitations of the plan, if a participant retires on an early retirement date
he will be entitled to a monthly retirement income for life or for a period of
ten years, whichever is longer, commencing on (or as soon as reasonably
practicable after) his retirement date.  A participant must give the plan
administrator at least 60 days advance written notice of his retirement date in
order to have his benefit commencement processed timely.  The amount of his
monthly retirement income will be computed in accordance with the benefit
formula in section 5.1 (as in effect as of his early retirement date) based
upon his highest average annual earnings and benefit service as at his early
retirement date and further reduced by one-quarter of one percent for each
month that the





                                     - 6 -
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date of commencement precedes the first day of the calendar month next
following the date on which he would attain age 65.

                 5.3      Disability Retirement.

                 (a)      Subject to the conditions and limitations of the
plan, if a participant retires on a disability retirement date, he will be
entitled to a monthly retirement income for life or a ten-year certain period,
whichever is longer, commencing on the first day of the month next following
his attainment of age 65.  The amount of his monthly retirement income will be
computed in accordance with the benefit formula in section 5.1 (as in effect as
of his disability retirement date) based upon his highest average annual
earnings as at his annuity commencement date (as defined in section 5.5) and
based on the benefit service he would have had if he had continued as an active
employee until his annuity commencement date.

                 (b)      If the participant recovers from his disability prior
to his attainment of age 65, unless he is then reemployed by the DSC Companies,
he shall be deemed to have terminated employment with the DSC Companies on the
date he recovered from his disability (his "disability recovery date").  The
amount of his monthly benefit will be computed in accordance with the benefit
formula in section 5.1 (as in effect as of his disability recovery date) based
upon his highest average annual earnings as at his disability recovery date and
based on the benefit service he would have had if he had continued as an active
employee until his disability recovery date.  If the participant is eligible to
retire on an early retirement date based on his attained age and the years of
benefit service credited to him in accordance with the preceding sentence, then
he will be considered to have retired on an early retirement date and his
monthly benefit will be payable for life or for a period of ten years,
whichever is longer, commencing on the first day of the month next following
his disability recovery date but subject to the further reduction described in
section 5.2 for early commencement prior to attainment of age 65.  If the
participant is not eligible to retire on an early retirement date, then he will
be considered to have terminated employment and, unless the participant is
eligible for a deferred vested benefit under section 6.1 below, he will not be
eligible for any benefit under the plan.

                 5.4      Form of Payment.  If a participant becomes entitled
to receive a retirement income benefit under the foregoing provisions of this
Article 5, payment of such benefit shall be made in accordance with, and
subject to, the applicable provisions of Article 7.

                 5.5      Annuity Commencement Date.  A participant's "annuity
commencement date" means the date as of which the initial payment of the
retirement income to which he is entitled under the plan is payable.


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                                   ARTICLE 6

                           Deferred Vested Benefits;
                     Death Before Retirement or Termination


                 6.1      Deferred Vested Benefit.  Subject to the conditions
and limitations of the plan, if within twenty-four months after a "change of
control" of the company occurs the participant's employment with all of the DSC
Companies is terminated by the company without "just cause" (as defined in
section 8.1 below) or the participant quits or resigns from the employ of all
of the DSC Companies for "good reason" (as defined below), the participant will
be eligible to receive a deferred vested benefit.  The deferred vested benefit
will be the lump sum actuarial equivalent of a monthly retirement income
payable to the participant commencing on the first day of the calendar month
next following the month in which he attains age 65 and continuing for life,
computed in accordance with the benefit formula in section 5.1 (as in effect as
of his employment termination date) based upon his highest average annual
earnings and benefit service as at his employment termination date.  The lump
sum actuarial equivalent shall be computed using a 7-1/2 percent interest rate
and the mortality tables adopted by the plan administrator for this purpose.
The deferred vested benefit will be payable to the participant as soon as
reasonably practicable after his termination of employment and in any event
will be paid by the first anniversary of his employment termination date.  A
"change of control" shall be deemed to have occurred if (a)Ethere shall be
consummated (i)Eany consolidation or merger of the company in which the company
is not the continuing or surviving corporation, or pursuant to which shares of
common stock of the company, par value $.01 per share ("common stock"), would
be converted into cash, securities, or other property other than a merger of
the company in which the holders of the company's common stock immediately
prior to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger, or (ii)Eany sale,
lease, exchange, or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the company, or
(b)Ethe stockholders of the company shall approve any plan or proposal for the
liquidation or dissolution of the company, or (c)Eany person (as such term is
used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (other than the trustee of any employee benefit
plan sponsored by the company) shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of twenty percent or more of the
company's outstanding common stock, or (d)Eduring any period of two consecutive
years, individuals who at the beginning of such period constitute the entire
Board of Directors of the company shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
company's stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period.  "Good reason" means (i) demotion (i.e., reassignment
to a position of materially lesser rank or status), (ii)Ereduction in annual
base salary, (iii) reduction in benefits (unless such reduction is made
uniformly in a plan of general application to all of the company's
substantially similar employees), or (iv) reassignment to a location that is
more than 50 miles from the participant's then current location without his
consent.  Notwithstanding anything to the contrary in the first sentence of
this section 6.1, a participant will not be eligible for a deferred vested
benefit under this section 6.1 if his employment with all of the DSC Companies
terminates due to his death or after he qualifies for retirement on a
retirement date (as defined in section 3.5 above) under the plan.





