Document:

<PAGE>
                                                                    Exhibit 10.3

                            SUMMARY PLAN DESCRIPTION

                 VALOR TELECOMMUNICATIONS SOUTHWEST, LLC SAVINGS

                                      PLAN

                                                                      12/31/2001

                                                              Revised 02/05/2004
<PAGE>

              VALOR TELECOMMUNICATIONS SOUTHWEST, LLC SAVINGS PLAN

<TABLE>
<S>                                                                                                                     <C>
SUMMARY PLAN DESCRIPTION.........................................................................................        4

I.       BASIC PLAN INFORMATION..................................................................................        5
         A.     ACCOUNT..........................................................................................        5
         B.     BENEFICIARY......................................................................................        5
         C.     EMPLOYEE.........................................................................................        5
         D.     EMPLOYER.........................................................................................        5
         E.     ERISA............................................................................................        6
         F.     HIGHLY COMPENSATED EMPLOYEE......................................................................        6
         G.     NON HIGHLY COMPENSATED EMPLOYEE..................................................................        6
         H.     PARTICIPANT......................................................................................        6
         I.     PLAN TYPE........................................................................................        6
         J.     PLAN ADMINISTRATOR...............................................................................        6
         K.     PLAN NUMBER......................................................................................        6
         L.     PLAN SPONSOR.....................................................................................        7
         M.     PLAN YEAR........................................................................................        7
         N.     SERVICE OF PROCESS...............................................................................        7
         O.     TRUSTEE..........................................................................................        7

II.      PARTICIPATION...........................................................................................        8
         A.     ELIGIBILITY REQUIREMENTS.........................................................................        8

III.     CONTRIBUTIONS...........................................................................................        9
         A.     COMPENSATION.....................................................................................        9
         B.     EMPLOYEE PRETAX CONTRIBUTIONS....................................................................        9
                  1.  Regular Contributions......................................................................        9
                  2.  Age 50 and Over Catch-Up Contributions.....................................................       10
         C.     EMPLOYEE AFTER-TAX CONTRIBUTIONS.................................................................       10
         D.     EMPLOYER MATCHING CONTRIBUTIONS..................................................................       10
                  1.  Non-discretionary Matching Contributions...................................................       10
                  2.  Discretionary Matching Contributions.......................................................       11
                  3.  Qualified Matching Contributions...........................................................       11
         E.     PROFIT SHARING CONTRIBUTIONS.....................................................................       11
                  1.  Discretionary Profit Sharing Contributions.................................................       11
         F.     QUALIFIED NONELECTIVE CONTRIBUTIONS..............................................................       11
         G.     LIMIT ON CONTRIBUTIONS...........................................................................       11
         H.     ROLLOVER CONTRIBUTIONS...........................................................................       12

IV.      INVESTMENTS.............................................................................................       13
         A.     INVESTMENTS......................................................................................       13
         B.     STATEMENT OF ACCOUNT.............................................................................       13

V.       VESTING.................................................................................................       15
         A.     FORFEITURE AND RE-EMPLOYMENT.....................................................................       16
</TABLE>

Valor Telecommunications Southwest, LLC Savings Plan                           1

<PAGE>

<TABLE>
<S>                                                                                                                     <C>
VI.      PARTICIPANT LOANS.......................................................................................       18
         A.     GENERAL LOAN RULES...............................................................................       18
         B.     SPECIFIC LOAN PROCEDURES.........................................................................       18

VII.     IN SERVICE WITHDRAWALS..................................................................................       19
         A.     HARDSHIP WITHDRAWALS.............................................................................       19
         B.     WITHDRAWALS AFTER AGE 59-1/2.....................................................................       19
         C.     WITHDRAWALS AFTER AGE 70-1/2.....................................................................       19
         D.     WITHDRAWALS AFTER NORMAL RETIREMENT AGE..........................................................       20
         E.     WITHDRAWALS OF VESTED EMPLOYER CONTRIBUTIONS.....................................................       20
         F.     WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS...........................................................       20
         G.     WITHDRAWALS OF ROLLOVER CONTRIBUTIONS............................................................       20

VIII.    DISTRIBUTION OF BENEFITS................................................................................       21
         A.     ELIGIBILITY FOR BENEFITS.........................................................................       21
         B.     DISTRIBUTABLE EVENTS.............................................................................       21
                  1. Death ......................................................................................       21
                  2. Disability .................................................................................       22
                  3. Retirement .................................................................................       22
                  4. Minimum Required Distributions..............................................................       22
                  5. Termination of Employment...................................................................       22
         C.     FORM OF PAYMENTS.................................................................................       22
                  1.  Lump Sum Distributions.....................................................................       22
                           a) Cash Distribution..................................................................       22
                           b) Direct Rollover Distribution.......................................................       23
                           c) Combination Cash Distribution and Direct Rollover Distribution.....................       24

IX.      MISCELLANEOUS INFORMATION...............................................................................       25
         A.     BENEFITS NOT INSURED.............................................................................       25
         B.     ATTACHMENT OF YOUR ACCOUNT.......................................................................       25
         C.     PLAN-TO-PLAN TRANSFER OF ASSETS..................................................................       25
         D.     PLAN AMENDMENT...................................................................................       25
         E.     PLAN TERMINATION.................................................................................       25
         F.     INTERPRETATION OF PLAN...........................................................................       26
         G.     ELECTRONIC DELIVERY..............................................................................       26

X.       INTERNAL REVENUE CODES TESTS............................................................................       27
         A.     NON-DISCRIMINATION TESTS.........................................................................       27
         B.     TOP HEAVY TEST...................................................................................       27

XI.      PARTICIPANT RIGHTS......................................................................................       28
         A.     CLAIMS...........................................................................................       28
                  1.  Claims Procedures..........................................................................       28
                  2.  Review Procedures (For Appeal of an Adverse Benefit Determination).........................       28
         B.     STATEMENT OF ERISA RIGHTS........................................................................       29
</TABLE>

Valor Telecommunications Southwest, LLC Savings Plan                           2

<PAGE>

<TABLE>
<S>                                                                                                                     <C>
XII.     SERVICE AND FEES........................................................................................       32

APPENDIX A. INVESTMENT OPTIONS...................................................................................       33

APPENDIX B. LOAN PROCEDURES......................................................................................       35

         A.     INITIATING LOANS.................................................................................       35
                  1.  Loan Application...........................................................................       35
                  2.  Loan Amount ...............................................................................       35
                  3.  Number of Loans............................................................................       35
                  4.  Interest Rate ..............................................................................      35
                  5.  Source of Loan Proceeds....................................................................       35
         B.     LOAN REPAYMENTS AND LOAN MATURITY................................................................       35
         C.     DEFAULT OR TERMINATION OF EMPLOYMENT.............................................................       36

APPENDIX C. SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS...........................................................       37

</TABLE>

Valor Telecommunications Southwest, LLC Savings Plan                           3

<PAGE>

                            SUMMARY PLAN DESCRIPTION

              VALOR TELECOMMUNICATIONS SOUTHWEST, LLC SAVINGS PLAN

The Valor Telecommunications Southwest, LLC Savings Plan (the "Plan") of Valor
Telecommunications Enterprise, LLC has been amended as of 05/29/2003 (the
"Effective Date"). This Plan is intended to be a qualified retirement plan under
the Internal Revenue Code.

The purpose of the plan is to enable eligible Employees to save for retirement.
As well as retirement benefits, the plan provides certain benefits in the event
of death, disability, or other termination of employment. The Plan is for the
exclusive benefit of eligible Employees and their Beneficiaries.

This booklet is called a Summary Plan Description ("SPD") and it contains a
summary in understandable language of your rights and benefits under the plan.
If you have difficulty understanding any part of this SPD, you should contact
the Plan Administrator identified in the Basic Plan Information section of this
document during normal business hours for assistance.

This SPD is a brief description of the principal features of the plan document
and trust agreement and is not meant to interpret, extend or change these
provisions in any way. A copy of the plan document is on file with the Plan
Administrator and may be read by any employee at any reasonable time. The plan
document and trust agreement shall govern if there is a discrepancy between this
SPD and the actual provisions of the plan.

This SPD is based on the federal tax implications of your participation in the
Plan, transactions made within your Account, and distributions you may receive
from the plan. The state tax implications of your participation and these
transactions should be determined based on an examination of appropriate state
law. Please consult with your tax advisor if you have any questions regarding
state tax law.

Valor Telecommunications Southwest, LLC Savings Plan                           4

<PAGE>

                            I. BASIC PLAN INFORMATION

The Information in this section contains definitions to some of the terms that
may be used in this Summary Plan Description. If the first letter of any of
these definitions below is capitalized then it represents the indicated defined
term.

         A.       ACCOUNT

An Account shall be established by the Trustee to record contributions made on
your behalf and any related income, expenses, gains or losses. It may also be
referred to as an Account balance.

         B.       BENEFICIARY

This is the person or persons (including a trust) you designate, or who are
identified by the plan document if you fail to designate or improperly
designate, who will receive your benefits in the event of your death. You may
designate more than one Beneficiary.

         C.       EMPLOYEE

An Employee is an individual who is employed by your Employer as a common law
employee or, in certain cases, as a leased employee and is not terminated.

         D.       EMPLOYER

The name, address and business telephone number of your Employer is:

Valor Telecommunications Enterprise, LLC
Las Colinas Tower 1
201 E. John Carpenter Fwy Suite 200
Irving, TX 75062
(972) 373-1000

Your Employer's federal tax identification number is: 75-2884398

The following Employers are also included as participating employers in the
Valor Telecommunications Southwest, LLC Savings Plan:

         Valor Telecommunications, LLC

         Valor Telecommunications of Texas, LP

         Valor Telecommunications of Oklahoma, LLC

         Valor Telecommunications of New Mexico, LLC

         Valor Telecommunications Southwest, LLC

         Valor Telecommunications Services, LP

         Valor Telecommunications Corporate Group, LP

         Valor Business Solutions, LLC

         Kerrville Telephone Company

Valor Telecommunications Southwest, LLC Savings Plan                           5

<PAGE>

         E.       ERISA

The Employee Retirement Income Security Act of 1974 (ERISA) identifies the
rights of Participants and Beneficiaries covered by a qualified retirement plan.

         F.       HIGHLY COMPENSATED EMPLOYEE

An Employee is considered a highly compensated Employee if (i) at anytime during
the current or prior year you own, or are considered to own, at least five
percent of your Employer, or (ii) received compensation from your Employer
during the prior year in excess of $90,000, as adjusted and you are in the top
paid group consisting of the top 20% of employees ranked by compensation.

         G.       NON HIGHLY COMPENSATED EMPLOYEE

An Employee who is not a Highly Compensated Employee.

         H.       PARTICIPANT

A participant is an eligible Employee who has satisfied the eligibility and
entry date requirements and is eligible to participate in the Plan or a formerly
eligible Employee who has an account balance remaining in the Plan.

         I.       PLAN TYPE

The Valor Telecommunications Southwest, LLC Savings Plan is a defined
contribution plan. These types of plans are commonly described by the method by
which contributions for participants are made to the plan. The Valor
Telecommunications Southwest, LLC Savings Plan is a 401(k) deferral plan. More
information about the contributions made to the plan can be found in Section
III, Contributions.

         J.       PLAN ADMINISTRATOR

The Plan Administrator is responsible for the administration of the Plan and its
duties are identified in the plan document. In general, the Plan Administrator
is responsible for providing you and your Beneficiaries with information about
your rights and benefits under the Plan. The name, address and business
telephone number of the Plan Administrator is:

         Valor Telecommunications Enterprise, LLC
         Las Colinas Tower 1
         201 E. John Carpenter Fwy Suite 200
         Irving, TX 75062
         (972) 373-1000

         K.       PLAN NUMBER

The three digit IRS number for the Plan is 001.

Valor Telecommunications Southwest, LLC Savings Plan                           6

<PAGE>

         L.       PLAN SPONSOR

Your Employer is the sponsor of the Plan.

         M.       PLAN YEAR

The Plan Year is the twelve-month period ending on the last day of December.
Your Employer may only change or have changed the Plan Year by amending and
restating to a new Plan Document.

         N.       SERVICE OF PROCESS

The plan's agent for service of legal process is the Plan Administrator.

         O.       TRUSTEE

The trustee is responsible for trusteeing the Plan's assets. The trustee's
duties are identified in the trust agreement and relate only to the assets in
its possession. The name and address of the Plan's Trustee are:

         Fidelity Management Trust Company
         82 Devonshire Street
         Boston, MA 02109

Valor Telecommunications Southwest, LLC Savings Plan                           7

<PAGE>

                                II. PARTICIPATION

         A.       ELIGIBILITY REQUIREMENTS

You are eligible to participate in the Plan if you are an Employee and you are
not:

     -   a resident of Puerto Rico

     -   a Leased Employee

     -   a nonresident alien with no income from a U.S. source

You are also not eligible to participate if you are an individual who is a
signatory to a contract, letter of agreement, or other document that
acknowledges your status as an independent contractor not entitled to benefits
under the Plan and you are not otherwise classified by the Employer as a common
law employee and the Employer does not withhold income taxes, file Form W-2 (or
any replacement form), or remit Social Security payments to the Federal
government for you, even if you are later adjudicated to be a common law
employee.

You will become eligible to participate in the Plan immediately upon completing
those eligibility requirements. To begin participating, call the Fidelity
Retirement Benefits Line at 1-800-835-5097 or access the NetBenefits(SM) web
site at www.401k.com. If you require further assistance with enrollment, please
contact your Plan Administrator. You will receive credit for purposes of
eligibility for the time that you worked for GTE Corporation and its
Subsidiaries.

Once you become a Participant, you are eligible to participate in the Plan until
you terminate your employment with your Employer or become a member of a class
of Employees excluded from the Plan. If you terminate your employment after you
have met the eligibility requirements, and are later re-employed by your
Employer, you will again be eligible to participate in the Plan after you
complete one hour of service.

Valor Telecommunications Southwest, LLC Savings Plan                           8

<PAGE>

                               III. CONTRIBUTIONS

After you satisfy the participation requirements in Section Two of this Summary
Plan Description, you will be eligible to make pretax and after-tax
contributions. In addition, your Employer may make matching and profit sharing
contributions to your Account. The type(s) of contributions available under the
Plan are described in this section.

         A.       COMPENSATION

Compensation must be defined to compute contributions under the Plan. Eligible
compensation for computing contributions under the Plan is the taxable
compensation for a Plan Year reportable by your Employer on your IRS Form W-2,
excluding reimbursements or other expense allowances, fringe benefits, moving
expenses, deferred compensation and welfare benefits and including salary
reduction contributions you made to an Employer sponsored cafeteria plan, 401(k)
plan or 403(b) program. In addition, compensation excludes:

     -   overtime pay

     -   the taxable value of a qualified or non-qualified stock option

     -   severance pay

Compensation for your first year of eligible Plan participation will be measured
only for that portion of your initial Plan Year that you are eligible. Tax laws
limit the amount of compensation that may be taken into account each Plan Year;
the maximum amount for the 2004 Plan Year is $205,000.

         B.       EMPLOYEE PRETAX CONTRIBUTIONS

                  1.       REGULAR CONTRIBUTIONS

You may elect to contribute a percentage of your eligible compensation into the
Plan after you satisfy the Plan's eligibility requirements. The percentage of
your eligible compensation you elect will be withheld from each payroll on a
pretax basis and contributed to an Account in the Plan on your behalf. For
pre-tax contributions being withheld from your compensation, the percentage you
defer is subject to an annual limit of the lesser of 90% of eligible
compensation or $13,000 (in 2004; for calendar years following 2002, legislation
has increased the deferral limit by $1,000 each year until it reaches $15,000
for 2006 and then thereafter as adjusted by the Secretary of the Treasury) in a
calendar year. Your pretax contributions cannot be forfeited for any reason,
however, there are special Internal Revenue Code rules that must be satisfied
and may require that some of your contributions be returned to you. The Plan
Administrator will notify you if any of your contributions will be returned. You
may increase or decrease the amount you contribute as of the beginning of each
payroll period. You may also completely suspend your contributions. If you want
to increase, decrease, suspend, or resume your

Valor Telecommunications Southwest, LLC Savings Plan                           9

<PAGE>

Employee pretax contributions, you must call the Fidelity Retirement Benefits
Line at 1-800-835-5097 or access the NetBenefits(SM) web site at www.40lk.com.

                  2.       AGE 50 AND OVER CATCH-UP CONTRIBUTIONS

The Plan provides that participants who are projected to be age 50 or older by
the end of the calendar year and who are making Deferral Contributions to the
Plan may also make a catch-up contribution of up to $1,000 in 2002, increasing
by $1,000 each year until reaching $5,000 in 2006, when such amount will be
indexed in $500 increments.

         C.       EMPLOYEE AFTER-TAX CONTRIBUTIONS

After you satisfy the Plan's eligibility and entry date requirements, you may
elect to contribute a percentage of your eligible compensation into the Plan on
an after-tax basis. You may contribute a whole percentage of not less than one
percent of eligible compensation. However, there are special Internal Revenue
Code rules which must be satisfied and the maximum amount you may contribute may
be a lower percentage. The Plan Administrator will notify you if any of your
contributions will be returned. Your Employer may refuse to accept your
after-tax contributions if they will have an adverse effect on the Plan's
non-discrimination tests. Your after-tax contributions belong to you and cannot
be forfeited for any reason.

         D.       EMPLOYER MATCHING CONTRIBUTIONS

All matching contributions, other than additional discretionary matching
contributions, will be computed by your Employer based on your eligible
compensation contributed to the Plan each Plan Year. You must be employed as of
the last day of the Contribution Period to be eligible for any matching
contributions that may be made for that Plan Year.

Your Employer will communicate the amount of any annual discretionary matching
contribution. You do not need to satisfy this requirement if you die, become
disabled, or retire during the Plan Year. Employer matching contributions must
be allocated to your Account in the Plan within prescribed legal time limits.

                  1.       NON-DISCRETIONARY MATCHING CONTRIBUTIONS

         Each Plan Year your Employer will make non-discretionary matching
         contributions in an amount equal to 75% of your Employee pretax
         contributions. Non-discretionary matching contributions are subject to
         a maximum of 6% of your eligible compensation contributed to the Plan.
         For purposes of determining your matching contributions under the Plan,
         your pre-tax contributions will not include Age 50 and Over Catch-Up
         Contributions described above.

         PLEASE NOTE: Employees covered by a collective bargaining agreement
         should refer to that agreement for the appropriate company matching
         contribution.

Valor Telecommunications Southwest, LLC Savings Plan                          10

<PAGE>

                  2.       DISCRETIONARY MATCHING CONTRIBUTIONS

         Each Plan Year your Employer may make discretionary matching
         contributions of a percent, if any, to be determined annually based on
         a percentage of your Employee pretax contributions. Your Employer will
         communicate the amount of any annual discretionary matching
         contributions. For purposes of determining your matching contributions
         under the Plan, your pre-tax contributions will not include Age 50 and
         Over Catch-Up Contributions described above.

                  3.       QUALIFIED MATCHING CONTRIBUTIONS

         Your Employer may designate all or a portion of any matching
         contributions for a Plan Year as "qualified matching contributions" and
         allocate them to Non Highly Compensated Employees to help the Plan pass
         one or more annually required Internal Revenue Code nondiscrimination
         test(s). Any such contributions will be allocated to those Participants
         eligible to receive the Employer matching contributions described above
         who made pretax contributions during the Plan Year. Participants are
         100% vested in these contributions and may not request a hardship
         withdrawal of these contributions. For purposes of determining your
         matching contributions under the Plan, your pre-tax contributions will
         not include Age 50 and Over Catch-Up Contributions described above.

         E.       PROFIT SHARING CONTRIBUTIONS

                  1.       DISCRETIONARY PROFIT SHARING CONTRIBUTIONS

         Your Employer may make annual discretionary profit sharing
         contributions in an amount to be determined at Plan Year end by the
         Board of Directors. You must be employed as of the last day of the Plan
         Year to be eligible for any profit sharing contributions that may be
         made for that Plan Year. You do not need to satisfy this requirement if
         you die, become disabled or retire during the Plan Year. Profit sharing
         contributions, if any, made to the Plan by your Employer will be
         allocated to your Account in the ratio that your eligible compensation
         bears to the total eligible compensation paid to all eligible
         Participants.

         F.       QUALIFIED NONELECTIVE CONTRIBUTIONS

Your Employer may designate all or a portion of any profit sharing contributions
for a Plan Year as "qualified nonelective contributions" and allocate them to
Non-Highly Compensated Employees to help the Plan pass one or more annually
required Internal Revenue Code nondiscrimination test(s). You will be 100%
vested in these contributions and may not request a hardship withdrawal of these
contributions.

         G.       LIMIT ON CONTRIBUTIONS

Federal law requires that amounts contributed by you and on your behalf by your
Employer for a given limitation year generally may not exceed the lesser of:

     -   $41,000 (or such amount as may be prescribed by the Secretary of the
         Treasury); or

Valor Telecommunications Southwest, LLC Savings Plan                          11

<PAGE>

     -   100% of your annual compensation.

The limitation year for purposes of applying the above limits is the twelve
month period ending December 31st. Contributions under this Plan may not exceed
the above limits. If this does occur, then excess contributions in your Account
may be forfeited or refunded to you based on the provisions of the Plan
document. You will be notified by the Plan Administrator if you have any excess
contributions. Income tax consequences may apply on the amount of any refund you
receive.

         H.       ROLLOVER CONTRIBUTIONS

You can roll over part or all of an eligible rollover distribution you received
from a prior employer's qualified plan. The Plan Administrator must approve any
rollover contribution and reserves the right to refuse to accept any such
contribution. If your rollover contribution to the Plan is not a direct rollover
(i.e., you received a cash distribution from your prior employer's plan or from
your rollover IRA), then it must be received by the Trustee within 60 days of
your receipt of the distribution. Rollover contributions shall only be made in
the form of cash or allowable mutual fund shares. You may make a rollover
contribution to the Plan before becoming a Participant. However, you will not
become a Participant in the Plan and become entitled to make pretax
contributions and share in Employer contributions until you have met the Plan's
eligibility and entry date requirements. Your rollover contributions Account
will be subject to the terms of this Plan and will always be fully vested and
nonforfeitable. In general, if you receive an eligible rollover distribution as
a surviving spouse of a participant or as a spouse or former spouse who is an
"alternate payee" pursuant to a qualified domestic relations order ("QDRO"), you
may also make a Rollover Contribution to the Plan.

Valor Telecommunications Southwest, LLC Savings Plan                          12

<PAGE>

                                 IV. INVESTMENTS

         A.       INVESTMENTS

The Employee Retirement Income Security Act of 1974 (ERISA) imposes certain
duties on the parties who are responsible for the operation of the Plan. These
parties, called fiduciaries, have a duty to invest Plan assets in a prudent
manner. However, an exception exists for plans that comply with ERISA Section
404(c) and permit a Participant to exercise control over the assets in his/her
Account and choose from a broad range of investment alternatives. This Plan is
intended to be a Section 404(c) plan. You are responsible for investment
decisions relating to the investment of assets in your Account under the Plan
and the Plan fiduciaries are not responsible for any losses based on your
investment instructions. In addition, you have the right to vote any mutual fund
proxy based on the number of shares you own. Please see Appendix A for a list of
the investments currently available under the Plan. If you want additional
information about any investment alternative, you may request any of the
following information by calling Fidelity at 1-800-835-5097 or by accessing the
NetBenefits(SM) web site at www.40lk.com:

     -   A description of the annual operating expenses of each investment fund
         (e.g., investment management fees, administrative fees, transaction
         costs) which reduce the rate of return to you, and the aggregate amount
         of such expenses expressed as a percentage of average net assets of the
         designated investment alternative;

     -   Prospectuses, financial statements and reports, plus any other material
         available to the Plan which relates to the available investment
         alternatives;

     -   A list of the assets comprising the portfolio of each investment fund,
         the value of such assets (or the proportion of the investment fund
         which it comprises), and with respect to each such asset which is a
         fixed rate investment contract issued by a bank, savings and loan
         association or insurance company, the name of the issuer of the
         contract, the term of the contract and the rate of return on the
         contract;

     -   Information concerning the value of shares or units of the investment
         funds available to Participants under the Plan, as well as the past
         investment performance of such funds, determined net of expenses, on a
         reasonable and consistent basis.

         B.       STATEMENT OF ACCOUNT

Your account statement is available online through NetBenefits(SM)at
www.40lk.com. You can view and print a statement for any time period up to 15
previous months. The assets in the Plan are invested in available investment
options and a separate Account is established for each Participant who receives
and/or makes a contribution. The value of your Account is updated each business
day to reflect any contributions, exchanges between investment options,
investment earnings or losses for each investment option and withdrawals. A hard
copy statement showing the value of your Account will also be automatically
mailed to you within 15 business days after the following dates: February 28,
May 31, August 31, and November 30. You can suppress

Valor Telecommunications Southwest, LLC Savings Plan                          13

<PAGE>

these mailings from being sent to your home by logging on to NetBenefits(SM) and
selecting Mail Preferences under the Accounts tab.

Valor Telecommunications Southwest, LLC Savings Plan                          14

<PAGE>

                                   V. VESTING

The term "vesting" refers to your nonforfeitable right to the money in your
Account. You receive vesting credit for the number of years that you have worked
for your Employer. If you terminate your employment with your Employer, you may
be able to receive a portion or all of your Account based on your vested
percentage. You are always 100% vested in your Rollover Contributions, After-Tax
Contributions, Qualified Matching Contributions, Qualified Nonelective
Contributions, Regular Contributions and any earnings thereon. Your Employer
Matching Contributions and Employer Profit Sharing Contributions and any
earnings thereon will be vested in accordance with the following schedule:

<TABLE>
<CAPTION>
YEARS OF SERVICE                 VESTING PERCENTAGE
<S>                              <C>
   Less than 1                           50
        1                                50
        2                                100
</TABLE>

Your years of service with GTE Corporation and its Subsidiaries will be counted
to determine the number of years of service for vesting purposes.

The Plan has changed the methodology used to determine your years of service.
Previously you received vesting credit for a year of service under the `general
method' if you worked more than 1,000 hours in a Plan Year. Vesting under the
Plan is now based upon the elapsed time method. Hours of service are not counted
and instead periods of service are computed. A period of service is determined
by the time you work for your Employer. Only your whole years of service with
your Employer will be counted to compute your years of service for vesting
purposes. For example, if you work three years and ten months then for vesting
purposes you will receive credit for three years of service.

If you were a Participant in the Plan before April 1, 2000 then you will receive
vesting credit for your years of service with your Employer based upon the
following:

<TABLE>
<CAPTION>
       APPLICABLE YEAR(S)                       METHOD                             MEASUREMENT
       ------------------                       ------                             -----------
<S>    <C>                               <C>                                     <C>
1.     Year(s) before 2000               General                                 Jan. 1 to Dec. 31
2.     2000                              General or Elapsed Time*                Jan. 1 to Dec. 31
3.     Year(s) after 2000                Elapsed Time                            Jan. 1 to Dec. 31
</TABLE>

* You will receive credit for this year based upon whichever method is more
favorable to you.

Valor Telecommunications Southwest, LLC Savings Plan                          15

<PAGE>

If you were hired on or after April 1, 2000 then you will receive vesting credit
for your years of service with your Employer based only on the elapsed time
method. In this case, your measurement period for determining your years of
service will generally be based upon your date of employment with your Employer.

         A.       FORFEITURE AND RE-EMPLOYMENT

If you terminate your employment with your Employer and are less than 100%
vested in your Employer Account, you may forfeit the non-vested portion of your
Employer Account. A forfeiture will occur in the Plan Year that you receive a
distribution of your entire vested Account, or if you do not receive a
distribution, after five consecutive one year breaks in service. Forfeitures are
retained in the Plan and will first be used to pay administrative expenses. Any
remaining amounts will be used to reduce future Employer contributions payable
under the Plan.

         Example: (This example is for illustration purposes only.) Assuming
         your vesting schedule is as follows:

<TABLE>
<CAPTION>
YEARS OF SERVICE                 VESTING PERCENTAGE
<S>                              <C>
  Less than 2                             0
       2                                 20%
       3                                 40%
       4                                 60%
       5                                 80%
       6                                100%
</TABLE>

         You terminate your employment in 2004 with five years of service and
         the following Account:

<TABLE>
<CAPTION>
SOURCE                 AMOUNT           VESTED PERCENTAGE             VESTED AMOUNT
<S>                    <C>              <C>                           <C>
Employee               $2,000                  100%+                      $2,000
Employer               $1,000                   80%                          800
                       ------                                             ------
Total                  $3,000                                             $2,800
</TABLE>

You received a $2,800 distribution in 2004 from the Plan. This represented a
complete distribution of your Account. A $200 forfeiture will occur in 2004.

         +        You are always 100% vested in your own employee pretax
                  contributions and earnings in the Plan.

A one-year break in service occurs when you work less than one hour in a twelve
consecutive month period. A break in service starts with the date you stop
working for your Employer. If you are absent from work due to maternity or
paternity reasons, and then the break period will not start until after the
first anniversary year of your absence.

Valor Telecommunications Southwest, LLC Savings Plan                          16

<PAGE>

If you were a Participant when you terminated your employment and are
re-employed by your Employer, then you will again become a Participant on the
date you complete one hour of service. Your period of employment before you were
rehired is referred to as your pre-break service. Your period of employment
after you were rehired is referred to as your post-break service. If you are
re-employed after incurring five consecutive one-year breaks in service then
your post-break service will not count in determining your vesting percentage in
your pre-break Account balance. Your post-break service will count in
determining your vesting percentage in your pre-break Account balance and any
forfeited amounts will be restored to your Account if:

         (1)      You are re-employed by your Employer before you incur five
                  consecutive one-year breaks in service, and

         (2)      If you received distribution of your vested Account and you
                  repay the full amount of the distribution before the end of
                  the five-year period that begins on the date you are
                  re-employed.

         EXAMPLE: Assume you terminate employment with your Employer in 2004
         with an Account balance of $10,000, of which $6,000 is vested. You
         elect to receive a lump sum distribution of your vested Account
         balance. The remainder, or $4,000, is forfeited in 2004. If you are
         rehired on January 1, 2005 and repay the $6,000 distribution prior to
         January 1, 2010, the $4,000 previously forfeited will be restored to
         your Account. Additionally, your service after January 1, 2005 is
         counted toward vesting your pre-break Account balance of $10,000.

