Document:

<PAGE>

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                                 AMENDMENT NO. 1

      This AMENDMENT NO. 1, dated as of August 9, 2005 (this "Agreement"), among
(a) VALOR TELECOMMUNICATIONS ENTERPRISES, LLC, a Delaware limited liability
company (the "Borrower"), (b) VALOR COMMUNICATIONS GROUP, INC., a Delaware
corporation ("Holdings"), as loan party representative (in such capacity, the
"Loan Party Representative") for itself and the other Loan Parties (such
capitalized term and all other capitalized terms not otherwise defined herein to
have the meanings provided in Article I), (c) the Lenders who are signatories to
this Agreement, (d) the Additional Lenders who are signatories to this
Agreement, and (e) BANK OF AMERICA, N.A., as administrative agent (in such
capacity, the "Administrative Agent") for the Lenders.

                                   WITNESSETH:

      WHEREAS, the Borrower, the Guarantors, the lenders from time to time party
thereto (collectively, the "Lenders"), the Administrative Agent and the other
Agents have entered into an Amended and Restated Credit Agreement dated as of
February 14, 2005 (the "Credit Agreement");

      WHEREAS, the Borrower has requested that the Lenders agree to amend the
Credit Agreement as hereinafter set forth to provide for a new Tranche of the
Term Facility having identical terms with, and having the same rights and
obligations under the Loan Documents as, the Tranche B Term Loans under the
Tranche B Term Facility, except as such terms are amended hereby (the "Tranche B
Replacement Term Facility"), the proceeds of which will be used to refinance and
replace all outstanding Tranche B Term Loans;

      WHEREAS, the Lenders signatory to this Agreement are, on the terms and
conditions stated below, willing to grant the request of the Borrower; and

      WHEREAS, on the Agreement Effective Date:

                  (a) each Tranche B Term Lender who executes and delivers this
      Agreement shall be deemed to have elected to exchange those of its Tranche
      B Term Loans designated on Schedule 2.01-A to this Agreement, for a like
      principal amount of Loans made under the Tranche B Replacement Term
      Facility ("Tranche B Replacement Term Loans") as provided in Section 4.01;

                  (b) each Additional Lender who executes and delivers this
      Agreement will become a Lender under the Credit Agreement pursuant
      to Section 4.02 and will make Tranche B Replacement Term Loans to Borrower
      on the Agreement Effective Date in an aggregate principal amount equal to
      the amount set forth opposite its name on Schedule 2.01-A to this
      Agreement, the proceeds of which will be used by the Borrower to refinance
      in full the outstanding principal amount of Tranche B Term Loans which are
      not exchanged for Tranche B Replacement Term Loans pursuant to Section
      4.01, it being understood that a Tranche B Term Lender may also execute
      and deliver this Agreement as an Additional Lender; and

                  (c) the Borrower shall pay to each Tranche B Term Lender all
      accrued and unpaid interest on its Tranche B Term Loans to the Agreement
      Effective Date;

      NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party to this Agreement
agrees, as follows:

                                 Amendment No. 1

<PAGE>

                                   ARTICLE I
                                  DEFINITIONS

      1.01 DEFINITIONS. The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):

      "Additional Lender" means each Person identified as an "Additional Lender"
on Schedule 2.01-A to this Agreement.

      "Agreement Effective Date" means the date on which the conditions
precedent to the effectiveness of this Agreement as specified in Article III
herein have been satisfied.

      "Agents" means, collectively, Bank of America, N.A., as Administrative
Agent, JPMorgan Chase Bank, National Association, and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated, as Syndication Agents, CIBC World Markets Corp. and
Wachovia Bank, N.A., as Documentation Agents, Banc of America Securities LLC and
J. P. Morgan Securities Inc., as Sole and Exclusive Lead Arrangers, and Banc of
America Securities LLC, J.P. Morgan Securities Inc. and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated, as Sole and Exclusive Book Managers.

      "Guarantors" means Holdings, each Restricted Subsidiary of Holdings
identified as a "Guarantor" on the signature pages of the Credit Agreement, and
each other Restricted Subsidiary of Holdings which may be identified as a
"Guarantor" in a Joinder Agreement delivered pursuant to Sections 6.11 or
7.04(a)(ii) of the Credit Agreement.

      1.02 OTHER DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Credit Agreement.

      1.03 OTHER INTERPRETIVE PROVISIONS. The rules of construction in Sections
1.02 to 1.06 of the Credit Agreement shall be equally applicable to this
Agreement.

                                   ARTICLE II
                                   AMENDMENTS

      2.01 AMENDMENTS. Effective as of the Agreement Effective Date, the Credit
Agreement is hereby amended as follows:

      (a) Defined Terms. Section 1.01 of the Credit Agreement is amended as
follows:

                  (i) the definition of "Applicable Rate" is replaced in its
      entirety with the following:

            ""Applicable Rate" means (a) in respect of Eurodollar Rate Loans and
      Base Rate Loans (including Swing Line Loans) under the Revolving Facility
      and the Letter of Credit Fee, from time to time, the following percentages
      per annum, based upon the Consolidated Total Leverage Ratio as set forth
      in the most recent Compliance Certificate received by the Administrative
      Agent pursuant to Section 6.02(b):

                                        2

                                 Amendment No. 1
<PAGE>

                               REVOLVING FACILITY

<TABLE>
<CAPTION>
    EURODOLLAR RATE LOANS, BASE RATE LOANS AND LETTER OF CREDIT FEE
-------------------------------------------------------------------------
             Consolidated           Eurodollar
                Total                  Rate                  Base Rate
Pricing        Leverage         Loans and Letter of       Loans and Swing
 Level           Ratio              Credit Fee               Line Loans
-------      ------------       -------------------       ---------------
<S>          <C>                <C>                       <C>
   I         > or = 3.5:1                2.00%                   1.00%

  II              < 3.5:1                1.75%                   0.75%       ; and
</TABLE>

                  (b) in respect of Eurodollar Rate Loans and Base Rate Loans
      under the Tranche B Replacement Term Facility (i) 1.75%, for Eurodollar
      Rate Loans and (ii) 0.75%, for Base Rate Loans.

            Any increase or decrease in the Applicable Rate for such Loans under
      the Revolving Facility and the Letter of Credit Fee resulting from a
      change in the Consolidated Total Leverage Ratio shall become effective as
      of the first Business Day immediately following the date a Compliance
      Certificate is delivered pursuant to Section 6.02(b); provided, however,
      that if a Compliance Certificate is not delivered when due in accordance
      with such Section 6.02(b), then Pricing Level I will be applicable until
      the date two Business Days after the appropriate Compliance Certificate is
      delivered, whereupon the Applicable Rate shall be adjusted based on the
      information contained in the Compliance Certificate.

            The Applicable Rate for Eurodollar Rate Loans, Base Rate Loans,
      Swing Line Loans and the Letters of Credit Fee shall be increased by 2.0%
      during certain periods as provided in Section 2.08(b)."; and

                  (ii) the definition of "Base Rate Loan" is amended by adding
the words "or a Tranche B Replacement Term Loan" immediately following the words
"a Tranche B Term Loan" in such definition;

                  (iii) the definition of "Borrowing" is amended by adding the
words ", a Tranche B Replacement Term Borrowing," immediately following the
words "a Tranche B Term Borrowing" in such definition;

                  (iv) the definition of "Commitment" is amended (A) by adding
the words ", a Tranche B Replacement Term Commitment," immediately after the
words "a Tranche B Term Commitment" in such definition and (B) by adding the
words ", the Tranche B Replacement Term Commitments," immediately after the
words "the Tranche B Term Commitments" in such definition;

                  (v) the definition of "Eurodollar Rate Loan" is amended by
adding the words "or a Tranche B Replacement Term Loan" immediately after the
words "a Tranche B Term Loan" in such definition;

                                        3

                                 Amendment No. 1
<PAGE>

                  (vi) the definition of "Lender" is amended by adding the
words, ", Tranche B Replacement Term Lender," immediately following the words
"Tranche B Term Lender" in such definition;

                  (vii) the definition of "Loan" is amended by adding the words
"and each Tranche B Replacement Term Loan" immediately following the words "and
each Tranche B Term Loan" in such definition;

                  (viii) the definition of "Note" is replaced in its entirety
with the following:

      ""Note" means a promissory note made by the Borrower in favor of a Lender
      evidencing Loans made by such Lender, substantially in the form of (a)
      Exhibit C-1-B for Tranche B Term Loans, (b) Exhibit C-1-BR for Tranche B
      Replacement Term Loans, (c) Exhibit C-1-C, for Tranche C Term Loans, (d)
      Exhibit C-1-D, for Tranche D Term Loans, (e) Exhibit C-2-R for Revolving
      Loans and (f) Exhibit C-2-S for Swing Line Loans, as applicable.";

                  (ix) the definition of "Outstanding Amount" is amended by
adding the words ", Tranche B Replacement Term Loans" immediately following the
words "Tranche B Term Loans" in such definition;

                  (x) the definition of "Term Facility" is amended by adding the
words ", the Tranche B Replacement Term Facility," immediately following the
words "Tranche B Term Facility" in such definition;

                  (xi) the definition of "Term Loan" is amended by adding the
words ", a Tranche B Replacement Term Loan," immediately following the words
"Tranche B Term Loan" in such definition;

                  (xii) the definition of "Tranche" is replaced in its entirety
with the following:

      ""Tranche" means the portion of the Term Facility which is comprised of
      (a) the Tranche B Term Loan Facility, (b) the Tranche B Replacement Term
      Loan Facility, (c) the Tranche C Term Loan Facility, or (d) the Tranche D
      Term Loan Facility, as the context may require.";

                  (xiii) the definition of "Tranche C Term Facility" is amended
by replacing the words "Tranche B Term Loans" with the words "Tranche B
Replacement Term Loans" in the second sentence of such definition; and

                  (xiv) the following new definitions are added to Section 1.01
of the Credit Agreement in the appropriate alphabetical order:

            ""Additional Lenders" means each Person identified as an "Additional
      Lender" on Schedule 2.01-A"."

            ""Amendment No. 1" means that certain Amendment No. 1 dated as of
      August 9, 2005, among the Borrower, the Loan Party Representative, the
      Lenders party thereto and the Administrative Agent."

            ""Converted Replacement Loan" shall have the meaning provided in
      Section 2.01 (a)(v)."

                                        4

                                 Amendment No. 1
<PAGE>

            ""First Amendment Effective Date" shall mean the Agreement Effective
      Date (as such term is defined in Amendment No. 1)."

            ""Repricing Transaction" shall have the meaning provided in Section
      2.05(g)."

            ""Tranche B Replacement Term Borrowing" means a borrowing consisting
      of simultaneous Tranche B Replacement Term Loans of the same Type and, in
      the case of Eurodollar Rate Loans, having the same Interest Period, made
      by the Tranche B Replacement Term Lenders (or converted from any Tranche C
      Term Loans pursuant to Section 11.06(b)(iii))."

            ""Tranche B Replacement Term Commitment" means, as to each Lender,
      its obligation to make Tranche B Replacement Term Loans to the Borrower
      pursuant to Section 2.01(a)(iv) in an aggregate principal amount at any
      one time outstanding not to exceed the amount set forth opposite such
      Lender's name on Schedule 2.01-A or in the Assignment and Assumption
      pursuant to which such Lender becomes a party hereto, as applicable, as
      such amount may be adjusted from time to time in accordance with this
      Agreement."

            ""Tranche B Replacement Term Facility" means on any date (a) prior
      to the Tranche B Replacement Term Borrowing(s) on the First Amendment
      Effective Date, the Tranche B Replacement Term Commitments of all Tranche
      B Replacement Term Lenders, and (b) thereafter, the Outstanding Amount of
      Tranche B Replacement Term Loans of all Tranche B Replacement Term Lenders
      on such date. On the First Amendment Effective Date the Tranche B
      Replacement Term Facility is equal to the outstanding principal amount of
      the Tranche B Term Loans on such date immediately prior to giving effect
      to Amendment No. 1. After the First Amendment Effective Date the Tranche B
      Replacement Term Facility may be increased by the conversion of any
      Tranche C Term Loans to Tranche B Replacement Term Loans pursuant to
      Section 11.06(b)(iii)."

            ""Tranche B Replacement Term Lender" means each Lender with a
      Tranche B Replacement Term Commitment or a Tranche B Replacement Term Loan
      (including any Tranche B Replacement Term Loan which has been converted
      (a) from a Tranche B Term Loan on the First Amendment Effective Date
      pursuant to Section 2.01(a)(vi) or (b) from a Tranche C Term Loan pursuant
      to Section 11.06(b)(iii))."

            ""Tranche B Replacement Term Loan" has the meaning specified in
      Section 2.01(a)(iv) (and shall include any Loan which has been converted
      (a) from a Trance B Term Loan on the First Amendment Effective Date
      pursuant to Section 2.01(a)(vi) or (b) from a Tranche C Term Loan pursuant
      to Section 11.06(b)(iii))."

      (b) Term Loans.

                  (i) Section 2.01 of the Credit Agreement is amended by adding
the following new subsections (iv), (v), (vi) and (vii) to the end of Subsection
(a) of such Section immediately following subsection (iii) thereof, as follows:

                        "(iv) Subject to the terms and conditions set forth
            herein, each Tranche B Replacement Term Lender severally agrees to
            make a single loan, or pursuant to clause (v) below, to elect to
            convert all or a portion of such Lender's existing Tranche B Term
            Loans under the Tranche B Term Facility into a loan under the
            Tranche B Replacement Term Facility (each such loan, a "Tranche B
            Replacement Term Loan") to the Borrower on the First Amendment
            Effective Date, and in an aggregate

                                        5

                                 Amendment No. 1
<PAGE>

            amount not to exceed such Tranche B Replacement Term Lender's
            Tranche B Replacement Term Commitment on such date. Each Tranche B
            Replacement Term Borrowing by the Borrower made on the First
            Amendment Effective Date shall consist of Tranche B Replacement Term
            Loans made to the Borrower simultaneously by the Tranche B
            Replacement Term Lenders ratably according to their Tranche B
            Replacement Term Commitments. Amounts borrowed under this Section
            2.01(a)(iv) and repaid or prepaid may not be reborrowed.

                        (v) In connection with the making of the Tranche B
            Replacement Term Loans pursuant to clause (iv) above, by delivering
            a counterpart of Amendment No. 1 to the Administrative Agent on or
            prior to the First Amendment Effective Date, each and every Tranche
            B Term Lender which has confirmed its Tranche B Replacement Term
            Commitment pursuant to Amendment No. 1 is hereby offered the
            opportunity to convert, and shall be deemed to have elected to
            convert all or a portion of the outstanding principal amount of its
            Tranche B Term Loans which have been designated for such purposes on
            Schedule 2.01-A into Tranche B Replacement Term Loans in a principal
            amount equal to the amount of the Tranche B Term Loans so designated
            for conversion (each such Tranche B Term Loan to the extent it is to
            be so converted, a "Converted Replacement Loan") and such Converted
            Replacement Loans shall be treated for all purposes hereunder as
            applying towards such Lender's Tranche B Replacement Term Loans
            requested by the Borrower to be made on the First Amendment
            Effective Date pursuant to clause (iv) of this Section 2.01(a).

                        (vi) On the First Amendment Effective Date, the
            Converted Replacement Loans shall be converted for all purposes of
            this Agreement into Tranche B Replacement Term Loans, and the
            Administrative Agent shall record in the Register the aggregate
            amount of Converted Replacement Loans converted into Tranche B
            Replacement Term Loans. A duly executed counterpart of Amendment No.
            1 delivered to the Administrative Agent by any Tranche B Term Lender
            shall confirm the amount of such Lender's Tranche B Replacement Term
            Commitment and the principal amount of Tranche B Term Loans held by
            such lender that are to be converted into Tranche B Replacement Term
            Loans. Delivery of a duly executed Amendment No. 1 to the
            Administrative Agent by each Additional Lender shall also confirm
            the amount of such Additional Lender's Tranche B Replacement Term
            Commitment and such execution and delivery shall obviate the need
            for any Additional Lender to execute this Agreement and such duly
            executed counterpart of Amendment No. 1 shall be deemed for all
            purposes to be a signature to this Agreement. The Borrower hereby
            authorizes and directs the Administrative Agent to apply the
            proceeds of Tranche B Replacement Term Loans made by the Additional
            Lenders to refinance the Tranche B Term Loans which are not
            Converted Replacement Loans.

                        (vii) On the First Amendment Effective Date, the
            Borrower shall pay all accrued and unpaid interest on the Tranche B
            Term Loans prior to the conversion or refinancing of such Loans
            pursuant to clause (vi) of this Section 2.01(a). On or after the
            First Amendment Effective Date the Borrower will compensate each
            Tranche B Term Lender for funding losses, if any, pursuant to
            Section 3.05 in respect of any Tranche B Term Loans which are
            Eurodollar Rate Loans which such Lender has not designated for
            conversion as Converted Replacement Loans pursuant to clause (v) of
            this Section 2.01(a) if the First Amendment Effective Date does not
            occur on the last day of an applicable Interest Period (but not in
            respect of any such Converted Replacement Loans which are converted
            to and continued as Tranche B Replacement Term Loans). Each

                                        6

                                 Amendment No. 1
<PAGE>

            Tranche B Replacement Term Lender acknowledges and agrees that,
            notwithstanding anything to the contrary in this Agreement, any
            unexpired Interest Periods in respect of the Tranche B Term Loans
            which are Eurodollar Rate Loans on the First Amendment Effective
            Date, shall continue in effect after the First Amendment Effective
            Date as the initial Interest Period (with corresponding Eurodollar
            Base Rate) for the Tranche B Replacement Term Loans which refinance
            such Tranche B Term Loans or into which such Tranche B Term Loans
            are converted."; and

                  (ii) Section 2.01 of the Credit Agreement is further amended
by adding the words "and Tranche B Replacement Term Loans" immediately following
the words "and Tranche B Term Loans" in subsection (e) of such Section.

      (c) Borrowings, Conversions and Continuations of Loans. Section 2.02 of
the Credit Agreement is amended by (i) replacing the words "Tranche B Term
Facility" with the words "Tranche B Replacement Term Facility" in subsection (a)
of such Section and (ii) replacing the words "Tranche B Term Loans" with the
words "Tranche B Replacement Term Loans" in subsection (e) of such Section.

      (d) Prepayments. Section 2.05 of the Credit Agreement is amended as
follows:

                  (i) the parenthetical clause "(except as provided in
subsection (C) of this Section 2.05(a)(i) and Section 3.05)" in the fourth and
fifth lines of subsection (a)(i)(A) of such Section is deleted and replaced as
follows: "(except as provided in subsection (C) of this Section 2.05(a)(i),
Section 2.05(g) and Section 3.05)";

                  (ii) the words "a Tranche B Replacement Term Loan," are added
after the words "a Tranche B Term Loan" in the last sentence of subsection
(a)(i)(A) of such Section;

                  (iii) a new subsection (3) is added to the end of subsection
(a)(i)(C) of such Section 2.05 immediately following subsection (2) thereof, as
follows:

            "(3) Any prepayment of Tranche B Replacement Term Loans with the
      proceeds of a Repricing Transaction shall be accompanied by a prepayment
      fee as provided in Section 2.05(g).";

                  (iv) by replacing the words "Tranche B Term Loans" each time
they appear with the words "Tranche B Replacement Term Loans" in
subsections(a)(i)(E), (a)(i)(F), (c)(ii), (c)(iii) and (d) of such Section; and

                  (v) a new subsection (g) is added immediately following
subsection (f) thereof, as follows:

            "(g) Any prepayment in full of all Tranche B Replacement Term Loans
      pursuant to this Section 2.05 on or prior to the first anniversary of the
      First Amendment Effective Date with the proceeds of any Repricing
      Transaction (as defined below) shall be accompanied by a prepayment fee
      equal to 1.00% of the principal amount prepaid. A "Repricing Transaction"
      means the incurrence by any Loan Party of any Indebtedness (including,
      without limitation, any new or additional term loans under this Agreement)
      that is secured or is broadly marketed or syndicated to banks and other
      institutional investors in financings similar to the Facilities (i) having
      an effective interest rate margin or weighted average yield (to be
      determined by the Administrative Agent consistent with generally accepted
      financial practice, after giving effect to, among other factors, margins,
      upfront or similar fees or original issue discount shared with all

                                        7

                                 Amendment No. 1
<PAGE>

      lenders or holders thereof, but excluding the effect of any arrangement,
      structuring, syndication or other fees payable in connection therewith
      that are not shared with all lenders or holders thereof) that is less than
      the Applicable Rate for, or weighted average yield (to be determined by
      the Administrative Agent on the same basis) of, the Tranche B Replacement
      Term Loans, and (ii) the proceeds of which are used, in whole or in part,
      to prepay all outstanding principal of the Tranche B Replacement Term
      Loans."

      (e) Termination or Reduction of Commitments. Section 2.06 of the Credit
Agreement is amended by adding a new subsection (f) immediately following
subsection (e) thereof as follows:

      "(f) The Commitments to make Tranche B Replacement Term Loans shall be
      automatically and permanently reduced to $0 on the First Amendment
      Effective Date after giving effect to the conversion of the Tranche B Term
      Loans to Tranche B Replacement Term Loans and the making of the Tranche B
      Replacement Term Loans by the Additional Lenders on the First Amendment
      Effective Date."

      (f) Repayment of Loans. Section 2.07 of the Credit Agreement is amended by
replacing subsection (c) of such Section in its entirety with the following:

      "(c) The Borrower shall repay to the Tranche B Replacement Term Lenders on
      the Maturity Date, the Outstanding Amount of Tranche B Replacement Term
      Loans on such date."

      (g) Interest. Section 2.08 of the Credit Agreement is amended by adding
the words "and Tranche B Replacement Term Loans" immediately following the words
"Tranche B Term Loans" in such Section.

      (h) Mitigation Obligations; Replacement of Lenders. Section 3.06(b) of the
Credit Agreement is amended by replacing the words "Tranche B Term Lender" in
such subsection with "Tranche B Replacement Term Lender".

      (i) Purpose of Loans. Section 5.19 of the Credit Agreement is amended by
(i) adding a new second sentence thereto as follows:

      "The proceeds of any Tranche B Replacement Term Loans which are provided
      by the Additional Lenders on the First Amendment Effective Date shall be
      applied to refinance and replace any Tranche B Term Loans which are not
      designated to be converted to Converted Replacement Loans pursuant to
      Section 2.01 (a)(v)."; and

      (ii) adding the word "other" immediately before the words "Credit
Extensions" in the last sentence thereof.

      (j) Use of Proceeds. Section 6.13 of the Credit Agreement is amended by
adding the words "and on the Amendment Effective Date" immediately following the
words "the Closing Date" in the first sentence thereof.

      (k) Successors and Assigns. Section 11.06(b)(iii) of the Credit Agreement
is amended by deleting each reference to "Tranche B Term Loans" and "Tranche B
Term Borrowing" in such Section and replacing each of them with a reference to
"Tranche B Replacement Term Loans" or "Tranche B Replacement Term Borrowing", as
applicable.

                                        8

                                 Amendment No. 1
<PAGE>

      (l) Replacement of Lenders. Section 11.13 of the Credit Agreement is
amended by replacing the words "Tranche B Term Lender" with the words "Tranche B
Replacement Term Lender" in such Section.

      (m) Commitments Schedule. Schedule 2.01-A attached to this Agreement is
attached to the Credit Agreement as a new Schedule 2.01-A thereto.

      (n) Form of Note. Exhibit C-1-BR attached to this Agreement is attached to
the Credit Agreement as a new Exhibit C-1-BR thereto.

      2.02 GUARANTORS' ACKNOWLEDGMENT. On behalf of each Guarantor, the Loan
Party Representative hereby confirms that each Guarantor consents and agrees to
the terms of this Agreement and the terms of the Credit Agreement, as amended
and otherwise modified by this Agreement. The Loan Party Representative will
cause each Guarantor to execute and deliver its consent to this Agreement
pursuant to Section 3.01(a)(ii) to confirm such agreement and the matters set
forth in Section 5.02(a).

                                  ARTICLE III
                              CONDITIONS PRECEDENT

      3.01 CONDITIONS OF EFFECTIVENESS. This Agreement is subject to the
provisions of Section 11.01 of the Credit Agreement, and shall become effective
when, and only when, each of the following conditions shall have been satisfied:

      (a) the Administrative Agent shall have received all of the following
documents (in sufficient copies for each Lender), each such document (unless
otherwise specified) dated the date of receipt thereof by the Administrative
Agent and each in form and substance satisfactory to the Administrative Agent:

                  (i) counterparts of this Agreement executed by (A) the
Borrower and the Loan Party Representative (on behalf of the other Loan
Parties), (B) the Required Lenders, (C) all the Tranche B Term Lenders
identified on Schedule 2.01-A to this Agreement, (D) all Additional Lenders, (E)
Lenders holding a majority of the Total Outstanding Amount of each Tranche of
the Term Facility (other than the Tranche B Term Facility), and (F) the Required
Revolving Lenders, or, as to any such Lender, advice satisfactory to the
Administrative Agent that such Lender has executed this Agreement;

                  (ii) a consent to this Agreement executed by each Guarantor;

                  (iii) one or more Notes in the form of Exhibit C-1-BR to this
Agreement, payable to the order of each Lender requesting such a Note, duly
executed by the Borrower, evidencing the Tranche B Replacement Term Loans of
such Lender;

                  (iv) a Certificate executed by a Responsible Officer of the
Loan Party Representative, on behalf of itself and the other Loan Parties, dated
the Agreement Effective Date, (A) attaching true and correct copies of
resolutions of each Loan Party as to the execution and delivery of this
Agreement and any such Note or such consent of a Guarantor, as the case may be,
(B) confirming the matters provided in subsection (c) below, and (C) as to such
other matters as the Administrative Agent may reasonably request; and

                  (v) favorable opinions of Dow, Lohnes & Albertson, PLC,
special counsel to the Loan Parties, and of the General Counsel to the Loan
Party Representative, on behalf of the Loan Parties, each addressed to the
Administrative Agent and each Lender, as to such matters with respect to

                                        9

                                 Amendment No. 1
<PAGE>

the Loan Parties, this Agreement, the Credit Agreement, as amended by this
Agreement, such Notes and such consents of the Guarantors as the Administrative
Agent may reasonably request.

      (b) the Administrative Agent shall have received payment of the following:
(i) for the account of each Tranche B Term Lender, accrued and unpaid interest
on the Tranche B Term Loans of such Lender to the Agreement Effective Date, (ii)
for the account of the Administrative Agent, the amount of any expenses required
to be reimbursed on or before the Agreement Effective Date pursuant to Section
5.03 hereof, and (iii) for the account of any arranger in connection with the
transactions contemplated hereby, any amounts as may have been separately agreed
with the Borrower;

      (c) the representations and warranties of the Loan Parties contained in
Section 5.04 hereof shall be true and correct in all material respects; and

      (d) evidence that arrangements satisfactory to the Administrative Agent
shall have been made for the application of the proceeds of the Tranche B
Replacement Term Loans made by the Additional Lenders to the repayment of all
Tranche B Term Loans which have not been designated for conversion pursuant to
Section 4.01.

                                   ARTICLE IV
                               CONVERSION; JOINDER

      4.01 CONVERSION. Each Tranche B Term Lender who executes and delivers this
Agreement commits and agrees that the Tranche B Term Loans of such Lender
designated on Schedule 2.01-A shall be converted to Tranche B Replacement Term
Loans on the Agreement Effective Date pursuant to Section 2.01(a)(vi) of the
Credit Agreement, as amended by this Agreement; it being understood that
notwithstanding anything to the contrary in this Agreement, such Tranche B
Replacement Term Loans amend and restate in their entirety, refinance and
replace such Tranche B Term Loans, and do not relieve the Loan Parties of their
Obligations (or constitute any novation) in respect of such Loans, as so
amended, restated, refinanced and replaced, and the Liens of the Collateral
Documents shall continue to secure such Obligations.

      4.02 JOINDER. From and after the Agreement Effective Date, each Additional
Lender who executes and delivers this Agreement irrevocably acknowledges and
unconditionally agrees to be bound by the terms and conditions of the Credit
Agreement, as amended by this Agreement, and the other Loan Documents; and each
Additional Lender will be a Lender under the Credit Agreement, as amended by
this Agreement, as if such Additional Lender had executed a counterpart of the
Credit Agreement on and as of the date thereof. Each Additional Lender hereby
represents that if it is a Foreign Lender or a Non-Corporate Domestic Lender, it
has delivered to the Administrative Agent any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by such Additional Lender.

                                   ARTICLE V
                                  MISCELLANEOUS

      5.01 LOAN DOCUMENT. This Agreement is a Loan Document executed pursuant to
the Credit Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance with the terms and provisions
thereof.

      5.02 EFFECT OF AGREEMENT. (a) The Credit Agreement, as specifically
amended by this Agreement, is and shall continue to be in full force and effect
and is hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Collateral Documents and all of the

                                       10

                                 Amendment No. 1
<PAGE>

Collateral described therein do and shall continue to secure the payment of all
Obligations of the Loan Parties under the Loan Documents, in each case as
amended by this Agreement.

      (b) The execution, delivery and effectiveness of this Agreement shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender or the Administrative Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.

      5.03 COSTS AND EXPENSES. On the Agreement Effective Date, the Borrower
agrees to pay all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, execution and delivery of this Agreement and
the other instruments and documents to be delivered hereunder (including,
without limitation, the reasonable fees and expenses of counsel for the
Administrative Agent) in accordance with the terms of Section 11.04(a) of the
Credit Agreement which are invoiced to the Borrower on or prior to the Agreement
Effective Date.

      5.04 REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to
enter into this Agreement, the Borrower and the Loan Party Representative, on
behalf of itself and the other Loan Parties, each hereby represents and warrants
that on and as of the Agreement Effective Date:

      (a) the execution and delivery (i) by the Borrower and the Loan Party
Representative of this Agreement, (ii) by the Borrower of any Notes requested
pursuant to Section 3.01(a)(iii), and (iii) by each Guarantor of the consent
delivered pursuant to Section 3.01(a)(ii), and the performance by the Borrower
of this Agreement and such Notes, and by each Loan Party of the Credit
Agreement, as amended by this Agreement, have been duly authorized by all
necessary organizational action of such Loan Party, and do not and will not: (A)
contravene the terms of any of such Person's Organization Documents; (B) in any
material respect conflict with or result in any breach or contravention of, or
(except for the Liens created under the Loan Documents) the creation of any Lien
under, or require any payment to be made under (1) any Contractual Obligation to
which such Person is a party or affecting such Person or properties of such
Person or any of its Restricted Subsidiaries or (2) any order, injunction, writ
or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; or (C) violate any Law;

      (b) this Agreement, the Credit Agreement as amended by this Agreement, and
each Note delivered hereunder constitutes a legal, valid and binding obligation
of each Loan Party which is a party thereto, enforceable against each such
Person in accordance with its terms, except as enforceability may be limited by
applicable Debtor Relief Laws and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law);

      (c) the representations and warranties of the Loan Parties contained in
the Credit Agreement and the other Loan Documents are true and correct in all
material respects except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date; and

      (d) no Default or Event of Default exists.

      5.05 SECTION CAPTIONS. Section captions used in this Agreement are for
convenience of reference only, and shall not affect the construction of this
Agreement.

      5.06 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                                       11

                                 Amendment No. 1
<PAGE>

      5.07 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                            [Signature Pages Follow]

                                       12

                                 Amendment No. 1

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                            VALOR TELECOMMUNICATIONS
                                            ENTERPRISES, LLC

                                            By ________________________________
                                               Name:
                                               Title:

                                            VALOR COMMUNICATIONS GROUP, INC., as
                                            Loan Party Representative

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page
\
                                 Amendment No. 1

<PAGE>

                                            BANK OF AMERICA, N.A., as
                                            Administrative Agent and as Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            JPMORGAN CHASE BANK, NATIONAL
                                            ASSOCIATION, as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            WACHOVIA BANK, N.A., as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            CIBC, INC., as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            MERRILL LYNCH CAPITAL CORPORATION,
                                            as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            CIT LENDING SERVICES CORPORATION,
                                            as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            CALYON NEW YORK BRANCH, as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            RURAL TELEPHONE FINANCE COOPERATIVE,
                                            as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            ___________________________________,
                                            [Name of existing Lender]
                                            as a Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                            ___________________________________,
                                            [Name of Additional Lender]
                                            as an Additional Lender

                                            By _________________________________
                                               Name:
                                               Title:

                                 Signature Page

                                 Amendment No. 1

<PAGE>

                                                                 SCHEDULE 2.01-A

                                   COMMITMENTS
                           AND APPLICABLE PERCENTAGES

                       TRANCHE B REPLACEMENT TERM FACILITY

<TABLE>
<CAPTION>
                                                                             APPLICABLE PERCENTAGE OF
                                                 TRANCHE B TERM               TRANCHE B REPLACEMENT
      TRANCHE B TERM LENDER                          LOAN(1)                       TERM LOANS
-------------------------------------       --------------------------       ------------------------
<S>                                         <C>                              <C>
Total for all Tranche B Term Lenders           $   725,000,000.00                  100.000000000%
  identified  on Annex 2.01-A to this
  Schedule
</TABLE>

<TABLE>
<CAPTION>
                                                                             APPLICABLE PERCENTAGE OF
                                              TRANCHE B REPLACEMENT           TRANCHE B REPLACEMENT
        ADDITIONAL LENDERS                       TERM COMMITMENT                    TERM LOANS
-------------------------------------       --------------------------       ------------------------
<S>                                         <C>                              <C>
N/A                                            $             0.00                    0.000000000%

TOTAL                                          $   725,000,000.00                  100.000000000%
</TABLE>

------------------
(1) The Tranche B Term Loans of each Tranche B Term Lender to be converted to
Tranche B Replacement Term Loans are specified on Annex 2.01-A to this Schedule.
Such amount constitutes the Tranche B Replacement Term Commitment of each such
Lender.

