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                                                                       Page 1


                               U.S. LONG DISTANCE CORP.



                         DIRECTOR COMPENSATION DEFERRAL PLAN
                         (WITH COMPANY MATCHING CONTRIBUTION)

                                       RESTATED


                             EFFECTIVE DECEMBER 19, 1995


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                                                                       Page 2

                                  TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----

ARTICLE 1  DEFINITIONS                                                        1

    1.1    "BENEFICIARY" or "BENEFICIARIES"                                   1
    1.2    "BOARD"                                                            1
    1.3    "CHANGE OF CONTROL"                                                1
    1.4    "COMPANY"                                                          2
    1.5    "COMPANY MATCHING CONTRIBUTION"                                    2
    1.6    "DEFERRED COMPENSATION ACCOUNTS"                                   2
    1.7    "DISABILITY"                                                       2
    1.8    "ELIGIBLE COMPENSATION"                                            2
    1.9    "ELIGIBLE COMPENSATION DEFERRAL CONTRIBUTION"                      2
    1.10   "INTEREST CREDITING RATE"                                          2
    1.11   "OUTSIDE DIRECTORS"                                                2
    1.12   "PARTICIPANT"                                                      2
    1.13   "PLAN"                                                             3
    1.14   "PLAN ENTRY DATE"                                                  3
    1.15   "PLAN YEAR"                                                        3
    1.16   "RETIREMENT"                                                       3
    1.17   "TERMINATION FOR CAUSE"                                            3
    1.18   INTERPRETATION                                                     3

ARTICLE 2  ELIGIBILITY                                                        3

ARTICLE 3  ELIGIBLE COMPENSATION DEFERRAL ELECTION                            3

    3.1    AMOUNT OF ELIGIBLE COMPENSATION DEFERRAL                           3
    3.2    VESTING OF ELIGIBLE COMPENSATION DEFERRAL                          4

ARTICLE 4  COMPANY MATCHING CONTRIBUTIONS                                     4

    4.1    AMOUNT OF COMPANY MATCHING CONTRIBUTION                            4
    4.2    VESTING OF COMPANY MATCHING CONTRIBUTIONS                          4

ARTICLE 5  DEFERRED COMPENSATION ACCOUNTS                                     5

    5.1    ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNTS                    5

           (a)  ELIGIBLE COMPENSATION DEFERRAL ACCOUNT                        5
           (b)  COMPANY MATCHING CONTRIBUTION ACCOUNT                         5

    5.2    CREDITING OF INTEREST                                              5

ARTICLE 6  PAYMENT OF BENEFIT                                                 5

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                                                                       Page 3


    6.1    AMOUNT OF BENEFIT                                                  5
    6.2    PAYMENT EVENTS                                                     6
    6.3    TIME AND MANNER OF PAYMENT OF BENEFITS                             6
    6.4    DEATH AFTER THE COMMENCEMENT OF INSTALLMENT BENEFIT PAYMENTS       6
    6.5    PAYMENT OF BENEFITS FROM GENERAL ASSETS; UNSECURED CREDITOR
           STATUS OF PARTICIPANTS                                             6

ARTICLE 7  ADMINISTRATION                                                     7

    7.1    ADMINISTRATION BY THE COMPANY                                      7

ARTICLE 8  AMENDMENT OR TERMINATION                                           8

    8.1    AMENDMENT OR TERMINATION                                           8
    8.2    EFFECT OF AMENDMENT OR TERMINATION                                 8
 
ARTICLE 9  GENERAL PROVISIONS                                                 8

    9.1    NO GUARANTEE OF BENEFITS                                           8
    9.2    NO ENLARGEMENT OF DIRECTOR RIGHTS                                  8
    9.3    SPENDTHRIFT PROVISION                                              8
    9.4    APPLICABLE LAW                                                     8
    9.5    INCAPACITY OF RECIPIENT                                            8
    9.6    CORPORATE SUCCESSORS                                               9
    9.7    UNCLAIMED BENEFITS                                                 9
    9.8    LIMITATIONS ON LIABILITY                                           9

ARTICLE 10 CLAIMS FOR BENEFITS                                                9

    10.1   CLAIMS PROCEDURE                                                   9
    10.2   REVIEW PROCEDURE                                                  10


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                                                                       Page 4

                               U.S. LONG DISTANCE CORP.

