**Exhibit (10)(c)(9)(a)**

 

**AGREEMENT**

 

This Agreement, datedJanuary 22, 2004, is made by and between ALLTEL Corporation, a Delawarecorporation (as hereinafter defined, the “Corporation”), and Scott H.Settelmyer (as hereinafter defined, the “Executive”).

 

**WHEREAS**, theCorporation recognizes that the possibility of a Change in Control (ashereinafter defined) of the Corporation exists and that such possibility, andthe uncertainty it may cause, may result in the departure or distraction of keymanagement employees of the Corporation or of a Subsidiary to the detriment ofthe Corporation and its stockholders; and

 

**WHEREAS**, theExecutive is a key management employee of the Corporation or of a Subsidiary;and

 

**WHEREAS**, theCorporation desires to encourage the continued employment of the Executive bythe Corporation or a Subsidiary and the continued dedication of the Executiveto the Executive’s assigned duties without distraction as a result of thecircumstances arising from the possibility of a Change in Control;

 

**NOW THEREFORE**, inconsideration of the premises and the mutual covenants herein contained, theCorporation and the Executive hereby agree as follows:

 

1.  **Defined Terms**.  For purposes of this Agreement, thefollowing terms shall have the meanings indicated below:

 

(A)                              “ALLTELGroup” shall mean, collectively, the Corporation and each Subsidiary of theCorporation from time to time, and a “member” of the ALLTEL Group shall meanthe Corporation or any of such entities.

 

(B)                                “Board”shall mean the Board of Directors of the Corporation, as constituted from timeto time.

 

(C)                                “Cause”for termination by the Corporation of the Executive’s employment shall mean (i)the willful failure by the Executive substantially to perform the Executive’sduties with the Corporation or a Subsidiary, other than any failure resultingfrom the Executive’s incapacity due to physical or mental illness or any actualor anticipated failure after the issuance of a Notice of Termination for GoodReason by the Executive in accordance with paragraph (A) of Section 6,that continues for at least 30 days after the Board delivers to the Executive awritten demand for performance that identifies specifically and in detail themanner in which the Board believes that the Executive willfully has failedsubstantially to perform the Executive’s duties, or (ii) the willful engagingby the Executive in misconduct that is demonstrably and materially injurious tothe Corporation or any Subsidiary, monetarily or otherwise, or (iii) a breachby the

 

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Executive of any of theExecutive’s covenants set forth in Section 7.  For purposes of clause (i) and clause (ii) of this definition, noact, or failure to act, on the Executive’s part shall be deemed “willful” unlessdone, or omitted to be done, by the Executive not in good faith and withoutreasonable belief that the Executive’s act, or failure to act, was in the bestinterest of the Corporation and its Subsidiaries.

 

(D)                               A“Change in Control” shall mean, if subsequent to the date of this Agreement:

 

(i)                                     Any“person,” as defined in Section 13(d) and 14(d) of the Securities ExchangeAct of 1934, as amended (the “Exchange Act”), other than the Corporation, anyof its subsidiaries, or any employee benefit plan maintained by the Corporationor any of its subsidiaries, becomes the “beneficial owner” (as defined in Rulel3d-3 under the Exchange Act) of (A) l5% or more, but no greater than 50%, ofthe outstanding voting capital stock of the Corporation, unless prior thereto,the Continuing Directors approve the transaction that results in the personbecoming the beneficial owner of 15% or more, but no greater than 50%, of theoutstanding voting capital stock of the Corporation or (B) more than 50% of theoutstanding voting capital stock of the Corporation, regardless whether thetransaction or event by which the foregoing 50% level is exceeded is approvedby the Continuing Directors;

 

(ii)                                  Atany time Continuing Directors no longer constitute a majority of the directorsof the Corporation; or

 

(iii)                               Theconsummation of (A) a merger or consolidation of the Corporation, statutoryshare exchange, or other similar transaction with another corporation,partnership, or other entity or enterprise in which either the Corporation isnot the surviving or continuing corporation or shares of common stock of theCorporation are to be converted into or exchanged for cash, securities otherthan common stock of the Corporation, or other property, (B) a sale ordisposition of all or substantially all of the assets of the Corporation, or (C)the dissolution of the Corporation.

 

(E)                                 “Code”shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

(F)                                 “ContinuingDirectors” means directors who were directors of the Corporation at thebeginning of the 12-month period ending on the date the determination

is made or whoseelection, or nomination for election by the Corporation’s stockholders, wasapproved by at least a majority of the directors who are in office at the timeof the election or nomination and who either (i) were directors at thebeginning of the period, or (ii) were elected, or nominated for election, by atleast a majority of the directors who were in office at the time of theelection or nomination and were directors at the beginning of the period.

 

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(G)                                “Corporation”shall mean ALLTEL Corporation and any successor to its business or assets, byoperation of law or otherwise.

 

(H)                               “Dateof Termination” shall have the meaning stated in paragraph (B) ofSection 6 hereof.

 

(I)                                    “Disability”shall be deemed the reason for the termination by the Corporation of theExecutive’s employment, if, as a result of the Executive’s incapacity due tophysical or mental illness, the Executive shall have been absent from thefull-time performance of the Executive’s duties with the Corporation or aSubsidiary for a period of six consecutive months, the Corporation shall havegiven the Executive a Notice of Termination for Disability, and, within 20business days after the Notice of Termination is given, the Executive shall nothave returned to the full-time performance of the Executive’s duties.