                                 Schedule 2.01-A
<PAGE>

                                                                  EXHIBIT C-1-BR

                                FORM OF TERM NOTE
                        (Tranche B Replacement Term Loan)

      FOR VALUE RECEIVED, the undersigned, VALOR TELECOMMUNICATIONS ENTERPRISES,
LLC, a Delaware limited liability company (the "Borrower"), HEREBY PROMISES TO
PAY to _____________________ or permitted assigns (the "Lender"), in accordance
with the provisions of the Agreement (as hereinafter defined), the principal
amount of the Tranche B Replacement Term Loan made by the Lender to the Borrower
(the "Term Loan") under that certain Amended and Restated Credit Agreement,
dated as of February 14, 2005, as amended by Amendment No. 1, dated as of August
9, 2005 (as further amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the "Agreement;" the terms defined
therein being used herein as therein defined), among the Borrower, the
Guarantors from time to time party thereto, the Lender, the other Lenders from
time to time party thereto, Bank of America, N.A., as Administrative Agent,
Swing Line Lender and L/C Issuer, and the other Agents party thereto.

      The Borrower promises to pay interest on the unpaid principal amount of
the Term Loan from the date of the Term Loan until such principal amount is paid
in full, at such interest rates and at such times as provided in the Agreement.
All payments of principal and interest shall be made to the Administrative Agent
for the account of the Lender in Dollars and in immediately available funds at
the Administrative Agent's Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Agreement.

      This Term Note is one of the Notes referred to in the Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Term Note is also entitled to
the benefits of the Guaranty of each Guarantor and is secured by the Collateral
of each Loan Party. Upon the occurrence and during the continuance of one or
more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Term Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. The Term Loan made
by the Lender shall be evidenced by one or more loan accounts or records
maintained by the Lender in the ordinary course of business. The Lender may also
attach schedules to this Term Note and endorse thereon the date and amount of
the Term Loan and payments with respect thereto.

      The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Term Note.

                                 Exhibit C-1-BR
<PAGE>

      THIS TERM NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

                                               VALOR TELECOMMUNICATIONS
                                               ENTERPRISES, LLC

                                               By:______________________________
                                               Name:
                                               Title:

                                 Exhibit C-1-BR<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 10.2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                        PAGE
<S>                                                     <C>
ARTICLE 1 - RECOGNITION                                  4

ARTICLE 2 - NONDISCRIMINATION                            4

ARTICLE 3 - UNION SECURITY                               5

ARTICLE 4 - PAYROLL DEDUCTION OF DUES                    5

ARTICLE 5 - MANAGEMENT RIGHTS                            6

ARTICLE 6 - BARGAINING AND CONTRACT ADMINISTRATION       7

ARTICLE 7 - RESPONSIBLE UNION - COMPANY RELATIONSHIP     7

ARTICLE 8 - UNION ACTIVITY AND LEAVES                    9

ARTICLE 9 - GRIEVANCE PROCEDURE                         12

ARTICLE 10 - ARBITRATION OF GRIEVANCES                  14

ARTICLE 11 - DISCIPLINE AND PERSONNEL RECORDS           16

ARTICLE 12 - EMPLOYEE CLASSIFICATIONS                   16

ARTICLE 13 - SENIORITY                                  17

ARTICLE 14 - NET CREDITED SERVICE                       18

ARTICLE 15 - WAGES                                      20

ARTICLE 16 - DIFFERENTIALS AND OVERTIME                 21

ARTICLE 17 - WORK SCHEDULES AND TOURS                   24

ARTICLE 18 - HOLIDAYS                                   25

ARTICLE 19 - VACATIONS                                  29

ARTICLE 20 - WORKING PRACTICES                          33
</TABLE>

                                       1
<PAGE>

<TABLE>
<S>                                                     <C>
ARTICLE 21 - SAFETY PRACTICES                           35

ARTICLE 22 - TOOLS AND EQUIPMENT                        36

ARTICLE 23 - JOB TITLES OF EMPLOYEES AND                37
             CHANGES IN ASSIGNMENT

ARTICLE 24 - JOB TRANSFER PROCEDURE                     40

ARTICLE 25 - BOARD AND LODGING                          42

ARTICLE 26 - FORCE ADJUSTMENT                           47

ARTICLE 27 - ABSENCE FROM DUTY                          54

ARTICLE 28 - TERMINATION ALLOWANCE                      57

ARTICLE 29 - PENSIONS                                   59

ARTICLE 30 - CONTRACT LABOR                             59

ARTICLE 31 - GROUP INSURANCE                            60

ARTICLE 32 - ILLNESS TREATMENT                          62

ARTICLE 33 - MILITARY LEAVE AGREEMENT                   68

ARTICLE 34 - DEFINITIONS                                69

ARTICLE 35 - CONTENTS AND VALIDATION                    74

ARTICLE 36 - DURATION                                   74

APPENDIX A - EXCHANGES                                  75

APPENDIX B - WAGE SCHEDULE GUIDE                        78
             WAGE SCHEDULES                             79

APPENDIX C - DUES DEDUCTION AUTHORIZATION CARD          81
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                                                            <C>
MEMORANDUMS OF AGREEMENT

      ARBITRATION PROCEDURE                                     83
      BUSINESS ATTIRE                                           85
      CALL CENTER COMMITTEE                                     87
      COMMON INTEREST FORUM (CIF)                               88
      COMPREHENSIVE MEDICAL PLAN                                89
      CONTRACT LABOR REPORTING                                  91
      DRUG & ALCOHOL POLICY                                     93
      ELECTRONIC DATA GATHERING                                 94
      FAMILY AND MEDICAL LEAVES OF ABSENCE (FMLA)               96
      FLEXIBLE SPENDING ACCOUNTS                                99
      FORCE ADJUSTMENT BOUNDARIES                              100
               ATTACHMENT A                                    101
      FORCE ADJUSTMENT BUMPING RESTRICTIONS                    102
      FOUR-DAY WORKWEEK                                        104
      HOME DISPATCH                                            107
      HOURLY EMPLOYEES' PENSIONS                               109
      VALOR TELECOMMUNICATIONS SOUTHWEST, LLC SAVINGS PLAN     111
      INCOME SECURITY PLAN                                     113
      LONG TERM DISABILITY                                     116
      LUMP SUM PAYMENT OPTION                                  119
      NEUTRALITY AND CONSENT ELECTION                          120
      NON-PRECEDENT SETTING AGREEMENT                          127
      ON-CALL PREMIUM PAY                                      128
      OVERTIME                                                 129
      PART-TIME EMPLOYEE USAGE                                 131
      PERSONAL LINES OF INSURANCE                              132
      RELOCATION ALLOWANCES                                    133
      RETAIL SALES INCENTIVE COMPENSATION PLAN                 135
      RETIREE LIFE INSURANCE                                   136
      RETIREE MEDICAL HEALTH BENEFITS                          137
      SALES INTIATIVES PROGRAM                                 140
      TEAM PERFORMANCE AWARD                                   142
      TELEPHONE CONCESSION                                     147
      TUITION REIMBURSEMENT PLAN                               148
      WAGES                                                    150
</TABLE>

                                       3
<PAGE>

                                   AGREEMENT

This Agreement is made as of March 1, 2005, by and between Valor
Telecommunications of Texas, LP, or their successors, hereinafter referred to as
the "Company" or "Management" and the Communications Workers of America,
hereinafter referred to as the "Union," and the employees of the Company in the
Bargaining Unit.

                                   ARTICLE 1
                               UNION RECOGNITION

1.1   The Company recognizes the Union as the exclusive collective bargaining
      agency for all non-supervisory, nonprofessional, and non-administrative
      employees within the Company with the exception of: (a) secretaries or
      clerical employees who handle confidential personnel information and who
      report directly to Company Officers, Directors, Division Vice President,
      and Department Managers; and (b) any and all employees located in
      Company's Headquarters Building in Irving, Texas, or subsequent location.
      The Company agrees that to the extent employees who perform work currently
      recognized as bargaining unit work are in the future assigned to work in
      the Company headquarters, such employees shall be included within the
      bargaining unit.

1.2   This Agreement recognizes the Union's right to sole and exclusive
      representation for collective bargaining purposes of the eligible
      employees of the Company as limited by the Labor Management Relations Act
      of 1947 and concerning wages, hours, working conditions and other
      conditions of employment.

1.3   The Company and the Union agree that during the term of this Agreement
      there shall be no lock-outs. The Union and the Company agree that during
      the same period, neither the Union nor its agents will authorize,
      instigate, aid, condone, or engage in work stoppage, slow down or strike.
      In the event any such work stoppage, slow down or strike or threat thereof
      should occur, the Union and its officers will do everything within their
      power to end or avert the same.

                                   ARTICLE 2
                               NON-DISCRIMINATION

Both parties reaffirm their intention that the provisions of this Agreement will
continue to be applied without discrimination because of race, color, age,
religion, national

                                       4
<PAGE>

origin, sex, mental or physical disability or veteran status of the employee.
Nothing in this Agreement or the parties' Memorandum of Understanding shall be
applied or interpreted to restrict either party from taking whatever action it
deems appropriate to comply with applicable disability non-discrimination
statutes.

                                   ARTICLE 3
                                 UNION SECURITY

3.1   The Company agrees to keep in its employ only members in good standing
      with the Union. For the purpose of this section, tender of the initiation
      fee on or immediately following the thirtieth (30th) day of employment or
      the effective date of this Agreement, whichever is later, and tender of
      the periodic dues uniformly required as a condition of acquiring and
      retaining membership, shall constitute membership in good standing in the
      Union.

3.2   The provisions of this Article shall not apply to any employee in any
      State in which the application of such provision would be inconsistent
      with the law of such State.

3.3   The Company may inform employees and applicants for employment of their
      rights and obligations under the provisions of this Article.

                                   ARTICLE 4
                           PAYROLL DEDUCTION OF DUES

4.1   The Company agrees that, upon receipt of a written request for deduction
      of Union membership dues signed by an employee, it will deduct from such
      employee's wages the amount specified in such request and transmit the sum
      so deducted, along with a list of all eligible employees in the Bargaining
      Unit designating for whom such deduction has been made, to the
      Secretary-Treasurer of the Union subject to all conditions contained in
      the Dues Deduction Authorization Card, designated as Appendix "C", a copy
      of which is a part of this Agreement. The list referred to above, shall
      set forth each employee's social security number, mailing address,
      employee number, work location, title, and wage rate.

4.2   An authorization by an employee for deduction of Union dues may be revoked
      by means of an individual written notice to the Company and the Local
      Union sent by the employee by Registered or Certified Mail, Return Receipt
      Requested. Such notice of revocation must be postmarked during the
      fourteen (14) day period prior to each anniversary date of the current
      collective bargaining agreement.

4.3   It shall be the responsibility of the Secretary-Treasurer of the Union to
      certify

                                       5
<PAGE>

      to the Company, in writing, the amount of the periodic Union membership
      dues uniformly required by each Local and that such amount was duly
      established in accordance with the Union's Constitution and the Bylaws of
      such Local.

4.4   The Union membership dues will be deducted from the pay earned during the
      first payroll period ending in each calendar month, provided there is
      sufficient pay available after other deductions are made in accordance
      with the established priority of deductions. If there is insufficient pay
      earned in the first payroll period from which to make such deduction, it
      will be deducted from subsequent payroll periods closing with the same
      calendar month.

4.5   The Company agrees to furnish the appropriate National Vice President of
      the Union, each month, with the names of all new eligible employees
      employed within the collective bargaining unit during the preceding month.
      The notification shall state the employee's name, residence address, and
      work location.

4.6   No charge shall be made to the Company for the cost incurred in carrying
      out this undertaking and in furnishing the service and information
      described in Paragraphs 4.1 and 4.5 of this Article.

4.7   The Union agrees to indemnify the Company and hold it harmless from all
      claims, damages, costs, fees or charges of any kind, except as provided in
      Paragraph 4.6 above, which may arise out of the honoring by the Company of
      dues deductions authorizations in accordance with the provisions of this
      Article and the transmitting of such deducted dues to the Union, or the
      Union Security provisions set forth in Article 3 of this Agreement.

                                   ARTICLE 5
                               MANAGEMENT RIGHTS

5.1   This Agreement shall not limit the Company in the exercise of any of the
      generally recognized customary rights of management to hire new employees,
      to discharge for cause, to promote, demote, transfer and lay off in
      accordance with the provisions of this Agreement, to establish work
      schedules and hours of work; to use improved methods, materials or
      equipment; to determine work assignments and tours; to develop and
      administer work standards and performance requirements; to be the sole
      judge of the quality and acceptability of Communications services rendered
      to the public; and to discipline for violation of Company rules. All other
      customary management rights shall be reserved solely by the Company.

5.2   The Company shall determine the size of the work force for all departments
      and shall make such adjustments in the size of the work force as are
      necessary to insure a profitable operation of the Company.

                                       6
<PAGE>

                                   ARTICLE 6
                     BARGAINING AND CONTRACT ADMINISTRATION

6.1   Meetings between the Union and the Company for the purpose of collective
      bargaining and for the adjustment of grievances shall be conducted by and
      between the duly authorized representatives of the Union and the Company
      upon request and reasonable notice at such times and places as may best
      suit the convenience of the parties.

6.2   The Company agrees to designate appropriate Management representatives to
      meet and deal with appropriate designated representatives of the Union.

6.3   The Union and the Company agree to provide each other with the current
      lists of the authorized representatives and officers qualified to
      represent the respective parties.

6.4   The Company and the Union agree not to change, add to, or delete from the
      titles and wage rates listed in Exhibit B during the term of this
      Agreement, except as provided by the following:

      a.    The Company shall have the right in its discretion to establish new
            job titles or revise existing job titles to maintain efficient
            operations. The Company will provide to the Union a job description
            for the new title and the wage rate.

      b.    If the Union is dissatisfied with the wage rate, it may request
            negotiations within twenty (20) days of the receipt of the job
            description.

      c.    If the Company and Union cannot agree in negotiations, disputes over
            the wage rate of the new or revised job title may be referred to the
            grievance and arbitration procedure.

6.5   The Company shall pay the Group Health, Dental and Life Insurance
      premiums, equal to that amount normally paid for regular full-time
      employees, for up to four (4) Company employees of the Union Negotiating
      Committee for the month prior and the portion of the month up to and
      including the expiration date of the labor agreement.

                                   ARTICLE 7
                     RESPONSIBLE UNION-COMPANY RELATIONSHIP

7.1   The Company and the Union recognize that it is in the best interest of
      both parties, the employees, and the public, that in the interest of
      efficiency,

                                       7
<PAGE>

      productivity, and amiable labor relations, all dealings between them
      continue to be characterized by mutual responsibility and respect. To
      insure that this relationship continues and improves, the Company and the
      Union will apply the terms of the Agreement in accordance with the
      bargained for intent and meaning and consistent with the Union's status as
      exclusive bargaining representative of all employees in the unit.

7.2   The parties also recognize that their mutual long-term success in the face
      of increased competition in the communications industry will be dependent
      on the provision of high quality products and services, as well as
      increased sensitivity at all levels to competitive activity and to
      customer needs, expectations and perceptions. Both parties agree in
      principle that these challenges require increased individual and
      collective emphasis on involvement, teamwork, innovation, pride and
      commitment to quality. The parties will endeavor to support and promote
      the acceptance of these principles by all employees at all levels.

7.3   It is mutually recognized that the preceding paragraphs 7.1 and 7.2 are
      but a statement of broad principle and as such are exempt from the
      provisions of Article 9.

7.4   The Company will not interfere with the Union. The Company agrees not to
      coerce or interfere with any employee with the object of restraining
      membership in the Union nor to discriminate in any way against employees
      because of membership in the Union.

7.5   The Company, its officers and supervisors shall not interfere with the
      rights of employees to become and remain members of the Union and shall
      not in any manner, directly or indirectly, discriminate against, interfere
      with, coerce, restrain, discharge, demote, transfer, or discipline any
      employee by reason of his or her membership or non-membership in the
      Union.

7.6   The Union, its officer, stewards and members shall not in any matter,
      directly or indirectly, discriminate against, interfere with, coerce or
      restrain any employee by reason of his or her membership or non-membership
      in the Union.

7.7   Company to Furnish List of Employees to Union. Company agrees to furnish
      to the Union, on or before December 1, a list of all employees within the
      designated bargaining unit showing name, employee number, work location,
      job title, and seniority date.

7.8   A Management representative shall advise all employees entering the work
      group of the names of all authorized Union representatives in the work
      group and shall introduce the employees to the appropriate Union
      representative in the work group.

                                       8
<PAGE>

7.9   List of Union Representatives. The Union agrees to furnish and maintain a
      current list of its Union Representatives. Such list shall be given to the
      Director of Labor Relations of the Company.

                                   ARTICLE 8
                           UNION ACTIVITY AND LEAVES

8.1   Local Union representatives or members may solicit members and carry on
      similar Union activity outside of working periods, in their own offices,
      in space where no Company operations, customer contact activities, or
      administrative work is performed. Any such activity shall be carried on in
      such a manner as not to interfere with the rights of an individual
      employee.

8.2   Union activities may be carried on by local Union representatives at
      locations specified by the State or District manager. Reasonable notice
      shall be furnished by the Union to Management requesting use of such
      locations.

8.3   Employees elected or selected to full-time positions in the International
      or Local Union which take them from their employment with the Company,
      shall, upon written request to the Company, each receive leaves of absence
      for periods of twelve (12) months, the sum total of which shall not exceed
      fifteen (15) years. Upon return they shall be reemployed at work generally
      similar to that which they did last prior to their leaving. Employees who
      return shall be assigned to the same position on the wage schedule where
      they were working at the time their leave of absence commenced.

      a.    A request for leave of absence for Union business shall be in
            writing from the Union and shall be furnished to the Company at
            least thirty (30) calendar days in advance of the original request
            for leave. At least fifteen (15) calendar days notice shall be
            furnished to the Company in writing in advance of each subsequent
            twelve (12) months' leave.

      b.    Not more than four (4) such employees shall be granted a leave of
            absence for Union business at a time.

      c.    Employees who are allowed a leave of absence for Union business
            shall take such leave without prejudice to their job rights and
            credited service.

      d.    Sick benefit credits and wage progression credits will not
            accumulate while an employee is on leave of absence for Union
            business. Changes in the basic hourly rate for the employee's wage
            step will be recognized for the purpose of pension calculations.

      e.    Pension credits and full wage credit for pension purposes will
            accumulate to employees while on leave of absence for Union

                                       9
<PAGE>

            business.

      f.    Employees who do not return to work as specified in their request
            for leave of absence shall be considered to have automatically
            terminated their employment effective on the date when the leave of
            absence started.

8.4   Incidental leaves of absence for Union duties. Employees of the Company
      who are officers of the Union Local, not to exceed four (4) in number, may
      upon fifteen (15) days' written notice to the Company be granted
      incidental leave of absence without pay in accordance with the following,
      provided service requirements will permit:

      a.    A leave of absence shall be for not less than a period of thirty
            (30) days or more than sixty (60) days, and must run continuously.

      b.    Any such leave of absence shall not prejudice an employee's job
            rights nor shall the period of such leave be deducted from an
            employee's credited service or cause a break in such service.

      c.    Any portion of such leave of absence over thirty (30) days shall not
            be counted for wage progression purposes.

      d.    If the Union shall request an extension of such leave of absence,
            such an extension shall be considered under the terms of Paragraph
            8.3 (including subsections).

8.5   Employees of the Company who are officers or designated representatives of
      the Union shall, upon reasonable notice to the employee's immediate
      supervisor, be allowed to take time off without pay up to and including
      forty (40) scheduled working days per contract year, provided, however,
      that no more than ten (10) scheduled working days of time off granted
      under that section shall run consecutively.

      a.    The Company and Union agree to meet and discuss individual cases
            where an employee requests to exceed the time limit specified in
            paragraph 8.5. The Company agrees to take into consideration any
            extenuating circumstances presented by the employee before
            determining whether to grant the request.

      b.    Grievances filed under paragraph 8.5 a. are excluded from the
            provisions of Article 10.

8.6   Reasonable notice shall be forty-eight (48) hours. Time off, as described
      in Paragraph 8.5 herewith, may be granted with less than forty-eight (48)
      hours' notice by the employee's immediate supervisor in case of emergency
      if the

                                       10
<PAGE>

      service requirements permit. It is understood and agreed that in those
      cases where the Union Representative has knowledge of the need to be off
      in advance of forty-eight (48) hours, it is incumbent upon such
      Representative to give the immediate supervisor as much advance notice as
      possible.

8.7   If the Union shall request an extension of time off for Union business,
      such an extension shall be considered under the terms of Paragraph 8.3 and
      8.4 of this Article.

8.8   Employees from the Divisions will be allowed time off for Union duties on
      the basis of the total number of employees within the same job title on
      duty at any given time, within the Headquarters area of the Operations
      Center, or Division Office. At one time or during any portion of the same
      period, the following will apply:

<TABLE>
<CAPTION>
NUMBER OF EMPLOYEES WITHIN THE LOCATION BY
<S>                            <C>
TITLE                          NUMBER EXCUSED
1-10                                 1
11-25                                2
26-40                                3
41-65                                4
66-100                               5
Over 100                             6
</TABLE>

      For Union convention purposes, each year the Union may submit a list of
      representatives not to exceed forty (40) in number per year for whom time
      off is desired. Such list must be submitted at least ten (10) working days
      prior to the beginning date of the absence. If service requirements
      permit, such time off without pay not to exceed three (3) scheduled
      working days not to include Saturday and Sunday for each employee shall be
      granted. This time off shall be deducted from the forty (40) days
      allowable as covered under Paragraph 8.5.

8.9   This section shall not apply to any joint Union-Management meeting.

8.10  The Union shall have the use of Company bulletin boards for the posting of
      material necessary to the conduct of its affairs or space shall be
      provided by the Company for Union bulletin boards to be erected by the
      Union.

                                       11
<PAGE>

                                   ARTICLE 9
                              GRIEVANCE PROCEDURE

9.1   The Company and the Union agree it shall be the objective to settle
      grievances promptly and at the lowest step possible. If an agreement is
      reached between the parties, either formally or informally at any step
      below the second step, it shall be considered non-precedent setting and
      non-referable.

9.2   Grievances involving discharge, demotion or disciplinary suspensions shall
      be filed within ten (10) calendar days. All other issues should involve an
      informal resolution meeting between the supervisor and the employee. The
      meeting should take place as soon as possible from the time the employee
      made the request. The employee should be advised that union representation
      will be made available if desired. If a resolution is reached without the
      union present, the supervisor shall notify the local union representative
      of the agreed to resolution. If a resolution is not reached in the
      informal meeting, a grievance may be filed.

      STEP 1

      Grievances shall be presented in writing to the immediate supervisor
      within thirty (30) calendar days following the occurrence of the act or
      incident giving rise to the grievance, or within thirty (30) calendar days
      following the date upon which the facts of the grievance first became
      known. Within ten (10) calendar days of receipt of the written grievance,
      unless otherwise mutually agreed upon, the supervisor and the authorized
      Union representative shall meet to resolve the grievance. The written
      grievance shall set forth:

      a.    The name(s) of the employee(s) aggrieved.

      b.    The nature of the grievance. (A brief description of the
            circumstances out of which it arose.)

      c.    The section(s) of this Agreement, if any, relied upon or claimed to
            have been violated.

      d.    The remedy or correction desired.

      The Company shall give its decision in writing to the Union within seven
      (7) calendar days following the conclusion of the Step 1 meeting(s). It
      shall be the objective of both the Company and the Union to settle
      grievances at the first step to the greatest extent possible.

      STEP 2

      If the Union is not satisfied with the Company's decision at Step 1, the
      Union

                                       12
<PAGE>

      may appeal the grievance to Step 2 within fifteen (15) calendar days
      following the Union's receipt of the Company's Step 1 written decision.
      The authorized Union representative and the Director, Labor Relations or
      authorized Company representative shall meet within thirty (30) calendar
      days of such appeal. The grievant may only be present for grievances
      involving suspension or termination, unless otherwise agreed to between
      the parties. Both parties shall attempt to resolve the matter, and the
      Company shall give its written decision to the Union within fifteen (15)
      calendar days following the Step 2 meeting(s).

9.3   If the Union is not satisfied with the final decision of the Company at
      Step 2, the Union may submit the matter to binding arbitration under the
      provisions of Article Ten (10), Arbitration, of this Agreement.

9.4   The Management and the Union agree to assist each other in the
      investigation of the circumstances surrounding and related to any
      grievance. The Management agrees that once a grievance has been referred
      to the Union, no representative of Management will discuss the matter with
      the grievant(s) without notification to an appropriate representative of
      the Union, and a reasonable opportunity for the Union representative to be
      present at the grievances.

9.5   Time limits specified in this Article shall be adhered to. Failure of
      either party to abide by the time limits shall result in a default of the
      grievance to the other party, which may be advanced to the next step of
      the grievance and arbitration procedure, if the Union so desires. The
      parties may extend said time limits by mutual agreement.

9.6   It is agreed that neither the Company nor its representatives, nor the
      Union, its locals, representatives or members, will attempt by means other
      than the grievance procedure to bring about the settlement of any issue
      which is properly a subject for disposition through the grievance or
      arbitration procedure.

9.7   The Company and the Union agree that the provisions of Article 6,
      Paragraph 6.1 concerning meetings and representatives shall apply in all
      respects, except as modified specifically in this Article.

9.8   Pay Treatment for the Handling of Grievances at the first step. Local
      Management will arrange at times consistent with service requirements to
      meet with employees who are authorized local Union representatives to
      discuss for a reasonable period of time the grievance of that local
      organization. The above time for the local Union representative, as well
      as the employee or employees having the grievance, if spent during their
      scheduled working hours shall be without loss of pay at straight time
      provided that not more than three (3) employees nor less than two (2)
      employees where

                                       13
<PAGE>

      practicable, including local Union representatives, shall be eligible for
      the above pay treatment. Where mutually agreeable, more than three (3)
      employees may be authorized without loss of pay.

9.9   Pay Treatment for the Handling of Grievances at the second step. Employees
      who are authorized Union representatives will be permitted to confer with
      Management during their scheduled working hours without loss of pay (at
      straight time) for the purpose of reviewing grievances. Such paid time
      shall be restricted to the time actually spent in meetings with Management
      and shall exclude travel time and preparation time. The number of Union
      representatives attending such meetings without loss of pay shall be
      limited to those authorized Union representatives required for the
      particular meetings and shall in no case exceed two (2).

9.10  The time spent in attendance at the meetings, listed in 9.7, 9.8, and 9.9
      above, shall be without loss of pay only if such meetings are held during
      such employee's scheduled working hours or with prior approval if the
      appropriate Company representative is not available during the employee's
      scheduled working hours. Such paid time shall be considered as time worked
      in computing any overtime payments to which the employees may become
      entitled.

                                   ARTICLE 10
                           ARBITRATION OF GRIEVANCES

10.1  A grievance which has not been satisfactorily settled after it has been
      presented in writing and processed completely through the grievance
      procedure contained in this Article may be submitted to arbitration by the
      Union notifying the Company in writing within sixty (60) days and the
      American Arbitration Association within ninety (90) days from the date of
      the Company answer at the third step (or the date of the default by the
      Company) provided the grievance concerns:

      a.    The interpretation, application or alleged violation of the terms of
            this Agreement;

      b.    The discharge, suspension, demotion or materially disciplining of
            any employee having more than one (1) year's net credited service
            with the Company.

10.2  In the event that either party to this Agreement elects to submit an
      arbitrable grievance to arbitration, the parties agree that the matter
      shall be so submitted and agree that such submission shall be to a single
      arbitrator.

10.3  The arbitrator shall be designated by the American Arbitration Association
      in accordance with the then existing rules and procedures of the
      Association.

                                       14
<PAGE>

      a.    The arbitration shall be conducted under the then existing rules of
            the Association.

10.4  The arbitrator shall be confined to the subjects submitted for decision
      and may in no event as a part of any such decision impose upon either
      party any obligation to arbitrate any subjects which have not been agreed
      upon as subjects for arbitration, nor may the arbitrator as a part of any
      such decision effect reformation of this Agreement or otherwise alter any
      of its provisions.

      a.    In rendering the decision, the arbitrator shall be confined to the
            specific issue, and to the matters set forth in 10.1a and 10.1b of
            this Article as may be appropriate.

      b.    The arbitrator shall not possess authority to assess damage or
            punitive payments against either party to the other.

      c.    The arbitrator shall have authority to include in the order an award
            for money restitution to any employee, or employee when improper
            payment, or failure to make proper payments is a point at issue in
            the specific complaint. In making any such award for restitution,
            however, the arbitrator will follow the "make whole" concept, and no
            more.

10.5  The decision of the arbitrator shall be rendered without delay and shall
      be final and binding on all parties and shall be enforceable in a court of
      law.

10.6  Each party shall bear the expense of presenting their own case and shall
      share equally the expenses of the arbitrator and the general expense of
      the arbitration.

10.7  The grievance procedure and arbitration provided herein shall constitute
      the sole and exclusive method of determining adjustments for settlement
      between the parties of any and all grievances as herein defined, and the
      grievance procedure and arbitration provided herein shall constitute the
      sole and exclusive remedy to be utilized by the parties hereto for such
      determination, decision, adjustment, or settlement of any and all
      grievances as herein defined.

      a.    Nothing in this Section is intended to impair the right of either
            the Company or the Union to apply to the National Labor Relations
            Board for relief from unfair labor practices as defined in the
            National Labor Relations Act.

                                       15
<PAGE>

                                   ARTICLE 11
                        DISCIPLINE AND PERSONNEL RECORDS

11.1  In the event that the job performance of an employee is unsatisfactory to
      the Company and the Company decides to demote, dismiss or suspend such
      employee, they shall first notify the appropriate local Union
      representative in the employee's work group or unit and the employee
      before taking such action. In instances where imminent risk to persons or
      property exists and immediate action is required, the Company will notify
      the appropriate Union representative as soon as possible after that action
      is taken.

11.2  At any meeting between a representative of the Company and an employee in
      which discipline (including warnings which are to be recorded in the
      personnel file, suspension, demotion or discharge for cause) is to be
      announced, a Union representative may be present if the employee so
      requests.

11.3  An employee may, upon seven (7) working days notice, inspect records
      contained in that employee's personnel file, such as absence and tardy
      records, work observation records, appraisals and records bearing on any
      disciplinary action. Employee notification shall be made when records are
      added to or removed from an employee's personnel file. For purposes of
      this Article, personnel file is defined as those records normally in the
      custody of the Division Human Resources Manager.

                                   ARTICLE 12
                            EMPLOYEE CLASSIFICATIONS

12.1  Status and Treatment of Probationary Employees

      a.    Probationary employees shall be accorded the same applicable rights
            and benefits as regular employees under the terms of this Agreement
            except for discretionary termination of probationary employment as
            set forth in Article 34.

      b.    It is understood that probationary employees shall enjoy full rights
            and privileges of Union representation and there will be no
            discriminatory action taken by the Company by reason of affiliation
            or non-affiliation with the Union.

      c.    The Company shall have the right in its discretion to transfer
            probationary employees.

12.2  Limitations on Occasional Employment.

                                       16
<PAGE>

      a.    Occasional employees shall not be employed to an extent as to
            adversely affect usual employment of the then current regular
            full-time or regular part-time employees. Employment for training or
            for needed periods in vacation reliefs will not be considered as
            adversely affecting usual employment.

12.3  Treatment of Temporary Employees

      a.    Temporary employees will not be used in any case which would result
            in the reduction of the normal assignment of work of regular
            employees.

      b.    If a temporary employee's employment continues beyond six (6)
            months, the employee shall be reclassified as a regular employee and
            shall be given net credited service from the date of hire for such
            employment.

                                   ARTICLE 13
                                   SENIORITY

13.1  Computation of Seniority

      a.    Seniority shall be computed in the same manner as net credited
            service.

      b.    In cases of service bridging, those portions of seniority and net
            credited service which pertain to prior service shall be identical.

13.2  Application of Seniority

      a.    Seniority shall be the deciding factor, insofar as the ability of
            the employee and the conditions of the business will permit, in
            matters affecting assignment of hours and vacations, voluntary and
            involuntary transfer, promotions, layoffs, and rehiring after
            layoffs.

            a.1   For purposes of work schedules, vacations, and holidays
                  part-time employees will select on the basis of continuous
                  service.

      b.    In the application of seniority there may arise some occasions when
            a conflict develops by reason of two (2) or more employees
            possessing equal seniority. In such cases, applicable seniority will
            be determined by the order of dates of birth (mm/dd/yy) of each
            employee concerned.

      c.    Whenever any provision contained within this Agreement makes
            specific reference to application of seniority for a given
            circumstance,

                                       17
<PAGE>

            the application prescribed within that provision will prevail.

      d.    One employee may displace another through application of seniority
            only under the following circumstances:

            d.1   Force adjustment.

            d.2   Return from a leave of absence that is actual or implied,
                  wherein reinstatement to the original job is a condition of
                  the leave.

            d.3   Return from military service under reemployment rights
                  established by law.

            d.4   Nothing within this Agreement shall be construed to mean that,
                  during application of force adjustment procedures, seniority
                  may be applied in such manner that an employee may achieve a
                  job assignment that is of a higher wage level than the job
                  which the employee is vacating by reason of force adjustment.

13.3  Transfers or Promotions.

      a.    Employees transferred or promoted from the bargaining unit shall
            continue to accrue seniority.

13.4  Training Opportunities

      a.    The Company agrees that opportunities for job training which would
            serve to equip employees for promotion to higher paid occupations
            within the bargaining unit will not be employed in such manner as to
            circumvent the seniority principles as set forth within this Article
            13.

      b.    Job training herein means formal training and, as well, informal
            training by experience gained in temporary assignments to higher
            paid occupations within the bargaining unit.

