Exhibit 10(i)
 
EMPLOYMENT AGREEMENT
 
AGREEMENT, dated as of the 5th day of May, 2006 (this “Agreement”), by and
between Alltel Corporation, a Delaware corporation (the “Company”), and Keith A.
Kostuch (the “Executive”).
 
WHEREAS, the Board of Directors of the Company (the “Board”), has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined herein). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the Company in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control that ensure that
the compensation and benefits expectations of the Executive will be satisfied
and that provide the Executive with compensation and benefits arrangements that
are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
 
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
 
Section 1.  Certain Definitions. (a) “Effective Date” means the first date
during the Change of Control Period (as defined herein) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive’s employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (1)
was at the request of a third party that has taken steps reasonably calculated
to effect a Change of Control or (2) otherwise arose in connection with or
anticipation of a Change of Control, then “Effective Date” means the date
immediately prior to the date of such termination of employment.
 
(b)  “Change of Control Period” means the period commencing on the date hereof
and ending on the tenth anniversary of the date hereof; provided, however, that,
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof, the
“Renewal Date”), unless previously terminated, the Change of Control Period
shall be automatically extended so as to terminate three years from such Renewal
Date, unless, at least 60 days prior to the Renewal Date, the Company shall give
notice to the Executive that the Change of Control Period shall not be so
extended.
 
(c)  “Affiliated Company” means any company controlled by, controlling or under
common control with the Company.
 
(d)  “Change of Control” means:
 
 
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(1)  Any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then-outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that, for purposes of this Section 1(d), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliated Company or (iv) any acquisition by any corporation pursuant to a
transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C);
 
(2)  Any time at which individuals who, as of the date hereof, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;
 
(3)  Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a “Business Combination”), in
each case unless, following such Business Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock (or,
for a non-corporate entity, equivalent securities) and the combined voting power
of the then-outstanding voting securities entitled to vote generally in the
election of directors (or, for a non-corporate entity, equivalent governing
body), as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-
 
 
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outstanding voting securities of such corporation, except to the extent that
such ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or
 
(4)  Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
 
Section 2.  Employment Period. The Company hereby agrees to continue the
Executive in its employ, subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the third
anniversary of the Effective Date (the “Employment Period”). The Employment
Period shall terminate upon the Executive’s termination of employment for any
reason.
 
Section 3.  Terms of Employment. (a) Position and Duties. (1) During the
Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 30-day period
immediately preceding the Effective Date and (B) the Executive’s services shall
be performed at the office where the Executive was employed immediately
preceding the Effective Date or at any other location less than 35 miles from
such office.
 
(2)  During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.
 
(b)  Compensation. (1) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary (the “Annual Base Salary”) at an annual rate
at least equal to 12 times the highest monthly base salary paid or payable,
including any base salary that has been earned but deferred, to the Executive by
the Company and the Affiliated Companies in respect of the 6-month period
immediately preceding the month in which the
 
 
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Effective Date occurs. The Annual Base Salary shall be paid at such intervals as
the Company pays executive salaries generally. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually, beginning no more than
12 months after the last salary increase awarded to the Executive prior to the
Effective Date. Any increase in the Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement. The Annual
Base Salary shall not be reduced after any such increase and the term “Annual
Base Salary” shall refer to the Annual Base Salary as so increased.
 
(2)  Short-Term Bonuses. In addition to the Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the “Annual Bonus”) in cash at least equal to the annualized
amount of the pre-established maximum short-term bonus(es) that may be earned by
the Executive under the Company’s short-term incentive plan(s), or any
comparable bonus under any predecessor or successor plan(s), including, without
limitation, the Company’s Performance Incentive Compensation Plan and the
Executive Incentive Compensation Plan, in each case, as in effect from time to
time (the “Short-Term Bonus Plans”), for the fiscal year in which the Effective
Date occurs or, if no short-term bonus(es) are established for such year, the
fiscal year immediately preceding the fiscal year in which the Effective Date
occurs (the “Maximum Annual Bonus”). Each such Annual Bonus shall be paid no
later than 30 days after the end of the fiscal year for which the Annual Bonus
is awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus pursuant to an arrangement that meets the requirements of Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”).
 