                                     - 8 -
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                 6.2      Death Before Retirement.  If a participant's
employment with all of the DSC Companies terminates due to his death or after
he qualifies for retirement on a retirement date but prior to his annuity
commencement date (as defined in section 5.5), his designated beneficiary will
be eligible to receive a pre-retirement death benefit.  The pre-retirement
death benefit will be the lump sum actuarial equivalent of a monthly retirement
income payable to the participant for a period of ten years commencing on the
first day of the month next following the later of the participant's 65th
birthday (assuming he had survived until then) or his death and computed in
accordance with the benefit formula in section 5.1 (as in effect as of the
participant's death) based upon his highest average annual earnings and benefit
service as at his death.  If the participant dies after he qualifies for
retirement on a disability retirement date, the pre-retirement death benefit
payable to the participant's designated beneficiary will be based upon the
benefit service the participant would have had if he had continued as an active
employee until his death and his highest average annual earnings as determined
under section 4.5 above, including the earnings he is deemed to have received
during his period of disability.  The pre-retirement death benefit will be
payable to the participant's designated beneficiary as soon as reasonably
practicable after the participant's death.  To the extent required by
applicable law, a participant's designation of a beneficiary other than his
spouse will not be given effect unless the spouse of the participant consents
in writing to such designation on a form acceptable to the plan administrator.
If a participant fails to designate a beneficiary before his death, or if the
beneficiary designated by a participant dies before the date of the
participant's death or before payment of the pre-retirement death benefit, the
pre-retirement death benefit will be paid to the participant's surviving
spouse, if any, and otherwise to his estate.





                                   ARTICLE 7

                Payment of Retirement Income and Other Benefits

                 7.1      Normal Form of Payment of Benefits.  Except as
otherwise specifically provided, payment of participants' monthly retirement
income benefits under Article 5 shall be made to them, and payment of monthly
benefits shall be made to their beneficiaries, if eligible for such benefits,
by the employers in the form of a monthly benefit payable to the participant
during his lifetime and, if the participant dies within a period of ten years
from his annuity commencement date, a continuing monthly payment of the same
amount to a person or persons designated by the participant for the balance of
such ten year period.

                 7.2      Optional Forms of Payment of Benefits.  In lieu of
the normal form and amount of monthly benefit specified in section 7.1, and
subject to the provisions of section 7.3, a participant may elect a retirement
income of actuarially equivalent value in one of the following forms:





                                     - 9 -
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                 (a)      Joint and Survivor Form.  A smaller monthly benefit
payable to the participant during his lifetime and, if another person he had
designated is living at the time of his death, payment of the same amount, 75
percent or 50 percent of that amount to such other person as long as such other
person lives.

                 (b)      Life Annuity Form.  A larger monthly benefit payable
to the participant during his lifetime and no benefit payable on or after his
death.

                 7.3      Rules as to Election and Discontinuance of Optional
Forms of Payment of Benefits.  A participant's election of an optional form of
benefit specified in section 7.2 shall be subject to the following rules, to
the extent appropriate:

                 (a)      An election must be in writing, signed by the
participant and approved by the plan administrator.  To the extent required by
applicable law, the participant's election will not be given effect unless the
spouse of the participant consents in writing to such election on a form
acceptable to the plan administrator.

                 (b)      A participant may make an election of an optional
form of benefit at any time up to twelve months prior to his retirement date.

                 (c)      A participant who has elected an optional form of
benefit may revoke it at any time up to twelve months prior to his annuity
commencement date by filing a written revocation with the plan administrator;
his benefits will then be paid in the normal form unless he timely elects
another optional form of benefit in accordance with paragraph (b) above.  With
the consent of the plan administrator, a participant who has elected an option
may change it at any time up to twelve months prior to his retirement date.  A
revocation or change of an option may be made without the consent of the person
the participant had designated in the option as his beneficiary.  However, to
the extent required by applicable law, the participant's revocation or change
of an option will not be given effect unless the spouse of the participant
consents in writing to such revocation or change on a form acceptable to the
plan administrator.

                 (d)      If a participant who had elected an optional form of
benefit dies before his annuity commencement date, such option automatically
will be cancelled and no benefits will be paid to any person under such option.

                 (e)      If the person designated by a participant in his
election of an option under subsection 7.2(a) dies before the participant's
annuity commencement date, the option automatically will be cancelled and the
participant's monthly benefit will be paid to him in the normal form unless a
new election can be and is made by the participant pursuant to the foregoing
provisions of this section.