                                   ARTICLE 14
                              NET CREDITED SERVICE

14.1  Net Credited Service is the term used to express the aggregate of the
      years, months, and days of active employment with Valor or any of its
      predecessors which will be recognized by the Company with respect to each
      employee. For employees of GTE Corporation who were active employees
      working in the Oklahoma properties purchased by Valor on July 1, 2000, or
      the Texas/ New Mexico properties purchased on September 1, 2000, and who
      became active employees of Valor on those respective dates, the term "Net
      Credited Service"

                                       18
<PAGE>

      also includes the Net Credited Service recognized by GTE as of each
      respective purchase date. Active employment will include only that time
      for which the employee actually receives pay or is on authorized Union or
      military leave of absence, and will not include time for which the
      employee receives Workers' Compensation as a result of being totally and
      permanently disabled in excess of one (1) year. Active employment will be
      computed in terms of whole work days.

      a.    Current net credited service for any employee shall be determined as
            the date of hire or adjusted date of hire, whichever applies.

14.2  Net credited service ceases to exist coincident with discharge, release,
      resignation for any reason, or reclassification of a regular employee to
      non-regular employment.

      a.    This provision will not serve to cancel net credited service
            previously earned by laid-off employees who accept occasional
            assignments during the period of layoff.

14.3  Regular employees who are reclassified as non-regular employees shall lose
      their net credited service and the net credited service for such employees
      shall be bridged only as outlined in the definition, "Net Credited
      Service," and as provided in this Article 14.

14.4  Net credited service will continue to accumulate during the first
      forty-five (45) calendar days of any layoff, but not thereafter.
      Seniority, however, will continue to accrue for not more than thirty (30)
      calendar months for purposes of recall from layoff.

14.5  Treatment for Part-Time Employees. The actual wage rates, progression
      increases, net credited service and seniority for part-time employees
      shall be determined by the accumulation of the actual hours worked as they
      relate to the normal full-time work week.

14.6  Bridging of Net Credited Service. At the employee's request, net credited
      service with respect to former employees of the Company will include
      recognition of all prior periods of active employment after the employee
      has completed six (6) continuous months active employment following the
      employee's reemployment, except that periods of prior active employment of
      less than six (6) continuous months' duration will not be recognized. Such
      recognition will include active employment with any of the predecessors
      and/or affiliates of the Company. Net credited service will be computed to
      the nearest half month.

14.7  Employees who have retired and who return to work for the Company will not
      be eligible to bridge any net credited service prior to retirement. The

                                       19
<PAGE>

      employee's rehire date will be used for the purposes associated with
      customary applications of net credited service and seniority.

                                   ARTICLE 15
                                     WAGES

15.1  All employees shall be paid bi-weekly. Payments to be made on the second
      Wednesday, following the close of the bi-weekly period. When a holiday
      falls on Wednesday, payment shall be made on the preceding Tuesday.

15.2  Where it is necessary to dismiss an employee in the field, he/she must be
      paid in full for all time due in compliance with applicable law, but in
      any event no later than the next pay period

15.3  When the first day of the month in which an increase is scheduled falls
      within the first seven (7) days of a two (2) week pay period, the
      scheduled increase shall be effective as of the first day of that two (2)
      week pay period.

15.4  When the first day of the month in which an increase is scheduled falls
      within the second seven (7) days of a two (2) week pay period, the
      scheduled increase shall be effective as of the first day of the following
      two (2) week pay period.

15.5  Such adjustments in the effective date of an increase to meet the first
      day of a two (2) week pay period shall not change the time interval used
      in determining the date of the next scheduled increase.

15.6  The wages attached as appendices to this Agreement shall prevail for the
      duration of this Agreement and shall be considered a part of it.

      a.    Changes or revision in the wage rates attached shall not be subject
            to arbitration except by mutual agreement between the Company and
            the Union.

      b.    The wage rates attached for purposes of this Agreement are hereby
            defined as basic wage rates, or basic rates.

15.7  These appendices also include the wage schedules which indicate the
      progression intervals and basic wage rates. The basic hourly wage rate
      assigned to each employee shall be based on the job classification.

15.8  An employee's positioning on any wage progression schedule is determined
      by classification, reclassification, and related contractual procedures,
      and not by net credited service, as such. Thus, the positioning may not
      necessarily be immediately related to actual net credited service.

                                       20
<PAGE>

                                   ARTICLE 16
                           DIFFERENTIALS AND OVERTIME

16.1  Overtime Payments

      a.    The overtime rate of pay is one and one-half (1 1/2) times the
            regular rate of pay except as hereinafter provided.

      b.    The overtime rate of pay will be paid for time worked in any one (1)
            day in excess of the length of a normal eight (8) hour tour.

      c.    All hours worked on the day a holiday is observed shall be paid at
            two and one-half (2 1/2) times the straight time rate.

      d.    Time worked in a work week in excess of fifty-four (54) hours will
            be paid two (2) times the straight time rate. In computing time
            worked, daily overtime and work on nonscheduled days will not be
            excluded. Any excused time paid for will not be considered time
            worked. Only actual hours worked are counted for use in this
            paragraph and tours of less than eight (8) hours shall not be deemed
            as equivalent to eight (8) hours.

      e.    Insofar as it is practical to do so, the Company will endeavor to
            distribute overtime work equally and impartially to the employees at
            a given location who are qualified to do the class of work to be
            performed and who usually perform such work during their normal
            working schedules.

      f.    If in any work week the time worked exceeds forty (40) hours, the
            excess over forty (40) hours shall be paid for at time and one-half
            (1 1/2) subject to the provision of this Article (exclusive of daily
            overtime and work on nonscheduled days for which overtime is paid or
            absent time paid for).

      g.    All time worked at an overtime rate will be calculated to the
            nearest equal or higher one-fourth (1/4) of an hour (fifteen (15)
            minutes.

      h.    When employees are called out for duty before or after regular
            working hours, time going to and from home shall be considered as
            time worked and paid for at overtime rate. The time thus paid for
            this type of emergency work, including traveling time, shall not be
            less than time and one-half for a minimum of two (2) hours work. The
            two (2) hour payment provision does not apply under the following
            conditions.

                                       21
<PAGE>

            h.1   To work required during a meal period falling within the hours
                  of the employee's overall tour of duty on scheduled days.

            h.2   If the employee is notified before leaving the Company
                  premises that he/she is required to work as a continuation of
                  his/her regular tour on that day.

            h.3   If the employee is called to work before the start of his/her
                  scheduled tour for the day and continued working all or part
                  of his/her scheduled tour.

      i.    Where it is necessary to change the work schedule and an employee is
            required to work a nonscheduled day, such time will be paid at the
            overtime rate. If twenty-four (24) hours notice is given of the
            change in schedule, the employee will be paid at the straight time
            hourly rate and a nonscheduled workday set later in the week. A
            scheduled workday shall not be changed to a nonscheduled day unless
            twenty-four (24) hours advance notice is given prior to the first
            day involved in the change. In no case shall the nonscheduled day be
            changed to a day in the following week.

      j.    When a scheduled day is changed at the request of an employee, the
            hours worked shall be paid at straight time. Changes from officially
            posted schedules will be made at the request of an employee when no
            replacement is required. When such replacement is required, the
            change will be made providing an agreeable shift can be made in the
            schedule of another qualified employee.

      k.    The provisions of this Section apply only to those employees subject
            to overtime payments under the Fair Labor Standards Act.

      l.    The employee shall work overtime as requested but only when
            authorized by his/her supervisor or some other employee designated
            by the Company.

16.2  Sunday Payments

      a.    Employees subject to overtime payments under the Fair Labor
            Standards Act shall be paid at the overtime rate of one and one-half
            (1 -1/2) times the basic hourly rate for all hours worked on Sunday
            during the period from 12.01 a.m. to 11:59 p.m.

      b.    A scheduled Sunday assignment of work shall be considered one (1) of
            the five (5) day tours and included in the total forty (40) hours
            authorized for any one (1) week.

                                       22
<PAGE>

16.3        Premium Payments

      a.    On-Call Premium. Employees in selected job title classifications and
            locations who hold themselves subject to on-call schedules will do
            so at their own option. In the absence of qualified volunteers,
            management will rotate on-call among the qualified employees in
            inverse order of seniority.

            No employee will serve on-call for more than one week per month,
            until all other qualified employees have served on-call.

            a.1   The on-call differential will be paid as follows:

                  Scheduled Days -          $17.00 from midnight to midnight

                  Non-scheduled Days -      $22.50 from midnight to midnight

                  Holidays -                $29.00 from midnight to midnight

                  Work Week -               $120.00 from 12:01 A.M. Sunday to
                                            midnight Saturday

            a.2   The on-call differential shall be paid in addition to any
                  other differential, premium or payment to which an employee is
                  otherwise entitled.

            a.3   Employees on-call will have their call out hours count toward
                  the apportionment of overtime.

      b.    Christmas and New Year's Eve Premium. Employees required to work
            after 6:00 p.m. on Christmas Eve or New Year's Eve shall receive six
            dollars ($6.00) in addition to their basic rate and any applicable
            differential and/or premium.

16.4  Differential Payments

      a.    Bilingual. A Bilingual Differential of $0.65 per hour will be paid
            for designated workgroup(s) in Call Center locations. The
            differential will apply to the scheduled tour of duty provided the
            assignment is for a period in excess of one full hour.

      b.    Night Shift. Full-time employees who are assigned to scheduled tours
            of work which start or end outside of the period between the hours
            of 6:00 a.m. to 9:00 p.m. shall receive a night differential for all
            scheduled hours worked between the hours of 9:00 p.m. and 6:00 a.m.
            of $1.15.

                                       23
<PAGE>

      c.    In Charge. When an employee is required and designated by the
            Company to exercise independent judgment and direct the flow of work
            of others and accept the responsibility of same, the employee shall
            receive a differential of $0.80 per hour so designated and worked
            provided such assignment is for a period in excess of one (1) full
            hour.

      d.    Customer Zone Technicians scheduled to perform maintenance in the
            Central Office during the maintenance window will receive the night
            differential for each hour scheduled.

16.5  When an employee of any department is required to work a shift which
      starts four (4) hours or more before or four (4) hours or more after the
      start of the regularly assigned shift as covered by the weekly schedule,
      the employee will be paid at the rate of time and one-half (1 1/2) for all
      time worked until the employee is again restored to the employee's regular
      scheduled shift or for such shifts worked for the balance of that
      scheduled week.

16.6  When two (2) or more types of time and one-half compensation are
      applicable to the same hours of work, only one time and one-half rate
      shall be paid. In no case will time and one-half compensation be
      duplicated or pyramided. Time and one-half compensation shall mean time
      and one-half the employee's regular rate of pay.

                                   ARTICLE 17
                            WORK SCHEDULES AND TOURS

17.1  For all purposes, each tour of duty will be considered to have been worked
      on the calendar day it started. However, nothing herein precludes the
      reporting of hours worked as of the calendar days worked for the purpose
      of Company payroll preparation.

17.2  Call Centers - Normal Tour of Duty

      a.    The normal tour of duty for employees shall normally consist of
            eight (8) hours in any one day. The workweek shall normally be forty
            (40) hours consisting of five (5) daily tours of eight (8) hours
            each.

      b.    The Company shall have the right to schedule all tours and sessions
            and the starting and ending time of each.

17.3  OPERATIONS-SERVICE AND ENGINEERING-CONSTRUCTION -NORMAL TOUR OF DUTY

      a.    Forty (40) hours, consisting of five (5) consecutive daily tours of
            eight

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<PAGE>

            (8) hours each shall normally constitute the workweek for all
            Operations-Service and Engineering-Construction employees.

      b.    The Company shall have the right to schedule all tours and sessions
            and the starting and ending time of each.

      c.    Operations-Service and Engineering-Construction employees may be
            scheduled other than five (5) consecutive work days when required to
            maintain normal service conditions. Selection of such schedule shall
            be voluntary. If no selection is made, the Company may assign the
            schedule in the inverse order of seniority.

      d.    Scheduled Saturday assignments and split weeks of nonconsecutive
            daily tours will be maintained at a minimum consistent with the
            needs of the business.

17.4  Work schedules shall be furnished each Operations-Service and
      Engineering-Construction Department employee and each Engineering Outside
      Plant Technician by four (4) week periods, and shall be furnished to the
      employees, by bulletin board posting or by written notice, at least seven
      (7) days in advance of the commencement of a given four (4) weeks'
      scheduling.

17.5  Grievances filed under this Article are excluded from the provisions of
      Article 10.

                                   ARTICLE 18
                                    HOLIDAYS

18.1  Seven (7) holidays shall be observed as designated:

      New Year's Day - January 1
      Memorial Day - Last Monday in May
      Independence Day - July 4
      Labor Day
      Thanksgiving Day
      Friday following Thanksgiving Day, EXCEPT AS SPECIFIED IN 18.1.A OF
      THIS ARTICLE Christmas Day - December 25

      a.    Employees assigned to Phone Stores will receive an additional
            Personal Holiday in lieu of the Friday following Thanksgiving
            Holiday unless scheduled off on the Friday following Thanksgiving
            Holiday. The additional Personal Holiday is to be scheduled
            following Thanksgiving Day up to and including December 31 of the
            calendar year. The additional Personal Holiday is subject to the
            eligibility requirements as set forth in this Section.

18.2  Five (5) Personal Holidays shall be observed.

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<PAGE>

      a.    A personal holiday will be any day of the employees' choosing, based
            on their normal schedule and service requirements. On these holidays
            employees will be paid at their basic rate of pay plus differentials
            and premiums (except Sunday premiums).

      b.    At least fifteen (15) days notice prior to the day or days to be
            observed must be given to the employee's supervisor. Such time limit
            may be waived by mutual agreement between the employee and
            supervisor.

      c.    If an employee selects a day or days to observe as the holiday,
            which, because of work requirements, would not be available, or if
            two or more employees in the same work group select the same day or
            days, the employees will choose an alternate available day or days
            in order of seniority.

      d.    The first holiday for which an employee is eligible under this
            provision must be taken prior to April 1 and the second holiday
            prior to July 1 of each calendar year.

      e.    If the remaining holidays for which an employee is eligible under
            these provisions, have not been selected by October 1 of each
            calendar year, management will designate the day to be observed.

      f.    It is the intent that Personal Holidays should normally be taken as
            a day off with pay and not worked. However, employees who are
            required to work on a Personal Holiday will be paid in accordance
            with Section 18.6 of this Article.

      g.    Employees may elect to take up to five (5) personal holidays in
            increments of two (2) or four (4) hours for a maximum total of forty
            (40) hours per year.

            g.1   Advance supervisory notice and approval are required prior to
                  the beginning of the employee's shift. In the event more than
                  twenty-five (25) percent of the work group is scheduled off or
                  service requirements dictate the employee's presence,
                  supervision reserves the right to grant or deny the request.

            g.2   Personal holidays that remain unscheduled as of October 1,
                  supervisor may schedule the remaining increment(s) to ensure
                  orderly work force management.

      h.    New employees will accrue personal holidays based on length of
            continuous service as follows:

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<PAGE>

      After  3 months continuous service:    2 days
      After  6 months continuous service:    1 day added
      After  9 months continuous service:    1 day added
      After 12 months continuous service:    1 day added

      After one (1) year of continuous service from date of hire, employees will
      be eligible for a total of five (5) personal holidays each calendar year.
      Personal holidays shall be selected at the time vacation selections are
      made and such personal holidays must be taken on a normally scheduled work
      day. By mutual agreement of the employee and the supervisor, a personal
      holiday may be rescheduled from the one originally selected.

      The provisions of 18.2.d of this Article do not apply to employees in
      their first year of employment.

18.3  A designated holiday which falls on Sunday shall be observed the following
      Monday and a designated holiday which falls on Saturday shall be observed
      on Friday for all Departments. Designated holidays for employees normally
      scheduled on weekends shall be observed on the actual day of the holiday
      and paid at their basic rate of pay plus differentials and premiums
      (except Sunday premium).

18.4  Holiday tours are those that begin on the holiday, and holiday pay will be
      paid for holiday tours only on the legally observed holiday.

18.5  Employees Not Working on Designated Holidays.

      a.    Regular and temporary employees, except absentees, who are not
            assigned to work shall be paid one (1) full day's basic pay for the
            designated holidays plus any applicable differential and/or premium
            payments which they would have received had they worked their
            regular hourly assignment. Employees not working on a holiday and
            receiving holiday pay shall receive credit for the equivalent as
            time worked toward the computation of weekly overtime.

      b.    Part-time employees shall be paid holiday pay at their basic wage
            rates, based upon their average scheduled work day computed from the
            four (4) week period immediately preceding the holiday period.

18.6  Employees Working on Designated Holidays

      a.    Regular and temporary employees, except absentees, who are assigned
            to work on a designated holiday shall be paid time and one-half in
            addition to their basic pay for the day and any applicable
            differential and/or premium payments.

                                       27
<PAGE>

      b.    Occasional employees working on a recognized holiday will be
            compensated according to time actually worked. Compensation will be
            basic rate, with any applicable premiums and differentials, plus
            holiday premium computed at basic rate.

      c.    When daily overtime hours (as defined in Article 16.1.b) fall within
            a holiday, such hours shall be compensated at time plus time and
            one-half rate in lieu of otherwise prescribed daily overtime at time
            and one-half.

      d.    Hours worked on a call-out on a recognized holiday for which no
            hours were originally scheduled for the employee, shall be paid for
            at the premium rate of time and one-half for the first eight (8)
            hours.

            d.1   The minimum time paid under this provision shall be two (2)
                  hours at the time and one-half rate; even though time actually
                  worked may be less than two (2) hours. Two (2) hours' actual
                  work time will not be demanded arbitrarily but only that time
                  is necessitated to meet service requirements. On the other
                  hand, employees shall have no authority or privilege to
                  perform call-out work in such manner as to promote compounding
                  of further call-outs.

18.7  The term "Absentee" used in Sections 18.5 and 18.6 of this Article shall
      mean any employee who does not work on a holiday and who is absent the
      scheduled work day preceding or following the designated holiday without
      being excused by the Company for such absence, or any employee scheduled
      to work who is absent on the holiday without being excused by the Company
      for such absence.

      a.    A regular and/or temporary employee who has not been excused under
            the provisions of Paragraph 18.7 of this Article may be excused on
            the scheduled workday preceding or following the holiday by
            presenting a medical doctor's certificate of inability to work due
            to illness provided they were not scheduled to work on the holiday.

            a.1   The Company's "Illness Treatment Plan" shall prevail if
                  Paragraph 18.7.a of this section conflicts.

18.8  Holiday Falling Within a Scheduled Vacation Period (See Article 19
      Vacations).

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<PAGE>

                                   ARTICLE 19
                                   VACATIONS

19.1  Vacations with pay shall be granted in January of each year in line with
      demands of the service as listed below:

      a.    One (1) week vacation shall be allowed after completion of six (6)
            months of service.

      b.    Two (2) weeks' vacation shall be allowed after completion of twelve
            (12) months of service. If any employee completes six months service
            and twelve months service within the same vacation year, only two
            weeks vacation will be granted in that calendar year.

      c.    Three (3) weeks' vacation shall be allowed to all employees during
            the calendar year in which their total net credited service is five
            (5) full years or more.

      d.    Four (4) weeks' vacation shall be allowed all employees during the
            calendar year in which their total net credited service is fifteen
            (15) full years or more. Employees eligible for four (4) weeks
            vacation must take at least one (1) week of vacation during the
            months of January, February, March, April, October or November.

      e.    Five (5) weeks' vacation shall be allowed all employees during the
            calendar year in which their total net credited service as
            established by the Company is twenty-five (25) full years or more.
            Employees eligible for five (5) weeks vacation must take at least
            two (2) weeks of vacation during the months of January, February,
            March, April, October or November.

19.2  It is the Company's established policy that employees take their vacation
      during the calendar year in which it is granted, except as outlined in
      provisions of this Article pertaining to the right to vacation banking.

19.3  Vacation schedules will be prepared by the Company for each department
      and/or workgroup. After December 1 and prior to February 1 of each year,
      the Company will check with each employee as to the dates desired for
      vacations, respecting the wishes of the employees insofar as the demands
      of service of the respective work groups will permit. The Company will
      distribute vacation schedules to all reporting locations and/or post where
      practical. The selection of vacation dates within each schedule will be on
      the basis of seniority as shown by the records of the Company. Except as
      otherwise provided in this Article, employees may split vacations into
      periods of not less than one (1)

                                       29
<PAGE>

      workweek, if the demands of service permit.

      a.    Vacation increments must be scheduled at the beginning of the year
            in which it is to be taken. Requests for full weeks vacation will
            have precedence over requests for single day vacation time during
            the selection process. Likewise, requests for single day vacation
            time will have precedence over requests for half day vacation time
            during the selection process.

            a.1   Scheduling of vacations shall take into account the service
                  requirements and preferences of the employees. Vacations shall
                  usually start on the first day of the calendar week. Except as
                  noted for day-at-a-time and half-day-at-a-time vacations,
                  employees may split their vacations into periods of not less
                  than one (1) week if service requirements permit.

      b.    Schedules will be prepared in such a manner as to permit a maximum
            number of vacations during the more desirable vacation season if the
            demands of the service permit.

      c.    A vacation week will be a workweek and no work shall be scheduled
            for the employee in a vacation week. The last week in December will
            be considered a work week for vacation purposes in the current year.
            It will be considered a workweek for vacation purposes in the
            following year only if four or more days in that week are in the
            following calendar year.

      d.    Employees cannot waive their scheduled vacations and draw pay plus
            vacation allowance for working during the time allowed for a
            scheduled vacation, unless, in case of emergency, the Company
            requests the employee to work during the scheduled vacation period.

            d.1   If an employee is called back from vacation because of an
                  emergency, the employee shall have the choice of receiving
                  vacation pay plus pay at the basic rate for the hours actually
                  worked or substituting another vacation period in order to
                  complete the full vacation to which the employee is entitled.

19.4  If an employee desires to change his/her vacation period, he/she shall
      give the Company at least fourteen (14) calendar days written notice and
      the Company will accommodate him/her providing the change does not
      conflict with other vacations or the demands of service.

19.5  If an authorized holiday to which the employee is entitled under this
      Article occurs during an employee's vacation he/she shall be granted an
      additional day off with pay. This additional day off with pay shall be
      granted prior to or

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<PAGE>

      subsequent to but not necessarily consecutive with the vacation. Such day
      off shall not be considered as time worked.

19.6  Absence due to sickness or accident disability exceeding thirty (30) days
      shall not affect vacation eligibility; following return to duty after
      absences, an employee who has not taken his/her vacation within the
      calendar year under the provisions of Paragraph 19.1 of this Section will
      be expected to take whatever vacation or part thereof he/she is entitled
      to by December 31 of the current calendar year. Remaining vacation
      balances will be handled as an exception in accordance with this Article.

19.7  Employees who have an approved leave of absence exceeding thirty (30) days
      are encouraged to take all available vacation prior to the start of their
      leave. If, however, an employee has remaining vacation upon returning from
      leave, he/she will be expected to use remaining vacation by December 31 of
      the current year. If vacation cannot be taken due to demands of service,
      remaining vacation balances will be handled in accordance with this
      Article.

      a.    Any employee who is approved for a leave of absence in excess of 30
            days during the fourth quarter of the calendar year shall take all
            available vacation prior to the start of the leave. Employees
            eligible for vacation banking may also bank one week.

19.8  An employee returning to duty following approved leave of absence for
      service in the armed forces of the United States, including the reserve
      components thereof, who has not received his/her vacation within the
      calendar year shall be eligible to take vacation within the calendar year
      of his/her return to duty, which he/she would have received if he/she had
      been continuously on duty with the Company during the period of absence.
      The same conditions with respect to vacation taken within the calendar
      year shall apply as covered in this Article.

19.9  An employee who returns to regular employment during the same calendar
      year in which he/she terminated or began a leave of absence will not be
      granted additional vacation during that remaining calendar year if he/she
      had received pay in lieu of vacation at the time of his/her
      leave/termination.

19.10 If, at the time of termination, layoff, retirement or resignation with a
      minimum of two (2) weeks' notice, an employee has not taken all of his/her
      vacation which had been granted for that calendar year, he/she will
      receive pay for the unused portion.

19.11 Day-at-a-time (single day) and half-day-at-a-time (half day) vacations. A
      portion of the vacation period may be taken on a one single day or half
      day basis if accomplished in the following manner:

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<PAGE>

      a.    At the time an employee is making their vacation period selection,
            the employee may elect to take up to one week of their vacation, two
            (2) weeks if eligible for 5 weeks of vacation, of their vacation
            eligibility on a single day or half day basis. The choice of
            vacation time periods shall be noted on the vacation schedule.

      b.    Subject to the demands of the service and upon the basis of the
            earliest request to the employee's immediate supervisor, an employee
            may request to change previously scheduled single day and half day
            vacation. Notice of not less than forty-eight (48) hours must be
            made for any request for single day and half-day vacation time.

19.12 Vacations will ordinarily begin on Sunday and end on Saturday. An employee
      may not schedule nonconsecutive vacation periods so as to encompass more
      than three (3) authorized holidays which are subject to rescheduling as
      "in lieu" days. The pay treatment to be accorded for an authorized holiday
      falling within a vacation period shall be as provided in Article 18.5
      Paragraphs a and b.

19.13 Vacation Banking

      a.    Employees eligible for three (3) or four (4) weeks of vacation may
            bank up to one (1) vacation week for each vacation year; Employees
            eligible for five (5) weeks of vacation may bank up to two (2)
            vacation weeks for each vacation year.

      b.    Vacation time must be banked in full forty (40) hour increments.

      c.    Banked vacation will be paid at the employee's basic rate of pay at
            the time the vacation is taken.

      d.    Banked vacation may be accumulated from year to year, in compliance
            with the stipulations of this Section.

      e.    When an employee resigns with proper notice, is laid off or retires,
            the banked vacation will be taken prior to the respective date of
            resignation, layoff or retirement.

      f.    Employees terminated for cause will not forfeit banked vacation.

      g.    The employee's request to bank vacation time must be received by
            December 1 of the vacation year.

      h.    Banked vacation cannot be scheduled to be taken until all applicable
            employees have chosen their regular, single day and half day
            vacation for that year.

      i.    The maximum-banked vacation will be five (5) weeks.

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<PAGE>

19.14 Vacation Pay

      a.    Full-time employees shall be paid during their vacation periods at
            their basic wage rates.

            a.1   Part-time employees shall be paid vacation pay at their basic
                  wage rates, based upon their average scheduled work week
                  computed from the six (6) month period immediately preceding
                  their vacation period

      b.    Differential and/or premium payments will be included in vacation
            pay if the differential and/or premium was in full effect for the
            four (4) weeks prior to the vacation.

      c.    For the purposes of determining vacation eligibility, regular
            part-time employees shall accumulate vacation eligibility on the
            basis of continuous service.

                                   ARTICLE 20
                               WORKING PRACTICES

20.1  Working practices applicable to Customer Services or a combination of
      these services, to which the Company and the Union have mutually agreed,
      are so indicated by appropriate service designation within the Sections
      and Paragraphs of the Articles of this Agreement. Those Sections and
      Paragraphs of the Articles of this Agreement which bear no designation
      limiting their application to a particular service or combination of
      services shall be considered as applicable to all services covered by this
      Agreement. Such practices shall remain unchanged and in full force and
      effect for the duration of this Agreement.

20.2  Any working practice or condition not contained in this Agreement shall
      not be changed to the detriment of the employees covered by this
      Agreement.

20.3  Inclement Weather.

      a.    When employees report for duty and because of inclement weather are,
            in the opinion of the supervisor, unable to perform their regular
            duties, they shall be assigned such other work as may be available
            in order that their time may be profitably utilized. If no such
            duties are assigned, they will be paid for the time off, provided
            they remain available for service or are specifically excused by the
            supervisor.

20.4  Productive Work by Management

      a.    The Company acknowledges a general policy and intent that

                                       33
<PAGE>

            supervisory personnel will not be expected to do substantial
            productive work of the same type and nature as normally assigned
            subordinate employees within the bargaining unit.

      b.    It is understood that the exercise of supervisory responsibilities
            can involve duly limited performance of productive work under the
            following circumstances: to acquire and maintain knowledge and
            skills of equipment and procedures for effectively directing the
            work of subordinates; to perform such inspection and testing as may
            be necessitated to evaluate quality and quantity of work performed
            by subordinates, or to determine what, if any, work needs to be
            performed by subordinates; to acquire and practice the skills
            necessary for Civilian Defense or other public emergency; to meet
            service emergencies; to accomplish appropriate training of
            employees; to teach and enforce safety practices; to perform such
            other work as may be necessary to meet the service requirements of
            the Company when an appropriate nonsupervisory employee is not
            available, or cannot be reached for assignment; or when the
            supervisor already is on the site for other management purposes and
            the correction of an existing difficulty entails such limited effort
            that customer service is facilitated and the calling out of a
            non-supervisory employee would not be supportable by the
            circumstances.

20.5  Temporary Assignments Away from Headquarters

      a.    Located employees, who are assigned to work locations away from
            headquarters, excluding Company school attendance, may, at employee
            request, be returned to headquarters at Company expense once each
            three (3) weeks for personal time at home.

      b.    This provision will not be applicable under circumstances that the
            employee has accepted temporary relocation, with or without
            reclassification, in lieu of layoff at the employee's headquarters
            location.

      c.    Whenever there exists a service emergency, the three (3) week period
            will not operate to limit the Company in taking actions appropriate
            to the circumstances. In such events, the return to headquarters
            will be as expeditious as circumstances then existing will permit.

      d.    Whenever normal work can be completed within a fourth week, the work
            circumstances shall be controlling except that the period away from
            headquarters shall not exceed four (4) weeks except in service
            emergencies.

20.6  Temporary Assignments Outside Assigned Plant Area

                                       34
<PAGE>

      a.    Employees may be assigned temporarily to work at other places, but,
            while so assigned, they retain status as of their principal
            location, including wage treatment.

      b.    The Company will provide at least two (2) calendar days advance
            notice of such assignment under circumstances that no service
            emergency exists.

      c.    Whenever a service emergency exists wherein the Company decides that
            direct action is required, notice given will be that which is
            consistent with the circumstances then existing.

      d.    The advance notice specified in this provision does not apply under
            circumstances that the employee will return to headquarters the same
            day.

20.7  Use of Employee's Motor Vehicles

      a.    Employees will not usually be called upon to make use of their
            personal vehicles in connection with their job duties.

      b.    Whenever employees should be requested to use their personal vehicle
            in connection with job duties or whenever they may so use a personal
            vehicle upon their request with Company permission granted, the
            Company will reimburse the employees for such use at the Company
            policy rate determined on the direct route mileage between the
            respective points of travel. This rate shall not be less than
            maximum allowable I.R.S. rate per mile for this contract period.

                                   ARTICLE 21
                                SAFETY PRACTICES

21.1  Safety is a concern of the Company and the Union. The Company and the
      Union mutually recognize the need for a work environment in which safe
      operations can be achieved in accomplishing all phases of work, and the
      need to promote full understanding and acceptance of principles of safety
      on the part of all employees to provide for their own safety and that of
      their fellow employees, customer and the general public.

21.2  There shall be a Safety Committee in each division composed of members
      appointed by the Company and the Union (maximum of three (3) from each
      unless mutually agreed otherwise) which shall normally meet at least
      monthly by conference call for outlying areas to discuss and cooperate in
      the application and enforcement of safe work principles and practices.
      Federal, State, and Municipal laws or regulations that are in force in the
      locality where work is being done shall be complied with at all times.

                                       35
<PAGE>

21.3  Any employee may submit to his/her supervisor or the Safety Committee
      comments, concerns or suggestions relating to safe working conditions,
      accidents or injuries.

21.4  The Company agrees to furnish protective clothing necessary to inhibit
      unreasonable damage or deterioration of clothing due to caustics, etc.,
      i.e., apron style protectors for cable splicers handling jelly-filled
      cable.

21.5  The Company shall provide to employees, when necessary, rubber gloves for
      the safe performance of their job assignment.

21.6  In cases of emergency or disaster when employees are required to work in
      inclement weather, the Company shall provide if available the necessary
      slickers and rubber foot covering.

21.7  The Company shall supply rubber aprons where necessary for employees
      working around batteries in central offices.

                                   ARTICLE 22
                              TOOLS AND EQUIPMENT

22.1  The Company will furnish to new employees, and on a replacement basis to
      present employees, all tools and equipment necessary for the proper
      performance of the job. The Company will specify the quantity, kind, type
      and make of all such items to be furnished. No tools or equipment other
      than those furnished by the Company may be used unless specifically
      approved by the supervisor. Any such tool or equipment allowed will not be
      replaced by the Company or at Company expense.

22.2  All tools and equipment furnished by the Company will be charged to the
      employee, and the employee will be held responsible.

      a.    Employees who are furnished tools and equipment will be held
            responsible for the proper use, care and maintenance of these items,
            and will be held to an accounting of all tools and equipment at the
            time of replacement thereof, or upon termination of employment with
            the Company.

22.3  The Company will replace all tools and equipment that are broken and/or
      worn-out through normal wear, except those not specified as standard by
      the Company.

      a.    Tools and equipment that are lost or mistreated to the extent that
            they are no longer usable will be replaced by the Company, except
            those not

                                       36
<PAGE>

            specified as standard by the Company; however, the employee
            responsible for the items may be required at the discretion of
            management to pay for them, and will be billed accordingly.

22.4  The Company reserves the right of inspecting all tools and equipment at
      any time and condemning for further use any tools and equipment which are
      worn out or unfit for further use or any tools and equipment not of the
      kind, type or make furnished by the Company.