(3)  Long-Term Cash Incentive Bonuses. In addition to the Annual Base Salary and
Annual Bonus, the Executive shall be awarded, for each fiscal year ending during
the Employment Period, a long-term cash incentive bonus (the “LTIP Bonus”) at
least equal to the pre-established maximum bonus that may be earned by the
Executive under the Company’s long-term cash incentive compensation plan(s), or
any comparable bonus under any predecessor or successor plan(s), including,
without limitation, the Company’s Long-Term Performance Incentive Compensation
Plan as in effect from time to time (the “LTIP”), for the performance period
commencing immediately prior to the Effective Date, but excluding for this
purpose the LTIP Bonus granted to the Executive with respect to the period
commencing on the Distribution Date (as defined in the Distribution Agreement by
and between Alltel Corporation and Alltel Holding Corporation Dated as of
December 8, 2005) and ending on December 31, 2007 (the “Maximum LTIP Bonus”) on
terms and conditions no less favorable, in the aggregate, than the most
favorable of those provided by the Company and the Affiliated Companies for the
Executive under such plans as in effect at any time during the 6-month period
immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer
executives of the Company and the Affiliated Companies. Each such LTIP Bonus
shall be paid no later than 30 days after the end of the performance period for
which the LTIP Bonus is awarded, unless the Executive shall elect to defer the
receipt of such LTIP Bonus pursuant to an arrangement that meets the
requirements of Section 409A of the Code.
 
 
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(4)  Equity Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all equity incentive,
including without limitation any stock option, stock appreciation right,
restricted stock, restricted stock unit or other equity or equity-based
compensation plans, practices, policies, and programs (other than the LTIP) and
savings and retirement plans, practices, policies, and programs, in each case,
applicable generally to other peer executives of the Company and the Affiliated
Companies, but in no event shall such plans, practices, policies and programs
provide the Executive with equity incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and the Affiliated Companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 6-month period immediately preceding the Effective Date or, if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the Affiliated
Companies.
 
(5)  Welfare Benefit Plans. During the Employment Period, the Executive and/or
the Executive’s family, as the case may be, shall be eligible for participation
in and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and the Affiliated Companies
(including, without limitation, medical, prescription, dental, disability,
employee life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives of the
Company and the Affiliated Companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits that are
less favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time during
the 6-month period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the Affiliated
Companies.
 
(6)  Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Company and the Affiliated Companies in effect for the
Executive at any time during the 6-month period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and the
Affiliated Companies.
 
(7)  Fringe Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and the
Affiliated Companies in effect for the Executive at any time during the 6-month
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies.
 
 
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(8)  Office and Support Staff. During the Employment Period, the Executive shall
be entitled to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive by
the Company and the Affiliated Companies at any time during the 6-month period
immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company and the Affiliated Companies.
 
(9)  Paid-Time Off. During the Employment Period, the Executive shall be
entitled to paid vacation, sick leave, sabbatical, holiday and other paid-time
off (“Paid-Time Off”) in accordance with the most favorable plans, policies,
programs and practices of the Company and the Affiliated Companies as in effect
for the Executive at any time during the 6-month period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and the Affiliated Companies. Without limiting the generality of the
foregoing, during the Employment Period, in no event shall the Executive receive
fewer paid vacation days and holidays (including floating holidays) than the
Executive was eligible to receive at any time during the fiscal year immediately
prior to the year in which the Effective Date occurs.
 
Section 4.  Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically if the Executive dies during the
Employment Period. If the Company determines in good faith that the Disability
(as defined herein) of the Executive has occurred during the Employment Period
(pursuant to the definition of “Disability”), it may give to the Executive
written notice in accordance with Section 11(b) of its intention to terminate
the Executive’s employment. In such event, the Executive’s employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the “Disability Effective Date”), provided that, within the 30
days after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. “Disability” means the absence of the
Executive from the Executive’s duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or
physical illness that is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive’s legal representative.
 
(b)  Cause. The Company may terminate the Executive’s employment during the
Employment Period with or without Cause. “Cause” means:
 
(1)  the willful and continued failure of the Executive to perform substantially
the Executive’s duties (as contemplated by Section 3(a)(1)(A)) with the Company
or any Affiliated Company (other than any such failure resulting from incapacity
due to physical or mental illness or following the Executive’s delivery of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company that specifically identifies the manner in which the
Board or the Chief Executive Officer of the
 
 
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Company believes that the Executive has not substantially performed the
Executive’s duties, or
 
(2)  the willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the Company.
 
For purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority (A) given pursuant to a resolution
duly adopted by the Board, or if the Company is not the ultimate parent
corporation of the Affiliated Companies and is not publicly-traded, the board of
directors of the ultimate parent of the Company (the “Applicable Board”), (B)
upon the instructions of the Chief Executive Officer of the Company or a senior
officer of the Company or (C) based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Applicable Board (excluding the Executive, if the
Executive is a member of the Applicable Board) at a meeting of the Applicable
Board called and held for such purpose (after reasonable notice is provided to
the Executive and the Executive is given an opportunity, together with counsel
for the Executive, to be heard before the Applicable Board), finding that, in
the good faith opinion of the board, the Executive is guilty of the conduct
described in Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof
in detail.
 
(c)  Good Reason. The Executive’s employment may be terminated by the Executive
for Good Reason or by the Executive voluntarily without Good Reason. “Good
Reason” means:
 
(1)  the assignment to the Executive of any duties inconsistent in any respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
3(a), or any other diminution in such position, authority, duties or
responsibilities (whether or not occurring solely as a result of the Company’s
ceasing to be a publicly traded entity), excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and that is remedied
by the Company promptly after receipt of notice thereof given by the Executive;
 
(2)  any failure by the Company to comply with any of the provisions of Section
3(b), other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
 
(3)  the Company’s requiring the Executive (i) to be based at any office or
location other than as provided in Section 3(a)(1)(B), (ii) to be based at a
location other
 
 
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than the principal executive offices of the Company if the Executive was
employed at such location immediately preceding the Effective Date, or (iii) to
travel on Company business to a substantially greater extent than required
immediately prior to the Effective Date;
 
(4)  any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement; or
 
(5)  any failure by the Company to comply with and satisfy Section 10(c).
 
For purposes of this Section 4(c), any good faith determination of Good Reason
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason pursuant
to a Notice of Termination given during the 90-day period immediately following
the first anniversary of the Effective Date shall be deemed to be a termination
for Good Reason for all purposes of this Agreement. The Executive’s mental or
physical incapacity following the occurrence of an event described above in
clauses (1) through (5) shall not affect the Executive’s ability to terminate
employment for Good Reason.
 
(d)  Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(b). “Notice of
Termination” means a written notice that (1) indicates the specific termination
provision in this Agreement relied upon, (2) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated, and (3) if the Date of Termination (as defined herein) is other than
the date of receipt of such notice, specifies the Date of Termination (which
Date of Termination shall be not more than 30 days after the giving of such
notice). The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s respective rights hereunder.
 
(e)  Date of Termination.“Date of Termination” means (1) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified in the Notice of Termination, (which date shall not be more than 30
days after the giving of such notice), as the case may be, (2) if the
Executive’s employment is terminated by the Company other than for Cause or
Disability, the date on which the Company notifies the Executive of such
termination, (3) if the Executive resigns without Good Reason, the date on which
the Executive notifies the Company of such termination, and (4) if the
Executive’s employment is terminated by reason of death or Disability, the date
of death of the Executive or the Disability Effective Date, as the case may be.
 
Section 5.  Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
 
 
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Company terminates the Executive’s employment other than for Cause or Disability
or the Executive terminates employment for Good Reason:
 
(1)  the Company shall pay to the Executive, in a lump sum in cash within 30
days after the Date of Termination, the aggregate of the following amounts:
 
(A)  the sum of (i) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (ii) notwithstanding any
provision of any Short-Term Bonus Plans or LTIP, including, without limitation,
any provision of any Short-Term Bonus Plans or LTIP requiring continued
employment after the completed fiscal year or other measuring period, the amount
of any incentive compensation under any Short-Term Bonus Plans or LTIP that has
been earned by the Executive for a completed fiscal year or other measuring
period preceding the Date of Termination under any Short-Term Bonus Plans or the
LTIP, but has not yet been paid to the Executive, (iii) the product of (A) the
greater of (x) the Maximum Annual Bonus and (y) the annualized amount of the
pre-established maximum short-term bonus(es) that may be earned by the Executive
under the Company’s Short-Term Bonus Plans for the fiscal year in which the Date
of Termination occurs (such greater amount, the “Recent Annual Bonus”) and (B) a
fraction, the numerator of which is the number of days in the applicable
performance period through the Date of Termination and the denominator of which
is 365, (iv) for each performance period then-outstanding under the LTIP, an
amount equal to the product of (A) the greater of (x) the Maximum LTIP Bonus and
(y) the pre-established maximum bonus that may be earned by the Executive under
the LTIP for the performance period commencing immediately prior to the Date of
Termination (such greater amount, the “Recent LTIP Bonus”) and (B) a fraction,
the numerator of which is the number of days in the applicable performance
period under the LTIP through the Date of Termination and the denominator of
which is 1095, provided, that with respect to the performance period commencing
under the LTIP on or about the Distribution Date and ending on December 31,
2008, a fraction, the numerator of which is the total number of days from the
period commencing January 1, 2006 through the Date of Termination and the
denominator of which is the total number of days from January 1, 2006 until
December 31, 2008, and (v) any accrued Paid-Time Off pay to the extent not
theretofore paid (the sum of the amounts described in subclauses (i), (ii),
(iii), (iv) and (v), the “Accrued Obligations”);
 