Valor Telecommunications Southwest, LLC Savings Plan                          17

<PAGE>

                              VI. PARTICIPANT LOANS

         A.       GENERAL LOAN RULES

Loans shall be made available to all qualifying Participants on a reasonably
equivalent basis. However, loans may not be made to an eligible Employee who
makes a rollover contribution and who has not satisfied the Plan's age, service
and entry date requirements. Loans are not considered distributions and are not
subject to Federal or state income taxes, provided they are repaid as required.
While you do have to pay interest on your loan, both the principal and interest
are deposited in your Account.

         B.       SPECIFIC LOAN PROCEDURES

Please see Appendix B, Loan Procedures, for specific information regarding
receiving and repaying loans from the Plan. Additional information may be
attained from the Plan Administrator.

Valor Telecommunications Southwest, LLC Savings Plan                          18

<PAGE>

                           VII. IN SERVICE WITHDRAWALS

If you qualify, as indicated below for each withdrawal, you may obtain a
withdrawal from the Plan while you are still an Employee. You can apply for any
of the below described distributions by calling the Fidelity Retirement Benefits
Line at 1-800-835-5097 or by accessing the NetBenefits(SM) web site at
www.401k.com. All telephone calls will be recorded. Most distributions have been
pre-approved by the Plan Administrator. The following types of withdrawals are
available under the Plan:

         A.       HARDSHIP WITHDRAWALS

If you are an Employee and request a hardship withdrawal and it is approved by
the Plan Administrator, you may withdraw your Employee pretax contributions to
satisfy any of the following immediate and heavy financial needs: (1) medical
expenses for you, your spouse, children or dependents; (2) the purchase of your
principal residence; (3) to prevent your eviction from, or foreclosure on, your
principal residence; or (4) to pay for post-secondary education expenses
(tuition, related educational fees, room and board) for you, your spouse,
children or dependents for the next twelve months; or any other immediate and
heavy financial need as determined based on Internal Revenue Service
regulations. In accordance with Internal Revenue Service regulations, you must
first exhaust all other assets reasonably available to you prior to obtaining a
hardship withdrawal. This includes obtaining a withdrawal of any after-tax
contribution in your Account and a loan from this Plan and any other qualified
plan maintained by your Employer. Your pretax contributions to this Plan, and
any other Employer-sponsored qualified or non-qualified plan, will be suspended
for six months after your receipt of the hardship withdrawal. The minimum
hardship withdrawal is $500. Hardship withdrawals distributed after December 31,
2001 will not be considered an "eligible rollover distribution". Instead of the
required federal withholding on an "eligible rollover distribution", these
amounts will be subject to the 10% nonperiodic income tax withholding rate
unless you elect out of the withholding.

         B.       WITHDRAWALS AFTER AGE 59-1/2

If you have reached age 59-1/2, then you may elect to withdraw all or a portion
of your entire Account while you are still employed by your Employer.

         C.       WITHDRAWALS AFTER AGE 70-1/2

Starting in the calendar year in which you reach age 70-1/2, you may elect to
receive distributions calculated in the same manner as Minimum Required
Distributions. For more information, please refer to the paragraph so entitled
under the Distributable Events subsection of this SPD's section on Distribution
of Benefits below.

Valor Telecommunications Southwest, LLC Savings Plan                          19

<PAGE>

         D.       WITHDRAWALS AFTER NORMAL RETIREMENT AGE

You may elect to withdraw your vested Account balance after you reach the Plan's
normal retirement age, the later of age 65 or the fifth anniversary of your
Employment Commencement Date, or delay it until you retire. Notwithstanding the
above, by law certain contributions including employee pretax, qualified
matching, safe harbor matching, qualified nonelective, and safe harbor
nonelective contributions cannot be withdrawn prior to age 59-1/2.

         E.       WITHDRAWALS OF VESTED EMPLOYER CONTRIBUTIONS

You may elect to withdraw all or a portion of your vested profit sharing
contributions that have been in your Account for at least 24 months. The
following special restrictions apply to any withdrawal of Vested Profit Sharing
Contributions:

     -   No more than one in every six months

         F.       WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS

If you have previously made after-tax contributions then you may elect to
withdraw all or a portion of them. You may not make withdrawals more frequently
than once every 6 months.

         G.       WITHDRAWALS OF ROLLOVER CONTRIBUTIONS

If you have a balance in your rollover contributions Account, you may elect to
withdraw all or a portion of it.

The amount of any taxable withdrawal other than the return of your after-tax
contributions that is not rolled over into an Individual Retirement Account or
another qualified employer retirement plan will be subject to Federal and state,
if applicable, income taxes. In general, the amount of any taxable withdrawal
that is not rolled over into an Individual Retirement Account or another
qualified employer retirement plan will be subject to 20% Federal Income Tax and
any applicable State Income Tax. A 10% Internal Revenue Code early withdrawal
penalty tax may apply to the amount of your withdrawal if you are under the age
of 59-1/2 and do not meet one of the Internal Revenue Code exceptions.

The amount of any withdrawal will be withdrawn from available investment options
in the order established by the Trustee.

Valor Telecommunications Southwest, LLC Savings Plan                          20

<PAGE>

                         VIII. DISTRIBUTION OF BENEFITS

         A.       ELIGIBILITY FOR BENEFITS

A distribution can be made to you if you request one due to your disability,
retirement, or termination of employment from your Employer and any Related
Employer. Your Beneficiary or Beneficiaries may request a distribution of your
vested Account balance in the event of your death.

You may defer receipt of your distribution until a later date. However, you
cannot postpone it if your vested Account balance is $5,000 or less in which
case the Plan Administrator will direct the Trustee to distribute it to you as a
lump sum distribution without your consent. If your vested Account balance
exceeds $5,000, you may delay your distribution until you are required by law to
receive minimum required distributions. You will have a continuing election to
request a distribution if you elect to postpone your distribution unless you are
re-employed by your Employer or any Related Employer. The value of your Account
balance will continue to increase or decrease, as appropriate, based on the
investment returns until it is distributed. Your written consent will be
required for any distribution if your vested Account balance is greater than
$5,000.

You should consult with your tax advisor to determine the financial impact of
your situation before you request a distribution. You may apply for a
distribution by calling the Fidelity Retirement Benefits Line at 1-800-835-5097
and/or by accessing the NetBenefits(SM) web site at www.401k.com. All telephone
calls will be recorded. Most distributions have been pre-approved by the Plan
Administrator.

         B.       DISTRIBUTABLE EVENTS

You are eligible to request a distribution of your vested Account balance based
on any of the following events:

                  1.       DEATH

         If you are a Participant in the Plan and die, your vested Account
         balance, if any, will be paid to your designated Beneficiary or
         Beneficiaries. If you are an Employee of your Employer or a Related
         Employer at the time of your death, your Account balance will
         automatically become 100% vested. You may designate a Beneficiary or
         Beneficiaries on a designation form that must be properly signed and
         filed with the Plan Administrator. If you are married and want to
         designate someone other than your spouse as your primary Beneficiary,
         your spouse must consent to this designation by signing the form.
         His/her signature must be witnessed by a Plan representative or a
         notary public. You should contact the Plan Administrator to obtain a
         designation of beneficiary form.

Valor Telecommunications Southwest, LLC Savings Plan                          21

<PAGE>

                  2.       DISABILITY

         If you become disabled while you are employed by your Employer or a
         Related Employer, so that you are determined disabled by a physician
         selected by the Plan Administrator, the full value of your Account
         balance may be distributed to you upon request. You will automatically
         become 100% vested in your Account balance when you become disabled.
         You may request a distribution of your Account balance only if you
         terminate your employment with your Employer or Related Employer.

                  3.       RETIREMENT

         You do not have to terminate your employment with your Employer just
         because you attain your normal retirement age of the later of age 65 or
         the fifth anniversary of your commencement date. You will automatically
         become 100% vested in your Account balance upon meeting the retirement
         requirements.

                  4.       MINIMUM REQUIRED DISTRIBUTIONS

         You are required by law to receive a minimum required distribution from
         the Employer's Plan, unless you are a five percent owner of the
         Employer, no later than April 1 of the calendar year following the
         calendar year you turn 70-1/2 or terminate your employment, whichever
         is later. If you are a five percent owner of the Employer, you must
         start receiving your distribution no later than April 1 of the calendar
         year following the calendar year you turn 70-1/2. Once you start
         receiving your minimum required distribution, you should receive it at
         least annually and you should complete the appropriate documentation
         each year until all assets in your Account are distributed. If you have
         any questions about your minimum required distributions, please contact
         your Plan Administrator.

                  5.       TERMINATION OF EMPLOYMENT

         If you terminate your employment with your Employer and any Related
         Employer, you may elect to receive a distribution of your vested
         Account balance from the Plan.

         C.       FORM OF PAYMENTS

                  1.       LUMP SUM DISTRIBUTIONS

         Your entire vested Account balance will be paid to you in a single cash
         distribution or other distribution that you elect.

                           a)       CASH DISTRIBUTION

                  Any distribution paid directly to you will be subject to
                  mandatory Federal income tax withholding of 20% of the taxable
                  distribution and the remaining amount will be paid to you. You
                  cannot elect out of this tax withholding but you can avoid it
                  by electing a direct rollover distribution as described below.
                  This withholding is not a penalty but a prepayment of your
                  Federal income taxes.

Valor Telecommunications Southwest, LLC Savings Plan                          22

<PAGE>

                  You may rollover the taxable distribution you receive to an
                  individual retirement account (IRA) or your new employer's
                  qualified plan, if it accepts rollover contributions and you
                  roll over this distribution within 60 days after receipt. You
                  will not be taxed on any amounts timely rolled over into the
                  IRA or your new employer's qualified Plan until those amounts
                  are later distributed to you. Any amounts not rolled over may
                  also be subject to certain early withdrawal penalties
                  prescribed under the Internal Revenue Code.

                           b)       DIRECT ROLLOVER DISTRIBUTION

                  As an alternative to a cash distribution, you may request that
                  your entire distribution be rolled directly into a Fidelity
                  IRA, a non-Fidelity IRA or to your new employer's qualified
                  plan if it accepts rollover contributions. Federal income
                  taxes will not be withheld on any direct rollover
                  distribution.

                  When you call the Fidelity Retirement Benefits Line to take a
                  withdrawal, you will be asked whether you will be rolling over
                  any part of your distribution. If you wish to have any part of
                  your distribution rolled over to an IRA or another qualified
                  plan, you will need to speak to a Fidelity representative.

                           1.       Rollover to Fidelity IRA - You will be asked
                                    whether you have received a Fidelity Service
                                    for Exiting Employees (`SEE') Rollover IRA
                                    Kit. If you haven't received a SEE Kit, the
                                    Fidelity representative will send out one.
                                    Then, your rollover request will be entered
                                    on the system and will pend (for up to 90
                                    days) until the Rollover IRA account is set
                                    up. You must return the signed Rollover IRA
                                    application to Fidelity's Retail Customer
                                    Service Department (in Dallas, TX) in order
                                    to set up the Rollover IRA account. Once the
                                    Rollover IRA account has been set up, your
                                    vested Account balance will be transferred
                                    to the Fidelity Rollover IRA.

                           2.       Rollover to Non-Fidelity IRA - A check will
                                    be issued by the Trustee payable to the IRA
                                    custodian or trustee for your benefit. The
                                    check will contain the notation `Direct
                                    Rollover' and it will be mailed directly to
                                    you. You will be responsible for forwarding
                                    it on to the custodian or trustee. You must
                                    provide the Plan Administrator with complete
                                    information to facilitate your direct
                                    rollover distribution.

                           3.       Rollover to your New Employer's Qualified
                                    Plan - You should check with your new
                                    employer to determine if its plan will
                                    accept rollover contributions. If allowed,
                                    then a check will be issued by the Trustee
                                    payable to the trustee of your new
                                    employer's qualified plan. The check will
                                    contain the notation `Direct Rollover' and
                                    it will be mailed directly to you. You will
                                    be responsible for forwarding it on to the
                                    new trustee. You must provide the plan

Valor Telecommunications Southwest, LLC Savings Plan                          23

<PAGE>

                                    Administrator with complete information to
                                    facilitate your direct rollover distribution

                           c)       COMBINATION CASH DISTRIBUTION AND DIRECT
                  ROLLOVER DISTRIBUTION

                  You may request that part of your distribution be paid
                  directly to you and the balance rolled into an IRA, your new
                  employer's retirement plan, or a 403(a) annuity. Any cash
                  distribution will be subject to the Federal income tax
                  withholding rules referred to in subsection 1a above and any
                  direct rollover distribution will be made in accordance with
                  section lb above. Your direct rollover distribution must be at
                  least $500.

                  You will pay income tax on the amount of any taxable
                  distribution you receive from the Plan unless it is rolled
                  into an IRA or your new employer's qualified Plan. A 10% IRS
                  premature distribution penalty tax may also apply to your
                  taxable distribution unless it is rolled into an IRA or
                  another qualified plan. The 20% Federal income tax withheld
                  under this section may not cover your entire income tax
                  liability. In the case of a combination distribution, if any
                  portion of the eligible rollover distribution consists of
                  after-tax contributions, the cash paid directly to you will be
                  considered to consist completely of after-tax contributions
                  before any after-tax contributions are attributed to the
                  portion paid as a direct rollover. Consult with your tax
                  advisor for further details.

Valor Telecommunications Southwest, LLC Savings Plan                          24

<PAGE>

                         IX. MISCELLANEOUS INFORMATION

         A.       BENEFITS NOT INSURED

Benefits provided by the Plan are not insured or guaranteed by the Pension
Benefit Guaranty Corporation under Title IV of the Employee Retirement Income
Security Act of 1974 because the insurance provisions under ERISA are not
applicable to this particular Plan. You will only be entitled to the vested
benefits in your Account based upon the provisions of the Plan and the value of
your Account will be subject to investment gains and losses.

         B.       ATTACHMENT OF YOUR ACCOUNT

Your Account may not be attached, garnished, assigned or used as collateral for
a loan outside of this Plan except to the extent required by law. Your creditors
may not attach, garnish or otherwise interfere with your Account balance except
in the case of a proper Internal Revenue Service tax levy or a Qualified
Domestic Relations Order (QDRO). A QDRO is a special order issued by the court
in a divorce, child support or similar proceeding. In this situation, your
spouse, or former spouse, or someone other than you or your Beneficiary, may be
entitled to a portion or all of your Account balance based on the court order.
Participants and Beneficiaries can obtain, without a charge, a copy of QDRO
procedures from the Plan Administrator.

         C.       PLAN-TO-PLAN TRANSFER OF ASSETS

Your Employer may direct the Trustee to transfer all or a portion of the assets
in the Account of designated Participants to another plan or plans maintained by
your Employer or other employers subject to certain restrictions. The plan
receiving the Trust Funds must contain a provision allowing the transfer and
preserve any benefits required to be protected under existing laws and
regulations. In addition, a Participant's vested Account balance may not be
decreased as a result of the transfer to another plan.

         D.       PLAN AMENDMENT

Your Employer reserves the authority to amend certain provisions of the Plan by
taking the appropriate action. However, any amendment may not eliminate certain
forms of benefits under the Plan or reduce the existing vested percentage of
your Account balance derived from Employer contributions. If you have three or
more years of service with your Employer and a Related Employer and the vesting
schedule is amended, then you will be given a choice to have the vested
percentage of future Employer contributions made to your Account computed under
the new or the old vesting schedule. The Plan Administrator will provide you
with the appropriate information to make an informed decision if the Plan's
vesting schedule is amended.

         E.       PLAN TERMINATION

Your Employer has no legal or contractual obligation to make annual
contributions or to continue the Plan. Your Employer reserves the right to
terminate the Plan at any time by taking

Valor Telecommunications Southwest, LLC Savings Plan                          25

<PAGE>

appropriate action as circumstances may dictate, with the approval of the Board
of Directors. In the event the Plan should terminate, each Participant affected
by such termination shall have a vested interest in his Account of 100 percent.
The Plan Administrator will facilitate the distribution of Account balances in
single lump sum payments to each Participant in accordance with Plan provisions
until all assets have been distributed by the Trustee. Each Participant in the
Plan upon Plan termination will automatically become 100% vested in his/her
Account balance.

         F.       INTERPRETATION OF PLAN

The Plan Administrator has the power and discretionary authority to construe the
terms of the Plan based on the Plan document, existing laws and regulations and
to determine all questions that arise under it. Such power and authority
include, for example, the administrative discretion necessary to resolve issues
with respect to an Employee's eligibility for benefits, credited services,
disability, and retirement, or to interpret any other term contained in Plan
documents. The Plan Administrator's interpretations and determinations are
binding on all Participants, Employees, former Employees, and their
Beneficiaries.

         G.       ELECTRONIC DELIVERY

This Summary Plan Description and other important Plan information may be
delivered to you through electronic means. This Summary Plan Description
contains important information concerning the rights and benefits of your Plan.
If you receive this Summary Plan Description (or any other Plan information)
through electronic means you are entitled to request a paper copy of this
document, free of charge, from the Plan Administrator. The electronic version of
this document contains substantially the same style, format and content as the
paper version.

Valor Telecommunications Southwest, LLC Savings Plan                          26

<PAGE>

                        X. INTERNAL REVENUE CODES TESTS

         A.       NON-DISCRIMINATION TESTS

The Plan must pass Internal Revenue Code non-discrimination tests as of the last
day of each Plan Year to maintain a qualified Plan. These tests are intended to
ensure that the amount of contributions under the Plan do not discriminate in
favor of Highly Compensated Employees. In order to meet the tests, your Employer
encourages participation from all eligible Employees. Depending upon the results
of the tests, the Plan Administrator may have to refund pretax contributions
contributed to the Plan and vested matching contributions to certain Highly
Compensated Employees, as determined under Internal Revenue Service regulations.
Pretax or matching contributions will be refunded to you from applicable
investment options. You will be notified by the Plan Administrator if any of
your contributions will be refunded to you.

         B.       TOP HEAVY TEST

The Plan is subject to the Internal Revenue Code "top-heavy" test. Each Plan
Year, the Plan Administrator tests this Plan, together with any other
Employer-sponsored qualified plans that cover one or more key employees, to
ensure that no more than 60% of the benefits are for key employees. If this Plan
is top-heavy, then your Employer may be required to make a minimum annual
contribution on your behalf to this, or another Employer sponsored plan, if you
are employed as of Plan Year-end. In addition, the following vesting schedule
will be used instead of the one previously listed in the vesting section of this
Summary Plan Description.

<TABLE>
<CAPTION>
YEARS OF SERVICE                    VESTING PERCENTAGE
<S>                                 <C>
  less than 1                               50
       1                                    50
       2                                   100
</TABLE>

Valor Telecommunications Southwest, LLC Savings Plan                          27

<PAGE>

                             XI. PARTICIPANT RIGHTS

         A.       CLAIMS

                  1.       CLAIMS PROCEDURES

A plan participant or beneficiary may make a claim for benefits under the Plan.
Any such claim you file must be submitted to the Plan Administrator in a form
and manner acceptable to the Plan Administrator. Contact your Plan Administrator
for more information. Generally, the Plan Administrator will provide you with
written notice of the disposition of your claim within 90 days after receipt of
your claim by the Plan. If the Plan Administrator determines that special
circumstances require an extension of time to process your claim, the Plan
Administrator will furnish written notice of the extension to the claimant prior
to the expiration of the initial 90-day period. In no event shall such extension
exceed a period of 90 days from the end of the initial period the Plan
Administrator had to dispose of your claim. The extension notice shall indicate
the special circumstances requiring an extension of time and the date by which
the Plan expects to render the benefit determination. (A different procedure
applies for disability related claims -- see the next paragraph). In the event
the claim is denied, the Plan Administrator will disclose to you in writing the
specific reasons for the denial, a reference to the specific provisions of the
Plan on which the determination is based, a description of additional material
or information necessary for the claimant to perfect the claim and an
explanation of why it is required, and information about the steps that must be
taken to submit a timely request for review, including a statement of your right
to bring a civil action under Section 502(a) of ERISA following as adverse
determination upon review.

If your claim concerns disability benefits under the Plan, the Plan
Administrator must notify you in writing within 45 days after you have filed
your claim in order to deny it. If special circumstances require an extension of
time to process your claim, the Plan Administrator must notify you before the
end of the 45-day period that your claim may take up to 30 days longer to
process. If special circumstances still prevent the resolution of your claim,
the Plan Administrator may then only take up to another 30 days after giving you
notice before the end of the original 30-day extension. If the Plan
Administrator gives you notice that you need to provide additional information
regarding your claim, you must do so within 45 days of that notice.

                  2.       REVIEW PROCEDURES (FOR APPEAL OF AN ADVERSE BENEFIT
                           DETERMINATION)

You may appeal the denial of your claim made under the procedures described
above within 60 days after the date following your receipt of notification of
the denied claim (a different procedure applies for disability related claims --
see the next paragraph) by filing a written request for review with the Plan
Administrator. This written request may include comments, documents, records,
and other information relating to your claim for benefits. You shall be
provided, upon your request and free of charge, reasonable access to, and copies
of, all documents, records, and other information relevant to your claim for
benefits. The review will take into account all comments, documents, records,
and other information submitted by you

Valor Telecommunications Southwest, LLC Savings Plan                          28

<PAGE>

relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

If your initial claim was for disability benefits under the Plan and has been
denied by the Plan Administrator, you have 180 days from the date you receive
notice of your denial in which to appeal that decision. Your review will be
handled completely independently of the findings and decision made regarding
your initial claim and will be processed by an individual who is not a
subordinate of the individual who denied your initial claim. If your claim
requires medical judgment, the individual handling your appeal will consult with
a medical professional who was not consulted regarding your initial claim and
who is not a subordinate of anyone consulted regarding your initial claim and
identify that medical professional to you.

The Plan Administrator shall notify you of the Plan's benefit determination on
review within a reasonable period of time, but not later than 60 days after
receipt of your request for review by the Plan, unless the Plan Administrator
determines that special circumstances require an extension of time for
processing the claim. If the Plan Administrator determines that an extension of
time for processing is required, written notice of the extension shall be
furnished to you prior to the termination of the initial 60-day period. In no
event shall such extension exceed a period of 60 days from the end of the
initial period. The extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the Plan expects to render
the determination on review.

The Plan Administrator shall provide you with written notification of a plan's
benefit determination on review. In the case of an adverse benefit
determination, the notification shall set forth, in a manner calculated to be
understood by you -- the specific reason or reasons for the adverse
determinations, reference to the specific plan provisions on which the benefit
determination is based, a statement that you are entitled to receive, upon your
request and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to your claim for benefits.

                  B.       STATEMENT OF ERISA RIGHTS

As a Participant in the Plan, you are entitled to certain rights and protections
under ERISA. ERISA provides that all Plan Participants shall be entitled to:

RECEIVE INFORMATION ABOUT YOUR PLAN AND BENEFITS

     -   Examine, without charge, at the Plan Administrator's office and at
         other specified locations, such as worksites and union halls, all
         documents governing the Plan, including insurance contracts and
         collective bargaining agreements, and a copy of the latest annual
         report (Form 5500 Series) filed by the Plan with the U.S. Department of
         Labor and available at the Public Disclosure Room of the Pension and
         Welfare Benefit Administration.

     -   Obtain, upon written request to the Plan Administrator, copies of
         documents governing the operation of the plan, including insurance
         contracts and collective bargaining agreements, and copies of the
         latest annual report (Form 5500 Series) and updated

Valor Telecommunications Southwest, LLC Savings Plan                          29

<PAGE>

         Summary Plan Description. The Plan Administrator may make a reasonable
         charge for the copies.

     -   Receive a summary of the Plans annual financial report. The Plan
         Administrator is required by law to furnish each Participant with a
         copy of this Summary Annual Report each year.

     -   Obtain a statement telling you whether you have a right to receive a
         benefit under the plan at normal retirement age (the later of age 65 or
         the fifth anniversary of your Employment Commencement Date) and if so,
         what your benefits would be at normal retirement age if you stop
         working under the Plan now. If you do not have a right to a benefit
         under the plan, the statement will tell you how many more years you
         have to work to get a right to a benefit. This statement must be
         requested in writing and is not required to be given more than once
         every twelve (12) months. The Plan must provide the statement free of
         charge.

PRUDENT ACTIONS BY FIDUCIARIES

In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called "fiduciaries" of the Plan, have a duty
to do so prudently and in the interest of you, other Plan Participants and
Beneficiaries. No one, including your Employer, your union, or any other person,
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a retirement benefit or exercising your rights under ERISA.

ENFORCE YOUR RIGHTS

If your claim for a benefit under the Plan is denied or ignored, in whole or in
part, you have a right to know why this was done, to obtain copies of documents
relating to the decision without charge, and to appeal any denial, all within
certain time schedules. Under ERISA, there are steps you can take to enforce the
above rights. For instance, if you request a copy of plan documents or the
latest annual report from the Plan and do not receive them within 30 days, you
may file suit in a Federal court. The Plan's agent for legal service of process
in the event of a lawsuit is the Plan Administrator. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$110 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator.

If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or Federal court. In addition, if you
disagree with the Plan's decision or lack thereof concerning the qualified
status of a domestic relations order, you may file suit in Federal court. If it
should happen that Plan fiduciaries misuse the Plan's money, or if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in a Federal court. The court
will decide who should pay court costs and legal fees. If you are successful,
the court may order the person you have sued to pay these costs and fees. If you
lose, the court may order you to pay these costs and fees, for example, if it
finds your claim frivolous.

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<PAGE>

ASSISTANCE WITH YOUR QUESTIONS

If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or your rights
under ERISA, or if you need assistance in obtaining documents from the Plan
Administrator, you should contact the nearest office of the Pension and Welfare
Benefits Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance and Inquiries, Pension and
Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution
Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications
about your rights and responsibilities under ERISA by calling the publications
hotline of the Pension and Welfare Benefits Administration.

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<PAGE>

                              XII. SERVICE AND FEES

Fees and expenses charged under your Account will impact your retirement
savings, and fall into three basic categories. Investment fees are generally
assessed as a percentage of assets invested, and are deducted directly from your
investment returns. Investment fees can be in the form of sales charges, loads,
commissions, 12b-l fees, or management fees. You can obtain more information
about such fees from the documents (e.g., a prospectus) that describe the
investments available under your Plan and from Appendix A: Investment Options.
Plan administration fees cover the day-to-day expenses of your Plan for
recordkeeping, accounting, legal and trustee services, as well as additional
services that may be available under your Plan, such as daily valuation,
telephone response systems, internet access to plan information, retirement
planning tools, and educational materials. In some cases, these costs are
covered by investment fees that are deducted directly from investment returns.
In other cases, these administrative fees are either paid directly by your
Employer, or are passed through to the participants in the Plan, in which case a
recordkeeping fee will be deducted from your Account. Transaction-based fees are
associated with optional services offered under your Plan, and are charged
directly to your Account if you take advantage of a particular plan feature that
may be available, such as a Plan loan. For more information on fees associated
with your Account, refer to your quarterly Account statement or speak with your
Plan Administrator.

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<PAGE>

                         APPENDIX A. INVESTMENT OPTIONS

You have the opportunity to direct the investments of your Account among the
following investment funds:

<TABLE>
<CAPTION>
     FUND NAME             FUND CODE                         FUND OBJECTIVE
<S>                        <C>           <C>
FIDELITY RET GOVT MM         0631        Seeks as high a level of current income as is
                                         consistent with the security of principal and liquidity.

FIDELITY INTER BOND          0032        Seeks a high level of current income.

FIDELITY EQUITY INC          0023        Seeks reasonable income. The fund will also consider
                                         the potential for capital appreciation. Seeks a yield
                                         that exceeds the yield on the securities comprising the
                                         Standard and Poor's 500 Index.

OAKMARK SELECT I             OFOA        To increase the value of your investment over the long
                                         term through capital growth.

FIDELITY MAGELLAN            0021        Seeks capital appreciation.

SPARTAN US EQ INDEX          0650        The fund seeks to provide investment results that
                                         correspond to the total return (i.e. the combination of
                                         capital changes and income) performance of common
                                         stocks publicly traded in the United States.

FIDELITY GROWTH CO           0025        Seeks capital appreciation.

FIDELITY AGGR GROWTH         0324        Seeks capital appreciation.

BARON GROWTH                 OFBK        To seek Capital Appreciation.

FIDELITY DIVERS INTL         0325        Seeks capital growth.

FID FREEDOM INCOME           0369        Seeks high current income and, as a secondary
                                         objective, capital appreciation.

FID FREEDOM 2000             0370        Seeks high total return.

FID FREEDOM 2010             0371        Seeks high total return.
</TABLE>

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<PAGE>

<TABLE>
   FUND NAME               FUND CODE          FUND OBJECTIVE
   ---------               ---------          --------------
<S>                        <C>           <C>
FID FREEDOM 2020             0372        Seeks high total return.

FID FREEDOM 2030             0373        Seeks high total return.

FID FREEDOM 2040             0718        Seeks high total return.
</TABLE>

Your Employer has agreed to pay certain investment fees associated with having
each investment in excess of the 15 investment options allowed for the Plan at
no additional fee. If your Employer fails to pay any of those fees, then
Participants may have those fees deducted from their Accounts.

If a contribution is received for your Account and you have not supplied
investment instructions to the Trustee, this contribution will be invested based
on Employer direction, or absent such direction, in the most conservative
investment option in the Plan.

You may redirect the investment of your future contributions or exchange your
existing Account balance among available investment options by calling
1-800-835-5097 on any business day between 8:30 AM (ET) and 8:00 PM (ET). This
is an automated telephone service and you should follow the telephonic
instructions or you can press the appropriate number if you want to talk to a
Fidelity telephone representative. All representative-assisted calls will be
recorded for your protection. You may call the telephone number virtually 24
hours a day, seven days a week to check Account balances, prices, yields or
obtain investment information. You may also use the internet to redirect the
investment or your future contributions or exchange your existing Account
balance by using Fidelity's NetBenefits internet account access website (at
401k.com). Please contact the Plan Administrator for further information.

Exchanges received and confirmed before the close of the market (usually 4:00 PM
(ET)) will be posted on that business day based upon the closing price of the
affected investment(s). Exchanges received and confirmed after the market close
will be processed on the next business day based upon the closing price of the
affected investment(s) on that next business day. The minimum exchange is the
lesser of $250 or 100% of your Account balance in the investment option. If your
exchange is less than $250 then it may only be exchanged into one investment
option. A written confirmation of your change in the investment of your future
contributions or your exchange of an existing fund will be mailed to you within
five business days. Fidelity reserves the right to change, restrict, or
terminate exchange procedures to protect mutual fund shareholders.