                         DIRECTOR COMPENSATION DEFERRAL PLAN
                         (WITH COMPANY MATCHING CONTRIBUTION)


                                       RESTATED
                                    PLAN DOCUMENT


    The U.S. LONG DISTANCE CORP. DIRECTOR COMPENSATION DEFERRAL PLAN (the
"Plan"), originally effective January 1, 1994, is hereby amended effective the
19th day of December, 1995.  The Plan is established and maintained by U.S. LONG
DISTANCE CORP. (the "Company") solely for the purpose of permitting certain
outside directors of the Company to defer all or a portion of their director's
fees and to provide for a partial Company Matching Contribution.

    Accordingly, U.S. LONG DISTANCE CORP. hereby adopts the restated Plan
pursuant to the terms and provisions hereinafter set forth and designates the
Company as Plan Administrator of this Plan.

                                      ARTICLE 1

                                     DEFINITIONS


    Whenever used herein, the following terms shall have the meanings as set
forth in this Article:

1.1  "BENEFICIARY" or "BENEFICIARIES" means the individual or individuals
     designated by a Participant on a Beneficiary Form filed with the Company to
     receive the amount of benefit specified in Section 6.1 in the event of the
     Participant's death prior to Retirement, Disability, or other lifetime
     termination of employment, or to receive the death benefit as provided in
     Section 6.4 in the event of the Participant's death while receiving
     installment payments after the occurrence of one of such events.  If a
     Participant has not designated any beneficiary, or if no designated
     beneficiary is living on the date of distribution, then such amounts shall
     be paid to the Participant's spouse, or if the Participant's spouse is not
     then living or if the Participant is unmarried or action for divorce or
     annulment has been filed at the time of death, then, unless the provisions
     of Section 9.8 apply, such amounts shall be paid to the Participant's
     estate.

1.2  "BOARD" means the Board of Directors of the Company, or any committee of
     the Board authorized to act in its behalf in connection with the Plan.

1.3  "CHANGE OF CONTROL" shall mean change in at least 51% ownership interest in
     the Company by sale, merger or liquidation, dissolution or reorganization.


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                                                                       Page 5

1.4  "COMPANY" means U.S. LONG DISTANCE CORP., a Delaware corporation, or, to
     the extent provided in Section 9.7, any successor corporation or other
     entity resulting from a merger or consolidation into or with the Company or
     from a transfer or sale of substantially all of the assets of the Company.

1.5  "COMPANY MATCHING CONTRIBUTION" means the contribution made by the Company
     out of its own funds in behalf of a Plan Participant during any Plan Year
     pursuant to Article 4.
     
1.6  "DEFERRED COMPENSATION ACCOUNTS" means the Accounts established in the name
     of a Plan Participant pursuant to Article 5.  One of such Accounts shall be
     designated as the "Eligible Compensation Deferral Account" and the other
     Account shall be designated as the "Company Matching Contribution Account."

1.7  "DISABILITY" means that the Participant is unable to perform the usual and
     customary duties of his or her regular job and is unable to work elsewhere
     in the Company in a capacity for which the Participant is suited by
     education, training, or experience, for a period of six (6) months as a
     result of illness or injury.
     
1.8  "ELIGIBLE COMPENSATION" means the base fees payable to a Participant by the
     Company for services as a Director of the Company.

1.9  "ELIGIBLE COMPENSATION DEFERRAL CONTRIBUTION" means the contribution
     credited to a Participant's Eligible Compensation Deferral Account
     resulting from a deferral from Eligible Compensation under and in
     accordance with the terms of the Plan during any Plan Year.

1.10 "INTEREST CREDITING RATE" means the interest rate declared by the Company
     which will be credited at least annually to a Participant's Deferred
     Compensation Accounts.  For the first Plan Year, the interest rate shall be
     declared by the Company at the inception of the Plan and shall apply until
     the end of that year.  Thereafter, the interest rate shall be declared by
     the Company by December 15th of each year for the following Plan Year.  If
     it is not declared by that time, the rate for the following year shall be
     the prime rate of interest declared by the Frost National Bank of
     San Antonio plus two percent (2%), determined as of December 15th.