 

(J)                                   “Executive”shall mean the individual named in the first paragraph of this Agreement.

 

(K)                               “GoodReason” for termination by the Executive of the Executive’s employment shallmean the occurrence, without the Executive’s express written consent, of anyone of the following:

 

(i)                                     asubstantial adverse alteration in the nature or status of the Executive’sresponsibilities from those in effect immediately prior to the Change inControl;

 

(ii)                                  areduction by the Corporation in the Executive’s annual base salary to anyamount less than the Executive’s annual base salary as in effect immediatelyprior to the Change in Control;

 

(iii)                               theCorporation’s requiring the Executive to be based more than 35 miles from thelocation of the Executive’s principal office immediately prior to the Change inControl, except for required business travel to an extent substantiallyconsistent with the Executive’s business travel obligations immediately priorto the Change in Control;

 

(iv)                              ifthe Executive was based at the principal executive offices of the Corporationor of a Subsidiary, as the case may be, immediately prior to the Change inControl, the Corporation’s requiring the Executive to be based anywhere otherthan the principal executive offices of the Corporation or Subsidiary, as thecase may be, except for required business travel to an extent substantiallyconsistent with the Executive’s business travel obligations immediately priorto the Change in Control;

 

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(v)                                 thefailure by the Corporation to pay to the Executive any portion of theExecutive’s current compensation, or to pay to the Executive any deferredcompensation under any deferred compensation program of the Corporation, withinfive days after the date the compensation is due or to pay or reimburse theExecutive for any expenses incurred by the Executive for required businesstravel;

 

(vi)                              thefailure by the Corporation to continue in effect any compensation plan in whichthe Executive participates immediately prior to the Change in Control that ismaterial to the Executive’s total compensation, including but not limited to,stock option, restricted stock, stock appreciation right, incentivecompensation, bonus, and other plans, unless an equitable alternativearrangement embodied in an ongoing substitute or alternative plan has beenmade, or the failure by the Corporation to continue the Executive’sparticipation therein (or in a substitute or alternative plan) on a basis notmaterially less favorable, both in terms of the amount of compensation providedand the level of the Executive’s participation relative to other participants,than existed immediately prior to the Change in Control;

 

(vii)                           thefailure by the Corporation to continue to provide the Executive with benefitssubstantially similar to those enjoyed by the Executive under any of theCorporation’s pension, profit-sharing, life insurance, medical, health andaccident, disability, or other employee benefit plans in which the Executive wasparticipating immediately prior to the Change in Control; the failure by theCorporation to continue to provide the Executive any material fringe benefit orperquisite enjoyed by the Executive immediately prior to the Change in Control;or the failure by the Corporation to provide the Executive with the number ofpaid vacation days to which the Executive is entitled in accordance with theCorporation’s normal vacation policy in effect immediately prior to the Changein Control; or

 

(viii)                        anypurported termination by the Corporation of the Executive’s employment that isnot effected in accordance with a Notice of Termination satisfying therequirements of paragraph (A) of Section 6 hereof.

 

(L)                                 “Noticeof Termination” shall have the meaning stated in paragraph (A) ofSection 6 hereof.

 

(M)                            “PaymentTrigger” shall mean the occurrence of a Change in Control during the term ofthis Agreement coincident with or followed at any time before the end of the12th month immediately following the month in which the Change in Controloccurred, by the termination of the Executive’s employment with the Corporationor a Subsidiary for any reason other than (A) by the Executive without GoodReason, (B) by

 

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the Corporation as aresult of the Disability of the Executive or with Cause, or (C) as a result ofthe death of the Executive.

 

(N)  “Person” shall have the meaning given inSection 3(a)(9) of the Securities Exchange Act of 1934, as amended fromtime to time, as modified and used in Sections 13(d) and 14(d) thereof; exceptthat, a Person shall not include (i) the Corporation or any Subsidiary, (ii) atrustee or other fiduciary holding securities under an employee benefit plan ofthe Corporation or any Subsidiary, or (iii) an underwriter temporarily holdingsecurities pursuant to an offering of such securities.

 

(O)                               “Subsidiary”shall mean any corporation or other entity or enterprise, whether incorporatedor unincorporated, of which at least a majority of the securities or otherinterests having by their terms ordinary voting power to elect a majority ofthe board of directors or others serving similar functions with respect to suchcorporation or other entity or enterprise is owned by the Corporation or otherentity or enterprise of which the Corporation directly or indirectly ownssecurities or other interests having all the voting power.