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<PAGE>

                           APPENDIX B. LOAN PROCEDURES

         A.       INITIATING LOANS

                  1.       LOAN APPLICATION

         If you have met the Plan's eligibility and entry date requirements, you
         may apply for a loan by calling the Fidelity Retirement Benefits Line,
         1-800-835-5097 or by accessing the NetBenefits(SM) web site at
         www.401k.com. All telephone calls will be recorded. You may apply for
         only one loan each Plan Year. All loans have been pre-approved by the
         Plan Administrator based on the criteria outlined in the Plan. Loans
         will be allowed for any purpose. A loan set up fee of $75 will be
         deducted from your Account for each new loan processed.

                  2.       LOAN AMOUNT

         The minimum loan is $1,000 and the maximum amount is the lesser of
         one-half of your vested Account balance or $50,000 reduced by the
         highest outstanding loan balance in your Account during the prior
         twelve month period. All of your loans from plans maintained by your
         Employer or a Related Employer will be considered for purposes of
         determining the maximum amount of your loan. Up to 50% of your vested
         Account balance may be used as collateral for any loan.

                  3.       NUMBER OF LOANS

         You may only have 2 loans outstanding at any given time. You may not
         refinance an existing loan or obtain a second loan for the purpose of
         paying off the existing loan.

                  4.       INTEREST RATE

         All loans shall bear a reasonable rate of interest as determined by the
         Plan Administrator based on the prevailing interest rates charged by
         persons in the business of lending money for loans which would be made
         under similar circumstances. The interest rate shall remain fixed
         throughout the duration of the loan.

                  5.       SOURCE OF LOAN PROCEEDS

         Loan proceeds will be withdrawn from available contribution sources and
         investment options in the order established by the Trustee.

         Please contact the Plan Administrator for more information.

         B.       LOAN REPAYMENTS AND LOAN MATURITY

All loans must be repaid in level payments through after-tax payroll deductions
on at least a quarterly basis over a five year period unless it is for the
purchase of your principal residence in

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<PAGE>

which case the loan repayment period may not extend beyond 20 years from the
date of the loan. If repayment is not made by payroll deduction, a loan shall be
repaid to the Plan by payment to the Employer. You will be assessed an annual
fee of $25 for each outstanding loan. The level repayment requirement may be
waived for a period of one year or less if you are on a leave of absence,
however, your loan must still be repaid in full on the maturity date. If you are
on a military leave of absence, the repayment schedule may be waived for the
entire length of the time missed on leave. Your loan will accrue interest during
this time, and upon return from a military leave of absence, your loan will be
reamortized to extend the length of the loan by the length of the leave. If a
loan is not repaid within its stated period, it will be treated as a taxable
distribution to you.

         C.       DEFAULT OR TERMINATION OF EMPLOYMENT

The Plan Administrator shall consider a loan in default if any scheduled
repayment remains unpaid as of the last business day of the calendar quarter
following the calendar quarter in which a loan is initially considered past due.
In the event of a default, death, disability or termination of employment, the
entire outstanding principal and accrued interest shall be immediately due and
payable. In addition, you will be deemed to have received a taxable distribution
from the Plan.

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<PAGE>

             APPENDIX C. SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS

This notice explains how you can continue to defer federal income tax on your
retirement savings or retirement Plan benefits in Valor Telecommunications
Southwest, LLC Savings Plan (the "Plan") and contains important information you
will need before you decide how to receive your Plan benefits.

This notice is provided to you at the request of Valor Telecommunications
Enterprise, LLC (your "Plan Administrator") because all or part of the payment
that you will soon receive from the Plan may be eligible for rollover by you or
your Plan Administrator to a traditional IRA or an eligible employer plan. A
rollover is a payment by you or the Plan Administrator of all or part of your
benefit to another plan or IRA that allows you to continue to postpone taxation
of that benefit until it is paid to you. Your payment cannot be rolled over to a
Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings Account (formerly known
as an education IRA). An "eligible employer plan" includes a plan qualified
under section 401(a) of the Internal Revenue Code, including a 401(k) plan,
profit-sharing plan, defined benefit plan, stock bonus plan, and money purchase
plan; a section 403(a) annuity plan; a section 403(b) tax-sheltered annuity; and
an eligible section 457(b) plan maintained by a governmental employer
(governmental 457 plan).

An eligible employer plan is not legally required to accept a rollover. Before
you decide to roll over your payment to another employer plan, you should find
out whether the plan accepts rollovers and, if so, the types of distributions it
accepts as a rollover. You should also find out about any documents that are
required to be completed before the receiving plan will accept a rollover. Even
if a plan accepts rollovers, it might not accept rollovers of certain types of
distributions, such as after-tax amounts. If this is the case, and your
distribution includes after-tax amounts, you may wish instead to roll your
distribution over to a traditional IRA or split your rollover amount between the
employer plan in which you will participate and a traditional IRA. If an
employer plan accepts your rollover, the plan may restrict subsequent
distributions of the rollover amount or may require your spouse's consent for
any subsequent distribution. A subsequent distribution from the plan that
accepts your rollover may also be subject to different tax treatment than
distributions from this Plan. Check with the administrator of the plan that is
to receive your rollover prior to making the rollover.

If you have additional questions after reading this notice, you can contact your
plan administrator at (972) 373-1000.

                                     SUMMARY

There are two ways you may be able to receive a Plan payment that is eligible
for rollover:

                  (1) Certain payments can be made directly to a traditional IRA
                  that you establish or to an eligible employer plan that will
                  accept it and hold it for your benefit ("DIRECT ROLLOVER"); or

                  (2) The payment can be PAID TO YOU.

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<PAGE>

If you choose a DIRECT ROLLOVER:

     -   Your payment will not be taxed in the current year and no income tax
         will be withheld.

     -   You choose whether your payment will be made directly to your
         traditional IRA or to an eligible employer plan that accepts your
         rollover. Your payment cannot be rolled over to a Roth IRA, a SIMPLE
         IRA, or a Coverdell Education Savings Account because these are not
         traditional IRAs.

     -   The taxable portion of your payment will be taxed later when you take
         it out of the traditional IRA or the eligible employer plan. Depending
         on the type of plan, the later distribution may be subject to different
         tax treatment than it would be if you received a taxable distribution
         from this Plan.

If you choose to have a Plan payment that is eligible for rollover PAID TO YOU:

     -   You will receive only 80% of the taxable amount of the payment, because
         the Plan Administrator is required to withhold 20% of that amount and
         send it to the IRS as income tax withholding to be credited against
         your taxes.

     -   The taxable amount of your payment will be taxed in the current year
         unless you roll it over. Under limited circumstances, you may be able
         to use special tax rules that could reduce the tax you owe. However, if
         you receive the payment before age 59-1/2, you may have to pay an
         additional 10% tax.

     -   You can roll over all or part of the payment by paying it to your
         traditional IRA or to an eligible employer plan that accepts your
         rollover within 60 days after you receive the payment. The amount
         rolled over will not be taxed until you take it out of the traditional
         IRA or the eligible employer plan.

     -   If you want to roll over 100% of the payment to a traditional IRA or an
         eligible employer plan, you must find other money to replace the 20% of
         the taxable portion that was withheld. If you roll over only the 80%
         that you received, you will be taxed on the 20% that was withheld and
         that is not rolled over.

YOUR RIGHT TO WAIVE THE 30-DAY NOTICE PERIOD. Generally, neither a direct
rollover nor a payment can be made from the plan until at least 30 days after
your receipt of this notice. Thus, after receiving this notice, you have at
least 30 days to consider whether or not to have your withdrawal directly rolled
over. If you do not wish to wait until this 30-day notice period ends before
your election is processed, you may waive the notice period by making an
affirmative election indicating whether or not you wish to make a direct
rollover. Your withdrawal will then be processed in accordance with your
election as soon as practical after it is received by the Plan Administrator.

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<PAGE>

                                MORE INFORMATION

I.       PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER

II.      DIRECT ROLLOVER

III.     PAYMENT PAID TO YOU

IV.      SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES

                 I. PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER

Payments from the Plan may be "eligible rollover distributions." This means that
they can be rolled over to a traditional IRA or to an eligible employer plan
that accepts rollovers. Payments from a plan cannot be rolled over to a Roth
IRA, a SIMPLE IRA, or a Coverdell Education Savings Account. Your Plan
administrator should be able to tell you what portion of your payment is an
eligible rollover distribution.

The following types of payments cannot be rolled over:

PAYMENTS SPREAD OVER LONG PERIODS. You cannot roll over a payment if it is part
of a series of equal (or almost equal) payments that are made at least once a
year and that will last for:

     -   your lifetime (or a period measured by your life expectancy), or

     -   your lifetime and your beneficiary's lifetime (or a period measured by
         your joint life expectancies), or

     -   a period of 10 years or more.

REQUIRED MINIMUM PAYMENTS. Beginning when you reach age 70-1/2% or retire,
whichever is later, a certain portion of your payment cannot be rolled over
because it is a "required minimum payment" that must be paid to you. Special
rules apply if you own more than 5% of your employer.

HARDSHIP DISTRIBUTIONS. A hardship distribution cannot be rolled over.

ESOP DIVIDENDS. Cash dividends paid to you on employer stock held in an employee
stock ownership plan cannot be rolled over.

CORRECTIVE DISTRIBUTIONS. A distribution that is made to correct a failed
nondiscrimination test or because legal limits on certain contributions were
exceeded cannot be rolled over.

LOANS TREATED AS DISTRIBUTIONS. The amount of a plan loan that becomes a taxable
deemed distribution because of a default cannot be rolled over. However, a loan
offset amount is eligible for rollover, as discussed in Part III below. Ask the
Plan Administrator of this Plan if distribution of your loan qualifies for
rollover treatment.

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<PAGE>

The Plan Administrator of this Plan should be able to tell you if your payment
includes amounts which cannot be rolled over.

                               II. DIRECT ROLLOVER

A DIRECT ROLLOVER is a direct payment of the amount of your Plan benefits to a
traditional IRA or an eligible employer plan that will accept it. You can choose
a DIRECT ROLLOVER of all or any portion of your payment that is an eligible
rollover distribution, as described in Part I above. You are not taxed on any
taxable portion of your payment for which you choose a DIRECT ROLLOVER until you
later take it out of the traditional IRA or eligible employer plan. In addition,
no income tax withholding is required for any taxable portion of your Plan
benefits for which you choose a DIRECT ROLLOVER. This Plan might not let you
choose a DIRECT ROLLOVER if your distributions for the year are less than $200.

DIRECT ROLLOVER TO A TRADITIONAL IRA. You can open a traditional IRA to receive
the direct rollover. If you choose to have your payment made directly to a
traditional IRA, contact an IRA sponsor (usually a financial institution) to
find out how to have your payment made in a direct rollover to a traditional IRA
at that institution. If you are unsure of how to invest your money, you can
temporarily establish a traditional IRA to receive the payment. However, in
choosing a traditional IRA, you may wish to make sure that the traditional IRA
you choose will allow you to move all or a part of your payment to another
traditional IRA at a later date, without penalties or other limitations. See IRS
Publication 590, Individual Retirement Arrangements, for more information on
traditional IRAs (including limits on how often you can roll over between IRAs).

DIRECT ROLLOVER TO A PLAN. If you are employed by a new employer that has an
eligible employer plan, and you want a direct rollover to that plan, ask the
plan administrator of that plan whether it will accept your rollover. An
eligible employer plan is not legally required to accept a rollover. Even if
your new employer's plan does not accept a rollover, you can choose a DIRECT
ROLLOVER to a traditional IRA. If the employer plan accepts your rollover, the
plan may provide restrictions on the circumstances under which you may later
receive a distribution of the rollover amount or may require spousal consent to
any subsequent distribution. Check with the plan administrator of that plan
before making your decision.

DIRECT ROLLOVER OF A SERIES OF PAYMENTS. If you receive a payment that can be
rolled over to a traditional IRA or an eligible employer plan that will accept
it, and it is paid in a series of payments for less than 10 years, your choice
to make or not make a DIRECT ROLLOVER for a payment will apply to all later
payments in the series until you change your election. You are free to change
your election for any later payment in the series.

CHANGE IN TAX TREATMENT RESULTING FROM A DIRECT ROLLOVER. The tax treatment of
any payment from the eligible employer plan or traditional IRA receiving your
DIRECT ROLLOVER might be different than if you received your benefit in a
taxable distribution directly from the Plan. For example, if you were born
before January 1, 1936, you might be entitled to ten-year averaging or capital
gain treatment, as explained below. However, if you have your benefit rolled
over to a section 403(b) tax-sheltered annuity, a governmental 457 plan, or a
traditional IRA in a DIRECT ROLLOVER, your benefit will no longer be eligible
for that

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<PAGE>

special treatment. See the sections below entitled "Additional 10% Tax if You
Are under Age 59 1/2" and "Special Tax Treatment if You Were Born before January
1, 1936."

                            III. PAYMENT PAID TO YOU

If your payment can be rolled over (see Part I above) and the payment is made to
you in cash, it is subject to 20% federal income tax withholding on the taxable
portion (state tax withholding may also apply). The payment is taxed in the year
you receive it unless, within 60 days, you roll it over to a traditional IRA or
an eligible employer plan that accepts rollovers. If you do not roll it over,
special tax rules may apply.

INCOME TAX WITHHOLDING:

MANDATORY WITHHOLDING: If any portion of your payment can be rolled over under
Part I above and you do not elect to make a DIRECT ROLLOVER, the Plan is
required by law to withhold 20% of the taxable amount. This amount is sent to
the IRS as federal income tax withholding. For example, if you can roll over a
taxable payment of $10,000, only $8,000 will be paid to you because the Plan
must withhold $2,000 as income tax. However, when you prepare your income tax
return for the year, unless you make a rollover within 60 days (see "Sixty-Day
Rollover Option" below), you must report the full $10,000 as a taxable payment
from the Plan. You must report the $2,000 as tax withheld, and it will be
credited against any income tax you owe for the year. There will be no income
tax withholding if your payments for the year are less than $200.

VOLUNTARY WITHHOLDING. If any portion of your payment is taxable but cannot be
rolled over under Part I above, the mandatory withholding rules described above
do not apply. In this case, you may elect not to have withholding apply to that
portion. If you do nothing, an amount will be taken out of this portion of your
payment for federal income tax withholding. To elect out of withholding, ask the
Plan Administrator for the election form and related information.

SIXTY-DAY ROLLOVER OPTION. If you receive a payment that can be rolled over
under Part I above, you can still decide to roll over all or part of it to a
traditional IRA or to an eligible employer plan that accepts rollovers. If you
decide to roll over, you must contribute the amount of the payment you received
to a traditional IRA or eligible employer plan within 60 days after you receive
the payment. The portion of your payment that is rolled over will not be taxed
until you take it out of the traditional IRA or the eligible employer plan.

You can roll over up to 100% of your payment that can be rolled over under Part
I above, including an amount equal to the 20% of the taxable portion that was
withheld. If you choose to roll over 100%, you must find other money within the
60-day period to contribute to the traditional IRA or the eligible employer
plan, to replace the 20% that was withheld. On the other hand, if you roll over
only the 80% of the taxable portion that you received, you will be taxed on the
20% that was withheld.

                  EXAMPLE: The taxable portion of your payment that can be
                  rolled over under Part I above is $10,000, and you choose to
                  have it paid to you. You will receive $8,000, and $2,000 will
                  be sent to the IRS as income tax withholding. Within 60 days
                  after receiving the $8,000, you may roll over the entire
                  $10,000 to a traditional IRA or an eligible employer plan. To
                  do this, you roll over the $8,000

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<PAGE>

                  you received from the Plan, and you will have to find $2,000
                  from other sources (your savings, a loan, etc.). In this case,
                  the entire $10,000 is not taxed until you take it out of the
                  traditional IRA or an eligible employer plan. If you roll over
                  the entire $10,000, when you file your income tax return you
                  may get a refund of part or all of the $2,000 withheld.

                  If, on the other hand, you roll over only $8,000, the $2,000
                  you did not roll over is taxed in the year it was withheld.
                  When you file your income tax return, you may get a refund of
                  part of the $2,000 withheld. (However, any refund is likely to
                  be larger if you roll over the entire $10,000.)

ADDITIONAL 10% TAX IF YOU ARE UNDER AGE 59-1/2. If you receive a payment before
you reach age 59-1/2 and you do not roll it over, then, in addition to the
regular income tax, you may have to pay an extra tax equal to 10% of the taxable
portion of the payment. The additional 10% tax generally does not apply to (1)
payments that are paid after you separate from service with your employer during
or after the year you reach age 55, (2) payments that are paid because you
retire due to disability, (3) payments that are paid as equal (or almost equal)
payments over your life or life expectancy (or your and your beneficiary's lives
or life expectancies), (4) dividends paid with respect to stock by an employee
stock ownership plan (ESOP) as described in Code section 404(k), (5) payments
that are paid directly to the government to satisfy a federal tax levy, (6)
payments that are paid to an alternate payee under a qualified domestic
relations order, or (7) payments that do not exceed the amount of your
deductible medical expenses. See IRS Form 5329 for more information on the
additional 10% tax.

The additional 10% tax will not apply to distributions from a governmental 457
plan, except to the extent the distribution is attributable to an amount you
rolled over to that plan (adjusted for investment returns) from another type of
eligible employer plan or IRA. Any amount rolled over from a governmental 457
plan to another type of eligible employer plan or to a traditional IRA wilt
become subject to the additional 10% tax if it is distributed to you before you
reach age 59-1/2, unless one of the exceptions applies.

SPECIAL TAX TREATMENT IF YON WERE BORN BEFORE JANUARY 1, 1936. If you receive a
payment from a plan qualified under section 401(a) or a section 403(a) annuity
plan that can be rolled over under Part I and you do not roll it over to a
traditional IRA or an eligible employer plan, the payment will be taxed in the
year you receive it. However, if the payment qualifies as a "lump sum
distribution," it may be eligible for special tax treatment. (See also "Employer
Stock or Securities", below.) A lump sum distribution is a payment, within one
year, of your entire balance under the Plan (and certain other similar plans of
the employer) that is payable to you after you have reached age 59-1/2 or
because you have separated from service with your employer (or, in the case of a
self-employed individual, after you have reached age 59-1/2 or have become
disabled). For a payment to be treated as a lump sum distribution, you must have
been a participant in the plan for at least five years before the year in which
you received the distribution. The special tax treatment for lump sum
distributions that may be available to you is described below.

                  TEN-YEAR AVERAGING. If you receive a lump sum distribution and
                  you were born before January 1, 1936, you can make a one-time
                  election to figure the tax on the

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<PAGE>

                  payment by using "10-year averaging" (using 1986 tax rates).
                  Ten-year averaging often reduces the tax you owe.

                  CAPITAL GAIN TREATMENT. If you receive a lump sum distribution
                  and you were born before January 1, 1936, and you were a
                  participant in the Plan before 1974, you may elect to have the
                  part of your payment that is attributable to your pre-1974
                  participation in the Plan taxed as long-term capital gain at a
                  rate of 20%.

There are other limits on the special tax treatment for lump sum distributions.
For example, you can generally elect this special tax treatment only once in
your lifetime, and the election applies to all lump sum distributions that you
receive in that same year. You may not elect this special tax treatment if you
rolled amounts into this Plan from a 403(b) tax-sheltered annuity contract, a
governmental 457 plan, or from an IRA not originally attributable to a qualified
employer plan. If you have previously rolled over a distribution from this Plan
(or certain other similar plans of the employer), you cannot use this special
averaging treatment for later payments from the Plan. If you roll over your
payment to a traditional IRA, governmental 457 plan, or 403(b) tax-sheltered
annuity, you will not be able to use special tax treatment for later payments
from that IRA, plan, or annuity. Also, if you roll over only a portion of your
payment to a traditional IRA, governmental 457 plan, or 403(b) tax-sheltered
annuity, this special tax treatment is not available for the rest of the
payment. See IRS Form 4972 for additional information on lump sum distributions
and how you elect the special tax treatment.

REPAYMENT OF PLAN LOANS. If your employment ends and you have an outstanding
loan from your Plan, your employer may reduce (or "offset") your balance in the
Plan by the amount of the loan you have not repaid. The amount of your loan
offset is treated as a distribution to you at the time of the offset and will be
taxed unless you roll over an amount equal to the amount of your loan offset to
another qualified employer plan or a traditional IRA within 60 days of the date
of the offset. If the amount of your loan offset is the only amount you receive
or are treated as having received, no amount will be withheld from it. If you
receive other payments of cash or property from the Plan, the 20% withholding
amount will be based on the entire amount paid to you, including the amount of
the loan offset. The amount withheld will be limited to the amount of other cash
or property paid to you (other than any employer securities). The amount of a
defaulted plan loan that is a taxable deemed distribution cannot be rolled over.

        IV. SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES

In general, the rules summarized above that apply to payments to employees also
apply to payments to surviving spouses of employees and to spouses or former
spouses who are "alternate payees." You are an alternate payee if your interest
in the Plan results from a "qualified domestic relations order," which is an
order issued by a court, usually in connection with a divorce or legal
separation.

If you are a surviving spouse or an alternate payee, you may choose to have a
payment that can be rolled over, as described in Part I above, paid in a DIRECT
ROLLOVER to a traditional IRA or to an eligible employer plan or paid to you. If
you have the payment paid to you, you can keep it or roll it over yourself to a
traditional IRA or to an eligible employer plan. Thus, you have the same choices
as the employee.

Valor Telecommunications Southwest, LLC Savings Plan                          43

<PAGE>

If you are a beneficiary other than a surviving spouse or an alternate payee,
you cannot choose a direct rollover, and you cannot roll over the payment
yourself.

If you are a surviving spouse, an alternate payee, or another beneficiary, your
payment is generally not subject to the additional 10% tax described in Part III
above, even if you are younger than age 59-1/2.

If you are a surviving spouse, an alternate payee, or another beneficiary, you
may be able to use the special tax treatment for lump sum distributions and the
special rule for payments that include employer stock, as described in Part III
above. If you receive a payment because of the employee's death, you may be able
to treat the payment as a lump sum distribution if the employee met the
appropriate age requirements, whether or not the employee had 5 years of
participation in the Plan.

HOW TO OBTAIN ADDITIONAL INFORMATION

This notice summarizes only the federal (not state or local) tax rules that
might apply to your payment. The rules described above are complex and contain
many conditions and exceptions that are not included in this notice. Therefore,
you may want to consult with the Plan Administrator or a professional tax
advisor before you take a payment of your benefits from your Plan. Also, you can
find more specific information on the tax treatment of payments from qualified
employer plans in IRS Publication 575, Pension and Annuity Income, and IRS
Publication 590, Individual Retirement Arrangements. These publications are
available from your local IRS office, on the IRS's Internet Web Site at
www.irsgov, or by calling 1-800-TAX-FORMS.

Rev 1/2002

Valor Telecommunications Southwest, LLC Savings Plan                          44<PAGE>
                                                                    Exhibit 10.4

                    VALOR TELECOMMUNICATIONS ENTERPRISES, LLC
                                  PENSION PLAN

                             EFFECTIVE JULY 1, 2000

<PAGE>
                                                                               .
                                                                               .
                                                                               .

             Valor Telecommunications Enterprises, LLC Pension Plan

                                Table of Contents

<TABLE>
<S>               <C>
Article I         Introduction
1.1               Establishment of the Plan
1.2               Tax Qualification of Plan and Trust
1.3               Incorporation of Trust Agreement
1.4               Schedules to Plan

Article II        Definitions
2.1               Accredited Service
2.2               Accrued Benefit
2.3               Actuarial Equivalence
2.4               ADEA
2.5               Affiliate
2.6               Age 65 Normal Retirement Date
2.7               Annual Compensation Limit
2.8               Article
2.9               Average Annual Compensation
2.10              Beneficiary
2.11              Board
2.12              Code
2.13              Committee or Employee Benefits Committee
2.14              Company
2.15              Control Group Affiliate
2.16              Customary Work Year
2.17              Deferred Vested Pension
2.18              Disability Pension
2.19              Disabled or Disability
2.20              Distribution-Eligible Employee
2.21              Early Retirement Date
2.22              Eligibility Computation Period
2.23              Employee
2.24              Enrolled Actuary
2.25              ERISA
2.26              GATT Assumptions
2.27              Hour of Service
2.28              Hourly Employee
2.29              Joint-Survivor Pension
2.30              Monthly Compensation
2.31              Normal Retirement Age
2.32              Normal Retirement Date
2.33              Other Pension Plan
2.34              PBGC
2.35              PBGC Immediate Rate
2.36              PBGC Rate
</TABLE>

                                        1
<PAGE>

<TABLE>
<S>               <C>
2.37              Pension
2.38              Pension Commencement Date
2.39              Pension Fund
2.40              Pension Plan Administrator
2.41              Plan
2.42              Plan Year
2.43              Qualified Domestic Relations Order
2.44              Qualified Joint and Survivor Annuity
2.45              Required Starting Date
2.46              Residual Assets
2.47              Retire, Retired or Retirement
2.48              Retired Employee
2.49              Retirement Date
2.50              Salaried Employee
2.51              Schedule
2.52              Section
2.53              Service Pension
2.54              Social Security Integration Level
2.55              Spouse
2.56              Spouse's Pension
2.57              Supplemental Agreement Distribution
2.58              Trust Agreement
2.59              Trust Fund
2.60              Trustee
2.61              Vesting Service

Article III       Participation
3.1               General Rule
3.2               Participating Division or Unit
3.3               Participation Required for Pension

Article IV        Computation of Vesting Service and Accredited Service
4.1               Vesting Service
4.2               Break in Vesting Service
4.3               Reemployment After Break in Vesting Service
4.4               Accredited Service
4.5               Break in Accredited Service
4.6               Reemployment After Break in Accredited Service
4.7               Calculation of Benefits Following Bridging of Accredited Service

Article V         Eligibility for Pension
5.1               Normal Retirement
5.2               Early Retirement
5.3               Disability Retirement
5.4               Deferred Vested Pension
5.5               Spouses Pension
</TABLE>

                                        2
<PAGE>

<TABLE>
<S>               <C>
5.6               Supplemental Agreement Distribution

Article VI        Computation of Pensions and Form of Payment
6.1               Service Pension
6.2               Disability Pension
6.3               Deferred Vested Pension
6.4               Spouse's Pension
6.5               Normal Forms of Payment
6.6               Optional Forms of Payment
6.7               Limitations on Pensions
6.8               Eligible Rollover Distributions

Article VII       Payment of Pensions and Conditions Related Thereto
7.1               Annuity Forms of Payments
7.2               Prohibition Against Alienation of Benefits
7.3               Suspension of Benefits
7.4               Provision of Necessary Information
7.5               Transfer Between Affiliates
7.6               Change between Hourly Employee and Salaried Employee Status
7.7               Mandatory Lump Sum Distribution of Small Benefits
7.8               Minimum Distributions Required Under Code Section 401(a)(9)
7.9               Early Commencement Election
7.10              Employment Following Sale of Affiliate

Article VIII      Funding
8.1               Establishment of Pension Fund
8.2               Trust Agreement
8.3               Insurance Arrangement
8.4               Contributions
8.5               Exclusive Benefit
8.6               Return of Contributions

Article IX        Fiduciary Responsibilities and Plan Administration
9.1               Allocation of Fiduciary Responsibilities
9.2               Employee Benefits Committee
9.3               Committee Action by Majority Vote
9.4               Plan Administrator
9.5               Committee Reliance on Professional Advice
9.6               Plan Administration Expenses
9.7               Responsibilities of Trustees
9.8               Investment Management by Trustee
9.9               Allocation of Investment Management Responsibilities
9.10              Appointment and Removal of Investment Managers
9.11              Ascertainment of Plan Financial Needs
9.12              Delegation of Company's Duties
9.13              Benefit Claim Procedure
</TABLE>

                                        3
<PAGE>

<TABLE>
<S>               <C>
9.14              QDRO Procedures
9.15              Service in Multiple Fiduciary Capacities

Article X         Co-Sponsorship of Plan by Affiliates and Mergers With Affiliate Plans
10.1              Co-sponsorship of Plan by Affiliates
10.2              Merger with Plan of Affiliate

Article XI        Duration and Amendment
11.1              Reservation of Right to Suspend or Terminate Plan
11.2              Reservation of Right to Amend Plan
11.2              Transactions Subject to Code Section 414(l)

Article XII       Distribution of the Pension Plan Fund Upon Termination of the Plan
12.1              Vesting on Plan Termination
12.2              Allocation of Assets on Plan Termination
12.3              Provision for Pensions After Plan Termination
12.4              Computation of Pensions After Plan Termination
12.5              Continued Employment Not Required After Plan Termination
12.6              Data in Company Records on Plan Termination
12.7              Satisfaction of Liabilities on Plan Termination
12.8              High-25 Distribution Restrictions

Article XIII      Interchange of Benefit Obligations
13.1              Interchange Agreement Permitted

Article XIV       General Provisions
14.1              No Employment Rights Conferred
14.2              Integration Clause
14.3              Incapacity of Recipient
14.4              ERISA Fiduciary Duties
14.5              Compliance with State and Local Law
14.6              Usage
14.7              Titles and Headings
14.8              Severability Clause
14.9              USERRA

Article XV        Top-Heavy Requirements
15.1              In General
15.2              Definitions
15.3              Determination of Top-Heavy Ratio
15.4              Top-Heavy Minimum Benefits
15.5              Termination of Top-Heavy Status
15.6              Interpretation
</TABLE>

                                        4
<PAGE>

<TABLE>
<S>               <C>
Article XVI       Special Provisions Relating to Certain Former GTE Employees
                  Who Became Participants in the Plan During 2000
16.1              In General
16.2              Schedule Applicability and Incorporation
</TABLE>

                                        5
<PAGE>

                                    ARTICLE I

                                  INTRODUCTION

1.1      Establishment of Plan. This Plan shall be known as the Valor
         Telecommunications Enterprises, LLC Pension Plan. The Plan is
         established effective as of July 1, 2000, for the purpose of providing
         retirement benefits for eligible employees and their beneficiaries.

1.2      Tax Qualification of Plan and Trust. It is the intention of the Company
         that the Plan shall satisfy the requirements of ERISA, that the Plan
         shall be qualified under section 401(a) of the Code, and that the Trust
         Fund(s) established under the Plan shall be tax-exempt under section
         501(a) of the Code.

1.3      Incorporation of Trust Agreement. The Trust Agreement(s) established
         under the Plan shall be incorporated into, and made a part of, the Plan
         in accordance with Section 8.2.

