Unassociated Document


    Exhibit
      10.3

     

    
 

    TAX
      SHARING AGREEMENT

    


    This
      Tax
      Sharing Agreement (this "Agreement") is entered into as of July 17, 2006, by
      and
      among ALLTEL Corporation, a Delaware corporation ("AT Co."), ALLTEL Holding
      Corp., a newly formed Delaware corporation and a wholly owned subsidiary of
      AT
      Co. ("Spinco"), and Valor Communications Group, Inc., a Delaware corporation
      ("Valor"). Capitalized terms used in this Agreement and not otherwise defined
      herein shall have the meanings ascribed to such terms in the Distribution
      Agreement, dated as of December 8, 2005, by and between AT Co. and Spinco,
      as
      amended on June 29, 2006 (the "Distribution Agreement").

    


    RECITALS

    


    Whereas,
      AT Co. is the common parent corporation of an affiliated group of corporations
      within the meaning of Section 1504(a) of the Internal Revenue Code of 1986,
      as
      amended (the "Code"), that has filed consolidated federal income tax returns.
      

    


    Whereas
      Spinco is a newly-formed, wholly owned subsidiary of AT Co.

    


    Whereas,
      pursuant to the Distribution Agreement, among other things, AT Co. will transfer
      or cause to be transferred to Spinco or one or more subsidiaries of Spinco
      (pursuant to certain preliminary restructuring transactions) all of the Spinco
      Assets, Spinco will assume or cause to be assumed all of the Spinco Liabilities,
      and Spinco will issue to AT Co. Spinco Common Stock and Spinco Exchange Notes
      and will pay the Special Dividend
      (the
      "Contribution"). 

    


    Whereas,
      on the Distribution Date, AT Co. will distribute all of the issued and
      outstanding shares of Spinco Common Stock on a pro rata basis to holders of
      the
      AT Co. Common Stock (the "Distribution").

    


    Whereas,
      pursuant to the Merger Agreement, dated as of December 8, 2005, by and among
      AT
      Co., Spinco and Valor (the " Merger Agreement"), following the Distribution,
      Spinco will merge with and into Valor pursuant to the Merger.

     

           
      Whereas, the parties to this Agreement intend that the Contribution, together
      with the Debt Exchange, qualify as a tax-free reorganization under Section
      368
      of the Internal Revenue Code of 1986, as amended (the "Code"), that the
      Distribution qualify as a distribution of Spinco stock to AT Co. stockholders
      pursuant to Section 355 of the Code, that the Merger qualify as a tax-free
      reorganization pursuant to Section 368 of the Code, and that no gain or loss
      be
      recognized as a result of such transactions for federal income tax purposes
      by
      any of AT Co., Spinco, and their respective stockholders (except to the extent
      of cash received in lieu of fractional shares).

     

    Whereas,
      AT Co., Spinco and Valor desire to set forth their rights and obligations with
      respect to Taxes (as defined herein) due for periods before and after the
      Distribution Date.

    



    
      
        
          


        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          


        

      

    



    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, the parties hereto agree as follows:

    


    ARTICLE
      I.

    


    DEFINITIONS

    


    "Advisory
      Fees" shall have the meaning set forth in Section 3.06(b).

    


    "Affiliate"
      shall mean any Person that directly or indirectly through one or more
      intermediaries Controls, is Controlled by, or is under common Control with
      a
      specified Person.

    


    "Agreement"
      shall have the meaning set forth in the recitals.

    


    "Applicable
      Federal Rate" shall have the meaning set forth in Section 1274(d) of the Code,
      compounded quarterly.

    


    "AT
      Co."
      shall have the meaning set forth in the preamble to this Agreement.

    


    "AT
      Co.
      Group" shall mean AT Co. and all Subsidiaries of AT Co. at any time preceding,
      at or following the Contribution, but shall not include any member of the Spinco
      Group. 

    


    "AT
      Consolidated Group" shall mean any consolidated, combined or unitary group
      (i)
      of which AT Co. is the common parent corporation at any time or (ii) that
      otherwise included Spinco or any Spinco Subsidiary for any Pre-Distribution
      Period.

    


    “AT
      Excess Expenses” shall have the meaning set forth in Section
      3.06(a).

    


    “AT
      Tax
      Expenses” shall have the meaning set forth in Section 3.06(b).

    


    "Code"
      shall have the meaning set forth in the recitals. 

    


    "Combined
      Return" shall have the meaning set forth in Section 2.01.

    


    "Contribution"
      shall have the meaning set forth in the Recitals. 

    


    "Control"
      or "Controlled" shall mean, with respect to any Person, the presence of one
      of
      the following: (i) the legal, beneficial or equitable ownership, directly or
      indirectly, of more than 50% (by vote or value) of the capital or voting stock
      (or other ownership or voting interest, if not a corporation) of such Person
      or
      (ii) the ability, directly or indirectly, to direct the voting of a majority
      of
      the directors of such Person's board of directors or, if the Person does not
      have a board of directors, a majority of the positions on any similar body,
      whether through appointment, voting agreement or otherwise.