                                   ARTICLE 23
                          JOB TITLES OF EMPLOYEES AND
                             CHANGES IN ASSIGNMENT

23.1  The job title classification, to which any employee is assigned Under this
      Agreement, will be in accordance with the preponderance of work duties
      they are called upon to perform as related to the nature of the duties
      attributable to the particular job title classification.

      a.    The foregoing does not preclude an employee being called upon to
            perform work not usually performed, nor does it preclude temporary
            assignments in a higher or lower job title classification.

      b.    An employee under consideration for reclassification to a higher or
            lower job category may be required to work in the other job for a
            period not exceeding one (1) month without formal reclassification.
            Such temporary assignment involves consideration for
            reclassification, and opportunity for observation of the employee's
            knowledge, skills and other qualifications, to perform the job
            duties associated with the assignment under consideration.

      c.    Employees may be temporarily assigned out of their own
            classification for the purpose of receiving specific training for
            another position.

      d.    None of the provisions of the foregoing paragraphs a, b, and c shall
            be applied in such manner as to negate the intents and application
            of Article 24, Job Application Procedure, nor of Article 13,
            Seniority, Section 13.4, nor of Article 23, Job Titles of Employees
            and Changes in Assignment.

23.2  A supervisory employee who is reclassified to a nonsupervisory position
      outside of the bargaining unit or who is transferred within the bargaining
      unit shall take their proper place in seniority among nonsupervisory
      employees covered by this Agreement according to their total number of
      service credits as listed on the Company's records.

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<PAGE>

23.3  Employees Temporarily Assigned to a Higher Classification.

      a.    Except as otherwise provided in this contract, any employee assigned
            to a higher classification for one (1) full working hour or more
            shall be paid for the time worked on the temporary assignment in
            accordance with Section 4 or 6, which ever is applicable.

            a.1   This Section shall not apply to employees who are receiving
                  specific training for another position.

            a.2   "Temporarily assigned" shall mean an employee who works for at
                  least one (1) hour on a specific job assignment.

            a.3   Applicable differentials for work in the higher class as
                  described above shall apply.

      b.    The Company will not make assignments in such manner as to
            constitute deliberate avoidance of wage rate readjustment by virtue
            of the one (1) hour preliminary period.

      c.    Any employee temporarily assigned to a higher classification in a
            location other than their principal location, will be paid in
            accordance with Section 6 of this Article.

23.4  Wage Treatment Upon Reclassification - Promotion

      a.    Whenever an employee is reclassified to a higher rated job, a
            reclassification wage increase will be made. The employee's wage
            rate for the new assignment will be the higher schedule amount which
            most closely represents an immediate wage increase.

            a.1   The amount of wage increase as described in paragraph 23.4a
                  shall in no case be less than fifteen cents ($0.15) per hour.

            a.2   For employees on incentive compensation plans, other than TPA,
                  the amount of wage increase as described in paragraph 23.4a
                  shall in no case be less than seventy-five cents ($0.75) per
                  hour.

            a.3   The adjusted wage rate may not be more than the top rate for
                  the higher job.

            a.4   The wage rate of an employee reclassified to a higher schedule
                  job previously held would be determined either by placement on
                  the corresponding step position the employee was in when they
                  last held that position, or through the procedure set forth in
                  this Section, whichever is greater.

                                       38
<PAGE>

      b.    The date for the employee's next wage progression adjustment, as
            established within the previous job, is not to be disturbed by the
            reclassification. This date remains the date for the next
            progression adjustment on the new job.

23.5  Wage Treatment Upon Reclassification - Lower Job

      a.    When an employee is reclassified to a lower rated job, a
            reclassification wage decrease will be made. The employee's wage
            rate for the lower rated job will be that lower schedule amount
            which most closely represents a minimal wage decrease.

            a.1   The adjusted wage rate may not be less than the lowest rate
                  for the lower job.

            a.2   When the downward reclassification is to the immediately
                  preceding job assignment, and the action is taken within a
                  period of six (6) months, the employee's wage rate treatment
                  will be the same as though the original upward
                  reclassification had not occurred.

23.6  Wage Treatment Upon Reclassification - Lateral

      a.    When an employee is reclassified to an equally rated job (lateral)
            within the same Exchange Wage Classification Area, the current wage
            rate would remain in effect until normal progression provides for a
            higher amount.

      b.    When an employee is reclassified to an equally rate job (lateral) or
            transferred in the same job title classification from one Exchange
            Wage Classification Area to another, the following procedure will
            apply:

            b.1   The employee will be placed at the corresponding wage schedule
                  step position in the new Exchange Wage Classification Area.

            b.2   Whenever such transfer is made for Company convenience, the
                  employee's original wage rate will be protected should the
                  determined new rate be lower. In such event, the original rate
                  will remain in effect until normal progression on the
                  applicable wage schedule provides for a higher amount.

            b.3   The exception in paragraph b.2 shall not apply when the
                  transfer is for the employee's convenience, such as being a
                  successful bidder or requests for transfer for personal
                  reasons.

                                       39
<PAGE>

            b.4   When the transfer is arranged as the result of a force
                  adjustment, the employee's basic wage rate will be reduced
                  incrementally until it reaches the appropriate step in the new
                  Exchange Wage Classification Area.

                                   ARTICLE 24
                           JOB APPLICATION PROCEDURE

24.1  Whenever there is an approved job vacancy within the bargaining unit, the
      Company agrees to utilize the job application procedure hereinafter
      described.

      a.    Jobs will be posted for a period of seven (7) working days on the
            intranet and an Interactive Voice Response Unit (IVRU). The Company
            will make an effort to post on Company Bulletin Boards within each
            District.

            a.1.  The parties agree that the intranet and IVRU are the methods
                  employees will use to nominate themselves for a vacancy. A job
                  not posted to Company Bulletin Boards does not absolve the
                  employee's responsibility to use the aforementioned methods.

      b.    Employees may apply for an unlimited number of posted vacancies at
            any given time.

      c.    The appropriate application must be completed by the employee and
            forwarded to the responsible Division Human Resources Manager on or
            before the posting close date. The posting close date will be
            included on every posting. Applications must be received by the
            Division Human Resources Manager on or before the posting close.

            c.1   All applications must indicate the requisition number of the
                  posted vacancy for which the employee is applying. The
                  requisition number is available on the intranet and IVRU for
                  all postings.

      d.    Employees must submit a separate application for each and every
            posted vacancy for which they are interested. Employee applications
            will only be valid for the specific requisition number indicated on
            the application and will not be valid for any other vacancies.

      e.    Employees will not be eligible candidates for vacancies in their
            current job title within the same exchange and department.

      f.    Employees who refuse a position offered through the job posting

                                       40
<PAGE>

            procedure can be considered for future vacancies within the same job
            title/location. The employee must apply for each vacancy they are
            interested in as it occurs.

24.2  Interdepartmental lateral job placements will be contingent upon there
      being no material disruption to operations within the department from
      which the employee would transfer. In the event that immediate job
      placement is denied an otherwise qualified employee for such reason, the
      employee shall be afforded transfer consideration at the earliest
      opportunity thereafter.

24.3  In the selection of employees for transfer, seniority will govern if all
      other qualifications of the employees are substantially equal, except that
      when a current under-utilization study indicates a deficiency, then
      affected class members of the unit whose ability and qualifications are
      sufficient shall be given priority.

24.4  Under the application procedure, seniority shall be the deciding factor,
      insofar as the ability of the employee and the conditions of the business
      will permit, in filling vacancies through the application procedure.

      a.    Candidates for job vacancies for Outside Plant Technician and
            Graphics Operator in the Engineering & Construction Department will
            be evaluated in the light of engineering aptitudes and skills over
            and above plant craft skills.

      b.    When a transfer is made from one (1) location to another at the
            request of the employee, all expenses of the move will be paid by
            the employee.

      c.    When a job vacancy is filled by the Company, candidates will be
            considered in the following priority order:

            c.1   Employees with preferential placement rights (employees who
                  are either surplus, laid off, or have medical restrictions).

            c.2   Employees who submit a valid application for a posted vacancy.

            c.3   New hires

      d.    Should no qualified employee submit an application or should no
            valid application be received for a job vacancy, the Company may
            fill the vacancy.

            d.1   The Company will consider employees, in seniority order, who

                                       41
<PAGE>

                  have filed invalid application requests at the time the
                  vacancy is effective.

24.5  It is agreed between the parties that "shopping around" will not be
      condoned.

      a.    Employees who have accepted positions on Wage Schedule HH, within
            the thirty-six (36) months preceding the date of a later vacancy
            will not be considered for transfer.

      b.    Employees who have accepted positions of Cable Splicer, Customer
            Zone Technician II, Customer Service Representative, or Business
            Account Representative, within twenty-four (24) months preceding the
            date of a later vacancy will not be considered for transfer.

      c.    Employees who have accepted positions other than those mentioned in
            24.5 a, b above, within 18 months preceding the date of later
            vacancy will not be considered for transfer.

      d.    These limitations shall not apply to an employee force adjusted
            under Article 26 to the extent that the employee is seeking to
            retreat to the position from which the employee was force adjusted.
            Nor shall the above limitations apply to employees involuntarily
            moved fifty (50) miles or less under the provisions of Article
            26.1.a.

24.6  The Company will notify selected employees of their selections within ten
      (10) calendar days. The Company will also notify within that time frame
      any employee or employees of more seniority than the employee selected
      together with the reason or reasons why they were not selected. A copy of
      this notification will also be sent to the Union.

24.7  The parties recognize that there may be times when a distress transfer or
      reclassification must be made. The problem shall be resolved by mutual
      consent of the Company and the Union. The employee involved shall pay all
      moving expenses, if any, but with no loss in regular scheduled "basic
      wages" for reasonable travel time as determined by the Company.

                                   ARTICLE 25
                               BOARD AND LODGING

25.1  Located employees may be, from time to time, temporarily assigned by the
      Company to work or attend meetings or schools in a town other than the
      town in which they are located.

25.2  The daily allowance (per diem) for such temporary assignments of one (1)
      full tour or more is listed in paragraph 25.3 below. The per diem
      allowance does

                                       42
<PAGE>

      not apply to temporary assignments of less than one (1) tour. In cases
      where the temporary assignment continues for two (2) or more consecutive
      tours, whether or not the employee worked part of the first tour at the
      employee's normal town location, the employee is eligible for the
      applicable daily allowance. On the last day of the assignment, the
      employee will be eligible for an incidental meal allowance of eight
      dollars ($8.00) plus round trip mileage, if applicable.

25.3  The qualifying distance for per diem will be the one-way highway distance
      by shortest direct route between the employee's normal work location and
      the temporary work location.

<TABLE>
<CAPTION>
                              DAILY ALLOWANCE
DISTANCE                           AMOUNT
--------                      ---------------
<S>                           <C>
Over 0 and up to 20                 $  6.50

Over 20 and up to 40                $ 24.00

Over 40 and up to 60                $ 32.00

Greater than 60                     $ 38.00
</TABLE>

25.4  When an employee is assigned to a distant location as outlined in
      paragraph 25.2 and the use of the employee's personal vehicle has been
      authorized for this purpose, the employee will be granted a mileage
      allowance for round trip mileage from the normal work location to the
      temporary assignment location on the last day of each such assignment at
      the Valor Telecom, LP policy rate. This will be in addition to the
      applicable per diem allowance on the first day of the assignment. This
      rate shall not be less than the IRS maximum allowable rate.

25.5  Employees assigned to a temporary location forty-five (45) miles or more
      from their headquarters location for seven (7) continuous days will be
      entitled to reimbursement for reasonable receipted laundry expense,
      excluding dry-cleaning.

25.6  On assignments to temporary locations of more than forty-five (45) miles
      from the employee's normal headquarters location, employees may elect, at
      their option, to receive actual expenses for company designated lodging
      and reasonable meal costs in lieu of per diem.

25.7  Traveling time spent by an employee as part of their principal job duties
      shall be treated as hours worked.

      a.    The time shall be inclusive between the limits of when the employee
            reports for work for the day, as required, and when released from
            work at the end of that day, mealtime excluded.

                                       43
<PAGE>

      b.    The time commences when the employee reports for work at the
            designated place and time, and ends when released from duties,
            mealtime excluded.

25.8  Time spent by an employee, under Company direction and in line of assigned
      job duties, as driver or passenger of a Company motor vehicle while going
      to or from a work location shall be treated as working time, meal time
      excluded.

      a.    Whenever an employee is directed to, or is authorized to use a
            personal motor vehicle in lieu of a Company-assigned motor vehicle,
            travel time shall be paid as specified in paragraph 25.8.

25.9  Traveling time spent by an employee, under Company direction and in
      connection with their job duties, by means of public transportation
      facilities, will be compensated as work time, but not in excess of eight
      (8) hours a day.

      a.    On scheduled workdays, compensation will be for the time spent in
            traveling that falls within the limits of the scheduled work hours,
            mealtime excluded.

      b.    On nonscheduled workdays, compensation will be for the time spent in
            traveling that falls within the limits of those hours that
            correspond to a normal scheduled workday. In event of question as to
            what constitutes corresponding scheduled hours, the work day for a
            full-time employee shall be presumed to include eight (8) hours,
            8:00 A.M. to 5:00 P.M.

      c.    Should the employee elect alternatively to travel by means of
            personal motor vehicle as a matter of convenience, and the Company
            consent be granted, traveling time will be compensated as though the
            employee had traveled by offered public transportation facilities.

25.10 Traveling time spent by an employee, by reason of Company-required
      attendance at Company schools or conferences, shall be compensated as work
      time under the provisions of paragraphs 25.8 or 25.9, as the case may be.

25.11 There shall be no reduction in scheduled hours on a scheduled work day by
      reason of traveling under Company direction for Company business.

25.12 Compensable travel time on a Sunday shall be paid at time and one-half as
      prescribed for Sunday tours in Article 16.2, however, such time shall not
      be considered when determining weekly overtime.

25.13 The provisions of Article 16.2, are applicable to Sunday travel time only
      when such time is spent in direct connection with performance of immediate
      job duties.

                                       44
<PAGE>

25.14 When an employee has elected to receive actual meal expenses, a meal
      allowance shall be paid as follows:

<TABLE>
<CAPTION>
<S>         <C>
Breakfast   $ 6.75

Lunch       $ 8.50

Dinner      $15.00
</TABLE>

      The above daily allowance will be paid to employees temporarily assigned
      over sixty (60) miles, except absentees, for Saturdays, Sundays, holidays
      or scheduled days off when the employee works the last scheduled tour
      preceding and the first scheduled tour following the scheduled day(s) off.

25.15 The term "absentee" used in paragraph 25.14 above shall mean:

      a.    Any employee who does not work on a scheduled day off and who is
            absent the scheduled work day preceding or the scheduled work day
            next following the scheduled day(s) off.

      b.    Employees described in 25.15.a above may have the absence excused at
            the supervisor's discretion.

25.16 Employees assigned qualifying duty for per diem who are not able to work
      because of illness or injury will continue to receive per diem while
      temporarily incapacitated, provided they are actually staying overnight
      and incurring expenses. Employees hospitalized or at home during the
      disability will not continue to receive the per diem while away from the
      job.

25.17 When fluctuations in distance from home headquarters occur during a
      temporary assignment, the daily per diem will be paid according to the
      distance from home headquarters at the end of each tour.

25.18 Employees will be reimbursed for evening meal expenses of nine dollars and
      fifty cents ($9.50) if the employee works in excess of eleven (11) hours
      that day without a meal break during the last session. Employees on 4x10
      schedules are required to work in excess in thirteen (13) hours to receive
      the evening meal allowance.

      a.    This section shall not apply to employees receiving per diem
            expenses, to employees eligible for an evening or night premium, or
            if a reasonable meal is furnished at Company expense.

25.19 Under no circumstances will the per diem allowances set forth in
      paragraphs 25.3 and the evening meal allowance in paragraph 25.18 be paid
      for the same

                                       45
<PAGE>

      day.

25.20 When the Company elects to furnish transportation and employees travel
      from the headquarters location to a temporary location and return to the
      headquarters location within the scheduled tour or during overtime, no
      daily allowance will be paid as set forth in paragraph 25.3; however,
      travel time shall be treated as time worked in these cases.

      a.    In the case of employees assigned to a temporary location forty-five
            (45) miles or more from the headquarters location under
            circumstances where there are no suitable commercial lodging
            facilities within a ten (10) mile radius of the temporary location,
            travel time to and from the nearest suitable lodging shall be
            considered as time worked. In this circumstance, the per diem
            allowance prescribed in paragraph 25.3 would be continued.
            Additionally, if use of a personal vehicle has been authorized for
            the temporary assignment, the mileage allowance would also be
            applicable to and from the lodging site.

25.21 Transportation to each distant temporary assignment location will be
      furnished by the Company, and at its option may be either by Company
      vehicle, public conveyance, or in lieu thereof, by paying a mileage
      allowance at the Valor Telecom, LP policy rate when the use of an
      employee's personal vehicle has been authorized as covered in paragraph
      25.4.

      a.    Employees authorized or requested by the Company to use their
            personal vehicles at distant locations for Company business
            activities will be reimbursed for miles driven in such activities at
            the Valor Telecom, LP policy rate. This rate shall not be less than
            the IRS maximum allowable rate per mile for this contract period.

25.22 The one-way highway distance by the shortest reasonable direct route will
      be used by the Company in computing mileage allowances. Reimbursement of
      turnpike tolls will be made to employees electing to receive actual
      expenses.

25.23 Under no circumstances will a located employee qualify for per diem or
      mileage allowances by being temporarily assigned to a facility other than
      the employee's normal work facility which is located in the same town or
      exchange in which the employee is located or resides.

25.24 In the event an employee on temporary assignment becomes subject to
      disciplinary action requiring suspension without pay, the employee would
      receive per diem compensation as determined by Company management, based
      on the circumstances of each individual case.

      a.    For suspensions of one (1) day or less, there will be no
            interruption in per diem payments.

                                       46
<PAGE>

      b.    For suspensions of more than one (1) day when the employee has not
            been authorized the use of a personal vehicle, and return to the
            headquarters location would be inconvenient in the judgment of
            Company management, the employee will be authorized the appropriate
            per diem allowance for the period of the suspension, or until it
            becomes convenient to return the employee to the headquarters
            location, if that should occur before the end of the suspension.

      c.    For suspensions of more than one (1) day when the employee has been
            authorized use of a personal vehicle, the employee may be granted
            the applicable incidental meal allowances and the mileage allowance
            on the first day of the suspension. If return to work location
            requires travel on the last day of suspension, the employee would be
            eligible for applicable per diem for that day.

25.25 The Company recognizes that there may be certain special circumstances
      that make it impractical to apply the per diem described in paragraph
      25.3. Examples of these cases are when travel for training or other
      purposes is to distant high cost locations outside the boundaries of the
      Company, or when unusual conditions such as tornadoes or hurricanes in the
      area temporarily assigned have temporarily created substantial increases
      in room and board expenses. In these cases, and others determined
      qualifying by the Company, as well as special cases where an employee is
      required to spend the night at a location less than forty-five (45) miles
      away from the employee's headquarters location, the Company retains the
      right to shift to an actual expense form of reimbursement.

                                   ARTICLE 26
                                FORCE ADJUSTMENT

26.1  Force Adjustment means a directed reduction in the number of employees
      working in any given job title classification, in any division or
      exchange, as against the currently prevailing level.

      a.    The provisions of 26.1 do not apply to an exchange if employees are
            offered a job within their title classification in an exchange that
            is located fifty (50) miles or less from their existing exchange
            within their district.

      b.    A Force Adjustment results from a reduced need in quantity of
            scheduled productive work hours by reason of technological change,
            altered market requirements for services or products, shifts in
            general economic conditions, or other similar factors that may
            influence the conduct of the Company's business.

                                       47
<PAGE>

      c.    Variations in the scheduling of regular part-time employees does not
            constitute a Force Adjustment.

26.2  Temporary Force Adjustment means a force adjustment that is local in
      nature and without immediately identifiable long-term effects.

      a.    A temporary force adjustment is a layoff of forty-five (45) days, or
            less, and involves incidental variances in immediate work
            requirements.

26.3  Force Surplus means those regular employees whose status is changed by
      reason of a Force Adjustment.

26.4  Laid-Off Employees are those regular employees whose active employment is
      terminated by reason of a force adjustment.

      a.    Laid-Off Employees are "employees" only with regard to recall rights
            set forth within this article. They are at liberty to secure other
            employment without loss of prescribed recall rights.

26.5  Unless otherwise specified, or mutually agreed upon by parties to this
      agreement, force adjusting will be by job title classification(s) in each
      Department affected, and within the exchange, or division, as the case may
      be.

26.6  Temporary force adjustments will be made on an immediate basis according
      to the needs of the business and the jobs directly concerned.

      a.    The provisions of Article 13.2.a, Seniority, will apply in temporary
            force adjustments.

26.7  When a force adjustment, that is other than temporary, is considered
      necessary by the Company, layoffs will be accomplished in the following
      order to the extent needed within each Department and location.

      a.    Occasional and/or temporary employees

      b.    Probationary employees

      c.    Regular part-time employees

      d.    Regular employees with less than twelve (12) months' net credited
            service.

26.8  In the sequential laying off of regular part-time employees, and of
      regular full-time employees with less than twelve (12) months' net
      credited service, order of seniority will not be solely governing but,
      other factors being equal, inverse

                                       48
<PAGE>

seniority will be followed.

      a.    A major factor in the determination will be the employee's exhibited
            relative qualifications for the job and for the Company's projected
            force needs.

      b.    Part-time employees who have been available for, and ready to
            accept, full-time employment will have superior privileges for
            retention of employment over those who are part-time by their own
            choice and/or availability.

26.9  In the event that additional layoffs, or part-timing, or both become
      necessary, the Company and the Union may negotiate a plan for further
      procedure.

      a.    Such negotiations in process shall not serve to prevent the Company
            from reducing its forces during the interim period, at least on a
            temporary basis pending development of an alternate plan.

26.10 If no call is made for negotiations, or if agreement as to a mutually
      accepted final plan cannot be achieved within fifteen (15) calendar days
      after commencement of negotiations, force adjustments will be effected to
      the extent needed, by inverse order of seniority in the affected job title
      classifications.

26.11 Employees outside the collective bargaining unit, who are entered into the
      bargaining unit as a result of a force adjustment, shall take their proper
      place in seniority among bargaining unit employees according to their
      total net credited service as established by Company records.

      a.    The employees so transferred will not be afforded exceptional
            privileges but, rather, will exercise seniority on the same basis as
            other bargaining unit personnel for all purposes other than bumping.

      b.    During the first six (6) months thereafter, such employees may
            exercise bumping rights only to the extent of seniority actually
            developed by previous employment in the bargaining unit.

26.12 For the purposes of this Article, employees absent from active employment
      by reason of disability and/or leave of absence shall be treated as
      follows:

      a.    When sufficient seniority exists for retention of employment, the
            employee's status is to remain unchanged pending otherwise
            availability to return to active employment.

      b.    When insufficient seniority exists, the employee shall be subject to
            layoff, the same as though the employee was actively at work.

                                       49

<PAGE>

      c.    Employees on leave of absence, where under reinstatement is not
            assured by the conditions of the leave, will be treated similarly
            but within the terms of the leave, and failure to attain
            reinstatement shall not be construed as a layoff.

26.13 The Company will keep the Union informed as soon thereafter as practical,
      of temporary force adjustments that exceed or are expected to exceed, five
      (5) consecutive work days.

      a.    At least twenty-one (21) calendar days' notification will be given
            of expected full layoff of regular full-time employees.

      b.    All notifications will be directed to the designated office of the
            Union by the Director of Labor Relations or the Division Manager or
            designated representative.

26.14 Any force surplus regular full-time employee, or regular full-time
      employee who is force adjusted to regular part-time employee, having more
      than twelve (12) months' net credited service, shall have job transfer
      and/or "bumping" rights.

      a.    Such employee may file a transfer request as against a job vacancy
            elsewhere in the Company.

      b.    Transfer may be to a vacant job within the bargaining unit in the
            same title classification but in another location, in a different
            title classification at the same location, or in a different title
            classification in another location.

      c.    If an employee relocates to another work location as a result of a
            force adjustment under the provisions set forth, such reasonable
            moving expenses will be borne by the Company up to an amount not to
            exceed three thousand five hundred dollars ($3,500.00). Employees
            who relocate as a result of "bumping", pursuant to this section,
            shall not be eligible for moving expenses.

26.15 In the application of bumping privileges, the following area limitations
      shall apply:

      a.    Employees having four (4) year's net credited service, or less, may
            exercise their option within the same Department, and within the
            Division.

      b.    Employees having over four (4) years' net credited service may
            exercise their option within the collective bargaining unit.

                                       50

<PAGE>

      c.    The Force Adjustment Boundary is defined as the surplus employee's
            headquarters division and one other division of their choosing.

      d.    The division to be the Force Adjustment Boundary must be selected by
            force surplus employees and communicated to their supervisors in
            writing within ten (10) days of notifications of layoff.

26.16 The privilege of displacing a less senior employee to retain continuing
      employment is at the election of the employee subject to the following
      considerations:

      a.    Force surplus employees not desiring to exercise their option, do
            not prejudice their rights for recall from layoff under the
            provisions of this Article.

      b.    Advance notification of desire to exercise their option must be
            given by force surplus employees to their supervisors in writing
            within ten (10) days of notification of layoff. Employees electing
            not to exercise their option prior to layoff may not recover the
            privilege once they are laid off.

      c.    A force surplus employee may not exercise seniority so as to
            displace another who is in a higher job classification.

      d.    Neither "shopping around" nor seeking of new job experience will be
            permitted. The force surplus employee may not exercise bumping
            elsewhere in the Division unless there is no reasonable opportunity
            to do so within the Exchange, likewise from the Division to the
            Force Adjustment Boundary (as outlined in this Section) or from the
            Force Adjustment Boundary to the bargaining unit.

26.17 Force surplus employees also may not bump into a new job title
      classification when there is opportunity to bump in their own
      classification or into one previously occupied by them.

26.18 When the selected job requires the force surplus employee to relocate, and
      more than one (1) choice of location is possible, the Company may exercise
      discretion as to permitted location, or alternate locations, based on best
      meeting the needs of the business, giving due weight to the employee's
      desires.

26.19 If the selected job is one previously held by those employees, they must
      be able to perform the same job currently with but minimal time for
      refamiliarization.

      a.    If the selected job is one not previously held by those employees,
            they must possess sufficient qualifications of skill, aptitude,
            experience,

                                       51

<PAGE>

            dexterity, and knowledge, in accordance with Company standards in
            effect at the time, so that the job can be performed with minimum
            additional training.

      b.    So as to avoid situations of employees of limited experience in
            their title classification from bumping a more seasoned employee in
            that same classification, force surplus employees can exercise their
            full seniority only if they have two (2) or more years' work time
            spent in that job. If they elect to seek a job of lower
            classification previously held by them, their time in both jobs
            shall be additive for purposes of this provision.

      c.    The least senior employees in the job title classification shall be
            the ones who are displaced and they, in turn, then become force
            surplus and may exercise any privileges available to them under this
            Article.

26.20 The advance notification requirements of this Article are not applicable
      to such displacements, but, rather, will be considered as a consequence of
      the original force adjustment. However, it is intended that the displaced
      employees be given best practical advance notification that they are being
      bumped.

26.21 Employees force adjusted under the provisions of this Article who are
      still in active regular employment status shall have retreat rights if the
      original job becomes open within twelve (12) months. Such employees will
      be given the choice of remaining where they are or returning to the
      original job.

26.22 When additions to the remaining work force are required, laid-off
      employees will be offered reinstatement in order of seniority to the
      extent that the individual can do the work.

      a.    Laid-off employees shall be offered reinstatement before new
            employees are engaged.

      b.    The Company is not obligated to recall former employees who have
            been laid off continuously for more than thirty, (30) calendar
            months. The Company will, however, give them preferential
            consideration in rehiring upon application filed by the individual.

      c.    Net credited service will continue to accumulate during the first
            forty-five (45) calendar days of any layoff, but not thereafter.
            Seniority, however, will continue to accrue for not more than thirty
            (30) calendar months for purposes of recall from layoff.

26.23 Laid-off employees must keep the Company informed of the address at which
      they can be reached.

      a.    The Company is not obligated to go beyond the address last given by

                                       52

<PAGE>

            the individual.

26.24 When the Company is prepared to recall laid-off employees, a registered
      letter or a telegram will be directed to them at their last address on
      record.

      a.    Employees shall indicate their acceptance or rejection in writing
            within five (5) calendar days from the date of delivery of the
            message at the given address.

      b.    Employees must be prepared to report to work within fifteen (15)
            calendar days from date of delivery at the given address.

      c.    Failure to keep the Company posted as to an address at which they
            can be reached, to indicate timely acceptance or rejection, or to
            report to work within the prescribed period, shall constitute a
            forfeiture of further recall rights.

      d.    Reasonable exception may be extended when temporary personal
            disability prevents timely acceptance of offered reinstatement. In
            such event the Company will decide whether to hold the vacancy open
            or to repeat the recall at the next suitable vacancy.

      e.    Refusal to accept recall to a job not similar in nature to the
            normal occupation or work of the person shall not terminate recall
            rights. However, recall rights can be lost upon refusal to accept an
            offered comparable job assignment. (See also Article 28.11, a and
            b.)

26.25 In recalling after a force adjustment, the Company will recall laid-off
      employees at each Exchange, or Division in order of their seniority.

      a.    Employees will be recalled for departments from which they were laid
            off. If all positions within another department are not filled
            following a recall of laid-off employees from that department, then
            it is the Company's intention to recall employees laid off from
            other departments, based on seniority, ability, and qualifications.

26.26 When laid-off employees are recalled following a force adjustment, they
      shall be placed on the appropriate wage progression schedule in accordance
      with the following:

      a.    If the same job title is available, they shall be placed on the same
            position of the wage progression schedule they were on at the time
            of the force adjustment.

      b.    If they return to a lower rated job, or to a higher rated job, they
            shall be considered as reclassified from their former job with wage
            treatment

                                       53

<PAGE>

            thereby as outlined in Article 23. This procedure will be
            applicable, as well, when relocation is involved.

26.27 Vacations Pertaining to Force Adjustment (See Article 19.10 - Vacation.)

                                   ARTICLE 27
                                ABSENCE FROM DUTY

27.1  Voting. Employees are expected to make every effort to vote during other
      than working hours. Any employee who on a day on which a National, State
      or Local election is held is unable to vote due to the scheduled tour, may
      upon adequate explanation at least 24 hours before the election day have
      his or her schedule adjusted to allow at least three (3) hours either
      before or after such rescheduled tour to vote.

27.2  Jury Duty. Employees who are required to serve as jurors shall be excused
      from their regular workday schedule each day they are required to report
      for jury duty, and they shall be paid at their basic wage rate for such
      absence. Employees who are scheduled to work an evening or night shift
      will be rescheduled to work a day shift effective the first day they
      report for jury duty. If employees are excused from such jury duty for all
      or part of a scheduled day, they shall promptly contact their immediate
      supervisor in person or by telephone for an assignment. Any monies, other
      than expenses, paid the employee by the court shall be integrated into the
      employee's basic wage paid during that jury duty.

27.3  Witness Duty. Regular employees who are required to appear as witnesses in
      court shall be excused from their regular workday schedule each day they
      are required to report for witness duty and they shall be paid at their
      basic wage rate for such absence. Employees who are scheduled to work an
      evening or night shift shall be rescheduled to work a day shift on each
      day the employee is required to serve as a witness. If employees are
      excused from such witness duty for all or part of a scheduled day, they
      shall promptly contact their immediate supervisor in person or by
      telephone for an assignment. Any monies, other than expenses, paid the
      employee by any source for acting as a witness shall be integrated into
      the employee's basic wage paid while being a witness.

27.4  Election Day Service. Any employee who requests time off to serve in
      connection with a National, State or Local election shall be excused for
      the entire day without pay if the demands of service permit.

27.5  Death in Family. In the event of a death in the immediate family, a
      Regular Full-time employee shall be granted time off without loss of pay
      for a period not to exceed five (5) days. The amount of time off depends
      upon the circumstances of each case.

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<PAGE>

27.6  Illness in Family. A Regular Full-time employee who actually attends to an
      immediate family member because of a life threatening injury/illness to
      that immediate family member, shall suffer no loss in pay for up to forty
      (40) hours per calendar year. The parties agree that this provision may
      appropriately be monitored for possible abuse.

27.7  When it is necessary for employees to be active pallbearers, they will be
      paid at their basic hourly rate of pay for a maximum of one (1) tour upon
      proper approval.

27.8  "Immediate family or household" for the purpose of this Agreement shall be
      interpreted to mean spouse, father, mother, brother, sister, son,
      daughter, son-in-law, daughter-in-law, grandfather, grandmother,
      grandchildren, stepmother, stepfather, or stepchildren of an employee or
      anyone so related to the employee's spouse or anyone who lives in the
      immediate household as a member of the family.

27.9  A maximum of one (1) day's pay at the basic hourly rate shall be allowed
      for time involved in taking physical examination prior to entering Armed
      Services.