1.4      Schedules to Plan. The provisions of the main text of this Plan, as
         they relate to the employees of a division, office, or location of
         Valor Telecommunications Enterprises, LLC, or another category or
         categories of employees of Valor Telecommunications Enterprises, LLC,
         may be varied by special provisions stated in one or more Schedules
         attached to the Plan.

                                        6
<PAGE>

                                   ARTICLE II

                                   DEFINITIONS

When used in capitalized form in this Plan, the following terms shall have the
following meanings, unless the context clearly requires a different meaning:

2.1      Accredited Service means the period of employment taken into account as
         Accredited Service under Article IV.

2.2      Accrued Benefit means for any participant, on any given date, the
         Service Pension (whether or not vested) that would be payable to the
         participant as of the month next following his Normal Retirement Date
         in accordance with Section 6.1 based on his Accredited Service and
         Average Annual Compensation as of the date as of which his Accrued
         Benefit is determined.

2.3      Actuarial Equivalent means, for annuity conversion factors, an interest
         rate of 7 percent per annum and the TPF&C 1971 Forecast Mortality Table
         for Males (with ages set back 2 years in the case of Employees and 4
         years in the case of Spouses and Beneficiaries). if the participant is
         disabled, the PBGC Table for disabled males (67% of Table 5), as set
         forth in 29 CFR Part 2619, Appendix A.

2.4      ADEA means the Age Discrimination in Employment Act of 1967, as amended
         and in effect from time to time.

2.5      Affiliate means:

         (a)      the Company;

         (b)      any other corporation that is a member of a controlled group
         of corporations (as defined in section 1563(a) of the Code, without
         regard to section 1563(a)(4) and (e)(3)(C) of the Code) of which the
         Company is also a member;

         (c)      any unincorporated business under common control with the
         Company, as determined under section 414(c) of the Code and, to the
         extent not inconsistent therewith, under such rules as may be adopted
         by the Board;

         (d)      a member of any affiliated service group that includes the
         Company, as determined under section 414(m) of the Code; or

         (e)      except to the extent otherwise provided in Treasury
         Regulations, a leasing organization with respect to the periods of
         service performed by any individual who is a leased employee (within
         the meaning of section 414(n) of the Code) with respect to an Affiliate
         (determined without regard to this paragraph (e)) or any related person
         (within the meaning of section 144(a)(3) of the Code).

         A corporation, unincorporated business, or other organization shall
         qualify as an Affiliate only with respect to the period during which it
         satisfies one or more of the applicable

                                        7
<PAGE>

         descriptions in paragraphs (a) through (e), above. Except as otherwise
         specifically provided in the Plan, the employment of an individual with
         an Affiliate for purposes of the Plan shall not include any period with
         respect to which the corporation, unincorporated business, or other
         organization constituting the Affiliate fails to satisfy one or more of
         the applicable descriptions in paragraphs (a) through (e), above, and
         an individual's employment with an Affiliate shall be considered
         terminated for purposes of the Plan no later than the date on which the
         corporation, unincorporated business, or other organization
         constituting the Affiliate ceases to satisfy any of the applicable
         descriptions in paragraphs (a) through (e), above. Paragraphs (d) and
         (e), above, shall apply solely for purposes of determining an
         individual's eligibility for participation and his Vesting Service, and
         shall not apply for any other purpose under the Plan, including,
         without limitation, for purposes of determining his Accredited Service.

2.6      Age 65 Normal Retirement Date means, for any participant, the last day
         of the month in which he attains age 65, except that in the case of a
         participant who was not employed by the Affiliates on or before the
         last day of the month during which he attained age 60 and completes at
         least one Hour of Service, the last day of the month in which occurs
         the fifth anniversary of the date as of which his participation in the
         Plan commenced.

2.7      Annual Compensation Limit means the annual compensation limit
         determined under section 401(a)(17) of the Code. For purposes of this
         definition, the benefit accruals of an Employee shall consist of
         accruals of (i) any benefit accrued or treated as accrued under section
         411(d)(6) of the Code, and (ii) any ancillary benefit provided under
         the Plan. in addition, the accrued benefit of an Employee shall consist
         of all benefits accrued or treated as accrued under section 411(d)(6)
         of the Code.

2.8      Article means an article of this Plan.

2.9      Average Annual Compensation means twelve (12) times the average of an
         Employee's Monthly Compensation over the sixty (60) consecutive
         calendar months during which the average of his Monthly Compensation is
         the highest. For this purpose, calendar months during which the
         Employee is not employed by a Control Group Affiliate shall be ignored.
         If an Employee has been employed by the Control Group Affiliates for
         less than sixty (60) calendar months, his Average Annual Compensation
         shall be determined over such lesser period of employment.

2.10     Beneficiary means the Spouse of a deceased Employee who is entitled to
         a Spouse's Pension or any individual designated or deemed designated by
         an Employee or former Employee, in accordance with Section 6.5, to
         receive a Joint-Survivor Pension or other benefit after his death under
         the Plan.

2.11     Board means the Board of Managers of the Company.

2.12     Code means the Internal Revenue Code of 1986, as amended and in effect
         from time to time.

                                        8
<PAGE>

2.13     Committee or Employee Benefits Committee means the committee appointed
         by the Board of Managers of Valor Telecommunications Enterprises, LLC
         to administer the Plan pursuant to Article IX.

2.14     Company means Valor Telecommunications Enterprises, LLC. Except for
         purposes of the definitions of "Board," "Control Group Affiliate," and
         of exercising the power to amend the Plan, the term "Company" also
         means an Affiliate that co-sponsors the Plan.

2.15     Control Group Affiliate means the Company and any other corporation
         that is a member of a controlled group of corporations (as defined in
         section 1563(a) of the Code, without regard to section 1563(a)(4) and
         (e)(3)(C) of the Code) of which the Company is also a member, but only
         with respect to the period during which such other corporation is a
         member of such controlled group of corporations. Except as otherwise
         specifically provided in the Plan, the employment of an individual with
         a Control Group Affiliate for purposes of the Plan shall not include
         any period with respect to which the corporation constituting the
         Control Group Affiliate is not a member of the controlled group of
         corporations described in the preceding sentence, and an individual's
         employment with a Control Group Affiliate shall be considered
         terminated for purposes of the Plan no later than the date on which the
         corporation constituting the Control Group Affiliate ceases to be a
         member of the controlled group of corporations described in the
         preceding sentence.

2.16     Customary Work Year means the lesser of (i) 2080 hours or (ii) the
         standard number of hours worked in any calendar year by full-time
         Employees comparably situated in the Company according to written
         statements of Company policy in effect from time to time.

2.17     Deferred Vested Pension means the payments under the Plan to an
         Employee who is eligible by reason of age and Vesting Service, pursuant
         to Section 5.4 and Section 6.3.

2.18     Disability Pension means the payments under the Plan, by reason of
         Disability, to a Retired Employee for the period of Disability,
         pursuant to Section 5.3 and Section 6.2.

2.19     Disabled or Disability means the total disability of an Employee as
         determined by the Committee on the basis of proper medical evidence,
         whereby the Employee is completely unable to engage in any and every
         duty pertaining to any occupation or employment for wage or profit for
         which he is reasonably qualified by training, education or experience,
         and such total disability can be expected to result in death or to be
         of long-continued and indefinite duration.

2.20     Distribution-Eligible Employee means an Employee who has attained
         Normal Retirement Age and who has not terminated employment.

2.21     Early Retirement Date means any date prior to his Normal Retirement
         Date on which an Employee actually Retires or is Retired pursuant to
         Section 5.2.

2.22     Eligibility Computation Period means the period determined with respect
         to an employee under the following rules:

                                        9
<PAGE>

         (a)      The initial computation period shall be the twelve (12)
         consecutive-month period commencing on the date the employee first
         completes an Hour of Service;

         (b)      The second computation period shall be the Plan Year that
         includes the first anniversary of the date the employee first completes
         an Hour of Service; and

         (c)      Succeeding computation periods shall be computed on the basis
         of the Plan Year.

2.23     Employee means any individual determined by the Company to be employed
         in an employer-employee relationship by the Company other than an
         individual employed in a division or unit designated by the Company to
         be a non-participating division or unit on the basis of uniform and
         non-discriminatory rules, who receives a regular and stated
         compensation, other than a retainer, from the Company and who completes
         1,000 Hours of Service during any Eligibility Computation Period. The
         term "Employee" shall not include a "leased employee" within the
         meaning of section 414(n) of the Code, an individual who is retained by
         the Company pursuant to a contract or agreement that specifies that the
         individual is not eligible to participate in the Plan, an individual
         whose basic compensation for services rendered on behalf of the Company
         is not paid directly by the Company; or an individual who is not
         classified as a common-law employee by the Company, regardless of any
         subsequent reclassification of such individual as a "common-law"
         employee of the Company by the Company, any governmental agency, or any
         court.

2.24     Enrolled Actuary means an actuary who is enrolled in accordance with
         ERISA.

2.25     ERISA means the Employee Retirement Income Security Act of 1974, as
         amended and in effect from time to time.

2.26     GATT Assumptions means the "applicable modality table" (within the
         meaning of section 417(e)(3)(A)(ii)(l) of the Code) and the "applicable
         interest rate" (within the meaning of section 417(e)(3)(A)(ii)(ll) of
         the Code) for the fifth month preceding the month in which the
         applicable Pension Commencement Date occurs.

2.27     Hour of Service means an hour for which credit is granted to an
         employee (including a leased employee within the meaning of section
         414(n) of the Code) as follows. An Employee shall be credited, in
         accordance with 29 C.F.R. Section 2630.200b-2, with one Hour of Service
         for:

                  (i)      each hour for which the employee is directly or
                  indirectly paid or entitled to payment by an Affiliate for the
                  performance of duties (such hours to be credited to the
                  employee for the computation period or periods in which the
                  duties are performed);

                  (ii)     each hour for which the employee is directly or
                  indirectly paid or entitled to payment by an Affiliate for
                  reasons other than the performance of duties; and

                  (iii)    each hour for which back pay to the employee,
                  irrespective of mitigation of damages, has been either awarded
                  or agreed to by an Affiliate.

                                       10
<PAGE>
         Hours credited in accordance with paragraphs (ii) and (iii), above,
         shall be credited in accordance with 29 C.F.R. Section 2530.200b-2(b) &
         (c). An employee also shall be credited with one Hour of Service for
         hours of excused absence time which have been approved for Vesting
         Service and Accredited Service purposes in accordance with Company
         policy in effect from time to time (within the meaning of Sections
         4.1(a) and 4.4(a), respectively).

         For a Salaried Employee and for employees whose hours are not
         available, an employee shall be credited with Hours of Service in
         accordance with 29 C.F.R. Section 2530.200b-3(e)(1)(ii) & (e)(4).

2.28     Hourly Employee means an Employee in an hourly-rated position or an
         Employee who is so designated by the Company.

2.29     Joint-Survivor Pension means the joint and survivor annuity form of
         payment described in Section 6.6(a).

2.30     Monthly Compensation means an Employee's monthly base rate of
         compensation for a calendar month determined in accordance with the
         following rules:

         (a)      If there is more than one monthly base rate of compensation in
         effect with respect to an Employee for a calendar month, the Employee's
         Monthly Compensation for the calendar month shall be the highest such
         monthly base rate of compensation.

         (b)      Only compensation for services rendered as an employee of a
         Control Group Affiliate shall be taken into account as Monthly
         Compensation. During periods when an Employee is scheduled to perform
         services on less than a full-time basis, the Employee's monthly base
         rate of compensation shall be reduced to reflect his reduced working
         schedule.

         (c)      Monthly Compensation shall include any amount that would
         qualify as such but for the Employee's agreement to defer or forego
         receipt thereof pursuant to a qualified cash or deferred arrangement
         described in section 401(k) of the Code or a cafeteria plan described
         in section 125 of the Code.

         (d)      Monthly Compensation (i) shall include (A) foreign service
         premium paid as an incentive to accept a foreign assignment, (B)
         payments made under the Performance Rewards Program, (C) Executive
         Incentive Plan (EIP) awards when earned (provided that, to the extent
         an EIP award is awarded on other than a monthly basis, it shall be
         attributed to Monthly Compensation ratably over the period for which it
         is awarded), (D) Management Incentive Plan (MIP) awards when paid, (E)
         International Team Incentive Program (ITIP) awards when paid, and (F)
         commissions and bonuses on account of sales when received by an
         Employee pursuant to a written commitment of his employer and (G) other
         performance award programs sponsored by the Company, but (ii) shall not
         include any (A) Unit Incentive Plan (UIP) payment, (B) Distinguished
         Service Award payment, (C) overtime, (D) differentials, (E) premiums,
         and (F) other similar types of payment. In addition, with respect to
         any non-union hourly Employee, Monthly Compensation shall include
         team-oriented short-term incentives that are specifically

                                       11
<PAGE>

         included by the Committee from time to time. In addition, Monthly
         Compensation shall include temporary job reclassification pay
         adjustments that are paid to the Employee for a period of at least 90
         consecutive calendar days and the amount of any single sum merit
         payment made to an Employee in lieu of an annual salary increase. For
         employees who are subject to a collective bargaining agreement between
         the Company and CWA Local 6171 or 7019, Monthly Compensation shall
         include team-oriented, incentive payments payable under a team
         incentive plan.

         (e)      In addition to other applicable limitations that may be set
         forth in the Plan and notwithstanding any other contrary provision of
         the Plan, the sum of the Monthly Compensation taken into account with
         respect to an Employee for the twelve calendar months in a
         determination year shall not exceed the Annual Compensation Limit in
         effect with respect to the Employee for the calendar year in which the
         determination year begins. If the sum of the Monthly Compensation with
         respect to an Employee for a determination year would otherwise exceed
         such Annual Compensation Limit, the Monthly Compensation for each
         calendar month in the determination year shall be reduced, beginning
         with the calendar month in which the Employee has the greatest Monthly
         Compensation, until such Annual Compensation Limit is no longer
         exceeded. For purposes of this paragraph, the determination years with
         respect to an Employee shall consist of the consecutive
         twelve-calendar-month periods that end with the calendar month in which
         the Employee's employment with the Affiliates terminates.

2.31     Normal Retirement Age means age 65, except that in the case of any
         Employee who was not employed by the Affiliates on or before the last
         day of the month during which he attained age 60, "Normal Retirement
         Age" means the fifth anniversary of the date as of which the Employee's
         participation in the Plan commenced.

2.32     Normal Retirement Date means the last day of the month during which an
         Employee or former Employee attains Normal Retirement Age.

2.33     Other Pension Plan means:

         (a)      any pension plan or any pension system recognized under the
         GTE Southwest Incorporated Plan for Hourly Paid Employees' Pensions or
         the GTE Service Corporation Plan for Employees' Pensions for Employees
         who transfer employment from GTE (or an affiliate thereof) to the
         Company (other than this Plan),

         (b)      any payment required to be made by law or regulation on
         account of termination or separation from employment,

         (c)      any other similar program, or

         (d)      any similar plan, system, payment, or program, to the extent
         that it provides benefits that are attributable to service with a
         Control Group Affiliate and that result from a transfer of liabilities
         from this Plan or any other arrangement described in clause (a), (b),
         or (c), to which a Control Group Affiliate or (in the case of an
         arrangement described in clause (d)) any other employer has contributed
         or does contribute during the continuance of the Plan, either directly
         or indirectly, but in any case only to the extent

                                       12
<PAGE>

         that amounts paid thereunder are provided by or are attributable to
         employer contributions. Notwithstanding the foregoing, the term Other
         Pension Plan shall not include:

         (e)      a pension paid or payable pursuant to any Federal or State
         law,

         (f)      any amount paid or payable pursuant to any applicable law
         relating to worker's compensation or occupational diseases,

         (g)      any deferred compensation or similar payments made directly by
         the employer on an unfunded basis, or

         (h)      any other arrangement to the extent that offsetting the
         benefits otherwise provided under this Plan by the benefits provided
         under such other arrangement would result in an impermissible
         forfeiture within the meaning of section 411(a) of the Code.

         Nothing in this definition, including subsection (d) hereof, or in its
         application hereunder shall be deemed to reimpose on the Plan any
         liability with respect to a liability that has been transferred from
         the Plan in accordance with Section 11.3.

2.34     PBGC means the Pension Benefit Guaranty Corporation.

2.35     PBGC Immediate Rate means the interest rate in effect 90 days before
         the applicable Pension Commencement Date that would be used by the PBGC
         to value a participant's immediate annuity benefit upon termination of
         a trusteed single employer plan (or any applicable successor rate
         designated by the PBGC) or, if the PBGC no longer publishes such a rate
         and has not designated an applicable successor rate, the successor rate
         established for similar purposes by the Internal Revenue Service.
         Notwithstanding the foregoing, if a lump sum amount exceeds $25,000
         when determined using the PBGC Immediate Rate as defined in the
         preceding sentence, the "PBGC Immediate Rate" shall mean 120% of the
         PBGC Immediate Rate as defined in the preceding sentence, provided that
         in no event shall the amount of a lump sum determined using the PBGC
         Immediate Rate as defined in this sentence be less than $25,000.

2.36     PBGC Rate means the interest rate or rates in effect 90 days before the
         applicable Pension Commencement Date that would be used by the PBG to
         value a participant's benefit in the form of a lump sum upon
         termination of a trusteed single employer plan (or any applicable
         successor rate(s) designated by the PBGC) or, if the PBGC no longer
         publishes such a rate(s) and has not designated an applicable successor
         rate(s), the successor rate(s) established for similar purposes by the
         Internal Revenue Service. Notwithstanding the foregoing, if a lump sum
         amount exceeds $25,000 when determined using the PBGC Rate as defined
         in the preceding sentence, the "PBGC Rate" shall mean 120% of the PBGC
         Rate as defined in the preceding sentence, provided that in no event
         shall the amount of a lump sum determined using the PBGC Rate as
         defined in this sentence be less than $25,000.

                                       13
<PAGE>

2.37     Pension means a Service Pension, a Disability Pension, a Deferred
         Vested Pension, or a Spouse's Pension. Notwithstanding the preceding
         sentence, for purposes of Section 6.5, the term Pension shall not
         include a Spouse's Pension.

2.38     Pension Commencement Date means the date as of which a Pension is
         scheduled to commence in accordance with the provisions of the Plan.

2.39     Pension Fund means the Trust Fund or Funds, or an arrangement with an
         insurance company for the funding of Pensions under the Plan, or both.

2.40     Pension Plan Administrator means the person designated by the Committee
         to process and decide claims for benefits under the Plan pursuant to
         Section 9.13(a).

2.41     Plan means the Valor Telecommunications Enterprises, LLC Pension Plan,
         as now or previously in effect and as amended from time to time.

2.42     Plan Year means the calendar year.

2.43     Qualified Domestic Relations Order means (a) a qualified domestic
         relations order within the meaning of section 206(d) of ERISA, (b) a
         domestic relations order entered before January 1, 1985, if payment of
         benefits pursuant to such order had commenced as of such date, and (c)
         any other domestic relations order entered before January 1, 1985, that
         the Committee elects, in its sole discretion, to treat as a Qualified
         Domestic Relations Order.

2.44     Qualified Joint and Survivor Annuity means a Joint-Survivor Pension
         under which a 50-percent survivor annuity is payable to the
         participants Spouse as Beneficiary. Notwithstanding the preceding
         sentence, if the participant elects in accordance with Section 6.6(a)
         to receive his Pension in the form of a Joint-Survivor Pension under
         which a 66 2/3-percent or 100-percent survivor annuity is payable to
         the participant's Spouse as Beneficiary, the Joint-Survivor Pension so
         elected by the participant shall be the Qualified Joint and Survivor
         Annuity with respect to the participant.

2.45     Required Starting Date means the later of April 1 of the calendar year
         following the calendar year in which the participant attains age 70-1/2
         or the participant's Retirement. Notwithstanding the foregoing, the
         Required Starting Date of a 5 percent owner shall be April 1 of the
         calendar year following the year in which the participant attains age
         70-1/2. Notwithstanding the foregoing, the Required Starting Date of a
         participant who attained age 70-1/2 before January 1, 1988 (i.e., age
         70 before July 1, 1987), and who is not a 5-percent owner (as defined
         for purposes of section 401(a)(9) of the Code), shall be April 1 of the
         calendar year following the later of the calendar years in which he
         attains age 70 or Retires. Furthermore, the Required Starting Date of a
         participant who attained age 70-1/2 before January 1, 1988 (i.e., age
         70 before July 1,1987), and who is a 5-percent owner (as defined for
         purposes of section 401(a)(9) of the Code), shall be April 1 of the
         calendar year following the later of (1) the calendar year in which he
         attains age 70-1/2, or (2) the earlier of (A) the calendar year with or
         within which ends the Plan Year in which he becomes a 5-percent owner,
         or (B) the calendar year in which he Retires.

                                       14
<PAGE>

2.46     Residual Assets means the assets, if any, of the Pension Fund that
         remain after all liabilities of the Plan have been satisfied after
         termination of the plan, excluding any such assets that are
         attributable to participant contributions in accordance with Section
         4044 of ERISA and the regulations promulgated thereunder.

2.47     Retire, Retired, or Retirement means the termination of an Employee's
         employment with the Affiliates under such circumstances that he is
         entitled to receive a Pension, except that an Employee who becomes
         entitled to a Deferred Vested Pension shall be deemed to Retire on the
         last day of the month immediately preceding his Pension Commencement
         Date; provided that in the case of an Employee who attains Normal
         Retirement Age on account of clause (b) of the definition of Normal
         Retirement Age, "Retire," "Retired," and "Retirement" means the
         foregoing circumstances determined without regard to whether the
         Employee has terminated employment with the Affiliates.

2.48     Retired Employee means a former Employee who is eligible to receive or
         who is receiving a Pension under the Plan, other than a former Employee
         eligible for a Deferred Vested Pension prior to his Pension
         Commencement Date.

2.49     Retirement Date means the date on which an Employee actually Retires or
         is Retired pursuant to the terms of the Plan.

2.50     Salaried Employee means an Employee in a salary-rated position or an
         Employee who is so designated by the Company.

2.51     Schedule means a schedule appearing at the end of this Plan.

2.52     Section means a section of this Plan.

2.53     Service Pension means the payments under the Plan, by reason of an
         Employee's age and Accredited Service, to a Retired Employee for life,
         but does not include a Disability Pension or a Deferred Vested Pension.

2.54     Social Security Integration Level means, as to the calendar year in
         which an Employee Retires or otherwise terminates employment, the
         average annual wages (rounded to the next lower multiple of $100) with
         respect to which primary benefits would be provided under the Social
         Security Act for a male worker attaining age 65 in such calendar year,
         computed as though for each year prior to such calendar year the annual
         wages were equal to the maximum amount of the taxable wages under the
         Social Security Act; provided that (a) in the case of a participant or
         Beneficiary who is receiving benefits under the Plan, or (b) in the
         case of a participant who is separated from service and has
         nonforfeitable rights to benefits, such benefits are not decreased by
         reason of any increase in the benefit level payable under Title II of
         the Social Security Act or any Increase in the wage base under such
         Title II, if such increase takes place after September 2, 1974, or (if
         later) the earlier of the date of the first receipt of such benefits or
         the date of such separation, as the case may be.

2.55     Spouse means the person to whom an Employee or former Employee is
         legally married on his date of death or his Pension Commencement Date,
         whichever occurs first. The

                                       15
<PAGE>

         term "Spouse" also shall include a former spouse of an Employee or
         former Employee to the extent required by a Qualified Domestic
         Relations Order.

2.56     Spouse's Pension means the payments under the Plan for life to the
         Spouse of an Employee or former Employee who dies prior to his Pension
         Commencement Date payable pursuant to Section 5.5 and Section 6.4.

2.57     Supplemental Agreement Distribution means a Pension payable to a
         Distribution-Eligible Employee in accordance with Section 5.6.

2.58     Trust Agreement means the Trust Agreement by and between Valor
         Telecommunications Enterprises, LLC and PNC Bank, N.A. as from time to
         time amended and in effect, and any other or additional trust agreement
         under the Plan, so designated for such purpose by the Board, between
         the Company or any other Affiliate and any Trustee at any time acting
         thereunder.

2.59     Trust Fund means any fund held under a Trust Agreement.

2.60     Trustee means the trustee under a Trust Agreement.

2.61     Vesting Service means the period of employment taken into account as
         Vesting Service under Article IV.

                                       16
<PAGE>

                                  ARTICLE III

                                  PARTICIPATION

3.1      General Rule. Any individual described in this Article III shall become
         a participant in the Plan as of the first day of the Eligibility
         Computation Period in which he qualifies as an Employee under Article
         II. Notwithstanding anything in the Plan to the contrary, any
         individual described in Section 3.2(a) shall become a participant in
         the Plan as of the date his employment is transferred to the Company as
         described in Section 3.2(a) without regard to the requirement that he
         complete 1,000 Hours of Service as described in Section 2.23.

3.2      Participating Division or Unit. Only those Employees who are part of a
         participating division or unit of the Company shall become participants
         in the Plan. Employees of a participating division or unit include:

         (a)      Employees who transfer employment from GTE (or an affiliate
         thereof) to the Company pursuant to the acquisition by the Company of
         the Oklahoma, Texas and New Mexico properties of GTE Southwest and who
         are, as of the date employment is transferred to the Company,
         participants in the GTE Southwest Incorporated Plan for Hourly Paid
         Employees' Pensions or the GTE Service Corporation Plan for Employees'
         Pensions.

         (b)      Employees who are subject to a collective bargaining agreement
         between the Company and CWA Local 6171 or CWA Local 7019.

3.3      Participation Required for Pension. Except as otherwise provided in the
         Plan, no Pension shall be payable under the Plan except with respect to
         an individual who has become a participant in the Plan pursuant to this
         Article III.

                                       17
<PAGE>

                                   ARTICLE IV

              COMPUTATION OF VESTING SERVICE AND ACCREDITED SERVICE

4.1      Vesting Service. Vesting Service shall consist, without duplication, of
         the aggregate of the following:

         (a)      active employment with the Company and any excused absence
         time specifically approved for Vesting Service purposes in accordance
         with Company policy in effect from time to time;

         (b)      active employment with any other Affiliate;

         (c)      active employment with any other employer when specifically
         approved for Vesting Service purposes by the Board; and

         (d)      Vesting Service accrued under the GTE Southwest Incorporated
         Plan for Hourly Paid Employees' Pensions or the GTE Service Corporation
         Plan for Employees' Pensions, as of the date employment is transferred
         to the Company as a result of the Company's acquisition of facilities
         in Oklahoma, New Mexico and Texas from GTE Southwest Incorporated and
         any of its subsidiaries or affiliates.

         A full year of Vesting Service shall be included in the employee's
         aggregate of Vesting Service with respect to any calendar year in which
         he has been credited with not less than 1000 Hours of Service. In the
         case of an employee who, in any calendar year, has been credited with
         less than 1000 Hours of Service, the employee shall accrue a fraction
         of a year of Vesting Service (not in excess of 1), where the numerator
         of the fraction is the number of Hours of Service credited to the
         employee during such year and the denominator is the Customary Work
         Year.

4.2      Break in Vesting Service.

         (a)      Vesting Service shall be broken in any calendar year in which
         an employee who has not been credited with more than 500 Hours of
         Service ceases to be an employee of the Affiliates.

         (b)      Solely for purposes of determining under subsection (a),
         above, whether an employee has been credited with more than 500 Hours
         of Service during a calendar year, up to 501 of the Hours of Service
         that would otherwise normally have been credited to the employee during
         the calendar year but for the fact that the employee was absent from
         work (i) by reason of the employee's pregnancy, (ii) by reason of the
         birth of the employee's child, (iii) by reason of the placement of a
         child with such employee in connection with an adoption of such child
         by the employee, or (iv) for purposes of caring for a child for a
         period beginning immediately following birth or placement, shall be
         credited as Hours of Service. If the employee would have been credited
         with more than 500 Hours of Service during the calendar year
         notwithstanding the immediately preceding sentence, such Hours of
         Service shall be credited to the succeeding calendar

                                       18
<PAGE>

         year. Notwithstanding Section 4.5, this subsection (b) shall not apply
         for purposes of determining whether an employee's Accredited Service
         has been broken.

4.3      Reemployment After Break in Vesting Service. When an employee's Vesting
         Service is broken, and he thereafter is reemployed by an employer
         described in Section 4.1 and accumulates 1000 Hours of Service
         constituting Vesting Service during the period that begins on the date
         he is reemployed and that ends on the date his Vesting Service is next
         broken, then the break in the employee's employment shall be bridged,
         and there shall be added to the Vesting Service that has accumulated
         since his reemployment the aggregate of all previous periods of Vesting
         Service that the employee had prior to the break, provided that the
         employee had at least one year of Vesting Service preceding the break
         in service. If the Employee accumulates 1000 Hours of Service
         constituting Vesting Service during the period that begins on the date
         he is reemployed and that ends on the date his Vesting Service is next
         broken, that fact shall be taken into account as provided in the
         preceding sentence solely for purposes of bridging the break in his
         employment.

4.4      Accredited Service. Accredited Service shall consist, without
         duplication, of the aggregate of the following:

         (a)      active employment with the Company and any excused absence
         time specifically approved for Accredited Service purposes in
         accordance with Company policy in effect from time to time;

         (b)      active employment with a Control Group Affiliate other than
         the Company;

         (c)      active employment with any other employer when specifically
         approved for Accredited Service purposes by the Board; and

         (d)      Accredited Service accrued under the GTE Southwest
         Incorporated Plan for Hourly Paid Employees' Pensions or the GTE
         Service Corporation Plan for Employees' Pensions, as of the date
         employment is transferred to the Company.

         A full year of Accredited Service shall be added to the Employee's
         aggregate Accredited Service for any Plan Year in which he has been
         credited with not less than the Customary Work Year. In the case of an
         Employee who, in a calendar year, is credited with less than the
         Customary Work Year, the Employee shall accrue a fraction of a year of
         Accredited Service (not in excess of 1), where the numerator of the
         fraction is the number of Hours of Service credited to the Employee
         during such year and the denominator is the Customary Work Year. If the
         compensation (if any) used to determine an Employee's accrued benefit
         under any benefit formula in the Plan is so defined as to cause
         application of the preceding sentence otherwise to violate the
         prohibition against double proration in 29 C.F.R. Section
         2530.204-2(d), then the Employee's compensation under such definition
         for any calendar year during which he is credited with less than the
         Customary Work Year shall be adjusted by multiplying his compensation
         under such definition for the calendar year by a fraction, the
         numerator of which is the Customary Work Year, and the denominator of
         which is the number of Hours of Service credited to the Employee during
         such year.