 

2.  **Term of Agreement**.  This Agreement shall become effective on thedate hereof and, subject to the second sentence of this Section 2, shallcontinue in effect until the earliest of (i) a Date of Termination inaccordance with Section 6 or the death of the Executive shall haveoccurred prior to a Change in Control, (ii) the reassignment of the Executiveprior to a Change in Control to any position with the Corporation whose jobgrade or classification is less than 90 (or its equivalent in the event theCorporation’s job classification system is changed after the date of thisAgreement), (iii) if a Payment Trigger shall have occurred during the term ofthis Agreement, the performance by the Corporation of all its obligations, andthe satisfaction by the Corporation of all its obligations and liabilities,under this Agreement, (iv) any date the Corporation may, in its sole andabsolute discretion, designate which is on or after the third year anniversaryof the date on which notice in writing is given by ALLTEL to the Executive inaccordance with Section 11 that this Agreement will so terminate(hereinafter,  the “Nonrenewal Date”),if, as of the Nonrenewal Date, a Change in Control shall not have occurred andbe continuing, or (v) in the event, as of the Nonrenewal Date, a Change inControl shall have occurred and be continuing, either the expiration of suchperiod thereafter within which a Payment Trigger does not or can not occur orthe ensuing occurrence of a Payment Trigger and the performance by theCorporation of all of its obligations and liabilities under thisAgreement.  Any Change in Control duringthe term of this Agreement that for any reason ceases to constitute a Change inControl or is not followed by a Payment Trigger shall not effect a terminationor lapse of this Agreement.

 

3.  **General Provisions**.

 

(A)                              TheCorporation hereby represents and warrants to the Executive as follows:  The execution and delivery of this Agreementand the performance by the Corporation of the actions contemplated hereby havebeen duly authorized by all

 

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necessary corporateaction on the part of the Corporation. This Agreement is a legal, valid and legally binding obligation of theCorporation enforceable in accordance with its terms.  Neither the execution or delivery of this Agreement nor theconsummation by the Corporation of the actions contemplated hereby (i) willviolate any provision of the certificate of incorporation or bylaws (or other charterdocuments) of the Corporation, (ii) will violate or be in conflict with anyapplicable law or any judgment, decree, injunction or order of any court orgovernmental agency or authority, or (iii) will violate or conflict with orconstitute a default (or an event of which, with notice or lapse of time orboth, would constitute a default) under or will result in the termination of,accelerate the performance required by, or result in the creation of any lien,security interest, charge or encumbrance upon any of the assets or propertiesof the Corporation under, any term or provision of the certificate ofincorporation or bylaws (or other charter documents) of the Corporation or ofany contract, commitment, understanding, arrangement, agreement or restrictionof any kind or character to which the Corporation is a party or by which theCorporation or any of its properties or assets may be bound or affected.  The Corporation shall not at any time assertthat any provision of this Agreement is invalid or unenforceable in any respector to any extent, irrespective of the outcome of any action, suit, orproceeding.

 

(B)                                Noamount or benefit shall be payable under Section 4 or Section 5unless there shall have occurred a Payment Trigger during the term of this Agreement.  In no event shall payments in accordancewith this Agreement be made in respect of more than one Payment Trigger.  Any transfer of the Executive’s employmentfrom the Corporation to a Subsidiary, from a Subsidiary to the Corporation, orfrom one Subsidiary to another Subsidiary shall not constitute a termination ofthe Executive’s employment for purposes of this Agreement and shall not limit,reduce or terminate any of the Executive’s rights or benefits under thisAgreement.

 

(C)                                ThisAgreement shall not be construed as creating an express or implied contract ofemployment, and, except to the extent (if any) otherwise agreed in writingbetween the Executive and the Corporation, the Executive shall not have anyright to be retained in the employ of the Corporation or of a Subsidiary andthe Corporation and any Subsidiary may in its sole and absolute discretion atany time terminate the Executive’s employment for any reason (but theCorporation shall be obligated, subject to the provisions of this Agreement, tomake the payments described in Section 4 and Section 5 if a PaymentTrigger occurred during the term of this Agreement, including, withoutlimitation, a Payment Trigger that occurs as a result of any such terminationof the Executive’s employment).  Notwithstanding the immediately preceding sentence or any otherprovision of this Agreement, no purported termination of the Executive’semployment that is not effected in accordance with a Notice of Terminationsatisfying paragraph (A) of Section 6 shall be effective for purposes ofthis Agreement.  The Executive’s right,following the occurrence of a Change in Control, to terminate the Executive’semployment under this Agreement for Good Reason shall not be affected by theExecutive’s Disability or incapacity. The Executive’s continued employment shall not

 

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constitute consent to, ora waiver of rights with respect to, any act or failure to act constituting GoodReason under this Agreement.

 

4.  **Payments Due Upon a Payment Trigger**.

 

(A)                              TheCorporation shall pay to the Executive the payments described in thisSection 4 upon the occurrence of a Payment Trigger during the term of thisAgreement.

 

(B)                                Uponthe occurrence of a Payment Trigger during the term of this Agreement, theCorporation shall pay to the Executive a lump sum payment, in cash, equal tothe product of:

 

(i)                                     twomultiplied by

 

(ii)                                  thesum of —

 

(a)             the higher of theExecutive’s annual base salary in effect immediately prior to the occurrence ofthe Change in Control or the Executive’s annual base salary in effectimmediately prior to the Payment Trigger, plus

 

(b)            the higher of theaggregate maximum amounts payable to the Executive pursuant to all incentivecompensation plans for the fiscal year or other measuring period commencing coincidentwith or most recently prior to the date on which the Change in Control occursor the aggregate maximum amounts payable to the Executive pursuant to allincentive compensation plans for the fiscal year or other measuring periodcommencing coincident with or most recently prior to the date on which thePayment Trigger occurs, in each case, assuming that the Executive werecontinuously employed by the Corporation or a Subsidiary on the terms andconditions, including, without limitation, the terms of the incentive plans, ineffect immediately prior to the Change in Control or Payment Trigger, whicheverapplies, until the last day of that fiscal year or other measuring period.