27.10 Leaves of Absences. Regular Full-time employees may upon written request
      be granted a leave of absence, without pay, service requirements
      permitting, as determined by the Company, for a period of up to six (6)
      months. Such request must be submitted to the employee's supervisor in
      advance of the time the leave of absence is wanted, indicating the reason
      for requesting a leave of absence and the date of return to work.

      a.    The period of absence will not be deducted in computing term of
            employment, and the period of absence will not be credited for wage
            progression purposes.

      b.    A leave of absence granted under the terms of this Agreement will be
            terminated:

            b.1   Whenever the Union shall cease to be the bargaining
                  representative for the eligible employees in the department
                  involved.

            b.2   Or upon expiration of the period for which the leave is
                  granted.

            b.3   Or prior to such expiration, upon the date an employee shall
                  return to work following assignment by his/her supervisor.

      c.    Any employee excused from duty or granted a leave of absence under
            this Agreement will be restored to the status of an active employee
            at

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<PAGE>

            the termination of his/her absence; provided that, had he/she
            remained in active service during the period of absence, he/she
            would be qualified and eligible to retain his/her former position or
            an equivalent position.

      d.    No physical or occupational examination shall be required as a
            requisite of reemployment except where an obvious physical or mental
            condition exists which requires medical advice regarding job
            placements or fitness for work.

      e.    The rate of pay upon return shall be that rate at the same point on
            the wage schedule the employee occupied when he/she left; that is,
            any modifications in wage progression schedules effected while the
            employee is on leave, which changes the occupational rate in effect
            at the time of the leave, will be applicable to him/her upon his/her
            return.

      f.    All rights of any employee under a leave of absence granted under
            this Article shall terminate if the employee resigns his/her
            employment with the Company or accepts employment with other than
            the Union or the Company, prior to the expiration of the leave.

      g.    The Company may grant a leave of absence for up to six (6) months
            with no guarantee that a position will be available upon expiration
            of the leave if the employee so requests it.

      h.    Incidental continuous absences of less than forty-five (45) days
            shall not be subtracted from the employee's service or cause a break
            in service, but when employees have been employed by the Company for
            less than six (6) months and have been absent from work continuously
            for more than thirty (30) days and are not entitled to sick
            benefits, their employment will be automatically terminated.

      i.    A leave of absence granted continuous with an incidental absence
            will become effective from the first day of absence.

27.11 Leave of absence for personal affairs is a leave granted to an employee
      who wishes time off from work to attend to some pressing personal affair
      such as, but not limited to, the settlement of an estate after death in
      the family, pregnancy, or serious illness of a member of the immediate
      family.

27.12 Leave of absence for personal illness is a leave granted to an employee
      who is not eligible for benefits under the Plan for Employees' Disability
      Benefits and because of a personal illness suffered by the employee is
      unable to report for regular assigned duties.

27.13 Leaves requested under this section may be extended for reasonable periods

                                       56

<PAGE>

      of time on proper Company approval.

27.14 The Company, at its option and at its expense, may have the employee on
      leave of absence for illness, report to a physician selected by the
      Company for a medical examination and the Company will determine whether
      the employee's leave of absence shall be continued, based upon the medical
      report submitted by the physician.

27.15 The leave of absence will terminate upon a physician's report that the
      individual is fit to return to work, and the individual has been notified
      to return with reasonable time allowed for reporting for assignment.

27.16 Return from Leave Before Expiration of Leave. A regular employee on leave
      of absence and who may return to work as a nonregular employee at the
      discretion of the Company before the expiration of such leave, will not
      experience a break in service because of such nonregular employment. Such
      an employee is treated as a nonregular employee only while engaged on the
      non-regular work.

                                   ARTICLE 28
                              TERMINATION ALLOWANCE

28.1  Regular full-time and regular part-time employees are eligible for
      termination allowance under the provisions of this Article 28.

28.2  Termination allowance will be paid as herein provided to eligible
      employees whose service with the Company is terminated by layoff, by
      compulsory retirement without pension, by displacement arising through
      technological change, or by discharge, dismissal or release without
      sufficiency of cause.

28.3  No termination allowance shall be due to an employee whose termination is
      the result of (a) resignation or quit by the employee, (b) death, (c)
      voluntary or involuntary retirement with pension, (d) transfer to another
      System company, (e) discharge, dismissal, or release for cause, or (f) as
      a result of any sale or other disposition by the Company of the exchange
      at which the employee is working or at which the employee is assigned to
      work out of, when the employee concerned is continued in the employment of
      the company as of the new management of the exchange.

28.4  Termination Allowance will be computed as follows:

      a.    One (1) week's pay for each completed year of net credited service
            up to and including five (5) years; plus

      b.    Two (2) weeks' pay for each completed year of net credited service

                                       57

<PAGE>

            from six (6) years to ten (10) years, both inclusive; plus C. Three
            (3) weeks' pay for each completed year of net credited service from
            eleven (11) years to thirteen (13) years, both inclusive; plus

      d.    Four (4) weeks' pay for each completed year of net credited service
            beyond thirteen (13) years.

28.5  A week's pay for the purpose of this Article 28 shall be the normal basic
      rate of pay of the employee at time of termination plus any permanent
      differential, which effectively becomes a part of the basic rate for the
      duties performed. Overtime and premium payments will not be considered.

28.6  Termination allowance for part-time employees will be computed according
      to the representative normal work week for each such employee.

28.7  Termination allowance will be exclusive of earned pay and of vacation
      payments to which the employee may be eligible. Furthermore, it shall be
      computed without regard to unemployment compensation as established by
      governmental programs.

28.8  Termination allowance will be paid on a weekly basis for the hours
      equivalent to the employee's regular workweek to the extent of the total
      allowance granted. Such payment, however, shall not operate to change the
      effective date of termination of employment, which shall be the last day
      worked.

28.9  Lump sum payment shall be made at the employee's request conditional upon
      full termination of employment with no further obligation resting upon the
      Company with respect to that employee.

28.10 Whenever an employee who has been paid termination allowance is
      subsequently reemployed and is again terminated, termination allowance in
      the instance of the second, and subsequent, terminations will be computed
      on the basis of total net credited service less payments previously
      received.

28.11 No termination allowance shall be due any eligible employee who fails or
      refuses to accept an offered comparable job assignment within the same
      headquarters location area without good and sufficient cause demonstrated.

      a.    If such an offer for transfer be made when the employee is receiving
            termination allowance payments, such payments will thereupon be
            discontinued.

      b.    Employees who disqualify themselves for termination allowances by
            refusal of available transfer opportunities will be treated as
            waiving all further rights to reemployment and to eligibility for or
            continuation of termination allowance payments.

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<PAGE>

28.12 Eligible employees may refuse to accept an offer of a comparable job
      assignment in some other headquarters location area without loss of
      termination allowance. However, upon such refusal, they will be treated as
      waiving all further rights to reemployment with the Company as otherwise
      provided in this agreement.

                                   ARTICLE 29
                                    PENSIONS

29.1  The pension plan for the employees of the Company covered by this
      Agreement shall be the plan as outlined in the booklet, "Valor
      Telecommunications Enterprises, LLC Pension Plan," as amended or as may be
      amended thereafter.

29.2  During the term of this Agreement, the Company agrees that no changes will
      be made in the "Valor Telecommunications Enterprises, LLC Pension Plan,"
      without prior concurrence of the Union.

                                   ARTICLE 30
                                 CONTRACT LABOR

30.1  Contract labor shall be held to nine (9) percent of the aggregate
      bargaining unit work force.

30.2  It is the Company's desire to retain its employees, and there is no
      intention to lay-off or part-time employees in order to replace them with
      contractors. Accordingly, the Company shall not subcontract work normally
      performed by Bargaining Unit employees, or new work, which the Bargaining
      Unit employees are qualified to perform. Further, it is recognized by the
      parties to this Agreement that in a rapidly changing, competitive
      environment of the telecommunications industry, the Company may deem it
      necessary to make operational changes based upon economic considerations,
      which could include the use of subcontractors or contractors.

30.3  The use of contractors shall not be used in an attempt to prevent payment
      of overtime to Company employees.

30.4  This Article 30 shall not apply to installation of central office
      equipment, burying drops, placing and splicing of new outside plant,
      locating cable, non-regulated competitive bid situations, air conditioning
      and other service contracts, and contract workers performing those
      functions shall not be included in determining the nine (9) percent
      limitations.

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<PAGE>

                                   ARTICLE 31
                                 GROUP INSURANCE

The Company will provide a health care plan that includes medical, dental,
vision, employee assistance plan (EAP), mental health and substance abuse
program, prescription drug, and flexible spending accounts. The Company will
also provide survivor protection plans that include Company paid basic life and
Business Travel and Accident coverage. Optional coverage to include long-term
disability, personal lines of insurance, and supplemental life insurance plans
will be provided by the Company at the employee's expense.

All health care plans will be administered solely in accordance with the
provisions of each plan and no matter concerning the health care plans or any
difference arising thereunder shall be subject to the grievance or arbitration
procedure of the Collective Bargaining Agreement.

The selection of the health care plan administrator, the administration of the
health care plans and all the terms and conditions relating thereto, and the
resolution of any disputes involving the terms, conditions, interpretation,
administration, or benefits payable shall be determined by and at the sole
discretion of the Company.

The Company shall have the right to amend the health care plans in any way,
including the selection of carriers. However, any amendment diminishing the
level of benefits or increasing the cost to the employee/dependent will be
limited to those changes applicable to salaried employees.

With respect to hospitalization, major medical and dental insurance, the Company
agrees to the following monthly premium payments during the life of this
Contract:

BASIC                                        BASIC
COVERAGE                                     HOSPITALIZATION &
TYPE                                         MAJOR MEDICAL INSURANCE

REGULAR FULL-TIME EMPLOYEES

EFFECTIVE JANUARY 1, 2006 & 2007

Option 1 ($350 Deductible)
All Coverage Categories                      90% of premium

Option 2 ($500 Deductible)
All Coverage Categories                      90% of premium

Option 3 ($1,000 Deductible)
All Coverage Categories                      95% of premium

                                       60

<PAGE>

<TABLE>
<S>                                             <C>
EFFECTIVE JANUARY 1, 2008

Option 1 ($350 Deductible)
All Coverage Categories                         85% of premium

Option 2 ($500 Deductible)
All Coverage Categories                         90% of premium

Option 3 ($1,000 Deductible)
All Coverage Categories                         95% of premium

REGULAR PART-TIME EMPLOYEES

EFFECTIVE JANUARY 1, 2006 & 2007

EFFECTIVE JANUARY 1, 2006 & 2007

Option 1 ($350 Deductible)
All Coverage Categories
Less than 17.5 hours per week                   0% of premium
17.5 hours but less than 22.5 hours per week    40% of premium
22.5 hours but less than 30 hours per week      65% of premium
30 hours per week or more                       90% of premium

Option 2 ($500 Deductible)
All Coverage Categories
Less than 17.5 hours per week                   0% of premium
17.5 hours but less than 22.5 hours per week    40% of premium
22.5 hours but less than 30 hours per week      65% of premium
30 hours per week or more                       90% of premium

Option 3 ($1,000 Deductible)
All Coverage Categories
Less than 17.5 hours per week                   0% of premium
17.5 hours but less than 22.5 hours per week    40% of premium
22.5 hours but less than 30 hours per week      65% of premium
30 hours per week or more                       95% of premium

EFFECTIVE JANUARY 1, 2008

Option 1 ($350 Deductible)
All Coverage Categories
Less than 17.5 hours per week                   0% of premium
17.5 hours but less than 22.5 hours per week    40% of premium
22.5 hours but less than 30 hours per week      65% of premium
30 hours per week or more                       85% of premium
</TABLE>

                                       61

<PAGE>

<TABLE>
<S>                                             <C>
Option 2 ($500 Deductible)
All Coverage Categories
Less than 17.5 hours per week                   0% of premium
17.5 hours but less than 22.5 hours per week    40% of premium
22.5 hours but less than 30 hours per week      65% of premium
30 hours per week or more                       90% of premium

Option 3 ($1,000 Deductible)
All Coverage Categories
Less than 17.5 hours per week                   0% of premium
17.5 hours but less than 22.5 hours per week    40% of premium
22.5 hours but less than 30 hours per week      65% of premium
30 hours per week or more                       95% of premium
</TABLE>

<TABLE>
<S>                                             <C>
COVERAGE TYPE                                      DENTAL

REGULAR FULL-TIME EMPLOYEES

Employee                                        100% of premium
Employee + 1 and Family                          50% of premium

REGULAR PART-TIME EMPLOYEES

Employee                                        50% of premium
Employee + 1 and Family                         25% of premium
</TABLE>

A cap on the employee's medical co-pay responsibility of fourteen percent (14%)
on the prior year's premium or premium - equivalent, shall be applied January 1,
2006, 2007, and 2008.

                                   ARTICLE 32
                                ILLNESS TREATMENT

32.1  Provisions of this Article shall only apply to Regular Full-time
      employees.

      Payment for absence because of personal illness shall be as follows:

      a.    For employees who have more than one (1) year of net credited
            service but less than five (5) years, the waiting period shall be
            three (3) consecutive workdays.

      b.    For employees who have five (5) years or more of net credited
            service, but less than ten (10) years, the waiting period shall be
            two (2)

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<PAGE>

            consecutive workdays.

      c.    For employees who have ten (10) years or more of net credited
            service, but less than fifteen (15) years, the waiting period shall
            be one (1) consecutive workday.

      d.    For employees who have fifteen (15) years or more of net credited
            service, there will be no waiting days.

      e.    Employees who have less than fifteen (15) years of net credited
            service shall have no waiting period provided the employee has not
            been absent due to illness for six (6) months immediately preceding
            the first day of absence, or the employee is admitted into a
            hospital, or the employee has outpatient surgery.

32.2  The following benefits shall apply for absence due to sickness or
      accidental injury occurring outside of employment. Successive sickness
      benefit periods are added together in computing the period for which
      benefits are payable, except that sickness occurring after thirteen (13)
      weeks of continuous employment is considered as a new sickness.

      a.    If the term of employment has been one (1) year but less than five
            (5) years - Full pay four (4) weeks, half pay nine (9) weeks.

      b.    If term of employment has been five (5) years but less than ten (10)
            years - Full pay thirteen (13) weeks, half pay thirteen (13) weeks.

      c.    If term of employment has been greater than ten (10) years but less
            than fifteen (15) years - Full pay thirteen (13) weeks, half pay
            thirty-nine (39) weeks.

      d.    If term of employment has been greater than fifteen (15) years or
            more - Full pay twenty-six (26) weeks, half pay twenty-six (26)
            weeks.

32.3  If an employee reports for duty and is forced by reason of illness to
      leave work after having worked at least 2 hours of the regularly assigned
      session, payment at the basic wage rate plus applicable differentials
      and/or premium payments shall be made for the remainder of the regularly
      assigned session. Illness benefit payments shall be paid beginning with
      the next regularly assigned session in accordance with the waiting periods
      set forth above.

32.4  Accident Disability Benefits. The Company, as an employer, is subject to
      the "Workers Compensation Laws" of the various states in which it
      operates: Texas, Oklahoma, Arkansas, and New Mexico. These laws provide,
      in effect, that employees who are injured in the course of their
      employment or while they are engaged in the business of the Company shall,
      during the period of

                                       63

<PAGE>

      their resulting disability, receive the compensation prescribed by the
      various laws, and accordingly the Company carries a policy of Workers'
      Compensation Insurance to protect its employees in compliance with these
      laws. Under the provisions of these laws, however, insurance compensation
      does not commence until after certain "waiting periods" have elapsed
      following the date of injury. Such waiting periods are set out below or as
      may be amended by legislation:

      Texas: Waiting period - Seven (7) calendar days (provided if and after
      disability has continued for four (4) weeks after date of injury,
      compensation shall be paid for the first Seven (7) days).

      Arkansas: Waiting period - Seven (7) calendar days (provided if and after
      disability has continued for four (4) weeks after date of injury,
      compensation shall be paid for the first Seven (7) days).

      Oklahoma: Waiting period - Three (3) calendar days.

      New Mexico: Waiting period - Seven (7) calendar days.

32.5  In order to reduce the loss of earnings, which will be suffered during the
      disability period, the Company will pay benefits to such injured employees
      in accordance with the following sections:

      a.    All regular employees who are injured in the course of their
            employment while engaged in the business of the Company, whose claim
            for compensation under the "Workers' Compensation Laws" of the
            various states are acceptable under the terms of those laws, shall
            be paid an amount which when added to Workers' Compensation payments
            will aggregate either 100% of regular basic daily wage (full pay) or
            50% of regular basic daily wage (half pay) as outlined below:

            a.1   If the term of employment has been less than sixty (60) months
                  - full pay twenty-six (26) weeks, half pay twenty-six (26)
                  weeks.

            a.2   If the term of employment has been sixty (60) months but less
                  than one hundred twenty (120) months - full pay thirty-nine
                  (39) weeks, half pay thirteen (13) weeks.

            a.3   If the term of employment has been one hundred twenty (120)
                  months or more - full pay fifty-two (52) weeks.

            a.4   Such disability not to extend beyond the effective date of the
                  beginning of total and Permanent Disability under Group Life
                  Insurance or the granting of a disability pension.

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<PAGE>

            a.5   The Compensation Laws of Arkansas and Texas provide that
                  compensation will be paid for the first seven (7) day "waiting
                  period" if the period of disability continues for four (4)
                  weeks in Arkansas and Texas and three (3) weeks in Oklahoma.
                  If the period of disability extends four (4) weeks in Arkansas
                  and Texas and three (3) weeks in Oklahoma, the Company shall
                  deduct from future payments to employees the amount in excess
                  of that normally received by the employee for the first seven
                  (7) calendar days.

      b.    Temporary employees will be eligible to receive full pay for only
            the first ten (10) work days of absence due to occupational injury.

32.6  Employees who are injured and are required to leave their work at any time
      during their regularly assigned session shall be paid in full at their
      basic wage rate, plus applicable differentials and/or premium payments for
      the remainder of the day and shall commence to receive benefits as
      provided in Section 32.3 and 32.4 of this Article with the work day
      following the day of their injury.

32.7  If an employee is injured and required to leave work during a holiday
      session, payment of basic wage rate, plus applicable differentials and/or
      premium payments shall be made.

32.8  Computation of weekly Workers' Compensation benefits shall be in
      accordance with applicable state laws.

32.9  In ascertaining the period during which Accident Disability Benefits shall
      be paid, the period of disability shall be taken as commencing upon the
      first day on which, because of disability, a full day's wages is not paid.
      Successive periods of disability from accident shall be counted together
      if from the same accident and separately if from different accidents.

32.10 Accidental injuries shall be considered as arising out of and in the
      course of employment only where the injury has resulted solely from
      accident during and in direct connection with the performance of duties to
      which employees are assigned in the service of the Company, or which they
      are directed to perform by proper authority, or involuntarily protecting
      the Company's property or interests, and there must be a clear and
      well-established history of the cause and circumstances of injury
      accidentally inflicted, and they must be sufficient to have produced the
      alleged injury, and there must be satisfactory evidence that such injury
      renders the employee unable to perform their duty in the service of the
      Company.

32.11 General Provisions -

      a.    During the periods of Sickness or Accident Disability for which
            benefits

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<PAGE>

            are paid, employees shall not accumulate net credited service for
            the purpose of qualifying for benefits under this Plan.

      b.    Assignment of benefits under the Plan will not be permitted or
            recognized.

      c.    Benefits shall not be payable for both accident and sickness at the
            same time to the same person.

      d.    Employees separated from the services of the Company shall have no
            claim to any benefit or allowance under the Plan unless the right to
            such benefit has accrued prior to such separation.

      e.    "Full pay" and "half pay" for the purposes of this Plan shall be
            based on the number of hours per week, not including overtime, and
            shall be computed at the employees' basic rate of pay, plus
            permanent differential payments and night premium will be included
            if the premium was in full effect for the four (4) weeks preceding
            the employees' being placed on disability payroll, at the time the
            disability began, provided, however, that the benefits shall at no
            time exceed the pay the employees would receive based on their rate
            of pay and the general schedule of hours per week constituting a
            full week's service at the time the disability began.

            e.1   "Full pay" shall be computed as above during the first seven
                  (7) calendar days of any disability.

            e.2   After the first seven (7) continuous calendar days of
                  disability, "full pay" shall be computed so as to result in
                  that net amount, after applications of taxes, which would have
                  been payable had the employee remained at work. This
                  computation shall be effected by deducting an amount
                  equivalent to the total of all taxes which the Company would
                  have been required to withhold by Federal and State laws if
                  the payment were being made as compensation for services
                  performed for the Company. Such deduction shall be limited to
                  produce an equivalent net payment to such extent as these
                  disability benefit payments be exempt from taxes normally
                  applicable to earnings. The Company will not, as permitted by
                  law, again make tax deductions from the computed net amount
                  for later recovery by the employee.

            e.3   Part-time employees shall be paid benefits at their basic wage
                  rates, based on their average scheduled work week computed
                  from the six (6) month period immediately preceding their
                  disability period.

      f.    Benefits under this Plan may be suspended or terminated in cases of

                                       66

<PAGE>

            conduct prejudicial to the interest of the Company.

      g.    All employees who shall be absent from duty on account of sickness
            or on-the-job injury must at once notify their immediate supervisor
            and furnish evidence of disability satisfactory to the Company. The
            employee shall not be entitled to benefits for time previous to such
            notice unless delay shall be shown to have been unavoidable and
            satisfactory evidence of disability is furnished.

      h.    Benefits shall not be payable to employees who are physically
            disabled by reason of injuries directly arising from employment with
            any other employer, nor from circumstances directly associated with
            the pursuit of self-employment for profit in a personal business or
            occupation.

            h.1   For purposes of this provision, work conducted for or on
                  behalf of the Union wherein the employee retains normal
                  employment with the Company, even though the employee may
                  receive incidental payments from the Union, shall not be
                  construed as engagement with another employer.

      i.    Whenever an employee entitled to Disability Benefits under this Plan
            is disabled by injury caused either intentionally or by the
            negligence of a third party, such employee need not elect whether to
            take such Disability Benefits or to pursue a remedy against such
            third party, but may proceed to accept applicable benefits under
            this Plan.

            i.1   In the event that the employee elects to pursue a remedy
                  against such third party, the Company shall have a lien on the
                  proceeds of any recovery from such third party, whether by
                  judgment, settlement, or otherwise, after the deduction of
                  reasonable and necessary expenditures, including attorney's
                  fees, incurred in effecting such recovery to the extent of the
                  total amount of disability benefits provided by this Plan and
                  paid.

            i.2   Notice of such action by the employee against the third party
                  shall be given within ninety (90) days thereafter to the
                  Company. No compromise of any such course of action by the
                  employee in an amount less than the benefits provided by the
                  Plan shall be made in the absence of written consent of the
                  Company.

      j.    Disability benefits remaining unpaid for any period prior to the
            death of an employee shall be payable to the named beneficiary or to
            the estate of said employee.

                                       67

<PAGE>

                                   ARTICLE 33
                            MILITARY LEAVE AGREEMENT

33.1  Military leaves of absence will be granted to regular employees of the
      Company entering military services of the United States under any law
      which is now in effect or may in the future be enacted by the United
      States.

33.2  Application for reemployment must be made within ninety (90) days of
      release from active duty. If at the time of application for reemployment
      by an employee who has been in the military services, no vacancy exists,
      one may be created by discharge, layoff, transfer or demotion, and in such
      cases the discharge, layoff, transfer or demotion will be in seniority
      order.

33.3  Regular employees, other than those employed on a regular part-time basis,
      who are members of the reserve components of the Armed Forces of the
      United States, shall be excused for a period not to exceed fourteen
      calendar (14) days in any calendar year to attend military training. The
      employee must provide a copy of his/her military orders to the supervisor
      prior to the commencement of leave showing the dates of the leave.

      a.    The above maximums will be increased to fifteen (15) calendar days
            in any calendar year to attend military training.

33.4  Employee benefits to those regular employees who are granted military
      leave of absence are as follows:

      a.    Group Life Insurance for an employee will be continued by the
            Company for one hundred twenty (120) days after the beginning of the
            leave and then cancelled at the end of the one hundred twenty (120)
            day period. Upon reinstatement, the employee may have Group Life
            Insurance reinstated without a physical examination provided the
            employee makes application for such reinstatement within ninety (90)
            days after returning to work.

      b.    An employee shall be given full service credit under the Plan for
            Employees' Pensions for the term of a military leave of absence,
            provided, however, that such credit shall be given only if the
            employee is covered by the Plan for Employees' Pensions at the time
            the military leave became effective.

      c.    Employees who enter military service may receive a lump sum payment
            in lieu of vacation to which such employees were entitled at the
            time they leave the Company to enter military service. Upon
            reinstatement with the Company, vacation privileges will be
            reinstated and the time spent on military leave will be counted as
            credited service for

                                       68

<PAGE>

            the purposes of computing vacation eligibility.

      d.    Sick Leave Credit Upon reinstatement after a military leave of
            absence, employees will be granted the same amount of sick benefit
            credit they had at the time of the beginning of the leave.

      e.    Telephone concessions that may be in effect at the time a military
            leave of absence is granted will be continued at one-half (-1/2) the
            regular filed tariff rate for the period of the military leave. This
            service would normally be given only where the employee concerned
            had maintained a home with those dependent upon the employee for
            support.

      f.    Military leave of absence service will be considered as service with
            the Company in the determination of credited service for purposes of
            scheduled wage increases or other wage purposes.

      g.    An employee will accumulate net credited service for seniority
            during the period of military service.

33.5  An employee who is presently on military leave of absence and who is
      eligible for benefits upon reinstatement will be granted such benefits in
      accordance with the provisions of 33.4 of this Article.

      This Agreement supersedes any and all plans or agreements covering
      military leave of absence of this Company or any predecessor Companies.

                                   ARTICLE 34
                                   DEFINITIONS

BASIC WAGE RATE, BASIC RATE - The hourly rate of pay determined by the wage
schedule for the job; it excludes differentials, premiums, and other extra
payments.

CALENDAR DAY OF A TOUR - Shall be one which starts during the period from
midnight of that calendar day. Any time worked as an extension of a tour or
call-out before midnight shall be reported on that day, including all continuing
time worked up to the starting time of the next calendar day tour. Call-out
beginning after midnight shall be reported on that calendar day tour.

CALENDAR WEEK - A consecutive period of seven (7) days, the first day of which
is Sunday.

DEPARTMENT - For the purposes of this Agreement, the following are recognized as
departmental entities:

      -     Operations

                                       69

<PAGE>

      -     Accounting

      -     Supply & Fleet

      -     Network Engineering & Construction

      -     Long Distance

      -     Human Resources

      -     Customer Service

      -     Retail Sales

      -     Public Relations & Communications

      -     Marketing

      -     Finance

      -     Sales

      -     Legal & Regulatory

      -     Information Services

DIFFERENTIAL PAY - An additional payment given for certain responsibilities or
positions assigned to employees by the Company.

DISCHARGED - Means involuntary discontinuance of employment with the Company
when the employee is terminated for cause.

DISCIPLINE - Means the application of Company-initiated procedures or actions
designed to correct unsatisfactory employee performance, and involving an action
lesser than discharge.

EMERGENCY - An event such as a fire or other catastrophe, severe weather
conditions, or major cable or equipment needs. The Company shall give as much
advance notice as possible to the Union in the event of such as emergency.

EMPLOYEE - The general term "employee" refers to those who perform the work of
the Company for a regular stated compensation and the nature of whose work
duties are within the scope of the collective bargaining unit.

EMPLOYEE, REGULAR - One who is hired for continuous employment, has been
reclassified from probationary employment accumulates net credited service, and
is entitled to all the benefits and coverages as granted in this Agreement.

EMPLOYEE, FULL-TIME - One whose normal assignment of work is forty (40) hours
per week.

EMPLOYEE, LOCATED - One who is assigned to work in a definite location or
specific headquarters, as the principal location of employment for all purposes.

EMPLOYEE, PART-TIME - One whose normal assignment of work is less than forty
(40) hours per week, whose assigned or schedule tour is not less than three (3)
hours and who may be called to work at the Company's request outside of the
assigned or scheduled hours.

                                       70

<PAGE>

EMPLOYEE, PROBATIONARY - A person engaged by the Company with the intent of
assignment as a regular employee who has not acquired one hundred eighty (180)
days uninterrupted service, or its actual work time equivalent, and may be
terminated for failure to meet Company standards of employment.

EMPLOYEE, NON-REGULAR - A person who is not hired for continuous employment,
including occasional, temporary, part-time, does not accumulate credited
service, and is not entitled to benefits such as pensions, vacations, sick
leaves, medical coverage etc. which accrue to regular employees.

EMPLOYEE, OCCASIONAL - A person who has no normal weekly assignment of work, but
works on a voluntary basis, as required by the Company to meet unusual service
demands, to replace absentees, and such other purposes as may arise. An
occasional employee is an employee of the Company only on the day which the
employee works.

EMPLOYEE, TEMPORARY - A person who is employed for a continuous work period, not
to exceed six (6) months, when additional work of any nature requires a
temporarily augmented force, or when replacements are required for regular
employees who are absent.

HEADQUARTERS - An exchange, location or town designated by the Company as being
the place of employment for a particular employee or employees., and on which
location the employee's basic wage rate is established.

HOLIDAY TOUR - Shall be one which starts during the period from midnight to
midnight of the day observed as the holiday.

IN-CHARGE - Refers to the status of a Bargaining Unit employee who has been
assigned certain responsibilities additional to the normal and usual duties for
the employee's job title classification. These responsibilities may entail
direction and coordination of work performed by other employees and proper usage
of tools and equipment employed to perform such work.

LAID OFF, LAY OFF - Means the termination of an employee from active employment
by reason of insufficient work or other business reasons.

MAINTENANCE WINDOW - is the period between 10:00 p.m. and 6:00 a.m. During this
period temporary measures will be taken to perform maintenance/upgrades on
switching platforms and other electronic equipment.

NET CREDITED SERVICE - Term used to express the aggregate of the years, months,
and days of active employment with Valor or any of its predecessors which will
be recognized by the Company with respect to each employee. For employees of GTE
Corporation who were active employees working

                                       71

<PAGE>

in the Oklahoma properties purchased by Valor on July 1, 2000, or the Texas/ New
Mexico properties purchased on September 1, 2000, and who became active
employees of Valor on those respective dates, the term "Net Credited Service"
also includes the Net Credited Service recognized by GTE as of each respective
purchase date. Active employment will include only that time for which the
employee actually receives pay or is on authorized Union or military leave of
absence, and will not include time for which the employee receives Workers'
Compensation as a result of being totally and permanently disabled in excess of
one (1) year. Active employment will be computed in terms of whole workdays.

NIGHT TOUR - A tour which falls wholly or partly within the period from 9:00
p.m. to 6:00 a.m.

PREMIUM PAY - Is the amount in addition to basic rates which an employee is paid
for working less desirable hours (night or evening) or days (Sundays or
holidays).

HOLIDAY PREMIUM PAY shall be considered to be the pay an employee will receive
for the holiday if they do not work, or the amount in excess of their regular
rate if they do work on the holiday.

RECLASSIFICATION - Is a change in the position title of an employee.

REGULAR RATE OF PAY - The hourly compensation of the particular employee during
the particular work week as determined by the sum of the employee's basic rate
time hours worked plus any night tour premiums plus any Christmas or New Year's
Eve premiums plus any differential pay divided by the total hours worked in the
week.

RELEASED - Means termination of employment by Company action when the employee's
qualifications for telephone work are not satisfactory, and no disciplinary
action is involved.

RELOCATE - Is a change of an employee from one location to another on a
voluntary or involuntary basis.

RESIGNED - Means voluntary severance of employment by choice of the employee.

RETIRED - Means termination of employment by attainment of adequate net credited
service by employee choice.

SCHEDULED HOURS - Hours falling within an employee's scheduled tour. Any of the
hours which are officially posted on the work schedule for a particular employee
to work.

SENIORITY - Means the computed employment service according to which an employee
can receive certain preferential treatments to such extent as specifically named
with this Agreement.

                                       72

<PAGE>

SERVICE EMERGENCIES - Means that period of time or condition during an
emergency, when service to the public, the welfare of the employees and/or the
Company is or would be in jeopardy unless temporary measures are applied in an
expedient manner.

SERVICE REQUIREMENTS - Means the requirements that are necessary to provide
adequate and satisfactory telephone service to telephone customers and
efficiently and effectively performs the work necessary to economic operation.

SESSION - That portion of a tour of duty which occurs from the time an employee
reports for work until they are excused for mealtime or from the time they
return from their excused meal time until they have completed the scheduled day
of work.

SUNDAY WORK - Any work or tour which begins on Sunday.

TERMINATION DATE - If employees terminate their employment with this Company
voluntarily or involuntarily, the official date of termination shall be the last
day they are entitled to payment for services, from the Company.

TOUR - The entire scheduled workday of an employee, which will be eight (8)
hours or less.

TRANSFER - Is a change of an employee from one job title classification to
another with or without relocation.

TRANSFER REQUEST - A transfer request filed by an employee shall mean a written
request involving a change in job title classification, a change in location in
the same job classification, or a change both in job classification and
location, as the case may be.

WORK DAY - The period of time between 12:00 midnight preceding and 12:00
midnight ending any day. Any tour or call-out is part of the workday on which
such tour or call-out begins.

WORKGROUP - Those employees within the same headquarters location who normally
perform the same type work. Tours will be scheduled accordingly.

WORKWEEK - The workweek shall begin on Sunday 12:01 a.m. and end on the
following Saturday at 12:00 midnight.

                                       73

<PAGE>

                                   ARTICLE 35
                             CONTENTS AND VALIDATION

35.1  This Agreement contains the entire agreement between the Company and the
      Union. There are no oral agreements which have not been reduced to writing
      for inclusion in this Agreement, and no changes shall be effective until
      reduced to writing and signed by an officer of the Company and by an
      officer of the Union.

35.2  In the event any applicable and effective Federal or State Law affects any
      one or more practices or provisions of this Agreement, the practices or
      provisions so affected shall be made to comply with the requirements of
      such law, and in all other respects, the Agreement shall continue in full
      force and effect.

                                   ARTICLE 36
                                    DURATION

36.1  This Agreement shall be effective March 1, 2005 and shall remain in effect
      for an initial period to and including February 28, 2008, and shall
      continue in effect thereafter unless terminated by a sixty (60) day prior
      written notice given by either party to the other, in which event this
      Agreement shall terminate sixty (60) days following the receipt of such
      notice.

36.2  At any time after sixty (60) days prior to the expiration of the initial
      term, either party may serve written notice on the other party of its
      desire to negotiate revisions, changes, modifications and amendments to
      this Agreement. In such event, the parties agree to commence collective
      bargaining within thirty (30) days after receipt of such notice by other
      party unless mutually agreed otherwise. Both parties agree to make bona
      fide bargaining attempts to resolve any differences during such
      negotiations.