(B)  the amount equal to the product of (i) three and (ii) the sum of (A) the
Executive’s Annual Base Salary, (B) the Recent Annual Bonus and (C) the Recent
LTIP Bonus; and
 
(C)  an amount equal to the sum of (i) excess of (A) the actuarial equivalent of
the benefit under the Company’s qualified defined benefit retirement plan (the
“Retirement Plan”) (utilizing actuarial assumptions no less favor-
 
 
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able to the Executive than those in effect under the Retirement Plan immediately
prior to the Effective Date) and any excess or supplemental defined benefit
retirement plan in which the Executive participates (collectively, the “SERP”)
that the Executive would receive if the Executive’s employment continued for
three years after the Date of Termination, assuming for this purpose that (1)
all accrued benefits are fully vested, (2) the Executive’s age is increased by
the number of years that the Executive is deemed to be so employed and (3) the
Executive’s compensation in each of the three years is that required by Sections
3(b)(1), 3(b)(2) and 3(b)(3) payable in equal monthly installments over such
three-year period, over (B) the actuarial equivalent of the Executive’s actual
benefit (paid or payable), if any, under the Retirement Plan and the SERP as of
the Date of Termination and (ii) an amount equal to the sum of the Company
matching or other Company contributions under the Company’s qualified defined
contribution plans and any excess or supplemental defined contribution plans in
which the Executive participates that the Executive would receive if the
Executive’s employment continued for three years after the Date of Termination,
assuming for this purpose that (w) the Company’s contribution under the
Company’s Profit Sharing Plan is equal to the greater of (1) four percent of
Compensation (within the meaning of the Alltel Corporation Profit-Sharing Plan)
or (2) the highest percent contribution made by the Company in the three years
preceding the year in which the Effective Date occurs, (x) the Executive’s
benefits under such plans are fully vested, (y) the Executive’s compensation in
each of the three years is that required by Sections 3(b)(1), 3(b)(2) and
3(b)(3) and (z) to the extent that the Company contributions are determined
based on the contributions or deferrals of the Executive, that the Executive’s
contribution or deferral elections, as appropriate, are those in effect
immediately prior to the Date of Termination;
 
(2)  for three years after the Executive’s Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, program,
practice or policy, but, to the extent required in order to comply with Section
409A, in no event beyond the end of the second calendar year that begins after
the Executive’s “separation from service” within the meaning of Section 409A
(the “Benefit Continuation Period”), the Company shall continue benefits to the
Executive and/or the Executive’s family at least equal to, and at the same cost
to the Executive and/or the Executive’s family, as those that would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 3(b)(5) and 3(b)(7) if the Executive’s employment had not
been terminated or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Company and
the Affiliated Companies and their families; provided, however, that, if the
Executive becomes reemployed with another employer and is eligible to receive
such benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan, and such other benefits shall not be provided by the Company,
during such applicable period of eligibility. The Executive’s entitlement to
COBRA continuation coverage under Section 4980B of
 
 
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the Code (“COBRA Coverage”) shall not be offset by the provision of benefits
under this Section 5(a)(2) and the period of COBRA Coverage shall commence at
the end of the Benefit Continuation Period. For purposes of determining
eligibility (but not the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until the end of the
Benefit Continuation Period and to have retired on the last day of such period;
 
(3)  the Company shall, at its sole expense as incurred, provide the Executive
with outplacement services the scope and provider of which shall be selected by
the Company, provided that such outplacement benefits shall begin at the Date of
Termination and shall end not later than the last day of the second calendar
year that begins after the Date of Termination; and
 
(4)  to the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any Other Benefits (as defined in Section 6).
 