 

The amount determinedunder the foregoing provisions of this paragraph (B) shall be reduced by anycash severance benefit otherwise paid to the Executive under any applicableseverance plan or other severance arrangement. For purposes of this paragraph (B), amounts payable to the Executivepursuant to an incentive compensation plan for the fiscal year or othermeasuring period commencing coincident with or most recently prior to the dateon which the Change of Control or Payment Trigger, as applicable, occurs (the“applicable year/period”) shall not include amounts attributable to a fiscalyear or other measuring period that commenced prior to the applicableyear/period and that become payable during the applicable year/period.  For purposes of this paragraph (B),incentive compensation plans shall include, without limitation, the

 

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ALLTEL CorporationPerformance Incentive Compensation Plan as in effect from time to time, theALLTEL Corporation Long-Term Performance Incentive Compensation Plan as ineffect from time to time, and any incentive bonus plan or arrangement that providesfor payment of cash compensation, and shall exclude, without limitation, theALLTEL Corporation Executive Deferred Compensation Plan as in effect from timeto time, any plan qualified or intended to be qualified underSection 401(a) of the Code and any plan supplementary thereto, executivefringe benefits, and any plan or arrangement under which stock, stock options,stock appreciation rights, restricted stock or similar options, stock, orrights are issued.

 

(C)                                Notwithstandingany provision of any incentive compensation plan, including, withoutlimitation, any provision of any incentive plan requiring continued employmentafter the completed fiscal year or other measuring period, the Corporationshall pay to the Executive a lump sum amount, in cash, equal to the amount ofany incentive compensation that has been allocated or awarded to the Executivefor a completed fiscal year or other measuring period preceding the occurrenceof a Payment Trigger under any incentive compensation plan but has not yet beenpaid to the Executive.

 

(D)                               Thepayments provided for in paragraphs (B) and (C) of this Section 4 shall bemade not later than the fifth day following the occurrence of a PaymentTrigger, unless the amounts of such payments cannot be finally determined on orbefore that day, in which case, the Corporation shall pay to the Executive onthat day an estimate, as reasonably determined in good faith by theCorporation, of the minimum amount of the payments to which the Executive isclearly entitled and shall pay the remainder of the payments (together withinterest at the rate provided in Section 1274(b)(2)(B) of the Code) assoon as the amount thereof can be determined but in no event later than thethirtieth day after the occurrence of a Payment Trigger.  In the event the amount of the estimatedpayments exceeds the amount subsequently determined to have been due, theexcess shall constitute a loan by the Corporation to the Executive, payable onthe fifth business day after demand by the Corporation (together with interestat the rate provided in Section l274(b)(2)(B) of the Code).  At the time that payments are made underthis Section 4, the Corporation shall provide the Executive with a writtenstatement setting forth the manner in which the payments were calculated andthe basis for the calculations including, without limitation, any opinions orother advice the Corporation has received from outside counsel, auditors orconsultants (and any opinions or advice that are in writing shall be attachedto the statement).

 

5.  **Gross-Up Payments**.

 

(A)                              ThisSection 5 shall apply if a Payment Trigger shall have occurred during theterm of this Agreement.

 

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(B)                                Inthe event it shall be determined that any payment or distribution by theCorporation or other amount with respect to the Corporation to or for thebenefit of the Executive, whether paid or payable or distributed ordistributable pursuant to the terms of this Agreement or otherwise, butdetermined without regard to any additional payments required under thisSection 5 (a “Payment”), is (or will be) subject to the excise tax imposedby Section 4999 of the Code or any interest or penalties are (or will be)incurred by the Executive with respect to the excise tax imposed bySection 4999 of the Code with respect to the Corporation (the excise tax,together with any interest and penalties, are hereinafter collectively referredto as the “Excise Tax”), the Executive shall be entitled to receive anadditional cash payment (a “Gross-Up Payment”) from the Corporation in anamount equal to the sum of the Excise Tax and an amount sufficient to pay thecumulative Excise Tax and all cumulative income taxes (including any interestand penalties imposed with respect to such taxes) relating to the Gross-UpPayment so that the net amount retained by the Executive is equal to allpayments received pursuant to the terms of this Agreement or otherwise lessincome taxes (but not reduced by the Excise Tax).

 

(C)                                Subjectto the provisions of paragraph (D) of this Section 5, all determinationsrequired to be made under this Section 5, including whether and when aGross-Up Payment is required and the amount of such Gross-Up Payment and theassumptions to be utilized in arriving at the determination, shall be made by anationally recognized certified public accounting firm designated by theExecutive (the “Accounting Firm”) which shall provide detailed supportingcalculations both to the Corporation and the Executive within 30 days after thereceipt of notice from the Executive that there has been a Payment, or suchearlier time as is requested by the Corporation.  In the event that at any time relevant to this Agreement theAccounting Firm is serving as accountant or auditor for the individual, entityor group or Person effecting the Change in Control, the Executive shall appointanother nationally recognized certified public accounting firm to make thedeterminations required hereunder (which accounting firm shall then be referredto as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely bythe Corporation.  Any Gross-Up Payment,as determined in accordance with this Section 5, shall be paid by theCorporation to the Executive within five days after the receipt of theAccounting Firm’s determination.  If theAccounting Firm determines that no Excise Tax is payable by the Executive, itshall so indicate to the Executive in writing. Any determination by the Accounting Firm shall be binding upon theCorporation and the Executive.  As aresult of uncertainty in the application of Section 4999 of the Code atthe time of the initial determination by the Accounting Firm, it is possiblethat Gross-Up Payments that the Corporation should have made will not have beenmade (an “Underpayment”), consistent with the calculations required to be madehereunder.  In the event the Corporationexhausts its remedies in accordance with paragraph (D) of this Section 5and the Executive thereafter is required to make a payment of any Excise Tax,the Accounting Firm shall determine the amount of Underpayment that hasoccurred and the Underpayment shall be promptly paid by the Corporation to orfor the benefit of the Executive.

