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Delaware		4813		20-0792300
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Joshua N. Korff, Esq. Kirkland & Ellis LLP Citigroup Center 153 East 53rd Street New York, NY 10022 Tel. (212) 446-4800 Fax (212) 446-4900		Richard N. Massey, Esq. Executive Vice President and Secretary Alltel Corporation One Allied Drive Little Rock, Arkansas 72202 Tel. (501) 905-0625 Fax (501) 905-0962		John P. Fletcher Executive Vice President and General Counsel Alltel Holding Corp. One Allied Drive Little Rock, Arkansas 72202 Tel. (501)-905-0809 Fax (501) 905-0707		Daniel L. Heard, Esq. Kutak Rock LLP 425 W. Capitol Avenue Suite 1100 Little Rock, AR 72201 Tel. (501) 975-3000 Fax (501) 975-3001

Proposed Maximum

Proposed Maximum

Amount of

Title of Each Class of

Amount to be

Offering

Aggregate

Registration

Securities to be Registered

Registered(1)

Price per Share

Offering Price(2)

Fee(3)

Common Stock, par value $.0001 per share

402,715,523

N/A

$3,721,091,432.52

$398,157.78

(1)	This Registration Statement relates to shares of common stock, par value $0.0001 per share, of Valor Communications Group, Inc. issuable to holders of common stock, par value $0.01, of Alltel Holding Corp. (“Spinco”) pursuant to the proposed merger of Spinco with and into Valor. The amount of Valor common stock to be registered represents the maximum number of shares of common stock that Valor will issue to holders of common stock of Spinco upon consummation of the merger based on a formula set forth in the merger agreement, which requires that Valor issue a number of shares of its common stock equal to the aggregate number of shares of Valor common stock issued and outstanding, on a fully diluted basis, as of the effective time of the merger, multiplied by 5.667. Because it is not possible to accurately state the number of shares of Valor common stock that will be outstanding as of the effective time of the merger, this calculation is based on 71,063,265 shares of Valor common stock outstanding as of February 1, 2006.
(2)	Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(f)(2) of the Securities Act, based on the book value (computed as of February 1, 2006, the most recent date for which such information is available) of the common stock of Spinco to be exchanged in the merger.
(3)	Computed in accordance with Rule 457(f) and Section 6(b) under the Securities Act of 1933 by multiplying (A) the proposed maximum aggregate offering price for all securities to be registered by (B) 0.000107.

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The information in this proxy statement/ prospectus-information statement is not complete and may be changed. Valor Communications Group, Inc. may not distribute or issue the shares of Valor common stock being registered pursuant to this registration statement until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/ prospectus-information statement is not an offer to distribute these securities and Valor Communications Group, Inc. is not soliciting offers to receive these securities in any state where such offer or distribution is not permitted.

	Sincerely,
	John J. Mueller
	President and Chief Executive Officer
	Member of the Board of Directors

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	Sincerely,
	Scott T. Ford
	President and Chief Executive Officer

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	1. to adopt the Agreement and Plan of Merger, dated as of December 8, 2005, as such may be amended from time to time (the “Merger Agreement”), by and among Alltel Corporation, Alltel Holding Corp. (“Spinco”) and Valor Communications Group, Inc., pursuant to which (i) Spinco will merge with and into Valor, after which Valor will survive as a stand-alone company and will hold and conduct the combined business operations of Valor and Spinco and (ii) each outstanding share of Spinco common stock will be converted into the right to receive approximately 1.04 shares of Valor common stock (subject to variation based on the number of shares of Spinco common stock that is distributed to Alltel stockholders and as a result of compensatory equity grants and other issuances);
	2. to approve the amendment to the Certificate of Incorporation of Valor Communications Group, Inc. pursuant to the merger to increase the authorized shares of Valor common stock from 200,000,000 to 2,000,000,000 to be effective contemporaneously with the effective time of the merger;
	3. to approve the issuance of up to 403,000,000 shares of Valor common stock to Alltel stockholders in accordance with the terms of the Merger Agreement;
	4. to adopt and approve the 2006 Equity Incentive Plan, a copy of which is attached as Annex G to this proxy statement/ prospectus-information statement;
	5. to elect eleven (11) directors to serve until the 2007 Annual Meeting of Stockholders or until their successors are duly elected and qualified or until their earlier removal, resignation or death;
	6. to ratify the appointment of Deloitte & Touche LLP as Valor’s independent registered public accounting firm for the fiscal year ending December 31, 2006 or until their earlier removal or termination;
	7. to adjourn the annual meeting, if necessary, to solicit additional proxies for the adoption of the merger agreement, approval of the amendment to the Certificate of Incorporation of Valor pursuant to the merger or approval of the issuance of shares of Valor common stock pursuant to the merger; and
	8. to transact any and all other business that may properly come before the annual meeting or any adjourned session of the annual meeting.

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	By Order of the Board of Directors,

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS				vi
SUMMARY				1
SELECTED HISTORICAL FINANCIAL DATA OF SPINCO				11
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF VALOR				14
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA				16
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA				17
VALOR COMMUNICATIONS GROUP, INC. MARKET PRICE AND DIVIDEND INFORMATION				18
THE MERGER				19
	Introduction			19
	The Companies			19
RISK FACTORS				21
	Risks Relating to the Spin-Off and the Merger			21
	Risks Relating to Newco’s Business After the Merger			24
THE TRANSACTIONS				29
	Structure of the Spin-Off and the Merger			29
	Calculation of Merger Consideration			30
	Background of the Merger			31
	Valor’s Reasons for the Merger			35
	Valor Board of Directors’ Recommendation to Valor Stockholders			36
	Opinion of Valor’s Financial Advisor — Wachovia Securities			36
	Opinion of Valor’s Financial Advisor — Bear Stearns			44
	Alltel’s Reasons for the Spin-Off and the Merger			52
	Board of Directors and Management of Newco After the Merger			53
	Interests of Certain Persons in the Merger			54
	Regulatory Approvals			55
	Accounting Treatment			56
	Federal Securities Law Consequences; Resale Restrictions			57
	No Appraisal Rights			57
	Name Change; Listing			57
	Dividend Policy of Newco			57
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF AND THE MERGER				58
THE MERGER AGREEMENT				61
	The Merger			61
	Effective Time			62
	Merger Consideration			62
	Distribution of Per Share Merger Consideration			62
	Treatment of Fractional Shares			62
	Officers and Directors of Newco			62
	Stockholders Meeting			63
	Related Transactions			63
	Financing			63
	Corporate Offices			63
	Representations and Warranties			63
	Conduct of Business Pending Closing			64
	Proxy Materials			65

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	Reasonable Best Efforts			65
	Employee Matters			66
	No Solicitation			66
	Insurance and Indemnification			67
	Amendment of Company Securityholders Agreement			68
	Dividend Policy of Newco			68
	Conditions to the Completion of the Merger			69
	Termination			70
	Termination Fee Payable in Certain Circumstances			71
	Indemnification			72
	Amendments			72
	Expenses			72
	Tax Matters			72
THE DISTRIBUTION AGREEMENT				74
	General			74
	Preliminary Transactions			74
	Coordination of Asset Separation Transactions			75
	Spinco Financing			75
	Net Debt Adjustment			75
	Covenants			76
	Conditions to the Completion of the Spin-Off			76
	Subsequent Transfers			76
	Mutual Release; Indemnification			76
	Insurance			77
	Non-Solicitation of Employees			77
	Expenses			78
	Termination			78
THE VOTING AGREEMENT				78
ADDITIONAL AGREEMENTS RELATED TO THE SPIN-OFF AND THE MERGER				79
	Employee Benefits Agreement			79
	The Tax Sharing Agreement			81
	Transition Services Agreement			83
FINANCING OF NEWCO				84
	Committed Financings			84
	Indebtedness Before and After Merger			85
	Proposed Terms of the Senior Secured Credit Facilities			85
SPINCO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS				88
	Basis of Presentation			88
	Executive Summary			89
	Pending Acquisitions to be Completed During 2006			89
SPINCO — DESCRIPTION OF BUSINESS				114
	General			114
	Employees			114
	Organizational Structure and Operating Segments			114
	ILEC Operations			114
	Competition			115
	Local Service — Regulation			115
	Federal Regulation			116

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	State Regulation			117
	Universal Service			118
	Unbundled Network Elements			120
	Network Access Services — Regulation			121
	Technology			123
	CLEC Operations			123
	Long-Distance and Network Management Operations			123
	Product Distribution			124
	Directory Publishing			124
	Telecommunications Information Services			124
MANAGEMENT OF NEWCO FOLLOWING THE MERGER				125
	Board of Directors			125
	Management			127
COMPENSATION OF EXECUTIVE OFFICERS OF NEWCO				128
	Summary Compensation Table			128
	Option Grants in Last Fiscal Year			129
	Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values			130
	Long-Term Incentive Plan — Awards in Last Fiscal Year			130
OTHER COMPENSATION ARRANGEMENTS				130
	Change in Control Agreements			130
	Defined Benefit Pension Plan			131
	Benefit Restoration Plan			131
	Supplemental Executive Retirement Plan			132
	Grantor Trust			132
OWNERSHIP OF NEWCO COMMON STOCK				132
DESCRIPTION OF NEWCO CAPITAL STOCK				134
	General			134
	Preferred Stock			134
	Common Stock			134
	Delaware Anti-Takeover Statute			134
	Rights of Appraisal			135
	Board of Directors			135
	Stockholders			136
	Voting on Certain Fundamental Issues			137
	Amendment of the Newco Certificate			137
	Amendment of the Newco Bylaws			137
	Limitation on Liability of Directors			137
	Indemnification			138
	Name Change; Listing			138
	Transfer Agent and Registrar			138
COMPARISON OF THE RIGHTS OF STOCKHOLDERS BEFORE AND AFTER THE SPIN-OFF AND MERGER				139
	Shares of Stock			139
	Board of Directors			139
	Stockholders			139
	Certain Related Party Transactions			141
	Rights of Alltel Corporation Stockholders Before and After the Merger			141
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION				142

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THE ANNUAL MEETING				152
	Date, Time and Place			152
	Matters for Consideration			152
	Annual Meeting Record Date; Voting Information			153
	Quorum			153
	Required Vote			153
	Voting by Proxy			154
	Revocability of Proxies and Changes to a Valor Stockholder’s Vote			155
	Solicitation of Proxies			155
	Voting by Valor Management			155
	No Appraisal Rights
	Other Matters			156
	Stockholder Proposals for the 2007 Annual Meeting			156
	2005 Annual Report on Form 10-K			156
	Certain Information			156
PROPOSAL 1. ADOPTION OF THE MERGER AGREEMENT				157
PROPOSAL 2. AMENDMENT TO VALOR’S CERTIFICATE OF INCORPORATION PURSUANT TO THE MERGER TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF VALOR COMMON STOCK				157
PROPOSAL 3. ISSUANCE OF VALOR COMMON STOCK PURSUANT TO THE MERGER				158
PROPOSAL 4. ADOPTION OF 2006 EQUITY INCENTIVE PLAN				158
	Federal Income Tax Consequences			165
	Registration with the SEC			166
	Plan Benefits			166
	Current Equity Compensation Plan Information			167
PROPOSAL 5. ELECTION OF DIRECTORS				167
	Nominees for Director			167
	Director Compensation			169
GOVERNANCE OF VALOR AND COMMITTEES OF THE BOARD OF DIRECTORS				169
	Committees of the Board			170
	Nominations by Stockholders			171
COMMUNICATIONS WITH THE BOARD OF DIRECTORS				171
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION				172
	Overall Compensation Policies			172
	Compensation of Chief Executive Officer			174
	Conclusion			174
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION				175
EXECUTIVE COMPENSATION				175
	Summary Compensation Table			175
	Employment and Severance Agreements			176
BENEFICIAL OWNERSHIP OF VALOR COMMON STOCK				179
PERFORMANCE GRAPH				181
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE				182
RELATED PARTY TRANSACTIONS				182
	Equity Sponsors			182
	Management			182
AUDIT COMMITTEE REPORT				183

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PROPOSAL 6. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2006			183
PROPOSAL 7. ADJOURNMENT FOR THE PURPOSE OF OBTAINING ADDITIONAL VOTES FOR THE MERGER PROPOSALS			184
SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS			185
EXPERTS			186
LEGAL MATTERS			186
WHERE YOU CAN FIND ADDITIONAL INFORMATION			187
FINANCIAL STATEMENTS			F-1

ANNEX A		MERGER AGREEMENT
ANNEX B		DISTRIBUTION AGREEMENT
ANNEX C		VOTING AGREEMENT
ANNEX D-1		OPINION OF WACHOVIA SECURITIES
ANNEX D-2		OPINION OF BEAR STEARNS
ANNEX E		FORM OF RESTATED CERTIFICATE OF INCORPORATION OF NEWCO
ANNEX F		FORM OF RESTATED BYLAWS OF NEWCO
ANNEX G		2006 EQUITY INCENTIVE PLAN
ANNEX H		VALOR AUDIT COMMITTEE CHARTER
EX-2.2: LIST OF EXHIBITS AND SCHEDULES TO AGREEMENT AND PLAN OF MERGER
EX-10.2: EMPLOYEE BENEFITS AGREEMENT
EX-10.3: FORM OF TAX SHARING AGREEMENT
EX-10.4: FORM OF TRANSITION SERVICES AGREEMENT
EX-10.5: FORM OF REVERSE TRANSITIONS SERVICES AGREEMENT
EX-21.1: SUBSIDIARIES
EX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-23.2: CONSENT OF DELOITTE & TOUCHE LLP
EX-24.1: POWER OF ATTORNEY
EX-99.3: CONSENT OF WACHOVIA SECURITIES
EX-99.4: CONSENT OF BEAR, STEARNS & CO. INC.

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Q:		What are Valor Communications Group, Inc. stockholders being asked to vote on at the annual meeting?
A:		Valor Communications Group, Inc. (also referred to herein as “Valor”) stockholders are being asked to consider and vote upon proposals to adopt the merger agreement entered into among Valor, Alltel Corporation (also referred to herein as “Alltel”) and Alltel Holding Corp. (also referred to herein as “Spinco”), to approve the amendment to Valor’s certificate of incorporation pursuant to the merger increasing the authorized number of shares of Valor common stock, to approve the issuance of Valor common stock to Alltel stockholders pursuant to the merger and to adopt the 2006 Equity Incentive Plan. Other matters to be considered and voted upon at the annual meeting are the election of directors, ratification of Valor’s independent auditors and such other matters as may properly come before the meeting.
Q:		What will happen in the spin-off and merger?
A:		First, Alltel will engage in a series of preliminary restructuring transactions to effect the transfer to Spinco’s subsidiaries of all of the assets relating to Alltel’s wireline telecommunications business and the transfer to Alltel of all assets not relating to such business. Following these preliminary restructuring transactions, and immediately prior to the effective time of the merger, Alltel will contribute all of the stock of the Spinco subsidiaries to Spinco (which we will refer to as the “contribution”) in exchange for:

		• the issuance to Alltel of Spinco common stock to be distributed to Alltel’s stockholders pro rata in the spin-off (which we will refer to as the “distribution”),
		• the payment of a special dividend to Alltel in an amount not to exceed Alltel’s tax basis in Spinco (which equals approximately $2.4 billion as of June 30, 2005), which Alltel will use to repurchase stock pursuant to a special stock buyback program authorized by the Alltel Board of Directors in connection with the spin-off, to repay outstanding indebtedness, or both, within one year following the spin-off, and
		• the distribution by Spinco to Alltel of certain Spinco debt securities (which we will refer to as the “exchange notes”) in an amount equal to approximately $1.538 billion, which Alltel intends to exchange for outstanding Alltel debt securities or otherwise transfer to Alltel’s creditors, thereby reducing Alltel’s outstanding indebtedness.

		Prior to the distribution, Spinco will consummate certain financing transactions pursuant to which it will incur approximately $3.965 billion in indebtedness through (1) borrowings under a new senior secured credit agreement or the issuance of senior unsecured debt securities in an offering under Rule 144A, promulgated under the Securities Act of 1933, as amended, or a public offering and (2) the distribution of the exchange notes to Alltel. All proceeds of the financing will be used to pay the consideration to be received by Alltel for the contribution (through payment of the special dividend and distribution of the exchange notes) and to pay related fees and expenses.
		After the contribution and immediately prior to the merger, Alltel will spin-off Spinco to the stockholders of Alltel by distributing all of its shares of Spinco common stock to Alltel stockholders on a pro rata basis. Spinco will then merge with and into Valor in accordance with the merger agreement. Valor will survive the merger as a stand-alone company holding and conducting the combined business operations of Valor and Spinco. Immediately following the merger, Valor will change its name to [ •  ] and its common stock will be quoted on the New York Stock Exchange. For ease of reference, throughout this proxy statement/ prospectus information statement we will refer to [ •  ], the new company formed by the merger of Valor and Spinco as “Newco.”
		Pursuant to the merger, it is presently estimated that Alltel stockholders will receive approximately 1.04 shares of Valor common stock for each share of Spinco common stock they are entitled to receive on the distribution date. However, this amount is subject to change based on the number of shares of Spinco common stock distributed to Alltel stockholders and as a result of compensatory equity grants and other issuances of Valor common stock that may be made prior to the spin-off. For a more complete discussion

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		of the calculation of the number of shares of Valor common stock to be issued in the merger, see the section titled “The Transactions — Calculation of Merger Consideration” on page [ •  ] of this proxy statement/ prospectus-information statement. Holders of Alltel common stock will not be required to pay for the shares of Valor common stock they receive and will also retain all of their shares of Alltel Corporation. Existing shares of Valor common stock will remain outstanding.
		By virtue of the merger, Newco will assume $261.0 million in Alltel debt on a consolidated basis and $400.0 million in outstanding Valor debt securities. Newco will also borrow approximately $781.0 million under its new senior secured credit facility in order to prepay the amounts outstanding under Valor’s existing credit facility. These amounts, together with the $3.965 billion in financings consummated by Spinco prior to the merger and certain expenses related to the transaction, will result in Newco having approximately $5.5 billion in total debt immediately following completion of the merger. It is expected that Newco will use proceeds from its new senior secured credit facilities to refinance approximately $81.0 million of Alltel’s outstanding bonds (plus an additional approximately $9.5 million in related make-whole premiums) and to purchase any of Valor’s outstanding bonds that may be tendered pursuant to the terms thereof as a result of the merger. However, no Valor bonds are expected to be tendered as a result of the merger.
Q:		What will Alltel Corporation stockholders be entitled to receive pursuant to the transactions?
A:		As a result of the merger, Alltel stockholders will be entitled to receive approximately 1.04 shares of Valor common stock (subject to variation based on the number of shares of Spinco common stock distributed to Alltel stockholders and as a result of compensatory equity grants and other issuances) for every share of Spinco common stock that they are entitled to receive in the distribution of the Spinco businesses to Alltel stockholders. No fractional shares of Valor common stock will be issued to Alltel stockholders in the merger. Alltel stockholders that otherwise would be entitled to a fraction of a Valor common share will be entitled to receive a cash payment in lieu of issuance of that fractional share. See “The Merger Agreement — Merger Consideration” on page [ •  ]. Following the merger, approximately 85% of the outstanding common shares of Newco will be held by Alltel stockholders.
Q:		Does Valor’s Board support the merger?
A:		Yes. The Valor Board of Directors has unanimously approved the merger agreement and the merger and unanimously recommends that Valor stockholders vote FOR the proposals to adopt the merger agreement, to approve the amendment to Valor’s Certificate of Incorporation pursuant to the merger increasing the authorized number of shares of Valor common stock, to approve the issuance of Valor common stock to Alltel stockholders pursuant to the merger and to adopt the 2006 Equity Incentive Plan.
Q:		How will my rights as a Newco stockholder after the merger differ from my current rights as a Valor stockholder?
A:		After the merger, your rights as a stockholder will be governed by the amended and restated certificate of incorporation attached to this document as Annex E, rather than the current certificate of incorporation of Valor. A comparison of the differences of your rights as a stockholder under these two governing documents is discussed in the section titled “Comparison of the Rights of Valor Stockholders Before and After the Spin-Off and Merger” starting on page [ •  ] of this proxy statement/ prospectus-information statement.
Q:		What will happen to Valor’s dividend policy as a result of the merger?
A:		The merger agreement provides that the initial dividend policy of Newco (which may be changed at any time by Newco’s Board of Directors) will provide for the payment, subject to applicable law, of regular quarterly dividends on each issued and outstanding share of common stock of $0.25 per share. See “The Transactions — Dividend Policy.”

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Q:		What are the material tax consequences to Valor stockholders and Alltel stockholders resulting from the spin-off and the merger?
A:		The merger will be tax-free to Valor stockholders. Assuming that the spin-off qualifies as a tax-free distribution under Sections 355, 368 and related provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and that the merger qualifies as a tax-free reorganization under Section 368(a) of the Code, Alltel stockholders will not recognize any gain or loss for U.S. federal income tax purposes as a result of the spin-off or the merger, except for any gain or loss attributable to the receipt of cash in lieu of a fractional share of Valor common stock. The material U.S. federal income tax consequences of the spin-off and the merger are described in more detail under “Certain United States Federal Income Tax Consequences of the Spin-Off and the Merger” on page [ •  ].
Q:		Are there risks associated with the merger?
A:		Yes. We may not achieve the expected benefits of the merger because of the risks and uncertainties discussed in the section titled “Risk Factors” starting on page [ •  ] and the section titled “Special Note Concerning Forward-Looking Statements” starting on page [ •  ]. Those risks include, among other things, risks relating to the uncertainty that we will be able to integrate the existing Valor business with the Spinco business successfully and uncertainties relating to the performance of the businesses following the completion of the merger.
Q:		What should Alltel stockholders do now?
A:		Alltel common stockholders should carefully read this proxy statement/ prospectus-information statement, which contains important information about the spin-off, the merger, Spinco and Valor. Alltel stockholders are not required to take any action to approve the spin-off, the merger or any of the transactions contemplated thereby. After the merger, Newco will mail to holders of Alltel common stock who are entitled to receive shares of Valor common stock book-entry statements evidencing their ownership of Valor common stock and other information regarding their receipt of Valor common stock.
		ALLTEL STOCKHOLDERS WILL NOT BE REQUIRED TO SURRENDER THEIR EXISTING ALLTEL CORPORATION COMMON SHARES IN THE SPIN-OFF TRANSACTION OR THE MERGER AND THEY SHOULD NOT RETURN THEIR ALLTEL STOCK CERTIFICATES.
Q:		How will the market price of Alltel common stock be affected by the merger?
A:		The market value of Alltel common stock following the merger will decrease in order to give effect to the distribution. Some or all of this decrease in value realized by Alltel stockholders will be offset by the value of the Newco common stock they will receive in the merger. However, there can be no assurances that the combined trading prices of shares of Alltel common stock and Newco common stock after the merger will be equal to or greater than the trading price of shares of Alltel common stock prior to the merger. Until the market has fully evaluated the business of Alltel without the business of Newco, the price at which shares of Alltel common stock trade may fluctuate significantly. Similarly, until the market has fully evaluated the combined businesses of Valor and Spinco on a stand-alone basis, the price at which shares of Newco common stock trade may fluctuate significantly.
Q:		What should Valor stockholders do now?
A:		After carefully reading and considering the information contained in this proxy statement/ prospectus-information statement, Valor stockholders should vote their shares as soon as possible so that their shares will be represented and voted at the Valor annual meeting. Please follow the instructions set forth on the enclosed proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of your broker or other nominee.
Q.		Have any stockholders already agreed to vote for the merger?
A.		Yes. Holders of approximately 41% of Valor common stock have agreed to vote for the adoption of the merger agreement and have signed a Voting Agreement with Spinco to that effect.

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Q:		How do Valor stockholders vote?
A:		Valor stockholders may vote before the annual meeting in one of the following ways:
		• use the toll-free number, if any, shown on your proxy card;
		• visit the website, if any, shown on your proxy card to submit a proxy via the Internet; or
		• complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.
Q:		What if a Valor stockholder does not vote on the matters relating to the merger?
A:		If you are a Valor stockholder and you fail to respond with a vote or fail to instruct your broker or other nominee how to vote on the proposals to adopt the merger agreement, to approve the amendment to Valor’s certificate of incorporation pursuant to the merger increasing the authorized number of shares of Valor common stock and to approve the issuance of Valor common stock to Alltel stockholders pursuant to the merger, it will have the same effect as a vote against these proposals, each of which must be approved for the merger to occur. In addition, if you fail to vote or instruct your broker or other nominee to vote on the proposal to adopt the 2006 Equity Incentive Plan, it will also have the same effect as a vote against this proposal. If you respond and abstain from voting, your proxy will have the same effect as a vote against these proposals. If you respond but do not indicate how you want to vote on the proposals, your proxy will be counted as a vote in favor of these proposals.
Q:		What stockholder approvals are needed in connection with the merger?
A:		The merger cannot be completed unless the merger agreement is adopted, the amendment to Valor’s certificate of incorporation pursuant to the merger increasing the authorized number of shares of Valor common stock is approved and the issuance of Valor common stock to Alltel stockholders pursuant to the merger is approved by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Valor common stock entitled to vote at the annual meeting. No vote of Alltel stockholders is required or being sought in connection with the spin-off transaction or the merger.
Q:		Why are Valor stockholders being asked to approve the 2006 Equity Incentive Plan?
A:		Valor stockholders are being asked to approve the 2006 Equity Incentive Plan to ensure that upon completion of the merger, Newco has in place an equity incentive plan that will enable it to address equity incentives for the management of Newco in a timely manner.
		On February 9, 2005, the Board of Directors of Valor adopted the 2005 Long-Term Equity Incentive Plan (the “2005 Plan”). A total of 2,500,000 shares of our common stock were reserved for issuance under the 2005 Plan, of which 342,469 remain available for awards. Newco will be a considerably larger company than Valor was at the time of the adoption of the 2005 Plan and will correspondingly have more key employees. To focus the Newco management team on objectives that are designed to enhance the value and performance of the merged entity to the benefit of the Valor stockholders, it is anticipated that Newco will grant equity awards to its key employees following completion of the merger. As a result, to ensure that Newco has adequate means to provide equity incentive compensation for its employees thereafter, the Board of Directors deems it to be in the best interests of Valor for its stockholders to approve the adoption of the 2006 Equity Incentive Plan because if Valor stockholders approve the merger, but not act on the 2006 Equity Incentive Plan at the annual meeting, Newco would be required to either call a special stockholder meeting following completion of the merger or wait until its 2007 annual meeting of stockholders to obtain approval for a new equity compensation plan.
Q:		Who can vote at the Valor annual meeting?
A:		Holders of Valor common stock can vote their shares at the annual meeting if they are holders of record of those shares at the close of business on [ •  ], 2006, the record date for the annual meeting.
Q:		When and where is the annual meeting of Valor stockholders?
A:		The annual meeting of Valor stockholders will be held at [ •  ] on [ •  ], 2006 at [ •  ], at [ •  ], local time.