1.11 "OUTSIDE DIRECTORS" shall mean those Directors of the Company who are not
     employed by the Company on a full-time basis.

1.12 "PARTICIPANT" means an individual who qualifies to participate in the Plan
     under the eligibility requirements set forth in Article 2 and who elects to
     participate in the Plan by filing with the Company Participation Enrollment
     and Election Forms.
     
1.13 "PLAN" means the Director Compensation Deferral Plan provided for herein
     for 


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                                                                        Page 6

     selected Directors of the Company.

1.14 "PLAN ENTRY DATE" shall mean the effective date of the Plan, the date a
     Director first becomes an Eligible Director (as defined in Article 2), and
     each January 1st thereafter.

1.15 "PLAN YEAR" means each 12-month calendar year.

1.16 "RETIREMENT" means either (i) a Participant's actual retirement from
     service with the Company, or (ii) the Participant's attainment of age 65 if
     later than actual retirement, as elected by the Participant on the Payout
     Election Form filed at the time of the Participant's initial election to
     defer Eligible Compensation under the Plan.

1.17 "TERMINATION FOR CAUSE" shall mean a Participant's removal from the Board
     of Directors by the Board of Directors for fraud, embezzlement, or such
     other egregious and serious act against the interests of the Company that
     warrants immediate removal.
     
1.18 INTERPRETATION.  Words in the masculine gender shall include the feminine,
     and the singular shall include the plural, and vice versa, unless otherwise
     required by context.  Any headings used herein are for ease of reference
     only and are not to be construed as to alter the meaning of the substantive
     provisions of the Plan.

                                      ARTICLE 2

                                     ELIGIBILITY
                                           
    Selected individuals occupying positions as Outside Directors of the
Company who are determined by the Board from time to time to be eligible to
participate in the Plan ("Eligible Directors").  All Eligible Directors may
thereafter participate in the Plan beginning on the effective date of the Plan
or any Plan Entry Date thereafter.

                                      ARTICLE 3

                       ELIGIBLE COMPENSATION DEFERRAL ELECTION
                                           
3.1  AMOUNT OF ELIGIBLE COMPENSATION DEFERRAL.  A Director of the Company who is
     eligible to participate in the Plan may elect effective on a Plan Entry 
     Date to defer all or a portion of his or her Eligible Compensation for a 
     Plan Year by filing with the Company an Annual Deferral Election Form 
     prior to the Plan Year to which such election relates; provided, 
     however, that (i) for Directors who are eligible to participate in the 
     Plan upon adoption of the Plan, the election for the first Plan Year may 
     be made with the 30-day period immediately after adoption of the Plan, 
     and (ii) for Directors who become eligible to participate in the Plan 
     thereafter, the election for the Plan Year during which they first 
     become eligible 

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                                                                         Page 7

     may be made within the first pay period immediately after becoming 
     eligible.  Deferrals from Eligible Compensation shall be made in equal 
     monthly amounts of up to 100% of a Participant's Eligible Compensation.

3.2  VESTING OF ELIGIBLE COMPENSATION DEFERRAL.  An Eligible Compensation
     Deferral is 100% vested, unless the Participant is removed for cause, in
     which case the Eligible Compensation shall be forfeited.

                                      ARTICLE 4

                            COMPANY MATCHING CONTRIBUTIONS
                                           
4.1  AMOUNT OF COMPANY MATCHING CONTRIBUTION.  In addition to a Participant's
     deferral from Eligible Compensation, the Company intends, each Plan 
     Year, to contribute out of its own funds, on behalf of each Participant, 
     an amount equal to thirty-three percent (33%) of the amount of such 
     Participant's deferral from Eligible Compensation for such Plan Year. 
     Effective for Plan Years beginning on or after January 1, 1996, the 
     amount of Company Matching Contribution shall in no event be less than 
     $3,000. Notwithstanding anything contained in this paragraph, the 
     Company, in its sole discretion, reserves the right at any time for any 
     Plan Year, either (i) not to provide such Company Matching Contribution 
     altogether, or (ii) to make a Company Matching Contribution of a 
     different amount, in either case by giving written notice to each 
     affected Participant by December 15th of the prior Plan Year.  Any such 
     skipped or reduced Company Matching Contribution shall not be required 
     to be made up in future Plan Years.