 

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(D)                               TheExecutive shall notify the Corporation in writing of any claim by the InternalRevenue Service that, if successful, would require a Gross-Up Payment (that hasnot already been paid by the Corporation). The notification shall be given as soon as practicable but no later thanten business days after the Executive is informed in writing of the claim andshall apprize the Corporation of the nature of the claim and the date on whichthe claim is requested to be paid.  TheExecutive shall not pay the claim prior to the expiration of the 30-day period followingthe date on which the Executive gives notice to the Corporation or any shorterperiod ending on the date that any payment of taxes with respect to the claimis due.  If the Corporation notifies theExecutive in writing prior to the expiration of the 30-day period that itdesires to contest the claim, the Executive shall:

 

(i)                                     givethe Corporation any information reasonably requested by the Corporationrelating to the claim;

 

(ii)                                  takeany action in connection with contesting the claim as the Corporation shallreasonably request in writing from time to time, including, without limitation,accepting legal representation with respect to the claim by an attorneyreasonably selected by the Corporation;

 

(iii)                               cooperatewith the Corporation in good faith in order effectively to contest the claim;and

 

(iv)                              permitthe Corporation to participate in any proceedings relating to the claim.

 

The Corporation shallbear and pay directly all costs and expenses (including additional interest andpenalties) incurred in connection with the contest and shall indemnify and holdthe Executive harmless, on an after-tax basis, for any Excise Tax or income tax(including interest and penalties with respect thereto) imposed as a result ofthe representation and payment of costs and expenses.  Without limitation of the foregoing provisions of thisSection 5, the Corporation shall control all proceedings taken inconnection with the contest and, at its sole option, may pursue or forego anyand all administrative appeals, proceedings, hearings, and conferences with thetaxing authority in respect of the claim and may, at its sole option, eitherdirect the Executive to pay the tax claimed and sue for a refund or contest theclaim in any permissible manner, and the Executive agrees to prosecute thecontest to a determination before any administrative tribunal, in a court ofinitial jurisdiction and in one or more appellate courts, as the Corporationshall determine.  If the Corporationdirects the Executive to pay the claim and sue for a refund, the Corporationshall advance the amount of the payment to the Executive, on an interest-freebasis, and shall indemnify and hold the Executive harmless, on an after-taxbasis, from any Excise Tax or income tax (including interest or penalties withrespect thereto) imposed with respect to the advance or with respect to anyimputed income with respect to the advance; and any extension of the statute oflimitations relating to payment of taxes for the taxable year of the

 

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Executive with respect towhich the contested amount is claimed to be due shall be limited solely to thecontested amount.  The Corporation’scontrol of the contest shall be limited to issues with respect to which aGross-Up Payment would be payable hereunder and the Executive shall be entitledto settle or contest, as the case may be, any other issue raised by theInternal Revenue Service or any other taxing authority.

 

(E)                                 If,after the receipt by the Executive of an amount advanced by the Corporationpursuant to paragraph (D) of this Section 5, the Executive becomesentitled to receive any refund with respect to the claim, the Executive shall,subject to the Corporation’s compliance with the requirements of paragraph (D)of this Section 5, promptly pay to the Corporation the amount of therefund (together with any interest paid or credited thereon after taxesapplicable thereto).  If, after thereceipt by the Executive of an amount advanced by the Corporation pursuant toparagraph (D) of this Section 5, a determination is made that theExecutive shall not be entitled to any refund with respect to the claim and theCorporation does not notify the Executive in writing of its intent to contestthe denial of refund prior to the expiration of 30 days after thedetermination, then the advance shall be forgiven and shall not be required tobe repaid and the amount of the advance shall offset, to the extent thereof,the amount of Gross-Up Payment required to be paid.

 

(F)                                 Notwithstandingany other provision of this Section 5, to the extent that the Executive isentitled to a tax “gross-up” payment with respect to a Payment from theCorporation, any Subsidiary, or any affiliate of the Corporation under anyother agreement, the foregoing provisions of this Section 5 shall notapply to that Payment.

 

6.  **Termination Procedures**.

 

(A)                              Duringthe term of this Agreement, any purported termination of the Executive’semployment (other than by reason of death) shall be communicated by writtenNotice of Termination from one party hereto to the other party hereto inaccordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean awritten notice that sets forth the effective date of termination (subject tothe provisions of Section 11(B) below) and, if for Cause, Disability, orGood Reason, the facts and circumstances providing the basis for termination ofthe Executive’s employment for Cause or for Disability or Good Reason, as thecase may be.