                 (f)      If after a participant has commenced receiving
monthly benefits under section 7.1, but prior to the participant's death, the
person or persons designated by the participant under that section die, the
option shall remain in effect and, unless the participant





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designates another person to receive any benefits payable under that option
after his death, such benefits shall be payable to his surviving spouse, if
any, and otherwise to his estate.

                 (g)      If after a participant has commenced receiving
monthly benefits under subsection 7.2(a), but prior to the participant's death,
the person or persons designated by the participant under that subsection die,
the option shall remain in effect and no benefits will be paid to any person
after the participant's death.

                 (h)      Any election of an optional form that cannot be given
effect because it does not satisfy the conditions of this section 7.3 will be
null and void and of no effect.

                 7.4      Payment of Small Amounts.  If the lump sum
actuarially equivalent value of the monthly retirement income payable to any
participant under the plan is less than $3,500, then payment of such amount
shall be made in a lump sum on the participant's annuity commencement date.  In
addition, the purchase for a participant or beneficiary and distribution to
that person of an annuity contract or annuity certificate to provide his
benefits shall constitute the complete payment of that person's benefits under
the plan.

                 7.5      Missing Persons.  Each participant and each other
person entitled to benefits under the plan must file with the plan
administrator from time to time in writing his post office address and each
change of post office address.  Any communication, statement or notice
addressed to a participant or a person entitled to benefits at his last post
office address as shown on the employers' records will be binding on the
participant and any person entitled to benefits for all purposes of the plan.
None of the employers or the plan administrator are required to search for or
locate any participant or other person entitled to benefits under the plan.


                                   ARTICLE 8

                                  Forfeitures

                 8.1      Termination for Just Cause.  Notwithstanding any
other provision of the plan, a participant shall forfeit all right and
entitlement to any benefit under the plan, and the employers shall not be
obligated to make or continue to make any payment of any plan benefit to or on
behalf of such participant, if the participant's employment with a DSC Company
is terminated for "just cause" (or if the participant quits or resigns from a
DSC Company before such termination for "just cause" can occur).  For purposes
of this Article 8, "just cause" means any of the following, as determined by
the plan administrator:  (i)Egross negligence or willful misconduct by the
participant in the performance of the participant's duties for a DSC Company,
(ii)Efraud, embezzlement, misappropriation or other material dishonesty against
or with respect to any DSC Company or any conviction or admission of a felony
or other offense involving dishonesty, fraud or moral turpitude, (iii)Ethe
participant's willful, knowing or reckless unauthorized dissemination of
"proprietary information" (as defined in section 8.2 below), (iv)Eany other
breach by the participant of the restrictive covenants contained in





                                     - 11 -
<PAGE>   15
section 8.2 or any other material breach by the participant of any other
agreement relating to employment with a DSC Company to which the participant is
a party or bound, (v)Ethe participant's material failure to perform or the
participant's refusal to perform his duties for any DSC Company, or such duties
as are reasonably requested by an immediate supervisor or the Board of
Directors of a DSC Company and which are commensurate with his position,
(vi)Eparticipant conduct that has brought or could reasonably bring any DSC
Company into substantial public disgrace or disrepute or (vii)Eviolation by the
participant of any policy of the DSC Company that then employs him.

                 8.2      Restrictive Covenants.

                 (a)      The participant acknowledges and agrees that
(i)Ethrough his continuing services to the DSC Companies, he will learn
valuable trade secrets and other proprietary information relating to the
business of the DSC Companies, (ii)Ethe participant's services to the DSC
Companies are unique in nature, and (iii)Ethe DSC Companies would be
irreparably damaged if the participant were to provide services to any person
or entity in violation of the restrictions contained in this section 8.2
Accordingly, in consideration for the employers' maintaining this plan for the
benefit of the participant and paying benefits hereunder, the participant
agrees that at all times during which the participant is employed by a DSC
Company and for the period following termination of the participant's
employment that the participant is entitled to receive or is receiving a
monthly retirement income or deferred vested benefit hereunder, the participant
shall not, directly or indirectly, without the written consent of the company:

                 (i)      anywhere in the United States or any other location
                 where a DSC Company is doing business (or planning to do
                 business in the reasonably near future), engage or participate
                 in, as an employee, owner, partner, shareholder, officer,
                 director, member, advisor, consultant, agent or (without
                 limitation by the specific enumeration of the foregoing)
                 otherwise, or permit his name to be used by or render services
                 of any type for, any "competitor(s)" (as herein defined);
                 provided, however, that nothing in this section 8.2 shall
                 prevent the participant from acquiring or owning, as a passive
                 investment, up to five percent of the outstanding securities
                 of a competitor which are publicly traded in any recognized
                 national securities market;

                 (ii)     take any action which could reasonably be expected to
                 divert from a DSC Company any opportunity which would be
                 within the scope of such DSC Company's business;

                 (iii)    directly or indirectly, solicit or attempt to solicit
                 any person or entity who is or has been (A)Ea customer of a
                 DSC Company at any time within two years prior to the date of
                 termination of the participant's employment to purchase any
                 product or service which may be provided by a DSC Company or
                 (B)Ea customer, supplier, licensor, licensee or other business
                 relation of a DSC Company conducting business with a DSC
                 Company at any time within two





                                     - 12 -
<PAGE>   16
                 years prior to the date of termination of participant's
                 employment to cease doing business with the DSC Company; or

                 (iv)     solicit any officers, employees, representatives or
                 agents of a DSC Company to terminate their association with
                 the DSC Company.