                                       19
<PAGE>

         Accredited Service shall not include any period of an individual's
         employment during which the individual is not classified by the Company
         or an Affiliate as a common-law employee of the Company or an
         Affiliate, regardless of any subsequent reclassification of such
         individual as a "common-law" employee of the Company or an Affiliate by
         the Company, an Affiliate, any governmental agency, or any court.

4.5      Break in Accredited Service. Accredited Service shall be broken in any
         calendar year in which the Employee has a break in Vesting Service
         pursuant to Section 4.2(a).

4.6      Reemployment After Break in Accredited Service. When an employee's
         Accredited Service is broken, and he thereafter is reemployed by an
         employer described in Section 4.1 and accumulates 1000 Hours of Service
         constituting Vesting Service during the period that begins on the date
         he is reemployed and that ends on the date his Vesting and Accredited
         Service are next broken, then the break in the employee's employment
         shall be bridged, and he shall be credited with the aggregate of all
         periods of Accredited Service that he had prior to the break, provided
         that the employee had at least one year of Vesting Service preceding
         the break in service. If the Employee accumulates 1000 Hours of Service
         constituting Vesting Service during the period that begins on the date
         he is reemployed and that ends on the date his Vesting Service is next
         broken, that fact shall be taken into account as provided in the
         preceding sentence solely for purposes of bridging the break in his
         employment.

4.7      Calculation of Benefits Following Bridging of Accredited Service. Upon
         Retirement or separation from service following the bridging of a break
         in Accredited Service pursuant to Section 4.6 the Employee's Pension
         shall be based. on his Average Annual Compensation and Accredited
         Service before and after the break.

         Not withstanding the foregoing, the Service Pension shall be permitted
         to disregard service with respect to the Deferred Vested Pension
         distributed under Section 7.7 for the sole purpose of determining the
         amount of the Accrued Benefit under the Plan.

                                       20
<PAGE>

                                    ARTICLE V

                             ELIGIBILITY FOR PENSION

5.1      Normal Retirement. Any Employee who attains Normal Retirement Age shall
         have the right to Retire with a fully vested and nonforfeitable Service
         Pension commencing as of the first day of the month next following his
         Retirement.

5.2      Early Retirement.

         (a)      An Employee whose combined age and Accredited Service (of not
         less than 15 years) total 76 or more years may Retire before attaining
         Normal Retirement Age and shall be entitled to a Service Pension.
         Additionally, any Employee whose Accredited Service totals thirty or
         more years may Retire and shall be entitled to a Service Pension.
         Credit for fractional parts of a year, with respect to both age and
         Accredited Service in excess of 15 years, shall be recognized for each
         full month of age in excess of the Employee's full years of age and for
         each full week of Accredited Service in excess of the Employee's full
         years of Accredited Service.

         (b)      Any non-union hourly Employee with 15 or more years of
         Accredited Service whose employment is terminated by his employer for
         any reason other than age or cause before attaining Normal Retirement
         Age and whose employment is terminated either

                  (i)      within 24 months of the date on which his age
                  combined with his years of Accredited Service on the date of
                  his termination of employment would equal 76, or

                  (ii)     within 24 months of the date of his 55th birthday, if
                  his combined age and years of Accredited Service equal or
                  exceed 76 on the date of his termination of employment,

         shall be eligible to be Retired on a Service Pension computed under
         Section 6.1 as of the last day of the month in which, if paragraph (i)
         applies, his age combined with his previously accrued years of
         Accredited Service equal 76 or, if paragraph (ii) applies, he attains
         age 55. However, in no event shall an Employee Retiring under this
         subsection (b) accrue Accredited Service for benefit computation
         purposes for any period after the date of his termination of
         employment.

         (c)      The normal Pension Commencement Date of the Service Pension
         shall be the first day of the month next following the Employee's
         Normal Retirement Date. However, the Employee may elect, in accordance
         with Section 7.9, to have his Service Pension commence as of the first
         day of any month following his Early Retirement Date and preceding his
         Normal Retirement Date. The Service Pension of any Employee whose
         Pension Commencement Date occurs prior to attaining age 55 shall be
         reduced pursuant to the schedule set forth in Section 6.1(b).

5.3      Disability Retirement. Any Employee with 15 or more years of Accredited
         Service shall be entitled to a Disability Pension if he becomes
         Disabled. The normal Pension

                                       21
<PAGE>

         Commencement Date of the Disability Pension shall be the first day of
         the month next following the Employee's Normal Retirement Date.
         However, the Employee may elect, in accordance with Section 7.9, to
         have his Disability Pension commence as of the first day of any month
         preceding his Normal Retirement Date.

5.4      Deferred Vested Pension. Any Employee with 5 or more years of Vesting
         Service whose employment with the Affiliates terminates other than by
         death, but who does not qualify for a Service Pension or Disability
         Pension, shall be entitled to a Deferred Vested Pension. The Pension
         Commencement Date of the Deferred Vested Pension shall be determined as
         follows:

         (a)      In general, the Pension Commencement Date shall be the first
         day of the month next following the former Employee's Normal Retirement
         Date.

         (b)      However, if such former Employee has 15 or more years of
         Accredited Service, he may elect, in accordance with and subject to
         Section 7.9, to have his Deferred Vested Pension commence prior to his
         Normal Retirement Date on the first day of any month following the date
         on which his combined Accredited Service and age equal 76 years. Credit
         for fractional parts of a year, with respect to both Accredited Service
         in excess of 15 years and age, shall be recognized for each full month
         of age in excess of the Employee's full years of age and for each full
         week of Accredited Service in excess of the Employee's full years of
         Accredited Service.

         (c)      If a former Employee has 10 or more years of Accredited
         Service, he may elect, in accordance with and subject to Section 7.9,
         to have his Deferred Vested Pension commence prior to his Normal
         Retirement Date on the first day of any month following the date on
         which he attains age 55.

         The Deferred Vested Pension of any former Employee whose Pension
         Commencement Date occurs prior to his Normal Retirement Date shall be
         reduced in accordance with Section 6.3.

5.5      Spouse's Pension.

         A Spouse's Pension shall be payable to the Spouse of a participant who
         dies before his Pension Commencement Date without having in effect a
         valid waiver of the Spouse's Pension under Section 6.4(e) or 6.5(b), if
         the participant:

         (a)      had not terminated his employment with the Affiliates but had
         earned a nonforfeitable right to a Pension;

         (b)      had terminated his employment with the Affiliates after (A)
         attaining Normal Retirement Age, (B) meeting the age and Accredited
         Service requirements prescribed by Section 5.2, or (C) meeting the
         requirements prescribed by Section 5.3; or

         (c)      had terminated his employment with the Affiliates after
         acquiring a nonforfeitable right to a Pension but before (A) attaining
         Normal Retirement Age, (B) meeting the age

                                       22
<PAGE>

         and Accredited Service requirements prescribed by Section 5.2, or (C)
         meeting the requirements prescribed by Section 5.3.

         No Spouse's Pension shall be payable to the Spouse of a participant who
         dies before his Pension Commencement Date either without having earned
         a nonforfeitable right to a Pension or while having in effect a valid
         waiver of the Spouse's Pension under Section 6.4(e) or 6.5(b). Except
         as otherwise provided in the Plan, whether a participant has earned a
         nonforfeitable right to a Pension shall be determined in accordance
         with Section 5.4.

5.6      Supplemental Agreement Distribution.

         (a)      Subject to the provisions of subsections (b), (c), and (d),
         below, each Distribution-Eligible Employee may elect to receive a
         Service Pension commencing as of any March 1, based on the
         Distribution-Eligible Employee's Accredited Service and Average Annual
         Compensation as of the immediately preceding December 31; provided that
         a Distribution-Eligible Employee may receive no more than one
         Supplemental Agreement Distribution pursuant to this Section 5.6.

         (b)      If a Distribution-Eligible Employee receives a Supplemental
         Agreement Distribution pursuant to this Section 5.6, the amount of any
         additional Pension payable upon the Distribution-Eligible Employee's
         subsequent termination of employment with the Affiliates shall be
         determined in accordance with the following rules:

                  (i)      Subject to clause (ii), below, the amount of the
                  additional Pension shall be determined under the generally
                  applicable provisions of the Plan (determined without regard
                  to this Section 5.6).

                  (ii)     For purposes of clause (i), above, (A) the
                  Distribution-Eligible Employee's Accredited Service shall be
                  determined solely by reference to Accredited Service earned
                  after the December 31 as of which his Accredited Service is
                  determined for purposes of subsection (a), above, and (B) the
                  Distribution-Eligible Employee's Average Annual Compensation
                  shall be determined by reference to all of the
                  Distribution-Eligible Employee's Monthly Compensation,
                  regardless of whether it was paid for the period before or
                  after the December 31 as of which his Average Annual
                  Compensation was determined for purposes of subsection (a),
                  above.

         (c)      A Distribution-Eligible Employee who wishes to elect a
         Supplemental Agreement Distribution with a Pension Commencement Date of
         March 1 must elect such a distribution, in a form and manner acceptable
         to the Committee, during the period established by the Committee for
         this purpose. A Distribution-Eligible Employee who wishes to elect a
         Supplemental Agreement Distribution with a Pension Commencement Date
         after March 1 must elect such a distribution, in a form and manner
         acceptable to the Committee, during the period established by the
         Committee for this purpose from time to time in its sole discretion.

                                       23
<PAGE>

         (d)      Subject to the requirements of Section 6.5, a
         Distribution-Eligible Employee may elect to receive his distribution
         pursuant to this Section 5.6 in either the normal form of payment
         described in Section 6.5 or in any of the optional forms of payment
         described in Section 6.6; provided that in determining the amount of
         any lump-sum distribution under Section 6.6(b)(i) for purposes of this
         subsection (d), the applicable interest rate assumption shall be based
         on the otherwise applicable rate that is effective for a Pension
         Commencement Date of January 1 or March 1 of the year in which the
         distribution is made, whichever produces the larger lump-sum
         distribution. If a Distribution-Eligible Employee who receives a
         distribution pursuant to this Section 5.6 subsequently becomes entitled
         to receive an additional Pension upon termination of employment with
         the Affiliates in accordance with subsection (b), above, the form of
         such additional Pension shall be governed by the generally applicable
         provisions of the Plan, as if the Distribution-Eligible Employee were
         then first Retiring.

                                       24
<PAGE>

                                   ARTICLE VI

                   COMPUTATION OF PENSIONS AND FORM OF PAYMENT

6.1      Service Pension.

         (a)      Subject to subsections (b) through (d), below, the annual
         Service Pension payable to a Retired Employee in the form of a single
         life annuity commencing on the first day of the month next following
         his Normal Retirement Date shall equal:

                  (i)      for an Hourly Employee, the product determined by
                           multiplying the Retired Employee's years of
                           Accredited Service  1.35 percent of his Average
                           Annual Compensation.

                  (ii)     for a Salaried Employee, the greater of the amounts
                           determined under paragraphs (A) and (B), below.

                                    (A)      The amount determined under this
                                             paragraph (A) is the product
                                             determined by multiplying the
                                             Retired Employee's years of
                                             Accredited Service by the sum of
                                             (1) 1.15 percent of his Average
                                             Annual Compensation not in excess
                                             of the Social Security Integration
                                             Level, and (2) 1.45 percent of his
                                             Average Annual Compensation in
                                             excess of the Social Security
                                             Integration Level.

                                    (B)      The amount determined under this
                                             paragraph (B) is the product
                                             determined by multiplying the
                                             Retired Employee's years of
                                             Accredited Service by 1.35 percent
                                             of his Average Annual Compensation.

         (b)      If an Employee begins receiving his Service Pension as of any
         date that precedes his Normal Retirement Date, the amount determined
         under subsection (a), above, shall be multiplied by the appropriate
         percentage indicated below;

<TABLE>
<CAPTION>
PENSION COMMENCING AT AGE                            PERCENTAGE
<S>                                                  <C>
      55 and over                                       100%

          54                                             97%

          53                                             94%

          52                                             91%

          51                                             88%

          50                                             85%

     49 and under                                        82%
</TABLE>

         Any Employee whose Accredited Service totals thirty or more years shall
         be entitled to an unreduced Service Pension. In the case of a
         fractional part of a year, the above percentages shall be adjusted at
         the rate of 1/4 of 1 percent (0.25%) for each full month by which the
         Pension Commencement Date follows the first day of the month after the

                                       25
<PAGE>

         attainment of age 49 through age 54. For the purpose of this
         calculation, the Pension Commencement Date shall be deemed to occur not
         earlier than the first day of the month following the Employee's 49th
         birthday.

         (c)      The amount determined in subsections (a) and (b), above, shall
         not be less than the applicable amount according to the Employee's
         years of Accredited Service as set forth in paragraphs (1) CWA Local
         7019, (2) CWA Local 6171 and (3) non-bargained Hourly Employee below,
         whichever is applicable.

                  (1)      In the case of an Employee who is subject to the
                           collective bargaining agreements between the Company
                           and CWA Local 7019, his applicable amount shall be
                           determined in accordance with the following table:

<TABLE>
<CAPTION>
 YEARS OF ACCREDITED SERVICE                APPLICABLE AMOUNT (ANNUAL FIGURE)
<S>                                         <C>
at least 15 but less than 20                             $ 4,350
at least 20 but less than 25                             $ 5,650
at least 25 but less than 30                             $ 6,950
at least 30 but less than 35                             $ 8,250
at least 35 but less than 40                             $ 9,950
         40 or more                                      $10,850
</TABLE>

                  (2)      In the case of a non-union hourly Employee or an
                           Employee who is subject to a collective bargaining
                           agreement between the Company and CWA Local 6171, his
                           applicable amount shall be determined in accordance
                           with the following table:

<TABLE>
<CAPTION>
 YEARS OF ACCREDITED SERVICE                   APPLICABLE AMOUNT (ANNUAL FIGURE)
<S>                                            <C>
 at least 15 but less than 20                              $  4,700
 at least 20 but less than 25                              $  6,100
 at least 25 but less than 30                              $  7,500
 at least 30 but less than 35                              $  8,900
 at least 35 but less than 40                              $ 10,300
          40 or more                                       $ 11,700
</TABLE>

                  (3)      In the case of an Hourly Employee not described in
                           (1) or (2) above, the applicable amount shall be
                           determined in accordance with the following table:

                                       26
<PAGE>

<TABLE>
<CAPTION>
YEARS OF ACCREDITED SERVICE                    APPLICABLE AMOUNT (ANNUAL FIGURE)
<S>                                            <C>
at least 15 but less than 20                                $ 4,700
at least 20 but less than 25                                $ 6,100
at least 25 but less than 30                                $ 7,500
at least 30 but less than 35                                $ 8,900
at least 35 but less than 40                                $10,300
         40 or more                                         $11,700
</TABLE>

         (d)      The amount determined under subsections (a), (b), and (c),
         above, shall be reduced by:

                  (i)      the annual amount (if any) payable from any Other
                           Pension Plan, and

                  (ii)     the amount (if any) prescribed by Section 6.4(d).

                  For purposes of paragraph (i), above, the annual amount (if
                  any) payable from any Other Pension Plan shall be the annual
                  amount of a benefit that is payable in the form of a single
                  life annuity commencing on the first day of the month next
                  following the Employee's Normal Retirement Date, and that is
                  the actuarial equivalent of the same or similar benefit
                  payable at normal retirement age under the Other Pension Plan.

6.2      Disability Pension. The annual Disability Pension payable to a Retired
         Employee shall be computed in the same manner prescribed in Section
         6.1, but without applying any reduction otherwise required under
         Section 6.1(b).

6.3      Deferred Vested Pension. The annual Deferred Vested Pension payable
         after reaching Normal Retirement Age to a former Employee who qualifies
         for such a Pension shall be computed in the same manner prescribed in
         Section 6.1, except that the amount determined under Section 6.1(c)
         shall be:

         (a)      based on the Accredited Service the former Employee would have
         had at his Normal Retirement Date if his employment with the Affiliates
         had not been terminated until his Normal Retirement Date; and

         (b)      then multiplied by the ratio of the Employee's actual Vesting
         Service to the Vesting Service he would have had at his Normal
         Retirement Date if his employment with the Affiliates had not been
         terminated until his Normal Retirement Date.

         If such former Employee is eligible, in accordance with Section 5.4, to
         elect to have his Deferred Vested Pension commence prior to his Normal
         Retirement Date, and he so elects in accordance with Section 7.9, the
         amount of such Deferred Vested Pension shall be reduced for each year
         by which distribution of his Deferred Vested Pension precedes his
         Normal Retirement Date by one-fifteenth (1/15) for each of the first
         five years, 5% for

                                       27
<PAGE>

         each of the next five years, one-thirtieth (1/30) for each of the next
         five years, then actuarially reduced thereafter as follows:

<TABLE>
<CAPTION>
PENSION COMMENCING AT AGE                  PERCENTAGE OF DEFERRED VESTED PENSION
<S>                                        <C>
           65                                                100%
           64                                              93.33%
           63                                              86.67%
           62                                              80.00%
           61                                              73.33%
           60                                              66.67%
           59                                              61.67%
           58                                              56.67%
           57                                              51.67%
           56                                              46.67%
           55                                              41.67%
           54                                              38.33%
           53                                              35.00%
           52                                              31.67%
           51                                              28.33%
           50                                              25.00%
</TABLE>

6.4      Spouse's Pension.

         (a)      The annual Spouse's Pension payable to a Spouse who qualifies
         for a Spouse's Pension under Section 5.5 shall be the annual amount
         payable to the Spouse as Beneficiary under the survivor annuity portion
         of the Qualified Joint and Survivor Annuity with respect to the
         participant, computed as if the participant had:

                  (i)      terminated employment with the Affiliates on the date
                  of his death (or, if earlier, on the date of his actual
                  termination of employment with the Affiliates),

                  (ii)     elected the first day of the month next following his
                  Normal Retirement Date (or, if later, the first day of the
                  month next following the date of his death) as his Pension
                  Commencement Date, and

                  (iii)    died on his Pension Commencement Date.

         Except as provided in subsections (b) and (c) below, the normal Pension
         Commencement Date of a Spouse's Pension shall be the first day of the
         month next following the later of the deceased participant's Normal
         Retirement Date or the date of his death.

         (b)      In the case of a participant who dies before his Normal
         Retirement Date while in the service of a Control Group Affiliate, the
         Spouse may elect, in accordance with Section 7.9, that the Pension
         Commencement Date of the Spouse's Pension shall be the first day of any
         month before the participant's Normal Retirement Date and after the
         month of the participant's death. The annual amount of a Spouse's
         Pension that

                                       28
<PAGE>

         commences before the participant's Normal Retirement Date in accordance
         with this subsection (b) shall not be reduced on account of such early
         commencement.

         (c)      In the case of a participant who dies before his Normal
         Retirement Date other than in circumstances described in subsection
         (b), above, the Spouse may elect, in accordance with Section 7.9, that
         the Pension Commencement Date of the Spouse's Pension shall be the
         first day of any month before the participant's Normal Retirement Date
         and after the month of the participant's death, provided that such
         first day is on or after the earliest date the participant could have
         elected as his Pension Commencement Date had he survived and terminated
         employment with the Affiliates on the date of his death (or, if
         earlier, on the date of his actual termination of employment with the
         Affiliates). The annual amount of a Spouse's Pension that commences
         before the participant's Normal Retirement Date in accordance with this
         subsection (c) shall equal the annual amount payable to the Spouse as
         Beneficiary under the survivor annuity portion of the Qualified Joint
         and Survivor Annuity that would have been payable with respect to the
         participant computed as if the participant had:

                  (i)      terminated employment with the Affiliates on the date
                  of his death (or, if earlier, on the date of his actual
                  termination of employment with the Affiliates),

                  (ii)     elected as his Pension Commencement Date the date
                  elected by the Spouse in accordance with this subsection (c),
                  and

                  (iii)    died on his Pension Commencement Date.

         (d)      In the case of a Pension of an hourly participant subject to a
         collective bargaining agreement, the amount of the Pension of a
         participant described in Section 5,5(c) shall be reduced in accordance
         with the charges set forth below for each full month that Spouse's
         Pension coverage was in effect during the period beginning on the date
         the participant terminated employment with the Affiliates and ending on
         the date that the earliest of the following occurred: (i) his
         reemployment by an Affiliate, (ii) the death of his Spouse, (iii) the
         entry of a final divorce decree dissolving the participant's marriage
         unless coverage is required pursuant to a Qualified Domestic Relations
         Order, (iv) the participant's Pension Commencement Date, (v) the
         participant's death, or (vi) the waiver of coverage in accordance with
         subsection (e), below.

<TABLE>
<CAPTION>
  For Each Year of Coverage in Effect         The Reduction in the Participant's
After the Participant's Termination of      Pension Accrued to His Termination Date
            Employment...                                  Shall Be
<S>                                         <C>
          Prior to Age 40                                   0.1%

      From Age 40 Through Age 49                            0.2%

      From Age 50 Through Age 54                            0.3%

      From Age 55 To Retirement                             0.5%
</TABLE>

                                       29
<PAGE>

         (e)      At any time during the period beginning 90 days before the
         date as of which a participant terminates employment with the
         Affiliates and ending on the earliest to occur of the date he is
         reemployed by an Affiliate, his Pension Commencement Date, or his date
         of death, a participant described in Section 5.5(c) whose Pension is
         subject to reduction under subsection (d), above, may elect to waive,
         or revoke a prior election to waive, Spouse's Pension coverage. Such
         election or revocation shall be subject to the following terms and
         conditions:

                  (i)      Any election or revocation shall be made by giving
                  written notice in such form and manner as may be required by
                  the Committee.

                  (ii)     An election or revocation shall be ineffective unless
                  the participant's Spouse consents in writing to such election
                  or revocation. The Spouse's consent must acknowledge the
                  effect of such election and must be witnessed by a notary
                  public or authorized plan representative. The Spouse's consent
                  must acknowledge the effect of the Beneficiary or
                  Beneficiaries (including any class of Beneficiaries and any
                  contingent Beneficiaries) that the participant has designated,
                  if any. Any consent by a Spouse shall be irrevocable unless
                  the participant agrees to a revocation.

                  (iii)    Subsection (e)(ii), above, shall not apply if the
                  Committee determines that the consent required therein cannot
                  be obtained because there is no Spouse, because the Spouse
                  cannot be located, or because of any other circumstances that
                  are specified by regulation, revenue ruling, notice, or other
                  guidance of general applicability issued by the Department of
                  the Treasury.

                  (iv)     Any consent by a Spouse pursuant to subsection
                  (e)(U), above, shall be effective only with respect to that
                  Spouse. Similarly, any establishment that the consent of a
                  Spouse cannot be obtained for any of the reasons described in
                  subsection (e)(iii), above, shall be effective only with
                  respect to that Spouse.

         Spouse's Pension coverage shall be automatic and without charge while a
         participant is employed by an Affiliate, and a participant's waiver of
         Spouse's Pension coverage shall be ineffective during any period of
         employment by an Affiliate, except to the extent that such coverage is
         waived in accordance with Section 6.5(b) during the 90-day period
         ending on the participant's Pension Commencement Date.

         (f)      The Committee shall provide to each participant eligible to
         waive Spouse's Pension coverage pursuant to subsection (e) hereof,
         within a reasonable period before or after the date as of which he
         becomes eligible to waive Spouse's Pension coverage, a written
         explanation of:

                  (i)      the terms and conditions of the Spouse's Pension;

                  (ii)     the participant's right to elect, and the effect of
                  electing, to waive Spouse's Pension coverage;

                                       30
<PAGE>

                  (iii)    the rights of a married participant's Spouse with
                  respect to that election; and

                  (iv)     the right of the participant to revoke, and the
                  effect of revoking, an election to waive Spouse's Pension
                  coverage.

         The Committee shall also provide each participant eligible to waive
         Spouse's Pension coverage pursuant to Section 6.5(b) with the written
         explanation described in this subsection (f). The Committee shall
         provide such written explanation at the same time as it provides the
         written explanation described in Section 6.5(e) hereof.

6.5      Normal Forms of Payment.

         (a)      Unless he elects another form of payment in accordance with
         the provisions of this Section 6.5,

                  (i)      a participant who is married on his Pension
                  Commencement Date shall receive his Pension in the form of a
                  Qualified Joint and Survivor Annuity, and

                  (ii)     a participant who is not married on his Pension
                  Commencement Date shall receive his Pension in the form of a
                  single life annuity.

         (b)      A participant may elect to waive the default form of Pension
         otherwise payable to him under subsection (a), above, and to receive
         his Pension in another form of benefit pursuant to the following terms
         and conditions:

                  (i)      The Qualified Joint and Survivor Annuity payable by
                  default under subsection (a)(i), above, shall be a
                  Joint-Survivor Pension, under which a 50-percent survivor
                  annuity is payable to the participant's Spouse as Beneficiary.
                  A participant who is married on his Pension Commencement Date
                  may elect to waive the default Qualified Joint and Survivor
                  Annuity in favor of an alternative form of Qualified Joint and
                  Survivor Annuity, which shall be a Joint-Survivor Pension
                  under which either a 66-2/3-percent or a 100-percent survivor
                  annuity is payable to the participant's Spouse as Beneficiary.
                  In addition, a participant who is married on his Pension
                  Commencement Date may elect to waive the default Qualified
                  Joint and Survivor Annuity in favor of a single life annuity
                  or any optional form of benefit described in Section 6.6.

                  (ii)     A participant who is not married on his Pension
                  Commencement Date may elect to waive the single life annuity
                  payable by default under subsection (a)(ii), above, in favor
                  of any optional form of benefit described in Section 6.6.

                  (iii)    A participant who makes an election under this
                  subsection (b) shall designate the alternative form of benefit
                  in which he wishes to receive his Pension. Any election of a
                  Joint-Survivor Pension must be accompanied by proof of the
                  Beneficiary's age satisfactory to the Committee.

                                       31
<PAGE>
                  (iv)     During the 90-day period that ends on his Pension
                  Commencement Date, a married participant who elects to receive
                  his Pension in any form other than a Qualified Joint and
                  Survivor Annuity also may waive the Spouse's Pension benefit
                  which would be provided pursuant to Section 5.5 if the
                  participant's death were to occur after termination of
                  employment and prior to his Pension Commencement Date. In no
                  event may the participant waive the Spouse's Pension benefit
                  that would be provided pursuant to Section 5.5 if the
                  participant's death were to occur on or prior to the date of
                  termination of employment, and, in the event of a
                  participant's death on or prior to termination of employment,
                  the only benefit payable with respect to such participant
                  shall be the Spouse's Pension under the Qualified Joint and
                  Survivor Annuity in effect with respect to the participant. A
                  waiver of the Spouse's Pension coverage pursuant to this
                  paragraph (iv) shall be subject to the terms and conditions in
                  Section 6.4(e)(i) through (iv) and shall be effective for the
                  period beginning on the later of (l) the day after the
                  participant's final day of employment with the Company and the
                  Affiliates or (ll) the date on which the Committee receives
                  the participant's waiver, and ending on the earlier of (x) the
                  participant's Pension Commencement Date, or (y) the date on
                  which the waiver is revoked.

                  (v)      A married participant who elects to receive his
                  Pension in any form of Qualified Joint and Survivor Annuity
                  shall not be entitled to waive the Spouse's Pension coverage
                  for which he otherwise is eligible at any time during the
                  90-day period that ends on his Pension Commencement Date.

                  (vi)     Any waiver of Spouse's Pension coverage previously in
                  effect with respect to a participant shall be revoked
                  automatically at the beginning of the 90-day period that ends
                  on his Pension Commencement Date, unless the participant
                  elects to receive his Pension in a form other than a Qualified
                  Joint and Survivor Annuity.

         (c)      An election under subsection (b), above, may be revoked either
         automatically in the circumstances described in subsection (f), below,
         or by filing a written revocation with the Committee in a form and in a
         manner acceptable to the Committee. After any such revocation, a new
         election under subsection (b), above, may be made at any time before
         the participant's Pension Commencement Date (or during such other
         period permitted or required by law). However, except as provided in
         Section 7.3(b) or as the Committee may otherwise provide on the basis
         of uniform and nondiscriminatory rules, any election under subsection
         (b), above, shall be irrevocable after the participant's Pension
         Commencement Date.

         (d)      An election or revocation of an election under subsections (b)
         and (c), above, shall be subject to the following terms and conditions:

                  (i)      Any election or revocation shall be made within the
                  90-day period ending on the participant's Pension Commencement
                  Date (or during such other period permitted or required by
                  law) by giving written notice in such form and manner as may
                  be required by the Committee.

                                       32
<PAGE>

                  (ii)     If a participant who is married on his Pension
                  Commencement Date elects to receive his Pension in any form
                  other than a Qualified Joint and Survivor Annuity, the
                  election shall be ineffective unless the participant's Spouse
                  consents in writing to the election, the consent acknowledges
                  the effect of the election, and the consent is witnessed by a
                  notary public or authorized plan representative. The Spouse's
                  consent must acknowledge the effect of the form of benefit
                  that the participant has elected, as well as the effect of any
                  Beneficiary or Beneficiaries (including any class of
                  Beneficiaries and any contingent Beneficiaries) that the
                  participant has designated. Any consent by a Spouse shall be
                  irrevocable unless the participant agrees to a revocation.

                  (iii)    Subsection (d)(ii), above, shall not apply if the
                  Committee determines that the consent required therein cannot
                  be obtained because there is no Spouse, because the Spouse
                  cannot be located, or because of any other circumstances that
                  are specified by regulation, revenue ruling, notice, or other
                  guidance of general applicability issued by the Department of
                  the Treasury.

                  (iv)     Any consent by a Spouse pursuant to subsection
                  (d)(ii), above, shall be effective only with respect to that
                  Spouse. Similarly, any establishment that the consent of a
                  Spouse cannot be obtained for any of the reasons described in
                  subsection (d)(iii), above, shall be effective only with
                  respect to that Spouse.

                  (v)      Any consent by a Spouse pursuant to subsection
                  (d)(ii), above, shall be effective only as long as the
                  participant makes no change in the designated Beneficiary or
                  class of Beneficiaries.