    


    "Controlling
      Party" shall have the meaning set forth in Section 5.01. 

     

     

    
      
        
        

      

      
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    "Disqualifying
      Action" shall have the meaning set forth in Section 10.2 of the Merger
      Agreement.

    


    "Distribution"
      shall have the meaning set forth in the Recitals. 

    


    "Distribution
      Agreement" shall have the meaning set forth in the preamble to this
      Agreement.

    


    "Distribution
      Date" shall have the meaning set forth in the Distribution
      Agreement.

    


    “Exchange
      Note Expenses” shall have the meaning set forth in Section 3.06(b).

    


    “Exchange
      Notes” shall have the meaning set forth in Section 3.06(b).

    


    "Final
      Determination" shall have the meaning set forth in the Merger
      Agreement.

    


    "Income
      Taxes" shall mean any and all Taxes based upon or measured by net or gross
      income (including alternative minimum tax under Section 55 of the Code and
      including any liability described in clauses (ii) or (iii) of the definition
      of
      "Taxes" that relates to any Income Tax).

    


    “Investment
      Banking Letter Agreements” shall have the meaning set forth in Section
      3.06(b).

    


    “Merger
      Advisory Fees” shall have the meaning set forth in Section 3.06(b).

    


    "Other
      Taxes" shall mean any and all Taxes other than Income Taxes, including any
      liability described in clauses (ii) or (iii) of the definition of "Taxes" that
      relates to any Other Tax.

    


    "Person"
      shall mean any individual, partnership, joint venture, corporation, limited
      liability company, trust, unincorporated organization, government or department
      or agency of a government.

    


    "Post-Distribution
      Period" shall mean any taxable year or other taxable period beginning after
      the
      Distribution Date and, in the case of any taxable year or other taxable period
      that begins before and ends after the Distribution Date, that part of the
      taxable year or other taxable period that begins at the beginning of the day
      after the Distribution Date.

    


    "Pre-Distribution
      Period" shall mean any taxable year or other taxable period that ends on or
      before the Distribution Date and, in the case of any taxable year or other
      taxable period that begins before and ends after the Distribution Date, that
      part of the taxable year or other taxable period through the close of the
      Distribution Date.

    


    "Reimbursing
      Party" shall have the meaning set forth in Section 3.05(d).

     

     

    
      
        
        

      

      
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    "Reimbursed
      Party" shall have the meaning set forth in Section 3.05(d).

    


    "Separate
      Return" shall have the meaning set forth in Section 2.01(b).

    


    "Short
      Period Return" shall have the meaning set forth in Section 2.01(b).

    


    "Spinco"
      shall have the meaning set forth in the Recitals.

    


    “Spinco
      Credit/Note Expenses” shall have the meaning set forth in Section
      3.06(b).

    


    "Spinco
      Group" shall mean Spinco and all entities that are Subsidiaries of Spinco
      immediately following the Contribution. 

    


    “Spinco
      Tax Expenses” shall have the meaning set forth in Section 3.06(b).

    


    "
      Spinco
      Transaction Expenses" shall have the meaning set forth in Section
      3.06(a).

    


    "Straddle
      Return" shall have the meaning set forth in Section 2.01.

    


    "Straddle
      Period" shall mean any taxable period that includes but does not end on the
      Distribution Date.

    


    "Subsidiary"
      shall mean a corporation, limited liability company, partnership, joint venture
      or other business entity if 50% or more of the outstanding equity or voting
      power of such entity is owned directly or indirectly by the corporation with
      respect to which such term is used. 

    


    "Tax"
      or
      "Taxes" shall have the meaning set forth in the Merger Agreement. 

    


    "Tax
      Attribute" shall mean any net operating loss carryover, net capital loss
      carryover, investment tax credit carryover, foreign tax credit carryover,
      charitable deduction carryover or other similar item that could reduce Income
      Tax for a past or future taxable period.

    


    "Tax
      Benefit" shall means, in the case of separate state, local or other Income
      Tax
      Return, the sum of the amount by which the Tax liability (after giving effect
      to
      any alternative minimum or similar Tax) of a corporation to the appropriate
      Taxing Authority is reduced (including by deduction, entitlement to refund,
      credit or otherwise, whether available in the current taxable year, as an
      adjustment to taxable income in any other taxable year or as a carryforward
      or
      carryback, as applicable) plus any interest from such government or jurisdiction
      relating to such Tax liability, and in the case of a consolidated federal Income
      Tax Return or combined, unitary or other similar state, local or other Income
      Tax Return, the sum of the amount by which the Tax liability of the affiliated
      group (within the meaning of Section 1504(a) of the Code) or other relevant
      group of corporations to the appropriate government or jurisdiction is reduced
      (including by deduction, entitlement to 

     

     

    
      
        
        

      

      
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    refund,
      credit or otherwise, whether available in the current taxable year, as an
      adjustment to taxable income in any other taxable year or as a carryforward
      or
      carryback, as applicable) plus any interest from such government or jurisdiction
      relating to such Tax liability. 

    


    "Tax
      Contest" shall have the meaning set forth in Section 5.01.