Notwithstanding the foregoing provisions of this Section 5(a), to the extent
required in order to comply with Section 409A of the Code, cash amounts or
benefits that would otherwise be payable or provided under this Section 5(a)
during the six-month period immediately following the Date of Termination shall
instead be paid, with interest on any delayed payment at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), on the
first business day after the date that is six months following the Executive’s
“separation from service” within the meaning of Section 409A.

(b)  Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, the Company shall provide the
Executive’s estate or beneficiaries with the Accrued Obligations and the timely
payment or delivery of the Other Benefits, and shall have no other severance
obligations under this Agreement. The Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of the Other
Benefits, the term “Other Benefits” as utilized in this Section 5(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and the Affiliated Companies to the estates and
beneficiaries of peer executives of the Company and the Affiliated Companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 6-month period immediately preceding the
Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death
with respect to other peer executives of the Company and the Affiliated
Companies and their beneficiaries.
 
(c)  Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, the Company shall provide
the Executive with the Accrued Obligations and the timely payment or delivery of
the Other Benefits, and shall have no other severance obligations under this
Agreement. The Accrued Obligations
 
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shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination, provided, that to the extent required in order to comply with
Section 409A of the Code, amounts and benefits to be paid or provided under this
Section 5(c) shall be paid, with Interest, or provided to the Executive on the
first business day after the date that is six months following the Executive’s
“separation from service” within the meaning of Section 409A. With respect to
the provision of the Other Benefits, the term “Other Benefits” as utilized in
this Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and the
Affiliated Companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 6-month period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and the Affiliated Companies and their families.
 
(d)  Cause; Other Than for Good Reason. If the Executive’s employment is
terminated for Cause during the Employment Period, the Company shall provide the
Executive with the Executive’s Annual Base Salary through the Date of
Termination, and the timely payment or delivery of the Other Benefits, and shall
have no other severance obligations under this Agreement. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, the Company shall provide to the Executive the
Accrued Obligations and the timely payment or delivery of the Other Benefits,
and shall have no other severance obligations under this Agreement. In such
case, all the Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination, provided, that to the extent
required in order to comply with Section 409A of the Code, amounts and benefits
to be paid or provided under this sentence of Section 5(d) shall be paid, with
Interest, or provided to the Executive on the first business day after the date
that is six months following the Executive’s “separation from service” within
the meaning of Section 409A.
 
Section 6.  Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive’s continuing or future participation in any plan,
program, policy or practice provided by the Company or the Affiliated Companies
and for which the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other contract or agreement with the Company or the Affiliated
Companies. Amounts that are vested benefits or that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any other
contract or agreement with the Company or the Affiliated Companies at or
subsequent to the Date of Termination (“Other Benefits”) shall be payable in
accordance with such plan, policy, practice or program or contract or agreement,
except as explicitly modified by this Agreement. Without limiting the generality
of the foregoing, the Executive’s resignation under this Agreement with or
without Good Reason, shall in no way affect the Executive’s ability to terminate
employment by reason of the Executive’s “retirement” under any compensation and
benefits plans, programs or arrangements of the Affiliated Companies, including
without limitation any retirement or pension plans or arrangements or to be
eligible to receive benefits under any com-
 
 
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pensation or benefit plans, programs or arrangements of the Affiliated
Companies, including without limitation any retirement or pension plan or
arrangement of the Affiliated Companies or substitute plans adopted by the
Company or its successors, and any termination which otherwise qualifies as Good
Reason shall be treated as such even if it is also a “retirement” for purposes
of any such plan. Notwithstanding the foregoing, if the Executive receives
payments and benefits pursuant to Section 5(a) of this Agreement, the Executive
shall not be entitled to any severance pay or benefits under any severance plan,
program or policy of the Company and the Affiliated Companies, unless otherwise
specifically provided therein in a specific reference to this Agreement.
 
Section 7.  Full Settlement. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred (within 10 days following the Company’s
receipt of an invoice from the Executive), to the full extent permitted by law,
all legal fees and expenses that the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by the Executive about the amount of any payment
pursuant to this Agreement), plus, in each case, Interest.
 
Section 8.  Certain Additional Payments by the Company.
 