4.2  VESTING OF COMPANY MATCHING CONTRIBUTIONS.  The portion of the Company
     Matching Contribution Account established for a Participant pursuant to 
     Article 5 to which the Participant or the Participant's Beneficiary or 
     Beneficiaries shall be entitled upon the occurrence of one of the 
     payment events specified in Section 6.2 shall be based upon the number 
     of full years of service with the Company completed by the Participant 
     as of the last day of the plan year prior to the date payment is due 
     under this Plan. Such vested portion shall be determined in accordance 
     with the following schedule:

         YEARS OF SERVICE                     VESTED PORTION
         ----------------                     --------------
         Less than 1 year                           0.00%
         More than 1 and less than 2               33.33%
         More than 2 and less than 3               66.66%
         3 years or more                          100.00%
         Change of Control of Company             100.00%
         Termination for Cause                      0.00%


                                      ARTICLE 5

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                                                                       Page 8

                            DEFERRED COMPENSATION ACCOUNTS
                                           
5.1  ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNTS.  The Company shall
     establish and maintain in the name of each Plan Participant two separate 
     accounts (the "Participant's Accounts") designated, respectively, as the 
     "Eligible Compensation Deferral Account" and the "Company Matching 
     Contribution Account."  Such Accounts shall be segregated from other 
     accounts on the books and records of the Company and shall together be 
     carried as a contingent liability of the Company to the Participant.

     (a)  ELIGIBLE COMPENSATION DEFERRAL ACCOUNT.  The Company shall credit to
          the Eligible Compensation Deferral Account (the "Deferral Account")
          the amount of each deferral from Eligible Compensation which the
          Participant elects to make on a timely filed Annual Deferral Election
          Form.  Such amount shall be credited to the Deferral Account as of the
          day such Eligible Compensation would otherwise be payable to the
          Participant.

     (b)  COMPANY MATCHING CONTRIBUTION ACCOUNT.  The Company shall credit to
          the Company Matching Contribution Account (the "Matching Account") the
          amount of each Company Matching Contribution.  Such amount shall be
          credited to the Matching Account on the same day as the Participant's
          deferral from Eligible Compensation to which it relates is credited to
          the Participant's Deferral Account.

5.2  CREDITING OF INTEREST.  From time to time, the Company shall credit each of
     the Participant's Accounts with interest at the Interest Crediting Rate 
     declared by the Company for that year.  Interest on amounts in an 
     Account for less than a full calendar year shall be appropriately 
     pro-rated based upon the number of days within the calendar year such 
     amounts have been in such Account.  Interest shall continue to be 
     credited to a Participant's Accounts in the foregoing manner for only as 
     long as the Participant is a Director with the Company and not disabled 
     or deceased.  Thereafter, the Company shall credit the Participant's 
     Deferral Account and the vested Matching Account with the rate of 
     interest earned on federally insured passbook savings accounts at Frost 
     National Bank of San Antonio, Texas.

                                      ARTICLE 6

                                  PAYMENT OF BENEFIT
                                           
6.1  AMOUNT OF BENEFIT.  The benefit payable to a Participant or a Participant's
     Beneficiary or Beneficiaries shall be equal to 100% of the value of such 
     Participant's Deferral Account, unless terminated for cause, plus the 
     vested percentage of the value of such Participant's Matching Account, 
     "value" in each case to be determined in accordance with Article 5 as of 
     the date of the 


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                                                                       Page 9

     applicable payment event specified in Section 6.2, except, in the event 
     of a Participant's death, the Participant's Beneficiary or Beneficiaries 
     shall be entitled to a minimum benefit in an amount equal to the 
     standard annual Director's fee which the Participant received for the 
     year prior to the Participant's death.