    


    "Tax
      Return" shall have the meaning set forth in the Merger Agreement.

    


    "Taxing
      Authority" shall have the meaning set forth in the Merger
      Agreement.

    


    “Transaction
      Expenses” shall have the meaning set forth in Section 3.06(a).

    


    "USF
      Payments" shall have the meaning set forth in Section 2.04(a).

    


    "USF
      Tax
      Amount" shall have the meaning set forth in Section 2.04(a).

    


    "Valor"
      shall have the meaning set forth in the recitals

    


    "Valor
      Group" shall mean Valor and all entities that are Subsidiaries of Valor
      immediately following the Merger.

    


    "Windstream
      Corporation" shall mean the corporation surviving the Merger.

    


    ARTICLE
      II.

    


    TAX
      RETURNS AND TAX PAYMENTS

    


    2.01
      OBLIGATIONS TO FILE TAX RETURNS. 

    


    (a)
      AT
      Co. shall file or cause to be filed any Income Tax Return that is required
      to be
      filed after the Distribution Date by or with respect to any member of the Spinco
      Group that (i) is filed on a consolidated, combined or unitary basis, (ii)
      includes both one or more members of the AT Co. Group and one or more members
      of
      the Spinco Group, and (iii) is for a taxable period that includes a
      Pre-Distribution Period (a "Combined Return"). Each member of the Spinco Group
      hereby irrevocably authorizes and designates AT Co. as its agent, coordinator
      and administrator for the purpose of taking any and all actions necessary or
      incidental to the filing of any such Combined Tax Return and, except as
      otherwise provided herein, for the purpose of making payments to, or collecting
      refunds from, any Taxing Authority in respect of a Combined Return. Except
      as
      otherwise provided herein, AT Co. shall have the exclusive right to file,
      prosecute, compromise or settle any claim for refund for Income Taxes in respect
      of a Combined Return for which AT Co. bears responsibility hereunder and to
      determine whether any refunds of such Income Taxes to which the AT Consolidated
      Group may be entitled shall be received by way of refund or credit against
      the
      Tax liability of the AT Consolidated Group.

     

     

    
      
        
        

      

      
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    (b)
      Valor
      shall file or cause to be filed any other Income Tax Return required to be
      filed
      after the Distribution Date by or with respect to one or more members of the
      Spinco Group, including any such Tax Return (i) with respect to any taxable
      period that includes but does not end on the Distribution Date (a "Straddle
      Return"), (ii) with respect to a taxable period ending on the Distribution
      Date
      (a "Short Period Return"), and (iii) with respect to a taxable period beginning
      after the Distribution Date (a "Separate Return"). AT Co. shall remit to Valor
      in immediately available funds the amount of any Income Taxes (including
      estimated Income Taxes) related to a Straddle Return or Short Period Return
      for
      which AT Co. is responsible hereunder, at least two Business Days before payment
      of the relevant amount is due to a Taxing Authority. Valor shall file or cause
      to be filed any Other Tax Return required to be filed after the Distribution
      Date by one or more members of the Spinco Group.

    


    2.02
      APPROVAL OF STRADDLE RETURNS AND SHORT PERIOD RETURNS. No later than thirty
      (30)
      days prior to the date on which any Straddle Return or Short Period Return
      is
      required to be filed (taking
      into account any valid extensions)
      (the
      "Due Date"), Valor shall submit or cause to be submitted to AT Co. the Straddle
      Return or Short Period Return and
      shall
      make or cause to be made any and all changes to such return reasonably requested
      by AT Co., to the extent that such changes relate to items for which AT Co.
      has
      responsibility hereunder (and for which at least substantial authority exists
      within the meaning of Section 6662 of the Code and the Treasury Regulations
      thereunder). Valor shall not file or allow to be filed any such Straddle Return
      or Short Period Return prior to receiving written approval of the return from
      AT
      Co., which approval shall not be unreasonably withheld, delayed or
      conditioned. 

    


    2.03
      OBLIGATION TO REMIT TAXES. Subject to Section 2.01 and subject always to the
      ultimate division of responsibility for Taxes set out in Section 2.04, AT Co.
      and Valor shall each remit or cause to be remitted to the applicable Taxing
      Authority any Taxes due in respect of any Tax Return that such party is required
      to file (or, in the case of a Tax for which no Tax Return is required to be
      filed, which is otherwise payable by such party or a member of such party's
      group (the AT Co. Group or the Spinco Group) to any Taxing Authority) and shall
      be entitled to reimbursement for such payments to the extent provided herein
      or
      in the Merger Agreement. 