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Q:		If I am not going to attend the annual meeting, should I return my proxy card(s)?
A:		Yes. Returning your proxy card(s) ensures that your shares will be represented at the annual meeting, even if you are unable to or do not attend.
Q:		Can Valor stockholders change their vote after they mail their proxy card?
A:		Yes. If you are a holder of record of Valor common stock and have properly completed and submitted your proxy card, you can change your vote in any of the following ways:
		• by sending a written notice to the corporate secretary of Valor that is received prior to the annual meeting stating that you revoke your proxy;
		• by properly completing a new proxy card bearing a later date and properly submitting it so that it is received prior to the annual meeting;
		• by logging onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card prior to the annual meeting, in each case if you are eligible to do so and following the instructions on the proxy card; or
		• by attending the annual meeting and voting in person.
		Simply attending the annual meeting will not revoke a proxy.
		If you are a Valor stockholder whose shares are held in “street name” by your broker and you have directed such person to vote your shares, you should instruct such person to change your vote.
Q:		If my Valor shares are held in “street name” by my broker, will my broker vote my shares for me?
A:		Your broker will vote your Valor shares only if you provide instructions on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Without instructions, your shares will not be voted, which will have the effect of a vote against the adoption of the merger agreement, the approval of the amendment to Valor’s certificate of incorporation increasing the authorized number of shares of Valor common stock, the approval of the issuance of Valor common stock to Alltel stockholders pursuant to the merger and the adoption of the 2006 Equity Incentive Plan.
Q:		Can Alltel or Valor stockholders demand appraisal of their shares?
A:		No. Neither Alltel nor Valor stockholders have appraisal rights under Delaware law in connection with the spin-off, the merger or the transactions contemplated thereby.
Q:		When will the merger be completed?
A:		We are working to complete the merger as quickly as possible. If approved by the Valor stockholders, we hope to complete the merger as early as the second quarter of 2006. However, it is possible that factors outside our control could require us to complete the merger at a later time or not complete it at all. For a discussion of the conditions to the merger see “Merger Agreement — Conditions to Merger” beginning on page [ •  ].
Q:		Who can answer my questions?
A:		If you are a Valor stockholder and you have any questions about the merger, the annual meeting, or if you need assistance in voting your shares, please contact:

	Investor Relations Department
	Valor Communications Group, Inc.
	201 E. John Carpenter Freeway, Suite 200
	Irving, Texas 75062
	Attn: Investor Relations
	Tel: (866) 779-1296
	Email address: investorrelations@valortelecom.com

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		If you are an Alltel stockholder and you have any questions regarding the distribution of Spinco shares, the merger or any matter described in this proxy statement/ prospectus-information statement, please direct your questions to:

	Investor Relations Department
	Alltel Corporation
	One Allied Drive
	Little Rock, Arkansas 72202
	Tel: (877) 446-3682
	Email address: alltel.investor.relations@alltel.com

		In addition, if you have questions about the merger or if you need additional copies of this proxy statement/ prospectus-information statement you may also contact:

	Georgeson Shareholder
	17 State Street, 10th Floor
	New York, NY 10004
	Call toll free: (888) 206-1124

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	Valor Communications Group, Inc.

	Alltel Holding Corp.

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	Spinco and Valor may not realize the anticipated benefits from the merger.

	The integration of Spinco and Valor following the merger may present significant challenges.

	•	the necessity of coordinating geographically separate organizations;
	•	the challenge of integrating the business cultures of each company, which may prove to be incompatible; and
	•	the need to retain key officers and personnel of Spinco and Valor.

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	After the close of the transaction, sales of Newco common stock may negatively affect its market price.

	Regulatory agencies may delay or impose conditions on approval of the spin-off and the merger, which may diminish the anticipated benefits of the merger.

	Some of the directors, officers and stockholders of Valor have interests that may be different from, or in addition to, the interests of Valor stockholders.

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	•	arrangements regarding the appointment of directors and officers of Valor;
	•	restrictions upon certain restricted shares under Valor stock plans issued prior to the date of the merger agreement, including those held by executive officers and directors, will lapse; and
	•	modifications to employment and severance arrangements maintained for Valor executive officers that may result in increased benefits to such officers.

	The merger agreement contains provisions that may discourage other companies from trying to acquire Valor.

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	•	depending on the reasons for termination of the merger agreement, the requirement that Valor pay Alltel a termination fee of $35 million;
	•	substantial costs related to the merger, such as legal, accounting, filing, financial advisory and financial printing fees, must be paid regardless of whether the merger is completed; and
	•	potential disruption to the businesses of Valor and distraction of its workforce and management team.

	Valor Stockholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

	Following completion of the merger, Newco will face intense competition in its businesses that could reduce its market share or adversely affect its financial performance.

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	Newco will provide services to its customers over access lines, and if it loses access lines like Spinco and Valor historically have, its revenues, earnings and cash flow from operations could be adversely affected.

	Newco will be subject to government regulation of the telecommunications industry.

	In 2005, Valor and Spinco received 22.8% and 5.8% of their respective revenues from state and federal Universal Service Funds, and any adverse regulatory developments with respect to these funds could adversely affect Newco’s profitability following completion of the merger.

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	Newco’s substantial indebtedness could adversely affect its operations and financial condition.

	•	limiting its operational flexibility due to the covenants contained in its debt agreements;
	•	limiting its ability to invest operating cash flow in its business due to debt service requirements;
	•	limiting its ability to compete with companies that are not as highly leveraged and that may be better positioned to withstand economic downturns;
	•	increasing its vulnerability to economic downturns and changing market conditions; and
	•	to the extent that Newco’s debt is subject to floating interest rates, increasing its vulnerability to fluctuations in market interest rates.

	Newco will be subject to restrictive debt covenants, which may restrict its operational flexibility.

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	Newco may be affected by significant restrictions following the merger.

	•	generally, for two years after the spin-off, taking, or permitting any of its subsidiaries to take, an action that might be a disqualifying action without receiving the prior consent of Alltel;
	•	for two years after the spin-off, entering into any agreement, understanding or arrangement or engaging in any substantial negotiations with respect to any transaction involving the acquisition of Newco stock or the issuance of shares of Newco’s stock, or options to acquire or other rights in respect of such stock, in excess of a permitted basket of 71,130,989 shares (as adjusted for stock splits, stock dividends, recapitalizations, reclassifications and similar transactions), unless, generally, the shares are issued to qualifying Newco employees or retirement plans, each in accordance with “safe harbors” under regulations issued by the IRS;
	•	for two years after the spin-off, repurchasing Newco’s shares, except to the extent consistent with guidance issued by the IRS;
	•	for two years after the spin-off, permitting certain wholly-owned subsidiaries that were wholly-owned subsidiaries of Spinco at the time of the spin-off to cease the active conduct of the Spinco business to the extent so conducted by those subsidiaries immediately prior to the spin-off; and
	•	for two years after the spin-off, voluntarily dissolving, liquidating, merging or consolidating with any other person, unless (i) Newco is the survivor of the merger or consolidation or (ii) prior to undertaking such action, Newco receives the prior consent of Alltel.

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	Weak economic conditions may decrease demand for Newco’s services.

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	•	the issuance to Alltel of Spinco common stock to be distributed to Alltel’s stockholders pro rata in the spin-off (which we will refer to as the “distribution”),
	•	the payment of a special dividend to Alltel in an amount not to exceed Alltel’s tax basis in Spinco (which equals approximately $2.4 billion as of June 30, 2005), which Alltel will use to repurchase stock pursuant to a special stock buyback program authorized by the Alltel Board of Directors in connection with the spin-off, to repay outstanding indebtedness, or both, within one year following the spin-off, and
	•	the distribution by Spinco to Alltel of certain Spinco debt securities (which we will refer to as the “exchange notes”) in an amount equal to approximately $1.538 billion, which Alltel intends to exchange for outstanding Alltel debt securities or otherwise transfer to Alltel’s creditors, thereby reducing Alltel’s outstanding indebtedness.

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	For purposes of this calculation only it is assumed that the effective time of the merger occurred on February 1, 2006. On February 1, 2006 there were 387,188,917 shares of Alltel common stock outstanding and 71,063,265 fully-diluted shares of Valor common stock outstanding.
	Step 1: Calculate the “aggregate merger consideration.” The merger agreement provides that Valor will issue to holders of Alltel common stock a number of Valor shares equal to the number of fully-diluted shares of Valor common stock outstanding as of the effective time of the merger multiplied by 5.667. As of February 1, 2006 there were 71,063,265 shares of Valor common stock outstanding. Therefore to determine the aggregate merger consideration we must multiply 71,063,265 by 5.667, which equals 402,715,522.76 shares.
	Step 2: Determine number of Spinco shares outstanding. The distribution agreement contemplates Alltel issuing a number of shares of Spinco common stock for each share of Alltel common stock outstanding as of the effective time that is to be determined by Alltel and Spinco prior to the distribution. For purposes of this illustration only, it is assumed that one share of Spinco common stock will be issued for each share of Alltel common stock outstanding. Assuming 387,188,917 shares of Alltel common stock are outstanding as of the effective time of the merger, there will be 387,188,917 shares of Spinco common stock outstanding as of the effective time of the merger.
	Step 3: Calculate the “per share merger consideration.” The merger agreement provides that each share of Spinco common stock will be converted into the right to receive a number of Valor shares equal to the aggregate merger consideration, divided by the number of Spinco shares outstanding as the effective time of the merger. In this illustration the aggregate merger consideration equals 402,715,522.76 shares and the number of Spinco shares outstanding as of the effective time is

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	387,188,917. Hence, to determine the per share merger consideration we must divide 402,715,522.76 by 387,188,917, which equals approximately 1.04.
	Based on the foregoing, it is currently estimated that Alltel stockholders will receive approximately 1.04 shares of Valor common stock in exchange for each Spinco share such stockholder is entitled to receive in the distribution and that Valor will be obligated to issue in the aggregate 402,715,522.76 shares of Valor common stock to Alltel stockholders. This issuance would result in Alltel stockholders owning approximately 85%, and Valor’s stockholders will own approximately 15%, of the shares of common stock of Newco on a fully diluted basis following completion of the merger.

Valor Common						Approximate per
Stock Outstanding		Spinco Common		Aggregate Merger		Share Merger
(fully-diluted)		Stock Outstanding		Consideration		Consideration
71,063,265		387,188,917		402,715,522.76		1.04

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	•	expected volume discounts and benefits of increased purchasing capacity expected to result from Newco’s increased size and scale;
	•	reduction in office space, real estate and facilities;
	•	consolidation of back-office functions;
	•	reduced employee and related costs associated with maintaining duplicative functions; and
	•	reduced combined sales and marketing costs and general and administrative costs.

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	•	Reviewed the merger agreement, including the financial terms of the merger, and the agreements contemplated thereby;
	•	Reviewed Annual Reports on Form 10-K of Alltel for the three fiscal years ended December 31, 2004; Annual Reports on Form 10-K of Valor for the fiscal year ended December 31, 2004; certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Alltel and Valor; and certain business, financial, and other information regarding each of Alltel and Valor that was publicly available;
	•	Reviewed certain business, financial, and other information regarding Valor and its prospects that was furnished to Wachovia Securities by, and discussed with, the management of Valor;
	•	Reviewed certain business, financial, and other information regarding Alltel and Spinco and their prospects that were furnished to Wachovia Securities by, and discussed with, the management of Alltel and Spinco;
	•	Reviewed the stock price and trading history of Valor common stock;
	•	Compared the available business, financial, and other information regarding each of Valor and Spinco with similar information regarding certain publicly traded companies that Wachovia Securities deemed relevant;
	•	Compared the proposed financial terms of the merger agreement with the financial terms of certain other business combinations and transactions that Wachovia Securities deemed relevant;
	•	Developed discounted cash flow models for each of Valor and Spinco based upon estimates provided by the management of each of Valor and Spinco, as to each of Valor and Spinco respectively, and certain estimates discussed with the management of Valor;
	•	Reviewed the potential pro forma impact of the merger on Valor’s financial statements;
	•	Considered other information such as financial, economic and market criteria that Wachovia Securities deemed relevant; and
	•	Participated in the discussions and negotiations among representatives of Valor and Alltel and their respective financial and legal advisors that resulted in the merger agreement.

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Implied Valor

Reference

Equity Value per

Low

High

Median

Mean

Multiple Range

Share

Enterprise Value to 2005(E) EBITDA (earnings before interest, taxes, depreciation and amortization)

5.5x

8.3x

6.9x

6.9x

6.1x - 7.8x

$7.64 - $14.29

Equity Value to 2005(E) Free Cash Flow

6.3x

9.5x

8.0x

8.0x

7.0 - 9.3x

$12.75 - $16.97

Enterprise Value per Access Line

$3,158.4

$4,509.1

$3,675.0

$3,678.8

$3,175 - 4,153

$7.32 - $14.46

Target		Acquiror
NTELOS		Quadrangle/CVC
Verizon Communications — Hawaii		The Carlyle Group
TXU Communications		Consolidated Communications
Illinois Consolidated Telephone Co.		Homebase Acquisition Corp.
Conestoga Enterprises		D&E Communications
Verizon — KY		ALLTEL
Verizon — AL, MO		CenturyTel
Kerrville Communications		VALOR Telecom
Global Crossing ILEC		Citizens Communications
GTE Corp. (Illinois)		Citizens Communications

Reference

Implied Equity

Low

High

Median

Multiple Range

Value per Share

Enterprise Value to LTM (last twelve months) EBITDA

6.0x

9.4x

7.4x

6.5x - 7.5x

$9.15 - $13.01

Enterprise Value per Access Line

$2,334

$4,370

$3,137

$3,250 - $4,000

$7.86 - $13.34

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Target		Acquiror
First National Bankshares FL		Fifth Third Bancorp
Varco International Inc.		National-Oilwell Inc.
Artesyn Technologies Inc.		Bel Fuse Inc.
Cornerstone Realty Income Trust		Colonial Properties Trust
Veritas Software Corp.		Symantec Corp.
Public Svc Enterprise Group Inc.		Exelon Corp.
Gillette Co.		Procter & Gamble Co.
AT&T Co.		SBC Communications Inc.
Great Lakes Chemical Corp.		Crompton Corp.
Ask Jeeves Inc.		IAC/ InterActive Corp.
Mykrolis Corp.		Entegris Inc.
Macromedia Inc.		Adobe Systems Inc.
SpectraSite Inc.		American Tower Corp.
Cinergy Corp.		Duke Energy Corp.
Shurgard Storage Centers Inc.		Public Storage Inc.
WFS Financial Inc.		Wachovia Corporation
Westcorp		Wachovia Corporation
Medicis Pharmaceutical Corp.		Mentor Corp.

Implied Valor

Reference Multiple

Equity Value

Low

High

Median

Mean

Range

per Share

30-Day Premium

(3.4)%

35.8%

16.8%

17.3%

(3.4)% - 35.8%

$12.07 - $16.97

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														Valor Implied Percentage
														Ownership of Combined
														Company
		Reference				Valor Implied				Spinco Implied Equity				Low End of				High End of
		Multiple Range				Equity Value				Value 2005(E)				Ranges				Ranges
Enterprise Value per 2005(E) Access Lines			$3,175 - $4,153				$520 - $1,029				$5,024 - $7,841				9.4%				11.6%
Enterprise Value to 2005(E) EBITDA			6.1x - 7.8x				$544 - $1,017				$4,487 - $6,922				10.8%				12.8%
Equity Value to 2005(E) Free Cash Flow			7.0x - 9.3x				$907 - $1,207				$3,558 - $4,734				20.3%				20.3%

		Implied Valor %
Access Lines 2005(E)-2006(P)			15.3% - 15.5%
EBITDA 2005(E)-2006(P)			16.3% - 16.3%
Free Cash Flow 2005(E)-2006(P)			20.3% - 21.2%

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		Low End of Range				High End of Range
Valor			Implied				Ownership
% of Combined Company			14.8%				15.3%

		Low End of Range				High End of Range
Valor Implied Ownership % of Combined Company			12.7%				13.4%

		Newco
		Reference
		Multiple
		Range				2005(PF)				2006(P)				2007(P)				2008(P)
EBITDA Multiple			6.5x - 7.5	x			23.4% - 35.4%				18.5% - 28.8%				20.2% - 30.7%				20.2% - 30.4%
Dividend Yield			7.0% - 8.0%				8.5% - 14.1%				8.5% - 14.1%				8.5% - 14.1%				8.5% - 14.1%
Free Cash Flow Multiple			6.5x - 9.5	x			(21.1)%				(26.6)%				(22.5)%				(23.9%)

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	•	reviewed the merger agreement and the distribution agreement;
	•	reviewed the voting agreement, dated as of December 8, 2005, among Alltel, Spinco and the stockholders of Valor named therein;
	•	reviewed Valor’s Annual Reports on Form 10-K for the year ended December 31, 2004, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 and its Current Reports on Form 8-K filed since January 1, 2005;
	•	reviewed Spinco’s Draft Audited Financial Statements for the years ended December 31, 2002, 2003 and 2004, its unaudited interim consolidated balance sheet as of September 30, 2005, and the related unaudited interim consolidated income statement and statement of cash flows for the nine months ended September 30, 2005;
	•	reviewed Alltel’s Annual Reports on Form 10-K for the years ended December 31, 2002, 2003 and 2004, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 and its Current Reports on Form 8-K filed since January 1, 2005;

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	•	reviewed certain operating and financial information relating to Valor and Spinco’s businesses and prospects (as prepared and furnished to Bear Stearns by Valor and Alltel’s senior managements, respectively), including projections for Valor for the six years ended December 31, 2010 as prepared by Valor’s senior management and projections for Spinco for the three years ended December 31, 2007 as prepared by Alltel’s management as well as certain publicly available research analyst projections for Alltel/ Spinco for the years ended December 31, 2008, 2009 and 2010 (which research analyst projections were reviewed by and discussed with the senior management of Valor);
	•	reviewed certain estimates of cost savings and other synergies estimates expected to result from the merger, as prepared and provided to Bear Stearns by Valor’s senior management and discussed with Alltel’s senior management, including persons who will become members of Newco’s senior management;
	•	met with certain members of Valor and Alltel’s senior management, including persons who will become members of Newco’s senior management, to discuss Valor and Spinco’s respective businesses, operations, historical and projected financial results and future prospects;
	•	reviewed the historical prices, trading multiples and trading volume of the common shares of Valor;
	•	reviewed publicly available financial data, stock market performance data and trading multiples of companies which Bear Stearns deemed generally comparable to Valor and Spinco, as appropriate;
	•	reviewed the terms of recent mergers and acquisitions involving companies which Bear Stearns deemed generally comparable to Valor;
	•	performed discounted cash flow analyses based on the projections for Valor and Spinco and the synergy estimates for the combined company, including certain tax attributes available to Valor and Spinco;
	•	reviewed the pro forma financial results, financial condition and capitalization of the combined company giving effect to the merger; and
	•	conducted such other studies, analyses, inquiries and investigations as Bear Stearns deemed appropriate.

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	Summary of Financial Analyses

	Spinco Valuation

	•	Alaska Communications Systems Group, Inc.;
	•	Citizens Communications Company (“Citizens”);
	•	Consolidated Communications Holdings, Inc.;
	•	FairPoint Communications, Inc.;
	•	Iowa Telecommunications Services, Inc.;
	•	Valor Communications Group, Inc.;
	•	CenturyTel, Inc. (“CenturyTel”); and
	•	Commonwealth Telephone Enterprises, Inc.

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											All Comparable
			Citizens				CenturyTel				Companies
Enterprise Value as a Multiple of:
	2005E EBITDA			7.2	x			5.4	x			5.4x - 8.0x
	2006E EBITDA			7.5	x			5.6	x			5.6x - 8.0x
	2005E Access Lines		$	3,601			$	3,098				$2,191 - $4,009
	2006E Access Lines		$	3,754			$	3,255				$2,204 - $4,115
Equity Value as a Multiple of:
	2005E Actual LFCF			7.7	x			8.5	x			6.1x - 9.7x
	2006E Actual LFCF			8.0	x			8.8	x			6.2x - 9.3x
	2005E Normalized LFCF			9.2	x			9.3	x			7.3x - 11.0x
	2006E Normalized LFCF			9.7	x			9.4	x			7.1x - 10.9x
Dividend Yield				7.9	%			0.7	%			0.7% - 13.7%

			Low				High
Enterprise Value as a Multiple of:
	2005E EBITDA			6.7	x			7.5	x
	2006E EBITDA			6.9	x			7.6	x
	2005E Access Lines		$	3,000			$	3,600
	2006E Access Lines		$	3,200			$	3,800
Equity Value as a Multiple of:
	2005E Actual LFCF			7.75	x			9.0	x
	2006E Actual LFCF			8.0	x			9.0	x
	2005E Normalized LFCF			8.7	x			10.0	x
	2006E Normalized LFCF			8.7	x			10.0	x
Dividend Yield				7.25	%			8.25	%

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	Valor Valuation

			$12.00				$14.00
As of December 6, 2005:
	Current Price			(1.4	)%			15.0	%
	20-Day Average Price			0.3	%			17.0	%
As of November 23, 2005:
	Current Price			3.2	%			20.4	%
	20-Day Average Price			(1.9	)%			14.5	%

	•	The Carlyle Group/ Verizon Hawaii Inc. — May 2, 2005;
	•	Consolidated Communications Holdings, Inc./ TXU Corp. — April 14, 2004;
	•	Alltel Corporation/ Verizon Communications Inc. (Kentucky) — August 1, 2002;

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	•	Homebase Acquisition Texas Corp./ Illinois Consolidated Telephone Co. — December 31, 2002; and
	•	CenturyTel, Inc./ Verizon Communications Inc. (Alabama and Missouri) — July 1, 2002 and August 31, 2002.

			LTM EBITDA				Access Lines
Most Comparable Transactions:
	High			7.8	x		$	3,199
	Mean			7.2	x		$	2,894
	Low			6.7	x		$	2,263
Other Transactions:
	High			12.0	x		$	5,698
	Mean			8.6	x		$	3,371
	Low			6.2	x		$	2,235
All Transactions:
	High			12.0	x		$	5,698
	Mean			8.2	x		$	3,292
	Low			6.2	x		$	2,235

	Transaction Combination Analysis

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		2005E
Valor			15.3	%
Spinco			84.7	%

		2005E				2006E				2007E
Valor			16.3	%			16.3	%			16.5	%
Spinco			83.7	%			83.7	%			83.5	%

		2005E				2006E				2007E
Valor			17.2	%			16.7	%			16.0	%
Spinco			82.8	%			83.3	%			84.0	%

		2005E				2006E				2007E
Valor			18.7	%			20.0	%			19.7	%
Spinco			81.3	%			80.0	%			80.3	%

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						With Potential
		No Synergies				Synergies
Valor			0.9% - 3.3%				7.8% - 11.6%
Spinco			2.4% - 2.7%				9.8% - 10.7%

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	•	the belief that the separation of the wireless and wireline segments will better position each to take advantage of emerging strategic, operational and financial opportunities, thereby enhancing stockholder value;
	•	the expectation that Alltel will receive cash proceeds and debt reduction totaling about $4.2 billion resulting from the spin-off, which will result in Alltel having net debt of about $1.2 billion and being levered at about 0.5 times net debt to operating income before depreciation and amortization;
	•	the potential value created for Alltel stockholders who, in the aggregate, will hold 85% of the outstanding shares of Newco immediately following the merger;

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	•	the potential to create a market leader in the rural wireline telecommunications industry;
	•	the potential positive financial impact resulting from such a combination (including, without limitation, an expected gain of $40 million in net annual synergies from the combination) the benefit of which would be passed on to Alltel stockholders through the spin-off and merger;
	•	the tax-efficient structure for Alltel and Alltel’s stockholders of the proposed spin-off and immediate merger of Spinco with and into Valor; and
	•	the expectation that Newco will pay an annual dividend of $1 per share of common stock, which equals $1.04 per equivalent Alltel share.

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	•	Anthony J. de Nicola, Valor’s current Chairman of the Board of Directors, is expected to be appointed to the board of Newco;
	•	John J. Mueller, Valor’s current chief executive officer, is expected to enter into a consulting agreement with Newco;
	•	W. Grant Raney and Cynthia B. Nash, current executive officers of Valor, are expected to accept employment with Newco;
	•	a portion of the following executive officers’ cash awards and shares of restricted stock that were scheduled to vest January 1, 2007, shall vest upon the consummation of the merger:

						Number of Shares
						of Restricted
		Amount of Cash Award				Stock Subject to
Name of Executive		to be Accelerated				Accelerated Vesting
John J. Mueller		$	400,000				165,501
Jerry E. Vaughn		$	0				90,383
W. Grant Raney		$	200,000				73,557
William M. Ojile, Jr.		$	100,000				62,522
Cynthia B. Nash		$	60,000				40,456

	•	the severance benefits payable to Messrs. Mueller, Raney and Ojile and Ms. Nash for termination of employment by Valor without “Cause” or by the executive officer for “Good Reason,” as each such term is defined in their employment agreements with Valor, were increased from 18 months of base salary to 24 months. Also, the bonus payment prescribed in the executive officers’ employment agreements were increased to two times annual target bonus;
	•	the acceleration of vesting of restricted stock grants scheduled to vest in 2008 and beyond for Messrs. Mueller, Ojile and Vaughn, Valor executive officers who will not remain employed by Newco; and
	•	prior to the completion of the merger, Valor Securityholders’ Agreement with certain of its stockholders will be amended so that persons affiliated with Welsh, Carson, Anderson & Stowe, or WCAS and Vestar Capital Partners, who collectively own approximately 41% of Valor’s outstanding common stock, will receive the following benefits:

	•	Newco will file and use reasonable best efforts to have declared effective an “evergreen” Shelf Registration Statement permitting sales of securities of Newco by WCAS and Vestar as soon as practicable after consummation of the merger;
	•	if requested by the holders of at least 50% of the outstanding securities initially held by WCAS, Vestar and their respective affiliates, Newco will conduct one underwritten offering, including management participation in road shows and similar customary obligations;
	•	WCAS and Vestar will have customary piggyback registration rights in connection with any registration by Newco of sales of its equity securities (other than on Forms S-4 or S-8), whether for

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		Newco’s own account or for the benefit of one or more stockholders exercising demand registration rights; and
	•	Newco will pay customary fees and expenses of registrations.

	Telecommunications Regulatory Approvals

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	United States Antitrust Laws

	•	The relative voting interests in the combined entity after the combination. In this case shareholders of Alltel, the sole shareholder of Spinco, will receive approximately 85% of the equity ownership and associated voting rights in the combined entity.
	•	The composition of the governing body of the combined entity. In this case the merger agreement provides that the composition of the Board of Directors of the surviving company will be largely determined by Alltel and/or Spinco.
	•	The composition of the senior management of the combined entity. In this case the merger agreement provides that the senior management of the combined entity was to be exclusively determined by Alltel and/or Spinco.

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	•	while the merger agreement contemplates the payment of a $0.25 per share quarterly dividend, this policy could be modified or revoked by Newco’s Board of Directors at any time in its sole discretion;
	•	the amount of dividends distributed will be subject to covenant restrictions under Newco’s new senior secured credit facility which will restrict its ability to take certain action with respect to dividends and payments in respect of capital stock, with the exception of dividends up to the sum of excess free cash flow and net cash equity issuance proceeds so long as the pro forma leverage ratio does not exceed 4.50 to 1.0;
	•	the amount of dividends distributed will be subject to restrictions under Delaware law pursuant to which the Newco Board of Directors will be permitted to declare dividends only to the extent of a “surplus” (which is defined as total assets at fair market value minus total liabilities, minus statutory capital) or, if there is no surplus, out of Newco’s net profits for the then current and/or immediately preceding fiscal year;
	•	Newco’s stockholders have no contractual or other legal right to receive dividends; and
	•	Newco may not have enough cash to pay dividends due to changes in Newco’s cash from operations, working capital requirements and/or anticipated cash needs.