         As used herein, "competitor(s)" means any entity in the business of
         telecommunication switches, access or transport products, or which
         otherwise reasonably and logically competes with the business of the
         DSC Companies as conducted at the time of enforcement of this section
         8.2 (if such enforcement occurs prior to the termination of the
         participant's employment) or at the time of the termination of the
         participant's employment (if enforcement of this section 8.2 occurs at
         or following such time) or under development at either such time, as
         the case may be, and expected to be introduced or undertaken in the
         next one-year period.

                 (b)(i)   The participant understands and acknowledges, that by
                 virtue of his position with a DSC Company, he may have access
                 to certain "proprietary information" (as defined below) of the
                 DSC Companies, the disclosure of which may damage the DSC
                 Companies.

                 (ii)     "Proprietary information" shall mean trade secrets,
                 confidential knowledge, data or any other proprietary
                 information.  By way of illustration but not limitation,
                 proprietary information includes (A) trade secrets,
                 inventions, mask works, ideas, processes, methods, formulas,
                 source and object codes, discoveries, developments, designs,
                 techniques, know-how and negative know-how (hereinafter
                 collectively referred to as "inventions"); and (B)Einformation
                 regarding plans for research, development, new products,
                 marketing and selling business plans, budgets and unpublished
                 financial statements, licenses, prices and costs, suppliers
                 and customers; and (C)Einformation regarding the skills and
                 compensation of other employees of the DSC Companies.  The
                 term "trade secret" shall mean any idea or knowledge that is
                 sufficiently valuable to give one entity any advantage over
                 its competitors.  This includes but is not limited to
                 knowledge of failed development efforts, knowledge of the
                 effectiveness of development tools or processes or other
                 information, including any formula, pattern, compilation,
                 program, device, method, technique or process, that
                 (A)Ederives independent economical value, actual or potential,
                 from not being generally known to the public or to other
                 persons who can obtain economic value from its disclosure or
                 use; and (B)Eis the subject of efforts that are reasonable
                 under the circumstances to maintain its secrecy.

                 (iii)    The participant agrees to not disclose, either
                 directly or indirectly, any proprietary information of the DSC
                 Companies to any person or entity not employed by the DSC
                 Companies, except as may be specifically authorized in
                 writing.





                                     - 13 -
<PAGE>   17
                 (iv)     The participant agrees to not disclose, either
                 directly or indirectly, any proprietary information of third
                 parties, to which the participant may become privy during his
                 employment at the DSC Companies, to any person or entity not
                 employed by the DSC Companies, except as may be specifically
                 authorized in writing.

                 (c) The participant agrees that all proprietary information
made or conceived by the participant either in whole or in part, during his
period of employment with the DSC Companies, and which are along the business,
work or investigations of the DSC Companies, or which result from or are
suggested by any work performed by the participant at the DSC Companies,
constitute "proprietary rights" (as herein defined) of the DSC Companies.
"Proprietary rights" means the ownership interest in proprietary information.
The participant further agrees:

                 (i)      to promptly and completely communicate to management
                 of the DSC Companies all proprietary information made or
                 conceived by the participant during employment at the DSC
                 Companies.

                 (ii)     to maintain current and appropriate notes, sketches
                 and other records of proprietary information made or conceived
                 by the participant during employment at the DSC Companies,
                 which documents shall belong to the DSC Companies.

                 (iii)    to assist the DSC Companies in every necessary way to
                 obtain and enforce their proprietary rights.  This particular
                 covenant shall survive the participant's period of employment
                 with the DSC Companies.  The DSC Companies agree to reimburse
                 the participant for reasonable compensation and expenses for
                 such efforts expended following the participant's period of
                 employment with the DSC Companies.

                 (iv)     California Labor Code Section 2870 provides for
                 certain rights that pertain to California employees.  To the
                 extent that section applies to the participant, the
                 participant acknowledges that he has been advised to consult
                 independent legal counsel prior to disclosing proprietary
                 information to the DSC Companies.

                 (d)      Notwithstanding any other provision of the plan, the
participant acknowledges and agrees that he shall forfeit all right and
entitlement to any benefit under the plan, and the employers shall not be
obligated to make or continue to make any payment of any plan benefit to or on
behalf of such participant, if the participant breaches the restrictive
covenants contained in this section 8.2.  The participant further acknowledges
and agrees that (i)Ethe covenants of section 8.2 (a)Eare reasonable as to time,
geographic scope and the scope of the activity to be restrained and do not
impose a greater restraint than is necessary to protect





                                     - 14 -
<PAGE>   18
the business interests of the DSC Companies, and (ii)Ethe restrictive covenants
of this section 8.2 are enforceable.