    


    2.04
      TAX
      SHARING OBLIGATIONS AND PRIOR AGREEMENTS.

    


    (a)
      From
      and after the Merger, Valor shall be liable for and shall indemnify and hold
      the
      AT Co. Group harmless against (i) any net liability for Income Taxes of a member
      of the Spinco Group (and Valor and the Spinco Group shall be entitled to receive
      and retain any net refund of Income Taxes or other net Tax Benefit) attributable
      to the treatment of payments received from a federal or state universal services
      fund ("USF Payments") in respect of the Spinco Business for the period from
      January 1, 1997, to the Distribution Date, taking into account (x) any refund
      of
      Income Taxes with respect to USF Payments previously not treated as
      contributions to capital within the meaning of Section 118(a) of the Code,
      (y)
      cost recovery deductions arising from property acquired with USF Payments and
      (z) Income Taxes payable as a result of a failure of a USF Payment to be treated
      as a 

     

     

    
      
        
        

      

      
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    contribution
      to capital within the meaning of Section 118(a) of the Code, in each case with
      respect to such period (a "USF Tax Amount"), (ii) any Other Taxes arising in
      the
      Pre-Distribution Period and attributable to a member of the Spinco Group or
      to
      the employees, assets or transactions of the Spinco Business, except for Other
      Taxes arising in respect of the Contribution (including the Preliminary
      Restructuring) or the Distribution and (iii) any liability for Taxes arising
      in
      the Post-Distribution Period and attributable to a member of the Spinco Group
      or
      to the assets, employees, or transactions of the Spinco Business. Except with
      respect to indemnification pursuant to clause (i), all indemnification pursuant
      to this Section 2.04(a) shall be on a net after-Tax basis.

    


    (b)
      Except for Taxes specifically allocated to Valor under this Agreement or for
      which Valor has indemnified AT Co. pursuant to the Merger Agreement, AT Co.
      shall be liable for and shall indemnify and hold Valor and its Subsidiaries
      and
      the Spinco Group harmless against, on a net after-Tax basis, any Tax liability
      (i) of the AT Co. Group or any AT Consolidated Group or any member thereof
      or
      attributable to the employees, assets or transactions of the AT Co. Business
      or
      (ii) of the Spinco Group or any member thereof, including Taxes arising from
      any
      Distribution Disqualification other than Taxes for which Valor is responsible
      pursuant to Article X of the Merger Agreement.

    


    (c)
      Except as set forth in this Agreement and in consideration of the mutual
      indemnities and other obligations of this Agreement, any and all prior Tax
      sharing or allocation agreements or practices between any member of the AT
      Co.
      Group and any member of the Spinco Group (including the ALLTEL Corporation
      and
      Subsidiaries Tax Sharing Policy in effect for taxable years ending on or after
      December 31, 1991) shall be terminated with respect to the Spinco Group as
      of
      the Distribution Date, and no member of the Spinco Group shall have any
      continuing rights or obligations thereunder.

    


    (d)
      Valor
      shall be entitled to any refund of or credit for Taxes for which Valor is
      responsible under this Agreement, and AT Co. shall be entitled to any refund
      of
      or credit for Taxes for which AT Co. is responsible under this Agreement.
      Refunds for any Straddle Period shall be equitably apportioned between the
      AT
      Co. Group and the Spinco Group in accordance with the provisions of this
      Agreement governing such periods. A party receiving a refund to which another
      party is entitled pursuant to this Agreement shall pay the amount to which
      such
      other party is entitled within five days after the receipt of the
      refund.

    


    2.06
      PERIOD THAT INCLUDES THE DISTRIBUTION DATE.

    


    (a)
      To
      the extent permitted by law or administrative practice, the taxable year of
      each
      member of the Spinco Group with respect to any Tax shall be treated as closing
      at the close of the Distribution Date.

    


    (b)
      If it
      is necessary for purposes of this Agreement to determine the Tax liability
      of
      any member of the Spinco Group for a taxable year or period that begins on
      or
      before and ends after the Distribution Date and that is not treated under
      Section 2.05(a) as closing at the close of the Distribution Date, the
      determination shall be made, in the case of Taxes 

     

     

    
      
        
        

      

      
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    that
      are
      based upon income or receipts, by assuming that the relevant taxable period
      ended at the close of the Distribution Date, except that any exemptions,
      allowances or deductions that are calculated on an annual basis shall be
      apportioned on a time basis. In the case of Taxes that are imposed on a periodic
      basis, are payable for a taxable period that includes (but does not end on)
      the
      Distribution Date, and are not based upon or related to income or receipts,
      the
      portion of such Tax that relates to the Pre-Distribution Period shall be deemed
      to be the amount of such Tax for the entire taxable period multiplied by a
      fraction the numerator of which is the number of days in the taxable period
      ending on the Distribution Date and the denominator of which is the number
      of
      days in the entire taxable period. 

    


    (c)
      For
      the avoidance of doubt, Taxes allocated to the Pre-Distribution Period shall
      include (i) any Tax resulting from the departure of any corporation from any
      AT
      Consolidated Group (resulting from the triggering into income of deferred
      intercompany transactions under Section 1.1502-13 of the Treasury Regulations
      or
      excess loss accounts under Section 1.1502-19 of the Treasury Regulations or
      otherwise) other than any such Tax that would not have arisen in the absence
      of
      a Disqualifying Action, and (ii) any Tax related to items of income or gain
      arising with respect to any interest in an entity treated as a partnership
      for
      United States federal income tax purposes, held by a member of the Spinco Group
      in the Pre-Distribution Period, in accordance with the principles of Section
      1.1502-76(b)(2)(vi) of the Treasury Regulations.