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	•	an individual who is a citizen or a resident of the United States;
	•	a corporation, or other entity taxable as a corporation for United States federal income tax purposes, created or organized under the laws of the United States or any state thereof or the District of Columbia;
	•	an estate, the income of which is subject to United States federal income taxation regardless of its source; or
	•	a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more United States persons have the authority to control all of its substantial decisions, or (ii) in the case of a trust that was treated as a domestic trust under the law in effect before 1997, a valid election is in place under applicable Treasury regulations.

	•	insurance companies,
	•	dealers or traders in securities or currencies,
	•	tax-exempt organizations,
	•	financial institutions,
	•	mutual funds,
	•	partnerships or other entities classified as partnerships for United States federal income tax purpose and investors in such entities,
	•	holders who hold their shares as a hedge or as part of a hedging, straddle, conversion, synthetic security, integrated investment or other risk-reduction transaction,
	•	holders who are subject to the alternative minimum tax, or
	•	holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation.

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	The Spin-Off

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	The Merger

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	•	due organization, good standing and qualification;
	•	capital structure;
	•	authority to enter into the merger agreement (and the other agreements executed in connection therewith) and no conflicts with or violations of governance documents or laws;
	•	documents filed with the SEC and financial statements;
	•	absence of certain changes or events;
	•	no material investigations or litigation;
	•	compliance with applicable laws and possession of required licenses and regulatory approvals;
	•	accuracy of information supplied for use in this proxy statement/ prospectus-information statement;
	•	compliance with environmental laws;
	•	tax matters;
	•	employee benefit plan matters;
	•	labor matters;
	•	intellectual property matters;
	•	communications regulatory matters;
	•	material contracts;

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	•	title to real properties;
	•	opinion of company financial advisors;
	•	payment of fees to finders or brokers in connection with the merger;
	•	approval by the Board of Directors; and
	•	affiliate transactions.

	•	declaring or paying dividends in respect of its capital stock; provided, Valor may, and intends to, continue paying quarterly dividends at an annual rate of $1.44 per share in accordance with its existing dividend policy until the transaction closes;
	•	splitting, combining or reclassifying its capital stock or issuing securities in respect of, in lieu of or in substitution for its capital stock;
	•	repurchasing, redeeming or otherwise acquiring its capital stock;
	•	issuing, delivering, or selling any shares of its capital stock or any securities convertible into or exercisable for, or any right to acquire, capital stock;
	•	making acquisitions of a substantial equity interest or material assets of another entity or selling, leasing, disposing of or otherwise encumber assets, other than inventory in the ordinary course of business consistent with past practice;
	•	incurring debt, other than under existing agreements or in the ordinary course of business which is not material;
	•	incurring any capital expenditures other than in the ordinary course of business consistent with past practice;
	•	changing its accounting methods other than in accordance with accounting principles generally accepted in the United States;
	•	making or rescinding any material tax elections or settling or compromising any material income tax liabilities, amending any material tax returns and changing any method of reporting income or deductions;
	•	paying, discharging or satisfying any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than in the ordinary course of business consistent with past practice; and

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	•	taking or agreeing or committing to take any action that would result in any of such party’s representations and warranties set forth in the merger agreement or the other transaction agreements being or becoming untrue or in any of the conditions set forth in merger agreement not being satisfied at the effective time of the merger.

	•	amending its organizational documents in any manner that would prevent or materially impair or delay the consummation of the transactions contemplated by the merger agreement;
	•	compensation and benefit matters with respect to directors, officers and employees;
	•	establishing, adopting, entering into, terminating or amending any collective bargaining agreement;
	•	complete or partial liquidation or dissolution of Valor or any of its subsidiaries;
	•	entering into or amending agreements or arrangements with related parties; and
	•	modifying, amending, terminating, renewing or failing to use reasonable best efforts to renew any material contract or waiving, releasing or assigning any material rights or claims except in the ordinary course of business consistent with past practice.

	•	the obtaining of all necessary actions or non-actions, waivers, consents, and approvals;
	•	the making of all necessary registrations and filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
	•	the filing of all applications necessary to obtain state public service, or public utility commissions, and FCC consent to the transfer of control of certain licenses held by Spinco;
	•	the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any governmental authority; and
	•	the defending of any lawsuits or other legal proceedings.

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	•	knowingly solicit, initiate or encourage any inquiry or proposal that constitutes or could reasonably be expected to lead to a acquisition proposal;
	•	provide any non-public information or data to any person relating to or in connection with an acquisition proposal, engage in any discussions or negotiations concerning an acquisition proposal, or otherwise knowingly facilitate any effort or attempt to make or implement an acquisition proposal;
	•	approve, recommend, agree to or accept, or propose publicly to approve, recommend, agree to or accept, any acquisition proposal; or
	•	approve, recommend, agree to or accept, or propose to approve, recommend, agree to or accept, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement related to any acquisition proposal.

	•	any merger, consolidation, share exchange, business combination, recapitalization or other similar transaction or series of related transactions involving Valor or any of its significant subsidiaries;
	•	any direct or indirect purchase or sale, lease, exchange, transfer or other disposition of the consolidated assets (including stock of Valor’s subsidiaries) of Valor and its subsidiaries, taken as a whole, constituting 15% or more of the total consolidated assets of Valor and its subsidiaries, taken as a whole, or accounting for 15% or more of the total consolidated revenues of Valor and its subsidiaries, taken as a whole, in any one transaction or in a series of transactions;
	•	any direct or indirect purchase or sale of or tender offer, exchange offer or any similar transaction or series of related transactions engaged in by any person involving 15% or more of the outstanding shares of Valor common stock; or

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	•	any other substantially similar transaction or series of related transactions that would reasonably be expected to prevent or materially impair or delay the consummation of the transactions contemplated by the merger agreement or the other agreements executed in connection therewith.

	•	Valor stockholders have not yet adopted and approved the merger agreement;
	•	the Valor board, after consulting with its legal advisors, determines in good faith, that failure to take such action would be a breach of its fiduciary duties to stockholders under applicable laws;
	•	before approving or recommending a proposal or terminating the merger agreement, the Valor board has provided Alltel with at least three business days’ notice of such action;
	•	before providing any information or data to any person in connection with an acquisition proposal by that person, Valor’s Board of Directors receives from that person an executed confidentiality agreement with terms substantially the same as those contained in the confidentiality agreement between Alltel and Valor; and
	•	before providing any non-public information or data to any person or entering into discussions with any person, Valor’s Board of Directors promptly notifies Alltel of any such inquiry, proposal or offer received from, any information requested by, or any discussions or negotiations sought to be initiated or continued with, that person and identifies the material terms and conditions of the acquisition proposal and the identity of the person making such acquisition proposal.

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	•	WCAS will agree not to sell, transfer or otherwise dispose of Valor shares for a period of 90 days after consummation of the merger;
	•	Newco will file and use reasonable best efforts to have declared effective an “evergreen” shelf registration statement permitting sales of securities of Newco by WCAS and Vestar as soon as practicable after consummation of the merger (provided that WCAS will not be able to sell shares of Newco prior to the expiration of the lock-up referred to above) which will remain effective until each of WCAS and Vestar can sell all of its Newco securities under Securities Act Rule 144 without volume limitations;
	•	if requested by the holders of at least 50% of the outstanding registrable securities (initially held by WCAS, Vestar and their respective affiliates), Valor will conduct one underwritten offering, including management participation in road shows and similar customary obligations (underwriters to be selected by Valor); and
	•	WCAS and Vestar will have customary piggyback registration rights in connection with any registration by Valor of sales of its equity securities (other than on Forms S-4 or S-8), whether for Valor’s own account or for the benefit of one or more stockholders exercising demand registration rights.

	•	the completion of the spin-off transaction in accordance with the terms of the merger agreement and the distribution agreement;
	•	the termination or expiration of the applicable waiting period under the Hart-Scott-Rodino Act and receipt of certain other approvals as set forth in the merger agreement;
	•	receipt of the requisite consents of regulators in the telecommunications industry;
	•	the effectiveness of the registration statement of which this proxy statement/ prospectus-information statement is a part;
	•	the approval for listing on the New York Stock Exchange of the Valor common stock to be issued pursuant to the spin-off and the merger;
	•	the completion of the financing of the transaction;

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	•	receipt by Alltel and Spinco (and, to the extent applicable, Valor) of the requisite IRS rulings regarding the spin-off and the merger;
	•	receipt by Alltel of a legal opinion from Alltel’s counsel to the effect that the spin-off will qualify as tax-free to Alltel, Spinco and the stockholders of Alltel under Section 355 and related provisions of the Code, which opinion will rely on the IRS rulings as to matters covered by the rulings;
	•	receipt by each of Alltel and Spinco, on the one hand, and Valor, on the other hand, of a legal opinion stating that the merger will constitute a reorganization under Section 368(a) of the Code;
	•	receipt by the boards of directors of Alltel, Spinco and Valor of customary “solvency” and “surplus” opinions of a nationally recognized investment banking or appraisal firm in form and substance reasonably satisfactory to such boards and, to the extent relating to Spinco, reasonably satisfactory to Valor; and
	•	the absence of any statute, rule, regulation, order or injunction having the effect of restraining, enjoining or prohibiting the contribution transaction, the distribution transaction or the merger or imposing any restrictions or requirements thereon or on Alltel, Spinco or Valor that would reasonably be expected to have a material adverse effect on Alltel or Newco following the merger.

	•	performance by Valor, in all material respects, of all its obligations and compliance by Valor, in all material respects, with all covenants required by the merger agreement, as certified in writing by a senior officer of Valor;
	•	the accuracy of Valor’s representations and warranties set forth in the merger agreement (subject to certain exceptions), without any qualification as to materiality or material adverse effect set forth therein, except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on Valor and its subsidiaries, as certified in writing by a senior officer of Valor;
	•	the absence of any event, occurrence, development or state of circumstances or facts that has had, individually or in the aggregate, a material adverse effect on Valor, except as previously disclosed; and
	•	delivery of evidence, in form and substance reasonably satisfactory to Alltel and Spinco, demonstrating that Valor’s securityholders agreement has been amended in accordance with the merger agreement.

	•	performance by Alltel and Spinco, in all material respects, of all their respective obligations and compliance by Alltel and Spinco, in all material respects, with all covenants required by the merger agreement, as certified in writing by a senior officer of each of Alltel and Spinco;
	•	the accuracy of Alltel and Spinco’s representations and warranties set forth in the merger agreement (subject to certain exceptions), without any qualification as to materiality or material adverse effect set forth therein, except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on Alltel and Spinco and their subsidiaries, as certified in writing by a senior officer of each of Alltel and Spinco;
	•	execution by Spinco and Alltel of the Tax Sharing Agreement, the Employee Benefits Agreement, the Shared Assets Agreement, the Distribution Agreement and the Transition Services Agreement;
	•	the absence of any event, occurrence, development or state of circumstances or facts that has had, individually or in the aggregate, a material adverse effect on each of Alltel and Spinco, except as previously disclosed; and

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	•	delivery by Spinco of an affidavit, dated as of the closing date, in form and substance required under the Treasury Regulations issued pursuant to Section 1445(b) of the Code.

	•	the merger is not consummated by December 8, 2006 through no fault of the party seeking to terminate the merger agreement;
	•	there are final, non-appealable legal restraints preventing the merger and the party seeking to terminate the merger agreement has used all reasonable best efforts to remove such legal restraints; or
	•	the requisite Valor stockholder approval shall have failed to be obtained at the stockholders’ meeting, except that Valor will not be permitted to terminate the merger agreement because of the failure to obtain the stockholder approval if such failure was caused by (i) Valor’s actions or inactions that constitute a material breach of the merger agreement or (ii) a material breach of the voting agreement by any party thereto other than Spinco.

	•	Valor has breached or failed to perform in any material respect a representation, warranty, covenant or agreement contained in the merger agreement, resulting in a failure of a condition to Valor’s obligation to effect the merger, and such breach cannot be cured by December 8, 2006;
	•	the Board of Directors of Valor withdraws or modifies its approval or recommendation of the merger or the merger agreement or approves or recommends (or approves to recommend) to the Valor stockholders an acquisition proposal; or
	•	Valor fails to call and hold stockholders’ meeting within sixty (60) days after the effectiveness of the registration statement to which this proxy statement/ prospectus-information statement is a part.

	•	either Alltel or Spinco breached or failed to perform in any material respect a representation, warranty, covenant or agreement contained in the merger agreement, resulting in a failure of a condition to the Alltel or Spinco’s obligations to effect the merger, and such breach cannot be cured by December 8, 2006; or
	•	the Valor Board of Directors determines in good faith that an acquisition proposal constitutes a superior proposal and (i) Valor notifies Alltel of the acquisition proposal in accordance with the merger agreement, (ii) simultaneously with terminating the merger agreement Valor enters into a definitive agreement to effect the superior proposal, and (iii) Valor pays to Alltel the termination fee described below.

	•	Valor terminates the merger agreement because its Board of Directors determines in good faith that an acquisition proposal constitutes a superior proposal;
	•	Alltel and Spinco terminate the merger agreement because the Board of Directors of Valor withdraws or modifies its approval or recommendation of the merger or recommends an acquisition proposal to the Valor stockholders; or
	•	any person makes an acquisition proposal and thereafter the merger agreement is terminated (i) by Valor, Alltel or Spinco because either the merger is not consummated by December 8, 2006 or if the requisite Valor stockholder approval shall have failed to be obtained, or (ii) by Alltel or Spinco

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		because Valor fails to call and hold stockholders’ meeting within sixty (60) days after the effectiveness of the registration statement to which this proxy statement/ prospectus-information statement is a part, and, in each of the following cases, within twelve (12) months after the termination of the merger agreement:

	•	Valor is acquired by any merger, business combination or other similar transaction;
	•	Valor disposes of 15% or more of the total consolidated assets of Valor and its subsidiaries, taken as a whole, or accounting for 15% or more of the total consolidated revenues of Valor and its subsidiaries, taken as a whole;
	•	any person or entity acquires 15% or more of the outstanding shares of Valor common stock;
	•	any other substantially similar transaction that would reasonably be expected to prevent or materially impair or delay the consummation of merger is consummated; or
	•	Valor enters into a definitive agreement with respect to the foregoing.

	•	Alltel and Spinco or Valor terminates the merger agreement because the meprger is not consummated by December 8, 2006 and at the time of such termination, all of the conditions to the transactions in the merger agreement have been satisfied other than such conditions which by their terms are intended to be satisfied contemporaneously with the closing or such condition regarding the completion of the financing of the transaction; or
	•	Valor terminates the merger agreement because either Alltel or Spinco breached or failed to perform in any material respect a representation, warranty, covenant or agreement contained in the merger agreement, resulting in a failure of the conditions to the Alltel or Spinco’s obligations regarding the completion of the financing of the transaction, and such breach cannot be cured by December 8, 2006.

	•	Alltel and Spinco or Valor terminates the merger agreement because the merger is not consummated by December 8, 2006 and at the time of such termination, all of the conditions to the transactions in the merger agreement have been satisfied other than such conditions which by their terms are intended to be satisfied contemporaneously with the closing or such conditions regarding:

	•	the receipt by Alltel and Spinco (and, to the extent applicable, Valor) of the requisite Internal Revenue Service rulings relating to the spin-off and the merger and the receipt by Alltel of a legal opinion from its counsel to the effect that the spin-off will be tax-free to Alltel, Spinco and the stockholders of Alltel under Section 355 and related provisions of the Code; or
	•	the receipt by each of Alltel and Spinco, on the one hand, and Valor, on the other hand, of a legal opinion stating that the merger will constitute a reorganization under section 368(a) of the Internal Revenue Code; or

	•	Valor terminates the merger agreement because either Alltel or Spinco breached or failed to perform in any material respect a representation, warranty, covenant or agreement contained in the merger agreement, resulting in a failure of the two conditions to the Alltel or Spinco’s obligations listed immediately above, and such breach cannot be cured by December 8, 2006.

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	•	generally, not taking, or permitting any of its subsidiaries to take, any disqualifying action, provided that a disqualifying action would not include (i) an action taken pursuant to the terms of the transaction agreements, (ii) an action that would not have caused the tax-free status of the transactions to be lost, but for an action taken by Alltel or (iii) an action taken by Spinco prior to the distribution or taken solely to mitigate the adverse effects on the tax-free status of the transactions of an action taken by Spinco prior to the distribution;
	•	generally, for two years after the distribution, not taking, or permitting any of its subsidiaries to take, an action that might be a disqualifying action, without receiving the prior determination of Alltel that the action would not jeopardize the tax-free status of the transactions;

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	•	for two years after the distribution, not entering into any agreement, understanding or arrangement or engaging in any substantial negotiations with respect to any transaction involving the acquisition of Newco stock or the issuance of shares of Newco stock, or options to acquire or other rights in respect of such stock, in excess of a permitted basket of 71,130,989 shares (as adjusted for stock splits, stock dividends, recapitalizations, reclassifications and similar transactions), unless, generally, the shares are issued to qualifying Newco employees or retirement plans, each in accordance with “safe harbors” under regulations issued by the IRS;
	•	for two years after the distribution, not repurchasing Newco shares, except to the extent consistent with guidance issued by the IRS;
	•	for two years after the distribution, causing certain wholly-owned subsidiaries that were wholly-owned subsidiaries of Spinco at the time of the distribution to continue the active conduct of the Spinco business to the extent so conducted by those subsidiaries immediately prior to the distribution;
	•	for two years after the distribution, not voluntarily dissolving, liquidating, merging or consolidating with any other person, unless (i) Newco is the survivor of the merger or consolidation or (ii) prior to undertaking such action, Alltel has delivered a written determination to Newco that such action would not jeopardize the tax-free status of the transactions.

	•	Alltel had delivered to Newco a written determination that a potential disqualifying action would not jeopardize the tax-free status of the transactions (except to the extent that a disqualifying action resulted from the inaccuracy, incorrectness or incompleteness of any representation provided by Newco to Alltel in respect of that determination);
	•	the tax-related loss arose in respect of any action or transaction that was permitted to be taken without the consent of Alltel pursuant to the limitations described in the third preceding paragraph (except to the extent that, in the case of an action permitted pursuant to an IRS ruling, a disqualifying action resulted from the inaccuracy, incorrectness or incompleteness of any representation provided by Newco to the IRS in connection with such ruling);
	•	the tax-related loss arose in respect of any item of income, gain, deduction or loss that resulted from Alltel’s preliminary internal restructuring or that was attributable, under certain provisions of the Code, to a predecessor of Alltel or Spinco; or

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	•	the tax-related loss arose from the recognition of taxable income or gain by Alltel or any Alltel affiliate on the distribution, as a result of any deemed sale of Spinco stock by Alltel attributable to such stock being treated for federal income tax purposes as not having been distributed to Alltel’s stockholders or any failure by Alltel to distribute an amount of Spinco stock constituting “control” of Spinco within the meaning of Section 368(c) of the Code as a result of such a deemed sale.

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	•	the issuance to Alltel of Spinco common stock to be distributed to Alltel’s stockholders pro rata in the spin-off,
	•	the payment of a special dividend to Alltel in an amount not to exceed Alltel’s tax basis in Spinco (which equals approximately $2.4 billion), which Alltel will use to repurchase stock pursuant to a special stock buyback program authorized by the Alltel Board of Directors in connection with the spin-off, to repay outstanding indebtedness, or both, within one year following the spin-off, and
	•	the distribution by Spinco to Alltel of certain Spinco debt securities in an amount equal to the difference between $3.965 billion (the aggregate amount Spinco will borrow) and the special dividend paid to Alltel by Spinco, which Alltel intends to exchange for outstanding Alltel debt securities or otherwise transfer to Alltel’s creditors.

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	•	immediately prior to the spin-off, all material contracts, licenses, agreements, commitments and other arrangements, formal and informal, between Alltel and its subsidiaries, on the one hand, and Spinco and its subsidiaries, on the other hand, will be terminated (except as contemplated by the other agreements executed in connection with the transactions);
	•	immediately prior to the spin-off, all intercompany cash management loan balances between Alltel and its subsidiaries, on one hand, and Spinco and its subsidiaries, on the other hand, will be canceled;
	•	no longer using any material showing, or otherwise representing to any third party, any affiliation or connection between Alltel and Spinco after the spin-off, other than in filings, reports and other documents required by applicable law or regulations of securities exchanges to be filed or made publicly available; and
	•	entering into the Employee Benefits Agreement, the Merger Agreement, the Tax Sharing Agreement, the Shared Assets Agreement, the Shared Contracts Agreement, and the Transition Services Agreement (see “Additional Agreements Related To The Spin-Off And The Merger” on page [ •  ]).

	•	any liability assumed, transferred, assigned or allocated to Spinco or to Alltel in accordance with, or any other liability of either of them under, the merger agreement or any other transaction agreements or any contracts contemplated thereby;
	•	the ability of a party to enforce its rights under the merger agreement or any other transaction agreements or any contracts contemplated thereby; or

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	•	any liability the release of which would result in the release of any person other than Spinco, Alltel or their respective subsidiaries.

	•	to pay or satisfy:

	•	any liability of Alltel or any of its subsidiaries (including Spinco and its subsidiaries) primarily relating to or arising from the business of Spinco, including the liabilities set forth on the audited balance sheet of Spinco prepared in accordance with the distribution agreement or arising after the date thereof;
	•	any liability of Spinco under the transaction agreements executed in connection with the merger;
	•	any liability to be transferred to Spinco or a Spinco subsidiary in connection with a benefit and compensation plan, in accordance with the employee benefits agreement; or
	•	any liability or obligation arising in connection with or related to the assets transferred to Spinco by Alltel in accordance with the distribution agreement; or

	•	to perform any of its obligations under the distribution agreement.

	•	to pay or satisfy any liability of Alltel or any of its subsidiaries, including the liabilities of Alltel under the transaction agreements executed in connection with the merger, in each case, other than the liabilities of Spinco thereunder; or
	•	to transfer to Spinco all of the assets transferred or to be transferred to Spinco pursuant to the distribution agreement, or
	•	to perform any of its obligations under the distribution agreement.

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	•	A retirement plan and related trust substantially similar to the Alltel pension plan. The amount transferred from the Alltel pension plan to the Spinco plan will be a pro rata share of the fair market value of the Alltel pension plan assets.

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	•	Plans substantially similar to the Alltel 401(k) and profit sharing plans. Any participant loan notes held by the Alltel 401(k) will be transferred in-kind.
	•	A plan substantially identical to the provisions of the Alltel comprehensive group insurance plan. The Spinco plan will recognize and maintain the current status for elections and deductible plan maximums made with respect to Spinco Employees and Spinco Individuals under the Alltel plan. No assets of the trust related to the Alltel comprehensive group insurance plan shall be transferred to Spinco or any trust established by Spinco. The Spinco plan will recognize and maintain all coverage and contribution elections made under the Alltel plan and will recognize and give credit for all deductibles and co-payments paid by, and all benefits paid to, Spinco Employees and Spinco Individuals under the Alltel plan.
	•	Plans established for Spinco Employees that are substantially similar to the Alltel long term disability plan, group accident plan, and Special Insurance Plan for Former Allied Telephone Profit Sharing. The Alltel long term disability plan, group accident plan, and Special Insurance Plan for Former Allied Telephone Profit Sharing will remain liable for obligations incurred with respect to Spinco Employees and Spinco Individuals prior to establishment of the new Spinco plans.
	•	A plan established for Spinco Individuals that is substantially similar to the provisions of Alltel’s Income Advantage Plan (POP). The Spinco plan will maintain coverage and contribution elections made under the Alltel Income Advantage Plan and recognize account balances as if participation in the Spinco plan had been since the beginning of the calendar year.
	•	Educational assistance and adoption assistance plans for Spinco Employees that are substantially similar to the Alltel plans of the same name. The obligations and liabilities with respect to Spinco Employees under the Alltel educational assistance and adoption assistance plans will be transferred to and assumed by the respective Spinco plans.
	•	A severance pay plan for Spinco Employees substantially similar to the severance pay plan of Alltel; provided, however, the spin-off, merger or both will not be an event that entitles a Spinco Employee or Spinco Individual to benefits under the Alltel severance pay plan or new Spinco severance plan. The Spinco severance plan will not be amended so as to provide decreased benefits for a period of one year after the distribution date.
	•	People practices for Spinco Employees substantially similar to the provisions of the people practices in effect at Alltel. Spinco has agreed to recognize all periods of service of Spinco Employees with Alltel under the Spinco people practices plan.
	•	A plan substantially identical to the Alltel Corporation Performance Incentive Compensation Plan for the performance period beginning the day after the distribution date and ending on December 31, 2006. Awards held by Spinco Individuals under the 2006 Alltel Corporation Performance Incentive Compensation Plan will be paid a pro rated amount if deemed earned based on a reasonable estimate of the actual performance level from January 1, 2006 to the distribution date.
	•	A plan for Spinco Employees that is substantially identical to the provisions of Alltel’s Benefit Restoration Plan.
	•	A plan for Spinco Employees and Spinco Individuals substantially similar to the provisions of Alltel’s Supplemental Medical Reimbursement Plan. The obligations and liabilities incurred under the Alltel Supplemental Medical Reimbursement Plan with respect to Spinco Employees and Spinco Individuals will be and remain the sole responsibility of the Alltel Supplemental Medical Reimbursement Plan.

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	•	For awards in effect as of the distribution date for the 2004–2006 performance measurement period, each Spinco Individual will be entitled to a pro rata amount if deemed earned based on a reasonable estimate of the actual performance level of such period.
	•	Awards in effect as of the distribution date for the 2005–2007 performance measurement period will be deemed earned at the target performance level and paid pro rata to eligible Spinco Individuals.

	•	To the extent that a Spinco Individual is holding an award consisting of an Alltel option that is vested and outstanding as of the distribution date, he or she will be treated as experiencing a separation from service from, or otherwise terminating employment with, Alltel. Any such Alltel option will expire unless it is exercised within the time provided in the option itself.
	•	To the extent that a Spinco employee is holding an award consisting of an Alltel option that is not vested as of the distribution date, that option shall be cancelled as of the distribution date and replaced by restricted shares of Newco common stock in accordance with the terms of the Merger Agreement. The merger agreement authorizes up to 2.8 million restricted shares of Valor common stock to be awarded. The restrictions on such shares will lapse on a date to be determined by the Board of Directors of Newco. The Newco Board of Directors will also determine the value of the awards.

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	•	any net liability for income taxes of a member of the Spinco group attributable to the treatment of payments received from a federal or state universal services fund in respect of the Spinco business for the period from January 1, 1997 to the distribution;
	•	any non-income taxes arising prior to the spin-off and relating to Spinco and its subsidiaries or to the employees, assets or transactions of the Spinco business, except for non-income taxes arising in respect of the preliminary restructuring of the Spinco group and the distribution of the stock of Spinco to the stockholders of Alltel; and
	•	any liability for taxes arising after the spin-off attributable to Spinco and its subsidiaries or to the employees, assets or transactions of the Spinco business.

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	•	information technology systems,
	•	billing,
	•	human resources,
	•	customer service,
	•	accounting and finance,
	•	engineering and network,
	•	sales and marketing,
	•	operations,
	•	real estate,
	•	branding, and
	•	capital asset management.

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	•	senior secured five-year revolving credit facility in a principal amount of $500.0 million, and
	•	senior secured term loan facilities in an aggregate amount of up to $3.7 billion consisting of sub-facilities in the following amounts:

	(i) Tranche A Term Loan Facility — up to $500.0 million;
	(ii) Tranche B Term Loan Facility — up to $2.8 billion; and
	(iii) Tranche C Term Loan Facility — up to $400.0 million.