                 8.3      Loan Offset.  If at the time payments are to be made
hereunder the participant is indebted to or obligated to any DSC Company, then
the payments remaining to be made to or on behalf of the participant may, at
the discretion of the plan administrator, be reduced by the amount of such
indebtedness or obligation, provided, however, that an election by the plan
administrator not to reduce any such payment shall not constitute a waiver of
its claim or prohibit or otherwise impair the plan administrator's right to
offset future payments for such indebtedness or obligation.


                                   ARTICLE 9

                                  Reemployment

                 9.1      Rehired Participant.  If a former participant or a
participant whose employment with all of the DSC Companies had terminated but
who has not received all benefits due him under the plan, is reemployed by a
DSC Company, the following provisions shall apply, notwithstanding any other
provisions of the plan:

                 (a)      He shall become an active participant on the date he
         again becomes an employee of an employer.

                 (b)      If he is reemployed by an employer and becomes a
         participant, his prior benefit service shall be added to his benefit
         service earned after his reemployment, except if as a result of his
         prior termination of employment he has received his entire benefit due
         under the plan in the form of a lump sum payment, his prior benefit
         service shall not be reinstated and shall be disregarded for purposes
         of the plan.

                 9.2      Redetermination of Benefits.  If a former participant
who is reemployed by an employer again becomes a participant in accordance with
subsection 9.1(a), no benefits shall be payable to him under the plan during
the period of his reemployment if he was not receiving benefits at the time of
his reemployment.  If he was receiving benefits at the time of his
reemployment, payment of his benefits shall be suspended for any calendar month
within the period of his reemployment.  Benefits payable to or with respect to
a participant under the plan after his period of reemployment ends shall be
redetermined in accordance with the provisions of the plan as then in effect.
However, if the benefit service he was entitled to at the time of his initial
termination of employment has been added to the benefit service earned after
his reemployment pursuant to section 9.1, such benefits shall be reduced by the
actuarial equivalent of the benefits, if any, previously paid to him under the
plan.





                                     - 15 -
<PAGE>   19
                                   ARTICLE 10

                               General Provisions

                 10.1     Notices.  Any notice or document relating to the plan
required to be given to or filed with the plan administrator or any DSC Company
shall be considered as given or filed if delivered or mailed by registered or
certified mail, postage prepaid, to the plan administrator, in care of the
company.

                 10.2     Nonalienation of Plan Benefits.  The rights or
interests of any participant or any participant's beneficiaries to any benefits
or future payments under the plan shall not be subject to attachment or
garnishment or other legal process by any creditor of any such participant or
beneficiary nor shall any such participant or beneficiary have any right to
alienate, anticipate, commute, pledge, encumber or assign any of the benefits
or rights which he may expect to receive (contingently or otherwise) under the
plan, except as otherwise provided in Article 8 or as may be required by the
tax withholding provisions of the Internal Revenue Code or a state's income tax
act or pursuant to a qualified domestic relations order (as defined in Section
206(d)(3)(B)(i) of ERISA).

                 10.3     Payment with Respect to Incapacitated Persons.  If
any person entitled to benefits under the plan is under a legal disability or,
in the plan administrator's opinion, is incapacitated in any way so as to be
unable to manage his financial affairs, the plan administrator may direct the
payment of such benefits to such person's legal representative or to a relative
or friend of such person for such person's benefit, or the plan administrator
may direct the application of such benefit for the benefit of such person in
any manner which the plan administrator may select that is consistent with the
plan.  Any payments made in accordance with the foregoing provisions of this
section shall be a full and complete discharge of any liability for such
payments.

                 10.4     No Employment or Benefit Guaranty.  None of the
establishment of the plan, any modification thereof, the creation of any fund
or account, or the payment of any benefits shall be construed as giving to any
participant or other person any legal or equitable right against the employers
or the plan administrator except as provided herein.  Under no circumstances
shall the maintenance of this plan constitute a contract of employment or shall
the terms of employment of any participant be modified or in any way affected
hereby.  Accordingly, participation in the plan will not give any participant a
right to be retained in the employ of any DSC Company.

                 10.5     Litigation.  In any action or proceeding regarding
any plan benefits or the administration of the plan, employees or former
employees of the employers, their beneficiaries and any other persons claiming
to have an interest in the plan shall not be necessary parties and shall not be
entitled to any notice of process.  Any final judgment which is not appealed or
appealable and which may be entered in any such action or proceeding shall be
binding and conclusive on the parties hereto and on all persons having or
claiming to have any interest in the plan.  Acceptance of participation in the
plan shall constitute a release of the employers, the Nominating Committee, the
plan administrator, and their agents from any and all liability and obligation
not involving willful misconduct or gross neglect.