      It is mutually agreed that no notice of termination of this Agreement
      shall be given by the party having given notice of desire to amend prior
      to thirty (30) days after the beginning of such period of bargaining upon
      amendments. It is further agreed, however, that a notice of termination
      given under this provision of this Article shall be effective to terminate
      this Agreement thirty (30) days following receipt of such notice by the
      other party rather than as set forth in this Article 36.1.

                                       74

<PAGE>

APPENDIX A

WEST TEXAS EXCHANGES

<TABLE>
<S>                        <C>                 <C>
Abernathy                  Adrian              Amherst
Andrews                    Anton               Aspermont
Baird                      Balmorhea           Benjamin
Blackwell                  Booker              Bovina
Boys Ranch                 Brownfield          Cactus
Channing                   Clarendon           Claude
Clyde                      Coyanosa            Crosbyton
Cross Plains               Dalhart             Darrouzett
Denver City                Dimmitt             Dodson
Dumas                      Estelline           Fabens
Follett                    Forsan              Fort Hancock
Frankel City               Friona              Fritch
Groom                      Happy               Hart
Hartley                    Haskell             Hedley
Higgins                    Holiday             Hurlwood
Idalou                     Imperial            Kamay
KnoxCity                   Lakeview            Lamesa
Levelland                  Littlefield         Loraine
Lorenzo                    May                 Meadow
Megargel                   Memphis             Mentone
Merkel                     Miami               Mobeetie
Moran                      Morton              Munday
Nazareth                   Orla                Panhandle
Pecos                      Perryton            Petersburg
Post                       Putnam              Ralls
Rising Star                Rochester           Ropesville
Rule                       Sanford             Seagraves
Seymour                    Shallowater         Sierra Blanca
Smyer                      Spade               Spearman
Stratford                  Sundown             Sunray
Tahoka                     Throckmorton        Toyah
Trent                      Tulia               Valentine
Van Horn                   Vega                Weinert
Wellington                 Wheeler             White Deer
Whiteface                  Whitharral          Wildorado
Wilson                     Wolfforth
</TABLE>

                                       75

<PAGE>

EAST TEXAS EXCHANGES

<TABLE>
<S>                        <C>                 <C>
Annona                     Austonio            Avalon
Avinger                    Avery               Bagwell
Bedias                     Buffalo             Beckville
Blooming Grove             Bogata              Bon Weir
Broaddus                   Bronson             Burkeville
Burlington                 Bynum               Chilton
Colmesneil                 Clarksville         Centerville
Crawford                   Crockett            Cushing
Deport                     Douglassville       Dekalb
Daingerfield               Detroit             Dawson
Elkhart                    Fairmont            Franklin
Fairfield                  Frost               Gary
Glen Rose                  Grapeland           Groveton
Hubbard                    Hughes Springs      Hemphill
Huntington                 Hooks               Hilltop Lakes
Iola                       Irene               Joaquin
Kennard                    Karnack             Linden
Lone Star                  Lovelady            Leona
Lott                       Malone              Maud
Milam                      Milford             Morgan
Marquez                    Marietta            Mt. Calm
Naples                     New Boston          Negley
Newton                     North Zulch         Oakwood
Pennington                 Pineland            Purdon
Redwater                   Reklaw              Richland
Riesel                     Rogers              Rosebud
Simms                      Slocum              Streetman
Teneha                     Texarkana           Trinity
Whitney                    Walnut Springs      Zavalla
</TABLE>

OKLAHOMA EXCHANGES

<TABLE>
<S>                        <C>                 <C>
Asher                      Avant               Barnsdall
Boynton                    Broken Arrow        Checotah
Coweta                     Fairfax             Haskell
Hominy                     Kaw City            Lindsay
Maysville                  Meeker              Morris
Paden                      Porter              Prague
Purcell                    Ramona              Snug Harbor
St. Louis                  Stroud              Tecumseh
Wagoner                    Washington          Wayne
</TABLE>

                                       76

<PAGE>

NEW MEXICO EXCHANGES

<TABLE>
<S>                        <C>                 <C>
Abiquiu                    Alto                Bent
Caballo                    Canjilon            Capitan
Carlsbad                   Carlsbad Caverns    Chama
Chimayo                    Cuba                Dixon
Dulce                      Elephant Butte      El Rito
Espanola                   Eunice              Gallina
Hillsboro                  Hobbs               Jal
Jemez Springs              Lindrith            Loving
Lovington                  Lybrook             Mescalero
Ojo Caliente               Ruidoso             Ruidoso Downs
San Ysidro                 Tierra Amailla      Truchas
Truth or Consequences      Vallecitos          Velarde
White Mountain
</TABLE>

                                       77

<PAGE>

APPENDIX B

                               WAGE SCHEDULE GUIDE

SCHEDULE SC
Retail Sales Consultant

SCHEDULE C
General Clerk
Planner

SCHEDULE D
Administrative Clerk
Customer Service Representative
Lead Planner

SCHEDULE E
Business Account Rep*
Coin Collector/Maintainer
Graphics Operator
Line Assigner
Public Access Sales Technician

SCHEDULE F
Complex Line Assigner
Logistics Specialist
Tester

SCHEDULE H
Cable Splicer
Customer Zone Technician II

SCHEDULE HH
Building Services Technician
Business Systems Technician
Chief Garage Mechanic
Customer Zone Technician I
Equipment Installer
Facility Assigner
Fleet Technician
Monitor & Control Technician
Outside Plant Technician

*In the selection of Business Account Representatives seniority shall be the
deciding factor when qualifications are equal.

                                       78

<PAGE>

VALOR TELECOMMUNICATIONS

WAGE SCHEDULE SC

<TABLE>
<CAPTION>
       Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate
       Effective    Effective    Effective    Effective    Effective    Effective    Effective
       8/29/04      2/27/05      8/28/05      2/26/06      8/27/06      3/04/07      9/02/07
<S>    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Start         7.10         7.10         7.21         7.31         7.42         7.54         7.65
1             7.81         7.81         7.93         8.05         8.17         8.29         8.41
2             8.25         8.25         8.37         8.50         8.63         8.76         8.89
3             8.71         8.71         8.84         8.97         9.11         9.24         9.38
4             9.21         9.21         9.35         9.49         9.63         9.78         9.92
5             9.73         9.73         9.88        10.02        10.17        10.33        10.48
6            10.27        10.27        10.42        10.58        10.74        10.90        11.06
7            10.86        10.86        11.02        11.19        11.36        11.53        11.70
8            12.02        12.02        12.20        12.38        12.57        12.76        12.95
</TABLE>

WAGE SCHEDULE C

<TABLE>
<CAPTION>
       Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate
       Effective    Effective    Effective    Effective    Effective    Effective    Effective
       8/29/04      2/27/05      8/28/05      2/26/06      8/27/06      3/04/07      9/02/07
<S>    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Start         8.91         8.91         9.04         9.18         9.32         9.46         9.60
1            10.32        10.32        10.47        10.63        10.79        10.95        11.12
2            10.96        10.96        11.12        11.29        11.46        11.63        11.81
3            11.77        11.77        11.95        12.13        12.31        12.49        12.68
4            12.59        12.59        12.78        12.97        13.17        13.36        13.56
5            13.41        13.41        13.61        13.82        14.02        14.23        14.45
6            14.37        14.37        14.59        14.80        15.03        15.25        15.48
7            15.23        15.23        15.46        15.69        15.93        16.16        16.41
8            16.26        16.26        16.50        16.75        17.00        17.26        17.52
</TABLE>

WAGE SCHEDULE D

<TABLE>
<CAPTION>
       Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate
       Effective    Effective    Effective    Effective    Effective    Effective    Effective
       8/29/04      2/27/05      8/28/05      2/26/06      8/27/06      3/04/07      9/02/07
<S>    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Start         9.24         9.24         9.38         9.52         9.66         9.81         9.95
1            10.75        10.75        10.91        11.07        11.24        11.41        11.58
2            11.54        11.54        11.71        11.89        12.07        12.25        12.43
3            12.39        12.39        12.58        12.76        12.96        13.15        13.35
4            13.31        13.31        13.51        13.71        13.92        14.13        14.34
5            14.28        14.28        14.49        14.71        14.93        15.16        15.38
6            15.35        15.35        15.58        15.81        16.05        16.29        16.54
7            16.38        16.38        16.63        16.88        17.13        17.39        17.65
8            17.59        17.59        17.85        18.12        18.39        18.67        18.95
</TABLE>

                                       79

<PAGE>

WAGE SCHEDULE E

<TABLE>
<CAPTION>
       Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate
       Effective    Effective    Effective    Effective    Effective    Effective    Effective
       8/29/04      2/27/05      8/28/05      2/26/06      8/27/06      3/04/07      9/02/07
<S>    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Start         9.46         9.46         9.60         9.75         9.89        10.04        10.19
1            11.10        11.10        11.27        11.44        11.61        11.78        11.96
2            11.98        11.98        12.16        12.34        12.53        12.72        12.91
3            12.94        12.94        13.13        13.33        13.53        13.73        13.94
4            13.98        13.98        14.19        14.40        14.62        14.84        15.06
5            15.11        15.11        15.34        15.57        15.80        16.04        16.28
6            16.30        16.30        16.54        16.79        17.04        17.30        17.56
7            17.61        17.61        17.87        18.14        18.41        18.69        18.97
8            19.02        19.02        19.31        19.59        19.89        20.19        20.49
</TABLE>

WAGE SCHEDULE F

<TABLE>
<CAPTION>
       Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate
       Effective    Effective    Effective    Effective    Effective    Effective    Effective
       8/29/04      2/27/05      8/28/05      2/26/06      8/27/06      3/04/07      9/02/07
<S>    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Start        10.17        10.17        10.32        10.48        10.63        10.79        10.96
1            11.94        11.94        12.12        12.30        12.49        12.67        12.86
2            12.88        12.88        13.07        13.27        13.47        13.67        13.88
3            13.93        13.93        14.14        14.35        14.57        14.78        15.01
4            15.04        15.04        15.27        15.49        15.73        15.96        16.20
5            16.25        16.25        16.49        16.74        16.99        17.25        17.51
6            17.57        17.57        17.83        18.10        18.37        18.65        18.93
7            18.97        18.97        19.25        19.54        19.84        20.13        20.44
8            20.49        20.49        20.80        21.11        21.43        21.75        22.07
</TABLE>

WAGE SCHEDULE H

<TABLE>
<CAPTION>
       Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate
       Effective    Effective    Effective    Effective    Effective    Effective    Effective
       8/29/04      2/27/05      8/28/05      2/26/06      8/27/06      3/04/07      9/02/07
<S>    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Start        10.57        10.57        10.73        10.89        11.05        11.22        11.39
1            12.51        12.51        12.70        12.89        13.08        13.28        13.48
2            13.63        13.63        13.83        14.04        14.25        14.47        14.68
3            14.86        14.86        15.08        15.31        15.54        15.77        16.01
4            16.21        16.21        16.45        16.70        16.95        17.20        17.46
5            17.66        17.66        17.92        18.19        18.47        18.74        19.02
6            19.23        19.23        19.52        19.81        20.11        20.41        20.72
7            20.97        20.97        21.28        21.60        21.93        22.26        22.59
8            22.85        22.85        23.19        23.54        23.89        24.25        24.62
</TABLE>

WAGE SCHEDULE HH

<TABLE>
<CAPTION>
       Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate  Hourly Rate
       Effective    Effective    Effective    Effective    Effective    Effective    Effective
       8/29/04      2/27/05      8/28/05      2/26/06      8/27/06      3/04/07      9/02/07
<S>    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Start        11.15        11.15        11.32        11.49        11.66        11.83        12.01
1            13.21        13.21        13.41        13.61        13.81        14.02        14.23
2            14.40        14.40        14.62        14.84        15.06        15.28        15.51
3            15.68        15.68        15.92        16.15        16.40        16.64        16.89
4            17.10        17.10        17.36        17.62        17.88        18.15        18.42
5            18.62        18.62        18.90        19.18        19.47        19.76        20.06
6            20.31        20.31        20.61        20.92        21.24        21.56        21.88
7            22.14        22.14        22.47        22.81        23.15        23.50        23.85
8            24.12          .12        24.48        24.85        25.22        25.60        25.98
</TABLE>

                                       80
<PAGE>

APPENDIX C

                        DUES DEDUCTION AUTHORIZATION CARD

                              TERMS AND CONDITIONS

If through error on the part of VALOR Telecommunication, its successors,
purchasers, subsidiaries, and assigns ("Company") a scheduled deduction is not
made, the Company will make up such deduction or deductions on the payrolls for
a pay period or pay periods following discovery of such error.

The Union agrees that the Company may refund to employees deductions, which are
made in error and deduct the amount of such refunds from a subsequent remittance
to the Union.

This payroll allotment authorization may be cancelled by the Company, through
written notice to the employee executing this authorization, upon the Union's
refusal or incapacity to accept and receipt for any amount so deducted or upon
the suspension, expiration, or termination of any applicable contract provision
covering dues deductions between the Company and the Union named in this
authorization.

The Company may cancel this deduction authorization upon the transfer of the
employee by whom it is executed to a title or department not included in the
then current collective bargaining unit.

            Union membership dues and agency fees are not deductible as
            charitable contributions to Federal income tax purposes. Dues and
            agency fees, however, may be deductible in limited circumstances
            subject to various restrictions imposed by the Internal Revenue
            Code.

                              SOURCE OF MEMBERSHIP

New Member________________  Received by Transfer____________  Reinstated________

                              MEMBERSHIP TERMINATED

Transfer_______________________________________   Date__________________________

Suspension_____________________________________   Date__________________________

Withdrawal_____________________________________   Date__________________________

Death__________________________________________   Date__________________________

                              ASSOCIATE MEMBERSHIP

                            Effective Date _________

                              TERMS AND CONDITIONS

Authorization cards to participate, change, or cancel participation in payroll
deduction for CWA-PAC shall be accepted by Company only upon being forwarded by
Union. No authorization cards shall be accepted by Company directly from
employees.

I understand that I may not change or cancel this authorization for one (1)
month from the date hereof.

I further understand and agree that this authorization card constitutes approval
for the release, by Company to Union, of any Personally Identifiable Employee
Information concerning myself requested by Union in connection with the
administration of the TERMS AND CONDITIONS PLAN FOR PAYROLL DEDUCTION, FOR
CWA-PAC. By signing this authorization, I agree to indemnify and hold harmless
VALOR Telecommunication, its successors, purchasers, subsidiaries, and assigns
("Company") from any claims, actions, suits, damages, or judgments which may
arise from release of such information.

================================================================================
                     (FOR USE BY COMPTROLLER'S DEPARTMENT)

                                  Date of First                        Entered
Checked__________________         Deduction_________________    Records_________

                                       81

<PAGE>

<TABLE>
<S>         <C>                      <C>           <C>                   <C>
-----------------------------------------------------------------------------------
(Last Name) (Given Name or Initials) (Payroll No.) (Social Security No.) (Local No.)
</TABLE>

               (Employee will please PRINT the above information)

     PAYROLL ALLOTMENT AUTHORIZATION FOR UNION DUES OR AMOUNT EQUIVALENT TO
                                   UNION DUES

I hereby authorize and direct VALOR Telecommunications, its successors,
purchasers, subsidiaries, and assigns ("Company"), to deduct once each month
from my pay the amount of regular monthly Union dues (as listed below) or the
percent of the basic rate of pay constituting the amount of regular Union dues,
whichever is greater, until each amount is changed in accordance with the
lawfully adopted by-laws of the Local described above, and advice of such change
is certified to the Company by an authorized representative of the
Communications Workers of America, and thereafter the amount of regular monthly
Union dues of the percent of basic rate of pay constituting the amount of
regular Union dues, in accordance with said by-laws, and to pay the amount so
deducted to the order of the Secretary- Treasurer of the Communications Workers
of America.

                     [ ] MINIMUM MONTHLY SCHEDULED DUES

This authorization is voluntarily made and is not conditioned on my present or
future membership In the Union, and shall be governed by the terms and
conditions set forth herein irrespective of Union membership. This authorization
shall continue in effect until cancelled by written notice signed by me and sent
by certified or registered mail, return receipt requested, to the Company. This
cancellation of authorization must be postmarked during the fourteen (14) day
period prior to each anniversary date of the current or any subsequent
Collective Bargaining Agreement, or during the fourteen (14) day period prior to
the termination date of the current or any subsequent Collective Bargaining
Agreement.

I hereby ratify all such deductions made by the Company under any prior
authorization from me and direct that any amount now held by the Company under
prior authorization be paid to the order of the Secretary- Treasurer of
Communications Workers of America.

This authorization supersedes all previous authorizations executed by me for
deductions of such payments. Neither VALOR Telecommunications, its successors,
purchasers, subsidiaries, and assigns ("Company"), nor any of their officers or
agents shall be held liable or responsible for any loss by action of the
above-named Union or its officers.

Dated______ 20________     ____________________________________________________
                           Residence  (Signature of Employee)
Signed in the presence of  Address_____________________________________________
                                       (Street and Number)
                           _____________________________________________________
                           (City or Town)     (State)     (Zip code)

                                APPLICATION BLANK

Name (Mr./Mrs./Ms.)___________________         Soc. Sec. No.____________________
Address ________________________________________________________________________

                        COMMUNICATIONS WORKERS OF AMERICA

I hereby request and accept membership in the COMMUNICATIONS WORKERS OF AMERICA
and when accepted by the Local, agree to be bound by the Constitution of the
Union and Amendments thereto and Rules and Regulations now in effect of
subsequently enacted by the Union and/or the Local to which I am assigned.

Dated______________________________   Signature_________________________________

Net Credited Service Date__________             Present Title___________________

Department_________________________             Base/Work Location______________

Resident Telephone No._____________             Representative__________________

Initiation Fee_____________________             Business Telephone No.__________

         [ ] Accepted  [ ] Rejected  [ ] Registered Voter

                 AUTHORIZING SIGNATURE_________________________

Union membership dues and agency fees are not deductible as charitable
contributions for Federal income tax purposes. Dues and agency fees, however,
may be deductible in limited circumstances subject to various restrictions
imposed by the Internal Revenue Code.

<TABLE>
<S>          <C>                     <C>            <C>                  <C>
-----------------------------------------------------------------------------------
(Last Name) (Given Name or Initials) (Payroll No.) (Social Security No.) (Local No.)
</TABLE>

               (Employee will please PRINT the above information)

                   PAYROLL ALLOTMENT AUTHORIZATION FOR CWA-PAC

I hereby authorize and direct VALOR Telecommunications, its successors,
purchasers, subsidiaries, and assigns ("Company") to deduct twice each month
from my pay the following amount $ _____________________ and to remit such
amount to the Secretary- Treasurer, CWA-COPE Political Contributions Committee.
I understand and agree that this authorization shall be governed by and
controlled in accordance with the Terms and Conditions on the reverse side
hereof and the TERMS AND CONDITIONS PLAN FOR PAYROLL DEDUCTION FOR CWA-PAC
entered into between the Company and the Communications Workers of America,
District 6 ("Union").

       [ ] NEW  [ ] CHANGE  [ ] CANCEL

This authorization is made voluntarily and supersedes all previous
authorizations executed by me for deductions of such payments.

                                  (See Reverse)

Dated____________ 20_____   ____________________________________________________
Signed in the presence of   Residence       (Signature of Employee)
                            Address_____________________________________________
                                                (Street and Number)
                            ____________________________________________________
                            (City or Town)      (State)      (Zip code)

                                       82
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                              ARBITRATION PROCEDURE

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, agree to the provisions concerning
Arbitration Procedures set forth in this Memorandum of Agreement.

1.    Whenever the Union notifies the Company in writing of its election to
      arbitrate a grievance pursuant to Article 9, Grievance Procedure, of the
      2005 Agreement of Recognition, Bargaining Procedure and Operating
      Contract, and in the same writing also notifies the Company: (1) that the
      election to arbitrate is involved in the Union's internal appeal process,
      and (2) that the notice of election to arbitrate is therefore being given
      solely to preserve the Union's right to arbitrate in the event that the
      appeal is upheld, the parties agree that the running of the 90-day limit
      provided for in Article 10 shall be frozen as of the postmarked date of
      the written notice. Furthermore, it is understood that during the period
      of time the union is processing its internal appeal, the Company shall
      assume no back pay or other grievance liability for the grievance(s) in
      question.

2.    With respect to any grievance as to which notice is given to the Company
      in accordance with the terms of Paragraph 1, above, the Union shall notify
      the Company promptly in writing of the outcome of its internal appeal
      process, and at the same time:

      a)    If the appeal is upheld, the Union shall notify the Company of its
            intent to proceed to arbitration, and the running of the 90-day time
            limit shall resume as of the postmarked date of the written notice.

      b)    If the appeal is denied, the Union shall also notify the Company of
            withdrawal of its previous notice election to arbitrate the subject
            grievance.

                                       83

<PAGE>

3.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      arbitration procedure shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       84

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                                 BUSINESS ATTIRE

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, recognize the necessity to enhance
and promote a professional businesslike image in the highly competitive
telecommunications marketplace. Therefore, standard business attire may be
required of employees in classifications with customer contact, as designated by
the Company. The Company will be responsible for 100% of the expenses associated
with providing the required attire.

The Company will determine what the appropriate business attire will be and
reserves the right to change or modify the required attire. However, such a
change could not result in any cost to employees in the designated
classification.

While normal wear and tear is anticipated, clothing items that are lost, misused
or abused will be replaced at the employee's expense. The employee will be
responsible for the normal cleaning and continued upkeep of the items provided.

All employees will exercise good judgment and common sense in projecting the
proper professional image appropriate for their assignment and at all times be
neat, clean and well groomed.

It is further the intent of this Memorandum of Agreement that employees
recognize the importance of participation in the business attire program,
however participation is not mandatory. Employees participating in the program
may order attire with or without Union lettering. Additionally nothing in this
Memorandum is intended to prevent the wearing of professional attire with union
insignia.

                                       85

<PAGE>

This Memorandum of Agreement is effective on March 1, 2005, and shall expire on
February 28, 2008. The parties specifically agree that the terms and conditions
set forth in this Memorandum of Agreement, relating to business attire shall
terminate on February 28, 2008, and shall not survive the expiration of this
Memorandum of Agreement unless agreed to by the parties in writing.

COMPANY                                     COMMUNICATIONS
                                            WORKERS OF AMERICA

_______________________________             ______________________________
By: David Daniel                            By: Donna Bentley
Its: Director - Labor Relations             Its: CWA Representative

Date:__________

                                       86

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                              CALL CENTER COMMITTEE

As a result of 2005 negotiations between Valor Telecommunications of Texas, LP,
hereinafter referred to as the "Company," and the Communications Workers of
America, and in furtherance of the positive working relationship between the
parties, the Company and Union agreed to establish a Company Call Center
Partnership Committee. The committee will include Company and Union
representatives from the Call Center groups in Texas and New Mexico.

The committee will meet at minimum on a quarterly basis and include one Union
representative and one management representative from each center. Discussion
will be related to Call Center business/employee topics. The committee will not
address grievance, arbitration, or bargaining issues.

It is the intent of the Company and Union that this committee will use its time
and effort to improve the work place by full and open communication,
involvement, adaptability, integrity, trust and respect involving common Call
Center issues and synergy opportunities.

This MOA is effective on execution. Either party may terminate this MOA on
thirty (30) days prior written notice, but such termination shall not be
effective until the International Representative from any affected area and the
Company Director - Labor Relations, have upon request discussed the reason(s)
for such termination.

COMPANY                                     COMMUNICATIONS
                                            WORKERS OF AMERICA

_______________________________             ______________________________
By: David Daniel                            By: Donna Bentley
Its: Director - Labor Relations             Its: CWA Representative

Date:__________

                                       87

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           COMMON INTEREST FORUM (CIF)

The telecommunications industry calls on all of us, the Company, the Union, and
the employees to respond quickly to new and changing markets. The changes which
are impacting our customers, our employees, and our Company are the challenges
that we must meet and handle together.

During the course of collective bargaining, the Company and the Union have
frequently discussed that changes can give rise to issues of mutual concern
among employees, managers, investors or other stakeholders, and we agree that
those concerns may appropriately be minimized through joint discussion and
timely resolution of issues.

To this end, Common Interest Forums, (joint committees) comprised of appropriate
representatives of the Union and the Company shall be established. Meetings will
be convened by the parties at mutually agreed upon places and times, no less
than twice annually.

This MOA is effective on execution. Either party may terminate this MOA on
thirty (30) days prior written notice, but such termination shall not be
effective until the International Representative from any affected area and the
Company Director - Labor Relations, have upon request discussed the reason(s)
for such termination.

COMPANY                                     COMMUNICATIONS
                                            WORKERS OF AMERICA

_______________________________             ______________________________
By: David Daniel                            By: Donna Bentley
Its: Director - Labor Relations             Its: CWA Representative

Date:__________

                                       88

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           COMPREHENSIVE MEDICAL PLAN

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to implement the
      provisions of the Comprehensive Medical Plan set forth in this Memorandum
      of Agreement.

2.    For a summary of details, refer to the attachment entitled, Valor
      Telecommunications Health and Welfare Summary Plan Description.

3.    Some of the major provisions include:

      A.    The following Deductible Levels will apply for term of the
            agreement:

            Option 1     $   350
            Option 2     $   500
            Option 3     $ 1,000

      B.    Coverage Categories

            Employee
            Employee plus one
            Family

      C.    First dollar deductible on all comprehensive benefits.

      D.    Out-of-pocket maximums:

            Option 1                           Option 2
            $  2,500 Employee                  $  3,000  Employee
            $  5,000 Employee plus one         $  6,000  Employee plus one
            $  7,500 Family                    $  9,000  Family

            Option 3
            $ 5,000 Employee
            $10,000 Employee plus one
            $15,000 Family

                                       89

<PAGE>

      E.    Coordination of Benefits permitted to the level of benefits provided
            in the Comprehensive Medical Plan.

      F.    Continue Preferred Provider Organizations (PPOs) where available.

      G.    Lifetime maximum benefit limit - $2,000,000.

      H.    Coverage under the Plan begins after three (3) months net credited
            service is achieved or the date which the employee enrolls, which
            ever is later.

      I.    Employees may elect not to accept health care coverage under the
            Comprehensive Medical Plan and elect a ($600.00) annual ($50.00 per
            month) "Opt-out Credit".

4.    Comprehensive Medical Plan will be administered solely in accordance with
      its provisions and no matter concerning the Comprehensive Medical Plan or
      any difference arising thereunder shall be subject to the grievance or
      arbitration procedure of the Collective Bargaining Agreement. The
      selection of the Health Care Plan Administrator, the administration of the
      Comprehensive Medical Plan and all the terms and conditions relating
      thereto, and the resolution of any disputes involving the terms,
      conditions, interpretation, administration, or benefits payable shall be
      determined by and at the sole discretion of the Company.

5.    The Company shall have the right to amend the Comprehensive Medical Plan
      in any way, including the selection of the Comprehensive Medical Plan
      carrier. However, any amendment diminishing the level of benefits
      contained in this Memorandum of Agreement or increasing the cost to the
      employee/dependent will be limited to those changes applicable to salaried
      employees.

6.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to the
      Comprehensive Medical Plan shall terminate on February 28, 2008, and shall
      not survive the expiration of this Memorandum of Agreement unless agreed
      to by the parties in writing.

      COMPANY                                         COMMUNICATIONS
                                                      WORKERS OF AMERICA

      _________________________________               __________________________
      By:  David Daniel                               By:  Donna Bentley
      Its:   Director - Labor Relations               Its:   CWA Representative

      Date:__________

                                       90

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                            CONTRACT LABOR REPORTING

The Company and the Union agree to administer the reporting of Contract Labor by
using the following specifics:

1.    The base for calculating the nine percent cap will be determined monthly.
      The number of employees in the bargaining unit will be determined by the
      number of employees on the payroll in the second payroll period of each
      month for the succeeding month.

2.    The Company will provide a summary to the Union of its utilization of
      contract labor on a monthly basis. This monthly summary will be an average
      of the weekly information compiled during the month. The company will also
      provide the Union weekly detail information with its monthly summary.

3.    Additionally, it is agreed weekly detail will consist of the following:

      -     Name or names of the contract firms.

      -     Number of contract employees performing work for each contract firm.

      -     Location (exchange) where work is performed.

      -     Brief description of the work being performed.

      -     Start/Completion date of the work order where work is being
            performed.

4.    If the Company exceeds the cap in any given month as a result of employees
      not being offered overtime, the appropriate remedy will be to offer
      overtime (to the extent the cap was exceeded) to those employees who
      normally perform the work contracted at the locations(s) the cap was
      exceeded. This overtime will be offered as job requirements warrant the
      need for overtime, but no later than in the month immediately succeeding
      the month the cap was exceeded.

5.    The parties agree the provisions of this Memorandum of Agreement are
      subject to the grievance and arbitration procedures as outlined in the
      Collective Bargaining Agreement.

6.    Neither the Union nor the Company waive any right existing under the
      National Labor
                                       91

<PAGE>

      Relations Act concerning access to or providing information relative to
      specific grievances on contract labor.

7.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      Contract Labor Reporting, shall terminate on February 28, 2008, and shall
      not survive the expiration of this Memorandum of Agreement unless agreed
      to by the parties in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       92

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                             DRUG AND ALCOHOL POLICY

1.    The Company is committed to maintaining a workplace free from drugs or
      alcohol and is obligated to comply with the requirements of the Drug Free
      Workplace Act of 1988, as well as the special Department of Defense
      drug-free work force rules for specific government contracts.

2.    The Company has developed and implemented a policy on substance abuse
      which applies to all employees. The Company reserves the right to take
      appropriate measures to comply with restrictions or procedures placed on
      our Company and its employees by our customers.

3.    In the event there are any revisions to the existing policy, the Company
      and the Union agree to meet and discuss the changes.

4.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to drug
      and alcohol policy shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       93

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                            ELECTRONIC DATA GATHERING

Electronic Data Gathering, with the constant changes in technology, is today and
will be in the future, an integral part of the work place. The proper use of the
data gathered by this method shall be an important factor in the continued
successes of the corporation and therefore, of its employees.

For the purpose of this agreement, Electronic Data Gathering is defined as the
systematic use of computerized technology to collect, store, report and analyze
information about the work activities of employees. This is also referred to as
Electronic Monitoring.

The following policy statement has been developed by the 2005 bargaining
committee from the Communications Workers of America and Valor
Telecommunications of Texas, LP, to address this issue.

      To provide a beneficial experience in an environment of trust and respect,
      all employees shall be made aware of the current capabilities, impacts,
      uses and changes of Electronic Data Gathering. The Company's
      responsibility is to ensure clear definition and communication of
      Electronic Data Gathering to all employees as it relates to their work
      activities. The Company will also ensure managers have a working knowledge
      of systems that monitor their work groups and that uniform guidelines are
      utilized within the Organizations.

The following guidelines will apply:

      1.    Information and method of notification about new or changed
            Electronic Data Gathering systems shall be shared with the Local
            Union President or their designated representative and employees in
            the work group before implementation.

      2.    Results of the data gathered will be provided to employees in a
            timely manner based on the frequency of the information obtained.

Quality service and increased revenues are cornerstones to the success of Valor
Telecommunications of Texas, LP.

                                       94

<PAGE>

Communications Workers of America and Valor Telecommunications of Texas, LP, are
committed to working together to achieve these results.

Electronic Data Gathering is a valuable tool that can assist all of us in
accomplishing our goals when used in accordance with the developed policy and
guidelines outlined above.

No employee shall be disciplined as a result of Electronic Data Gathering except
for cause.

COMPANY                                     COMMUNICATIONS
                                            WORKERS OF AMERICA

_______________________________             ____________________________________
By: David Daniel                            By: Donna Bentley
Its: Director - Labor Relations             Its: CWA Representative

Date:__________

                                       95

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                   FAMILY AND MEDICAL LEAVES OF ABSENCE (FMLA)

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to the provisions
      concerning Family and Medical Leaves of Absence under the Family and
      Medical Leave Act of 1993 (FMLA), set forth in this Memorandum of
      Agreement.

2.    The purpose of the leave shall be as follows:

      a.    for the birth and care of a newborn child of the employee, or the
            placement of a child with the employee for adoption or foster care.

      b.    to care for a spouse, biological or adoptive parent, or person who
            has acted in role as parent with day-to-day responsibility, or child
            (biological, adopted, foster or stepchild or legal ward or child for
            whom the employee has day-to-day parental responsibility) who has a
            "serious health condition."

      c.    for a serious health condition of the employee which makes the
            employee unable to perform the functions of the position of such
            employee. As with any absence for a serious health condition,
            employees will be required to provide a "fitness for duty"
            certification to return to work after such leave.

3.    The total period of this leave will be up to twelve (12) work weeks within
      a twelve (12) month period, calculated on a rolling twelve (12) month
      period.

4.    Employees who have completed at least twelve (12) months of accredited
      service at the beginning of the leave and worked at least 1,250 hours
      during such period may be eligible for leave.

5.    The FMLA excludes employees where there are less than fifty (50) employees
      within seventy-five (75) miles of the employee's work site. The Company
      will attempt to accommodate requests for FMLA leave for employees at
      remote locations, however, such requests may be denied based on business
      necessity.

6.    Leave may be taken on an intermittent or reduced schedule basis for
      reasons specified in paragraphs 2.b and 2.c if determined to be "medically
      necessary" as defined in the Department of Labor Regulations 29 CFR Part
      825. It may not be taken intermittently or on a reduced schedule basis for
      reasons specified in paragraph 2.a unless approved by the Company.

7.    If an employee is granted intermittent or reduced schedule leave, the
      Company

                                       96

<PAGE>

      may require such employee to transfer temporarily to an available
      alternative, equivalent position that better accommodates recurring
      periods of leave than the employee's regular position.