 

(B)                                “Dateof Termination” with respect to any purported termination of the Executive’semployment during the term of this Agreement (other than by reason of death)shall mean (i) if the Executive’s employment is terminated for Disability, 20business days after Notice of Termination is given (provided that the Executiveshall not have returned to the full-time performance of the Executive’s dutiesduring that 20 business day period) and (ii) if the Executive’s employment isterminated for any other reason, the date specified in the Notice ofTermination, which, in the case of a termination by the Corporation, shall notbe less than ten business days except in the case

 

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of a termination forCause, and, in the case of a termination by the Executive, shall not be lessthan ten business days nor more than 20 business days, respectively, after thedate such Notice of Termination is given.

 

7.  **Protective Covenants By The Executive**.

 

(A)                              Returnof Property.  Within five days after thedate of termination of the Executive’s employment with the ALLTEL Group, theExecutive shall deliver to the Corporation all of the ALLTEL Group’s propertyin the Executive’s possession, custody or control, including, withoutlimitation, all keys and credit cards, all computers and fax machines, and allfiles, documents, data and information in any medium relating in any way to theALLTEL Group or its employees, suppliers, customers or business.

 

(B)                                Non-Disclosure.  The Executive acknowledges that in thecourse of the Executive’s employment with the ALLTEL Group he has had and willhave access to confidential information and trade secrets proprietary to ALLTELGroup, including but not limited to, information relating to the ALLTEL Group’sproducts, suppliers, and customers, the sources, nature, processes, costs andprices of the ALLTEL Group’s products, the names, addresses, contact persons,purchasing and sales histories, and preference of the ALLTEL Group’s suppliersand customers, the ALLTEL Group’s business plans and strategies, and the namesand addresses of, amounts of compensation paid to, and the trading and salesperformance of the ALLTEL Group’s employees and agents (hereinafter referred toas the “Confidential Information”).  TheExecutive further acknowledges that the Confidential Information is proprietaryto the ALLTEL Group, that the unauthorized disclosure of any of the ConfidentialInformation to any person or entity could result in immediate and irreparablecompetitive injury to the ALLTEL Group, that could not adequately be remediedby an award of monetary damages. Accordingly, the Executive shall not disclose at any time anyConfidential Information to any person or entity who is not properly authorizedby the Corporation to receive the information, without the prior writtenpermission of the Corporation’s Chief Executive Officer.

 

(C)                                Non-Interference.  The Executive shall not during theExecutive’s employment with the ALLTEL Group and thereafter until theexpiration of 12 calendar months immediately following the calendar month inwhich occurs the Executive’s termination of employment with the ALLTEL Groupknowingly employ, or knowingly assist any person or entity other than theALLTEL Group in employing, any employee of any member of the ALLTEL Group.  The Executive shall not during the term ofthe Executive’s employment with the ALLTEL Group and thereafter until the expirationof 12 calendar months immediately following the calendar month in which occursthe Executive’s termination of employment with the ALLTEL Group knowinglysolicit, or knowingly assist any person or entity to solicit, any employee ofany member of the ALLTEL Group to leave the ALLTEL Group’s employment or tobecome employed by any entity that is not a member of the ALLTEL Group.

 

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(D)                               HarmfulStatements.  The Executive shall not atany time knowingly disseminate any information or knowingly make anystatements, whether written, oral or otherwise, that are negative, disparagingor critical of the Corporation, any other member of the ALLTEL Group, or any oftheir parents, subsidiaries, affiliates, or their respective officers,directors, employees, shareholders, trustees, administrators, or employeebenefit plans, or the representatives, employees, agents, predecessors,successors, heirs, or assigns of any of the foregoing (hereinafter, the “ALLTELParties”), or their business or operations, or that place any of the ALLTELParties in a bad light, other than any such statement or information that ismade or disseminated by the Executive in a good faith belief as to their truthor accuracy and is either required by law or is reasonably necessary to the enforcementby the Executive of any right the Executive has related to the Executive’semployment with the ALLTEL Group.

 

(E)                                 Resignations.  Within five days after the termination ofthe Executive’s employment with the ALLTEL Group, the Executive shall executeand deliver to the Chief Executive Officer of the Corporation such resignationsas a director and officer of the Corporation and any other members of theALLTEL Group, in such form, as may be reasonably requested by the Corporation’sChief Executive Officer.

 

(F)                                 Challengeto Validity.  The Executive shall not atany time assert that any provision of this Agreement is invalid orunenforceable in any respect or to any extent, irrespective of the outcome ofany action, suit or proceeding.

 

(G)                                ExecutiveAssistance.  If a Payment Trigger occursduring the term of this Agreement and if the Corporation is not in breach ofany of the Corporation’s covenants set forth in this Agreement, the Executiveshall, until the expiration of 12 calendar months immediately following thecalendar month in which the Payment Trigger occurred, provide such informationand assistance as the Corporation may reasonably request as necessary orappropriate to assist any ALLTEL Group member in the arbitration or litigationor potential arbitration or litigation of any claim, action, suit or proceedingby any person or entity other than the Executive against any ALLTEL Groupmember arising from events occurring during the Executive’s employment with theALLTEL Group, if the Corporation pays all out-of-pocket expenses incurred bythe Executive in complying with this paragraph (G).  The Executive shall not, however, be required to provideassistance that would interfere with any activity for remuneration or profit inwhich the Executive is then actively engaged.