    


    ARTICLE
      III.

    


    CARRYBACKS;
      AMENDED RETURNS; TIMING ADJUSTMENTS; COMPENSATION DEDUCTIONS

    


    3.01
      CARRYBACKS. Without the consent of AT Co., no member of the Spinco Group shall
      carry back any Tax Attribute (unless required to carry back such Tax Attribute
      by law) from a Post-Distribution Period to a Pre-Distribution Period. Provided
      that AT Co. consents to the carryback or if the carryback is required by law,
      AT
      Co. (or any other member of the AT Co. Group receiving such refund) shall
      promptly remit to Valor any Tax Benefit it realizes with respect to any such
      carryback. 

    


    3.02
      AMENDED RETURNS. Valor shall not, and shall not permit any member of the Spinco
      Group to, file any amended Income Tax Return of a member of the Spinco Group
      or
      a Tax Return with respect to Other Taxes of a member of the Spinco Group that
      is
      filed on a combined basis with a member of the AT Co. Group, in each case with
      respect to a Pre-Distribution Period, without first obtaining the consent of
      AT
      Co., which shall not be unreasonably withheld, delayed or
      conditioned.

    


    3.03
      TIMING
      ADJUSTMENTS. 

    


    (a)
      If an
      audit or other examination by any Taxing Authority with respect to any Income
      Tax Return shall result (by settlement or otherwise) in any adjustment that
      (A)
      decreases deductions, losses or Tax credits or increases income, gains or
      recapture of Tax credits of a member of the AT Consolidated Group for a
      Pre-Distribution Period in respect 

     

     

    
      
        
        

      

      
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    of
      an
      item for which AT Co. is responsible hereunder and (B) will permit the Spinco
      Group to increase deductions, losses or tax credits or decrease income, gains
      or
      recapture of tax credits that would otherwise (but for such adjustment) have
      been taken or reported with respect to the Spinco Group for one or more
      Post-Distribution Periods, Valor shall, and shall cause the Spinco Group to,
      pay
      to AT Co. the amounts of any Tax Benefits that result therefrom within ten
      (10)
      days of the date on which such Tax Benefits are realized, provided, however,
      that this Section 3.02(a) shall not apply to any such adjustment relating to
      the
      subject matter of 2.04(a)(i) and the last sentence of Section 4.01.

    


    (b)
      If an
      audit or other examination by any Taxing Authority with respect to any Income
      Tax Return shall result (by settlement or otherwise) in any adjustment that
      (A)
      decreases deductions, losses or Tax credits or increases income, gains or
      recapture of Tax credits of a member of the Valor Group for a Post-Distribution
      Period and (B) will permit any member of the AT Co. Group or any AT Consolidated
      Group to increase deductions, losses or tax credits or decrease income, gains
      or
      recapture of tax credits in respect of an item for which AT Co. would be
      responsible hereunder, AT Co. shall, and shall cause the AT Co. Group to, pay
      to
      Valor the amounts of any Tax Benefits that result therefrom within ten (10)
      days
      of the date on which such Tax Benefits are realized.

    


    (c)
      The
      party in control of the audit or other examination to which any such adjustment
      described in 3.02(a) or (b) above relates shall notify the other party and
      provide it with adequate information so that it may reflect such adjustment
      on
      its applicable Tax Returns.

    


    3.04.
      TAX
      BENEFIT REALIZED. For purposes of this Agreement, a Tax Benefit shall be deemed
      to have been realized at the time any refund of Taxes is received or applied
      against other Taxes due, or at the time of filing of a Tax Return (including
      any
      relating to estimated Taxes) on which a loss, deduction or credit is applied
      in
      reduction of Taxes which would otherwise be payable; provided,
      however,
      that,
      where a party has other losses, deductions, credits or similar items available
      to it, deductions, credits or items for which the other party would be entitled
      to a payment under this Agreement shall be treated as the last items utilized
      to
      produce a Tax Benefit.

    


    3.05
      DEDUCTIONS WITH RESPECT TO RESTRICTED STOCK ISSUED PRIOR TO THE DISTRIBUTION
      DATE.

    


    (a)
      All
      deductions for United States federal, state and local income Tax purposes
      resulting from the vesting of shares of restricted stock of AT Co. issued prior
      to the Distribution Date and the related shares of Windstream Corporation
      received with respect to such AT Co. shares shall be taken by AT Co. or a member
      of the AT Co. Group, and no party to this Agreement shall take any position
      on
      any Tax Return which is inconsistent with such treatment, unless required to
      do
      so pursuant to a Final Determination to such effect.

    


    (b)
      If,
      by reason of a subsequent Final Determination as to the treatment of any tax
      deductions related to the AT Co. restricted stock or Windstream Corporation
      restricted

     

     

    
      
        
        

      

      
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    stock
      referred to in Section 3.05(a) above, the taxing authorities determine that
      Valor is entitled to such deduction, then Valor shall, and shall cause the
      Spinco Group to, pay to AT Co. the amount of any Tax Benefits that result
      therefrom within ten (10) days of the date on which such Tax Benefits are
      realized. 