                                     - 16 -
<PAGE>   20
                 10.6     Actuarial Equivalent.  A benefit shall be actuarially
equivalent to any other benefit if the value of the same is equal to the value
of such other benefit computed on the basis of the actuarial rates, tables and
procedures adopted by the plan administrator for this purpose.  The interest
rate adopted by the plan administrator for the calculation of deferred vested
benefits is set forth in section 6.1

                 10.7     Evidence.  Evidence required of anyone under the plan
shall be signed, made or presented by the proper party or parties and may be by
certificate, affidavit, document or other information which the person acting
thereon considers pertinent and reliable.

                 10.8     Gender and Number.  Words denoting the masculine
gender shall include the feminine and neuter genders, the singular shall
include the plural and the plural shall include the singular wherever required
by the context.

                 10.9     Waiver of Notice.  Any notice required under the plan
may be waived by the person entitled to notice.

                 10.10    Applicable Law.  The plan shall be construed in
accordance with the laws of the State of Texas.

                 10.11    Severability.  Whenever possible, each provision of
the plan shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the plan is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, and the plan shall be reformed,
construed and enforced in such jurisdiction so as to best give effect to the
intent of the company under the plan.

                 10.12    Withholding for Taxes.  Notwithstanding any other
provisions of the plan, any employer may withhold from any payment to be made
under the plan such amount or amounts as may be required for purposes of
complying with the tax withholding provisions of the Internal Revenue Code of
1986, as amended, any state or local income tax act or any applicable similar
laws.

                 10.13    Successors.  The plan is binding on all persons
entitled to benefits hereunder and their respective heirs and legal
representatives, on the plan administrator and its successor and on the
employers and their successors, whether by way of merger, consolidation,
purchase or otherwise.

                 10.14    Effect on Other Employee Benefit Plans.  Any benefit
paid or payable under this plan shall not be included in a participant's or
employee's compensation for purposes of computing benefits under any employee
benefit plan maintained or contributed to by a DSC Company except as may
otherwise be required under the terms of such employee benefit plan.





                                     - 17 -
<PAGE>   21
                 10.15    Gross-up Payments.  Not later than fifteen days prior
to the due date (including extensions) for the participant's filing of any tax
return reflecting amounts subject to Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), the independent public accountants then
regularly retained by the company in consultation with tax counsel acceptable
to the participant shall determine if, in such accountants' reasonable opinion,
any amount payable to the participant under the plan would constitute an
"excess parachute payment" within the meaning of Section 280G of the Code,
subject to the excise tax imposed by Section 4999 of the Code, or any similar
or successor provisions of the Code (together with any interest or penalties
related thereto, the "Excise Tax").  If such determination is so made, the
company shall pay to the participant the amount (a "gross-up payment") of such
Excise Tax and all Excise Tax, federal and state income tax, payroll (such as
Social Security and Medicare) tax, or other taxes with respect to the gross-up
payment.  If, at a later date, the Internal Revenue Service assesses a
deficiency against the participant on the basis that the Excise Tax with
respect to any amount paid to the participant under the plan is greater than
that which was determined at the time such amounts were paid, the company shall
pay to the participant a gross-up payment with respect to such Excise Tax, plus
any professional fees or expenses incurred by the participant as a result of
such assessment.  Upon notice by the participant of any audit or other
proceeding that may result in a liability to the company hereunder, the
participant shall promptly notify the company of such audit or other
proceeding; and the company may, at its option, but solely with respect to the
item or items that relate to such potential liability, choose to assume the
defense of such audit or other proceeding at its own cost, provided that
(i)Ethe participant shall cooperate with the company in such defense and
(ii)Ethe company will not settle such audit or other proceeding without the
consent of the participant (such consent not to be unreasonably withheld).  The
highest effective marginal tax rate (determined by taking into account any
reduction in itemized deductions and/or exemptions attributable to the
inclusion of the additional amounts payable under this Section 10.15 in the
participant's adjusted gross or taxable income) applicable to individuals
resident in Texas at the time of payment of such amounts will be used for
purposes of determining the federal and state income and other taxes with
respect thereto.


                                   ARTICLE 11

                        Relating to Plan Administration

                 11.1     Plan Administrator's Duties.   The Executive Plan
Committee of the company is the plan administrator.  Except as otherwise
specifically provided and in addition to the powers, rights and duties
specifically given to the plan administrator elsewhere in the plan, the plan
administrator shall have the following discretionary powers, rights and duties:

                 (a)      To construe and interpret the plan, to decide all
questions of plan eligibility, to determine the amount, manner and time of
payment of any benefits under the plan, and to remedy ambiguities,
inconsistencies or omissions in its sole and complete discretion.





                                     - 18 -
<PAGE>   22
                 (b)      To adopt such rules of procedure as may be necessary
for the efficient administration of the plan and as are consistent with the
plan, and to enforce the plan in accordance with its terms and such rules.

                 (c)      To make determinations as to the right of any person
to a benefit, to afford any person dissatisfied with such determination the
right to a hearing thereon, and to direct payments or distributions in
accordance with the provisions of the plan.

                 (d)      To furnish the employers and participants with such
information as may be required by them for tax or other purposes in connection
with the plan.