6.2  PAYMENT EVENTS.  Benefits shall become due and payable to a Participant or
     a Participant's Beneficiary or Beneficiaries upon the occurrence of the
     first to occur of the following events:

     (a)  Retirement of the Participant as defined in Section 1.16;

     (b)  Disability of the Participant as defined in Section 1.7, except that
          the Company may, in its sole discretion, commence benefit payments
          prior to the date specified in Section 1.7 if the Participant is
          unable to serve the Company as a result of illness or injury;

     (c)  Termination of service;

     (d)  Death of the Participant prior to the occurrence of any of the other
          events specified in this Section 6.2.

6.3  TIME AND MANNER OF PAYMENT OF BENEFITS.  Benefits payable upon the
     occurrence of an event specified in Section 6.2 shall be paid, or 
     installment payments shall commence, on the first day of the month next 
     following the occurrence of the event, or as soon thereafter as may 
     reasonably be practicable.  Benefits payable upon the occurrence of an 
     event specified in paragraph (a), (b), (c) or (d) of Section 6.2 shall 
     be paid in a lump sum, except that elections of payment in installments 
     with interest over a period of five (5) or ten (10) years signed prior 
     to December 19, 1995 and not subsequently revoked shall be honored.  The 
     Retirement of a Participant under Section 1.16 may be changed at any 
     time by means of execution and filing of a new Payout Election Form, but 
     any new Payout Election Form shall not become effective until the date 
     that is two calendar years following the date of the new election.  In 
     addition, a Participant who has elected payment of benefits in 
     installment form prior to December 19, 1995 may subsequently elect 
     payment in lump sum form, but such election shall not become effective 
     until two calendar years following the date of the election.

6.4  DEATH AFTER THE COMMENCEMENT OF INSTALLMENT BENEFIT PAYMENTS.  If a
     Participant dies after the commencement of installment benefit payments 
     but before distribution of the full amount specified in Section 6.1, 
     either (i) such payments shall continue to be paid to the Participant's 
     Beneficiary or Beneficiaries, or (ii) the balance due shall be paid to 
     such Beneficiary or Beneficiaries in a lump sum, as elected by the 
     Participant on the Payout Election Form filed with the Company.

6.5  PAYMENT OF BENEFITS FROM GENERAL ASSETS; UNSECURED CREDITOR STATUS OF


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                                                                       Page 10

     PARTICIPANTS. All benefits payable under the Plan to or in behalf of any 
     Participant shall be paid from the general assets of the Company.  The 
     Company shall set aside funds with which to discharge its obligations 
     hereunder, and may if it chooses to do so by the purchase of Corporate 
     Owned Life Insurance (COLI) policies on the lives of the Participants or 
     otherwise.  Any and all funds which may be so set aside shall remain 
     subject to the claims of the present and future general creditors of the 
     Company in the event of insolvency or bankruptcy, and any recipient of 
     benefits hereunder shall not have any security or other interest in such 
     funds.  Neither any Participant, his or her Beneficiary or 
     Beneficiaries, nor any other person shall, under any circumstances, have 
     an interest whatsoever in any particular property or assets of the 
     Company by virtue of the Plan, and the rights of the Participant and his 
     or her Beneficiary or Beneficiaries under the Plan shall be no greater 
     than the rights of a general unsecured creditor of the Company.  The 
     right of a Participant or his or her Beneficiary or Beneficiaries to 
     receive a benefit payment hereunder shall be an unsecured claim against 
     the general assets of the Company, and neither the Participant nor his 
     or her Beneficiary or Beneficiaries shall have any rights, in, to or 
     against any specific assets of the Company.  All amounts credited to the 
     Deferred Compensation Accounts of a Participant shall constitute general 
     assets of the Company and, subject to any trust agreement established to 
     hold assets pursuant to this Plan, may be disposed of by the Company at 
     such time and for such purposes as it may deem appropriate in the event 
     of bankruptcy or insolvency.