(a)  Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any Payment would be subject to the Excise Tax, then
the Executive shall be entitled to receive an additional payment (the “Gross-Up
Payment”) in an amount such that, after payment by the Executive of all taxes
(and any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but
excluding any income taxes and penalties imposed pursuant to Section 409A, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. The Company’s obligation to make Gross-Up Payments
under this Section 8 shall not be conditioned upon the Executive’s termination
of employment.
 
(b)  Subject to the provisions of Section 8(c), all determinations required to
be made under this Section 8, including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by Ernst & Young LLP, or such
other nationally recognized certified public accounting firm as may be
designated by the Executive (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has
 
 
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been a Payment or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive may appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Executive within 5 days of
the receipt of the Accounting Firm’s determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been
made (the “Underpayment”), consistent with the calculations required to be made
hereunder. In the event the Company exhausts its remedies pursuant to Section
8(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.
 
(c)  The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than 10 business days after the Executive is informed
in writing of such claim. The Executive shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that the Company desires to contest such claim,
the Executive shall:
 
(1)  give the Company any information reasonably requested by the Company
relating to such claim,
 
(2)  take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
 
(3)  cooperate with the Company in good faith in order effectively to contest
such claim, and
 
(4)  permit the Company to participate in any proceedings relating to such
claim;
 
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs
 
 
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and expenses. Without limitation on the foregoing provisions of this Section
8(c), the Company shall control all proceedings taken in connection with such
contest, and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority on
behalf of the Executive and direct the Executive to sue for a refund or contest
the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided,
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which the Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
 
(d)  If, after the receipt by the Executive of a Gross-Up Payment or payment by
the Company of an amount on the Executive’s behalf pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Section 8(c), if applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after payment by the Company of an amount on the
Executive’s behalf pursuant to Section 8(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then the amount of such payment shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
 
(e)  Notwithstanding any other provision of this Section 8, the Company may, in
its sole discretion, withhold and pay over to the Internal Revenue Service or
any other applicable taxing authority, for the benefit of the Executive, all or
any portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.
 
(f)  Definitions. The following terms shall have the following meanings for
purposes of this Section 8.
 
(i)  “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.
 
(ii)  A “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of the Executive, whether paid or payable pursuant to this Agreement
or otherwise.
 
 
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Section 9.  Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or the Affiliated Companies, and their
respective businesses, which information, knowledge or data shall have been
obtained by the Executive during the Executive’s employment by the Company or
the Affiliated Companies and which information, knowledge or data shall not be
or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive’s employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those persons designated
by the Company. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
 
Section 10.  Successors. (a) This Agreement is personal to the Executive, and,
without the prior written consent of the Company, shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.
 
(b)  This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. Except as provided in Section 10(c),
without the prior written consent of the Executive this Agreement shall not be
assignable by the Company.
 
(c)  The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. “Company” means
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law or otherwise.
 
Section 11.  Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
 
(b)  All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
 
 
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if to the Executive:
 

   
At the most recent address on file at the Company.

 
if to the Company:
 
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202

Attention: General Counsel

 
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
 
(c)  The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
 
(d)  The Company may withhold from any amounts payable under this Agreement such
United States federal, state or local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
 
(e)  The Executive’s or the Company’s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
 
(f)  The Executive and the Company acknowledge that, except as may otherwise be
provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company is “at will” and,
subject to Section 1(a), prior to the Effective Date, the Executive’s employment
may be terminated by either the Executive or the Company at any time prior to
the Effective Date, in which case the Executive shall have no further rights
under this Agreement. From and after the Effective Date, except as specifically
provided herein, this Agreement shall supersede any other agreement between the
parties with respect to the subject matter hereof.
 
(g)  If any compensation or benefits provided by this Agreement may result in
the application of Section 409A of the Code, the Company shall, in consultation
with the Executive, modify the Agreement in the least restrictive manner
necessary in order to exclude such compensation from the definition of “deferred
compensation” within the meaning of such Section 409A or in order to comply with
the provisions of Section 409A, other applicable
 
 
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provision(s) of the Code and/or any rules, regulations or other regulatory
guidance issued under such statutory provisions and without any diminution in
the value of the payments to the Executive.
 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
 

 
 
 
 /s/ Keith A. Kostuch
Keith A. Kostuch
    Alltel Corporation     By:  /s/ Richard N. Massey                         
     Richard N. Massey
     Executive Vice President,
     Secretary and General Counsel

 

 
 
 

 
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