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Description		Principal Amount to be Repaid
Valor Bank Facility — Amended and Restated Credit Facility dated as of February 14, 2005 among Valor, certain of its affiliates as guarantors and Bank of America, N.A., as Administrative Agent, and the lenders and other agents party thereto (as amended by Amendment No. 1 dated as of August 9, 2005)		Approximately $781.0 million of secured loans to be repaid in full with the proceeds of the Senior Credit Facilities and/or Refinancing Notes
Valor Bonds — 73/4% Senior Notes due 2015 issued by Valor		$400 million Valor Bonds to be repaid with the proceeds of the Tranche C Term Loan Facility to the extent put to the issuer pursuant to a change of control offer and noteholder consent required under the indenture governing the notes (assumed to be $0)
Alltel Bonds — Various bonds issued by certain of Alltel’s wireline subsidiaries		Approximately $81.0 million, including accrued interest of Alltel wireline bonds to be repurchased with the proceeds of the Senior Credit Facilities and/or Refinancing Notes (expected total payments of approximately $90.5 million including the related make-whole premiums)

Description			Principal Amount
Senior Credit Facilities:
	Revolving Credit Facility		Aggregate commitments of $500.0 million
	Term Facilities and/or Refinancing Notes		Aggregate of $3.3 billion
Distributed Notes			$1.538 billion of senior notes, plus $27 million in fees related thereto that will be capitalized, to be issued by Spinco to Alltel as consideration for the contribution
Assumed Spinco Debt — 63/4% Notes due 2028 and 61/2% Debentures due 2013 issued by certain wireline subsidiaries of Alltel			Approximately $180.0 million of Alltel wireline bonds to be assumed by Spinco in connection with the contribution transaction
Valor Bonds — 73/4% Senior Notes due 2015 issued by Valor			$400.0 million of Valor Bonds assumed to remain outstanding (assuming not put to the issuer pursuant to a change of control offer required under the applicable indenture)

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	•	if the Senior Credit Facilities are rated Ba2 or higher by Moody’s and BB or higher by S&P (in each case with a stable outlook):

	•	in the case of loans under the revolving credit facility, Tranche A Term Loans and Tranche C Term Loans, 1.25% for Eurodollar Loans and 0.25% for loans based on ABR, and
	•	in the case of Tranche B Term Loans, 1.50% for Eurodollar Loans and 0.50% for loans based on ABR, or

	•	if the Senior Credit Facilities are rated lower than Ba2 by Moody’s or lower than BB by S&P:

	•	in the case of loans under the revolving credit facility, Tranche A Term Loans and Tranche C Term Loans, 1.50% for Eurodollar Loans and 0.50% for loans based on ABR, and
	•	in the case of Tranche B Term Loans, 1.75% for Eurodollar Loans and 0.75% for loans based on ABR.

	Each quarter during Year 1 — 0%
	Each quarter during Year 2 — 1.25%
	Each quarter during Year 3 — 2.5%
	Each quarter during Year 4 — 3.75%
	Each of the first 3 quarters of Year 5 — 5%
	Maturity — 55%

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	•	Spinco added more than 154,000 high-speed data customers, increasing Spinco’s DSL customer base to almost 400,000. This increase more than offset the loss of approximately 124,000 local access lines, a year-over-year decline of 4 percent.
	•	Revenues and sales decreased by $10.0 million and operating income decreased by $33.8 million, primarily due to the loss in access lines discussed above. However, average revenue per customer increased 2 percent to $67.21, primarily due to growth in DSL revenues and selling additional services and features to existing wireline customers.
	•	During the fourth quarter of 2005, Spinco began offering DISH Network satellite television service to Spinco’s residential customers as part of a bundled service offering.

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				2005				2004				2003
				(In millions)
Revenues and sales:
	Service revenues			$	2,463.6			$	2,533.5			$	2,618.4
	Product sales				459.9				400.0				384.9
		Total revenues and sales			2,923.5				2,933.5				3,003.3
Costs and expenses:
	Cost of services				796.1				813.7				864.8
	Cost of products sold				374.8				333.8				339.0
	Selling, general, administrative and other				340.1				327.9				351.0
	Depreciation and amortization				474.2				508.5				519.4
	Royalty expense to Parent				268.8				270.2				273.0
	Restructuring and other charges				35.7				11.8				12.2
		Total costs and expenses			2,289.7				2,265.9				2,359.4
Operating income					633.8				667.6				643.9
Other income, net					11.6				13.7				5.8
Intercompany interest income (expense)					23.3				(15.2	)			(21.6	)
Interest expense					(19.1	)			(20.4	)			(27.7	)
Gain on disposal of assets and other					—				—				23.9
Income before income taxes					649.6				645.7				624.3
Income taxes					267.9				259.4				247.1
Income before cumulative effect of accounting change					381.7				386.3				377.2
Cumulative effect of accounting change, net of taxes					(7.4	)			—				15.6
Net income				$	374.3			$	386.3			$	392.8

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	Restructuring and Other Charges

			(Millions)
Severance and employee benefit costs			$	4.4
Costs associated with pending spin-off and merger of wireline operations				31.3
	Total restructuring and other charges		$	35.7

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							Product
			Wireline				Distribution				Other				Total
			(Millions)
Severance and employee benefit costs			$	11.2			$	0.1			$	0.3			$	11.6
Relocation costs				1.2				—				0.1				1.3
Lease and contract termination costs				(1.8	)			—				—				(1.8	)
Other exit costs				0.7				—				—				0.7
	Total restructuring and other charges		$	11.3			$	0.1			$	0.4			$	11.8

							Product
			Wireline				Distribution				Other				Total
			(Millions)
Severance and employee benefit costs			$	7.0			$	—			$	—			$	7.0
Lease and contract termination costs				—			$	—				(0.4	)			(0.4	)
Write-down of software development costs				1.8			$	—				3.8				5.6
	Total restructuring and other charges		$	8.8			$	—			$	3.4			$	12.2

	Other Income, Net

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	Intercompany Interest Income (Expense)

	Interest Expense

	Gain on Disposal of Assets and Other

	Income Taxes

	Income before Cumulative Effect of Accounting Change

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	Cumulative Effect of Accounting Change

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	Results of Operations By Business Segment

Wireline Operations				2005				2004				2003
				(Dollars in millions,
				except access lines in thousands)
Revenues and sales:
	Local service			$	1,081.5			$	1,115.6			$	1,135.6
	Network access and interconnection				1,034.1				1,038.3				1,049.9
	Miscellaneous				255.8				256.9				243.1
		Total revenues and sales			2,371.4				2,410.8				2,428.6
Costs and expenses:
	Cost of services				704.0				702.8				736.4
	Cost of products sold				31.7				29.4				28.0
	Selling, general, administrative and other				276.2				272.8				289.7
	Depreciation and amortization				468.2				502.2				510.2
	Royalty expense to Parent				268.8				270.2				273.0
		Total costs and expenses			1,748.9				1,777.4				1,837.3
Segment income				$	622.5			$	633.4			$	591.3
Access lines in service (excludes DSL lines)					2,885.7				3,009.4				3,095.6
Average access lines in service					2,950.0				3,061.5				3,136.8
Average revenue per customer per month(a)				$	67.21			$	65.87			$	64.72

(a)		Average revenue per customer per month is calculated by dividing total wireline revenues by average access lines in service for the period.

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			2005				2004				2003
			(Millions)
Severance and employee benefit costs			$	4.4			$	11.2			$	7.0
Relocation costs				—				1.2				—
Lease and contract termination costs				—				(1.8	)			—
Costs associated with pending spin-off and merger of wireline operations				31.3				—				—
Write-down of software development costs				—				—				1.8
Other exit costs				—				0.7				—
	Total restructuring and other charges		$	35.7			$	11.3			$	8.8

	Accounting for Regulated Entities

	•	Level of competition in Spinco’s markets. Sources of competition to Spinco’s local exchange business include, but are not limited to, resellers of local exchange services, interexchange carriers, satellite transmission services, wireless communications providers, cable television companies, and competitive access service providers including those utilizing Unbundled Network Elements-Platform (“UNE-P”), VoIP providers and providers using other emerging technologies. Spinco’s ILEC operations have begun to experience competition in their local service areas. Through December 31, 2005, this competition has not had a material adverse effect on the results of operations of Spinco’s ILEC operations, primarily because these subsidiaries provide wireline telecommunications services in mostly rural areas. To date, ILEC subsidiaries have not been required to discount intrastate service rates in response to competitive pressures.
	•	Level of revenues and access lines currently subject to rate-of-return regulation or which could revert back to rate-of-return regulation in the future. For the ILEC subsidiaries that follow SFAS No. 71, all interstate revenues are subject to rate-of-return regulation. The majority of the ILEC subsidiaries’ remaining intrastate revenues are either subject to rate-of-return regulation or could become subject to rate-of-return regulation at Spinco’s election, subject in certain cases to approval by the state public service commissions.
	•	Level of profitability of the ILEC subsidiaries. Currently, the prices charged to customers for interstate and intrastate services continue to be sufficient to recover the specific costs of the ILEC subsidiaries in providing these services to customers.

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	Regulatory Matters

	Telecommunications Law Modernization

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	State Regulation

	Inter-carrier Compensation

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	Universal Service

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	Emerging Competitive Technologies — VoIP

	CALEA

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	Broadband

	Product Distribution

				2005				2004				2003
				(Millions, except customers in
				thousands)
Revenues and sales:
	Product distribution			$	307.9			$	257.5			$	278.9
		Total revenues and sales		$	307.9			$	257.5			$	278.9
Costs and expenses:
	Cost of products sold				289.2				239.5				259.5
	Selling, general, administrative and other				12.4				12.4				13.6
	Depreciation and amortization				1.9				2.5				2.4
		Total costs and expenses			303.5				254.4				275.5
Segment income					4.4				3.1				3.4

			2005				2004				2003
			(Millions)
Severance and employee benefit costs			$	—			$	0.1			$	—
	Total restructuring and other charges		$	—			$	0.1			$	—

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	Other Operations

				2005				2004				2003
				(Millions, except customers in
				thousands)
Revenues and sales:
	Long-distance			$	180.4			$	174.1			$	182.4
	Directory publishing				154.7				155.9				122.6
	Telecommunications information services				17.2				41.8				108.8
		Total revenues and sales			352.3				371.8				413.8
Costs and expenses:
	Cost of services				138.9				155.6				190.1
	Cost of products sold				114.9				126.8				107.8
	Selling, general, administrative and other				51.8				42.7				47.7
	Depreciation and amortization				4.1				3.8				6.8
		Total costs and expenses			309.7				328.9				352.4
Segment income				$	42.6			$	42.9			$	61.4
Long-distance customers					1,750.8				1,770.8				1,680.2

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			2004				2003
			(Millions)
Severance and employee benefit costs			$	0.3			$	—
Relocation costs				0.1				—
Lease and contract termination costs				—				(0.4	)
Write-down of software development costs				—				3.8
	Total restructuring and other charges		$	0.4			$	3.4

	Segment Capital Requirements

													Software
			Capital Expenditures										Development
																	Totals
			)
			(Millions
Wireline			$	343.0			-		$	348.0			$	2.0			$	345.0			-		$	350.0
Product Distribution				2.0			-			2.0				—				2.0			-			2.0
Other				3.0			-			3.0				—				3.0			-			3.0
	Totals		$	348.0			-		$	353.0			$	2.0			$	350.0			-		$	355.0

	Financial Condition, Liquidity and Capital Resources

				2005				2004				2003
				(Millions)
Cash flows from (used in):
	Operating activities			$	953.9			$	962.2			$	1,135.0
	Investing activities				(352.7	)			(329.7	)			(356.9	)
	Financing activities				(602.4	)			(627.1	)			(784.2	)
	Effect of exchange rate changes				—				(0.1	)			0.8
		Change in cash and short-term investments		$	(1.2	)		$	5.3			$	(5.3	)

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	Cash Flows from Operations

	Cash Flows Used in Investing Activities

	Cash Flows Used in Financing Activities

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	Liquidity and Capital Resources

	Pension Plans

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	Other Postretirement Benefits

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	Off-Balance Sheet Arrangements

	Contractual Obligations and Commitments

			Payments Due by Period
			Less												More
			Than				1-3				3-5				Than
			1 Year				Years				Years				5 Years				Total
			(Millions)
Long-term debt, including current maturities(a)			$	22.1			$	45.7			$	39.9			$	154.1			$	261.8
Interest payments on long-term debt obligations				18.8				32.5				25.4				—				76.7
Operating leases				5.0				6.7				3.6				2.5				17.8
Purchase obligations(b)				1.3				0.6				—				—				1.9
Other long-term liabilities(c)				32.3				98.4				99.4				607.7				837.8
	Total contractual obligations and commitments		$	79.5			$	183.9			$	168.3			$	764.3			$	1,196.0

(a)		Excludes $(1.0) million of unamortized discounts included in long-term debt at December 31, 2005.
(b)		Purchase obligations represent amounts payable under noncancellable contracts and primarily represent agreements for software licensing.
(c)		Other long-term liabilities primarily consist of deferred tax liabilities and other postretirement benefit obligations.

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	Market Risk

	Critical Accounting Policies

	In evaluating the collectibility of Spinco’s trade receivables, it assesses a number of factors including a specific customer’s ability to meet its financial obligations to it, as well as general factors, such as the length of time the receivables are past due and historical collection experience. Based on these assumptions, Spinco records an allowance for doubtful accounts to reduce the related receivables to the amount that it ultimately expects to collect from customers. If circumstances related to specific customers change or economic conditions worsen such that Spinco’s past collection experience is no longer relevant, its estimate of the recoverability of its trade receivables could be further reduced from the levels provided for in the consolidated financial statements. At December 31, 2005, Spinco’s allowance for doubtful accounts was $14.1 million. A 10 percent increase in this reserve would have increased the provision for doubtful accounts by $1.4 million for the year ended December 31, 2005.
	The annual costs of providing pension and other postretirement benefits are based on certain key actuarial assumptions as discussed above. As previously discussed, the discount rate selected is based on a review of current market interest rates on high-quality, fixed-rate debt securities adjusted to reflect Spinco’s longer duration of expected future cash outflows for benefit payments. The expected return on plan assets reflects Spinco’s view of the long-term returns available in the investment market based on historical averages and consultation with investment advisors. The healthcare cost trend rate is based on Alltel’s actual medical claims experience and future projections of medical costs. See “Pension Plans” and “Other Postretirement Benefits” for the effects on Spinco’s future benefit costs resulting from changes in these key assumptions.
	The calculation of depreciation and amortization expense is based on the estimated economic useful lives of the underlying property, plant and equipment and finite-lived intangible assets. Although Spinco believes it is unlikely that any significant changes to the useful lives of its tangible or finite-lived intangible assets will occur in the near term, rapid changes in technology or changes in market conditions could result in revisions to such estimates that could materially affect the carrying value of these assets and Spinco’s future operating results. In addition, as previously discussed, during 2005 and 2004, Spinco reduced the depreciation rates on property, plant and equipment used in certain of Spinco’s ILEC markets based on studies of the related lives. Spinco also intends to perform similar studies on the property, plant and equipment used in its remaining ILEC markets during 2006. Spinco cannot predict what impact the results of those studies will have on depreciation and amortization expense in 2006. However, an extension of the average useful life of Spinco’s property, plant and equipment and finite-lived intangible assets of one year would decrease depreciation and amortization expense by approximately $20.5 million per year, while a reduction in the average useful life of one year would increase depreciation and amortization expense by approximately $24.0 million per year.

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	In accordance with SFAS No. 142, Spinco tests its goodwill and other indefinite-lived intangible assets for impairment at least annually, which requires it to determine the fair value of these intangible assets, as well as the fair value of its reporting units. For purposes of testing goodwill, fair value of the reporting units is determined utilizing a combination of the discounted cash flows of the reporting units and calculated market values of comparable public companies. Fair value of the other indefinite-lived intangible assets is determined based on the discounted cash flows of the related business segment. During 2005 and 2004, no write-downs in the carrying values of either goodwill or indefinite-lived intangible assets were required based on their calculated fair values. In addition, reducing the calculated fair values of goodwill and the other indefinite-lived intangible assets by five percent would not have resulted in an impairment of the carrying value of the related assets in either 2005 or 2004. Changes in the key assumptions used in the discounted cash flow analysis due to changes in market conditions could adversely affect the calculated fair values of goodwill and other indefinite-lived intangible assets, materially affecting the carrying value of these assets and Spinco’s future consolidated operating results.
	Spinco’s estimates of income taxes and the significant items resulting in the recognition of deferred tax assets and liabilities are disclosed in Note 10 to the consolidated financial statements and reflect its assessment of future tax consequences of transactions that have been reflected in its financial statements or tax returns for each taxing authority in which it operates. Actual income taxes to be paid could vary from these estimates due to future changes in income tax law or the outcome of audits completed by federal, state and foreign taxing authorities. Included in the calculation of Spinco’s annual income tax expenses are the effects of changes, if any, to its income tax contingency reserves. Spinco maintains income tax contingency reserves for potential assessments from the IRS or other taxing authorities. The reserves are determined based upon Spinco’s judgment of the probable outcome of the tax contingencies and are adjusted, from time to time, based upon changing facts and circumstances. Changes to the tax contingency reserves could materially affect its future consolidated operating results in the period of change.

	Legal Proceedings

	Recently Issued Accounting Pronouncements

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	•	Spinco’s regulated Alabama wireline subsidiary has operated since 1996 under a PSC-established alternative regulation plan. In 2005 the previous alternative regulation plan was replaced by two alternative regulation plans approved by the PSC. Spinco elected to be regulated under the price flexibility plan. Under this plan basic residential local service rates are capped for two years. Also in 2005, the legislature passed the Alabama Communications Reform Act of 2005. Under this reform Act, only stand-alone basic service, wholesale access services and certain calling features remain regulated after February 1, 2007. Spinco has elected to be regulated under the Communications Reform Act, effective February 2007.
	•	Spinco’s regulated Arkansas wireline subsidiary has operated since 1997 under an alternative regulation plan established by statute. Under this plan, basic local rates and access rates may be adjusted annually by up to 75 percent of the annual change in the Gross Domestic Product-Price Index (“GDP-PI”). Other local rates may be changed without PSC approval and become effective upon the filing of revised tariffs.
	•	Spinco’s regulated Florida wireline subsidiary operates under alternative regulation established by Florida statute. Under this plan, basic local rates may be increased once in any twelve-month period by an amount not to exceed the twelve month change in the GDP-PI less one percent. Spinco may increase rates for non-basic services as long as the annual increase for any category does not exceed six percent in any twelve-month period. Non-basic rates can be increased by up to 20 percent annually in exchanges where another local provider is providing service. Intrastate access rates can be increased by the annual change in GDP-PI or three percent, whichever is less, only after access rates reach parity with Spinco’s interstate rates.
	•	Spinco’s regulated Georgia wireline subsidiaries operate under an alternative regulation plan established by statute. Under this plan, basic local rates may be increased annually based on the annual change in GDP-PI. Other local rates may be increased by filing revised tariffs.
	•	Spinco has two regulated operating subsidiaries in Kentucky. The larger subsidiary is subject to rate-of-return regulation. The smaller subsidiary has operated under alternative regulation established by statute beginning in 1998. Under this plan, the subsidiary may adjust basic business and residential rates, once during any 24-month period by an amount not to exceed the sum of the annual percentage change in GDP-PI for the immediately preceding two calendar years subject to the following limitations: (1) basic business and residence rates may not exceed the average basic rates of the state’s largest telephone utility, and (2) rates may not be increased by more than 20 percent. Access charges may not be adjusted if the change would result in intrastate access rates that exceed Spinco’s interstate rates. Other local rates may be adjusted by filing tariffs.
	•	Spinco’s regulated Missouri wireline subsidiary is subject to alternative regulation election established by statute. Under Missouri’s alternative regulation, basic local service and intrastate access rates are

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		adjusted annually based on changes to the telephone service component of the Consumer Price Index. Prices for non-basic services may be increased up to five percent per year after the initial twelve-month period.
	•	Spinco’s regulated Nebraska operations are subject to alternative regulation established by statute. (Nebraska law exempts telecommunications companies from rate-of-return regulation.) In exchanges where competition exists, companies are required to file rate lists, which are effective after 10 days notice to the PSC. In exchanges where competition does not exist, companies file rate lists for all services except basic local service with 10 days notice to the PSC, and basic local rates may be increased after 90 days notice to affected subscribers. Basic local rate increases are reviewed by the PSC only if rates are increased more than 10 percent in twelve consecutive months or in response to a formal complaint signed by two percent of affected subscribers.
	•	Spinco’s New York operations are subject to rate-of-return regulation. In June 2005, the New York PSC opened a proceeding to examine potential changes to the existing form of regulation in light of increasing competition. A decision is expected in 2006.
	•	Spinco’s regulated North Carolina subsidiary has operated since 1998 under alternative regulation plan approved by the State Utility Commission. Local rates are adjusted annually by the annual change in GDP-PI. Rate changes are effective upon 14 days notice. Spinco has recently obtained Commission approval for changes to its current price regulation plan that will allow greater pricing flexibility, shorter implementation intervals for promotional offerings and deregulation of pricing for bundled services.
	•	Spinco’s regulated Ohio wireline subsidiaries began in 2004 to operate under an alternative regulation plan established by the Ohio Public Utilities Commission. Under this plan, basic service rates have been capped. Non-basic service rates are subject to limited pricing flexibility. New rules for alternative regulatory treatment of basic service, which include competitive market tests, are pending.
	•	In 1997 Spinco’s regulated Oklahoma wireline subsidiaries began to operate under an alternative regulation plan established by statute. Under this plan, basic service rates can be increased annually as long as the increase does not exceed a pre-determined amount.
	•	In July 2005, Spinco’s regulated Pennsylvania subsidiary began operating under a new alternative regulation plan passed by the Pennsylvania General Assembly in 2004. Under this plan, Spinco is required to make broadband access to the Internet available for purchase to 100 percent of its customer base by 2013. Rates for competitive services are not regulated, but the PUC retains authority over the quality of these services. Rate increases for noncompetitive services are restricted to the GDP-PI less two percent, annually. The total amount of an increase to basic local service rates cannot exceed $3.50 annually. Revenue neutral rate rebalancing is also permitted for noncompetitive services.
	•	Spinco’s regulated South Carolina operations are subject to alternative regulation established by statute. Local rates can be adjusted pursuant to an inflation-based index. All other service rates may be increased subject to a complaint process for abuse of market position. The PSC has determined that any allegations of abuse of market position will be investigated on a case-by-case basis. Rate increases become effective 14 days after filing.
	•	Spinco has two operating subsidiaries in Texas. These subsidiaries are subject to alternative regulation established by statute. All rates are capped for the duration of the plan.

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	Alltel Corporation Designees to the Board of Directors

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	Valor Designee to the Board of Directors

	Classified Board

	Committees of the Board of Directors

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																						Long-Term Compensation
																						Awards								Payouts
										Annual Compensation												Restricted				Securities
																						Stock				Underlying				Long-Term				All Other
		Principal																Other Annual				Award				Options				Incentive Plan				Compensation
Name(a)		Position				Year				Salary ($)				Bonus ($)				Compensation ($)				($)(b)				(#)(c)				Payouts ($)				($)(d)
Jeffery R. Gardner		Chief Executive					2005				525,000				680,400				—				939,420	(b)			60,000				466,667				118,259
			Officer				2004				475,000				855,000				—				739,200				60,000				452,625				72,982
							2003				400,000				615,600				—				—				120,000				390,000				51,421
Francis X. Frantz		Chairman of the					2005				500,000				648,000				—				939,420	(b)			60,000				470,000				224,241
			Board				2004				460,000				828,000				—				739,200				60,000				514,986				104,766
							2003				450,000				692,550				—				—				120,000				472,500				70,319
Michael D. Rhoda		Senior Vice					2005				191,102				94,617				—				103,613				7,500				49,029				15,205
			President —				2004				183,752				97,538				—				43,995				3,500				62,096				13,803
		Regulatory and					2003				175,002				86,453				—				—				7,000				62,388				10,989
			Wholesale
Brent K. Whittington		Chief Financial					2005				180,000				93,797				—				55,260				4,000				—				8,400
			Officer				2004				175,000				47,211				—				22,023				1,750				—				7,120
							2003				115,500				31,421				—				—				3,500				—				5,867
Robert G. Clancy Jr.		Senior Vice					2005				168,646				68,528				—				27,630				2,000				25,720				10,771
			President				2004				162,160				59,811				—				23,280				1,850				32,596				8,939
		and Treasurer					2003				149,940				40,986				—				—				3,700				—				7,632

(a)

The listed principal position of each named executive officer is the principal position each named executive officer is expected to hold with Newco following completion of the merger. Mr. Frantz served as the Executive Vice President and Secretary of Alltel. Mr. Gardner served as the Executive Vice President and Chief Financial Officer of Alltel. Mr. Whittington served as the Senior Vice President of Operations Support of Alltel. Mr. Rhoda served as Vice President — Regulatory and Wholesale for Alltel. Mr. Clancy served as the Vice President of Investor Relations for Alltel.

(b)		Holders of shares of Alltel restricted stock receive the same dividends as holders of Alltel common stock. On December 30, 2005, the aggregate Alltel restricted stock holdings for each of Messrs. Frantz and Gardner was 27,000 shares and for Messrs. Whittington, Rhoda and Clancy, 1,292 shares, 2,458 shares

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		and 808 shares respectively. The respective aggregate value of the shares based upon the December 31, 2005 closing price was $1,703,700 for Messrs. Gardner and Frantz. The respective aggregate value of the shares from Messrs. Whittington, Rhoda and Clancy were $81,525, $155,100 and $50,985 respectively. The distribution agreement executed in connection with the merger of Valor and Spinco provides that each Alltel restricted share award outstanding under Alltel’s 1998 Equity Incentive Plan and held by an individual to become an employee of Newco as of the distribution date will fully vest on the distribution date.
(c)		The distribution agreement executed in connection with the merger of Valor and Spinco provides that all vested options held by Spinco employees will expire upon the distribution date, unless exercised within the time provided in the options. To the extent a Spinco employee is holding an award consisting of an Alltel option that is not vested as of the distribution date, that option shall be cancelled as of the distribution date and replaced by restricted shares of Newco common stock, the value of which will be determined by the Newco Board of Directors.
(d)		Includes the following amounts for Messrs. Frantz, Gardner, Rhoda and Clancy: allocated benefits under the Alltel Benefit Restoration Plan in the respective amounts of $65,196, $64,751, $5,881 and $2,371; aggregate employer contributions under the Alltel Profit Sharing Plan and Alltel 401(k) Plan in the amount of $8,400 for each as well as Mr. Whittington; “above-market” earnings on deferred compensation in the respective amounts of $140,169, $45,108 and $924 for Messrs. Frantz, Gardner and Rhoda (payment of which is deferred until the deferred compensation is paid); and dollar amount of premiums paid under supplemental split dollar life insurance policies in the amount of $10,476 for Mr. Frantz, which was put into place prior to the enactment of the Sarbanes-Oxley Act in 2002 and is therefore not subject to the prohibitions regarding loans to officers and directors set forth in Section 402 of the act.