         (e)      The Committee shall provide to each participant, not less than
         30 days nor more than 90 days before his Pension Commencement Date (or
         during such other period permitted or required by law), a written
         explanation of:

                  (i)      The material features and relative financial values
                  of the forms of benefit, to which the participant is entitled,
                  or that he could elect to receive, under the Plan;

                  (ii)     In the case of a married participant, his right to
                  elect to waive, the effect of his electing to waive, and the
                  requirements (including any spousal consent requirements)
                  applicable to his electing to waive, the Qualified Joint and
                  Survivor Annuity payable by default under subsection (a)(i),
                  above, in favor of any other form of payment to which he is
                  otherwise entitled under the Plan;

                  (iii)    In the case of a participant other than a married
                  participant, his right to elect to receive, and the effect of
                  his electing to receive, any other form of benefit to which he
                  is entitled under the Plan in lieu of the single life annuity
                  specified in subsection (a)(ii), above;

                  (iv)     In the case of a participant who is entitled to elect
                  commencement of a form of payment before his Normal Retirement
                  Date, his right not to elect such early commencement; and

                                       33
<PAGE>

                  (v)      The terms and conditions (if any) under which an
                  election by a participant, or a consent by the Spouse of a
                  married participant, may be revoked, and the effect of such
                  revocation.

         Notwithstanding the foregoing, no notice pursuant to this subsection
         (e) shall be required in the case of a participant who is required to
         receive his Pension in the form of a lump sum payment pursuant to
         Section 7.7.

         (f)      (i)      If the designated Beneficiary with respect to a
                  Joint-Survivor Pension dies before the participant's Pension
                  Commencement Date, the election (including, if applicable, any
                  election pursuant to subsection (b), above, to waive Spouse's
                  Pension coverage) shall be void, and the participant shall be
                  deemed not to have previously elected a Joint-Survivor
                  Pension. If the designated Beneficiary with respect to a
                  Joint-Survivor Pension dies before the participant, but after
                  the Pension Commencement Date, the amount of the Pension
                  thereafter payable to the participant shall not be affected in
                  any way as a result thereof.

                  (ii)     If a participant dies before his Pension Commencement
                  Date without having made a valid election of an optional form
                  of payment described in Section 6.6, no individual shall have
                  a right to any payment under the Plan with respect to the
                  participant, unless the participant is survived by a Spouse
                  who is entitled to a Spouse's Pension.

                  (iii)    If a participant dies before his Pension Commencement
                  Date after terminating employment with the Affiliates and
                  after having made (and not revoked) a valid election of a lump
                  sum distribution described in Section 6.6(b) (and, in the case
                  of a married participant, after having made (and not revoked)
                  a valid waiver of the Spouse's Pension), the lump sum
                  distribution shall be paid to the participant's designated
                  Beneficiary (or, if the participant has not designated a
                  Beneficiary, or if none of his designated Beneficiaries
                  survives him, the lump sum distribution shall be paid to the
                  executor of the participant's will or the administrator of his
                  estate).

                  (iv)     If a participant dies before his Pension Commencement
                  Date after terminating employment with the Affiliates and
                  after having made (and not revoked) a valid election of a
                  Five-Year Certain and Life Annuity Option described in Section
                  6.6(c) (and, in the case of a married participant, after
                  having made (and not revoked) a valid waiver of the Spouse's
                  Pension), the participant's designated Beneficiary shall be
                  eligible to receive the five-year certain payments pursuant to
                  such option as if the Employee had died on the day following
                  his Pension Commencement Date (or, if the participant has not
                  designated a Beneficiary, or if none of his designated
                  Beneficiaries survives him, the five-year certain payments
                  pursuant to such option shall be paid to the executor of his
                  will or the administrator of his estate).

                  (v)      If a participant dies on or after his Pension
                  Commencement Date, any distribution that was scheduled to be
                  paid to him on or before his date of death but

                                       34
<PAGE>

                  that was not paid to him on or before his date of death due to
                  administrative or other delay, shall be paid instead to the
                  executor of his will or the administrator of his estate.

6.6      Optional Forms of Payment.

         (a)      Joint-Survivor Pension.

                  (i)      Under the Joint-Survivor Pension, a reduced amount
                  shall be payable to the Retired Employee for his lifetime. The
                  Beneficiary, if surviving at the Retired Employee's death,
                  shall be entitled to receive thereafter a lifetime survivor
                  benefit in an amount equal to 100 percent, 66-2/3 percent, 50
                  percent, or 33-1/3 percent as elected by the Employee, of the
                  reduced amount that had been payable to the Retired Employee.

                  (ii)     The reduced amount payable to the Retired Employee
                  shall be determined as prescribed by Section 6.1, 6.2, or 6.3,
                  as the case may be, except that the amount obtained shall be
                  the Actuarial Equivalent. The appropriate actuarial factor
                  shall be determined for any Employee and his Beneficiary as of
                  the Employee's Pension Commencement Date.

                  (iii)    If an Employee designates any individual other than
                  his Spouse as his Beneficiary, the annual amount of the
                  Employee's annuity under the Joint-Survivor Pension shall be
                  not less than 50 percent of his annual Pension calculated as a
                  single life annuity, and the Beneficiary's survivor annuity
                  under the Joint-Survivor Pension shall be reduced, in
                  accordance with the Actuarial Equivalent, to the extent
                  necessary to reflect any adjustment required by this paragraph
                  (iii) in the amount of the Employee's annuity under the
                  Joint-Survivor Pension.

         (b)      Lump Sum Distribution Option.

                  (i)      Any Employee who will qualify for a Pension under
                  Section 5.1, 5.2, or 5.4 may elect to receive his Pension in
                  the form of a lump sum distribution. The amount of any such
                  lump sum distribution shall be the actuarial present value (as
                  of the Employee's Pension Commencement Date) of his Service
                  Pension computed under Section 6.1 (or in the case of a
                  Deferred Vested Pension, as computed under Section 6.3) as a
                  single life annuity commencing on his Pension Commencement
                  Date. For purposes of this paragraph (i), actuarial present
                  value shall be determined under whichever of the following
                  assumptions produces the largest lump sum distribution:

                      (1)  For purposes of this subparagraph (1), the
                           assumptions shall be the TPF&C 1971 Forecast
                           Mortality Table for Males (with ages set back two
                           years) and the six-month moving average yield of
                           United States Treasury obligations with ten-year
                           maturities, as reported in the Federal Reserve
                           Statistical Release or an equivalent publication of
                           said Federal Reserve,

                                       35
<PAGE>

                           with the six-month averaging period commencing 12
                           months prior to the Employee's Pension Commencement
                           Date.

                      (2)  For purposes of this subparagraph (2), the
                           assumptions shall be the GATT Assumptions.

                      (3)  For purposes of this subparagraph (3), the
                           assumptions shall be the TPF&C 1971 Forecast
                           Mortality Table for Males (with ages set back two
                           years) and the PBGC Immediate Rate. This subparagraph
                           shall only apply to (A) an Employee who would have
                           been eligible for a Service Pension if he had Retired
                           before January 1, 2000 under the GTE Plan, or (B) a
                           Contel Participant (under Article XVI) who had
                           satisfied the requirements for an early retirement
                           benefit under section 4.3 of the Contel System
                           Pension Plan as of January 1, 1993.

                  Notwithstanding the foregoing, the amount of any lump sum
                  distribution determined under this subsection (b)(i) shall not
                  be less than the actuarial present value (as of the Employee's
                  Pension Commencement Date) of his Accrued Benefit based on the
                  GATT Assumptions.

                  (ii)     Any Employee who will qualify for a Disability
                  Pension under Section 5.3 may elect to receive his Disability
                  Pension in the form of a lump sum distribution. The amount of
                  any such lump sum distribution shall be the greatest of the
                  amounts determined under subparagraph (1) or (2), below,
                  whichever is the greatest.

                      (1)  The amount determined under this subparagraph (1)
                           shall be the actuarial present value (as of the
                           Employee's Pension Commencement Date) of the
                           Disability Pension payable to the Employee in the
                           form of a single life annuity commencing on his
                           Pension Commencement Date. For this purpose,
                           actuarial present value shall be determined using the
                           interest rate assumption set forth in Section
                           6.6(b)(i) and 67 percent of the PBGC Mortality Table
                           for Disabled Male Participants Receiving Social
                           Security Disability Benefit Payments as set forth in
                           Table 2-M of Appendix A to 29 C.F.R.Part 4044.

                      (2)  The amount determined under this subparagraph (2)
                           shall be the actuarial present value (as of the
                           Employee's Pension Commencement Date) of the
                           Disability Pension payable to the Employee in the
                           form of single life annuity commencing on the first
                           day of the month next following his Normal Retirement
                           Date. For this purpose, actuarial present value shall
                           be determined using the GATT Assumptions.

                  (iii)    Notwithstanding anything to the contrary in Section
                  7.1, the payment of a Service Pension or Disability Pension in
                  the form of a lump sum distribution shall be made in a single
                  taxable year of the recipient and shall be made on or as soon
                  as practicable after an Employee's Pension Commencement Date.

                                       36
<PAGE>

         (c)      Five-Year Certain and Life Annuity Option.

         A participant in the Plan shall be eligible to elect to receive his
         benefits in the form of an annuity that is the Actuarial Equivalent to
         the Plan's single life annuity and that provides equal monthly payments
         for the life of the participant, with the condition that if the
         participant dies before he has received 60 monthly payments, the
         participant's designated Beneficiary shall receive monthly payments in
         the same amount as the participant until a total of 60 monthly payments
         have been made to the participant and his Beneficiary combined.

6.7      Limitations on Pensions.

         (a)      In addition to any other limits set forth in the Plan, and
         notwithstanding any other provision of the Plan, in no event shall the
         annual amount of any retirement benefit payable with respect to a
         participant under the Plan exceed the maximum annual amount permitted
         by section 415 of the Code for a retirement benefit payable in the form
         and commencing at the age provided for with respect to the participant.
         The determination in the preceding sentence shall be made after taking
         into account the retirement benefits payable with respect to the
         participant under all other defined benefit plans required to be
         aggregated with this Plan under section 415(f)(1)(A) of the Code.

         (b)      If the limits imposed by subsection (a), above, with respect
         to a participant would otherwise be exceeded, the retirement benefits
         and annual additions with respect to the participant under the plans
         described in subsection (a), above, shall be reduced until those limits
         are satisfied. Reductions shall be made in reverse chronological order,
         that is, on a plan-by-plan basis, beginning with the plan under which
         the participant most recently accrued a benefit, and ending with the
         plan under which the participant least recently accrued a benefit.

         (c)      The limits imposed by subsection (a), above, shall be applied
         on the basis of:

                  (i)      in accordance with section 415(b)(2)(E) of the Code,
                  as amended by section 767 of the Uruguay Round Agreements Act
                  (as subsequently amended by section 1449 of the Small Business
                  Job Protection Act of 1996),

                  (ii)     the definition of compensation in Treas. Reg. Section
                  1.415-2(d)(11)(i),

                  (iii)    any cost-of-living increase that the Plan is
                  permitted to take into account under section 415(d) of the
                  Code,

                  (iv)     any applicable transition rule prescribed in section
                  1106(i) of the Tax Reform Act of 1986, and

                  (v)      any other applicable transition rule that preserves a
                  participant's accrued benefit under the Plan as of the
                  effective date of the enactment or amendment of section 415 of
                  the Code.

                                       37
<PAGE>

         (d)      Notwithstanding the foregoing, the application of this Section
         6.7 shall not cause a participant's accrued benefit (including any
         optional benefit) determined under the provisions of the Plan to be
         less than the greater of:

                  (i)      the participant's accrued benefit based on all
                  service credited under the Plan taking into account the
                  limitations of section 415 of the Code in effect as of the
                  date of the determination; or

                  (ii)     the sum of

                           (A) the participant's accrued benefit under the terms
                               of the GTE Plan in effect as of December 31,
                               1999, taking into account the limitations of
                               section 415 of the Code in effect as of December
                               7, 1994, and

                           (B) the participant's accrued benefit based solely on
                               service after December 31, 1999, taking into
                               account the limitations of section 415 of the
                               Code in effect as of the date of the
                               determination.

         (e)      This section 6,7 is intended to satisfy the requirements
         imposed by section 415 of the Code and shall be construed in a manner
         that will effectuate this intent. This Section 6.7 shall not be
         construed in a manner that would impose limitations that are more
         stringent than those required by section 415 of the Code.

6.8      Eligible Rollover Distributions.

         (a)      Notwithstanding any provision of the plan to the contrary that
         would otherwise limit a distributee's election under this Section 6.8,
         a distributee may elect, at the time and in the manner prescribed by
         the plan administrator, to have any portion of an eligible rollover
         distribution paid directly to an eligible retirement plan specified by
         the distributee in a direct rollover.

         (b)      Definitions.

                  (i)      Eligible rollover distribution: An eligible rollover
                  distribution is any distribution of all or any portion of the
                  balance to the credit of the distributee except that an
                  eligible rollover distribution does not include: any
                  distribution that is one of a series of substantially equal
                  periodic payments (not less frequently than annually) made for
                  the life (or life expectancy) of the distributee or the joint
                  lives (or joint life expectancies) of the distributee and the
                  distributee's designated beneficiary, or for a specified
                  period of ten years or more; any distribution to the extent
                  such distribution is required under section 401(a)(9) of the
                  Code; and the portion of any distribution that is not
                  includible in gross income (determined without regard to the
                  exclusion for eligible rollover distributions or the exclusion
                  for net unrealized appreciation with respect to employer
                  securities).

                                       38
<PAGE>

                  (ii)     Eligible retirement plan: An eligible retirement plan
                  is an individual retirement account described in section
                  408(a) of the Code, an individual retirement annuity described
                  in section 408(b) of the Code, an annuity plan described in
                  section 403(a) of the Code, or a qualified trust described in
                  section 401(a) of the Code, that accepts the distributee's
                  eligible rollover distribution. However, in the case of an
                  eligible rollover distribution to the surviving spouse, an
                  eligible retirement plan is an individual retirement account
                  or individual retirement annuity.

                  (iii)    Distributee: A distributee includes an employee or
                  former employee. In addition, the employee's or former
                  employee's surviving spouse and the employee's or former
                  employee's spouse or former spouse who is the alternate payee
                  under a qualified domestic relations order, as defined in
                  section 414(p) of the Code, are distributees with regard to
                  the interest of the spouse or former spouse.

                  (iv)     Direct rollover: A direct rollover is a payment by
                  the plan to the eligible retirement plan specified by the
                  distributee.

                                       39
<PAGE>

                                   ARTICLE VII

               PAYMENT OF PENSIONS AND CONDITIONS RELATED THERETO

7.1      Annuity Forms of Payments. All Pensions, except those Pensions paid in
         a lump sum distribution pursuant to Section 6.6(b) or 7.7, shall be
         payable in monthly installments as follows:

         (a)      The first installment shall be paid to the Retired Employee
         (or Spouse, in the case of a Spouse's Pension) as of the Pension
         Commencement Date determined in accordance with Articles V, VI, and
         VII;

         (b)      Where installments are to be paid to a Beneficiary under a
         Joint-Survivor Pension, the first installment to the Beneficiary shall
         be paid as of the beginning of the first month following the death of
         the participant; and

         (c)      The final installment shall be paid as of the beginning of the
         month during which the death of the Retired Employee or Beneficiary, as
         the case may be, occurs, except that Disability Pension installments
         shall cease prior to the death of the Retired Employee if and when he
         ceases to satisfy the disability conditions of Section 5.3.

         (d)      A check in payment of a monthly installment may be mailed, in
         the discretion of the Committee, before the date as of which the
         payment is made.

7.2      Prohibition Against Alienation of Benefits. The benefits under the Plan
         may not be anticipated, assigned (either at law or in equity),
         alienated, or subjected to attachment, garnishment, levy, execution, or
         other legal or equitable process, provided that:

         (a)      an arrangement whereby benefit payments are paid to a
         participants savings or checking account in a financial institution is
         not prohibited;

         (b)      once a participant begins receiving benefits under the Plan,
         such participant may assign or alienate the right to future payments if
         such transaction is limited to assignments or alienations that

                  (i)      are voluntary and revocable,

                  (ii)     with respect to a particular benefit payment, do not
                  in the aggregate exceed 10 percent of such payment, and

                  (iii)    neither are for the purpose, nor have the effect, of
                  defraying administrative costs of the Plan.

         (c)      payments made in accordance with a Qualified Domestic
         Relations Order are not prohibited.

         For the purposes of subsection (b), above, an attachment, garnishment,
         levy, execution or other legal or equitable process is not considered a
         voluntary assignment or alienation.

                                       40
<PAGE>

7.3      Suspension of Benefits.

         (a)      Except as otherwise provided in Section 5.6, no Pension shall
         be paid or payable with respect to a participant (including a Retired
         Employee) for any month in which (1) with respect to an Hourly
         Employee, he is credited with 40 or more Hours of Service as a regular
         or temporary employee of an Affiliate, or (2) with respect to a
         Salaried Employee, he is paid for at least 8 days of work as a regular
         or temporary employee of an Affiliate.

         Thus, except as otherwise provided in Section 5.6, a Retired Employee's
         Pension or the Pension of a participant other than a Retired Employee
         shall be suspended for any month beginning after his Normal Retirement
         Date during which (A) with respect to an Hourly Employee, he is
         credited with 40 or more Hours of Service as a regular or temporary
         employee of an Affiliate, or (B) with respect to a Salaried Employee,
         he is paid for at least 8 days of work as a regular or temporary
         employee of an Affiliate;

         The preceding provision of this subsection (a) shall apply even though
         the Retired Employee's or participant's service as a regular or
         temporary employee of an Affiliate does not constitute "section
         203(a)(3)(B) service" described in 29 C.F.R. Section 2530.203-3(c), and
         even though the procedures regarding notice, review, and administration
         otherwise prescribed under 29 C.F.R. Section 2530.203-3 are not
         observed.

         (b)      Except as otherwise provided in Section 5.6, if a participant
         (including a Retired Employee) is reemployed or remains in employment
         as a regular or temporary employee of an Affiliate as described in
         subsection (a), above, his Pension Commencement Date shall occur no
         earlier than the first day of the first month in which he ceases to be
         so employed, and his Pension shall be calculated, in accordance with
         Sections 4.4, 4.5, 4.6, and 4.7, to take such employment into account.
         If a Retired Employee subject to subsection (a)(i) or (ii), above,
         becomes entitled to have his Pension resume, the amount and form of the
         Pension shall be governed by the generally applicable provisions of the
         Plan, as if he were then first Retiring.

         (c)      (i)      If the Pension of a participant is suspended pursuant
                  to subsection (a), above, during any period after his Age 65
                  Normal Retirement Date, the amount of his Pension determined
                  under subsection (b), above, shall not be less than the
                  actuarial equivalent of the single life annuity that would
                  have been payable to him (or that he could have elected to
                  receive) commencing on the day after his Age 65 Normal
                  Retirement Date (or if later, the day his benefits were
                  suspended), had his Pension not been suspended. For this
                  purpose, actuarial equivalence shall be determined using an
                  interest rate of 7 percent per annum and the TPF&C 1971
                  Forecast Mortality Table for Males (with ages set back 2
                  years).

                  (ii)     If the Pension of a participant (including a Retired
                  Employee) is suspended pursuant to subsection (a), above,
                  during any period after his Normal Retirement Date (but before
                  his Age 65 Normal Retirement Date, if later), and his
                  employment during such period constitutes "section
                  203(a)(3)(B) service" described in 29 C.F.R. Section
                  2530.203-3(c), the Company shall notify the participant of
                  such suspension or delay by personal delivery or first

                                       41
<PAGE>

                  class mail during the first calendar month in which the
                  Pension is to be suspended, shall afford him a review of such
                  suspension under the procedure specified in Section 9.13, and
                  shall otherwise administer such suspension and any subsequent
                  resumption or commencement of Pension payments in a manner
                  consistent with 29 C.F.R. Section 2530.203-3.

         (d)      Except as otherwise provided in Section 5.5, if a Retired
         Employee subject to subsection (a)(i) or (ii), above, previously
         received a total distribution of his Pension in accordance with Section
         6.6(b) or 7.7, the amount of the single life annuity used to determine
         his Pension upon Retirement under subsection (b), above, shall be
         reduced by the amount of the single life annuity upon which such total
         distribution was based.

7.4      Provision of Necessary Information. The Committee may request an
         Employee, former Employee, Retired Employee, or Beneficiary to furnish
         it with such information as it considers reasonably necessary or
         appropriate for the proper administration of the Plan or the payment of
         a Pension. In the event that an Employee, former Employee, Retired
         Employee, or Beneficiary fails to furnish any such information that is
         necessary to the calculation or payment of a Pension and that is not
         reasonably available from alternative sources, the Committee shall
         withhold payment of the Pension until the information is provided.

7.5      Transfer Between Affiliates. Any Employee whose employment is
         transferred from one Affiliate to another Affiliate shall not by reason
         of such transfer be eligible for Early Retirement or a Deferred Vested
         Pension under this Plan. However, upon the conclusion of the Employee's
         employment with the Affiliates, he shall be entitled to the Pension, if
         any, for which he is eligible on the basis of his Average Annual
         Compensation, Vesting Service, and Accredited Service at that time,
         calculated in accordance with the provisions of this Plan.

7.6      Change between Hourly Employee and Salaried Employee Status. If an
         Hourly Employee becomes a Salaried Employee (or vice versa), his
         Pension under the Plan will be determined based on his status on his
         Retirement Date, or, in the case of an Employee entitled to a Deferred
         Vested Pension, on the date on which he terminates employment with the
         Company. Notwithstanding the foregoing, in no event shall an Employee's
         Pension be less than his Accrued Benefit on the day preceding the day
         on which he changes between Hourly Employee and Salaried Employee
         status.

7.7      Mandatory Lump Sum Distribution of Small Benefits. If a former Employee
         is entitled to a Deferred Vested Pension and the actuarial present
         value of such Deferred Vested Pension does not exceed $5,000, the
         former Employee shall receive such Deferred Vested Pension in the form
         of a lump sum payment equal to the actuarial present value of the
         Deferred Vested Pension otherwise payable to him under the Plan. If a
         Spouse is entitled to a Spouse's Pension and the actuarial present
         value of such Spouse's Pension does not exceed $5,000, the Spouse shall
         receive such Spouse's Pension in the form of a lump sum payment equal
         to the actuarial present value of the Spouse's Pension otherwise
         payable to the Spouse under the Plan. For purposes of the foregoing,
         the actuarial present value of a Deferred Vested Pension or Spouse's
         Pension shall be determined as of the payment date

                                       42
<PAGE>

         based on the GATT Assumptions. Notwithstanding the foregoing, this
         Section 7.7 shall not apply in the case of a former Employee or a
         Spouse who is otherwise eligible to elect immediate commencement of the
         Deferred Vested Pension or Spouse's Pension.

7.8      Minimum Distributions Required Under Code Section 401(a)(9). The
         following subsections limit the timing of Pension distributions under
         the Plan:

         (a)      Any Pension that is payable to a participant hereunder shall
         be distributed or commence not later than the participant's Required
         Starting Date. The Pension shall be distributed, in accordance with
         section 401(a)(9) of the Code (including the incidental benefit rules
         applicable thereunder),

                  (i)      in a lump sum (to the extent otherwise permitted
                  under the Plan, including, without limitation, under Section
                  6.6(b) or 7.7),

                  (ii)     over the life of the participant,

                  (iii)    over the lives of the participant and the
                  participant's Beneficiary,

                  (iv)     over a period not extending beyond the participant's
                  life expectancy, or

                  (v)      over a period not extending beyond the joint and last
                  survivor expectancy of the participant and the participant's
                  Beneficiary.

         If the participant's entire interest is to be distributed over a period
         of more than one year, then the amount to be distributed each year
         shall be no less than the amount prescribed under section 401(a)(9) of
         the Code.

         (b)      If the distribution of the participant's Pension has commenced
         in conformity with subsection (a), above, and the participant dies
         before his entire Pension has been distributed to him, the remaining
         portion of his Pension shall be distributed to his Beneficiary at least
         as rapidly as under the method of distribution that was in effect as of
         the date of the participant's death.

         (c)      Subject to subsection (d), below, if the participant dies
         before distribution of his Pension has commenced, any Pension that is
         payable under the terms of the Plan shall be distributed within five
         years after the participant's death.

         (d)      Subsection (c), above, shall not apply to:

                  (i)      any portion of the participant's Pension payable to
                  (or for the benefit of) a Beneficiary that is distributed (in
                  accordance with section 401(a)(9) of the Code) over the
                  Beneficiary's life (or a period not extending beyond his life
                  expectancy) commencing within one year after the date of the
                  participant's death (or such later date as may be prescribed
                  under section 401(a)(9) of the Code), or

                  (ii)     any portion of the participant's Pension payable to
                  his Spouse that is distributed over the Spouse's life (or a
                  period not extending beyond the Spouse's

                                       43
<PAGE>

                  life expectancy) commencing no later than the date on which
                  the participant would have attained age 70-1/2; provided that
                  if the Spouse dies before payments to such Spouse begin,
                  subsections (c) and (d) shall apply as if the Spouse were the
                  participant; and further provided that any amount paid to the
                  child of the participant shall be treated as if it had been
                  paid to the Spouse of the participant if such amount is
                  payable to the Spouse upon such child's reaching majority (or
                  such other event as may be prescribed by the regulations under
                  section 401(a)(9) of the Code).

         (e)      For purposes of this Section 7.8, the life expectancy of the
         participant and his Spouse shall be recomputed on an annual basis but
         the life expectancy of any non-spouse Beneficiary shall be computed
         only on the date as of which the distribution commences.

         (f)      This Section 7.8 shall apply notwithstanding any other
         provision of the Plan. The sole purpose of this Section 7.8 is to limit
         the manner in which the benefit payments may be made under the Plan in
         accordance with section 401(a)(9) of the Code. This Section 7.8 does
         not confer any rights or benefits upon any participant, Spouse,
         Beneficiary, or any other person.

         (g)      Any participant who does not elect a form of distribution
         before his distribution is required to commence under this Section 7.8
         shall receive the distribution in the form provided for under Section
         6.5(a).

7.9      Early Commencement Election. Notwithstanding any other provision in the
         Plan, and subject to the provisions of Section 6.5 and Section 7.7, the
         participant (or his Spouse, in the case of a Spouse's Pension) may
         elect a Pension Commencement Date that precedes the normal Pension
         Commencement Date if he is otherwise eligible to do so under the terms
         of the Plan. The election shall be in writing, in a form acceptable to
         the Committee, and executed and filed with the Committee during the
         90-day period ending on the Pension Commencement Date (or during such
         other period permitted or required by law).

7.10     Employment Following Sale of Affiliate.

         In the event of the sale or other disposition of all or a portion of
         the business operations of one or more Affiliates (however
         accomplished, including, without limitation, by sale of assets, sale of
         stock, merger, consolidation, or reorganization) as a result of which
         the business operations so sold or disposed of no longer are operated
         by one or more Affiliates, the Pension Commencement Date of any
         Employee who holds substantially the same position in such operations
         immediately before and immediately after such sale or disposition,
         regardless of whether such position is with the same or a different
         legal entity, shall not occur before the earlier of (i) the Employee's
         termination of employment with the purchaser's affiliated group or (ii)
         the first day of the month next following the Employee's Age 65 Normal
         Retirement Date. For purposes of the preceding sentence, the
         purchaser's affiliated group shall consist of the legal entity that,
         immediately following the sale or disposition, operates the business
         operations sold or disposed of, and all other legal entities that would
         be Affiliates (within the meaning of paragraphs (b) through (e) of the
         definition of "Affiliate" in Article II) of such legal entity if such
         legal entity were

                                       44
<PAGE>

         the Company. For purposes of this Section 7.10, the term "legal entity"
         shall include, without limitation, a corporation, unincorporated
         business, or other organization.

                                       45
<PAGE>

                                  ARTICLE VIII

                                     FUNDING

8.1      Establishment of Pension Fund. The Company, with the approval of the
         Board, shall establish a Pension Fund for the purpose of funding the
         Pensions under the Plan. The Pension Fund shall consist of one or more
         Trust Funds and/or one or more arrangements with insurance companies
         for the funding of Pensions.

8.2      Trust Agreement. Each Trust Fund shall be established and maintained
         pursuant to a Trust Agreement that contains such provisions as the
         Company shall determine. The terms of each Trust Agreement are hereby
         incorporated into and made a part of the Plan.

8.3      Insurance Arrangement. Each arrangement with an insurance company
         shall be established and maintained pursuant to a written contract or
         policy between the Company and an insurance company qualified to do
         business in a State, which shall contain such provisions as the Company
         shall determine.

8.4      Contributions. The Company intends to make contributions to the Pension
         Fund sufficient to comply with the minimum funding standards imposed
         by the Code. The Company's contributions shall be determined annually,
         or more frequently, by the Board. Each contribution made to the Plan
         shall be made on the condition that it is currently deductible under
         section 404 of the Code for the taxable year with respect to which the
         contribution is made and without regard to any subsequent amendment
         improving benefits under the Plan.

8.5      Exclusive Benefit. Except as provided in this Section 8.5 and in
         Section 8.6, all Company contributions to the Pension Fund and all
         property of the Pension Fund, including income from investments and
         other sources, shall be used for the exclusive benefit of Employees,
         Retired Employees, former Employees, and Beneficiaries and shall be
         used to provide benefits under the Plan and to pay the reasonable
         expenses of administering the Plan and the Pension Fund, except to the
         extent that such expenses are paid by the Company. Any forfeitures
         arising under the Plan shall be applied to reduce the Company's
         contributions to the Pension Fund and shall not be used to increase the
         Pension or other benefit that any Employee, Retired Employee, former
         Employee, or Beneficiary would otherwise be entitled to receive under
         the Plan. Except as provided in Section 8.6, it shall be impossible at
         any time prior to the satisfaction of all liabilities under the Plan
         for any portion of the Pension Fund to be used for, or diverted to,
         purposes other than the exclusive benefit of Employees, Retired
         Employees, former Employees, and Beneficiaries; provided, however, that
         after all liabilities under the Plan have been satisfied, any assets
         remaining in the Pension Fund that are attributable to erroneous
         actuarial computations shall be distributed to the Company, except as
         otherwise required by section 4044(d)(3)(A) of ERISA.

8.6      Return of Contributions. Notwithstanding any other provisions of the
         Plan, the Company shall be entitled upon request to the return of any
         contribution made to the Pension Fund (adjusted, in the case of any
         contribution described in subsection (a) or (c), below, to

                                       46
<PAGE>

         reflect any investment losses allocable thereto, but not to reflect any
         investment gains allocable thereto):

(a)      within one year after the payment of the contribution, in the case of a
         contribution made by mistake of fact;

(b)      within one year after the date of denial of the Plan's initial
         qualification, if the contribution is conditioned on initial
         qualification of the Plan under section 401(a) of the Code; or

(c)      within one year after the disallowance of the deduction, to the extent
         the deduction is disallowed if the contribution is conditioned on the
         deductibility of the contribution under section 404 of the Code.