                 (e)      To enroll participants in the plan, distribute and
receive plan administration forms and comply with all applicable governmental
reporting and disclosure requirements.

                 (f)      To employ agents, attorneys, accountants, actuaries
or other persons (who also may be employed by a DSC Company), and to allocate
or delegate to them such powers, rights and duties as the plan administrator
considers necessary or advisable to properly carry out the administration of
the plan (including but not limited to the preparation of recommendations of
actuarial assumptions which shall be reviewed by the plan administrator),
provided that any such allocation or delegation and the acceptance thereof must
be in writing.

                 (g)      To report at least annually to the Board of Directors
of the company or to such person or persons as the Board of Directors of the
company designates as to the administration of the plan, any significant
problems which have developed in connection with the administration of the plan
and any recommendations which the plan administrator may have as to the
amendment of the plan or the modification of plan administration.

                 11.2     Action by Plan Administrator.  During a period in
which two or more plan administrative committee members are acting, any action
by the plan administrator will be subject to the following provisions:

                 (a)      The committee may act by meeting (including a meeting
from different locations by telephone conference) or by document signed without
meeting, and documents may be signed through the use of a single document or
concurrent documents.

                 (b)      A committee member by writing may delegate part or
all of his rights, powers, duties and discretion to any other committee member,
with such other committee member's consent.

                 (c)      No member of the committee shall be liable or
responsible for an act or omission of other committee members in which the
former has not concurred.

                 11.3     Information Required for Plan Administration.  The
employers shall furnish the plan administrator with such data and information
as the plan administrator considers necessary or desirable to perform its
duties with respect to plan administration.  The





                                     - 19 -
<PAGE>   23
records of an employer as to an employee's or participant's period or periods
of employment, termination of employment and the reason therefor, leaves of
absence, reemployment and earnings will be conclusive on all persons unless
determined to the plan administrator's satisfaction to be incorrect.
Participants and other persons entitled to benefits under the plan also shall
furnish the plan administrator with such evidence, data or information as the
plan administrator considers necessary or desirable for the plan administrator
to perform its duties with respect to plan administration.

                 11.4     Decision of Plan Administrator Final.  Subject to
applicable law and section 11.5, any interpretation of the provisions of the
plan and any decision on any matter within the discretion of the plan
administrator made by the plan administrator in good faith shall be binding on
all persons.  A misstatement or other mistake of fact shall be corrected when
it becomes known and the plan administrator shall make such adjustment on
account thereof as the plan administrator considers equitable and practicable.

                 11.5     Review of Benefit Determinations.  If a claim for
benefits made by a participant or his beneficiary is denied, the plan
administrator shall within 90 days (or 180 days if special circumstances
require an extension of time) after the claim is made furnish the person making
the claim with a written notice specifying the reasons for the denial.  Such
notice shall also refer to the pertinent plan provisions on which the denial is
based, describe any additional material or information necessary for properly
completing the claim and explain why such material or information is necessary,
and explain the plan's claim review procedures.  If requested in writing within
60 days after receipt by the participant of the written notification of the
denial of his claim, the plan administrator shall afford each claimant whose
claim has been denied a full and fair review of the plan administrator's
decision and, within 60 days (120 days if special circumstances require
additional time) of the request for reconsideration of the denied claim, the
plan administrator shall notify the claimant in writing of the plan
administrator's final decision.

                 11.6     Interested Plan Administrator.  If a member of the
plan committee is also a participant in the plan, he may not decide or
determine any matter or question concerning his benefits unless such decision
or determination could be made by him under the plan if he were not a committee
member.

                 11.7     Indemnification.  No person (including any present or
former plan administrative committee member or Nominating Committee member, and
any present or former director, officer or employee of any employer) shall be
personally liable for any act done or omitted to be done in good faith in the
administration of the plan.  Each present or former director, officer or
employee of any employer to whom the plan administrator or an employer has
delegated any portion of its responsibilities under the plan, each present or
former plan administrative committee member, and each present or former
Nominating Committee member shall be indemnified and saved harmless by the
employers (to the extent not indemnified or saved harmless under any liability
insurance or other indemnification arrangement with respect to the plan) from
and against any and all claims of liability to which they are subjected by
reason of any act done or omitted to be done in good faith in connection





                                     - 20 -
<PAGE>   24
with the administration of the plan, including all expenses reasonably incurred
in their defense if the employers fail to provide such defense.