																		Potential Realizable Value at
																		Assumed Annual Rates of Stock Price
		Individual Grants																Appreciation for Option Term
		Number of				% of Total
		Securities				Options												5%								10%
		Underlying				Granted to				Exercise or
		Options				Employees				Base Price				Expiration				Stock				Dollar				Stock				Dollar
Name		Granted (#)				in 2005				($/Sh)				Date				Price ($)				Gain ($)				Price ($)				Gain ($)
Jeffery R. Gardner(a)			60,000				4.46				55.26				1/19/15				90.01				2,085,163				143.33				5,284,213
Francis X. Frantz(a)			60,000				4.46				55.26				1/19/15				90.01				2,085,163				143.33				5,284,213
Michael D. Rhoda(a)			7,500				.56				55.26				1/19/15				90.01				260,645				143.33				660,527
Brent K. Whittington			4,000				.30				55.26				1/19/15				90.01				139,011				143.33				352,281
Robert G. Clancy Jr.			2,000				.15				55.26				1/19/15				90.01				69,505				143.33				176,140
Dollar Gains of All Alltel Stockholders(b)																						$	1,333,030,000							$	3,378,417,000

(a)	These options become exercisable in five equal installments beginning on the first anniversary of the date of grant or sooner in the event Alltel experiences a “change in control.”

(b)		Total dollar gains are based on the indicated assumed annual rates of appreciation in the option exercise price, calculated on the 383,605,936 shares of Alltel common stock outstanding as of December 31, 2005.

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Number of Securities

Value of Unexercised

Shares

Underlying Unexercised

In-the-Money Options at

Acquired on

Value

Options at 2005 Year-End

2005 Year-End

Name

Exercise (#)

Realized ($)

Exercisable/Unexercisable

Exercisable/Unexercisable ($)

Jeffery R. Gardner

84,754

1,470,298

553,000/262,000

776,200/2,650,920

Francis X. Frantz

-0-

-0-

603,000/262,000

1,602,280/2,650,920

Michael D. Rhoda

6,000

131,155

24,200/18,300

84,682/184,046

Brent K. Whittington

-0-

-0-

3,850/8,900

79,219/119,856

Robert G. Clancy Jr.

4,250

46,249

13,800/8,000

3,188/81,065

						Estimated Future Payouts*
		Performance Period
Name		Until Payout				Minimum ($)				Mid-Point ($)				Target ($)
Jeffery R. Gardner			3 years				262,500				525,000				787,500
Francis X. Frantz			3 years				250,000				500,000				750,000
Michael D. Rhoda			3 years				23,888				47,776				71,664
Brent K. Whittington			3 years				20,625				41,250				61,875
Robert G. Clancy Jr.			3 years				16,875				33,750				50,625

*

The Employee Benefits Agreement executed in connection with the merger of Valor and Spinco provides that the awards for the 2005-2007 performance measurement period shall be deemed earned at the target performance level. Each eligible Spinco individual shall be entitled to a pro rata award, the amount of which shall be calculated based on (i) the number of days in the period commencing on January 1, 2005 and ending on the Distribution Date out of the total number of days in the performance measurement period and (ii) his or her average base compensation during such period.

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	•	each person who will beneficially own more than 5% of the outstanding shares of Newco common stock immediately after completion of the merger;
	•	the individuals who will be the chief executive officer and the other four most highly compensated executive officers of Newco;
	•	the individuals who will be the directors of Newco; and
	•	the individuals who will be the directors and executive officers of Newco as a group.

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				Amount and
				Nature of				Percent of
				Beneficial				Class (If 1% or
		Name of Beneficial Owner		Ownership				More)
5% Beneficial Owners
		Private Capital Management, Inc. 8889 Pelican Bay Boulevard Suite 500 Naples, FL 34108-7512			39,295,807	(a)			8.3%
Directors		Dennis E. Foster			428,328	(b)
		Anthony J. de Nicola			19,617,338	(c)(d)			4.1%
Named Executive Officers		Jeffery R. Gardner			711,308	(b)
		Francis X. Frantz			845,477	(b)
		Brent K. Whittington			5,403	(b)
		Michael D. Rhoda			33,736	(b)
		Robert G. Clancy, Jr.			18,155	(b)
All Directors and Executive Officers as a Group					21,674,554	(e)			4.6%

(a)	Based upon information contained in the Schedule 13G/ A filed by Private Capital Management (“PCM”) on February 14, 2006 evidencing its ownership of Alltel common stock, it has shared voting and investment power with respect to these shares. Bruce S. Sherman, chief executive officer of PCM, has sole voting and investment power with respect to 560,595 shares of Alltel common stock and shared voting and investment power with respect to 36,503,885 shares (including the shares held by PCM’s clients and managed by PCM), and Gregg J. Powers, president of PCM, has sole voting and investment power with respect to 30,000 shares of Alltel common stock and shared voting and investment power with respect to 36,468,040 shares (including the shares held by PCM’s clients and managed by PCM).
(b)	Includes shares that the indicated persons have the right to acquire (through the exercise of options to purchase Alltel common stock) on or prior to the projected closing date (which is assumed, for purposes of this calculation only, to be May 31, 2006), as follows: Dennis E. Foster (375,656); Francis X. Frantz (731,120); Jeffery R. Gardner (679,120); Brent K. Whittington (4,368); Michael D. Rhoda (31,408); and Robert G. Clancy, Jr. (16,712). The employee matters agreement provides that to the extent that these individuals are holding an award consisting of an Alltel option that is vested and outstanding as of the distribution date, he or she will be treated as experiencing a separation from service from, or otherwise terminating employment with, Alltel. Any such Alltel option will expire unless it is exercised within the time provided in the option itself.
(c)	As a member of WCAS VIII Associates LLC and WCAS IX Associates, LLC, Mr. de Nicola may be deemed to share beneficial ownership of the 19,574,421 shares held by Welsh, Carson, Anderson Stowe. Mr. de Nicola disclaims beneficial ownership of such shares and any other shares held by affiliates of Welsh, Carson, Anderson & Stowe.
(d)	Includes 42,579 shares held directly by Mr. de Nicola, of which 6,470 represents shares of restricted stock that will vest upon closing of the merger.
(e)	Includes a total of 1,852,008 shares that members of the group have the right to acquire (through the exercise of options) on or prior to the projected closing date (which is assumed, for purposes of this calculation only, to be May 31, 2006).

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	•	in the case of an annual meeting, a stockholder’s notice must be delivered to or mailed and received at Newco’s principal executive offices not less than 90 days nor more than 120 days before the first anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is changed by more than 30 days from such anniversary date, notice by the stockholder must be received not later than the close of business on the 10th day following the day on which notice of the date of the meeting was mailed or public disclosure of the meeting was made; and
	•	in the case of a special meeting, a stockholder’s notice must be delivered to or mailed and received at Newco’s principal executive offices not later than the close of business on the 10th day following the day on which notice of the date of the meeting was mailed or public disclosure of the meeting was made.

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	•	increase or decrease the aggregate number of authorized shares of such class (subject to certain exceptions);
	•	increase or decrease the par value of the shares of such class; or
	•	alter or change the powers, preferences or rights of such class so as to affect them adversely.

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							Additional
							Transfers of
							Assets and
							Liabilities				Issuance				Payment of												Pro Forma
			Spinco as				to/from				of Debt				Dividends to				Spinco, as				Valor as				Add (Deduct)
			Reported				Alltel				Securities				Alltel				Adjusted				Reported				Adjustments				Combined
			(Millions)
ASSETS
Cash and short-term investments			$	11.9			$	(5.2	)(a)		$	3,229.4	(b)		$	(2,400.0	)(b)		$	836.1			$	64.2			$	(794.0	)(i)		$	106.3
Other current assets				383.3				—				—				—				383.3				71.7				(13.6	)(e,i)			441.4
	Total current assets			395.2				(5.2	)			3,229.4				(2,400.0	)			1,219.4				135.9				(807.6	)			547.7
Investments				2.0				—				—				—				2.0				—				15.7	(c)			17.7
Goodwill				1,218.7				—				—				—				1,218.7				1,057.0				(114.8	)(d,i)			2,160.9
Other intangibles				317.7				—				—				—				317.7				—				675.0	(i)			992.7
Property, plant and equipment, net				2,963.6				82.9	(a)			—				—				3,046.5				717.5				—				3,764.0
Other assets				32.5				182.8	(a)			70.3	(b)			—				285.6				52.4				(49.4	)(c,d,e,g)			288.6
	Total assets		$	4,929.7				260.5			$	3,299.7			$	(2,400.0	)		$	6,089.9			$	1,962.8			$	(281.1	)		$	7,771.6
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities				364.0			$	0.1	(a)		$	(12.1	)(f)		$	—			$	352.0			$	100.3			$	(13.6	)(e,i)		$	438.7
Long-term debt				238.7				—				4,859.3	(b,f)			—				5,098.0				1,180.6				(762.6	)(f,i)			5,516.0
Deferred income taxes				680.6				88.2	(a)			—				—				768.8				84.1				234.0	(j)			1,086.9
Other liabilities				157.2				5.8	(a)			—				—				163.0				26.1				22.0	(e,g)			211.1
Common stock				—				—				—				—				—				—				—				—
Additional paid-in capital				—				—				—				(291.9	)(b)			(291.9	)			918.9				(108.0	)(h,i)			519.0
Treasury stock				—				—				—				—				—				(0.1	)			—				(0.1	)
Parent company investment				1,455.2				167.8	(a)			(1,538.0	)(b)			(85.0	)(b)			—				—				—				—
Accumulated other comprehensive income				0.5				(0.5	)(a)			—				—				—				(7.3	)			7.3	(h)			—
Deferred equity compensation				—				—				—				—				—				(18.5	)			18.5	(h)			—
Retained earnings (deficit)				2,033.5				(0.9	)(a)			(9.5	)(f)			(2,023.1	)(b)			—				(321.3	)			321.3	(h)			—
	Total liabilities and shareholders’ equity		$	4,929.7			$	260.5			$	3,299.7			$	(2,400.0	)		$	6,089.9			$	1,962.8			$	(281.1	)		$	7,771.6

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										Pro Forma
		Spinco,				Valor				Add (Deduct)
		as reported				as Reported				Adjustments				Combined
		(Millions, except per share amounts)
Revenues and sales		$	2,923.5			$	505.9			$	(15.9	)(k)		$	3,413.5
Costs and expenses:
Cost of services			796.1				107.6				—				903.7
Cost of products sold			374.8				—				—				374.8
Selling, general, administrative and other			340.1				139.7				(15.9	)(k)			463.9
Depreciation and amortization			474.2				89.9				29.2	(l)			593.3
Royalty expense to Parent			268.8				—				(268.8	)(m)			—
Restructuring and other charges			35.7				1.7				(31.3	)(n)			6.1
Operating income			633.8				167.0				270.9				1,071.7
Other income (expense), net			11.6				(33.9	)			3.0	(n)			(19.3	)
Intercompany interest income			23.3				—				(23.3	)(o)			—
Interest expense			(19.1	)			(83.2	)			(272.2	)(p)			(374.5	)
Income before income taxes			649.6				49.9				(21.6	)			677.9
Income taxes			267.9				14.3				(7.9	)(n,q)			274.3
Income before cumulative effect of accounting change		$	381.7			$	35.6			$	(13.7	)		$	403.6
Earnings per share:
Basic			N/A			$	.42							$	.85
Diluted			N/A			$	.42							$	.85
Average common shares outstanding:
Basic			N/A				69.4				404.8	(r)			474.2
Diluted			N/A				69.7				404.8	(r)			474.5

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Bank Debt:
	Senior secured five-year revolving credit facility			$	63
	Term loan A — 5 year maturity				500
	Term loan B — 7 year maturity				2,800
	Total bank debt				3,363
Notes:
	ALLTEL Communications Holdings of the Midwest, Inc. — 6.75%, due April 1, 2028				100
	ALLTEL Georgia Communications Corp. — 6.50%, due in annual installments through November 15, 2013				80
	Valor — 7.75%, due November 15, 2015				418
	ALLTEL Holdings — 10 year fixed maturity				1,565
	Total notes				2,163
		Total bank debt and notes			5,526
	Current portion of long-term debt				10
		Total long-term debt		$	5,516

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Consideration:
	Value of Valor shares issued and outstanding at December 31, 2005(1)		$	810.9
	Valor treasury stock			(0.1	)
	Repayment of Valor credit facility			780.6
	Direct costs of acquisition(2)			13.4
	Total			1,604.8
Allocated to:
	Current assets			132.8
	Property, plant and equipment			717.5
	Investments and other tangible assets			18.7
	Identifiable intangible assets(3)			675.0
	Current liabilities acquired			(97.2	)
	Long-term debt assumed (including fair value adjustment)(4)			(418.0	)
	Other long-term liabilities acquired (including deferred taxes)			(366.2	)
	Goodwill(3)		$	942.2

(1)	The value of Valor’s common stock was calculated on the basis of (1) 71,130,634 shares outstanding as of December 31, 2005 and (2) the closing price of Valor common stock on December 31, 2005 of $11.40. The final value of Valor shares will be based on the actual number of shares outstanding and the closing price of Valor stock as of the merger date.
(2)	Direct cash costs consist of estimates for professional fees (including banking fees) and other direct costs of the transaction that are expected to be incurred and capitalized as part of the merger transaction, including $10.5 million of costs incurred during 2005.
(3)	The identifiable intangibles consisted of (1) value assigned to the Valor customer base as of December 31, 2005 of $175.0 million and (2) value assigned to the Valor franchise rights as of December 31, 2005 of $500.0 million. For purposes of preparing the unaudited pro forma combined condensed statement of income, Spinco expects to amortize the fair value of the customer base on a straight-line basis over its average estimated life of six years. The franchise rights have been classified as indefinite-lived intangible assets and are not subject to amortization because Spinco expects both the renewal by the granting authorities and the cash flows generated from the franchise rights to continue indefinitely. Goodwill of $942.2 million represents the excess of the purchase price of the acquired business over the fair value of the underlying identifiable net tangible and intangible assets at December 31, 2005. The premium paid by Spinco in this transaction is due to the potential for greater long-term returns as the combination of Spinco and Valor will create the largest telecommunications carrier in the United States which is primarily focused on rural markets. Subsequent to this merger, due to the resulting increased size and economies of scale, the combined company should have greater financial flexibility to develop and deploy products, expand the capacity of its network, respond to competitive pressures and improve the cost structure of its operations. The preliminary allocation of value to the intangible assets was based on assumptions as to the fair value of customers and franchise rights. These values were determined by use of a market approach, which seeks to measure the value of assets as compared to similar transactions in the marketplace. To determine market values, Spinco utilized a third party valuation firm to derive current market values for the customer base (computed on a per customer basis) and franchise rights licenses (computed on a per access line basis) from publicly available data for similar transactions in the

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	wireline industry. These valuations are preliminary and do not necessarily represent the ultimate fair value of such assets that will be determined by an independent valuation firm subsequent to the consummation of the merger.
(4)	Fair value adjustments of $18.0 million have been made to the carrying value of Valor’s long term debt that was outstanding as of the merger date and not immediately repaid. The effect of the fair value adjustment to Valor’s long-term debt will be amortized as a reduction to interest expense over the term of each debt issue. The effect of the fair value adjustment to long-term debt has been included in the adjustments to the unaudited pro forma combined condensed statement of income. See Note (p).

Effects of pro forma adjustments on other current assets and other current liabilities:
	Eliminate current portion of Valor’s deferred activation costs/fees — Note(e)		$	(3.1	)
	Recognize payment of transaction costs and reclassification to goodwill — Note(i)(2)			(10.5	)
	Net decrease in other current assets and other current liabilities		$	(13.6	)
Effects of pro forma adjustments on goodwill:
	Eliminate carrying value of Valor’s goodwill — Note(d)		$	(1,057.0	)
	Record goodwill in connection with ALLTEL Holding’s reverse acquisition of Valor — Note(i)(3)			942.2
	Net increase in goodwill resulting from pro forma adjustments		$	(114.8	)
Effects of pro forma adjustments on other assets:
	Eliminate carrying value of Valor’s unamortized debt issuance costs — Note(d)		$	(30.7	)
	Reclassification of Valor’s investments in wireless partnerships and RTFC equity certificates — Note(c)			(15.7	)
	Eliminate long-term portion of Valor’s deferred activation costs — Note(e)			(2.2	)
	Eliminate Valor’s pension asset and customer list — Note(d) and Note(g)			(0.8	)
	Net decrease in other assets resulting from pro forma adjustments		$	(49.4	)
Effects of pro forma adjustments on long-term debt:
	Reflect repayment of Valor long-term debt obligations — Note(f)		$	(780.6	)
	Adjust Valor bonds to fair value — Note(i)(4)			18.0
	Net decrease in long-term debt resulting from pro forma adjustments		$	(762.6	)

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Effects of pro forma adjustments on other liabilities:
	Eliminate long-term portion of Valor’s deferred activation fees — Note(e)			(2.2	)
	Record additional pension and other postretirement benefit liabilities — Note(g)			24.2
	Net increase in other liabilities resulting from pro forma adjustments		$	22.0
Effects of pro forma adjustments on additional paid-in capital:
	Issuance of Valor common stock to effect the merger transaction — Note(i)(1)			810.9
	Eliminate Valor’s additional paid-in capital balance — Note(h)			(918.9	)
	Net decrease in additional paid-in capital resulting from pro forma adjustments		$	(108.0	)

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Senior secured five-year revolving credit facility			$	4.0
Term loan A — 5 year maturity				30.2
Term loan B — 7 year maturity				176.4
Senior notes — 10 year fixed maturity				113.5
	Total		$	324.1

						Amortization
		Issuance				Number of				Per
		Fee				Years				Year
Senior secured five-year revolving credit facility		$	5.0				5.0			$	1.0
Term loan A — 5 year maturity			6.0				5.0				1.2
Term loan B — 7 year maturity			19.0				7.0				2.7
Senior notes			40.3				10.0				4.0
Totals		$	70.3							$	8.9

Estimated annual interest expense related to newly issued debt of the combined company (per above)		$	324.1
Amortization of estimated capitalized debt issuance costs associated with the newly issued debt (per above)			8.9
Elimination of interest expense and amortization of debt issuance costs related to repayment of borrowings outstanding under Valor’s existing credit agreement and repurchase of certain debt obligations of ALLTEL Holding			(59.0	)
Reduction in interest expense due to amortizing fair value adjustment — Note(i)(4)			(1.8	)
Net increase in interest expense		$	272.2

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	1. to adopt the Agreement and Plan of Merger, dated as of December 8, 2005, as such may be amended from time to time (the “Merger Agreement”), by and among Alltel Corporation, Alltel Holding Corp. (“Spinco”) and Valor Communications Group, Inc., pursuant to which (i) Alltel Holding Corp. will merge with and into Valor, after which Valor will survive as a stand-alone company and will hold and conduct the combined business operations of Valor and Spinco and (ii) each outstanding share of Spinco common stock will be converted into the right to receive approximately 1.04 shares of Valor common stock (subject to variation based on the number of shares of Spinco common stock to be distributed to Alltel stockholders and as a result of compensatory equity grants and other issuances);
	2. to approve the amendment to the certificate of incorporation of Valor Communications Group, Inc. pursuant to the merger to increase the authorized shares of Valor Common Stock from 200,000,000 to 2,000,000,000 to be effective contemporaneously with the effective time of the merger;
	3. to approve the issuance of up to 403,000,000 shares of Valor common stock to Alltel stockholders in accordance with the terms of the Merger Agreement;
	4. to adopt and approve the 2006 Equity Incentive Plan, a copy of which is attached as Annex G to this proxy statement/ prospectus-information statement;
	5. to elect eleven (11) directors to serve until the 2007 Annual Meeting of Stockholders or until their successors are duly elected and qualified or until their earlier removal, resignation or death;
	6. to ratify the appointment of Deloitte & Touche LLP as Valor’s independent registered public accounting firm for the fiscal year ending December 31, 2006 or until their earlier removal or termination;
	7. to adjourn the annual meeting, if necessary, to solicit additional proxies for the adoption of the merger agreement, approval of the amendment to the certificate of incorporation of Valor pursuant to the merger or approval of the issuance of shares of Valor common stock pursuant to the merger; and
	8. to transact any and all other business that may properly come before the annual meeting or any adjourned session of the annual meeting.

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	•	Via telephone, by dialing the toll-free number and following the instructions on the proxy card or voter information form;
	•	Via the Internet, by following the instructions for internet voting on the proxy card or voter information form; or
	•	Mail, by completing and returning the proxy card or voter information form in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

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	•	sending a written notice to the corporate secretary of Valor that is received prior to the annual meeting stating that you revoke your proxy;
	•	properly completing a new proxy card bearing a later date and properly submitting it so that it is received prior to the annual meeting;
	•	logging onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card prior to the annual meeting, in each case if you are eligible to do so and following the instructions on the proxy card; or
	•	attending the annual meeting and voting in person.

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	Introduction

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	Plan Limits

	Administration

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	Eligibility

	Option Rights

	SARs

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	Performance Shares and Performance Units

	Restricted Shares

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	Restricted Stock Units

	Other Awards

	Non-employee directors

	Management Objectives

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	Change in Control

	Transferability

	Adjustments

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	Amendments and Miscellaneous

	Compliance with Section 409A of the Internal Revenue Code

	Termination

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	Tax Consequences to Participants

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	Tax Consequences to Newco

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	Securities Authorized for Issuance Under Equity Compensation Plans

	Equity Compensation Plan Information

Number of Securities

Remaining Available

Number of Securities

for Future Issuance

to be Issued Upon

Weighted-Average

Under Equity

Exercise of

Exercise Price of

Compensation Plans [c]

Outstanding Options,

Outstanding Options,

(Excluding Securities

Warrants and Rights

Warrants and Rights

Reflected in Column

Plan Category

[a]

[b]

[a])

Equity compensation plans not approved by security holders

2,500,000

$

0.0001

342,469

Equity compensation plans approved by security holders

Total

2,500,000

$

0.0001

342,469

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Nomination

and

Director

Audit

Compensation

Governance

Norman W. Alpert

X

Stephen B. Brodeur

X

Edward J. Heffernan

Chair

Edward L. Lujan

X

Anthony J. de Nicola

Chair

Chair

M. Ann Padilla

X

Federico Pena

X

Sanjay Swani

X

X

X

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	•	An appropriate peer group of companies for the purposes of comparing compensation levels and practices; and
	•	Key measures that the Compensation Committee will use in assessing performance for the purposes of incentive compensation awards to the chief executive officer and other members of the senior management team.

	Annual Salaries

	Annual Incentive Compensation

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	Anthony de Nicola, Chairman
	Sanjay Swani
	Norman W. Alpert

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															Long-Term
															Compensation
							Annual Compensation								Restricted
			Fiscal												Stock				All Other
			Year				Salary				Bonus(1)				Awards(2)				Compensation(3)
John J. Mueller				2005			$	500,000			$	579,800			$	9,516,300			$	84,283
	Chief Executive Officer and President			2004				469,616				1,875,000				—				46,004
Kenneth R. Cole				2005				300,000				750,000				995,482				17,197
	Vice Chairman(4)			2004				433,462				5,750,000				—				45,577
W. Grant Raney				2005				257,000				197,609				4,137,525				18,521
	Senior Vice President and Chief			2004				253,167				1,160,625				—				25,141
	Operating Officer
William M. Ojile, Jr.				2005				250,000				144,950				3,310,020				21,799
	Senior Vice President,			2004				246,692				656,250				—				21,197
	Chief Legal Officer and Secretary
Cynthia B. Nash				2005				176,346				109,758				2,234,265				37,887
	Senior Vice President and
	Chief Information Officer
Jerry E. Vaughn(5)				2005				81,250				61,718				4,927,695				33,216
	Senior Vice President and
	Chief Financial Officer

(1)	In 2004, amounts consisted of debt recapitalization bonuses and annual incentive bonuses. In 2005, amounts consisted of initial public offering bonuses and annual incentive bonuses. Annual incentive bonuses represented amounts earned by each named executive during the referenced year, although paid in the following year. In 2004, Mr. Cole’s bonus included a one-time transition bonus of $5 million.
(2)	Amounts in this column reported for 2005 represented the value of the following restricted stock awards primarily issued in February 2005, except for Mr. Vaughn, which were issued in October 2005, at $0.0001 per share: 634,420 shares to Mr. Mueller, 67,763 shares to Mr. Cole, 275,835 shares to Mr. Raney, 220,668 shares to Mr. Ojile, 148,951 shares to Ms. Nash and 361,533 shares to Mr. Vaughn. Using the closing price of our stock as of December 30, 2005, $11.40, the number and value of the remaining vested and unvested restricted stock awards as of December 31, 2005 were as follows: 634,420 shares, $7.2 million for Mr. Mueller; 42,543 shares, $484,990 for Mr. Cole; 275,835 shares, $3.1 million for Mr. Raney; 220,668 shares, $2.5 million for Mr. Ojile; 148,951 shares, $1.7 million for Ms. Nash and 361,533 shares, $4.1 million for Mr. Vaughn. These awards vest as follows:

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		Vested upon				Vests in				Vests in				Vests in				Vests in
Name		Issuance				2006				2007				2008				2009
John J. Mueller			21.74%				26.09%				26.09%				26.09%				0.00%
Kenneth R. Cole(4)			85.00%				5.00%				5.00%				5.00%				00.0%
W. Grant Raney			20.00%				26.67%				26.67%				26.67%				0.00%
William M. Ojile, Jr.			15.00%				28.33%				28.33%				28.33%				0.00%
Cynthia B. Nash			18.52%				27.16%				27.16%				27.16%				0.00%
Jerry E. Vaughn			0.00%				6.25%				25.00%				25.00%				43.75%

	Per Resolution of the Compensation Committee, dated December 8, 2005, equity grants vesting on January 1, 2007 will vest upon closing of the merger. Also, per the terms of the Long Term Incentive Plan, awards vesting in 2008 and beyond will accelerate upon closing of the merger for those employees whose employment is terminated without cause or who resign for Good Reason.
	We did not pay dividends on unvested restricted stock awards in 2005. On February 9, 2006, the Compensation Committee approved the payment of dividends on unvested restricted stock awards.

(3)	All other compensation amounts, disclosed in the table above include medical, life insurance and long-term disability premiums we pay on behalf of each named executive officer, personal travel expenses paid by the company, car allowances, our matching contributions to the 401(k) and miscellaneous other items we pay on behalf of each named executive officer, are as follows:

														Long-				Personal
										Life				Term				Travel				Car				401(k)				All other
		Year				Medical				Insurance				Disability				Expense				Allowance				Contributions				Compensation				Total
John J. Mueller			2005			$	10,003			$	3,123			$	1,044			$	7,554			$	18,731			$	9,450			$	34,378			$	84,283
			2004				9,570				4,334				7,210				7,478				8,187				9,225				—				46,004
Kenneth R. Cole			2005				6,905				9,248				1,044				—				—				—				—				17,197
			2004				9,570				14,530				4,774				7,478				—				9,225				—				45,577
W. Grant Raney			2005				6,164				1,823				1,044				—				—				9,450				40				18,521
			2004				5,369				2,025				1,044				7,478				—				9,225				—				25,141
William M. Ojile, Jr.			2005				10,004				1,261				1,044				—				—				9,450				40				21,799
			2004				8,645				1,468				1,859				—				—				9,225				—				21,197
Cynthia B. Nash			2005				9,094				1,016				870				3,777				—				3,089				20,041				37,887
Jerry E. Vaughn			2005				1,608				3,366				—				—				—				—				28,242				33,216

(4)	Mr. Cole served as our Chief Executive Officer from January 2002 through April 2004.
(5)	Mr. Vaughn became a senior vice president and Chief Financial Officer effective October 1, 2005.