                                       47
<PAGE>

                                   ARTICLE IX

               FIDUCIARY RESPONSIBILITIES AND PLAN ADMINISTRATION

9.1      Allocation of Fiduciary Responsibilities. Fiduciary responsibilities in
         connection with the Plan shall be allocated in accordance with the
         provisions of this Article IX and shall be carried out in accordance
         with the Plan and applicable law. It is intended that, to the extent
         permitted by applicable law, each fiduciary shall be obligated to
         discharge only the responsibilities assigned to him and that he shall
         not be charged with the responsibilities assigned to any other
         fiduciary.

9.2      Employee Benefits Committee. The Employee Benefits Committee shall
         consist of not less than three nor more than 11 persons to be appointed
         by and serve at the pleasure of the Board of Managers of Valor
         Telecommunications Enterprises, LLC.

9.3      Committee Action by Majority Vote. The Employee Benefits Committee may
         act, with or without a meeting, by a vote of a majority of its members
         then in office.

9.4      Plan Administrator. The Employee Benefits Committee shall be the Plan
         administrator and shall be responsible for the administration of the
         Plan. In addition to any implied powers and duties that may be
         necessary or appropriate to the conduct of its affairs, the Committee
         shall have the following powers and duties, including the discretionary
         power

         (a)      to make and enforce such rules and regulations as it shall
         determine to be necessary or proper for the administration of the Plan;

         (b)      to interpret the Plan and to decide all matters arising
         thereunder, including the right to remedy possible ambiguities,
         inconsistencies, and omissions;

         (c)      to determine the right of any person to benefits under the
         Plan and the amount of such benefits;

         (d)      to issue instructions to a Trustee or insurance company to
         make disbursements from the Pension Fund, and to make any other
         arrangement necessary or appropriate to provide for the orderly payment
         and delivery of disbursements from the Pension Fund:

         (e)      to delegate to other persons such of its responsibilities as
         it may determine;

         (f)      to retain an Enrolled Actuary;

         (g)      to employ suitable agents, actuaries, auditors, legal counsel,
         and other advisers as it may determine;

         (h)      to allocate among its members such of its responsibilities as
         it may determine; and

         (i)      to prepare, file, and distribute such forms, statements,
         descriptions, returns, and reports relating to the Plan as may be
         required by law.

                                       48
<PAGE>

9.5      Committee Reliance on Professional Advice. The Committee is authorized
         to obtain, and act on the basis of, tables, valuations, certificates,
         opinions, and reports furnished by an Enrolled Actuary, accountant,
         legal counsel, or other advisers.

9.6      Plan Administration Expenses. All reasonable expenses of administering
         the Plan (including, without limitation, the expenses of the Employee
         Benefits Committee) shall be paid out of the assets of the Pension
         Fund, in accordance with and to the extent provided in the provisions
         of the Trust Agreement, except to the extent paid by the Company
         without request by the Company for reimbursement from the Pension Fund.

9.7      Responsibilities of Trustees. Each Trustee shall be responsible for the
         custody of the assets assigned to it, making disbursements at the order
         of the Employee Benefits Committee, and accounting for all receipts and
         disbursements with respect to the Plan.

9.8      Investment Management by Trustee. Each Trustee shall be responsible for
         managing the investment of the portion of the Pension Fund in its
         custody, or any part thereof, when directed to do so by Valor
         Telecommunications Enterprises, LLC in accordance with the terms of the
         Trust Agreement.

9.9      Allocation of Investment Management Responsibilities. Valor
         Telecommunications Enterprises, LLC shall have the sole fiduciary
         responsibility for determining whether the investment of the Plan
         assets held by a Trustee shall be managed by the Trustee, or by one or
         more investment managers, or whether both the Trustee and one or more
         investment managers are to participate in investment management and, if
         so, how investment responsibility is to be divided.

9.10     Appointment and Removal of Investment Managers. Valor
         Telecommunications Enterprises, LLC shall have the sole fiduciary
         responsibility for the appointment or removal of any investment
         management and shall enter into an investment management agreement with
         each investment manager appointed by it on such terms and conditions
         consistent with the provisions of this Plan as it shall deem advisable.
         Each investment manager shall be responsible for managing the
         investment of such portion of the Pension Fund as shall be placed under
         its management pursuant to the investment management agreement.

9.11     Ascertainment of Plan Financial Needs. Valor Telecommunications
         Enterprises, LLC shall have the sole fiduciary responsibility for
         periodic ascertaining the financial needs of the Plan, including the
         Plan's liquidity needs, and shall convey the pertinent information to
         the Trustee and/or investment managers responsible for managing the
         investments of the Pension Fund.

9.12     Delegation of Company's Duties. Valor Telecommunications Enterprises,
         LLC shall designate, in accordance with its normal practice, such of
         its officers or other employees as it shall consider appropriate to
         carry out its duties under the foregoing Sections 9.8, 9.9, 9.10 and
         9.11.

                                       49
<PAGE>

9.13     Benefit Claim Procedure.

         (a)      If an individual is denied any benefits (in whole or in part)
         to which he believes he is entitled under the Plan, he may file a claim
         for benefits as set forth herein. Any claim for benefits under the Plan
         shall be delivered in writing by the claimant to the Pension Plan
         Administrator, who shall be designated by the Committee. The claim
         shall identify the benefits requested and shall include a statement of
         the reasons why the benefits should be granted. The Pension Plan
         Administrator shall grant or deny the claim. If the claim is denied in
         whole or in part, the Pension Plan Administrator shall give written
         notice to the claimant, setting forth: (i) the reasons for the denial,
         (ii) specific reference to pertinent Plan provisions on which the
         denial is based, (iii) a description of any additional material or
         information necessary for the perfection of the claim and an
         explanation of why such material or information is necessary, and (iv)
         an explanation of the Plan's claim review procedure. The notice
         described in the preceding sentence shall be furnished to the claimant
         within a period of time not exceeding 90 days after receipt of the
         claim; except that such period of time may be extended, if special
         circumstances should require, for an additional 90 days commencing at
         the end of the initial 90-day period. Written notice of such an
         extension shall be given to the claimant before the expiration of the
         initial 90-day period and shall indicate the special circumstances
         requiring the extension and the date by which the final decision is
         expected to be rendered. In exercising its responsibilities pursuant to
         this Section 9.13, the Pension Plan Administrator shall have the
         discretionary power to interpret the Plan and to decide all matters
         arising thereunder, including the right to remedy possible ambiguities,
         inconsistencies, and omissions.

         (b)      A claimant who has been denied a claim for benefits, in whole
         or in part, may, within a period of 60 days thereafter, request a
         review of such denial by filing a written notice of appeal with the
         Committee. In connection with an appeal, the claimant (or his duly
         authorized representative) may review pertinent documents and may
         submit evidence and arguments in writing to the Committee. The
         Committee shall decide the questions presented by the appeal, either
         with or without holding a hearing, and shall issue to the claimant a
         written notice setting forth: (i) the specific reasons for the decision
         and (ii) the specific reference to pertinent Plan provisions on which
         the decision is based. The notice described in the preceding sentence
         shall be issued within a period of time not exceeding 60 days after
         receipt of the request for review; except that such period of time may
         be extended, if special circumstances (including, but not limited to,
         the need to hold a hearing) should require, for an additional 60 days
         commencing at the end of the initial 60-day period. Written notice of
         such an extension shall be provided to the claimant prior to the
         expiration of the initial 60-day period. The decision of the Committee
         shall be final and conclusive. In the event that the Pension Plan
         Administrator is a member of the Committee, he shall not participate in
         the decision of the Committee or in any of the proceedings with respect
         thereto.

9.14     QDRO Procedures. The Committee shall establish written procedures to
         determine the qualified status of domestic relations orders and to
         administer distributions under Qualified Domestic Relations Orders.
         Such procedures shall be consistent with any regulations prescribed
         under section 206(d) of ERISA. In the case of any domestic

                                       50
<PAGE>

         relations order received by the Plan, the Committee shall promptly
         notify the participant and any other alternate payee (as defined in
         section 206(d)(3)(K) of ERISA) of the receipt of such order and the
         procedures for determining the qualified status of domestic relations
         orders. Within a reasonable period after receipt of such order, the
         Committee shall determine whether such order is qualified and shall
         notify the participant and each alternate payee of such determination.
         During any period in which the qualified status of a domestic relations
         order is being determined (by the Committee, by a court, or otherwise),
         the Committee shall direct the Trustee to account separately for the
         amounts that would have been payable to each alternate payee if the
         order had been determined to be a Qualified Domestic Relations Order.
         If within 18 months of the receipt of the order, the order (or
         modification thereof) is determined to be a Qualified Domestic
         Relations Order, the Committee shall direct the Trustee to pay the
         segregated amounts (plus any interest thereon) to the person or persons
         entitled thereto. If within 18 months of the receipt of the order, it
         is determined that the order is not qualified, or the issue as to
         whether the order is qualified is not resolved, then the Committee
         shall direct the Trustee to pay the segregated amounts (plus any
         interest thereon) to the person or persons who would have been entitled
         to such amounts if there had been no order. Any determination that an
         order is qualified that is made after the close of the 18-month period
         shall be applied prospectively only.

9.15     Service in Multiple Fiduciary Capacities. Any person or group of
         persons may serve in more than one fiduciary capacity with respect to
         the Plan in accordance with section 402(c)(1) of ERISA.

                                       51
<PAGE>

                                   ARTICLE X

      COSPONSORSHIP OF PLAN BY AFFILIATES AND MERGERS WITH AFFILIATE PLANS

10.1     Cosponsorship of Plan by Affiliates. Any Affiliate, with the specific
         approval of the Board and the Affiliate's board of directors (or other
         governing body, if applicable), may join in this Plan as a cosponsor.
         Thereupon, such Affiliate shall be included in the definition of
         Company hereunder and shall have the obligation to make contributions
         to this Plan sufficient to fund the benefits of its Employees and their
         Beneficiaries. In any such case, this Plan shall remain a single plan
         with any and all of its assets derived from Company contributions
         (regardless of the entity to whose contributions such assets can be
         traced) available to pay the benefits to each participant and
         Beneficiary hereunder and any other liabilities of the Plan.

10.2     Merger with Plan of Affiliate.

         (a)      Any other pension or retirement plan, sponsored by an
         Affiliate, may be merged into this Plan, with this Plan as the
         surviving instrument, with the specific approval of the Board and, if
         applicable, the board of directors (or other governing body, if
         applicable) of the Affiliate. Thereupon, if the employer sponsoring the
         merged plan is an Affiliate, the Affiliate shall become a cosponsor of
         the Plan, included in the definition of Company hereunder. In any such
         case, the Plan shall remain a single plan with any and all of its
         assets derived from Company contributions (regardless of the entity to
         whose contributions such assets can be traced) available to pay the
         benefits of each participant and Beneficiary hereunder and any other
         liabilities of the Plan.

         (b)      The assets of the merged plan shall be transferred to the
         Trustee and be assets of the Plan, and the liabilities of the merged
         plan shall be liabilities of the Plan.

         (c)      Each participant in the merged plan shall become a participant
         in the Plan on the merger date, with accrued or vested benefits under
         the Plan equal to his accrued or vested benefits under the merged plan,
         and thereafter shall continue to participate in the Plan in accordance
         with its terms. Furthermore, each participant in the merged plan who is
         an Employee on the merger date shall be entitled to Accredited Service
         for his service under the merged plan and the greater of (i) his
         accrued or vested benefits under the Plan on account of such Accredited
         Service or (ii) his accrued or vested benefits under the merged plan.

         (d)      It is the intention, and it shall be the effect, of this
         Section 10.2 that any merger of a plan into this Plan be carried out in
         accordance with Section 11.3.

                                       52
<PAGE>

                                   ARTICLE XI

                             DURATION AND AMENDMENT

11.1     Reservation of Right to Suspend or Terminate Plan. While it is the
         intention of the Company that the Plan shall remain in effect
         indefinitely, the Board reserves the right to suspend or terminate the
         Plan in whole or in part, at any time and from time to time, and for
         any reason whatsoever that in the Board's sole discretion appears to it
         to make such action advisable.

11.2     Reservation of Right to Amend Plan. The Plan may be amended in
         accordance with the procedures set forth in this Section 11.2. The
         Board by duly adopted written resolution or by unanimous written
         consent may modify or amend the Plan in whole or in part, prospectively
         or retroactively, at any time and from time to time. The Board by duly
         adopted written resolution or by unanimous written consent may delegate
         the power to so modify or amend the Plan to one or more officers of
         the Company, subject to such conditions as the Board may in its sole
         discretion impose. Notwithstanding the preceding sentence, and without
         the necessity of a delegation of authority from the Board, the General
         Counsel of the Company may adopt any amendment or modification to the
         Plan that is, in the opinion of such General Counsel, necessary or
         appropriate to comply with applicable laws and regulations, including
         without limitation ERISA and the Code. The officers of the Company may
         take all actions necessary or appropriate to implement or effectuate
         any amendment or modification to the Plan described herein. Any
         modification or amendment of the Plan by one or more officers of the
         Company (including without limitation the General Counsel) shall be
         adopted by a written instrument executed by such officer or officers.
         Notwithstanding the foregoing, no amendment shall reduce any benefit,
         that is accrued or treated as accrued under section 411(d)(6) of the
         Code, of any participant, or the percentage (if any) of such benefit
         that is vested, on the later of the date on which the amendment is
         adopted or the date on which the amendment becomes effective.

11.3     Transactions Subject to Code Section 414(l). The Plan may be merged
         into or consolidated with another plan, and its assets or liabilities
         may be transferred to another plan. However, to the extent that section
         401(a)(12) or 414(l) of the Code is applicable and in accordance
         therewith, no such merger, consolidation, or transfer shall be
         consummated unless each Employee, Retired Employee, former Employee,
         and Beneficiary under the Plan would, if the resulting plan then
         terminated, receive a benefit immediately after the merger,
         consolidation, or transfer that is equal to or greater than the benefit
         he would have been entitled to receive immediately before the merger,
         consolidation, or transfer, if the Plan had then terminated; provided
         that the foregoing provisions of this Section 11.3 shall not apply if
         such alternative requirements as may be imposed by the regulations
         under section 414(l) of the Code are satisfied. For purposes of the
         preceding sentence, the benefit of an Employee, Retired Employee,
         former Employee, or Beneficiary upon the deemed termination of a plan
         shall be determined without regard to any requirement under Title IV of
         ERISA or otherwise that (a) the employer or any other person make
         additional contributions to the plan in connection with its
         termination, or (b) any assets of the plan attributable to employee
         contributions remaining after

                                       53
<PAGE>

         satisfaction of all liabilities described in section 4044(a) of ERISA
         be distributed to participants pursuant to section 4044(d)(3) of ERISA.
         Any liability transferred from the Plan to another plan pursuant to
         this Section 11.3 shall result in the extinguishment of such liability
         hereunder immediately upon such transfer, and no benefit previously
         payable under the Plan on account of such liability shall be payable
         under the Plan following such transfer.

                                       54
<PAGE>

                                  ARTICLE XII

          DISTRIBUTION OF THE PENSION FUND UPON TERMINATION OF THE PLAN

12.1     Vesting on Plan Termination. In case of a termination or partial
         termination of the Plan, the rights of all affected Employees, Retired
         Employees, and Beneficiaries to benefits accrued under the Plan to the
         date of such termination or partial termination, to the extent then
         funded, shall be nonforfeitable.

12.2     Allocation of Assets on Plan Termination. Upon termination of the Plan,
         the Committee shall allocate the Pension Fund in accordance with the
         following priority schedule, after providing for reasonable Plan
         administration expenses:

         (a)      First, there shall be paid any portion of a participant's
         accrued benefits derived from any non-mandatory contributions by him to
         the Plan;

         (b)      Second, there shall be paid any portion of a participant's
         accrued benefits derived from any mandatory contributions by him to the
         Plan;

         (c)      Third, there shall be allocated to (i) the Pension of each
         Retired Employee (or Beneficiary) that was being paid on the date three
         years prior to the date of termination, and (ii) the Pension of each
         Employee (or former Employee or Beneficiary) that would have been in
         pay status three years prior to the date of termination if the Employee
         or former Employee had Retired prior to such earlier date and if his
         Pension had commenced (in the normal form of annuity under the Plan) as
         of the beginning of such three-year period, an amount that is
         sufficient to provide such Pension, payable from the date of
         termination based on the provisions of the Plan as in effect during the
         five-year period ending on such date and under which the Pension was or
         would have been the least;

         (d)      Fourth, there shall be allocated to each Pension an amount
         that together with any amount allocated under subsection (c), above, is
         sufficient to provide the portion of the Pension that is guaranteed by
         the Pension Benefit Guaranty Corporation, as provided under Title IV of
         ERISA (without regard to sections 4022(b)(5) and 4022(b)(6) thereof;

         (e)      Fifth, there shall be allocated to each Pension an amount that
         together with any amounts allocated under subsections (c) and (d),
         above, is sufficient to provide each such Pension, to the extent it is
         nonforfeitable;

         (f)      Sixth, there shall be allocated to each Pension the amount
         that together with any amounts allocated under subsections (c) through
         (e), above, is sufficient to provide the accrued Pension on the date of
         the termination; and

         (g)      Seventh, after all liabilities of the Plan have been
         satisfied, any Residual Assets shall be distributed to the Company,
         except as otherwise required by section 4044(d)(3)(A) of ERISA.

                                       55
<PAGE>

12.3     Provision for Pensions After Plan Termination. Provision pursuant to
         Section 12.2 may be made, in the discretion, of Valor
         Telecommunications Enterprises, LLC, by the purchase of annuities or by
         continuing in existence any Trust Agreements or arrangements with
         insurance companies entered into pursuant to the Plan and making
         provision therefrom for Pensions, or both, or by immediate distribution
         from the Pension Fund, or by any combination of these means, as Valor
         Telecommunications Enterprises, LLC, in its sole discretion, shall
         determine.

12.4     Computation of Pensions After Plan Termination. The Pensions specified
         in Section 12.2 shall be computed in accordance with the provisions of
         Article VI or Article XVI of the Plan, as applicable, except that, to
         the extent permitted by law, the periods of Vesting Service and
         Accredited Service used in the computation for Employees shall be
         regarded as ended as of the Plan termination date and only Average
         Annual Compensation as of that date shall be taken into account.

12.5     Continued Employment Not Required After Plan Termination. The payment
         of such Pensions shall not be contingent on an Employee's continuing in
         the service of the Company or any other employer after the termination
         of the Plan, except to the extent such service is otherwise required
         under the Plan to become eligible for a particular Pension or form of
         payment.

12.6     Data in Company Records on Plan Termination. In all cases such Pensions
         shall be determined, to the extent permitted by law, on the basis of
         the Employee's age, Vesting Service, Accredited Service, and Average
         Annual Compensation as shown by the Company's records as of the Plan
         termination date.

12.7     Satisfaction of Liabilities on Plan Termination. In the case of all
         Pensions for which provision is made for the purchase of annuities from
         an insurance company, the delivery of an annuity contract or
         certificate of the insurance company from which the annuity is
         purchased to each Employee, Retired Employee, former Employee, or
         Beneficiary to whom such Pensions are payable shall, to the extent
         permitted by applicable law, serve to relieve the Pension Fund from any
         further obligations for the payment of such Pensions. In the case of
         all Pensions for which provision is not made through the purchase of
         annuities from an insurance company, the judgment of Valor
         Telecommunications Enterprises, LLC as to the adequacy of the
         alternative provision shall be final to the extent permitted by
         applicable law. If such alternative provision made as of the Plan
         termination date should thereafter at any time appear, in the judgment
         of Valor Telecommunications Enterprises, LLC, inadequate or more than
         sufficient to continue the payment of the amounts previously estimated
         to be payable, the remaining payments of such Pensions shall be
         adjusted pro rata in the order of precedence set forth in Section 12.2.

12.8     High-25 Distribution Restrictions.

         (a)      Upon the termination of the Plan, the benefit of each highly
         compensated employee and each highly compensated former employee (both
         as defined in section

                                       56
<PAGE>

         414(q) of the Code) shall be limited to a benefit that is
         nondiscriminatory under section 401(a)(4) of the Code.

         (b)      The annual payments under the Plan with respect to a
         participant shall not exceed the annual payments that would be made
         with respect to the participant under a straight life annuity that is
         the actuarial equivalent of his Accrued Benefit. The preceding sentence
         shall not apply to a participant for a calendar year if: (i) the
         participant is not among the 25 highly compensated employees and highly
         compensated former employees (both as defined in section 414(q) of the
         Code) of the Affiliates with the greatest compensation in that calendar
         year or any prior calendar year; (ii) after satisfying all benefits
         payable to the participant under the Plan, the value of Plan assets
         does not fall below 110 percent of the Plan's current liabilities (as
         defined in section 412(1)(7) of the Code); (iii) the value of the
         benefits payable with respect to the participant under the Plan is less
         than 1 percent of the value of the Plan's current liabilities (as
         defined in section 412(1)(7) of the Code and determined before
         distribution to the participant); or (iv) the value of the benefits
         payable with respect to the participant under the Plan does not exceed
         the amount described in section 411(a)(11)(A) of the Code. If the Plan
         is terminated while the restrictions pursuant to this subsection (b)
         are in effect, amounts in excess of those restrictions shall first be
         applied in a nondiscriminatory manner to the satisfaction of any Plan
         liabilities to participants who are not subject to the restrictions,
         and any balance remaining shall then be applied in a nondiscriminatory
         manner to any Plan liabilities that may be outstanding with respect to
         participants who are subject to the restrictions.

         (c)      This Section 12.8 is intended to satisfy the requirements of
         Treas. Reg. Section 1.401(a)(4)-5(b). This Section 12.8 shall not be
         construed in a manner that would impose limitations that are more
         stringent than those required by section 1.401(a)(4)-5(b) of the
         Treasury Regulations. If Congress should provide by statute, or the
         United States Treasury Department or the Internal Revenue Service
         should provide by regulation, ruling, or other guidance of general
         applicability, that the foregoing restrictions are no longer necessary
         for the Plan to meet the requirements of section 401(a) of the Code or
         any other applicable provision of the Internal Revenue Code then in
         effect, such restrictions shall become void and shall no longer apply,
         without the necessity of further amendment to the Plan.

                                       57
<PAGE>

                                  ARTICLE XIII

                       INTERCHANGE OF BENEFIT OBLIGATIONS

13.1     Interchange Agreement. Permitted Agreements may be made by the Company
         with Affiliates other than the Company for an interchange of the
         obligations to which they may be subject under similar pension plans.
         These agreements shall provide that:

         (a)      pension plans shall be maintained on a consistent and
         substantially uniform basis by all of the companies participating in
         such interchange agreements;

         (b)      advance provision for the payment of pensions shall be made by
         each company in such amounts as may be necessary to provide for and
         fulfill all requirements of its plan as in effect from time to time;

         (c)      the vesting service and accredited service of the participants
         under the pension plans sponsored by the companies that are parties to
         such agreements shall include service with all such companies.

         (d)      the transfer of the accrued benefit of any participant to this
         Plan under any such agreement shall not result in a reduction of such
         accrued benefit or the elimination of an optional form of benefit with
         respect to such accrued benefit which is prohibited by Section
         411(d)(6) of the Code and the Treasury regulations thereunder.

                                       58
<PAGE>

                                   ARTICLE XIV

                               GENERAL PROVISIONS

14.1     No Employment Rights Conferred. Neither the action of the Company
         establishing this Plan nor any action taken by the Company under the
         Plan shall be construed as giving to any Employee a right to be
         retained in the service of the Company.

14.2     Integration Clause. No Employee, Retired Employee, former Employee,
         Beneficiary, or any other person shall be entitled to or have any
         vested right in or claim to a Pension under the Plan, except as
         expressly provided herein.

14.3     Incapacity of Recipient. Pension payments to a Retired Employee or a
         Beneficiary unable to execute a proper receipt therefor may be made to
         a relative or other person, selected by the Committee, for the benefit
         of the Retired Employee or the Beneficiary, and the receipt executed by
         such person shall discharge the obligations of the Plan and the
         Committee to such Retired Employee or Beneficiary and anyone claiming
         through either of them.

14.4     ERISA Fiduciary Duties. Nothing in the Plan shall relieve or be deemed
         to relieve any Plan fiduciary from any responsibility, obligation, or
         duty imposed by or under ERISA.

14.5     Compliance with State and Local Law. The provisions of this Plan
         relating to an Employee's age of Retirement shall not be applied in
         circumstances that would cause such provisions to be in violation of
         applicable state or local law. In such circumstances, the Employee
         Benefits Committee as Plan administrator shall modify the application
         of such provisions to the extent necessary to comply with applicable
         state or local law, but only to the extent such laws are not preempted
         by federal law.

14.6     Usage. Words in the masculine gender shall include the feminine gender
         and the plural shall include the singular unless the context indicates
         otherwise.

14.7     Titles and Headings. The titles to Articles and the headings of
         Sections, subsections, paragraphs, and subparagraphs in this Plan are
         placed herein for convenience of reference only and, as such, shall be
         of no force or effect in the interpretation of the Plan.

14.8     Severability Clause. In the event any provision of the Plan is held to
         be in conflict with or in violation of any state or federal statute,
         rule, or decision, all other provisions of this Plan shall continue in
         full force and effect.

14.9     USERRA. Notwithstanding any provision of this plan to the contrary,
         contributions, benefits and service credit with respect to qualified
         military service will be provided in accordance with section 414(u) of
         the Internal Revenue Code.

                                       59
<PAGE>

                                   ARTICLE XV

                             TOP-HEAVY REQUIREMENTS

15.1     In General. This Article XV shall apply only if the Plan is Top-Heavy,
         as defined below. If, as of any Determination Date, as defined below,
         the Plan is Top-Heavy, the provisions of Section 15.4, shall take
         effect as of the first day of the Plan Year next following the
         Determination Date and shall continue to be In effect until the first
         day of any subsequent Plan Year following a Determination Date as of
         which it is determined that the Plan is no longer Top-Heavy.

15.2     Definitions. For purposes of this Article XV, the following definitions
         shall apply, and shall be interpreted in accordance with the provisions
         of section 416 of the Code and the regulations thereunder:

         (a)      "Aggregation Group" means a group of Valor Telecommunications
         Enterprises, LLC Plans consisting of each Valor Telecommunications
         Enterprises, LLC Plan in the Required Aggregation Group and each other
         Valor Telecommunications Enterprises, LLC Plan selected by the
         Committee for inclusion in the Aggregation Group that would not, by its
         inclusion, prevent the group of Valor Telecommunications Enterprises,
         LLC Plans included in the Aggregation Group from continuing to meet the
         requirements of sections 401(a)(4) and 410 of the Code.

         (b)      "Average Compensation" means the participant's average
         Compensation, as defined in Section 15.2(c), below, for the period of
         consecutive years (not exceeding 5) during which the participant had
         the greatest aggregate Compensation from the Company, excluding years
         commencing after the last Top-Heavy Year, and adjusted, in accordance
         with section 416(c)(1)(D)(ii) of the Code, for years not included in a
         year of Vesting Service.

         (c)      "Compensation" means compensation for a calendar year within
         the meaning of section 415 of the Code and the regulations thereunder,
         but shall not exceed the annual compensation limit in affect for the
         calendar year under section 401(a)(17) of the Code.

         (d)      "Determination Date" means the December 31 immediately
         preceding the Plan Year for which the determination is made.

         (e)      "Valor Telecommunications Enterprises, LLC Plan" means any
         stock bonus, pension, or profit-sharing plan of the Company and the
         Affiliates intended to qualify under section 401(a) of the Code.

         (f)      "Key Employee" means any employee of the Company and the
         Affiliates who satisfies the criteria set forth in section 416(i)(1) of
         the Code. For purposes of determining who is a Key Employee,
         compensation shall mean compensation as defined in section 415 of the
         Code and the regulations thereunder.

         (g)      Required Aggregation Group means one or more Valor
         Telecommunications Enterprises, LLC Plans comprising each Valor
         Telecommunications Enterprises, LLC

                                       60
<PAGE>

         Plan in which a Key Employee is a participant and each Valor
         Telecommunications Enterprises, LLC Plan that enables any Valor
         Telecommunications Enterprises, LLC Plan in which a Key Employee is a
         participant to meet the requirements of section 401(a)(4) or 410 of the
         Code.

         (h)      "Top-Heavy" means that the Plan is included in an Aggregation
         Group under which, as of the Determination Date, the sum of the present
         value of the cumulative accrued benefits for Key Employees under all
         defined benefit plans in the Aggregation Group and the aggregate of all
         accounts of Key Employees under all defined contribution plans in the
         Aggregation Group exceeds 60 percent of the analogous sum determined
         for all employees. The determination of whether the Plan is Top-Heavy
         shall be made in accordance with section 416(g)(2)(B) of the Code and
         the regulations thereunder.

         (i)      "Top-Heavy Ratio" means the percentage calculated in
         accordance with Section 15.2(h) hereof and section 416(g)(2) of the
         Code and the regulations thereunder.

         (j)      "Top-Heavy Year' means a Plan Year for which the Plan is
         Top-Heavy.

         Unless otherwise specified herein, other terms in this Article XV have
         the respective meanings ascribed thereto by the other provisions of the
         Plan,

15.3     Determination of Top-Heavy Ratio. In determining the Top-Heavy Ratio
         with respect to any Plan Year, the following rules shall apply:

         (a)      The accrued benefit of any current participant shall be
         calculated, as of the most recent valuation date that is within a
         12-month period ending on the Determination Date, as if the participant
         had voluntarily terminated employment as of such valuation date. Such
         valuation date shall be the same valuation date used for computing plan
         costs for purposes of the minimum funding provisions of section 412 of
         the Code. Unless, as of the valuation date, the Plan provides for a
         nonproportional subsidy, the present value of the accrued benefit shall
         reflect a Pension commencing at age 65 (or attained age, if later). If,
         as of the valuation date, the Plan provides for a nonproportional
         subsidy, the Pension shall be assumed to commence at the age at which
         the Pension is most valuable.