8.    Employees shall be required to present, to the satisfaction of the
      Company's Human Resources Department, documentation concerning the basis
      for the requested leave of absence. Failure to provide medical
      certification within fifteen (15) days of the request for leave may result
      in denial of leave.

9.    Employees shall provide the Company with at least thirty (30) days advance
      notice of intent to take leave when foreseeable.

10.   In cases where both spouses are employees, the leave period will be
      restricted to a total of twelve (12) work weeks for both, except to care
      for a child with a serious health condition or for reasons provided in
      2.c.

11.   While on FMLA leave, eligible employees shall continue to receive
      company-paid life insurance and medical/dental benefits to the extent
      provided to active employees.

12.   Upon return to work, employees granted FMLA leave shall receive accredited
      service for the period of the leave. There is no break in service for
      purposes of vesting, eligibility to participate in pension plans and other
      types of benefits and seniority.

13.   Subject to Item 15 below, at the end of the approved leave (or each
      segment of the leave, as applicable), employees shall be guaranteed
      reinstatement to the same or equivalent job.

14.   Reinstatement is subject to any contractual provisions of the Collective
      Bargaining Agreement which cover adjustments to the workforce that may
      have occurred during the leave of affected employees.

15.   Employees who wish to change their projected return date may request the
      change and the Company will endeavor to accommodate such requests.

16.   Employees, while on leave, shall be considered to have terminated
      employment if they accept employment with another employer, engage in
      business for profit, and/or apply for unemployment insurance benefits.

17.   The provisions of this Memorandum of Agreement are not subject to the
      grievance or arbitration procedure of the Collective Bargaining Agreement
      except for the application for reinstatement by employees on leave.

18.   All terms herein shall be defined as set forth in the Department of Labor
      Regulations, 29 CFR Part 825.

                                       97

<PAGE>

19.   The Company has the right to act in accordance with the Family and Medical
      Leave Act of 1993 and to comply with the regulations provided by the
      Department of Labor.

20.   This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      Family Medical Leave shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       98

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           FLEXIBLE SPENDING ACCOUNTS

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to make available
      and to implement a Flexible Spending Account (FSA).

2.    For a summary of details, refer to the Valor Telecommunications
      Enterprises, LLC Welfare Benefit Cafeteria Plan Summary Plan Description
      and attachment titled Flexible Spending Arrangement document.

3.    The FSA will be administered solely in accordance with its provisions, and
      no matter concerning the FSA or any difference arising thereunder shall be
      subject to the grievance or arbitration procedure of the Collective
      Bargaining Agreement. The selection of the FSA Administrator, the
      administration of the FSA and all the terms and conditions relating
      thereto, and the resolution of any disputes involving the terms,
      conditions, interpretation, administration, or reimbursements shall be
      determined by and at the sole discretion of the Company.

      This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      flexible spending accounts shall terminate on February 28, 2008, and shall
      not survive the expiration of this Memorandum of Agreement unless agreed
      to by the parties in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       99

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           FORCE ADJUSTMENT BOUNDARIES

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, agree to the following provisions
regarding the force adjustment boundaries under Article 26.

1.    The division structures and boundaries for the purposes of force
      adjustment shall be as they exist on the effective date of this Memorandum
      of Agreement (see attachment A).

2.    Any changes to the division structure or boundaries listed in Attachment A
      will be provided to the Union.

3.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      Force Adjustment Boundaries, shall terminate on February 28, 2008, and
      shall not survive the expiration of this Memorandum of Agreement unless
      agreed to by the parties in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       100
<PAGE>

ATTACHMENT A

The following force adjustment boundaries shall be recognized for purposes as
outline in Article 26 of the March 1, 2005 - February 28, 2008 collective
bargaining agreement:

      -     The New Mexico Division shall consist of all company owned exchanges
            with the geographical borders of the state of New Mexico.

      -     The Oklahoma Division shall consist of all Company owned exchanges
            within the geographical borders of the state of Oklahoma.

      -     The East Texas Division shall consist of all Company owned exchanges
            that lie east of a North-South line with the following boundaries:
            Interstate 35 South from the Red River to Ft. Worth Interstate 20,
            west to U.S.377, and extending to Stephenville to U.S. 281, south to
            San Antonio to Interstate 35 south to the United States
            international boundary with the country of Mexico.

      -     The West Texas Division shall consist of all Company owned exchanges
            that lie west of a North-South line with the following boundaries:
            Interstate 35 south from the Red River to Ft. Worth Interstate 20,
            west to U.S. 377, and extending to Stephenville to U.S. 281, south
            to San Antonio to Interstate 35 south to the United States
            international boundary with the country of Mexico.

                                       101

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                      FORCE ADJUSTMENT BUMPING RESTRICTIONS
                    FOR EMPLOYEES HIRED BEFORE MARCH 1, 2002

Communications Workers of America, hereinafter referred to as "CWA," and Valor
Telecommunications of Texas, LP, hereinafter collectively referred to as the
"Company," hereby agree to the following bumping protections and other
principles:

Statement of Intent: It is the intent of the parties permanently to maintain the
same bumping rights that existed prior to March 1, 2002, in the Local 6171
bargaining unit, and to extend the same bumping rights to the Local 7019
bargaining unit effective March 1, 2002 as indicated and in accordance with the
provisions listed below. It is further the intent of the parties not to limit or
affect the bumping rights of employees hired before that date with respect to
employees hired on or after that date. It is further the intent of the parties
not to affect the transfer or recall rights of any employee.

In the event of a dispute over the interpretation or application of this MOA,
that dispute shall be resolved in a manner that best effectuates this Statement
of Intent.

1.    Schedule 1 to this MOA lists all members of the bargaining unit
      represented by Local 7019 and hired before March 1, 2002.

2.    Schedule 2 to this MOA lists all members of the bargaining unit
      represented by Local 6171 and hired before March 1, 2002.

3.    The Schedules shown may be corrected based on adequate proof of error
      satisfactory to all parties as undersigned.

4.    Bumping Rights and Restrictions:

      a.    No employee on Schedule 1 shall have the right to bump any employee
            listed on Schedule 2.

      b.    No employee on Schedule 2 shall have the right to bump employee
            listed on Schedule 1.

      c.    Nothing in this Memorandum of Agreement shall limit or affect the
            bumping rights of employees listed on either Schedule 1 or 2 with
            respect to employees hired on or after March 1, 2002.

                                      102

<PAGE>

5.    Employees shall remain on the respective Schedules until they permanently
      terminate their employment with the Company.

6.    Nothing contained in this Memorandum of Agreement shall prohibit or
      otherwise limit the right of any employee subject to a force adjustment to
      transfer to other jobs for which they may be qualified within the
      bargaining unit.

7.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on the date the last employee included on either Schedule 1 or
      Schedule 2 permanently leaves employment with the Company.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       103

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                                FOUR-DAY WORKWEEK

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, recognize that in certain
administrative work units or work groups, it may be beneficial to employees and
in the best interest of the business to establish a four-days-per-week,
ten-hours-per-day (four-day workweek) schedule as a normal workweek.

The provisions of the Agreement of Recognition, Bargaining Procedure and
Operating Contract, and any existing Union-Management agreements will continue
to apply to bargaining unit employees on four-day workweek schedules except as
noted in the parameters and implementation procedures listed below.

1.    The Company shall determine the eligible job classifications and
      locations. Participation in the ten-hour, four-day week shall be
      determined by a majority vote of the eligible work group. If an employee
      should be unable to work the ten-hour, four-day week because of overriding
      domestic reasons, the schedule shall not be made mandatory.

2.    The Company reserves the right to revert back to a 5/8 workweek in a work
      group or location where the 4/10 workweek proves not to be in the
      Company's best interest. Management and the Union will jointly, at the
      local level, work together to implement the four-day workweek schedule for
      a particular work group.

3.    Transfers/changes to or from a four-day workweek should, when practical,
      be made at the beginning of the workweek.

4.    The normal workweek shall consist of four, ten-hour tours. The four,
      ten-hour tours must be scheduled on consecutive days unless a service
      emergency clearly dictates an exception or the eligible work group agrees
      by majority vote to one non-consecutive work day. For the purpose of this
      Agreement a "tour" shall be defined as "The entire scheduled work day of
      an employee, which will be ten (10) hours or less."

5.    Overtime will be paid when an employee works in excess of ten (10) hours
      per day, or in excess of forty (40) hours in a workweek for employees
      covered under this Memorandum of Agreement.

6.    Holidays

                                       104

<PAGE>

      A.    Designated Holidays

            Whenever a designated holiday occurs during the week, management can
            change the 4/10 schedule to a 5/8 schedule. Employees whose
            schedules are not changed to a 5/8 schedule will receive ten (10)
            hours holiday pay.

      B.    Personal Holidays

            These holidays will be converted to hours up to a maximum of forty
            (40) hours. An employee scheduled off for a Personal Holiday will be
            compensated for up to ten (10) hours. The compensated hours will be
            deducted from the employee's total holiday hours.

      Holidays must be scheduled in increments of ten (10) or eight (8) hours,
      unless the remaining total hours are less than eight (8) hours. Employees
      with less than eight (8) hours may, with management's consent schedule the
      remaining hours during days off or on scheduled days and be compensated at
      the straight time rate only for the remaining balance of hours. Personal
      Holidays scheduled on days off will not count toward the workweek for
      overtime purposes.

7.    Absence for Jury, Witness or Election Duty will be compensated on a
      ten-hour basis. Employees who are required to be absent to attend a
      funeral as outline in Article 27.4 will receive up to ten (10) hours pay
      for four (4) regular working days.

8.    Employees electing to take day-at-a time vacations will do so on a
      four-day, ten-hour basis. In no case shall they receive in excess of forty
      (40) hours vacation pay per week. Weekly vacation will be taken on a
      five-day, eight-hour basis.

9.    Incidental absences due to illness will be compensated on a ten-hour
      basis. Employees who are absent forty (40) scheduled hours within a
      workweek will receive forty (40) hours of Sickness Disability Benefits. An
      illness waiting day consists of ten (10) consecutive scheduled hours.

10.   Employees working the four-day, ten-hour schedule will be reimbursed for
      evening meal expense of nine dollars and fifty cents ($9.50) if the
      employee works in excess of thirteen (13) hours that day without a meal
      break during the last session.

      A.    This section shall not apply to employees receiving per diem
            expenses, or to employees eligible for an evening or night premium.

                                      105

<PAGE>

      B.    Under no circumstances will the per diem allowances set forth in
            Article 25.3 and the evening meal allowance in paragraph 10 be paid
            for the same day.

11.   Employees working a four-day, ten-hour schedule who are assigned to a
      higher classification for one (1) full working hour or more shall be paid
      for the time worked on the temporary assignment in accordance with Article
      23.3.

12.   Disputes arising out of the application or intent of this agreement,
      except for paragraph 2 above, shall be subject to the Grievance and
      Arbitration procedure.

13.   This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      four-day workweek shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       106

<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                                  HOME DISPATCH

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, agree to continue the Home Dispatch
Program which will operate under the following provisions.

1.    The Company shall determine the eligible job classifications and work
      groups. The Home Dispatch Program may be presented on an individual basis
      or to groups of employees at the Company's discretion.

2.    Participation in the Home Dispatch Program will be voluntary, however
      employees who elect to participate will be required to remain in the
      program for a minimum of thirteen (13) weeks.

3.    Under this program, employees will report directly to a work site or sites
      and will travel on their own time. The scheduled workday will commence at
      the time designated by management, and the employee's scheduled tour will
      begin at the designated work site. The employee's first and last
      assignments should normally be within the exchange(s) which serves as
      their headquarters location. On occasions when the first or last
      assignment is outside the home exchange(s), employees will be paid for the
      reasonable time to travel from their headquarters location to the first
      job site or return to their headquarters location from the last job site.

4.    Employees who participate will be furnished a Company vehicle for travel
      to and from work. These vehicles will be used only for business purposes.
      Travel to and from home shall not be paid.

5.    Employees must live within thirty-five (35) miles of their Headquarters
      locations to be eligible to participate in the Home Dispatch Program.
      Should the employee live beyond the thirty-five (35) mile limit, the
      employee and the Company may find suitable parking for the vehicle within
      the thirty-five (35) mile limit.

6.    Employees will not be required to use personal time to maintain company
      vehicles. However, they shall be responsible to adhere to vehicle
      maintenance schedules for their assigned Company vehicle in accordance
      with the Company's preventive maintenance program.

7.    Employees will be expected to exercise good judgment in the use, storage
      and care of the Company vehicle.

                                       107

<PAGE>

8.    The contents of this Memorandum of Agreement shall be subject to the
      Grievance and Arbitration procedures as set forth in Articles 9 and 10.

9.    The Company will be responsible for providing all insurance coverage for
      participating employees and their assigned Company vehicle just as it does
      for other Company employees and vehicles during normal working hours.

10.   Should an employee's headquarters location change after implementation of
      the Home Dispatch program, the affected employee(s) will have the option
      to discontinue participation in the program during the thirteen-(13) week
      minimum participation period.

11.   This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to home
      dispatch shall terminate on February 28, 2008, and shall not survive the
      expiration of this Memorandum of Agreement unless agreed to by the parties
      in writing.

      COMPANY                                        COMMUNICATIONS
                                                     WORKERS OF AMERICA

      _______________________________                ___________________________
      By: David Daniel                               By: Donna Bentley
      Its: Director - Labor Relations                Its: CWA Representative

      Date:__________

                                       108
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           HOURLY EMPLOYEES' PENSIONS

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to modify the
      Valor Telecommunications Enterprises, LLC Pension Plan. Such modifications
      are subject to approvals by the Company's Board of Directors and the
      United States Department of the Treasury. Therefore, the effective date of
      March 1, 2005, for the modifications will be contingent upon receipt of
      necessary approvals.

2.    Specific language will be prepared to modify the present Valor
      Telecommunications Enterprises, LLC Pension Plan to effect the following:

<TABLE>
<CAPTION>
Years of Accredited Service   Annual Minimum Pension
---------------------------   ----------------------
<S>                           <C>
40 or more years                   $ 13,515
35 but less than 40 years          $ 11,897
30 but less than 35 years          $ 10,280
25 but less than 30 years          $  8,663
20 but less than 25 years          $  7,046
15 but less than 20 years          $  5,429
</TABLE>

3.    This Agreement shall become effective as of March 1, 2005, and shall
      remain in effect until midnight, February 28, 2008 and shall automatically
      continue in full force and effect thereafter until terminated, or amended,
      in accordance with the following procedure:

      If this Agreement is to be terminated, a written notice must be sent by
      either party to the other not less than sixty (60) days prior to any date
      thereafter on which such cancellation is to become effective.

                                      109
<PAGE>

4.    This Agreement may be amended or modified by either party giving written
      notice to the other of such desire to so amend or modify at least sixty
      (60) days and not more than ninety (90) days prior to the termination date
      set forth above. The written notice shall contain a full statement as to
      the amendments or modifications desired.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    _________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      110
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                     VALOR TELECOMMUNICATIONS SOUTHWEST, LLC
                                  SAVINGS PLAN

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, will make the Valor
      Telecommunications Southwest, LLC Savings Plan, hereinafter referred to as
      the Plan, available to regular full or part-time hourly employees of the
      Company who are covered by the Collective Bargaining Agreement.

2.    The Company reserves the right at any time, and from time to time, by
      action of the Board of Directors, to modify or amend in whole or part, any
      or all of the provisions of the Plan, but no such amendment or
      modification shall have the effect of reducing the accrued benefits of
      members, retired members, former members or their beneficiaries or of
      diverting any part of the Trust Fund to any purpose other than for the
      exclusive benefit of members, former members, or their beneficiaries and
      the payment of reasonable Plan administration expenses.

3.    The Company reserves the right, by action of the Board of Directors, to
      terminate or partially terminate the Plan at any time. Upon termination or
      partial termination of the Plan or upon the complete discontinuance of
      contributions under the Plan, the member accounts of the members affected
      by the termination, partial termination, or complete discontinuance of
      contributions, as the case may be, shall be nonforfeitable.

4.    The Plan may be merged into or consolidated with another plan, and its
      assets or liabilities may be transferred to another plan; provided,
      however, that no such merger, consolidation, or transfer shall be
      consummated unless each member and beneficiary under the Plan would
      receive a benefit immediately after the merger, consolidation, or
      transfer, if the transferee plan then terminated, that is equal to or
      greater than the benefit he/she would have been entitled to receive
      immediately before the merger, consolidation, or transfer, if the Plan had
      then terminated.

5.    The Company and the Union agree that every provision heretofore contained
      in this Agreement is contingent upon the Company's receipt of a favorable
      determination that the Plan, as amended, continues to be qualified under
      Section 401(a) et. seq., of the Internal Revenue Code. In the event any
      revision in the Plan is necessary to obtain or maintain a favorable
      determination from the Internal Revenue Service, the Company will make the
      revisions, adhering as closely as possible to the level of benefits
      contained in the Plan.

                                      111
<PAGE>

6.    In the event any portion of this Agreement is determined by a court or
      government agency to be in violation of existing law or is voided by a
      change in existing laws, the Company retains the unilateral right to make
      whatever modifications it deems necessary and appropriate to comply with
      the law, including the right to rescind the Agreement, if it deems no such
      modification is feasible. The Company shall have no obligation to bargain
      or negotiate with the Union in the event that this Agreement is modified
      or eliminated or in the event the Company does not implement any or all of
      the provisions of this Agreement because it does not receive Internal
      Revenue Service approval, any or all of these plans are deemed not
      qualified, or because of a change in existing laws.

7.    The Company matching contribution will be 66 cents ($0.66) for every one
      dollar ($1.00) contributed by the employee up to a maximum of 6% of
      eligible compensation as defined by the plan.

8.    The Plan will be administered solely in accordance with its provisions and
      no matter concerning the Plan or any difference arising there under shall
      be subject to the grievance or arbitration procedure of the Collective
      Bargaining Agreement but rather shall be governed by the terms and
      conditions of the Plan and the interpretation of the Plan Committee.

9.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to the
      Plan shall terminate on February 28, 2008, and shall not survive the
      expiration of this Memorandum of Agreement unless agreed to by the parties
      in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    ________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      112
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           INCOME SECURITY PLAN (ISP)

1.    Valor Telecommunications of Texas, LP and Communications Workers of
      America recognize the need for technological change in the business and
      hereby enter into this Memorandum of Agreement (hereinafter referred to as
      the Agreement). In order to lessen the economic impact upon regular
      employees who become surplus due to technological change, the Company and
      the Union agree to establish the INCOME SECURITY PLAN (the Plan).
      "Technological change" shall be defined as a change in plant or equipment,
      or a change in a method of operation, diminishing the total number of
      regular employees required to supply the same services to the Company or
      its subscribers. "Technological change" shall not include layoffs or force
      realignments caused by business conditions, variations in subscribers'
      requirements, or temporary or seasonal interruptions of work.

      When technological change brings about any of the following conditions,
      the Plan may apply:

            A.    A need to layoff and/or force realign employees in any job
                  title:

            B.    Reassignment of regular employees to permanent headquarters
                  fifty (50) miles or more from the employee's permanent
                  headquarters.

2.    During the term of this Agreement, if the Company notifies the Union in
      writing that a technological change has created or will create a surplus
      in any job title in any work group and/or work location, regular employees
      meeting the following qualifications shall be eligible for Plan
      participation:

            A.    Accredited service of one year or more;

            B.    No comparable assignment available within fifty (50) miles of
                  the former permanent headquarters and/or refusal of
                  reassignment to a new permanent headquarters fifty (50) miles
                  or more from the former permanent headquarters.

      However, the Company reserves the right to apply this Plan to any surplus
      in force, whether or not it is brought about by technological change, that
      the Company deems appropriate. All elections shall be voluntary and
      acceptance by the Company will be in order of seniority.

3.    The Company reserves the right to determine the job titles and work
      group(s)

                                      113
<PAGE>

      and/or work location(s) in which a surplus exists, the number of work
      groups and/or work locations in which a surplus exists, the number of
      employees in such titles and locations which are considered to be surplus,
      and the period during which the employee may, if he or she so elects,
      leave the service of the Company pursuant to this Plan. In no event shall
      the number of employee elections accepted under the terms of the Plan
      exceed the number of employees determined by the Company to be surplus.

4.    For those employees who are eligible in accordance with Sections 1 and 2,
      the Company will provide the following ISP Termination pay benefits:

            A.    ISP Termination Allowance of $1,100, less withholding taxes,
                  for each completed year of accredited service up to and
                  including thirty (30) years for a maximum of $33,000 prior to
                  withholding taxes. The ISP Termination Allowance is not
                  prorated for any partial year of service.

            B.    In addition to the ISP Termination Allowance, the Company
                  shall pay an employee who has left the service of the Company
                  with ISP benefits an ISP Expense Allowance not to exceed $750,
                  less withholding taxes, for each completed year of accredited
                  service for a maximum of $3,750 prior to withholding taxes.
                  The ISP Expense Allowance is not prorated for any partial year
                  of service.

      The combined maximum ISP Termination pay benefit payable as set forth in
      Paragraphs A and B of this Section 4 shall in no event exceed a total of
      $36,750.

      The dollar amounts set forth in this Agreement shall be prorated for
      regular part-time employees based on the average hours worked during the
      last twenty-six (26) pay periods; i.e., average of thirty (30) hours
      worked per week would result in termination benefits paid at 75% of those
      set forth in Paragraphs A and B of this Section 4.

5.    Employees eligible for ISP Termination Allowance in accordance with
      Section 2 will receive a lump sum payment for the entire amount of the ISP
      Termination Allowance paid in the month following the month in which the
      employee leaves the service of the Company.

6.    Re-employed employees must complete one (1) full year of accredited
      service with the Company before coming eligible again for termination
      benefits. Those employees who have previously received termination
      benefits of any kind shall be eligible for ISP Termination Pay benefits
      based on their most recent date of hire in lieu of their accredited
      service date as outlined in paragraphs 4 A and B above.

7.    All benefits payable under the Plan are subject to legally required
      deductions.

8.    Termination benefits shall not be made if the termination is the result of
      any sale

                                      114
<PAGE>

      or other disposition by the Company of the exchange or office at which the
      employee is working or from which the employee is assigned to work, when
      the employee is continued in the employment of the new management of the
      exchange or office.

9.    An employee's election to leave the service of the Company and receive
      termination pay benefits must be in writing and transmitted to the Company
      within fourteen (14) calendar days from the date of the Company's offer in
      order to be effective, and it may not be revoked after such fourteen (14)
      calendar day period.

10.   This Agreement will be implemented prior to invoking the provisions of
      Article 26, Force Adjustment, of the Collective Bargaining Agreement, when
      conditions set forth in Section 1 of this Agreement exist as determined by
      the Company.

11.   An employee who elects to participate in an offered ISP shall not be
      entitled to any of the provisions outlined in Article 26 (Force
      Adjustment) or Article 28 (Termination Allowance) of the collective
      bargaining agreement.

12.   Neither the right to effect a technological change, the determination of a
      surplus condition, eligibility for participation in the ISP, nor any part
      of this Plan or Agreement shall be subject to the grievance/arbitration
      procedure of the collective bargaining agreement.

13.   This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement shall also
      terminate on February 28, 2008, and shall not survive the expiration of
      this Memorandum of Agreement unless agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    __________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      115
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                              LONG TERM DISABILITY

In recognition of the impact a prolonged disability can have on income security
and as a valuable supplement to the short-term disability benefits currently
provided by the Company, Communications Workers of America (CWA) and Valor
Telecommunications of Texas, LP, agree to establish a Long-Term Disability
(hereinafter referred to as LTD) plan subject to the following provisions:

1.    Regular full-time employees are eligible to participate in the LTD plan,
      subject to the following requirements:

            A.    Completion of three (3) months of continuous employment (new
                  hires).

            B.    Enrollment during the first three (3) months of employment
                  (new hires).

            C.    Enrollment during the initial Company-designated enrollment
                  period (incumbents with at least three (3) months of
                  continuous employment).

            D.    Enrollment during periods not mentioned additionally requires
                  regular full-time employees to submit evidence of good health
                  at their expense and subject to approval by the Plan
                  Administrator.

            E.    When opting up or increasing the LTD benefits level, employees
                  are required to submit evidence of good health at their
                  expense and subject to approval by the Plan Administrator.

            F.    The contributions are continuously paid following enrollment.

2.    The cost of the LTD plan coverage will be paid by the employee.
      Contributions for coverage may change from time to time. Should this
      occur, the Company agrees to notify the Union in writing, within fifteen
      (15) calendar days prior to the date of modification, specifying the cause
      for any change in the contribution rate.

3.    The LTD plan shall pay monthly benefits as follows:

            A.    Up to 50% of the first $6,000 of predisability earnings, up to
                  a maximum of $3,000 per month, or

            B.    Up to 60% of the first $8,333.33 of predisability earnings, up
                  to a maximum of $5,000 per month.

                                      116
<PAGE>

4.    Monthly benefits shall be coordinated and reduced by any amount received
      by Worker's Compensation (or its equivalent), primary and dependent
      disability or retirement benefits from the Federal Social Security Act,
      payments under any other State or Federal disability benefits law,
      Company-provided salary continuation plan (layoff allowances) or the
      Railroad Retirement Act, or payments under any other plan which provides
      income benefits.

            A.    The employee must apply for primary and dependent (if
                  applicable) Social Security disability benefits.

            B.    Plan benefits are not payable for any period of disability
                  during which the employee refuses or fails to apply for Social
                  Security disability benefits or to appeal any denied claim for
                  Social Security benefits.

5.    LTD benefits will be paid, provided the Plan is in force, if eligible
      employees have been continuously and totally disabled, under the care of a
      physician and absent from work for one hundred eighty (180) days or if the
      disability has resulted in one hundred eighty (180) days of absence during
      a period of fifty-two (52) consecutive weeks and the eligible employees
      have been under care of a physician.

            A.    Monthly benefits will be paid for twelve (12) months, if the
                  disability prevents eligible employees from performing their
                  regular work or an alternative occupation with similar
                  earnings potential.

            B.    Monthly benefits will be paid following this twelve (12) month
                  period, if the disability prevents eligible employees from
                  performing any work for which they are otherwise qualified to
                  perform.

            C.    If eligible employees become disabled prior to age sixty (60),
                  benefits will be paid up to their sixty-fifth (65th) birthday.

            D.    If eligible employees become disabled on or after age sixty
                  (60), benefits will be paid according to the following
                  schedule:

<TABLE>
<CAPTION>
                    Maximum Benefit
Age of Disability   Duration In Months
-----------------   -------------------
<S>                 <C>
       60                 60
       61                 48
       62                 42
       63                 36
       64                 30
       65                 24
       66                 21
       67                 18
       68                 15
       69+                12
</TABLE>

                                      117
<PAGE>

            E.    Disabilities as a result of a mental health disorder,
                  alcoholism or drug addiction, will generally result in monthly
                  LTD benefits for no longer than twelve (12) months.

            F.    If the disability is not caused by participation in an
                  assault, crime or illegal occupation, an intentionally
                  self-inflicted injury, war or act of war.

            G.    If the disability does not result from Pre-existing Conditions
                  that existed within three (3) months before the date LTD
                  coverage began. Coverage for Pre-existing Conditions begins
                  twelve (12) months after the coverage effective date.

6.    During the period LTD benefits are paid, eligible employees will continue
      to receive medical, dental and life insurance coverage in accordance with
      the Collective Bargaining Agreement between Valor Telecommunications of
      Texas, LP, and Communications Workers of America. Accredited Service will
      be applied toward eligible employees' pension calculations until the
      disability benefits end or the eligible employee retires, resigns or dies.

7.    The amount and availability of benefits under the LTD Plan are governed by
      the provisions of the Plan and the insurance contract. Any benefits
      received will be determined under the terms of the Plan in effect at the
      time eligible employees receive the benefits in question. The operation
      and administration of the LTD Plan, selection of the insurance carrier,
      eligibility for the benefits, cost of coverage, eligibility requirements,
      all terms and conditions related thereto and the resolution of any
      disputes involving the terms, conditions, interpretation, administration
      or benefits payable shall rest with the Company and shall not be subject
      to the grievance or arbitration procedures set forth in the Collective
      Bargaining Agreement.

8.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to long
      term disability plan shall terminate on February 28, 2005, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    _____________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      118
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                             LUMP SUM PAYMENT OPTION

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to continue the
      lump sum payment option under the Valor Telecommunications Enterprises,
      LLC Pension Plan (hereinafter referred to as the Plan).

2.    Regular employees who are eligible to receive a single life annuity from
      the Plan will be provided a lump sum payment option which will be based on
      the present value of their single life annuity.

3.    The amount and availability of benefits under the Plan are governed by the
      provisions of the Plan and are subject to the Internal Revenue Code and
      related regulations. Any payments received will be determined under the
      terms of the Plan in effect at the time regular employees separate from
      service. The operation and administration of the Plan, the calculation of
      the lump sum benefit, eligibility requirements, all terms and conditions
      related thereto and the resolution of any disputes involving the terms,
      conditions, interpretation, and administration of the Plan shall rest with
      the Company and shall not be subject to the grievance or arbitration
      procedure set forth in the Collective Bargaining Agreement.

4.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to lump
      sum payment option shall terminate on February, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

        COMPANY                             COMMUNICATIONS
                                            WORKERS OF AMERICA

        ________________________________    _________________________
        By: David Daniel                    By: Donna Bentley
        Its: Director - Labor Relations     Its: CWA Representative

        Date:__________

                                      119
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                         NEUTRALITY AND CONSENT ELECTION

This agreement between Communications Workers of America, hereinafter referred
to as "CWA," and Valor Telecommunications Enterprises, LLC, and Valor
Telecommunications Enterprises II, LLC, hereinafter collectively referred to as
"Valor" or the "Company," covers all agreements and understandings between the
parties concerning union organizing, access to employees and code of conduct
applicable to union organizing efforts. This agreement is effective according to
the dates set forth below.

The Union and the Company recognize that it is in their mutual interest to
enhance the success and image of the Company, to acknowledge the Union as a
valued partner, and to foster the pride and commitment of the employees. The
parties also share the mutual goals of building a respected,
regionally-competitive, high performance enterprise and addressing employment
security through business success and employee development. As a means to
enhance these goals, the parties will mutually support regulatory and
legislative efforts, marketing/sales and service efforts and other business
initiatives leading to employment security and Valor's business success.

The parties also recognize that the Union's goal of growing membership is
intrinsically linked to the successful growth of the business. In order to
maintain this perspective and to avoid unnecessary confrontation, the parties
agree that the following principles regarding neutrality and consent election
will be applicable to the Company. This shall be the exclusive means by which
the Union, its locals, or individuals acting on their behalf, will conduct any
effort to organize eligible employees in the covered Company organizations as
defined by the National Labor Relations Act.

1. Employee Choice

Both the Union and the Company support and agree with the principle that the
decision as to whether or not to become represented by a union is one that does
not belong to either the Union or to the Company. Rather, it is an individual
decision that belongs to the employee. With the parties' mutual recognition of
this fundamental tenet, the following provisions are intended to establish,
encourage and nurture an environment during a union organizing drive that will
allow employees to choose in a fully informed and uncoerced manner whether or
not to become represented. All negotiations concerning appropriate unit, access,
conduct and voting will be

                                      120
<PAGE>

performed by the Company's Labor Relations' staff or counsel in conjunction with
local management and designated Union representatives.

2. Neutrality

The Company and the Union agree that an organizing drive will be met by a
neutral position by the Company. This statement is consistent with and
reinforces the previously established principle of employee choice. It should
follow that an environment intended to foster employee choice would be a neutral
environment and that information communicated by either party would be fact
based and not misleading, distorted or disparaging. Neutrality means the
following:

      a.    The Company will not be anti-Union nor will the Union be
            anti-Company.

      b.    Management will not advocate that employees should not vote for a
            Union to represent them.

      c.    The Unions will be afforded reasonable opportunities for access to
            employees during non-working time and in non-working and
            non-customer contact areas to get their message communicated.

      d.    In recognition of the importance of the positive public image of the
            Company to the Union, the Company, and the employees, in meeting
            their respective goals, the Company and the Unions will make
            reasonable efforts to avoid bringing organizing issue or matters to
            the general public.

      e.    Both parties will respond to employee questions and are obligated to
            correct inaccurate or misunderstood information by employees.

      f.    The Union will be referred to by name and will not be characterized
            as a "third party" or "outsider".

      g.    Any written information distributed to employees by either party
            relative to the organizing campaign will be shared with the other.
            The parties' communications with employees will be in accordance
            with this agreement.

      h.    Neither party will hire consultants (other than labor counsel) who
            encourage an adversarial relationship.

      i.    Neither managers nor Union representatives will be personally
            attacked.

      j.    Neither the Union nor the Company will be attacked as institutions.

                                      121
<PAGE>

      k.    The Company may conduct meetings for the sole purpose of discussing
            organizing activities without inviting appropriate Union
            representatives to attend. Allegations of violations of these
            provisions will be handled via the dispute resolution process
            contained in this Agreement.

4. Rules

The procedures to be followed are listed below:

      a.    The Union must show a minimum of 50% + 1 show of interest on
            signature cards of the appropriate unit.

      b.    A vote of 50% + 1 of those votes, validated by the Third Party
            Neutral (TPN), will determine the outcome.

      c.    If the Union is not successful, another election will not be
            scheduled for twelve months.

      d.    The TPN will resolve any issue concerning challenged ballots in
            similar fashion to the National Labor Relations Board (NLRB)
            process.