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		Number				%(1)
Welsh, Carson, Anderson Stowe(2)			19,574,421				27.5	%
Vestar Capital Partners(3)			8,497,942				12	%
Kenneth R. Cole			42,543				*
John Mueller(4)			634,420				*
Jerry E. Vaughn(5)			361,533				*
Cynthia Nash(6)			137,748				*
William Ojile(7)			220,668				*
Grant Raney(8)			275,835				*
Anthony J. de Nicola(9)(10)			19,617,000				27.6	%
Sanjay Swani(9)(11)			19,585,992				27.6	%
Norman W. Alpert(12)			8,497,942				12	%
Federico Pena(12)			8,497,942				12	%
Stephen B. Brodeur(13)			9,705				*
Michael E. Donovan(13)			9,705				*
Edward J. Heffernan(13)			9,705				*
Edward L. Lujan(13)			9,705				*
M. Ann Padilla(13)			9,705				*
All directors and executive officers as a group (15 persons)			29,814,518				42	%

	*	Less than 1%.

(1)	The respective percentages of beneficial ownership are based on 71,063,265 shares of common stock as of February 1, 2006.
(2)	Shares are held by the following affiliates of Welsh, Carson, Anderson & Stowe: Welsh, Carson, Anderson & Stowe VIII, L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WCAS Capital Partners III, L.P. Welsh, Carson, Anderson & Stowe disclaims beneficial ownership of such shares. WCAS VIII Associates, LLC, a limited liability company and affiliate of Welsh, Carson, Anderson & Stowe, exercises voting and investment control over the shares held by Welsh, Carson, Anderson & Stowe VIII, L.P. as general partner. Voting and investment decisions by WCAS VIII Associates, LLC are determined by an affirmative vote of two thirds of its managing members. WCAS IX Associates, LLC, a limited liability company and affiliate of Welsh, Carson, Anderson & Stowe, exercises voting and investment control over the shares held by Welsh, Carson, Anderson & Stowe IX, L.P. as general partner. Voting and investment decisions by WCAS IX Associates, LLC are determined by an affirmative vote of two thirds of its managing members. The address of Welsh, Carson, Anderson & Stowe is 320 Park Avenue, Suite 2500, New York, NY 10022.

	(3)	Shares are held by Vestar Capital Partners and the following affiliates of Vestar Capital Partners: Vestar Capital Partners III, L.P., Vestar Capital Partners IV, L.P. and Vestar/ Valor LLC. Vestar Capital Partners disclaims beneficial ownership of such shares. Vestar Capital Partners III, L.P. is a limited

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		partnership, the general partner of which is Vestar Associates III, L.P. As general partner of Vestar Associates III, L.P., Vestar Associates Corporation III, a corporation affiliated with Vestar Capital Partners, exercises voting and investment control over shares held by Vestar Capital Partners III, L.P. Vestar Capital Partners IV, L.P. is a limited partnership, the general partner of which is Vestar Associates IV, L.P. As general partner of Vestar Associates IV, L.P., Vestar Associates Corporation IV, a corporation and affiliate of Vestar Capital Partners, exercises voting and investment control over shares held by Vestar Capital Partners IV, L.P. Vestar/Valor LLC is a limited liability company, the managing member of which is Vestar Capital Partners IV, LP. As general partner of Vestar Associates IV, LP, Vestar Associates Corporation IV exercises voting and investment control over the shares held by Vestar/ Valor LLC. The address of Vestar Capital Partners is 245 Park Avenue, 41st Floor, New York, NY 10167.
	(4)	Includes 331,002 shares of restricted stock held by Mr. Mueller that will vest upon closing of the merger.
	(5)	Includes 338,937 shares of restricted stock held by Mr. Vaughn that will vest upon closing of the merger.
	(6)	Includes 80,912 shares of restricted stock held by Ms. Nash, of which 40,456 shares will vest upon closing of the merger and 40,456 shares will vest on January 1, 2008.
	(7)	Includes 125,045 shares of restricted stock held by Mr. Ojile that will vest upon closing of the merger.
	(8)	Includes 147,112 shares of restricted stock held by Mr. Raney, of which 73,556 shares will vest upon closing of the merger and 73,556 shares will vest on January 1, 2008.
	(9)	As members of WCAS VIII Associates LLC and WCAS IX Associates, LLC, Mr. de Nicola and Mr. Swani may be deemed to share beneficial ownership of the shares held by WCAS VIII Associates LLC and WCAS IX Associates, LLC. Mr. de Nicola and Mr. Swani disclaim beneficial ownership of such shares and any other shares held by affiliates of Welsh, Carson, Anderson & Stowe.

(10)	Includes 42,579 shares held directly by Mr. de Nicola, of which 6,470 represents shares of restricted stock that will vest upon closing of the merger.
(11)	Includes 11,571 shares held directly by Mr. Swani, of which 6,470 represents shares of restricted stock that will vest upon closing of the merger.
(12)	As managing directors of Vestar Capital Partners, Mr. Alpert and Mr. Pena may be deemed to share beneficial ownership of the shares held by Vestar Capital Partners. Mr. Alpert and Mr. Pena each disclaim beneficial ownership of such shares and any other shares held by affiliates of Vestar Capital Partners.
(13)	Includes 6,470 shares of restricted stock that will vest upon closing of the merger.

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			2/09/05					3/31/05					6/30/05					9/30/05					12/31/05
Valor Communications Group				100.00					95.65					93.64					94.92					81.87
SIC Code Index				100.00					98.04					97.83					100.41					98.56
NYSE Market Index				100.00					101.36					103.68					108.49					110.77

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	•	WCAS and Vestar have demand registration rights relating to the shares of our common stock that they received pursuant to our reorganization, subject to the requirement that the securities covered by each demand registration have an aggregate public offering price of at least $25.0 million if registered pursuant to a long-form registration statement, or $10.0 million if registered pursuant to a short-form registration statement; provided that the entities comprising WCAS and Vestar that initiate a demand for registration must hold a majority of the shares of common stock held by all such WCAS or Vestar entities, as the case may be, to initiate a demand for registration; provided, further, that WCAS or Vestar may exercise a demand right for less than an aggregate public offering price of $25.0 million if registered pursuant to a long-form registration statement, or $10.0 million if registered pursuant to a short-form registration statement, if such proposed offering is for all of the remaining shares of common stock held by WCAS or Vestar; provided, further, that WCAS can request up to three registrations that are registered pursuant to a long-form registration statement and Vestar can request up to two registrations that are registered pursuant to a long-form registration statement; and
	•	WCAS, Vestar and CVC have the right to include in our future public offerings of securities the shares of our common stock held by each of them.

	Transaction Bonuses.

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Name		Date of IPO				January 1, 2006				January 1, 2007(1)				Total
John J. Mueller		$	200,000			$	400,000			$	400,000			$	1,000,000
Kenneth R. Cole(2)			750,000				—				—				750,000
W. Grant Raney			100,000				200,000				200,000				500,000
William M. Ojile, Jr.			50,000				100,000				100,000				250,000
Cynthia Nash			30,000				60,000				60,000				150,000
Jerry E. Vaughn			—				—				—				—
Other			411,500				223,000				223,000				857,500
Total		$	1,541,500			$	983,000			$	983,000			$	3,507,500

(1)	Per Resolution of the Compensation Committee, dated December 8, 2005, cash grants scheduled to vest on January 1, 2007 will vest upon closing of the merger.
(2)	Pursuant to the terms of Amendment One to Mr. Cole’s Part-Time Employment Agreement, dated November 10, 2004.

	Edward J. Heffernan, Chairman
	Sanjay Swani
	Stephen Brodeur
	Ann Padilla
	Edward Lujan

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Type of Fees		2004				2005
Audit Fees(1)		$	512,611			$	535,000
Audit-Related Fees(2)			665,000				244,729
Tax Fees(3)			1,560,000				65,000
All Other Fees(4)			6,396				718,396
Total		$	2,744,007			$	1,563,125

(1)	Fees for the following services:

	(a)	audits of our consolidated year-end financial statements for each year;
	(b)	reviews of the unaudited quarterly financial statements for each of the first three quarters of each year;
	(c)	normally provided statutory or regulatory filings or engagements for each year; and
	(d)	estimated out-of-pocket costs Deloitte & Touche incurred in providing all of such services for which we reimburse Deloitte & Touche.

(2)	Fees for registration statements, employee benefit plan audits and services related to our internal controls over financial reporting in connection with Sarbanes-Oxley Act of 2002.
(3)	Fees for tax compliance, tax advice and tax planning services.
(4)	Fees for all services not described in the other categories. For 2004, the disclosed fees include fees for an annual on-line research tool. For 2005, the disclosed fees include due diligence services related to the pending merger with Alltel’s wireline business and fees for an annual on-line research tool.

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	•	adverse changes in economic conditions, in the regions in which Valor and Spinco operate;
	•	the extent, timing, and overall effects of competition in the communications business;
	•	material changes in the communications industry generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers;
	•	changes in communications technology;
	•	the risks associated with the integration of acquired businesses;
	•	the potential for adverse changes in the ratings given to Newco’s debt securities by nationally accredited ratings organizations;
	•	the availability and cost of financing in the corporate debt markets;
	•	the uncertainties related to Valor and Spinco’s strategic investments;
	•	the effects of work stoppages;
	•	the effects of litigation;
	•	potential outcome of income tax audits;
	•	the effects of federal and state legislation, rules, and regulations governing the communications industry;
	•	product liability and other claims asserted against Valor or Spinco; and
	•	those factors listed under the heading “Risk Factors.”

185

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186

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	•	Annual Report on Form 10-K for the fiscal year ended December 31, 2005; and
	•	The description of Valor common stock (discussed above under the heading “Description Of Newco Capital Stock”) contained in Valor’s Registration Statement on Form S-1 filed February 10, 2005.

	Valor Communications Group, Inc.
	201 E. John Carpenter Freeway, Suite 200
	Irving, Texas 75062
	Attn: William M. Ojile, Jr., Corporate Secretary
	Tel: (972) 373-1000

187

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188

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Report of Independent Registered Public Accounting Firm			F-2
Annual Financial Statements:
Combined Balance Sheets as of December 31, 2005 and 2004			F-3
Combined Statements of Operations and Comprehensive Income for the years ended December 31, 2005, 2004 and 2003			F-4
Combined Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003			F-5
Combined Statements of Equity for the years ended December 31, 2005, 2004 and 2003			F-6
Notes to Combined Financial Statements			F-7-27

F-1

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F-2

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			Unaudited
			Pro Forma
			2005
			(Note 13)				2005				2004
			(Millions)
ASSETS
Current Assets:
	Cash and short-term investments		$	11.9			$	11.9			$	13.1
	Accounts receivable (less allowance for doubtful accounts of $14.1 and $16.6, respectively)			312.8				312.8				339.5
	Inventories			36.9				36.9				35.4
	Prepaid expenses and other			33.6				33.6				16.2
	Total current assets			395.2				395.2				404.2
Investments				2.0				2.0				24.3
Goodwill				1,218.7				1,218.7				1,218.7
Other intangibles				317.7				317.7				325.9
Property, Plant and Equipment:
	Land			18.3				18.3				18.3
	Buildings and improvements			310.2				310.2				302.3
	Wireline			6,634.6				6,634.6				6,434.2
	Information processing			60.7				60.7				54.1
	Other			188.9				188.9				184.9
	Under construction			131.1				131.1				95.6
	Total property, plant and equipment			7,343.8				7,343.8				7,089.4
	Less accumulated depreciation			(4,380.2	)			(4,380.2	)			(4,015.1	)
	Net property, plant and equipment			2,963.6				2,963.6				3,074.3
Other assets				32.5				32.5				31.8
Total Assets			$	4,929.7			$	4,929.7			$	5,079.2
LIABILITIES AND EQUITY
Current Liabilities:
	Current maturities of long-term debt		$	22.1			$	22.1			$	22.1
	Accounts payable			145.5				145.5				109.5
	Advance payments and customer deposits			60.4				60.4				61.3
	Accrued taxes			83.1				83.1				43.5
	Accrued interest			4.2				4.2				4.5
	Dividend payable to Parent company			2,400.0				—				—
	Note payable to Parent company			1,538.0				—				—
	Other current liabilities			48.7				48.7				51.3
	Total current liabilities			4,302.0				364.0				292.2
Long-term debt				238.7				238.7				260.8
Deferred income taxes				680.6				680.6				680.2
Other liabilities				157.2				157.2				139.2
	Total liabilities			5,378.5				1,440.5				1,372.4
Commitments and Contingencies (See Note 11)
Equity (Deficit):
	Cumulative foreign currency translation adjustment			0.5				0.5				0.5
	Paid-in capital			(449.3	)			—				—
	Parent company investment			—				1,455.2				1,813.5
	Retained earnings			—				2,033.5				1,892.8
	Total equity (deficit)			(448.8	)			3,489.2				3,706.8
Total Liabilities and Equity			$	4,929.7			$	4,929.7			$	5,079.2

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					2005				2004				2003
					(Millions)
Revenues and sales:
Service revenues					$	2,463.6			$	2,533.5			$	2,618.4
Product sales						459.9				400.0				384.9
	Total revenues and sales					2,923.5				2,933.5				3,003.3
Costs and expenses: (See Note 1)
Cost of services (excluding depreciation of $415.8, $445.1 and $451.9 in 2005, 2004 and 2003, respectively included below)						796.1				813.7				864.8
Cost of products sold						374.8				333.8				339.0
Selling, general, administrative and other						340.1				327.9				351.0
Depreciation and amortization						474.2				508.5				519.4
Royalty expense to Parent						268.8				270.2				273.0
Restructuring and other charges						35.7				11.8				12.2
	Total costs and expenses					2,289.7				2,265.9				2,359.4
Operating income						633.8				667.6				643.9
Other income, net						11.6				13.7				5.8
Intercompany interest income (expense)						23.3				(15.2	)			(21.6	)
Interest expense						(19.1	)			(20.4	)			(27.7	)
Gain on disposal of assets and other						—				—				23.9
Income before income taxes						649.6				645.7				624.3
Income taxes						267.9				259.4				247.1
Income before cumulative effect of accounting change						381.7				386.3				377.2
Cumulative effect of accounting change (net of income tax expense (benefit) of $(4.6) in 2005 and $10.3 in 2003)						(7.4	)			—				15.6
Net income (See Note 13)						374.3				386.3				392.8
Foreign currency translation adjustment						—				(0.1	)			0.8
Comprehensive income					$	374.3			$	386.2			$	393.6
Pro forma amounts assuming changes in accounting principles were applied retroactively:
		Net income as reported:			$	374.3			$	386.3			$	392.8
			Effect of recognition of conditional asset retirement obligations			7.4				(0.4	)			(0.4	)
			Effect of change in recognition of asset retirement obligations			—				—				(15.6	)
		Net income as adjusted			$	381.7			$	385.9			$	376.8

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				2005				2004				2003
				(Millions)
Cash Provided from Operations:
Net income				$	374.3			$	386.3			$	392.8
Adjustments to reconcile net income to net cash provided from operations:
	Cumulative effect of accounting change				7.4				—				(15.6	)
	Depreciation and amortization				474.2				508.5				519.4
	Provision for doubtful accounts				29.2				38.3				33.0
	Non-cash portion of restructuring and other charges				—				0.8				5.6
	Non-cash portion of gain on disposal of assets				—				—				(31.0	)
	Change in deferred income taxes				4.9				70.0				91.0
	Other, net				1.8				5.0				15.3
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
	Accounts receivable				(4.0	)			(23.2	)			43.2
	Inventories				(1.5	)			10.9				11.2
	Accounts payable				36.0				(5.7	)			15.8
	Other current liabilities				35.8				(16.4	)			37.4
	Other, net				(4.2	)			(12.3	)			16.9
		Net cash provided from operations			953.9				962.2				1,135.0
Cash Flows from Investing Activities:
	Additions to property, plant and equipment				(352.9	)			(333.3	)			(383.2	)
	Additions to capitalized software development costs				(4.0	)			(4.5	)			(7.6	)
	Additions to investments				—				—				(0.2	)
	Proceeds from the sale of assets				—				—				37.0
	Proceeds from the sale of investments				0.1				7.6				—
	Other, net				4.1				0.5				(2.9	)
		Net cash used in investing activities			(352.7	)			(329.7	)			(356.9	)
Cash Flows from Financing Activities:
	Dividends paid to Parent Company				(233.6	)			(239.1	)			(232.4	)
	Repayments of long-term debt				(22.1	)			(22.1	)			(282.6	)
	Reductions in advances from Parent Company				(346.7	)			(365.9	)			(269.2	)
		Net cash used in financing activities			(602.4	)			(627.1	)			(784.2	)
Effect of exchange rate changes on cash and short-term investments					—				(0.1	)			0.8
Increase (decrease) in cash and short-term investments					(1.2	)			5.3				(5.3	)
Cash and Short-term Investments:
	Beginning of the year				13.1				7.8				13.1
	End of the year			$	11.9			$	13.1			$	7.8
Supplemental Cash Flow Disclosures:
	Interest paid, net of amounts capitalized			$	17.9			$	19.2			$	26.3
	Income taxes paid			$	215.4			$	187.9			$	18.3

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		Foreign
		Currency				Parent
		Translation				Company				Retained
		Adjustment				Investment				Earnings				Totals
		(Millions)
Balance at January 1, 2003		$	(0.2	)		$	2,453.9			$	1,585.2			$	4,038.9
Net income			—				—				392.8				392.8
Dividends to Parent			—				—				(232.4	)			(232.4	)
Net transfers to Parent			—				(274.5	)			—				(274.5	)
Foreign currency translation adjustment			0.8				—				—				0.8
Balance at December 31, 2003		$	0.6			$	2,179.4			$	1,745.6			$	3,925.6
Net income			—				—				386.3				386.3
Dividends to Parent			—				—				(239.1	)			(239.1	)
Net transfers to Parent			—				(365.9	)			—				(365.9	)
Foreign currency translation adjustment			(0.1	)			—				—				(0.1	)
Balance at December 31, 2004		$	0.5			$	1,813.5			$	1,892.8			$	3,706.8
Net income			—				—				374.3				374.3
Dividends to Parent			—				—				(233.6	)			(233.6	)
Net transfers to Parent			—				(358.3	)			—				(358.3	)
Balance at December 31, 2005		$	0.5			$	1,455.2			$	2,033.5			$	3,489.2

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1.	Summary of Significant Accounting Policies:

F-7

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	•	Level of competition in its markets. To date, competition has not had a significant adverse effect on the operating results of the Company’s ILEC subsidiaries, primarily because these subsidiaries provide wireline telecommunications services in mostly rural areas. To date, ILEC subsidiaries have not been required to discount intrastate service rates in response to competitive pressures.
	•	Level of revenues and access lines currently subject to rate-of-return regulation or which could revert back to rate-of-return regulation in the future. For the ILEC subsidiaries that follow SFAS No. 71, all interstate revenues are subject to rate-of-return regulation. The majority of the ILEC subsidiaries’

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		remaining intrastate revenues are either subject to rate-of-return regulation or could become subject to rate-of-return regulation upon election by the Company, subject in certain cases to approval by the state public service commissions.
	•	Level of profitability of the ILEC subsidiaries. Currently, the prices charged to customers for interstate and intrastate services continue to be sufficient to recover the specific costs of the ILEC subsidiaries in providing these services to customers.

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		2005				2004
		(Millions)
Investments in Rural Telephone Bank Class C stock		$	—			$	22.1
Other cost investments			2.0				2.2
		$	2.0			$	24.3

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		Depreciable
		Lives
Buildings and improvements			5-50 years
Wireline			5-56 years
Information processing			3-16 years
Other			3-23 years

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			2005				2004				2003
			(Millions)
Net income as reported			$	374.3			$	386.3			$	392.8
	Deduct stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects			(4.1	)			(4.8	)			(4.9	)
Pro forma net income			$	370.2			$	381.5			$	387.9

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2.	Accounting Changes:

F-13

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			(Millions)
Balance, as of:
	January 1, 2003		$	12.8
	December 31, 2003		$	13.2
	December 31, 2004		$	13.7
	December 31, 2005		$	14.0

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3.	Goodwill and Other Intangible Assets:

						Product
		Wireline				Distribution				Totals
		(Millions)
Balance at December 31, 2005 and 2004		$	1,218.4			$	0.3			$	1,218.7

		2005
										Net
		Gross				Accumulated				Carrying
		Cost				Amortization				Value
		(Millions)
Customer lists		$	67.6			$	(21.0	)		$	46.6
Franchise rights			22.5				(16.4	)			6.1
		$	90.1			$	(37.4	)		$	52.7

		2004
										Net
		Gross				Accumulated				Carrying
		Cost				Amortization				Value
		(Millions)
Customer lists		$	67.6			$	(14.3	)		$	53.3
Franchise rights			22.5				(14.9	)			7.6
		$	90.1			$	(29.2	)		$	60.9

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4.	Debt:

				2005				2004
				(Millions)
Issued by subsidiaries of the Company:
	Debentures and notes, without collateral:
		ALLTEL Communications Holdings of the Midwest, Inc. — 6.75%, due April 1, 2028		$	100.0			$	100.0
		ALLTEL Georgia Communications Corp. — 6.50%, due November 15, 2013			80.0				90.0
		ALLTEL New York, Inc. — 9.14% to 9.55%, due August 1, 2009 and October 1, 2011			10.7				13.0
		ALLTEL Pennsylvania, Inc. — 9.07%, due November 1, 2011			8.7				10.2
		Georgia ALLTEL Telecom, Inc. — 8.05% to 8.17%, due October 1, 2009 and 2014			20.5				24.1
		Teleview, Inc. — 7.00%, due January 2, 2010 and May 2, 2010			1.0				1.2
		Texas ALLTEL, Inc. — 8.11%, due March 31, 2018			15.0				15.0
		The Western Reserve Telephone Co. — 8.05% to 8.17%, due October 1, 2009 and 2014			25.9				30.5
	Discount on long-term debt				(1.0	)			(1.1	)
					260.8				282.9
	Less current maturities				(22.1	)			(22.1	)
		Total long-term debt		$	238.7			$	260.8

5.	Financial Instruments:

6.	Employee Benefit Plans and Postretirement Benefits Other Than Pensions:

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		Postretirement Benefits
		2005				2004				2003
		(Millions)
Benefits earned during the year		$	—			$	—			$	0.2
Interest cost on benefit obligation			9.6				11.2				10.2
Amortization of prior service (credit) cost			1.8				1.5				1.5
Recognized net actuarial loss			5.3				4.0				6.2
Effects of Medicare subsidy			—				(2.2	)			—
Expected return on plan assets			—				—				—
Total postretirement benefit expense		$	16.7			$	14.5			$	18.1

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		Postretirement
		Benefits
		2005				2004
		(Millions)
Fair value of plan assets at beginning of year		$	—			$	—
Employer contributions			8.2				9.6
Actual return on plan assets			—				—
Benefits paid			(8.2	)			(9.6	)
Fair value of plan assets at end of year			—				—
Projected benefit obligation at beginning of year			164.5				175.7
Benefits earned			—				—
Interest cost on projected benefit obligation			9.6				11.2
Plan amendments			—				1.7
Effects of Medicare subsidy			—				(14.2	)
Actuarial (gain) loss			5.8				(0.3	)
Benefits paid			(8.2	)			(9.6	)
Projected benefit obligation at end of year			171.7				164.5
Plan assets less than projected benefit obligation			(171.7	)			(164.5	)
Unrecognized actuarial loss			69.7				69.2
Unrecognized prior service cost			13.0				14.8
Net amount recognized		$	(89.0	)		$	(80.5	)
Amounts recognized in the consolidated balance sheet:
Prepaid benefit cost		$	—			$	—
Accrued benefit cost liability			(89.0	)			(80.5	)
Net amount recognized		$	(89.0	)		$	(80.5	)

		2005				2004
Healthcare cost trend rate assumed for next year			10.00	%			10.00	%
Rate that the cost trend rate ultimately declines to			5.00	%			5.00	%
Year that the rate reaches the rate it is assumed to remain at			2011				2010

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			Postretirement
			Benefits
			(Millions)
Expected employer contributions for 2006			$	9.4
Expected benefit payments:
	2006		$	9.4
	2007			10.1
	2008			10.8
	2009			11.4
	2010			11.8
	2011 — 2015			60.4
Expected subsidy:
	2006		$	0.5
	2007			0.5
	2008			0.5
	2009			0.6
	2010			0.6
	2011 — 2015			3.8

7.	Stock-Based Compensation Plans:

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		2005				2004				2003
Expected life			5.0 years				5.0 years				5.0 years
Expected volatility			27.7%				31.0%				32.5%
Dividend yield			2.8%				2.9%				2.8%
Risk-free interest rate			3.7%				3.2%				3.0%

														Weighted Average Price
		Number of Shares												per Share
		2005				2004				2003				2005				2004				2003
Outstanding at beginning of period			2,766,715				2,681,400				2,426,219			$	58.35			$	57.47			$	57.22
Granted			293,650				281,475				415,425				55.45				50.74				49.27
Exercised			(211,090	)			(196,160	)			(160,244	)			47.83				35.38				32.41
Forfeited			(2,350	)			—				—				50.97				—				—
Outstanding at end of period			2,846,925				2,766,715				2,681,400			$	58.83			$	58.35			$	57.47
Exercisable at end of period			1,807,680				1,499,010				1,183,405			$	61.89			$	61.01			$	57.11
Non-vested at end of period			1,039,245				1,267,705				1,497,995
Weighted average fair value of stock options granted during the year		$	13.48			$	13.74			$	13.94

		Options Outstanding												Options Exercisable
						Weighted				Weighted								Weighted
						Average				Average								Average
		Number of				Remaining				Exercise Price				Number of				Exercise Price
Range of Exercise Price		Shares				Contractual Life				per Share				Shares				per Share
$26.95 - $32.35			19,638				1.7 years			$	31.44				19,638			$	31.44
$37.75 - $46.32			103,893				6.4 years				45.50				42,178				44.59
$50.22 - $56.07			1,331,694				7.3 years				53.32				412,244				53.80
$62.94 - $68.25			1,391,700				4.3 years				65.50				1,333,620				65.39
			2,846,925				5.8 years			$	58.83				1,807,680			$	61.89

8.	Restructuring and Other Charges:

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							Other
			Wireline				Operations				Total
			(Millions)
Severance and employee benefit costs			$	11.2			$	0.4			$	11.6
Relocation costs				1.2				0.1				1.3
Lease and contract termination costs				(1.8	)			—				(1.8	)
Other exit costs				0.7				—				0.7
	Total restructuring and other charges		$	11.3			$	0.5			$	11.8

							Other
			Wireline				Operations				Total
			(Millions)
Severance and employee benefit costs			$	7.0			$	—			$	7.0
Lease termination costs				—				(0.4	)			(0.4	)
Write-down of software development costs				1.8				3.8				5.6
	Total restructuring and other charges		$	8.8			$	3.4			$	12.2

9.	Gain on Disposal of Assets and Other:

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10.	Income Taxes:

			2005				2004				2003
			(Millions)
Current:
	Federal		$	215.5			$	155.0			$	124.4
	State and other			55.9				37.2				30.3
				271.4				192.2				154.7
Deferred:
	Federal			11.5				57.1				76.9
	State and other			(15.0	)			10.1				15.5
				(3.5	)			67.2				92.4
			$	267.9			$	259.4			$	247.1

			2005				2004				2003
Statutory federal income tax rates				35.0	%			35.0	%			35.0	%
Increase (decrease):
	State income taxes, net of federal benefit			4.1				4.8				4.8
	Costs associated with pending spin-off of Company			1.7				—				—
	Other items, net			0.5				0.4				(0.2	)
Effective income tax rates				41.3	%			40.2	%			39.6	%