                                   ARTICLE 12

                          No Funding of Plan Benefits

                 Nothing herein shall require the employers to segregate or set
aside any funds or other property for the purpose of paying any benefits under
the plan.  Nothing contained in this plan, and no action taken pursuant to its
provisions by the employers or the plan administrator shall create, nor be
construed to create, a trust of any kind or a fiduciary relationship between
the employer and the participant, his designated beneficiary, or any other
person.  Benefits hereunder shall be paid from assets which shall continue, for
all purposes, to be a part of the general, unrestricted assets of the
employers.  The obligation of the employers hereunder shall be an unfunded and
unsecured promise to pay money in the future.  To the extent that the
participant or his designated beneficiary acquires a right to receive payments
from the employer under the provisions hereof, such right shall be no greater
than the right of any unsecured general creditor of the employer; no such
person shall have nor acquire any legal or equitable right, interest or claim
in or to any property or assets of the employer.  The preceding provisions of
this Article 12 shall not, however, prevent the employer or the plan
administrator from purchasing an annuity contract or insurance contract to
provide any benefits hereunder and from expressly transferring in writing such
annuity contract or insurance contract to the participant or his designated
beneficiary, with his or his designated beneficiary's consent, whichever is
applicable, in exchange for such person's rights under this plan and in full
satisfaction thereof.  It is intended that the plan be unfunded for tax
purposes and for purposes of Title I of ERISA.


                                   ARTICLE 13

                           Relating to the Employers

                 13.1     Action by Employers.  Any action required or
permitted of an employer under the plan shall be by resolution of its Board of
Directors or by a duly authorized committee of its Board of Directors, or by a
person or persons authorized by resolution of its Board of Directors or such
committee.

                 13.2     Additional Employers.  Any DSC Company that is not an
employer may adopt the plan and become an employer hereunder by filing with the
plan administrator a certified copy of a resolution of the Board of Directors
of the DSC Company providing for its adoption of the plan and a certified copy
of a resolution of the Board of Directors of the company consenting to such
adoption.





                                     - 21 -
<PAGE>   25
                                   ARTICLE 14

                           Amendment and Termination

                 14.1     Amendment.  While the employers expect and intend to
continue the plan, the company must necessarily reserve and hereby does reserve
the right to amend the plan from time to time.  Any amendment of the plan will
be by resolution of the Board of Directors of the company or any committee of
the Board of Directors to whom such authority has been delegated.
Notwithstanding the preceding sentence, the plan administrator may amend the
plan in the following respects without the approval of the Board of Directors
of the company:  (i) amendments required by law; (ii) amendments that relate to
the administration of the plan and that do not materially change the cost of
the plan; and (iii) amendments that are designed to resolve possible
ambiguities, inconsistencies, or omissions in the plan and that do not
materially increase the cost of the plan.  No amendment shall reduce the value
of a participant's benefits to less than the amount he would be entitled to
receive if he had resigned from the employ of all of the DSC Companies on the
day of the amendment.  If the plan is proposed to be amended within twenty-four
months after a change of control (as defined in section 6.1 above) of the
company occurs, then for purposes of determining whether such proposed
amendment satisfies the preceding sentence, the value of a participant's
deferred vested benefit under section 6.1 shall be computed using the actuarial
assumptions adopted by the plan administrator for the purpose of calculating
deferred vested benefits and in effect immediately before such change of
control of the company occurred.

                 14.2     Termination.  The plan will terminate as to all
employers on any date specified by the company if advance written notice of the
termination is given to the plan administrator and any other employers.  The
plan will terminate as to an individual employer on the first to occur of the
following:

                 (a)      The date it is terminated by that employer if advance
written notice of the termination is given to the company, the plan
administrator and the other employers.

                 (b)      The date that employer is judicially declared
bankrupt or insolvent.

                 (c)      The dissolution, merger, consolidation or
reorganization of that employer, or the sale by that employer of all or
substantially all of its assets, except that:

                          (i)     in any such event arrangements may be made
                          with the consent of the company whereby the plan will
                          be continued by any successor to that employer or any
                          purchaser of all or substantially all of its assets
                          without a termination thereof, in which case the
                          successor or purchaser will be substituted for that
                          employer under the plan; and

                          (ii)    if any employer is merged, dissolved or in
                          any way reorganized into, or consolidated with, any
                          other employer, the plan as applied to the





                                     - 22 -
<PAGE>   26
                          former employer will automatically continue in effect
                          without a termination thereof.

Notwithstanding the foregoing, if any of the events described above should
occur but some or all of the participants employed by an employer are
transferred to employment with one or more of the other employers coincident
with or immediately after the occurrence of such event, the plan as applied to
those participants will automatically continue in effect without a termination
thereof.

                 14.3     Vesting on Termination.  On termination of the plan
as respects all employers (and, at the discretion of the company, on a
termination of the plan as respects any employer that does not result in the
termination of the plan as respects all employers), the rights of all affected
participants to benefits accrued to the date of such termination shall be fully
vested and shall be subject to forfeiture only as provided in Article 8 and
shall be payable as provided in Article 7 as if each such affected participant
had retired on his normal retirement date immediately before such termination
of the plan.  Notwithstanding the foregoing, the benefit payable to each
affected participant shall be computed on an actuarially equivalent basis using
the then current age of such participant as determined on the date of plan
termination.





                                     - 23 -
<PAGE>   27
                 IN WITNESS WHEREOF, the company has executed this plan on the
27th day of October, 1997.




                                               James L. Donald
                                               Chief Executive Officer
                                               DSC Communications Corporation

ATTEST:

By:


Its:



                 (SEAL)





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