5. Time Bound

It is in the interest of both parties that the organizing campaign be conducted
expeditiously. The Union is therefore obligated to notify management of its
intention to conduct a formal organizing drive before it begins. The date of
this notification will "start the clock". The entire campaign, including the
consent election, will be concluded in 90 days. It is the intent of the parties
that the 90-day time frame will include discussion and agreement on the unit. In
the event the parties are unable to agree on the unit, the dispute resolution
process set forth below will be utilized and the time period will be extended by
the number of days required to reach agreement on the unit, but in no event will
the total campaign, including resolution of the scope of the bargaining unit and
the consent election process exceed 120 days.

If employees vote not to be represented, the Union agrees not to initiate
another campaign (nor continue the current campaign) in that same work group for
12 months from the date of the conclusion of the campaign. This would not
preclude the local Union from having contact with the workers in the group. If
employees vote to be represented, collective bargaining over the terms and
conditions of employment will commence within 60 days and will be limited to the
agreed upon unit.

                                      122
<PAGE>

6. Informed Decision

Both parties agree that employees should be fully informed about all aspects of
Union representation. The Union will provide fact-based information to employees
as it endeavors to convince prospective members of the merits of being
represented by a Labor Union. Management's role during this process will include
inter alia:

      a.    responding to individual employee inquiries;

      b.    explaining the organizing process, including obligations and
            responsibilities; and

      c.    Correcting any inaccuracies, misstatements or misunderstandings
            disseminated by the Union.

7. Free from Coercion

Consistent with the basic tenet of employee choice, the parties want to ensure
that employees have expressed their choice from an informed position and are
completely free from any coercion by the Company, the Union or any other party
or parties. One way to ensure this objective is to have a NLRB conducted
election.

In the alternative, the Company and the Union agree to use a process that is
called "Consent Election." This process will work as follows:

      (1)   As part of the access discussions, the parties agree to use "Consent
            Election".

      (2)   The Union shall initiate the consent election process by providing
            to a TPN proof of support by means of show of interest cards from
            50% + 1 of the employees in the unit. The TPN will then notify
            Company and request a list of names, job titles and home addresses.
            The Company will furnish the list within five working days. The
            Union will also be furnished with the list. The "show of interest"
            cards will clearly state their purpose and that a secret ballot
            consent election will be conducted to determine the will of the
            unit. If the TPN determines that the Union has a sufficient show of
            interest, he/she will schedule a Consent Election process in
            accordance with this agreement.

      (3)   The election process will be supervised by a mutually selected TPN,
            whose role is to ensure the integrity of the process itself, and
            will be conducted within two weeks of the submission of the Union's
            show of interest to the TPN. Employees will be asked to express
            their individual preference in a manner that will ensure that their
            choice will not be known to either party. The TPN will count the
            votes and advise the

                                      123
<PAGE>

            parties of the outcome. Consistent with this agreement, a vote of
            50% + 1 of those who vote will control. The parties may have an
            observer present when the TPN counts the ballots.

      (4)   In all cases, the election process shall take place within 14 days
            of receipt and verification of the Union's show of interest cards by
            the TPN. In those cases where there is no dispute about the
            composition of the unit, the election process will be held within
            seven days. The election may be held at the Company location or at a
            neutral site as agreed by the parties. The cost of using a neutral
            site will be split equally by the parties.

            If there is a dispute as to composition of the unit, the TPN shall
            decide the issue within an additional seven days.

8. Access Agreement

As soon as reasonably practicable after a request by the Union for access, Valor
Labor Relations staff, in conjunction with local management and Union
representatives, will meet to discuss the details related to reasonable access
to the unit by the Union representatives. The Union will be allowed reasonable
opportunities for access to Valor facilities. It is the intent and commitment of
Valor and the Union that the access agreed upon will not interfere in any regard
with the operation and other normal and routine business activities, plans and
programs of Valor generally, and specifically, the selected unit. Access agreed
upon will be in non-working areas and during employee non-working times.
Agreements as to eventful access, such as access to conference rooms, will be
reasonable in length and there will be reasonable periods between requests for
eventful access. However, an uneventful access, such as a prearranged meeting
with an individual employee, will not be affected.

If Valor and the Union are unable to agree on reasonable access, the TPN will be
asked to resolve the issue. Successful access agreements utilized at other units
will be looked to for guidance as to what works and is reasonable. Valor and the
Union commit that they will reach such an access agreement in each instance in
an expeditious manner.

9. Dispute Resolution

      a.    Questions or disputes arising during the course of an organizing
            effort within a particular unit of non-represented employees will,
            in all cases, be addressed first by and between the parties
            themselves and, in particular, Labor Relations Staff in conjunction
            with local Valor management and appropriate Union representatives.
            It is the intent and desire of Valor and the Union that such matters
            are dealt with by and between the parties themselves, particularly
            at the local level,

                                      124
<PAGE>

            without having to resort to the assistance of a third party. It is
            also agreed, however, that if every good faith and reasonable effort
            has been made, but the matter unresolved, the process described
            below will be utilized.

      b.    The TPN will resolve disputes in the manner set forth in this
            agreement. Either Valor or the Union can refer a question or
            dispute, unresolved after good faith efforts have been made to
            resolve the dispute locally, to the chosen TPN by providing three
            working days' written notice to both the other party and the TPN.
            The notice will provide concise statement of the question or dispute
            to be addressed and a statement that the parties have attempted in
            good faith but have been unable to resolve the matter by and between
            them.

      c.    If the question or dispute involves a matter related to access
            (i.e., the nature, event, time, location, individuals involved,
            etc.) the TPN will fully investigate all relevant facts surrounding
            the question or dispute. The TPN will then call the parties together
            and attempt to facilitate resolution of or otherwise mediate the
            matter.

            If, after a good faith attempt at facilitated resolution or
            mediation, the access question or dispute is still not resolved, the
            TPN will attempt to render an immediate decision, which includes a
            method or alternative methods of resolving the perceived problem.
            However, in no event will the TPN take longer than five days
            thereafter to render a decision. The decision of the TPN will be
            final and binding and the parties agree to abide by his/her
            decision. This process, from the time the TPN is contacted to the
            time his or her opinion is issued, will not take more than 15 days
            unless the parties agree otherwise.

      d.    If the dispute involves the appropriateness of the bargaining unit
            the Union seeks to organize and the parties are unable to agree,
            after negotiating in good faith for a reasonable time, upon the
            description of an appropriate unit for bargaining, the issue of the
            description of such unit shall be submitted to TPN and a hearing
            shall be conducted consistent with the rules of the American
            Arbitration Association. The TPN shall be confined solely to the
            determination of the appropriate unit for bargaining and shall be
            guided in such deliberations by the statutory requirements of the
            National Labor Relations Act and the decisions of the NLRB and
            Appellate reviews of such Board decisions.

      e.    Regardless of the type of question or dispute that is submitted to
            the TPN, the parties will each be given a full opportunity to
            present their positions and supporting factual information prior to
            the issuance of any opinion. No written briefs will be submitted.
            There shall be no ex parte contact with the TPN without the
            concurrence of all parties. Valor and

                                      125
<PAGE>

            Union believe that matters pertaining to these values are best
            handled by and between the parties themselves and resort to a TPN
            should be necessary in only a limited number of cases.

            Valor and the Union agree that the parties may distribute a decision
            of the TPN to employees in the selected unit but not outside to the
            public such as the press.

      f.    The parties agree that the process set forth herein shall be the
            exclusive means for resolving disputes covered by this dispute
            resolution process, and neither party will utilize any other forum
            (e.g. NLRB, federal court, etc.) to address issues subject to
            resolution pursuant to this process.

      g.    All expenses, resulting from the use of the TPN process, shall be
            split equally by Valor and Union.

10. Acquisitions and Ventures

The parties recognize the rapidly changing nature and structure of the
communications industry. Valor may acquire (or be acquired by) another entity.
It has and may in the future form joint ventures or strategic alliances, may
license its brand or technology, or may be a financial investor in other
entities. The employees in those entities may be non-represented, represented in
whole or in the part of the Union, or represented in whole or in part by some
other labor organization. It is not possible to structure a single rule which
will apply to all such circumstances and the Company cannot compel other
entities to abide by this agreement.

11. Duration

This Memorandum of Agreement is effective on March 1, 2005 and shall expire on
February 28, 2008. The parties specifically agree that all the terms and
conditions set forth in this Memorandum of Agreement shall also expire on
February 28, 2008 and shall not survive the expiration of this Memorandum of
Agreement, unless agreed to by the parties in writing.

COMPANY                                     COMMUNICATIONS
                                            WORKERS OF AMERICA

___________________________                 _____________________________
By: David Daniel                            By: Donna Bentley
Its: Director - Labor Relations             Its: CWA Representative

Date:__________

                                      126
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                         NON-PRECEDENT SETTING AGREEMENT

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, agree to continue a non-precedent
setting arrangement for grievances heard at the first step of the grievance
procedure.

1.    The resolution of these grievances shall not be binding on either party
      and cannot be used as precedent-setting examples in future disputes
      between the Company and the Union.

2.    This Memorandum of Agreement is not intended to circumvent existing
      contract language but is intended to allow for an increased
      problem-solving environment on those issues which are more localized in
      nature.

3.    The Company and the Union agree that this Agreement is not intended to
      encourage the filing of grievances but is intended to encourage and
      reinforce a problem-solving environment in the day-to-day relationships
      between the parties.

4.    This MOA is effective on March 1, 2005 and shall terminate February 28,
      2008. The parties specifically agree that the terms and conditions set
      forth in this Memorandum of Agreement, relating to Non-Precedent Setting
      Agreement shall terminate on April 30, 2008, and shall not survive the
      expiration of this Memorandum of Agreement unless agreed to by the parties
      in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      ________________________              _________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      127
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                               ON-CALL PREMIUM PAY

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, agree to implement the following
On-Call guidelines:

1.    Management will utilize the on-call plan to primarily respond to the
      following customer service issues:

      -     Switch/Processor Outages

      -     Single/Multi Line Business Outages

      -     Toll Degradation and Isolations

      -     Government Accounts

      -     E-911 Services

      -     Emergency Services

      -     Acts of God

      -     Public and Health Emergencies

2.    Construction personnel would not normally be required to hold themselves
      available for on-call schedules.

3.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      on-call premium shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    ____________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      128
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                                    OVERTIME

1.    Communications Workers of America, hereinafter referred to as "CWA," and
      Valor Telecommunications of Texas, LP, hereinafter referred to as the
      "Company," confirm an understanding reached regarding overtime and
      customer service commitment.

2.    It is understood and agreed that in the assignment of overtime, the
      Company will consider voluntary overtime to the extent provided below:

            a.    The Company will, to the greatest extent possible, determine
                  weekly overtime requirements prior to the end of the preceding
                  week and shall schedule such overtime using qualified
                  volunteers first before requiring any compulsory overtime.

            b.    Advance notice of daily overtime not previously scheduled
                  shall be given to employees as early in the as possible. If an
                  employee requests not to work such overtime, the Company shall
                  make a reasonable effort to obtain qualified volunteers to
                  work the overtime.

            c.    When necessary to assign employees more than five (5) days in
                  a week, such shall first be offered on a voluntary basis to
                  qualified.

            d.    Employees who volunteer for work assignments shall be expected
                  to work such commitment, which may rise.

3.    When mandatory overtime is required, the following limits shall be used:

            14 hours per week

4.    The Company and the Union recognize that in our rapidly changing industry
      we must provide the highest quality products and services to meet our
      customer's needs to remain a viable market leader in the face of
      increasing competition. The industry calls on all of us, the Company, the
      Union and the employees to respond quickly to our customer needs. The
      Company and the Union agree that this can only be accomplished through a
      high level of commitment and responsiveness to customer service by the
      employees of the Company. The Company, the Union and the employees agree
      in areas with limited employee resources that the needs of the

                                      129
<PAGE>

      customer will be considered in the administration of the mandatory
      overtime restrictions in this section and exceptions to this Memorandum of
      Agreement may be made to meet the customer service needs subject to mutual
      agreement by local and company representatives.

5.    It is further understood that an emergency is defined in this context as
      an event such as a fire or other catastrophe, severe weather conditions,
      or major cable or equipment needs. The Company shall give as much advance
      notice as possible to the Union in the event of such an emergency.

6.    The local union and company representatives shall make every attempt to
      resolve disputes on administration of the Memorandum of Agreement -
      Overtime at the local level. If a satisfactory resolution is not obtained
      by the local union and company representatives, the Union and Company
      Bargaining Agents may assist in the resolution. If a satisfactory
      resolution is not obtained by the Union and Company Bargaining Agents, the
      Union Bargaining Agent may file a grievance.

7.    The Memorandum of Agreement - Overtime shall only be subject to the
      Grievance and Arbitration Procedure at the Bargaining Agent Level.

8.    This Memorandum of Agreement is effective on March 1, 2005, shall expire
      on February 28, 2008. The parties specifically agree that the term and
      conditions set forth in this Memorandum of Agreement shall also terminate
      on February 28, 2008, and shall not survive the expiration of this
      Memorandum of Agreement unless agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    _________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      130
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                            PART-TIME EMPLOYEE USAGE

Communications Workers of America, hereinafter referred to as "CWA," and Valor
Telecommunications of Texas, LP, hereinafter referred to as the "Company,"
hereby agree as follows:

1.    Effective March 1, 2005, the Company agrees to a cap of less than thirty
      percent (30%) part-time employees within a job title at each current Call
      Center Headquarters exchange.

2.    This Memorandum of Agreement shall expire on February 28, 2008. The
      parties specifically agree that the terms and conditions set forth in this
      Memorandum of Agreement, relating to part-time employee usage shall
      terminate on February 28, 2008, and shall not survive the expiration of
      this Memorandum of Agreement unless agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    ____________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      131
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           PERSONAL LINES OF INSURANCE

1.    Valor Telecommunications of Texas, LP, hereinafter referred to as the
      Company, agrees to make available, without endorsement, the opportunity
      for regular full-time or part-time hourly employees of the Company who are
      covered by the Collective Bargaining Agreement to purchase automobile,
      home and other personal property and casualty insurance through payroll
      deduction.

2.    Personal Lines of Insurance will be administered solely in accordance with
      its provisions and no matter concerning Personal Lines of Insurance or any
      difference arising there under shall be subject to the grievance or
      arbitration procedure of the Collective Bargaining Agreement. The
      administration of Personal Lines of Insurance and all the terms and
      conditions relating thereto, and the resolution of any disputes involving
      the terms, conditions, interpretation, administration, or benefits payable
      shall be determined by and at the sole discretion of the Insurance
      Carrier.

3.    The Company reserves the right at any time, and from time to time, to
      modify or amend in whole or part, any and all provisions of the agreement
      with the Insurance Carrier, to change Insurance Carriers, or to terminate
      the agreement with the Insurance Carrier.

4.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      personal lines of insurance shall terminate on February 28, 2008, and
      shall not survive the expiration of this Memorandum of Agreement unless
      agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    __________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      132
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                              RELOCATION ALLOWANCES

Valor Telecommunications of Texas, LP, hereinafter referred to as the Company,
and the Communications Workers of America, hereinafter referred to as the Union,
agree to the following relocation allowance provisions as set forth in this
Memorandum of Agreement, which may be granted in lieu of the provisions of
Article 26.14.c of the Agreement between the Company and the Union.

1.    A lump sum relocation allowance of $5,000, grossed up, may be considered
      if the following criteria are met:

      a.    The relocation is a result of a consolidation or movement of work
            centers.

      b.    The relocation of the work center is in excess of 50 miles.

      c.    The employee is relocating to approximately the same job
            classification.

2.    Employee eligibility for the lump sum relocation allowance shall be
      determined by the Company, subject to the following:

      a.    The provisions of Article 24.3, Job Application Procedures, Article
            13.2.a, Seniority, and Article 26, Force Adjustment, of the
            Agreement, which provides for consideration of seniority.

      b.    The employee must possess the training and/or experience established
            in the selection criteria.

      c.    The employee relocates their primary residence in excess of 50
            miles.

3.    If an eligible employee makes a decision not to relocate, or subsequently
      terminates employment with the Company within one year after completion of
      the move (except for employees who are terminated as a result of Article
      26 of the Agreement), the lump sum relocation allowance of $5,000 shall be
      repaid to the Company in full.

4.    Employees who receive the lump sum relocation allowance waive any other
      relocation assistance provided by the Agreement. If relocation expenses do
      not exceed the lump sum amount, the Company will not require employees to
      return the remaining balance. In accepting the lump sum relocation
      allowance, the employee agrees that the Company and the Union assumes no
      responsibility in

                                      133
<PAGE>

      connection with any tax responsibilities associated with this allowance.
      It is understood and agreed that neither the Company nor the Union nor any
      of its Officers or Agents shall be held liable in any way by virtue of
      this Memorandum of Agreement.

5.    The provisions of Section 1(c) and Section 2 of this Memorandum of
      Agreement shall be subject to the grievance and arbitration procedure of
      the Agreement.

6.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      relocation allowances shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    ______________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      134
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                    RETAIL SALES INCENTIVE COMPENSATION PLAN

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to implement the
      Retail Sales Incentive Compensation Plan set forth in this Memorandum of
      Agreement. The implementation date of this plan will be as soon as
      administratively possible following ratification.

2.    For a summary of details, refer to the Company's Retail Sales Incentive
      Compensation Plan.

3.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      retail sales incentive compensation plan shall terminate on February 28,
      2008, and shall not survive the expiration of this Memorandum of Agreement
      unless agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    _________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      135
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                             RETIREE LIFE INSURANCE

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to make available
      to employees who retire on or after March 1, 2005 with a service or
      disability pension under the Valor Telecommunications Enterprises, LLC
      Pension Plan, a $5,000 retiree life insurance benefit.

2.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      retiree life insurance shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    _________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      136
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                         RETIREE MEDICAL HEALTH BENEFITS

Valor Telecommunications of Texas, LP, hereinafter referred to as the Company,
and the Communications Workers of America, hereinafter referred to as the Union,
agree to provide retiree medical benefits for eligible employees who retire
between March 1, 2005 and February 28, 2008 with a service or disability pension
under the Valor Telecommunications Enterprises, LLC Pension Plan and their
beneficiaries (hereinafter referred to as the Eligible Participants).

1.    Effective August 16, 1998, the level and type of Retiree Medical Benefits
      for the Eligible Participants shall be governed by the Valor Retiree
      Health and Welfare Summary Plan Description.

2.    In order to receive Retiree Medical Benefits, the retiree must pay a
      percentage/amount of the Retiree Medical premium ("Retiree Contribution
      Percentage/Amount"). Similarly, the Company will pay a percentage/amount
      of the premium ("Company Contribution Percentage/Amount"), subject to
      Section 3 below. During the term of this Memorandum of Agreement, the
      Company and retiree Contribution Percentages/Amount will be based on the
      following contribution schedule:

<TABLE>
<CAPTION>
 Years of Accredited    Company Contribution   Retiree Contribution
Service at Retirement        Percentage          Percentage/Amount
---------------------   --------------------   --------------------
<S>                     <C>                    <C>
Less than 10                     0                      100
10 through 14                   20                       80
15 through 19                   40                       60
20 through 24                   60                       40
25 through 29                   80                       20
30 and over                     90                       10
</TABLE>

3.    (a) The Company shall determine the cost of providing Retiree Medical
      Coverage ("Retiree Medical Benefits Premiums"). Further, it is the
      Company's intention to cap the amount it pays toward such Retiree Medical
      Benefits Premiums for employees who retire on or after January 1, 1997.

      (b) When the Retiree Medical Benefits Premiums for the $500 deductible
      coverage option under the Valor Retiree Health and Welfare Summary Plan
      Description reach the figures set forth in the chart below ("Capped
      Retiree Medical Benefits Premiums"), the Company Contribution Amount shall
      be capped

                                      137
<PAGE>

      and the Company shall make no additional contributions toward Retiree
      Medical Benefits Premiums.

<TABLE>
<CAPTION>
Capped Retiree Medical
   Coverage Category                          Benefits Premium
--------------------------------------------  ----------------
<S>                                           <C>
Retiree only (primary coverage)                   $  6,314
Retiree plus one dependant coverage               $ 12,628
Family Coverage                                   $ 14,144
Medicare covered retiree (per eligible life)      $  1,642
</TABLE>

      (c) The Maximum Company Contribution Percentage Amount applicable to each
      Coverage Category shall be determined by multiplying the applicable
      Company Contribution Percentage times the Capped Retiree Medical Benefits
      Premium as set forth above for that coverage. The applicable Maximum
      Company Contribution Amount shall not increase when the Retiree Medical
      Benefits Premium exceeds the amount set forth in the chart above.

4.    In order to receive Retiree Medical Benefits, the retiree must pay the
      Company the amount the Retiree Medical Premium exceeds the Company
      Contribution Amount as described in paragraphs 2 and 3 above ("Retiree
      Contribution Amount"). When the Retiree Medical Benefits Premium reaches
      or exceeds the Capped Retiree Medical Benefit premium, the retiree must
      pay the Company the amount the Retiree Medical Benefits Premium exceeds
      the Maximum Company Contribution Amount.

5.    The Capped Retiree Medical Benefits Premium and the Maximum Company
      Contribution Amount set forth in paragraph 3 above is based upon the $500
      deductible coverage option. If the retiree elects the $350 deductible
      coverage option, the Retiree Contribution Amount will increase by the
      amount the $350 deductible coverage option exceeds the $500 deductible
      coverage option. If the retiree elects the $1,000 deductible coverage
      option, the Retiree contribution amount will decrease by the amount the
      $1,000 deductible coverage option is less than the $350 deductible
      coverage option (not to exceed zero). When the Retiree Medical Benefit
      Premiums for the $500 deductible coverage option reach the amounts set
      forth in the chart in paragraph 3, the Company Contribution amount for all
      coverage options, including the $350 and $1,000 deductible coverage
      options, shall be capped at that time and the Company shall make no
      additional contributions toward Retiree Medical Benefits.

6.    The level and administration of the Retiree Medical Benefits; amount or
      cost of premiums, premium pricing mechanisms; the attainment of the
      Maximum Company Contribution Amount; the selection of the claims
      administrator, alternate health carrier or insurance carrier; eligibility
      for the benefits; all terms and conditions related hereto, and the
      resolution of any disputes involving the terms, conditions,
      interpretation, administration, or benefits payable shall rest with

                                      138
<PAGE>

      the Company and shall not be subject to the grievance or arbitration
      procedure set forth in the Collective Bargaining Agreement.

7.    Employees hired on or after March 1, 2002, shall not be eligible for the
      Retiree Medical Benefits contained in this memorandum of agreement.

8.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      retiree medical health benefits shall terminate on February 28, 2008, and
      shall not survive the expiration of this Memorandum of Agreement unless
      agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    ____________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      139
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                            SALES INITIATIVES PROGRAM

Communications Workers of America (CWA), hereinafter referred to as the Union,
and VALOR Telecommunications of Texas, LP, hereinafter referred to as the
Company, recognize the recent changes and challenges in the telecommunications
industry. The Union and the Company acknowledge that in today's highly
competitive telecommunications industry increased revenue generation, through
sale of Company products and services, are inherent to the success of VALOR
Telecommunications of Texas, LP. The Company and the Union agree to the
establishment of the Sales Initiatives Program.

1.    The Company may develop and implement sales and referral incentive
      programs which will provide employees in any title, who choose to
      participate, the opportunity to earn merchandise, cash, meals,
      recognition, and other awards of value based on individual and/or
      collective performance in achieving standards developed and administered
      solely by the Company.

2.    Sales employees are expected to continue their sales activities and other
      job responsibilities whether or not they participate in these incentive
      programs.

3.    Awards received under the Sales Initiative Program will not be recognized
      for any benefit plan calculation, i.e. pension, savings, life insurance,
      etc.

4.    Deductions for applicable taxes will be made in accordance with federal,
      state, and local tax laws.

5.    The Company shall have the right to alter, amend or discontinue any such
      program based on the needs of the business. The Company will notify the
      Union of any changes to such programs.

6.    All terms and conditions related to the Sales Initiative Program including
      the resolution of any disputes, interpretations, administration, or awards
      paid shall rest with the Company and shall not be subject to the grievance
      or arbitration procedure set forth in the Collective Bargaining Agreement.

                                      140
<PAGE>

7.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008, and shall not survive the expiration of the
      Memorandum of Agreement unless agreed to by the parties in writing.

      COMPANY                               COMMUNICATION
                                            WORKERS OF AMERICA

      __________________________________    _____________________________
      By: David Daniel                      By: Donna Bentley
      It's: Director - Labor Relations      It's: CWA Representative

      ___________
      Date

                                      141
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                             TEAM PERFORMANCE AWARD

1.    Communications Workers of America (CWA) and Valor Telecommunications of
      Texas, LP, hereinafter referred to as the Company, agree to implement the
      Team Performance Award set forth in this Memorandum of Agreement. The
      implementation date of this plan will be March 1, 2005.

2.    For a summary of details, refer to the attachment entitled Team
      Performance Award.

3.    This Memorandum of Agreement is effective on March 1, 2005 and shall
      expire on February 28, 2008. The parties specifically agree that all the
      terms and conditions set forth in this Memorandum of Agreement shall also
      expire on February 28, 2008 and shall not survive the expiration of this
      Memorandum of Agreement, unless agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            ORKERS OF AMERICA

      __________________________________    ____________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      142
<PAGE>

1. TEAM PERFORMANCE AWARD

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, agree to develop and implement a
Team Performance Award, which will provide participating employees the
opportunity to earn compensation based upon collective/team performance results.

2. ELIGIBILITY

All full-time and part-time regular hourly employees are eligible to receive an
award if they are on a TPA Team for 30 calendar days or more. Employees on other
Incentive plans are not eligible, i.e., Retail or other Sales based bonuses.

3. AWARDS

Awards are based on performance toward objectives over the period of a calendar
year. An award amount is determined for the applicable calendar year, a
percentage of which may be earned by eligible employees, depending on team
performance during that calendar year. The payout ranges from 0% to 120% of an
established target.

The range of the Team Performance Award payout is as follows:

A. The 2005 target award is 4% payable in April 2006.
The range is 0% to 120% based on achievement of objectives.

B. The 2006 target award is 4% payable in April 2007.
The range is 0% to 120 % based on achievement of objectives.

C. The 2007 target award is 4% payable in April 2008.
The range is 0% to 120% based on achievement of objectives.

The payout percentage is applied to an employee's highest hourly basic rate of
pay during the 26 pay periods of the calendar year.

Employees transferring between teams shall have their award prorated according
to the time on each team.

In the event of reorganization which results in employees changing teams, awards
shall be prorated based upon each team's performance.

An employee who resigns, is laid off, terminated, dies or retires during the
calendar year is eligible for a prorated Team Performance Award if all other
eligibility requirements have been met. *

* In case of Termination for Cause the individual situation will be reviewed to

                                      143
<PAGE>

  determine if the individual is eligible for an award.

Employees on approved military leave of absence who have one year or more
service will be given full wage credit up to three months toward the Team
Performance Award. Employees on any other unpaid leave will have cumulative
leave time excluded from award computation.

4. TIME OFF FOR UNION ACTIVITIES

Excused time off for union activity will be counted as time worked when
computing Team Performance Awards.

5. BENEFITS TREATMENT

Team Performance Award payments are recognized in the calculation of Pension
Plan benefits, Group Life Insurance, and the Valor Telecommunications SW, LLC
Savings Plan. Such payments will be applicable in the year payment is received.
This is in accordance with the Company benefit plan definitions.

All other benefits are in accordance with the collective bargaining agreement
and are based on rates shown in the hourly wage schedules.

6. TAXES, PERSONAL ALLOTMENT

Deductions for federal, state, and local tax liabilities will be made in
accordance with lump sum distribution tax laws.

Personal allotments such as savings bonds, and United Way contributions will not
be made.

Union dues will be withheld from the Team Performance Awards.

7. OVERTIME

The Team Performance Award payouts are for hours worked and must be included in
overtime payments.

The overtime payment will be calculated as follows:

The Team Performance Award payout divided by the total hours worked equals the
award hourly rate. This rate is then multiplied times .5 x number of overtime
hours in the same calendar year for which the Team Performance Award was paid.
The result of this calculation is the award overtime payment due the employee.

                                      144
<PAGE>

<TABLE>
<S>                           <C>
EXAMPLE:
Team Performance Award        $    500
divided by
Total Hours Worked               1,880
equals
Award Hourly Rate             $ 0.2659
times
Overtime Rate (1/2)                 .5
equals
Hourly Overtime Rate of Pay   $ 0.1329
times
Total Overtime Hours               100
equals
Award Overtime Payment        $  13.29
</TABLE>

The overtime-incentive payment is not included in benefit plan calculations.

A Team Performance Award overtime payment will be included in the award payout.

8. OBJECTIVES/MEASURES

All hourly employees will normally be assigned to teams based on their
functional area of responsibility. Teams may consist of a few employees or many.
Each team will be given a set of objectives linked to, but not limited to, one
or more of these performance areas:

Quality/Value of services delivered
Productivity
Expense Budget
Revenue

Teams that satisfy a minimum level of performance will receive an incentive
payment. If that minimum level of performance is exceeded, the incentive payment
will be larger. Each member of a team will receive the same percentage of target
award that the team achieved. An example would be as follows:

<TABLE>
<CAPTION>
LEVEL OF PERFORMANCE     PERCENTAGE OF TARGET AWARD
----------------------   --------------------------
<S>                      <C>
Below Minimum                          0%
Minimum to Target               10  - 99%
Target                               100%
Over Target to Maximum         101 - 120%
</TABLE>

9. The Company reserves the right to establish objectives and determine
performance results. The objectives, the performance results, or any part of the
Team Performance Award shall not be subject to the grievance or arbitration
provisions of the Collective Bargaining Agreement.

                                      145
<PAGE>

10. Prior to the announcement of objectives and performance targets for the
applicable year, Company representatives will meet with Union representatives to
review the rationale for such objectives and targets.

11. MODIFICATION OF THE TEAM PERFORMANCE PLAN

The Company may at any time modify, in part or in whole, the Team Performance
Award Plan. Any modification shall not affect awards already earned under this
plan.

12. TERMINATION OF THE TEAM PERFORMANCE PLAN

The suspension or termination must be by mutual agreement of the parties.

                                      146
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                              TELEPHONE CONCESSION

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, agree to provide current employees the following telephone concession:

1.    50% concession discount on the first line basic service charge.

2.    50% concession discount on any available bundled offering excluding
      unlimited long distance and DISH.

3.    Employees must have Valor telephone service to receive telephone
      concession.

4.    Current employees will have the option of retaining their existing
      telephone concession. Employees will be allowed to do so until they make
      changes to their existing service. Thereafter, they will be eligible for
      telephone concession as described in 1,2, & 3 above.

5.    This Memorandum of Agreement is effective on March 1, 2005, and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement, relating to
      telephone concession shall terminate on February 28, 2008, and shall not
      survive the expiration of this Memorandum of Agreement unless agreed to by
      the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    _____________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      147
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                           TUITION REIMBURSEMENT PLAN

Communications Workers of America (CWA) and Valor Telecommunications of Texas,
LP, hereinafter referred to as the Company, recognize the importance of
continuing education to aid employees in improving their job performance in
their present job, and hereby agree to offer a tuition reimbursement plan.

Tuition Reimbursement applies to tuition and book fees only. Reimbursement is
limited to $500.00 in any one calendar year per employee. The Company will limit
tuition reimbursement to a maximum of 50 eligible employees in any one calendar
year on a first come first serve basis.

1.    Eligibility

            -     Full-time employees with at least two (2) years of net
                  credited service or more prior to the starting date of the
                  course.

2.    Accepted Courses

            -     The course must be offered by an accredited school, college,
                  university, agency, or association.

            -     The course must be directly related to the employee's present
                  or future job with the Company.

3.    Reimbursement

            -     To receive reimbursement, employees must receive a letter
                  grade of "C" or above. For course not assessing a letter grade
                  the employee must receive a "satisfactory" completion.

            -     A copy of the grade transcript and a company expense voucher
                  must be submitted upon completion of the course.

                                      148
<PAGE>

This Memorandum of Agreement is effective on March 1, 2005 and shall expire on
February 28, 2008. The parties specifically agree that all the terms and
conditions set forth in this Memorandum of Agreement shall also expire on
February 28, 2008 and shall not survive the expiration of this Memorandum of
Agreement, unless agreed to by the parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA
      ______________________________        ______________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      149
<PAGE>

                             MEMORANDUM OF AGREEMENT
                                     BETWEEN
                      VALOR TELECOMMUNICATIONS OF TEXAS, LP
                                       AND
                        COMMUNICATIONS WORKERS OF AMERICA

                                      WAGES

1.    The parties agree that all employees on the Wage Schedules will receive
      the following:

<TABLE>
<S>   <C>        <C>
A.    2.00%      Lump Sum effective upon ratification.
B.    1.50%      General Wage Increase effective August 28, 2005
C.    1.50%      General Wage Increase effective February 26, 2006
D.    1.50%      General Wage Increase effective August 27, 2006
E.    1.50%      General Wage Increase effective March 4, 2007
F.    1.50%      General Wage Increase effective September 2, 2007
</TABLE>

2.    Employees covered by the Team Performance Award Plan (TPA) will be
      eligible to receive annual payouts at target as follows:

            -     4% for 2005

            -     4% for 2006

            -     4% for 2007

4.    Employees covered by the Retail Sales Incentive Plan will be eligible to
      receive monthly sales compensation in accordance with the provision of the
      plan in effect at the time.

5.    This Memorandum of Agreement is effective on March 1, 2005 and shall
      expire on February 28, 2008. The parties specifically agree that the terms
      and conditions set forth in this Memorandum of Agreement relating to wages
      shall terminate on February 28, 2008 and shall not survive the expiration
      of this Memorandum of Agreement unless specifically agreed to by the
      parties in writing.

      COMPANY                               COMMUNICATIONS
                                            WORKERS OF AMERICA

      __________________________________    ___________________________
      By: David Daniel                      By: Donna Bentley
      Its: Director - Labor Relations       Its: CWA Representative

      Date:__________

                                      150

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