                                      ARTICLE 7

                                    ADMINISTRATION
                                           
7.1  ADMINISTRATION BY THE COMPANY.  The Company shall be entitled to rely
     conclusively upon all tables, valuations, certificates, opinions and 
     reports furnished by any actuary, accountant, controller, counsel, or 
     other person employed or engaged by the Company with respect to the 
     Plan.  The Company shall have full power and discretion to administer 
     the Plan in all of its details, and its decision shall be binding.  For 
     this purpose, the Company's powers shall include, but shall not be 
     limited to, the following authority, in addition to all other powers 
     provided hereunder:

     (a)  To make and enforce such rules and regulations as it deems necessary
          or proper for the efficient administration of the Plan;

     (b)  To interpret the Plan, its interpretation thereof in good faith to be
          final and conclusive on all persons claiming benefits under the Plan;

     (c)  To decide all questions concerning the Plan and the eligibility of any
          person to participate in the Plan;

     (d)  To appoint such agents, counsel, accountants, consultants, and other


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                                                                       Page 11

          persons as may be required to assist in administering the Plan; and

     (e)  To allocate and delegate its responsibilities under the plan and to
          designate other persons or an administrative committee to carry out
          any of its responsibilities under the Plan, any such allocation,
          delegation or designation to be in writing.

                                      ARTICLE 8

                               AMENDMENT OR TERMINATION
                                           
8.1  AMENDMENT OR TERMINATION.  The Company intends the Plan to be permanent,
     but reserves the right to amend or terminate the Plan when, in the sole
     opinion of the Company, such amendment or termination is advisable.  Any
     such amendment or termination shall be made pursuant to a resolution of the
     Board and shall be effective as of the date specified in such resolution.

8.2  EFFECT OF AMENDMENT OR TERMINATION.  No amendment or termination of the
     Plan shall directly or indirectly reduce the value of any Deferred
     Compensation Account held hereunder as of the effective date of such
     amendment or termination.

                                      ARTICLE 9

                                  GENERAL PROVISIONS
                                           
9.1  NO GUARANTEE OF BENEFITS.  Nothing contained in the Plan shall constitute a
     guarantee by the Company or by any other person or entity that the assets
     of the Company will be sufficient to pay any benefits hereunder.

9.2  NO ENLARGEMENT OF DIRECTOR RIGHTS.  No Participant shall have any right to
     receive a benefit payment under the Plan except in accordance with the
     terms of the Plan.  Establishment of the Plan shall not be construed to
     give any Participant the right to be retained in the service of the
     Company.

9.3  SPENDTHRIFT PROVISION.  No interest of any person or entity in, or right to
     receive a benefit payment under, the Plan shall be subject in any manner to
     sale, transfer, assignment, pledge, attachment, garnishment or other
     alienation or encumbrance of any kind; nor may any such interest or right
     to receive a benefit payment be taken, either voluntarily or involuntarily,
     for the satisfaction of the debts of, or other obligations or claims
     against, such person or entity, including claims of alimony, support or
     separate maintenance, or claims in bankruptcy proceedings.

9.4  APPLICABLE LAW.  The Plan shall be construed and administered under the
     laws of the State of Texas.

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                                                                       Page 12

9.5  INCAPACITY OF RECIPIENT.  If any person entitled to a benefit payment under
     the Plan is deemed by the Company to be incapable of personally receiving,
     and giving a valid receipt for, such payment, then, unless and until claim
     therefor shall have been made by a duly appointed guardian, conservator or
     other legal representative of such person, the Company may provide for such
     payment or any part thereof to be made to any other person or institution
     then contributing toward or providing for the care and maintenance of such
     person.  Any such payment shall be a payment for the account of such person
     and shall constitute a complete discharge of any liability of the Company
     and the Plan therefor.

9.6  CORPORATE SUCCESSORS.  The Plan shall not be automatically terminated by a
     transfer or sale of assets of the Company or by the merger or consolidation
     of the Company into or with any other corporation or other entity, but the
     Plan shall be continued after such sale, merger or consolidation only if
     and to the extent that the transferee, purchaser or successor entity agrees
     to continue the Plan.  In the event that the Plan is not continued by the
     transferee, purchaser or successor entity, then the Plan shall terminate
     subject to the provisions of Section 8.2.