			2005				2004
			(Millions)
Property, plant and equipment			$	510.5			$	552.9
Goodwill and other intangible assets				160.4				126.1
Postretirement and other employee benefits				(21.7	)			(15.2	)
Other, net				20.8				16.4
	Deferred income taxes, net		$	670.0			$	680.2
Current deferred tax assets			$	(10.6	)		$	—
Noncurrent deferred tax liabilities				680.6				680.2
	Deferred income taxes, net		$	670.0			$	680.2

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11.	Commitments and Contingencies:

Year			(Millions)
2006			$	5.0
2007				4.2
2008				2.5
2009				2.0
2010				1.6
Thereafter				2.5
	Total		$	17.8

12.	Business Segments:

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			For the Year Ended
			December 31, 2005
							Product				Other				Total
			Wireline				Distribution				Operations				Segments
			(Millions)
Revenues and sales from unaffiliated customers:
	Domestic		$	2,236.7			$	130.9			$	333.1			$	2,700.7
	International			—				—				—				—
				2,236.7				130.9				333.1				2,700.7
Intercompany revenues and sales				134.7				177.0				19.2				330.9
	Total revenues and sales			2,371.4				307.9				352.3				3,031.6
Operating expenses				1,280.7				301.6				305.6				1,887.9
Depreciation and amortization				468.2				1.9				4.1				474.2
	Total costs and expenses			1,748.9				303.5				309.7				2,362.1
Segment income			$	622.5			$	4.4			$	42.6			$	669.5
Assets			$	4,782.3			$	51.6			$	100.9			$	4,934.8
Capital expenditures			$	351.9			$	0.2			$	0.8			$	352.9

			For the Year Ended
			December 31, 2004
							Product				Other				Total
			Wireline				Distribution				Operations				Segments
			(Millions)
Revenues and sales from unaffiliated customers:
	Domestic		$	2,281.2			$	121.6			$	344.1			$	2,746.9
	International			—				—				1.9				1.9
				2,281.2				121.6				346.0				2,748.8
Intercompany revenues and sales				129.6				135.9				25.8				291.3
	Total revenues and sales			2,410.8				257.5				371.8				3,040.1
Operating expenses				1,275.2				251.9				325.1				1,852.2
Depreciation and amortization				502.2				2.5				3.8				508.5
	Total costs and expenses			1,777.4				254.4				328.9				2,360.7
Segment income			$	633.4			$	3.1			$	42.9			$	679.4
Assets			$	4,924.7			$	43.2			$	114.6			$	5,082.5
Capital expenditures			$	332.0			$	0.4			$	0.9			$	333.3

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			For the Year Ended
			December 31, 2003
							Product				Other				Total
			Wireline				Distribution				Operations				Segments
			(Millions)
Revenues and sales from unaffiliated customers:
	Domestic		$	2,311.0			$	116.6			$	384.3			$	2,811.9
	International			—				—				4.4				4.4
				2,311.0				116.6				388.7				2,816.3
Intercompany revenues and sales				117.6				162.3				25.1				305.0
	Total revenues and sales			2,428.6				278.9				413.8				3,121.3
Operating expenses				1,327.1				273.1				345.6				1,945.8
Depreciation and amortization				510.2				2.4				6.8				519.4
	Total costs and expenses			1,837.3				275.5				352.4				2,465.2
Segment income			$	591.3			$	3.4			$	61.4			$	656.1
Assets			$	5,110.5			$	60.4			$	118.8			$	5,289.7
Capital expenditures			$	378.6			$	0.4			$	4.2			$	383.2

			2005				2004				2003
			(Millions)
Revenues and sales:
	Total business segments		$	3,031.6			$	3,040.1			$	3,121.3
	Less: intercompany eliminations(1)			(108.1	)			(106.6	)			(118.0	)
	Total revenues and sales		$	2,923.5			$	2,933.5			$	3,003.3
Income before income taxes:
	Total business segment income		$	669.5			$	679.4			$	656.1
	Restructuring and other charges			(35.7	)			(11.8	)			(12.2	)
	Other income, net			11.6				13.7				5.8
	Intercompany interest income (expense)			23.3				(15.2	)			(21.6	)
	Interest expense			(19.1	)			(20.4	)			(27.7	)
	Gain on disposal of assets and other			—				—				23.9
	Total income before income taxes		$	649.6			$	645.7			$	624.3
Assets:
	Total business segments		$	4,934.8			$	5,082.5			$	5,289.7
	Less: elimination of intercompany receivables			(5.1	)			(3.3	)			(12.8	)
	Total assets		$	4,929.7			$	5,079.2			$	5,276.9

(1)	See “Transactions with Certain Affiliates” in Note 1 for a discussion of intercompany revenues and sales not eliminated in preparing the combined financial statements.

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13.	Pending Spin-Off of Company and Merger with Valor Communications Group, Inc.:

			2005
			(Unaudited)
			(Millions)
Net income as reported			$	374.3
	Pro forma interest expense, net of related tax effects			(153.0	)
Pro forma net income			$	221.3

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						Page
	ARTICLE I			Definitions			A-2
	ARTICLE  II			The Merger			A-11
	2.1			The Merger			A-11
	2.2			Closing			A-11
	2.3			Effective Time			A-12
	2.4			Effects of the Merger			A-12
	2.5			Certificate of Incorporation and Bylaws of the Surviving Corporation			A-12
	2.6			Directors and Officers of the Surviving Corporation			A-12
	2.7			Stockholders Meeting			A-12
	2.8			Restructuring of the Merger
	ARTICLE  III			Conversion of Shares; Exchange of Certificates			A-13
	3.1			Effect on Capital Stock			A-13
	3.2			Distribution of Per Share Merger Consideration			A-14
	ARTICLE  IV			Related Transactions			A-16
	4.1			Distribution			A-16
	4.2			AT Co./ Spinco Transaction Agreements			A-16
	4.3			Corporate Offices			A-16
	4.4			Directors and Officers of Spinco			A-16
	4.5			Financing Cooperation			A-16
	ARTICLE V			Representations and Warranties of AT Co.			A-17
	5.1			Organization; Qualification			A-18
	5.2			Corporate Authority; No Violation			A-18
	5.3			Information Supplied			A-19
	5.4			AT Co. Reports and Financial Statements			A-19
	5.5			Brokers or Finders			A-20
	ARTICLE  VI			Representations and Warranties of AT Co. and Spinco			A-20
	6.1			Organization, Qualification			A-20
	6.2			Capital Stock and Other Matters			A-21
	6.3			Corporate Authority; No Violation			A-21
	6.4			Financial Statements			A-22
	6.5			Absence of Certain Changes or Events			A-23
	6.6			Investigations; Litigation			A-23
	6.7			Compliance with Laws; Permits			A-24
	6.8			Proxy Statement/ Prospectus; Registration Statement			A-24
	6.9			Information Supplied			A-24
	6.10			Environmental Matters			A-25
	6.11			Tax Matters			A-25
	6.12			Benefit Plans			A-27
	6.13			Labor Matters			A-28
	6.14			Intellectual Property Matters			A-28

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	6.15			Material Contracts			A-29
	6.16			Brokers or Finders			A-29
	6.17			Board and Stockholder Approval			A-30
	6.18			Assets			A-30
	6.19			Spinco Real Property			A-30
	6.20			Communications Regulatory Matters			A-31
	6.21			Spinco Operations			A-32
	6.22			Opinion of Spinco Financial Advisor			A-32
	6.23			Company Common Stock			A-32
	6.24			Affiliate Transactions			A-32
	ARTICLE  VII			Representations and Warranties of the Company			A-32
	7.1			Organization, Qualification			A-32
	7.2			Capital Stock and Other Matters			A-33
	7.3			Corporate Authority; No Violation			A-33
	7.4			Company Reports and Financial Statements			A-34
	7.5			Absence of Certain Changes or Events			A-35
	7.6			Investigations; Litigation			A-35
	7.7			Compliance with Laws; Permits			A-36
	7.8			Proxy Statement/ Prospectus; Registration Statement			A-36
	7.9			Information Supplied			A-36
	7.10			Environmental Matters			A-37
	7.11			Tax Matters			A-37
	7.12			Benefit Plans			A-38
	7.13			Labor Matters			A-40
	7.14			Intellectual Property Matters			A-40
	7.15			Communications Regulatory Matters			A-41
	7.16			Material Contracts			A-42
	7.17			Company Real Property			A-42
	7.18			Opinion of Company Financial Advisors			A-43
	7.19			Brokers or Finders			A-43
	7.20			Takeover Statutes			A-43
	7.21			Certain Board Findings			A-43
	7.22			Vote Required			A-43
	7.23			Affiliate Transactions			A-43
	ARTICLE  VIII			Covenants and Agreements			A-43
	8.1			Conduct of Business by the Company Pending the Merger			A-43
	8.2			Conduct of Business by Spinco and AT Co. Pending the Merger			A-46
	8.3			Tax Matters			A-48
	8.4			Proxy Statement/ Prospectus			A-48
	8.5			Listing			A-49
	8.6			Reasonable Best Efforts; Regulatory Matters			A-49
	8.7			IRS Distribution Ruling; Other IRS Rulings; Tax Opinions			A-51
	8.8			Letter of Spinco’s Accountants			A-52

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						Page
	8.9			Letter of the Company’s Accountants			A-52
	8.10			Employee Matters			A-52
	8.11			Access to Information			A-53
	8.12			No Solicitation by the Company			A-53
	8.13			Director and Officer Indemnification; Insurance			A-55
	8.14			Rule 145 Affiliates			A-56
	8.15			Public Announcements			A-56
	8.16			Defense of Litigation			A-56
	8.17			Notification			A-56
	8.18			SEC Reports			A-57
	8.19			Section 16 Matters			A-57
	8.20			Control of Other Party’s Business			A-57
	8.21			Dividend Policy of the Surviving Corporation			A-57
	8.22			Amendment of Company Securityholders Agreement			A-57
	8.23			Disclosure Controls			A-57
	8.24			Corporate Name; Branding			A-57
	ARTICLE  IX			Conditions to the Merger			A-58
	9.1			Conditions to the Obligations of Spinco, AT Co. and the Company to Effect the Merger			A-58
	9.2			Additional Conditions to the Obligations of AT Co. and Spinco			A-59
	9.3			Additional Conditions to the Obligations of the Company			A-60
	ARTICLE X			Tax Matters			A-61
	10.1			Representations			A-61
	10.2			Restrictions Relating to the Distribution			A-61
	10.3			Cooperation and Other Covenants			A-63
	10.4			Indemnification for Disqualifying Actions			A-63
	10.5			Procedure for Indemnification for Tax Liabilities			A-64
	10.6			Exclusivity of Article X			A-65
	ARTICLE  XI			Termination, Amendment and Waivers			A-65
	11.1			Termination			A-65
	11.2			Effect of Termination			A-67
	11.3			Termination Fee Payable in Certain Circumstances			A-67
	11.4			Amendment			A-67
	11.5			Waivers			A-67

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	ARTICLE  XII			Miscellaneous			A-68
	12.1			Survival of Representations, Warranties and Agreements; Indemnification			A-68
	12.2			Expenses			A-68
	12.3			Notices			A-69
	12.4			Interpretation			A-69
	12.5			Severability			A-70
	12.6			Assignment; Binding Effect			A-70
	12.7			No Third Party Beneficiaries			A-70
	12.8			Limited Liability			A-70
	12.9			Entire Agreement			A-70
	12.10			Governing Law			A-70
	12.11			Counterparts			A-70
	12.12			Waiver of Jury Trial			A-70
	12.13			Jurisdiction; Enforcement			A-70

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	(a) All of the shares of Spinco Common Stock issued and outstanding immediately prior to the Effective Time (other than shares canceled in accordance with Section 3.1(b)) shall be automatically converted into the right to receive an aggregate number of duly authorized, validly issued, fully paid and nonassessable shares of Company Common Stock equal to the product of (x) 5.6667 multiplied by (y) the aggregate number of shares of Company Common Stock issued and outstanding, on a Fully Diluted Basis, immediately prior to the Effective Time (the “Aggregate Merger Consideration”), with each such share of Spinco Common Stock issued and outstanding as of the Effective Time to be converted into the right to receive a number of shares of Company Common Stock equal to (i) the Aggregate Merger Consideration divided by (ii) the aggregate number of shares of Spinco Common Stock issued and outstanding as of immediately prior to the Effective Time (other than shares canceled in accordance with Section 3.1(b)) (the “Per Share Merger Consideration”).
	(b) Each share of Spinco Common Stock held by Spinco as treasury stock and each share of Spinco Common Stock owned by the Company or any wholly owned Subsidiary of the Company or Spinco, in each case immediately prior to the Effective Time, shall be canceled and shall cease to exist and no stock or other consideration shall be issued or delivered in exchange therefor.
	(c) Each share of Spinco Common Stock issued and outstanding immediately prior to the Effective Time, when converted in accordance with this Section 3.1, shall no longer be outstanding and shall automatically be canceled and shall cease to exist. Each holder of a certificate that, immediately prior to the Effective Time, represented outstanding shares of Spinco Common Stock (collectively, the “Certificates”) shall cease to have any rights with respect thereto, except the right to receive, upon the surrender of any such Certificate, the Per Share Merger Consideration.
	(d) Each share of Company Common Stock that is issued and outstanding immediately prior to and at the Effective Time shall remain outstanding following the Effective Time.

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	5.1     Organization; Qualification. AT Co. is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. AT Co. and its Subsidiaries have all requisite corporate power and authority to own, lease and operate their properties and assets that will be contributed to Spinco pursuant to the Distribution Agreement, except where the failure to have such power and authority would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business. Each of AT Co. and its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by the Spinco Business that will be contributed to Spinco pursuant to the Distribution Agreement or the nature of the Spinco Business operated by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business.
	5.2     Corporate Authority; No Violation.
	(a) AT Co. has the corporate power and authority to enter into this Agreement and each other Transaction Agreement to which it is a party and to carry out its obligations hereunder and thereunder. The execution, delivery and performance by AT Co. of this Agreement and each other Transaction Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of AT Co., except for such further action of the Board of Directors of AT Co. required to establish the Record Date and the Distribution Date, and the effectiveness of the declaration of the Distribution by the Board of Directors of AT Co. (which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Distribution Agreement). This Agreement has been duly executed and delivered by AT Co. and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding agreement of AT Co., enforceable against AT Co. in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing

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	the availability of equitable remedies). As of the Distribution Date, each other Transaction Agreement to which AT Co. is a party will have been duly executed and delivered by AT Co. and, assuming the due authorization, execution and delivery by the other parties thereto, will constitute a legal, valid and binding agreement of AT Co., enforceable against AT Co. in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).
	(b) Neither the execution and delivery by AT Co. of this Agreement and other Transaction Agreements to which it is a party nor the consummation by AT Co. of the transactions contemplated hereby or thereby or compliance by AT Co. with any of the provisions hereof or thereof will (i) violate or conflict with any provisions of AT Co.’s Certificate of Incorporation or Bylaws; (ii) result in a default (or an event that, with notice or lapse of time or both, would become a default) or give rise to any right of termination by any third party, cancellation, amendment or acceleration of any obligation or the loss of any benefit under, any Contract to which AT Co. or any of its Subsidiaries is a party or by which AT Co. or any of its Subsidiaries is bound or affected; (iii) result in the creation of a Lien, pledge, security interest, claim or other encumbrance on any of the issued and outstanding shares of Spinco Common Stock, capital stock of any Spinco Subsidiary or on any of the Spinco Assets pursuant to any Contract to which AT Co. or any of its Subsidiaries (including Spinco and its Subsidiaries) is a party or by which AT Co. or its Subsidiaries is bound or affected; or (iv) assuming the consents and approvals contemplated by Section 5.2(c) below are obtained, violate or conflict with any order, writ, injunction, decree, Law, ordinance, rule or regulation applicable to AT Co. or any of its Subsidiaries (including Spinco and its Subsidiaries), or any of the properties, business or assets of any of the foregoing, other than, in the case of each of clauses (i) through (iv), any such violation, conflict, default, right, loss or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business.
	(c) Other than in connection with or in compliance with (i) the provisions of the DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the HSR Act, (v) the Communications Act and applicable rules and regulations thereunder and FCC Rules, (vi) the approvals set forth on Section 5.2(c) of the AT Co. Disclosure Letter, and (vii) the rules and regulations of the NYSE (collectively, the “AT Co. Approvals”), no authorization, consent or approval of, or filing with, any Governmental Authority is necessary for the consummation by AT Co. of the transactions contemplated by this Agreement and the other Transaction Agreements, except for such authorizations, consents, approvals or filings that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business.
	5.3     Information Supplied. All documents that AT Co. is responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby and by each other Transaction Agreement will comply in all material respects with the provisions of applicable Law. All information supplied or to be supplied by AT Co. in any document, other than the Registration Statement which is addressed in Section 6.8 hereof, filed with any Governmental Authority in connection with the transactions contemplated hereby and by the other Transaction Agreements will be, at the time of filing, at the Distribution Date and at the Effective Time, true and correct in all material respects.
	5.4     AT Co. Reports and Financial Statements.
	(a) AT Co. has previously made available to the Company complete and correct copies of:

	(i) AT Co.’s Annual Reports on Form 10-K filed with the SEC under the Exchange Act for each of the years ended December 31, 2004, 2003 and 2002;
	(ii) AT Co.’s Quarterly Reports on Form 10-Q filed with the SEC under the Exchange Act for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005;
	(iii) each definitive proxy statement filed by AT Co. with the SEC under the Exchange Act since January 1, 2003;

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	(iv) all current reports on Form 8-K filed by AT Co. with the SEC under the Exchange Act since January 1, 2003; and
	(v) each other form, report, schedule, registration statement and definitive proxy statement filed by AT Co. or any of its Subsidiaries with the SEC since January 1, 2003 and prior to the date hereof (collectively, and together with the items specified in clauses (i) through (iv) above, the “AT Co. SEC Documents”).

	(b) As of their respective dates, the AT Co. SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and none of such AT Co. SEC Documents when filed contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited consolidated interim financial statements included in the AT Co. SEC Documents (including any related notes and schedules) fairly present in all material respects the financial position of AT Co. and its consolidated Subsidiaries as of the respective dates thereof and the results of operations and changes in cash flows, changes in stockholder’s equity or other information included therein for the periods or as of the respective dates then ended, subject, where appropriate, to normal year-end audit adjustments (none of which AT Co. management expects to be material), in each case in accordance with past practice and GAAP, consistently applied, during the periods involved (except as otherwise stated therein). Since January 1, 2002, AT Co. has timely filed all reports, registration statements and other filings required to be filed with the SEC under the rules and regulations of the SEC. Except as set forth in the AT Co. SEC Documents filed prior to the date hereof or Section 5.4 of the AT Co. Disclosure Letter or liabilities incurred in the ordinary course of business, consistent with past practice, since the Interim Balance Sheet Date, AT Co. and its Subsidiaries have not incurred any liability or obligation that is of a nature that would be required to be disclosed on a consolidated balance sheet of AT Co. and its Subsidiaries or in the notes thereto prepared in conformity with GAAP, other than liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business.
	(c) AT Co. has designed and maintains a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. AT Co. (A) has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by AT Co. in the reports that it files or submits under the Exchange Act with respect to the AT Co. Business and the Spinco Business is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to AT Co.’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of AT Co. required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act and (B) has disclosed, based on its most recent evaluation of such disclosure controls and procedures prior to the date hereof to AT Co.’s auditors and the audit committee of AT Co.’s Board of Directors, (x) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect AT Co.’s ability to record, process, summarize and report financial information with respect to the AT Co. Business and the Spinco Business and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the AT Co.’s internal controls over financial reporting with respect to the AT Co. Business and the Spinco Business. AT Co. has made available to the Company any such disclosure made by management to AT Co.’s auditors and the audit committee of AT Co.’s Board of Directors.
	5.5     Brokers or Finders. Other than Merrill Lynch, Pierce, Fenner & Smith Incorporated, JP Morgan Securities Inc. and Stephens, Inc., no agent, broker, investment banker, financial advisor or other similar Person is or will be entitled, by reason of any agreement, act or statement by AT Co. or any

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	of its Subsidiaries, directors, officers or employees, to any financial advisory, broker’s, finder’s or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement or other Transaction Agreement.

	6.1     Organization, Qualification.
	(a) Spinco and each of the Spinco Subsidiaries is, or on the date of its incorporation will be a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation, has, or will have, all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted or as proposed to be conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco, and is, or will be, duly qualified and licensed to do business and is, or will be, in good standing in each jurisdiction in which the ownership or leasing of its property or the conduct of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or to be in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. The copies of the Spinco Certificate of Incorporation and Bylaws and the Certificate of Incorporation and Bylaws (or analogous governing documents) of each Spinco Subsidiary that is, or upon completion of the Contribution will be, a Significant Subsidiary of Spinco previously made available to the Company are complete and correct copies of such documents as in full force and effect on the date hereof.
	(b) Section 6.1(b) of the Spinco Disclosure Letter sets forth a list of the Spinco Subsidiaries and their respective jurisdictions of incorporation, together with a designation of those Spinco Subsidiaries that upon completion of the Contribution will constitute Significant Subsidiaries of Spinco.
	6.2     Capital Stock and Other Matters.
	(a) As of the date hereof, (i) the authorized capital stock of Spinco consists of 1,000 shares of Spinco Common Stock, (ii) 1,000 shares of Spinco Common Stock are issued and outstanding, and (iii) no shares of Spinco Common Stock are held by Spinco in its treasury. All of the issued and outstanding shares of Spinco Common Stock immediately prior to the Effective Time will be validly issued, fully paid and nonassessable and free of pre-emptive rights.
	(b) No bonds, debentures, notes or other indebtedness of Spinco or any of the Spinco Subsidiaries having the right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which holders of shares of capital stock of Spinco (including Spinco Common Stock) may vote (“Spinco Voting Debt”) are, or immediately prior to the Effective Time will be, issued or outstanding.
	(c) Except in connection with the Merger or as otherwise provided for in the Transaction Agreements, there are not, and immediately prior to the Effective Time there will not be, any outstanding, securities, options, warrants, convertible securities, calls, rights, commitments, agreements, arrangements, undertakings or Contracts of any kind to which Spinco or any Spinco Subsidiary is a party or by which any of them is bound obligating Spinco or any Spinco Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock, Spinco Voting Debt or other

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	voting securities of Spinco or any Spinco Subsidiary or obligating Spinco or any Spinco Subsidiary to issue, grant, extend, redeem, acquire or enter into any such security, option, warrant, convertible security, call, right, commitment, agreement, arrangement, undertaking or Contract.
	(d) There are not, and immediately prior to the Effective Time there will not be, any stockholder agreements, voting trusts or other Contracts (other than the Distribution Agreement) to which Spinco is a party or by which it is bound relating to voting or transfer of any shares of capital stock of Spinco.
	6.3     Corporate Authority; No Violation.
	(a) Spinco has the corporate power and authority to enter into this Agreement and each other Transaction Agreement to which it is a party and to carry out its obligations hereunder and thereunder. The execution, delivery and performance by Spinco of this Agreement and each other Transaction Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Spinco, except for such further action by the Board of Directors of Spinco required to effect the reclassification of the Spinco Common Stock, the distribution of the Spinco Exchange Notes to AT Co. and the payment of the Special Dividend, each as contemplated by the Distribution Agreement.
	(b) This Agreement has been duly executed and delivered by Spinco and, assuming the due authorization, execution and delivery by the Company and AT Co., constitutes a legal, valid and binding agreement of Spinco, enforceable against Spinco in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies). As of immediately prior to the Effective Time, each other Transaction Agreement to which Spinco is a party will have been duly executed and delivered by Spinco and will, assuming the due authorization, execution and delivery by the other parties thereto, constitute a legal, valid and binding agreement of Spinco, enforceable against Spinco in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).
	(c) Neither the execution and delivery by Spinco of this Agreement and each other Transaction Agreement to which Spinco is a party, nor the consummation by Spinco of the transactions contemplated hereby or thereby, or performance by Spinco of the provisions hereof or thereof will (i) violate or conflict with any provision of Spinco’s Certificate of Incorporation or Bylaws; (ii) result in a default (or an event that, with notice or lapse of time or both, would become a default) or give rise to any right of termination or buy-out by any third party, cancellation, amendment or acceleration of any obligation or the loss of any benefit under any Contract to which Spinco or any Spinco Subsidiary is a party or by which Spinco or any Spinco Subsidiary or any of the Spinco Assets is bound or affected; (iii) result in the creation of a Lien, pledge, security interest, claim or other encumbrance on any of the issued and outstanding shares of Spinco Common Stock or capital stock of any Spinco Subsidiary or on any of the Spinco Assets pursuant to any Contract to which Spinco or any Spinco Subsidiary is a party or by which Spinco or any Spinco Subsidiary or any of the Spinco Assets is bound or affected; or (iv) assuming the consents and approvals contemplated by Section 6.3(d) below are obtained, violate or conflict with any order, writ, injunction, decree, Law, ordinance, rule or regulation applicable to Spinco or any Spinco Subsidiary, or any of the properties, businesses or assets of any of the foregoing, other than, in the case of each of clauses (i) through (iv), any such violation, conflict, default, right, loss or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	(d) Other than in connection with or in compliance with (i) the provisions of the DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the HSR Act, (v) the Communications Act and FCC Rules, and (vi) the approvals set forth on Section 6.3(d) of the Spinco Disclosure Letter (collectively, the “Spinco Approvals”), no authorization, consent or approval of, or filing with, any Governmental Authority is necessary for the consummation by Spinco of the transactions contemplated by this Agreement and the other Transaction Agreements to which Spinco is a party, except for such

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	authorizations, consents, approvals or filings that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	6.4     Financial Statements.
	(a) AT Co. and Spinco have previously made available to the Company:

	(i) the audited combined balance sheets of Spinco and its Subsidiaries at December 31, 2002, 2003 and 2004, and the related audited combined statements of operations, cash flows and stockholder’s equity for the fiscal years ended December 31, 2002, 2003 and 2004, including the notes thereto (collectively, the “Audited Financial Statements”); and
	(ii) the unaudited interim combined balance sheet at September 30, 2005, and the related unaudited interim combined statements of operations, cash flows and stockholder’s equity for the nine months ended September 30, 2005 (collectively, the “Interim Financial Statements” and, together with the Audited Financial Statements, the “Spinco Financial Statements”).