    


    3.06
      DEDUCTIONS WITH RESPECT TO TRANSACTION EXPENSES

    


    (a)
      Pursuant to Section 12.2 of the Distribution Agreement, the costs and expenses
      incurred by AT Co. or Spinco or their respective Subsidiaries and described
      in
      that Section (“Transaction Expenses”) are to be paid (borne economically) by (i)
      Spinco, in an amount up to $45.948 million (“Spinco Transaction Expenses”), and
      (ii) thereafter, by AT Co. (“AT Excess Expenses”).

    


    (b)
      As
      soon as is reasonably practicable after the Closing Date, AT Co. and Valor
      shall
      determine (i) those Transaction Expenses that are to be reported as items of
      the
      AT Co. Group for Tax purposes (“AT Tax Expenses”) and (ii) those Transaction
      Expenses that are to be reported as items of the Spinco Group for Tax purposes
      (“Spinco Tax Expenses”). In making that determination, the following principles
      shall apply - (i) the costs and expenses incurred in connection with (A) the
      Spinco Credit Agreement and (B) the $800 million in principal amount of Senior
      Notes due 2013 issued by Windstream Corporation (collectively, “Spinco
      Credit/Note Expenses”), including the aggregate fees, expenses and underwriting
      discount related thereto, shall be treated as Spinco Tax Expenses; (ii) the
      portion of the advisory fees (“Advisory Fees”) payable pursuant to those certain
      Letter Agreements, dated December 7 and 8, 2005, among Stephens, Inc., JP Morgan
      Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., Alltel
      Corporation and ALLTEL Holding Corp. (“Investment Banking Letter Agreements”)
      that relates to the Merger (“Merger Advisory Fees”), which portion the parties
      agree is $9.375 million, shall be treated as Spinco Tax Expenses; (iii) the
      remaining portion of the Advisory Fees, which relate to the Contribution and
      the
      Distribution and which portion the parties agree is $28.125 million
      (“Contribution/Distribution Advisory Fees”), shall be treated as AT Tax
      Expenses; (iv) the costs and expenses (“Exchange Note Expenses”) incurred in
      connection with the $1.746 billion in principal amount of Notes due 2016 issued
      by Spinco (“Exchange Notes”), other than the implicit underwriting commission
      arising on the transfer by AT Co. of the Exchange Notes in exchange for certain
      outstanding indebtedness of AT Co. (which shall be treated as an AT Tax
      Expense), shall be treated as Spinco Tax Expenses; (v) other fees and expenses
      related to the Merger shall be treated as Spinco Tax Expenses; (vi) other fees
      and expenses related to the Contribution and the Distribution shall be treated
      as AT Tax Expenses; and (vii) costs and expenses not provided for in clauses
      (i)
      through (vi) shall be allocated between AT Co. and Spinco for Tax purposes
      in
      such reasonable manner as the parties may agree. No party shall take a position
      on any Tax Return that is inconsistent with the allocations provided for in
      this
      paragraph (b), unless required to do so by a Final Determination to such
      effect.

    


    (c)
      If,
      as an original matter or by reason of a subsequent Final Determination as to
      the
      treatment of a Transaction Expense as an AT Tax Expense or a Spinco Tax Expense,
      a Spinco Tax Expense is borne economically by AT Co. (that is, if a Spinco
      Tax
      Expense is 

     

     

    
      
        
        

      

      
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    treated
      as an AT Excess Expense), then, in accordance with Section 3.04 of this
      Agreement and without duplication of the other adjustments required under this
      Agreement, Valor shall, and shall cause the Spinco Group to, pay to AT Co.
      the
      amount of any Tax Benefits that result therefrom within ten (10) days of the
      date on which such Tax Benefits are realized. For this purpose, the following
      ordering conventions shall apply - (i) Spinco Transaction Expenses shall be
      deemed to consist (A) first, of Spinco Credit/Note Expenses, to the full extent
      thereof, (B) second, of Exchange Note Expenses, to the full extent thereof,
      (C)
      third, of Merger Advisory Fees, to the full extent thereof, (D) fourth, of
      other
      fees and expenses related to the Merger described in paragraph (b)(v) and (E)
      fifth, of other Spinco Tax Expenses described in paragraph (b)(vii).


    


    (d)
      The
      principles of paragraph (c) shall apply, mutatis
      mutandis, if
      an AT
      Tax Expense is borne economically by Spinco (that is, if an AT Tax Expense
      is
      treated as a Spinco Transaction Expense).

    


    ARTICLE
      IV.