9.7  UNCLAIMED BENEFITS.  Each Participant shall keep the Company informed of
     his or her current address and the current address of his or her
     Beneficiary or Beneficiaries.  The Company shall not be obligated to search
     for the whereabouts of any person.  If the location of a Participant is not
     made known to the Company within three (3) years after the date on which
     payment of the Participant's benefit may first be made, payment may be made
     as though the Participant had died at the end of the three-year period,
     provided that proof of death satisfactory to the Plan Administrator is
     provided.  If, within one additional year after such three-year period has
     elapsed, or, within three years after the actual death of a Participant,
     the Company is unable to locate any Beneficiary or Beneficiaries of the
     Participant, and is further unable to locate a spouse, dependent or
     descendant of the Participant, then the Company shall have no further
     obligation to pay any benefit hereunder to or in behalf of such Participant
     or Beneficiary, and such benefits shall be irrevocably forfeited.

9.8  LIMITATIONS ON LIABILITY.  Notwithstanding any of the preceding provisions
     of the Plan, neither the Company nor any Individual acting as employee or
     agent of the Company shall be liable to any Participant, former
     Participant, Beneficiary, or other person for any claim, loss, liability or
     expense incurred in connection with the Plan.

                                      ARTICLE 10

                                 CLAIMS FOR BENEFITS

10.1 CLAIMS PROCEDURE.  The Plan Administrator shall make all determinations
     as to 


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                                                                       Page 13

     the right of a Participant or Beneficiary to a benefit under the Plan. 
     If any person does not receive the benefit to which he or she believes he
     or she is entitled under this Plan, said person may file a claim for
     benefits in writing which shall be signed by the Participant, Beneficiary
     or legal representative of a Participant or Beneficiary.  Claims shall be
     granted or denied within 30 days after receipt unless additional time is
     required because of special circumstances.  If additional time is required,
     the claimant will be notified in writing before the expiration of 30 days
     from the receipt of the claim.  In no event shall the time for reaching a
     decision with respect to a claim be extended beyond 180 days after receipt
     of the claim.

     In the event that the Plan Administrator denies a claim for benefits, the
     claimant will be notified in writing.  Such notice shall set forth the
     specific reasons for the denial, the specific provisions of this Plan on
     which the denial is based, a description of any additional materials or
     information necessary to perfect the claim along with an explanation of why
     such material or information is necessary, and an explanation of the claim
     review procedure.

     If no action is taken by the Plan Administrator on a claim within 30 days
     after its receipt, or, if the period for considering the claim has been
     extended, then if no action is taken within 180 days after receipt of the
     claims, the claim shall be deemed to be denied for purposes of the
     following review procedure.

10.2 REVIEW PROCEDURE.  If a claim is denied in whole or in part, the claimant
     may request the Board to review the decision with the Plan Administrator,
     neither body to include the claimant.  This request must be made in writing
     within 30 days after the claim has been denied or is deemed to be denied
     under Section 10.1 and must set forth all of the grounds upon which the
     request is based, any facts in support of the request, and any issues or
     comments which the claimant considers relevant to the review.  In preparing
     a request for review, the claimant will be entitled to review any documents
     which are pertinent to his or her claim at the office of the Company during
     regular business hours.

     The Board of Directors shall act upon each request for review as soon as
     possible but not later than 60 days after the request for review is
     received.  No Director shall participate in any Board action taken with
     respect to his or her own claim.

     The Board of Directors shall make an independent determination concerning
     the claim for benefits under this Plan and shall give written notice of its
     decision to the claimant.  The decision of the Board of Directors on any
     claim review shall be final.

     If the Board of Directors fails to deliver a decision within 60 days after
     receipt of the request for review, the claim shall be deemed denied on
     review.

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                                                                       Page 14

    IN WITNESS WHEREOF, U.S. LONG DISTANCE CORP. has caused this instrument to
be executed by its duly authorized officer this 19th day of December, 1995,
effective as of the 19th day of December, 1995.

ATTEST:                      U.S. LONG DISTANCE CORP.



/S/ JENNIFER B. HARVEY            By:  /S/ LARRY M. JAMES
------------------------             -------------------------------
Assistant Secretary                  Name:     Larry M. James
                                     Title:    President