 

8.  **No Mitigation**.  The Executive shall not be required to seekother employment or to attempt in any way to reduce any amounts payable to theExecutive by the Corporation pursuant to this Agreement.  Further, the amount of any payment orbenefit provided for in this Agreement shall not be reduced by any compensationearned by the Executive as the result of employment by another employer, byretirement benefits, by offset against any amount claimed to be owed by theExecutive to the Corporation or a Subsidiary, or otherwise.

 

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9.  **Disputes; Remedies**.

 

(A)                              If adispute or controversy arises out of or in connection with this Agreement, theparties shall first attempt in good faith to settle the dispute or controversyby mediation under the Commercial Mediation Rules of the American ArbitrationAssociation before resorting to arbitration or litigation.  Thereafter, any remaining unresolved disputeor controversy arising out of or in connection with this Agreement shall, upona written notice from the Executive to the Corporation either before suitthereupon is filed or within 20 business days thereafter, be settledexclusively by arbitration in accordance with the Commercial Arbitration Rulesof the American Arbitration Association in a city located within thecontinental United States designated by the Executive.  Judgment may be entered on the arbitrator’saward in any court having jurisdiction. Notwithstanding the foregoing provisions of this paragraph (A):

 

(i)                                     TheExecutive shall be entitled to seek specific performance of the Corporation’sobligations hereunder during the pendency of any dispute or controversy arisingunder or in connection with this Agreement; and

 

(ii)                                  TheCorporation shall be entitled to seek the injunctive relief described inparagraph (E) of this Section 9 during the pendency of any dispute orcontroversy arising under or in connection with this Agreement.

 

(B)                                Anylegal action concerning this Agreement, other than a mediation or anarbitration described in paragraph (A) of this Section 9, whetherinstituted by the Corporation or the Executive, shall be brought and resolvedonly in a state court of competent jurisdiction located in the territory thatencompasses the city, county, or parish in which the Executive’s principalresidence is located at the time such action is commenced.  The Corporation hereby irrevocably consentsand submits to and shall take any action necessary to subject itself to thepersonal jurisdiction of that court and hereby irrevocably agrees that allclaims in respect of the action shall be instituted, heard, and determined inthat court. The Corporation agrees that such court is a convenient forum, andhereby irrevocably waives, to the fullest extent it may effectively do so, thedefense of an inconvenient forum to the maintenance of the action.  Any final judgment in the action may beenforced in other jurisdictions by suit on the judgment or in any other mannerprovided by law.

 

(C)                                TheCorporation shall pay all costs and expenses, including attorneys’ fees anddisbursements, of the Corporation and, at least monthly, all reasonable costsand expenses, including reasonable attorney’s fees and disbursements, of theExecutive in connection with any legal proceeding (including arbitration), whetheror not instituted by the Corporation or the Executive, relating to theinterpretation or enforcement of any provision of this Agreement.  The Corporation shall pay prejudgmentinterest on any money judgment obtained by the Executive as a result of anysuch proceeding, calculated

 

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at the rate provided inSection 1274(b)(2)(B) of the Code. Notwithstanding the foregoing provisions of this paragraph (C):

 

(i)                                     Ifthe Executive instituted the legal proceeding and the judge, arbitrator, orother individual presiding over the proceeding affirmatively finds that theExecutive instituted the proceeding in bad faith, no reimbursement pursuant tothis paragraph (C) shall be due to the Executive, the Executive shall repay theCorporation for any amounts previously paid by it pursuant to this paragraph(C), and the Executive shall pay all reasonable costs and expenses, includingreasonable attorney’s fees and disbursements, of the Corporation in connectionwith the proceeding;

 

(ii)                                  Withrespect to any dispute in which the Executive challenges the validity orenforceability of any provision of this Agreement in any respect or to anyextent, no reimbursement or no further reimbursement pursuant to this paragraph(C) shall be due to the Executive, and the Executive shall repay theCorporation for any amounts previously paid by it pursuant to this paragraph(C); and

 

(iii)                               Withrespect to any dispute or controversy regarding the provisions ofSection 7, other than a dispute to which the immediately preceding clause(ii) applies, if the Executive does not prevail (after exhaustion of allavailable remedies), no further reimbursement pursuant to this paragraph (C)shall be due to the Executive, and the Executive shall repay the Corporationfor any amounts previously paid by it pursuant to this paragraph (C) in respectof such dispute.

 

(D)                               TheExecutive acknowledges and agrees that the Executive’s sole and exclusiveremedy with respect to any and all claims arising under this Agreement or forbreach hereof by the Corporation shall be the right to receive such amounts asare provided for under Section 4, Section 5, and paragraph (C) ofthis Section 9, to which the Executive is otherwise entitled pursuant tothe terms and conditions of this Agreement.