         (b)      The present value of such accrued benefit shall be calculated
         by multiplying the accrued benefit by the appropriate factor in the
         following table based on the participant's age as of the Determination
         Date:

<TABLE>
<CAPTION>
                 DEFERRED ANNUITY                 DEFERRED ANNUITY
AGE              FACTOR TO AGE 65      AGE        FACTOR TO AGE 65
<S>              <C>                   <C>        <C>
 19                  0.36752            45             2.18380
 20                  0.39337            46             2.34220
 21                  0.42104            47             2.51265
 22                  0.45067            48             2.69619
 23                  0.48240            49             2.89392
 24                  0.51637            50             3.10709
 25                  0.55274            51             3.33707
 26                  0.59169            52             3.58536
</TABLE>

                                       61
<PAGE>

<TABLE>
<CAPTION>
                 DEFERRED ANNUITY                 DEFERRED ANNUITY
AGE              FACTOR TO AGE 65      AGE        FACTOR TO AGE 65
<S>              <C>                   <C>        <C>
 27                  0.63340            53             3.85366
 28                  0.67806            54             4.14383
 29                  0.72589            55             4.45797
 30                  0.77713            56             4.79844
 31                  0.83202            57             5.16786
 32                  0.89084            58             5.56923
 33                  0.95388            59             6.00589
 34                  1.02145            60             6.48169
 35                  1.09389            61             7.00098
 36                  1.17156            62             7.56874
 37                  1.25486            63             8.19069
 38                  1.34422            64             6.87343
 39                  1.44010            65             9.62458
 40                  1.54301            66             9.41000
 41                  1.65348            67             9.19088
 42                  1.77212            68             8.96748
 43                  1.89957            69             8.73999
 44                  2.03654            70             8.50892
</TABLE>

         (c)      The Plan shall be aggregated with all Valor Telecommunications
         Enterprises, LLC Plans included in the Aggregation Group.

15.4     Top-Heavy Minimum Benefits.

         (a)      In any top-Heavy Year, each participant shall be entitled to
         the greater of:

                  (i)      the Pension he otherwise is entitled to under the
                  Plan, or

                  (ii)     an annual benefit that, when expressed as a Service
                  Pension commencing at his Normal Retirement Date (with no
                  ancillary benefits), is equal to 2 percent of the
                  participant's Average Compensation for each of the
                  participant's first 10 years of Accredited Service during
                  which the Plan is Top-Heavy.

                  The annual benefit described in paragraph (ii), above, shall
                  not be adjusted to take into account the availability of
                  preretirement death benefits under the Plan, but shall be
                  reduced in accordance with Section 6.4(d), if applicable.

         (b)      A participant who has completed at least 3 years of Vesting
         Service and who is credited with an Hour of Service in a Top-Heavy Year
         shall have a nonforfeitable right to his Accrued Benefit.

         (c)      For each Top-Heavy Year, the Annual Compensation of each
         participant taken into account under the Plan for all Plan Years
         (including Plan Years before the first Top-Heavy Year) shall not exceed
         his Compensation (as defined in Section 15.2(c)); provided

                                       62
<PAGE>

         that any benefits accrued before a Top-Heavy Year (determined without
         regard to any Plan amendments adopted after the end of the Plan Year
         next preceding the Top-Heavy Year) shall not be reduced as a result of
         the application of this subsection (c).

         (d)      For purposes of applying Section 6.7, the provisions of
         section 415(e)(2)(B) and (e)(3)(B) of the Code shall be applied by
         substituting "1.0" for "1.25" therein; provided that, if the
         application of the provisions of this subsection (d) would cause any
         participant to exceed the limitation imposed by Section 6.7, then

                  (i)      the application of the provisions of this subsection
                  (d) shall be suspended with respect to such participant until
                  he no longer exceeds such limitation as modified by the
                  application of the provisions of this subsection (d); provided
                  that, during the period of such suspension, there shall be, in
                  accordance with section 416(h)(3) of the Code and the
                  regulations thereunder, no employer contributions,
                  forfeitures, or voluntary nondeductible contributions
                  allocated to such participant's accounts under any defined
                  contribution plan of the Affiliates and no accruals for such
                  participant under the Plan or any other defined benefit plan
                  of the Affiliates; and

                  (ii)     during the period of such suspension, for purposes of
                  applying Section 6.7 to the participant. section
                  415(e)(6)(B)(i) of the Code shall be applied as modified by
                  section 416(h)(4) of the Code.

         (e)      The benefit required by Section 15.4(a) and vested pursuant to
         the provisions of Section 15.4(b) shall not be forfeitable under
         provisions that otherwise would be permitted by section 411(a)(3)(B)
         (relating to suspension of benefits upon reemployment) or 411(a)(3)(D)
         (relating to forfeitures upon withdrawal of mandatory contributions) of
         the Code.

         (f)      The Plan shall meet the requirements of this Section 15.4
         without taking into account, in accordance with section 416(e) of the
         Code, contributions or benefits under chapter 21 of the Code (relating
         to the Federal Insurance Contributions Act), Title II of the Social
         Security Act, or any other federal or state law.

         (g)      The requirements of this Section 15.4 shall not apply with
         respect to any employee included in a unit of employees covered by an
         agreement that the Secretary of Labor finds to be a collective
         bargaining agreement between employee representatives and one or more
         Affiliates if there is evidence that retirement benefits were the
         subject of good faith bargaining between such employee representatives
         and the Affiliate.

15.5     Termination of Top-Heavy Status. If, for any Plan Year after a
         Top-Heavy Year, the Plan is no longer Top-Heavy, the provisions of
         Section 15.4, above, shall not apply with respect to such Plan Year;
         provided that

         (a)      the Accrued Benefit of any participant shall not be reduced on
         account of the operation of this Section 15.5;

                                       63
<PAGE>

         (b)      each participant shall remain fully vested in any portion of
         the participant's Accrued Benefit that was fully vested before the Plan
         ceased to be Top-Heavy; and

         (c)      any participant who was a participant in a Top-Heavy Year and
         who has completed at least 5 years of Vesting Service as of the first
         day of the Plan Year in which the Plan is no longer Top-Heavy may elect
         to remain subject to the provisions of Section 15.4(b).

15.6     Interpretation. This Article XV is intended to satisfy the requirements
         imposed by section 416 of the Code and shall be construed in a manner
         that will effectuate this intent. This Article XV shall not be
         construed in a manner that would impose requirements that are more
         stringent than those imposed by section 416 of the Code.

                                       64
<PAGE>

                           [Intentionally Left Blank]

                                       65
<PAGE>

                                   ARTICLE XVI

           SPECIAL PROVISIONS RELATING TO CERTAIN FORMER GTE EMPLOYEES
                                       WHO
                   BECAME PARTICIPANTS IN THE PLAN DURING 2000

16.1     In General. This Article XVI applies to any Employee who transfers
         employment from GTE Service Corporation (or an affiliate thereof) to
         the Company between July 1, 2000 and December 31, 2000 and who is, as
         of the date employment is transferred to the Company, a participant in
         the GTE Southwest Incorporated Plan for Hourly Paid Employees' Pensions
         or the GTE Service Corporation Plan for Employees' Pensions.

16.2     Schedule Applicability and Incorporation. Notwithstanding anything in
         the Plan to the contrary, with respect to any individual described in
         16.1 above who is subject to and covered by a schedule listed in (a) or
         (b) hereunder, the terms and conditions of such schedules, as in effect
         on July 1, 2000, shall be incorporated into and made a part of this
         Plan and shall continue to apply to the respective individuals covered
         under the provisions of such schedules.

         (a)      GTE Southwest Incorporated Plan for Hourly-Paid Employees'
                  Pensions

                  (i)      Schedule I - Special Provisions Relating to Transfers
                           Between the Company and US Sprint.

                  (ii)     Schedule II - Provisions for Contel Employees.

                  (iii)    Schedule III - Special Provisions Relating to
                           Transfers Between the Company and Siemens.

                  (iv)     Schedule IV - Special Provisions Relating to
                           Transfers Between the Company and Fujitsu.

                  (v)      Schedule V - Special Provisions Relating to Transfers
                           Between the Company and Osram Sylvania.

                  (vi)     Schedule VI - Special Provisions Relating to Certain
                           Former Employees of BBN Corporation and Genuity, Inc.

         (b)      GTE Service Corporation Plan for Employees' Pensions

                  (i)      Schedule I - Special Provisions Relating to Certain
                           Employees Formerly Employed by GTE Sylvania
                           Incorporated or Other Employer Participating in the
                           GTE Sylvania Pension Plan for Salary Employees.

                  (ii)     Schedule II - Special Provisions Relating to Hourly
                           Paid Employees of Cosponsors of This Plan.

                                       66
<PAGE>

                  (iii)    Schedule III - Special Provisions Relating to Certain
                           Employees of GTE Sprint Communications Corporation
                           Who Were Formerly Participants in the Southern
                           Pacific Retirement Plan.

                  (iv)     Schedule IV - Special Provisions Relating to Certain
                           Employees of GTE Spacenet Corporation Who Were
                           Formerly Participants in the Southern Pacific
                           Retirement Plan.

                  (v)      Schedule V - Provisions for Special Vesting.

                  (vi)     Schedule VI - Special Provisions Relating to
                           Employees of GTE Service Corporation Who Were
                           Participants in the Sylvania Pension Plan on
                           September 1, 1961, Who Did Not Participate in the
                           Sylvania Savings & Retirement Plan as a Result of
                           that Plan's Being Amended to the Sylvania Pension
                           Plan on September 1, 1961.

                  (vii)    Schedule VII - Special Provisions Relating to
                           Transfers Between the Company and US Sprint.

                  (viii)   Schedule VIII - Special Provisions Relating to
                           Certain Employees of GTE Airfone Incorporated.

                  (ix)     Schedule IX - Special Provisions Relating to Certain
                           Employees of GTE Cellular Communications Corporation.

                  (x)      Schedule X - Special Provisions Relating to Certain
                           Employees of GTE Market Resources and Subsidiaries of
                           GTE Directories Corporation.

                  (xi)     Schedule Xl - Special Provisions Relating to Certain
                           Contel Employees Who Became Participants in the Plan
                           on January 1, 1992.

                  (xii)    Schedule XII - Special Provisions Relating to Certain
                           Contel Employees Who Became Participants in the Plan
                           on February 1, 1993.

                  (xiii)   Schedule XIII - Special Provisions Relating to
                           Transfers Between the Company and Siemens.

                  (xiv)    Schedule XIV - Special Provisions Relating to
                           Transfers Between the Company and Fujitsu.

                  (xv)     Schedule XV - Special Provisions Relating to
                           Transfers Between the Company and Osram Sylvania.

                  (xvi)    Schedule XVI - Special Provisions Relating to Certain
                           Employees of GTE Health Systems Incorporated Who Were
                           Formerly Participants in the IHC Retirement Plan

                                       67
<PAGE>

                  (xvii)   Schedule XVII - Special Provisions Relating to
                           Certain Employees of GTE Mobilnet Service Corporation
                           Who Were Formerly Employed by US West, Inc. and US
                           West Newvector Group, Inc.

                  (xviii)  Schedule XVIII - Special Provisions Relating to the
                           Merger Into the Plan of Certain Other Benefiting
                           Employees of Affiliates.

                  (xix)    Schedule XIX - Special Provisions Relating to Certain
                           Employees Who Transfer Employment from Chevron.

                  (xx)     Schedule XX - Special Provisions Relating to Certain
                           Employees Who Transfer Employment from Wellpoint
                           Health Networks.

                  (xxi)    Schedule XXI - Special Provisions Relating to Certain
                           Employees at the GTE Service Corporation Benefit
                           Resources Services Facility, Danvers, Massachusetts.

                  (xxii)   Schedule XXII - Special Provisions Relating to
                           Certain Former Employees of BBN Corporation and
                           Genuity, Inc.

                  (xxiii)  Schedule XXIII - Special Provisions Relating to
                           Certain Former Employees of the Boeing Company.

                  (xxiv)   Schedule XXIV - Special Provisions Relating to the
                           Acquisition of Ameritech Mobile Communications, Inc.
                           and Cybertel Financial Corporation.

                  (xxv)    Schedule XXV - Special Vesting Provisions Relating to
                           Certain Employees Who Terminate Employment in
                           Connection With the Divestiture of GTE Main Street
                           Incorporated.

                  (xxvi)   Schedule XXVI - Special Vesting Provisions Relating
                           to Certain Employees Who Terminate Employment In
                           Connection With the Divestiture of GTE Airfone
                           Incorporated.

IN WITNESS WHEREOF, and as evidence of the adoption of the Plan by the
Company, It has caused the same to be signed by its officer duly authorized, and
its corporate seal to be affixed this 16th day of December 2000.

                                 Valor Telecommunications Enterprises, LLC

Attest:  Shirley D. Hall         /s/ John Butler
         ---------------         ----------------------------------------
         Notary Public           John A. Butler
         State of Texas          Executive Vice President & Chief Financial
         Comm. Exp. 08-27-2002   Officer

                                       68
<PAGE>

                             FIRST AMENDMENT TO THE
                    VALOR TELECOMMUNICATIONS ENTERPRISES, LLC
                                  PENSION PLAN

         The Valor Telecommunications Enterprises, LLC Pension Plan is hereby
amended effective July 1, 2000 by making the following changes:

                  1.   The last sentence of Section 7.3(b) is replaced with the
                       following: If a Retired Employee subject to subsection
                       (a)(1) or (2) above, becomes entitled to have his Pension
                       resume, the amount and form of the Pension shall be
                       governed by the generally applicable provisions of the
                       Plan, as If he were then first Retiring.

                  2.   Section 15.5(c) is replaced with the following:
                       (c) any participant who was a participant in a Top-Heavy
                       Year and who has completed at least 3 years of Vesting
                       Service as of the first day of the Plan Year in which the
                       Plan is no longer Top-Heavy may elect to remain subject
                       to the provisions of Section 15.4(b).

                                          VALOR TELECOMMUNICATIONS
                                          ENTERPRISES, LLC

Date 9/20/02                              By: /s/ William M. Ojile, Jr., Esq.
                                              -------------------------------

         By their respective signatures hereto, each of the following entities
agrees to become a participating Employer in the Plan as of July 1, 2000, or the
date the entity became a member of the controlled group of entities which
includes the Plan sponsor, whichever is later, and agrees to be bound by the
terms of the Plan as amended. Furthermore, each entity delegates to Valor
Telecommunication Enterprises, LLC authority to make all future amendments to
the Pension Plan.

                                   VALOR. TELECOMMUNICATIONS
                                   SERVICES, LP

Date 9/20/02                       By: /s/ William M. Ojile, Jr., Esq.
                                       -------------------------------

                                   VALOR TELECOMMUNICATIONS CORPORATE GROUP, LP

Date 9/20/02                       By: /s/ William M. Ojile, Jr., Esq.
                                       -------------------------------

                                   VALOR TELECOMMUNICATIONS OF TEXAS, LP

Date 9/20/02                       By: /s/ William M. Ojile, Jr., Esq.
                                       -------------------------------

<PAGE>

                                   VALOR TELECOMMUNICATIONS OF OKLAHOMA, LLC

Date 9/20/02                       By: /s/ William M. Ojile, Jr., Esq.
                                       -------------------------------

                                   VALOR TELECOMMUNICATIONS OF NEW MEXICO, LLC

Date 9/20/02                       By: /s/ William M. Ojile, Jr., Esq.
                                       -------------------------------

                                       70
<PAGE>

                             SECOND AMENDMENT TO THE
                    VALOR TELECOMMUNICATIONS ENTERPRISES, LLC
                                  PENSION PLAN

         The Valor Telecommunications Enterprises, LLC Pension Plan is hereby
amended for EGTRRA by the adoption of the following provisions, effective as
stated herein:

         PREAMBLE

         1.       Adoption and effective date of amendment. This amendment of
the Plan is adopted to reflect certain provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001 ("EGTRRA"). This amendment is intended as good
faith compliance with the requirements of EGTRRA and is to be construed in
accordance with EGTRRA and guidance issued thereunder. Except as otherwise
provided, this amendment shall be effective as of the first day of the first
Plan Year beginning after December 31, 2001.

         2.       Supersession of inconsistent provisions. This amendment shall
supersede the provisions of the Plan to the extent those provisions are
inconsistent with the provisions of this amendment.

                       SECTION I. LIMITATIONS ON BENEFITS

         1.       Effective date. This section shall be effective for Limitation
Years ending after December 31, 2001.

         2.       Effect on Participants. Benefit increases resulting from the
increase in the limitations of Code Section 415(b) will be provided to all
employees participating in the Plan who have one Hour of Service on or after the
first day of the first Limitation Year ending after December 31, 2001.

         3.       Definitions.

                  3.1      Defined benefit dollar limitation. The "defined
benefit dollar limitation" is $160,000, as adjusted, effective January 1 of each
year, under Code Section 415(d) in such

<PAGE>

manner as the Secretary shall prescribe, and payable in the form of a straight
life annuity. A limitation as adjusted under Code Section 415(d) will apply to
Limitation Years ending with or within the calendar year for which the
adjustment applies.

                  3.2      Maximum permissible benefit The "maximum permissible
benefit" is the lesser of the defined benefit dollar limitation or the defined
benefit compensation limitation (both adjusted where required as provided in
(a) and, if applicable, in (b) or (c) below).

                           (a)      If the Participant has fewer than 10 years
of participation in the Plan, the defined benefit dollar limitation shall be
multiplied by a fraction, (i) the numerator of which is the number of years (or
part thereof) of participation in the Plan and (ii) the denominator of which is
10. In the case of a Participant who has fewer than 10 Years of Service with the
Employer, the defined benefit compensation limitation shall be multiplied by a
fraction, (i) the numerator of which is the number of Years (or part thereof) of
Service with the Employer and (ii) the denominator of which is 10.

                           (b)      If the benefit of a Participant begins prior
to age 62, the defined benefit dollar limitation applicable to the Participant
at such earlier age is an annual benefit payable in the form of a straight life
annuity beginning at the earlier age that is the actuarial equivalent of the
defined benefit dollar limitation applicable to the Participant at age 62
(adjusted under (a) above, if required). The defined benefit dollar limitation
applicable at an age prior to age 62 is determined as the lesser of (i) the
actuarial equivalent (at such age) of the defined benefit dollar limitation
computed using the interest rate and mortality table (or other tabular factor)
specified in Section 1.3 of the Plan as

                                       2
<PAGE>

amended by Section V. of this amendment and (ii) the actuarial equivalent (at
such age) of the defined benefit dollar limitation computed using a 5% interest
rate and the applicable mortality table as defined in Section 1.3 of the Plan as
amended by Section V. of this amendment. Any decrease in the defined benefit
dollar limitation determined in accordance with this paragraph (b) shall not
reflect a mortality decrement if benefits are not forfeited upon the death of
the Participant. If any benefits are forfeited upon death, the full mortality
decrement is taken into account.

                           (c)      If the benefit of a Participant begins after
the Participant attains age 65, the defined benefit dollar limitation applicable
to the Participant at the later age is the annual benefit payable in the form of
a straight life annuity beginning at the later age that is actuarially
equivalent to the defined benefit dollar limitation applicable to the
Participant at age 65 (adjusted under (a) above, if required). The actuarial
equivalent of the defined benefit dollar limitation applicable at an age after
age 65 is determined as (i) the lesser of the actuarial equivalent (at such age)
of the defined benefit dollar limitation computed using the interest rate and
mortality table (or other tabular factor) specified in Section 1.3 of the Plan
as amended by Section V. of this amendment and (ii) the actuarial equivalent (at
such age) of the defined benefit dollar limitation computed using a 5% interest
rate assumption and the applicable mortality table as defined in Section 1.3 of
the Plan as amended by Section V. of this amendment. For these purposes,
mortality between age 65 and the age at which benefits commence shall be
ignored.

                   SECTION II. MODIFICATION OF TOP-HEAVY RULES

         1.       Effective date. This section shall apply for purposes of
determining whether the Plan is top-heavy under Code Section 416(g) for Plan
Years beginning after December 31, 2001, and whether the Plan satisfies the
minimum benefits requirements of Code Section 416(c) for such years. This
section amends Article XV of the Plan

         2.       Determination of top-heavy status.

                                       3
<PAGE>

                  2.1      Key employee. Key employee means any employee or
former employee (including any deceased employee) who at any time during the
Plan Year that includes the determination date was an officer of the Employer
having annual compensation greater than $130,000 (as adjusted under Code Section
416(i)(1) for Plan Years beginning after December 31, 2002), a 5% owner of the
Employer, or a 1% owner of the Employer having annual compensation of mom than
$150,000. For this purpose, annual compensation means compensation within the
meaning of Code Section 415(c)(3). The determination of who is a key employee
will be made in accordance with Code Section 416(i)(1) and the applicable
regulations and other guidance of general applicability issued thereunder.

                  2.2      Determination of present values and amounts. This
Section 2.2 shall apply for purposes of determining the present values of
Accrued Benefits and the amounts of account balances of employees as of the
determination date.

                           2.2.1    Distributions during year ending on the
determination date. The present values of Accrued Benefits and the amounts of
account balances of an employee as of the determination date shall be increased
by the distributions made with respect to the employee under the Plan and any
plan aggregated with the Plan under Code Section 416(g)(2) during the 1-year
period ending on the determination date. The preceding sentence shall also apply
to distributions under a terminated plan which, bad it not been terminated,
would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In
the case of a distribution made for a reason other than separation from service,
death, or disability, this provision shall be applied by substituting "5-year
period" for "1-year period."

                           2.2.2    Employees not performing services during
year ending on the determination date. The Accrued Benefits and accounts of any
individual who has not

                                       4
<PAGE>

performed services for the Employer during the 1-year period ending on the
determination date shall not be taken into account.

         3.       Minimum benefits. For purposes of satisfying the minimum
benefit requirements of Code Section 416(c)(1) and the Plan, in determining
Years of Service with the Employer, any service with the Employer shall be
disregarded to the extent that such service occurs during a Plan Year when the
Plan benefits (within the meaning of Code Section 410(b)) no key employee or
former key employee.

               SECTION III. DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS

         I.       Effective date. This section shall apply to distributions made
after December 31, 2001.

         2.       Modification of definition of eligible retirement plan. For
purposes of the direct rollover provisions in Section 6.8 of the Plan, an
eligible retirement plan shall also mean an annuity contract described in Code
Section 403(b) and an eligible plan under Code Section 457(b) which is
maintained by a state, political subdivision of state, or an agency or
instrumentality of a state or political subdivision of a state and which agrees
to separately account for amounts transferred into such plan from this Plan. The
definition of eligible retirement plan shall also apply in the case of a
distribution to a surviving spouse, or to a spouse or former spouse who is the
alternate payee under a qualified domestic relation order, as defined in Code
Section 414(p).

                       SECTION IV. REVISED MORTALITY TABLE

         1.       Effective date. This section shall apply to distributions with
annuity starting dates on or after December 31, 2002.

                                       5
<PAGE>

         2.       Notwithstanding any other Plan provisions to the contrary, the
applicable mortality table used for purposes of adjusting any benefit or
limitation under Code Section 415(b)(2)(B), (C), or (D) as set fort in Section
1.3 of the Plan and the applicable mortality table used for purposes of
satisfying the requirements of Code Section 417(e) is the table prescribed in
Rev. Rul. 2001-62.

         3.       For any distribution with an annuity starting date on or after
the effective date of this section and before the adoption date of this section,
if application of the amendment as of the annuity starting date would have
caused a reduction in the amount of any distribution, such reduction is not
reflected in any payment made before the adoption date of this section. However,
the amount of any such reduction that is required under Code Section 4
15(b)(2)(B) must be reflected actuarially over any remaining payments to the
Participant.

                                   SECTION V.

         1.       Effective Date: This section shall be effective for disability
claims filed alter December 31, 2001.

         2.       Plan Section 2.19 is hereby replaced with the following:

                  Disabled or Disability means the total disability of the
                  Employee as determined in accordance with the federal Social
                  Security Act.

                             VALOR TELECOMMUNICATIONS ENTERPRISES, LLC

Date: 9/20/02                 By   /s/ William M. Ojile, Jr., Esq.
                                   ---------------------------------------------
                                   Senior Vice President of Regulatory General
                                   Counsel and Secretary

<PAGE>

                             THIRD AMENDMENT TO THE
                    VALOR TELECOMMUNICATIONS ENTERPRISES, LLC
                                  PENSION PLAN

         The Valor Telecommunications Enterprises, LLC Pension Plan is hereby
amended effective March 1, 2002 subject to approval of the Internal Revenue
Service by making the following changes:

         1.       The following sentence is added to the end of Section 6.1(c):

                           Notwithstanding the language in paragraphs (1) and
                  (3) above, effective March 1, 2002, in the case of an Employee
                  who is subject to the collective bargaining agreements between
                  the Company and CWA Local 7019 and CWA Local 6171, his
                  applicable amount shall be determined in accordance with the
                  following table:

<TABLE>
<CAPTION>
Years of Accredited Service                            Annual Minimum Pension
----------------------------                           ----------------------
<S>                                                    <C>
40 or more years                                               $l2,870
35 but less than 40 years                                      $11,330
30 but less than 35 years                                      $ 9,790
25 but less than 30 years                                      $ 8,250
20 but less than 25 years                                      $ 6,710
15 but less than 20 years                                      $ 5,170
</TABLE>

                                    VALOR TELECOMMUNICATIONS ENTERPRISES, LLC

Dated: 10/24/02                     By:    /s/ Ben Muro
                                           -------------------------------------

<PAGE>

                          MINUTES OF A SPECIAL MEETING
                                OF THE MEMBERS OF
                    VALOR TELECOMMUNICATIONS ENTERPRISES, LLC

         A special meeting of the Members of Valor Telecommunications Southwest
LLC Pension Committee was held on the 14 day of November, 2002 at the Company's
offices in Irving, TX. All of the Members, by their presence at the meeting, did
waive notice of the time, place and purpose of the meeting. The purpose of the
special meeting was to consider adoption of the Third Amendment to the Valor
Telecommunications Enterprises, LLC Pension Plan. Copies of the Amendment were
circulated among the Members. After discussion, the following resolutions were
unanimously adopted:

                  RESOLVED: That the Third Amendment to the Valor
                  Telecommunications Enterprises, LLC Pension Plan is hereby
                  adopted effective as set forth therein; and

                  FURTHER RESOLVED: That the Senior Vice President of
                  Regulatory, General Counsel and Secretary of the Company's
                  hereby authorized to execute the Third Amendments to the
                  Pension Plan and any related documents on behalf of the
                  Company.

                  There being no further business to come before the meeting, it
was duly adjourned.

                                                 /s/ William M. Ojile, Jr., Esq.
                                                 -------------------------------
                                                                     , Secretary

<PAGE>

                             THIRD AMENDMENT TO THE
                          VALOR TELECOMMUNICATIONS, LLC
                                  PENSION PLAN

                  The Valor Telecommunication Enterprises, LLC Pension Plan is
hereby amended effective March 1, 2002 subject to approval of the Internal
Revenue Service by making the following changes:

         1.       The following sentence is added to the end of Section 6.1(c):

                           Notwithstanding the language in paragraphs (1) and
                  (3) above, effective March 1, 2002, in the case of an Employee
                  who is subject to the collective bargaining agreements between
                  the Company and CWA Local 7019 and CWA Local 6171, his
                  applicable amount shall be determined in accordance with the
                  following table:

<TABLE>
<CAPTION>
Years of Accredited Service               Annual Minimum Pension
---------------------------               ----------------------
<S>                                       <C>
40 or more years                                  $12,870
35 but less than 40 years                         $11,330
30 but less than 35 years                         $ 9,790
25 but less than 30 years                         $ 8,250
20 but less than 25 years                         $ 6,710
15 but less than 20 years                         $ 5,170
</TABLE>

                                VALOR TELECOMMUNICATIONS ENTERPRISES, LLC

Dated: 11/14/02                 By:   /s/ William M. Ojile, Jr., Esq.
                                      -------------------------------

<PAGE>

                             FOURTH AMENDMENT TO THE
                    VALOR TELECOMMUNICATIONS ENTERPRISES, LLC
                                  PENSION PLAN

         WHEREAS, VALOR Telecommunications Enterprises, LLC ("VALOR")
established and adopted the VALOR Telecommunications Enterprises, LLC Pension
Plan ("Plan") effective as of July 1, 2000; and

         WHEREAS, Section 11.2 of the Plan permits the Board of Directors of
VALOR ("Board") to amend the Plan, in whole or in part, by an instrument in
writing executed by the Board; and

         WHEREAS, the Kerrville Telephone Company ("KTC") is an Affiliate of the
Company that co-sponsors the Plan effective January 1, 2003; and

         WHEREAS, as a result of KTC's co-sponsorship of the Plan, the Board
has, by signed Resolution, authorized and directed the amendment of the Plan to
provide benefits for the employees of KTC;

         NOW, THEREFORE, the Plan is hereby amended effective January 1, 2003,
to include a new Article XVII, as follows:

         Article XVII -- Special Provisions Relating to Employees of the
         Kerrville Telephone Company

         17.1     This Article applies to any individual who is an Employee of
                  the Kerrville Telephone Company.

         17.2     Effective January 1, 2003, the Kerrville Telephone Company
                  shall be an Affiliate of the Company that co-sponsors the
                  Plan.

         17.3     Notwithstanding any other provision of this Plan to the
                  contrary, with respect to any KTC Employee who was a
                  participant in the Kerrville Telephone Company Employees'
                  Retirement Plan ("Kerrville Plan") on December 31, 2002, the
                  following shall apply with respect to that individual's
                  Participation in this Plan:

                           a.       For purposes of calculating the Employee's
                                    Accrued Benefit, Accredited Service shall
                                    begin to accrue as of January 1, 2003; for
                                    all other purposes under the Plan,
                                    Accredited Service shall equal the sum of
                                    the Employee's Years of Credited Service
                                    under the Kerrville Plan as

<PAGE>

                                    of December, 2002, plus any Accredited
                                    Service earned under the terms of this Plan
                                    on and after January 1, 2003, without
                                    duplication.

                           b.       Vesting Service shall consist of all Years
                                    of Service under the Kerrville Plan through
                                    December, 2002, plus any Vesting Service
                                    earned under this Plan on and after January
                                    1, 2003.

         17.4     For purposes of the Plan, all KTC Employees shall be
                  considered Salaried Employees within the meaning of Section
                  2.50.

         IN WITNESS WHEREOF, this instrument has been executed by the Company,
this 18th day of December, 2002.

                                  VALOR Telecommunications Enterprises, Inc.

                                  By:  /s/ William M. Ojile, Jr., Esq.
                                       --------------------------------------
                                  Title: Secretary

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