    


    PAYMENTS

    


    4.01
      PAYMENTS. Except as provided in Section 2.01 and Section 3.03, payments due
      under this Agreement shall be made no later than thirty (30) days after the
      receipt or crediting of a refund, the realization of a Tax Benefit for which
      the
      other party is entitled to reimbursement, the delivery of notice of payment
      of a
      Tax for which the other party is responsible under this Agreement, or the
      delivery of notice of a Final Determination which results in such other party
      becoming obligated to make a payment hereunder to the other party hereto.
      Payments due hereunder, but not made within such 30-day period, shall be
      accompanied with interest at a rate equal to the Applicable Federal Rate from
      the due date of such payment. Notwithstanding the foregoing, in the case of
      any
      payment required to be made to AT Co. by Valor as the result of a Final
      Determination with respect to a USF Amount, such USF Amount may be paid in
      ten
      (10) equal, annual installments, commencing on a date which is not less than
      thirty (30) days after the date of such Final Determination, and on each of
      the
      nine succeeding anniversaries of such date.

    


    4.02
      NOTICE. AT Co. and Valor shall give each other prompt written notice of any
      payment that may be due to the provider of such notice under this Agreement.
      

    


    ARTICLE
      V.

    


    TAX
      CONTESTS

    


    5.01
      NOTICE. Valor shall promptly notify AT Co. in writing upon receipt by Valor
      or
      any member of the Valor Group of a written communication from any Taxing
      Authority with respect to any pending or threatened audit, dispute, suit,
      action, proposed assessment or other proceeding (a "Tax Contest") concerning
      any
      Combined Return, Straddle Return or Short Period Return or otherwise concerning
      Taxes for which AT Co. may be liable under this Agreement. AT Co. shall promptly
      notify Valor in writing upon 

     

     

    
      
        
        

      

      
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    receipt
      by AT Co. or any member of the AT Co. Group of a written communication from
      any
      Taxing Authority with respect to any Tax Contest concerning any Separate Return
      or otherwise concerning Taxes for which Valor may be liable under this
      Agreement. 

    


    5.02
      CONTROL OF CONTESTS BY AT. CO. Except as provided in Section 5.03, AT Co. shall
      have sole control of any Tax Contest of a member of the Spinco Group related
      to
      any Combined Return, Straddle Return or Short Period Return, including the
      exclusive right to communicate with agents of the Taxing Authority and to
      control, resolve, settle or agree to any deficiency, claim or adjustment
      proposed, asserted or assessed in connection with or as a result of any such
      Tax
      Contest, provided, however, that (i) AT Co. shall provide Valor an opportunity
      to review and comment upon AT Co.'s communications with such Taxing Authorities
      to the extent such communications relate to Spinco or any member of the Spinco
      Group, (ii) AT Co. shall act in good faith in connection with its control of
      such Tax Contest and (iii) in the case of any such Tax Contest that relates
      to
      Income Taxes for which Valor has responsibility hereunder, Valor may participate
      in the Tax Contest at its own expense, and AT Co. shall not settle or concede
      any such Tax Contest without the prior written consent of Valor, which consent
      shall not be unreasonably withheld, delayed or conditioned.

    


    5.03
      CONTROL OF CONTESTS BY VALOR. Valor shall have sole control of any Tax Contest
      related to any Separate Return and any Tax Contest relating to Other Taxes
      for
      which Valor is responsible hereunder, including the exclusive right to control,
      resolve, settle or agree to any deficiency, claim or adjustment proposed,
      asserted or assessed in connection with or as a result of any such Tax
      Contest.

    


    ARTICLE
      VI.

    


    COOPERATION

    


    6.01
      GENERAL. AT Co. and Valor shall cooperate with each other in the filing of
      any
      Tax Returns and the conduct of any audit or other proceeding and each shall
      execute and deliver such powers of attorney and make available such other
      documents as are reasonably necessary to carry out the intent of this Agreement.
      Each party agrees to notify the other party in writing of any audit adjustments
      which do not result in Tax liability but can be reasonably expected to affect
      Tax Returns of the other party, or any of its Subsidiaries, for a
      Post-Distribution Period. 

    


    6.02
      CONSISTENT TREATMENT. 

    


    (a)
      Unless and until there has been a Final Determination to the contrary, each
      party agrees to treat the Contribution, together with the Debt Exchange, as
      a
      reorganization qualifying under Section 368(a)(1)(D) of the Code, the
      Distribution as a transaction qualifying under Sections 355 and 361 of the
      Code
      and the Merger as a reorganization qualifying under Section 368(a) of the Code,
      pursuant to which no gain or loss is recognized by any of AT Co., Spinco, Valor
      and their respective shareholders (except to the extent of cash received in
      lieu
      of fractional shares).

     

     

    
      
        
        

      

      
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    (b)
      Unless and until there has been a Final Determination to the contrary or unless
      there is not at
      least
      substantial authority for a particular position within the meaning of Section
      6662 of the Code and the Treasury Regulations thereunder,
      Valor
      shall file or cause to be filed all Tax Returns of a member of the Spinco Group
      or relating to the Spinco Business and shall conduct any Tax Contests in respect
      of a member of the Spinco Group or the Spinco Business in a manner consistent
      with AT Co.'s determination of the adjusted Tax basis of any asset and the
      amount of any Tax Attribute or any similar item held by the Spinco Group at
      the
      time of the Distribution, and, without the consent of AT Co., in the case of
      a
      past practice of the AT Co. Consolidated Group that is subject to a Tax Contest
      at the time of the Distribution, Valor shall not permit any of the Spinco
      Subsidiaries to take any position on any Tax Return, in any Tax Contest or
      otherwise that is inconsistent with such past practice. For the avoidance of
      doubt, this Section shall not apply to reporting under GAAP.