 

(E)                                 TheExecutive acknowledges and agrees that each and every covenant contained inSection 7 (hereinafter, the “Protective Covenants “) is reasonable and isnecessary to protect the trade secrets, confidential information, and otherbusiness interests of the ALLTEL Group and that the Executive’s compliance witheach of the Protective Covenants is necessary to protect the ALLTEL Group fromunfair injury.  The Executiveacknowledges that the Protective Covenants are a principal inducement for thewillingness of the Corporation to enter into this Agreement and make thepayments and provide the benefits to the Executive under this Agreement andthat the Corporation and the Executive intend the Protective Covenants to bebinding upon and enforceable against the Executive in accordance with theirterms, notwithstanding any common or statutory law to the contrary.  Notwithstanding any other provision of thisAgreement, the obligations of the Corporation under this Agreement areconditioned upon compliance by

 

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the Executive with eachof the Protective Covenants, and failure by the Executive to comply, in allmaterial respects, with the Protective Covenants shall entitle the Corporationto all rights and remedies available at law or in equity.  The Executive acknowledges that a breach, inany material respect, of the Protective Covenants could result in irreparableand continuing harm and damage to the ALLTEL Group for which there may be noadequate remedy at law.  In the event ofa breach, in any material respects, of any of the Protective Covenants, eachand every member of the ALLTEL Group shall be entitled to injunctive relief inaddition to any other remedy or relief to which any of them may be entitled.

 

10.  **Successors; Binding Agreement**

 

(A)                              Inaddition to any obligations imposed by law upon any successor to theCorporation, the Corporation shall require any successor (whether direct orindirect, by purchase, merger, consolidation, or otherwise) to all orsubstantially all of the business or assets of the Corporation expressly toassume and agree to perform this Agreement in the same manner and to the sameextent that the Corporation would be required to perform it if no suchsuccession had taken place.  Failure ofthe Corporation to obtain the assumption and agreement prior to theeffectiveness of any succession shall be a breach of this Agreement and shallentitle the Executive to compensation from the Corporation in the same amountand on the same terms as the Executive would be entitled to hereunder if theExecutive were to terminate the Executive’s employment for Good Reasonimmediately after a Change in Control and during the term of this Agreement,except that, for purposes of implementing the foregoing, the date on which anysuccession becomes effective shall be deemed the Payment Trigger occasioned bythe foregoing deemed termination of employment for Good Reason immediatelyfollowing a Change in Control.  Theprovisions of this Section 10 shall continue to apply to each subsequentemployer of the Executive bound by this Agreement in the event of any merger,consolidation, or transfer of all or substantially all of the business orassets of that subsequent employer.

 

(B)                                ThisAgreement shall inure to the benefit of and be enforceable by the Executive’spersonal or legal representatives, executors, administrators, successors,heirs, distributees, devisees, and legatees. If the Executive shall die while any amount would be payable to theExecutive hereunder if the Executive had continued to live, the amount, unlessotherwise provided herein, shall be paid in accordance with the terms of thisAgreement to the executors, personal representatives, or administrators of theExecutive’s estate.

 

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11.  **Notices**.  For the purpose of this Agreement, notices and all othercommunications provided for in the Agreement shall be in writing and shall bedeemed to have been duly given when delivered or mailed by United Statesregistered mail, return receipt requested, postage prepaid, addressed to therespective addresses set forth below, or to such other address as either partymay have furnished to the other in writing in accordance herewith, except thatnotice of change of address shall be effective only upon actual receipt:

 

To the Corporation:

 

ALLTEL Corporation

One Allied Drive

Little Rock,Arkansas  72202

Attention:  Chairman of the Board

 

To the Executive:

 

Scott H. Settelmyer

5 Bonaparte Circle

Little Rock, AR 72211

 

12.  **Miscellaneous**.  No provision of this Agreement may bemodified, waived, or discharged unless such waiver, modification, or dischargeis agreed to in writing and signed by the Executive and an officer of theCorporation specifically designated by the Board.  No waiver by either party hereto at any time of any breach by theother party hereto of, or compliance with, any condition or provision of thisAgreement to be performed by such other party shall be deemed a waiver ofsimilar or dissimilar provisions or conditions at the same or at any prior orsubsequent time.  No agreements orrepresentations, oral or otherwise, express or implied, with respect to thesubject matter hereof have been made by either party which are not expresslyset forth in this Agreement.  Thevalidity, interpretation, construction, and performance of this Agreement shallbe governed by the laws of the State of Delaware.  All references to sections of the Exchange Act or the Code shallbe deemed also to refer to any successor provisions to such sections.  Any payments provided for hereunder shall bepaid net of any applicable withholding required under federal, state, or locallaw and any additional withholding to which the Executive has agreed.

 

13.  **Validity**.  The invalidity or unenforceability of any provision of thisAgreement shall not affect the validity or enforceability of any other provisionof this Agreement, which shall remain in full force and effect.

 

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14.  **Counterparts**.  This Agreement may be executed in several counterparts, each ofwhich shall be deemed to be an original but all of which together willconstitute one and the same instrument.

 

15.  **Prior Agreement**.  This Agreement supercedes the Agreement,dated March 8, 2002, between the Corporation and the Executive, which isvoid and of no further force or effect.

 

**IN WITNESS WHEREOF**,the parties have signed this Agreement as of the date set forth above.

 

 
|                 | **ALLTEL CORPORATION** |
|----------------------|------------------------|
|                 |                   |
| Attest:              |                   |
| /s/ C.J. Duvall, Jr. |                   | By: | /s/ Scott T. Ford |   |
| Name:                | C.J. Duvall, Jr.       |   | Name: | Scott T. Ford |
| Title:               | SVP-Human Resources    |   | Title: | President & CEO |
|                 |                   |
| Witness:             |                   |
|                 |                   |
| /s/ Lisa Bates       |                   | /s/ Scott Settelmyer |   |
|                 |                   | Scott H. Settelmyer |
|                      |                        |  |  |  |  |  |  |

 

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