    


    ARTICLE
      VII.

    


    RETENTION
      OF RECORDS; ACCESS

    


    The
      AT
      Co. Group and the Valor Group shall (a) in accordance with their then current
      record retention policy, retain records, documents, accounting data and other
      information (including computer data) necessary for the preparation and filing
      of all Tax Returns in respect of Taxes of any member of either the AT Co. Group
      or the Spinco Group for any Pre-Distribution Period or any Post-Distribution
      Period or for the audit of such Tax Returns; and (b) give to the other
      reasonable access to such records, documents, accounting data and other
      information (including computer data) and to its personnel (insuring their
      cooperation) and premises, for the purpose of the review or audit of such Tax
      Returns to the extent relevant to an obligation or liability of a party under
      this Agreement or for purposes of the preparation or filing of any such Tax
      Return, the conduct of any Tax Contest or any other matter reasonably and in
      good faith related to the Tax affairs of the requesting party. At any time
      after
      the Distribution Date that the Valor Group proposes to destroy such material
      or
      information, it shall first notify the AT Co. Group in writing and the AT Co.
      Group shall be entitled to receive such materials or information proposed to
      be
      destroyed. At any time after the Distribution Date that the AT Co. Group
      proposes to destroy such material or information, it shall first notify the
      Valor Group in writing and the Valor Group shall be entitled to receive such
      materials or information proposed to be destroyed.

    


    ARTICLE
      VIII.

    


    TERMINATION
      OF LIABILITIES

    


    Notwithstanding
      any other provision in this Agreement, any liabilities determined under this
      Agreement shall not terminate any earlier than the expiration of the applicable
      statute of limitation for such liability. All other covenants under this
      Agreement shall survive indefinitely.

     

     

    
      
        
        

      

      
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    ARTICLE
      IX.

    


    DISPUTE
      RESOLUTION

    


    AT
      Co.
      and Valor shall attempt in good faith to resolve any disagreement arising with
      respect to this Agreement, including, but not limited to, any dispute in
      connection with a claim by a third party (a "Dispute"). Either party may give
      the other party written notice of any Dispute not resolved in the normal course
      of business. If the parties cannot agree by the tenth Business Day following
      the
      date on which one party gives such notice (the "Dispute Date"), then the Dispute
      shall be determined as follows: Within 20 days of the Dispute Date, AT Co.
      and
      Valor shall each appoint one arbitrator. The two arbitrators so appointed shall
      appoint a third arbitrator within 30 days of the Dispute Date. If either party
      shall fail to appoint an arbitrator within such 20-day period, the arbitration
      shall be conducted by the sole arbitrator appointed by the other party. Whether
      selected by AT Co., Valor or otherwise, each arbitrator selected to resolve
      such
      dispute shall be a tax lawyer who is generally recognized in the tax community
      as a qualified and competent tax practitioner with experience in the tax area
      involved. Such arbitrators shall be empowered to resolve the Dispute, including
      by engaging nationally recognized accounting and other experts. Each of AT
      Co.
      and Valor shall bear 50% of the aggregate expenses of the arbitrators (or the
      sole arbitrator). The decision of the arbitrators shall be rendered no later
      than 90 days from the Dispute Date and shall be final.

    


    ARTICLE
      X.

    


    MERGER
      AGREEMENT CONTROLS

    


    None
      of
      the provisions of this Agreement are intended to supersede any provision in
      Article X of the Merger Agreement. In the event of any conflict between this
      Agreement and Article X of the Merger Agreement, Article X of the Merger
      Agreement shall control.

    


    ARTICLE
      XI.

    


    MISCELLANEOUS
      PROVISIONS

    


    To
      the
      extent not inconsistent with any specific term of this Agreement, the following
      sections of the Distribution Agreement shall apply in relevant part to this
      Agreement: 12.3 (Governing Law), 12.4 (Notice), 12.5 (Amendment and
      Modification), 12.6 (Successors and Assigns; No Third-Party Beneficiaries),
      12.7
      (Counterparts), 12.8 (Interpretation), 12.9 (Severability), 12.10 (References;
      Construction), and 12.11 (Terminability).

     

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
      the
      day and year first above written.

    


    ALLTEL
      CORPORATION

    


    By:
      /s/ Sharilyn S. Gasaway                

     

    Name:
      Sharilyn S. Gasaway

    Title:  
      Executive Vice President

    


    


    


    ALLTEL
      HOLDING CORP.

    


    By:
      /s/ John P. Fletcher                    

     

    Name:
      John P. Fletcher

    Title:  
      Executive Vice President and General Counsel

    


    


    


    VALOR
      COMMUNICATIONS GROUP, INC.

    


    By:
      /s/ William M. Ojile, Jr.,                


     

    Name:
      William M. Ojile, Jr., 

    Title:   
      Senior Vice President, Chief Legal Officer 

                        and
      Secretary