	(b) AT Co. and Spinco will deliver to the Company promptly upon request any and all other financial other financial statements for Spinco and Spinco Subsidiaries required to be included by Regulation S-X of the Exchange Act in the Registration Statement and the Proxy Statement/ Prospectus.
	(c) The Spinco Financial Statements fairly present in all material respects, and any other financial statements prepared in accordance with Section 6.4(b) will fairly present in all material respects, the financial position of the Spinco Business as of the dates thereof, and the results of operations and changes in cash flows, changes in stockholder’s equity or other information included therein for the periods or as of the dates then ended, in each case except as otherwise noted therein and subject, where appropriate, to normal year-end audit adjustments (none of which Spinco management expects to be material). The Spinco Financial Statements and such other financial statements have been or will be prepared in accordance with GAAP, and on a consistent basis, except as otherwise noted therein.
	(d) As of the date hereof, neither Spinco nor any of the Spinco Subsidiaries is required to file any form, report, registration statement, prospectus or other document with the SEC.
	(e) Except for liabilities incurred in the ordinary course of business, consistent with past practice, since the date of the balance sheet included in the Interim Financial Statements (the “Interim Balance Sheet Date”) or as set forth in the Spinco Financial Statements or the notes thereto, since the Interim Balance Sheet Date, Spinco and the Spinco Subsidiaries have not incurred any liabilities or obligations that are of a nature that would be required to be disclosed on a consolidated balance sheet of Spinco and the Spinco Subsidiaries or in the notes thereto prepared in conformity with GAAP, other than liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	(f) At or prior to the Effective Time, Spinco will have (A) designed and be maintaining a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting with respect to the Spinco Business and the preparation of financial statements with respect to the Spinco Business for external purposes in accordance with GAAP, and (B) designed and be maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information that AT Co. is required to disclose with respect to the Spinco Business in the reports AT Co. is required to file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to AT Co.’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of AT Co. required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”).
	6.5     Absence of Certain Changes or Events. Except as specifically contemplated by this Agreement or the other Transaction Agreements, since the Interim Balance Sheet Date, the Spinco Business

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	has been conducted in the ordinary course, consistent with past practice, and there has not been any event, occurrence, development or state of circumstances or facts that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. From the Interim Balance Sheet Date to the date hereof, none of AT Co., Spinco or any of their respective Subsidiaries has taken any action or failed to take any action, which action or failure, as the case may be, would constitute a breach of Section 8.2 if taken without the Company’s consent after the date hereof.
	6.6     Investigations; Litigation.
	(a) There is no investigation or review pending (or, to the knowledge of Spinco or AT Co., threatened) by any Governmental Authority with respect to Spinco or any of the Spinco Subsidiaries, or with respect to AT Co. or any AT Co. Subsidiary relating to the Spinco Business.
	(b) There are no actions, suits, inquiries, grievances, arbitrations, investigations or proceedings pending (or, to the knowledge of Spinco or AT Co., threatened) against or affecting Spinco or any of the Spinco Subsidiaries or any of their respective properties or otherwise affecting the Spinco Business at law or in equity and there are no orders, judgments or decrees of any Governmental Authority, in each case which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	6.7     Compliance with Laws; Permits.
	(a) Spinco and the Spinco Subsidiaries are, or on the Distribution Date will be, and have been since January 1, 2003, in compliance with all, and have received no notice of any violation (as yet unremedied) of any, Laws applicable to Spinco, such Spinco Subsidiaries or any of their respective properties or assets or otherwise affecting the Spinco Business, except where such non-compliance, default or violation has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. Notwithstanding anything contained in this Section 6.7(a), no representation or warranty shall be deemed to be made in this Section 6.7(a) in respect of environmental, tax, employee benefits, labor or communications Laws, which are the subject of the representations and warranties made in Sections 6.10, 6.11, 6.12, 6.13 and 6.21 of this Agreement, respectively.
	(b) Spinco and the Spinco Subsidiaries are, or on the Distribution Date will be, in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for Spinco and the Spinco Subsidiaries to own, lease and operate the Spinco Assets or to carry on the Spinco Business as it is now conducted, or on the Distribution Date will be conducted (the “Spinco Permits”), except where the failure to have any of the Spinco Permits has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. All Spinco Permits are in full force and effect, or immediately prior to the Effective Time will be in full force and effect, except where the failure to be in full force and effect has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	6.8     Proxy Statement/ Prospectus; Registration Statement. None of the information regarding AT Co. or its Subsidiaries, Spinco or the Spinco Subsidiaries, or the Spinco Business, or the transactions contemplated by this Agreement or any other Transaction Agreement provided by AT Co. or Spinco or any of their respective Subsidiaries specifically for inclusion in, or incorporation by reference into, the Proxy Statement/ Prospectus or the Registration Statement will, in the case of the definitive Proxy Statement/ Prospectus or any amendment or supplement thereto, at the time of the mailing of the definitive Proxy Statement/ Prospectus and any amendment or supplement thereto and at the time of the Company Stockholders Meeting, or, in the case of the Registration Statement, at the time it becomes effective, at the time of the Company Stockholders Meeting and at the Effective Time contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

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	6.9     Information Supplied. All documents that Spinco is responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby or by any other Transaction Agreement will comply in all material respects with the provisions of applicable Law. All information supplied or to be supplied by Spinco in any document, other than the Registration Statement, which is addressed in Section 6.8, filed with any Governmental Authority in connection with the transactions contemplated hereby and by the other Transaction Agreements will be, at the time of filing, at the Distribution Date and at the Effective Time, true and correct in all material respects.
	6.10     Environmental Matters. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco:

	(a) Spinco and each of the Spinco Subsidiaries is, or on the Distribution Date will be, and since January 1, 2003 has been, in compliance with all applicable Environmental Laws and Spinco and the Spinco Subsidiaries possess, or on the Distribution Date will possess, all Spinco Permits that are required under applicable Environmental Laws and are, or on the Distribution Date will be, in compliance with the terms and conditions thereof;
	(b) neither Spinco nor any of the Spinco Subsidiaries has received written notice of, or is the subject of, any actions, causes of action, claims, investigations, demands or notices by any person asserting an obligation on the part of Spinco or the Spinco Subsidiaries to conduct investigations or clean-up activities under Environmental Law or alleging liability under or non-compliance with any Environmental Law (collectively, “Environmental Claims”);
	(c) neither Spinco nor any of the Spinco Subsidiaries is subject to any indemnification obligation with respect to Environmental Laws or Hazardous Materials, including such obligations regarding businesses currently or formerly owned or operated by Spinco or any of the Spinco Subsidiaries or regarding properties formerly owned or leased by Spinco or any of the Spinco Subsidiaries;
	(d) there is no condition on, at, under or related to any property (including any release of a Hazardous Material into the air, soil, surface water, sediment or ground water at, under or migrating to or from such property) including related to property currently owned, leased or used by AT Co., Spinco or any of their respective Subsidiaries or created by AT Co.’s, Spinco’s or any Spinco Subsidiary’s operations that would give rise to liability for Spinco or any of the Spinco Subsidiaries under applicable Environmental Laws, and, to AT Co.’s and Spinco’s knowledge, the foregoing representation is true and correct with regard to property formerly owned, leased or used by AT Co., Spinco or any of their respective Subsidiaries;
	(e) neither AT Co., Spinco nor any of their respective Subsidiaries has any liability with respect to asbestos in any product or within any building or structure;
	(f) AT Co. or Spinco has made available to the Company all material site assessments, environmental compliance audits, and other documents relating to environmental matters and relating to the Spinco Business, or the current or former properties or facilities of Spinco and the Spinco Subsidiaries to the extent such documents are in the possession, custody or control of AT Co., Spinco or any of their Subsidiaries, including, without limitation, such documents relating to (i) the environmental conditions on, under or about the properties or assets currently or formerly owned, leased, operated or used by Spinco, any of the Spinco Subsidiaries or any predecessor in interest thereto and (ii) any Hazardous Materials used, managed, handled, transported, treated, generated, stored, discharged, emitted, or otherwise released by Spinco, any of the Spinco Subsidiaries or any other Person on, under, about or from any of the properties currently or formerly owned or leased by, or otherwise in connection with the use or operation of any of the properties owned or leased, or otherwise in connection with the use or operation of any of the properties and assets of Spinco or any of the Spinco Subsidiaries, or their respective businesses and operations.

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	(g) This Section 6.10 contains the sole and exclusive representations and warranties of AT Co. and Spinco with respect to environmental matters, including matters relating to Environmental Laws and Hazardous Materials.

	6.11     Tax Matters.
	(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Spinco or the Spinco Business, (i) all Tax Returns relating to AT Co. and its Subsidiaries, including Spinco and the Spinco Subsidiaries, or the Spinco Business required to be filed have been filed, (ii) all such Tax Returns are or will be true and correct in all respects, (iii) all Taxes shown as due and payable on such Tax Returns, and all Taxes (whether or not reflected on such Tax Returns) relating to AT Co. and its Subsidiaries, including Spinco and the Spinco Subsidiaries, in respect of the Spinco Business or otherwise in respect of the Spinco Business required to be paid, have been paid, (iv) all Taxes relating to AT Co. or its Subsidiaries, including Spinco and the Spinco Subsidiaries, in respect of the Spinco Business or otherwise in respect of the Spinco Business for any taxable period (or a portion thereof) beginning on or prior to the Closing Date (which are not yet due and payable) have been properly reserved for in the Spinco Financial Statements and (v) AT Co. and its Subsidiaries, including Spinco and the Spinco Subsidiaries, have duly and timely withheld all Taxes required to be withheld and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose and will be duly and timely paid to the proper Taxing Authority.
	(b) No written agreement or other written document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of any Taxes relating to Spinco, any Spinco Subsidiary or the Spinco Business, and no power of attorney with respect to any such Taxes has been filed or entered into with any Taxing Authority.
	(c) (i) No audits or other administrative proceedings or proceedings before any Taxing Authority are presently pending with regard to any Taxes or Tax Return of Spinco or any Spinco Subsidiary or the Spinco Business, as to which any Taxing Authority has asserted in writing any claim which, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco, any Spinco Subsidiary or the Spinco Business, and (ii) no Taxing Authority is now asserting in writing any deficiency or claim for Taxes or any adjustment to Taxes with respect to which Spinco or any Spinco Subsidiary or the Spinco Business, may be liable with respect to income or other material Taxes which has not been fully paid or finally settled.
	(d) Neither Spinco nor any Spinco Subsidiary (i) is a party to or bound by or has any obligation under any Tax separation, sharing or similar agreement or arrangement other than the Tax Sharing Agreement, and the AT Co. and Subsidiaries Tax Sharing Policy currently in effect for taxable periods ending on or after December 31, 1991 (which shall be terminated with respect to Spinco and any Spinco Subsidiary as of the Closing Date), (ii) is or has been a member of any consolidated, combined or unitary group for purposes of filing Tax Returns or paying Taxes (other than a group of which AT Co. is the common parent corporation) or (iii) has entered into a closing agreement pursuant to Section 7121 of the Code, or any predecessor provision or any similar provision of state or local law.
	(e) None of the Spinco Assets is subject to any Tax lien (other than liens for Taxes that are not yet due and payable.
	(f) Section 6.11 of the Spinco Disclosure Letter lists all foreign jurisdictions in which Spinco or any Spinco Subsidiary files a material Tax Return.
	(g) Neither Spinco nor any Spinco Subsidiary has agreed to make or is required to make any adjustment for a taxable period ending after the Effective Time under Section 481(a) of the Code by reason of a change in accounting method or otherwise, except where such adjustments have not had, and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

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	(h) Neither Spinco nor any Spinco Subsidiary has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock (other than the Distribution) qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in connection with the Merger.
	(i) None of AT Co., Spinco, and their respective Subsidiaries has taken or agreed to take any action that is reasonably likely to (nor is any of them aware of any agreement, plan or other circumstance that would) prevent the Tax-Free Status of the Transactions.
	(j) None of AT Co., Spinco, and any of their Subsidiaries in respect of the Spinco Business has engaged in any listed transaction, or any reportable transaction the principal purpose of which was tax avoidance, within the meaning of Sections 6011, 6111 and 6112 of the Code.
	6.12     Benefit Plans.
	(a) Section 6.12(a) of the Spinco Disclosure Letter lists each “employee benefit plan” (as defined in Section 3(3) of ERISA), and all other benefit, bonus, incentive, deferred compensation, stock option (or other equity-based), severance, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans, whether or not subject to ERISA and whether written or oral, sponsored, maintained or contributed to or required to be contributed to by Spinco or any of the Spinco Subsidiaries, to which Spinco or any of the Spinco Subsidiaries will be a party on the Distribution Date, as provided in the Employee Benefits Agreement, or in which any Person who is currently, has been or, on or prior to the Effective Time, is expected to become an employee of Spinco or any of the Spinco Subsidiaries (a “Spinco Employee”) will be a participant on the Distribution Date, or with respect to which Spinco or any of the Spinco Subsidiaries has any material liability (the “Spinco Benefit Plans”).
	(b) No material liability under Title IV (including Sections 4069 and 4212(c) of ERISA) or Section 302 of ERISA has been or as of the Effective Time will have been incurred by Spinco, any of the Spinco Subsidiaries or any ERISA Affiliate of any of them, and no condition exists that would reasonably be expected to result in Spinco or any of the Spinco Subsidiaries incurring any such liability, other than liability for premiums due the PBGC as of the Distribution Date. The present value of accrued benefits under each Spinco Benefit Plan that is subject to Title IV of ERISA, determined based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such plan’s actuary with respect to such plan, will not exceed the then current value of the assets of such plan allocable to such accrued benefits.
	(c) No Spinco Benefit Plan is or will be at the Effective Time a “multiemployer plan,” as defined in Section 3(37) of ERISA and (ii) none of Spinco, any of the Spinco Subsidiaries or any ERISA Affiliate of any of them has made or suffered or will as of the Effective Time have made or suffered a “complete withdrawal” or a “partial withdrawal,” as such terms are respectively defined in Section 4203 and 4205 of ERISA, the liability for which has not been satisfied in full.
	(d) Each Spinco Benefit Plan has been or for periods on or prior to the Distribution Date will have been operated and administered in all material respects in accordance with its terms and applicable Law, including ERISA and the Code. All contributions and premium payments required to be made with respect to any Spinco Benefit Plan have now been, or on the Distribution Date will have been, timely made, except as may otherwise be specifically permitted under the terms of the Employee Benefits Agreement. There are no pending or, to the knowledge of Spinco or AT Co., threatened claims by, on behalf of or against any of the Spinco Benefit Plans in effect as of the date hereof or any assets thereof, other than routine benefit claim matters, that, if adversely determined, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco, and no matter is pending (other than routine qualification determination filings, copies of which have been furnished to the Company or will be promptly furnished to the Company when made) before the IRS, the United States Department of Labor or the PBGC with respect to any Spinco Benefit Plan.

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	(e) Subject to the initial qualification determination filings to be made to the Internal Revenue Service (copies of which will be promptly furnished to the Company when made), each Spinco Benefit Plan intended to be “qualified” within the meaning of Section 401(a) of the Code is, or on the Distribution Date will be, so qualified and the trusts maintained thereunder are, or on the Distribution Date will be, exempt from taxation under Section 501(a) of the Code, each trust maintained under any Spinco Benefit Plan intended to satisfy the requirements of Section 501(c)(9) of the Code has, or on the Distribution Date will have, satisfied such requirements and, in either such case, no event has occurred or condition is known to exist that would reasonably be expected to have a material adverse effect on such tax-qualified status for any such Spinco Benefit Plan or any such trust.
	(f) No Spinco Benefit Plan provides, or on the Distribution Date will provide, medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of Spinco or any Spinco Subsidiary or for any other Person for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any “pension plan,” or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary).
	(g) Except as contemplated by this Agreement and each other Transaction Agreement, no Spinco Benefit Plan or employment arrangement, no similar plan or arrangement sponsored or maintained by AT Co. in which any Spinco Employee is, or on the Distribution Date will be, a participant and no contractual arrangement between Spinco and any third party exists, or on the Distribution Date will exist, that could result in the payment to any current, former or future director, officer, stockholder or employee of Spinco or any of the Spinco Subsidiaries, or of any entity the assets or capital stock of which have been acquired by Spinco or a Spinco Subsidiary, of any money or other property or rights or accelerate or provide any other rights or benefits to any such individual as a result of the consummation of the transactions contemplated by the Transaction Agreements (including the Distribution), whether or not (a) such payment, acceleration or provision would constitute a “parachute payment” (within the meaning of Section 280G of the Code) or (b) some other subsequent action or event would be required to cause such payment, acceleration or provision to be triggered.
	6.13     Labor Matters. Except to the extent listed in Section 6.13 of the Spinco Disclosure Letter, neither Spinco nor any of the Spinco Subsidiaries is a party to, or bound by, any collective bargaining agreement or other Contract with employees, a labor union or labor organization. Except for such matters which have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco, (a) as of the date hereof, (i) there are no strikes or lockouts with respect to Spinco Employees, and (ii) there are not now, and to the knowledge of Spinco or AT Co., since January 1, 2003 there has not been, any union organizing effort pending or threatened against Spinco or any of the Spinco Subsidiaries; (b) there is no unfair labor practice, charge, complaint, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of Spinco or AT Co., threatened against Spinco or any of the Spinco Subsidiaries; (c) there is no slowdown, or work stoppage in effect or, to the knowledge of Spinco or AT Co., threatened with respect to Spinco Employees; and (d) Spinco and the Spinco Subsidiaries are in compliance with all applicable Laws respecting (i) employment and employment practices, (ii) terms and conditions of employment and wages and hours, (iii) collective bargaining and labor relations practices, (iv) layoffs, (v) immigration, and (vi) the payment of taxes and other withholdings. As of the date hereof, neither Spinco nor any of the Spinco Subsidiaries has any liabilities under the WARN Act as a result of any action taken by Spinco and that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	6.14     Intellectual Property Matters. Section 6.14 of the Spinco Disclosure Letter contains a complete and accurate list of (i) all patented or registered Intellectual Property Rights (and pending applications therefore) owned by Spinco or any of the Spinco Subsidiaries, and (ii) all other patented or registered Intellectual Property Rights (and pending applications therefor) used by Spinco or any of the Spinco Subsidiaries, in each case, to the extent material to the Spinco Business taken as a whole. Spinco and the Spinco Subsidiaries own and possess, or will immediately prior to the Effective Time own and

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	possess, free and clear of any Liens, except Permitted Encumbrances, all right, title and interest in and to, or have, or will immediately prior to the Effective Time have, adequate licenses or other valid and enforceable rights to use, all material Intellectual Property Rights used or held for use in connection with the Spinco Business as currently conducted and as proposed to be conducted immediately prior to the Effective Time (including in connection with services provided by Spinco and the Spinco Subsidiaries to third parties) (the “Spinco IP Rights”), except where the failure to own or possess such items would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. To the best of AT Co.’s or Spinco’s knowledge, there is no assertion or claim challenging the validity, enforceability, ownership or use of any of the foregoing that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. The conduct of the Spinco Business as currently conducted and proposed to be conducted immediately prior to the Effective Time does not infringe, misappropriate or otherwise conflict in any way with any Intellectual Property Rights of any third party that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. To the best of AT Co.’s or Spinco’s knowledge, there are no infringements or misappropriations of, or other conflicts with, any Intellectual Property Rights owned by or licensed by or to Spinco or any Spinco Subsidiary that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. The transactions contemplated by this Agreement shall not impair the right, title or interest of Spinco or any Spinco Subsidiary in and to the Spinco IP Rights, and all of the Spinco IP Rights shall be owned or available for use by the Surviving Corporation immediately after the Effective Time on terms and conditions identical, in all material respects, to those under which Spinco and the Spinco Subsidiaries owned or used the Spinco IP Rights immediately prior to the Effective Time, except where such impairment or failure to be owned or available for use would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	6.15     Material Contracts.
	(a) Except for this Agreement, each other Transaction Agreement, the Spinco Credit Agreement, the Indenture governing the Spinco Notes, the Voting Agreement, the Spinco Benefit Plans and except as filed as an exhibit to any AT Co. SEC Document or as disclosed in Section 6.15 of the Spinco Disclosure Letter, neither AT Co. nor any of its Subsidiaries with respect to the Spinco Business is, and neither Spinco nor any Spinco Subsidiary will be immediately prior to the Effective Time a party to or bound by any “material contract” (as such term is defined in item 601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in this Section 6.15 being referred to herein as “Spinco Material Contracts”).
	(b) Neither Spinco nor any Spinco Subsidiary nor AT Co. nor any AT Co. Subsidiary is in breach of or default under the terms of any Spinco Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. To the knowledge of Spinco or AT Co. and their respective Subsidiaries, no other party to any Spinco Material Contract is in breach of or in default under the terms of any Spinco Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. Each Spinco Material Contract is a valid and binding obligation of Spinco or any Spinco Subsidiary or AT Co. or any AT Co. Subsidiary which is a party thereto and, to the knowledge of Spinco or AT Co. and their respective Subsidiaries, of each other party thereto, and is in full force and effect, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors’ rights generally and (ii) equitable remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
	6.16     Brokers or Finders. Except for Merrill Lynch, Pierce, Fenner & Smith Incorporated, JP Morgan Securities Inc. and Stephens, Inc., no agent, broker, investment banker, financial advisor or other similar Person is or will be entitled, by reason of any agreement, act or statement by Spinco or any Spinco Subsidiaries, directors, officers or employees, to any financial advisory, broker’s, finder’s or similar

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	fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement or each other Transaction Agreement.
	6.17     Board and Stockholder Approval. The Boards of Directors of AT Co. and Spinco, in each case, at a meeting duly called, have unanimously approved this Agreement and declared it advisable. As of the date hereof, the sole stockholder of Spinco is AT Co. Immediately after execution of this Agreement, AT Co. will approve and adopt (the “Spinco Stockholder Approval”) at a meeting of AT Co., as Spinco’s sole stockholder, all aspects of this Agreement and other Transaction Agreements and the transactions contemplated hereby and thereby which require the consent of Spinco’s stockholders under the DGCL, the NYSE rules, Spinco’s Certificate of Incorporation or Spinco’s Bylaws. The approval of AT Co.’s stockholders is not required to effect the transactions contemplated by the Distribution Agreement, this Agreement or the other Transaction Agreements. Upon obtaining the Spinco Stockholder Approval, the approval of Spinco’s stockholders after the Distribution Date will not be required to effect the transactions contemplated by this Agreement, including the Merger, unless this Agreement is amended in accordance with Section 251(d) of the DGCL after the Distribution Date and such approval is required, solely as a result of such amendment, under the DGCL, Spinco’s Certificate of Incorporation or Spinco’s Bylaws or by the IRS.
	6.18     Assets.
	(a) After giving effect to the Contribution and the other transactions described in or contemplated by the Distribution Agreement, Spinco, together with the Spinco Subsidiaries, will have, in all material respects, good and valid title (and, with respect to the Owned Real Property and Spinco Leasehold Improvements, good and marketable title) or, in the case of the Leased Real Property, valid leasehold interests in, all of the Spinco Assets, except where the failure to have such good and valid or marketable title, or valid leasehold interest, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	(b) At the Effective Time, the Assets of Spinco and the Spinco Subsidiaries, take together with the services available from AT Co. under the Transition Services Agreement, the Assets subject to the Shared Assets Agreement and the Contracts subject to the Shared Contracts Agreement, will be sufficient for the operation of the Spinco Business in all material respects as currently conducted and as proposed to be conducted at the Effective Time.
	6.19     Spinco Real Property.
	(a) Section 6.19(a) of the Spinco Disclosure Letter sets forth the address and description of all Real Property that is, or following the Contribution will be, Spinco Owned Real Property, the loss of which would be material and adverse to the Spinco Business as a whole. With respect to such Spinco Owned Real Property: (A) except as set forth in Section 6.19(a) of the Spinco Disclosure Letter, Spinco or Spinco Subsidiaries have not leased or otherwise granted to any Person the right to use or occupy such Spinco Owned Real Property or any material portion thereof; and (B) other than the right of the Company pursuant to this Agreement, there are no outstanding options, rights of first offer or rights of first refusal to purchase such Spinco Owned Real Property or any material portion thereof or interest therein.
	(b) Section 6.19(b) of the Spinco Disclosure Letter sets forth the address of all Spinco Leased Real Property, the loss of which would be material and adverse to the Spinco Business as a whole, and a true and complete list of all Spinco Leases for such properties (including all amendments, extensions, renewals, guaranties and other agreements with respect thereto) for each such Spinco Leased Real Property. Spinco has made available to the Company a true and complete copy of each such Spinco Lease document, and in the case of any such Lease that is an oral Lease, a written summary of the material terms of such Lease. Except as set forth in Section 6.19(b) of the Spinco Disclosure Letter, or as would not be reasonably expected to have a Material Adverse Effect on Spinco, with respect to each such Spinco Lease: (i) Spinco or Spinco’s Subsidiaries’ possession and quiet enjoyment of the Spinco Leased Real Property under such Spinco Lease has not been disturbed, and, to Spinco’s knowledge, there

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	are no disputes with respect to such Spinco Lease; (ii) neither Spinco nor Spinco Subsidiaries owe any material brokerage commissions or finder’s fees with respect to such Spinco Lease; (iii) Spinco or Spinco Subsidiaries have not subleased, licensed or otherwise granted any Person the right to use or occupy such Spinco Leased Real Property or any portion thereof; (iv) Spinco or Spinco Subsidiaries have not collaterally assigned or granted any other security interest in such Spinco Lease or any interest therein; and (v) there are no Liens on the estate or interest created by such Spinco Lease other than Permitted Encumbrances.
	(c) Except as would not be reasonably expected to have a Material Adverse Effect on Spinco, the Spinco Leasehold Improvements and all buildings, structures, improvements, fixtures, building systems and equipment, and all components thereof, included in the Spinco Owned Real Property are in good condition and repair and sufficient for the operation of the Spinco Business.
	6.20     Communications Regulatory Matters.
	(a) Spinco and the Spinco Subsidiaries hold, or on the Distribution Date will hold, all approvals, authorizations, certificates and licenses issued by the FCC, state public service or public utility commissions (the “State Regulators”) set forth in Section 6.19(a) of the Spinco Disclosure Letter, and all other material regulatory permits, approvals, licenses, and other authorizations, including but not limited to franchises, ordinances and other agreements granting access to public rights of way, issued or granted to Spinco or any Spinco Subsidiary by a state or federal agency or commission or other federal, state or local or foreign regulatory bodies regulating competition and telecommunications businesses (the “Spinco Licenses”) that are required for the conduct of the Spinco Business, as presently conducted and as proposed to be conducted, except such Spinco Licenses the failure of which to so hold would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	(b) Each Spinco License is, or will be on the Distribution Date, valid and in full force and effect and has not been, or will not have been, suspended, revoked, cancelled or adversely modified, except where the failure to be in full force and effect, or the suspension, revocation, cancellation or modification of which has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. No Spinco License is subject to (i) any conditions or requirements that have not been imposed generally upon licenses in the same service, unless such conditions or requirements would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco, or (ii) any pending regulatory proceeding (other than those affecting the wireline industry generally) or judicial review before a Governmental Authority, unless such pending regulatory proceedings or judicial review would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco. Neither AT Co. nor Spinco has knowledge of any event, condition or circumstance that would preclude any Spinco License from being renewed in the ordinary course (to the extent that such Spinco License is renewable by its terms), except where the failure to be renewed has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	(c) The licensee of each Spinco License is, or on the Distribution Date will be in compliance with each Spinco License and has fulfilled and performed, or will fulfill or perform, all of its material obligations with respect thereto, including all reports, notifications and applications required by the Communications Act or the rules, regulations, policies, instructions and orders of the FCC (the “FCC Rules”) or similar rules, regulations, policies, instructions and orders of State Regulators and the payment of all regulatory fees, except (i) for exemptions, waivers or similar concessions or allowances and (ii) where such failure to be in compliance, fulfill or perform its obligations or pay such fees or contributions has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	(d) Spinco or a wholly owned Spinco Subsidiary owns, or on the Distribution Date will own, one hundred percent (100%) of the equity and controls, or on the Distribution Date will control, one hundred percent (100%) of the voting power and decision-making authority of each licensee of the Spinco Licenses, except where the failure to own such equity or control such voting power and decision-making

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	authority of such licensees would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	6.21     Spinco Operations. Spinco is a direct, wholly owned Subsidiary of AT Co. that, subject to the terms of the Distribution Agreement, following the Contribution will own, directly or indirectly, the Spinco Assets, and will have assumed, directly or indirectly, the Spinco Liabilities, all as provided in the Distribution Agreement.
	6.22     Opinion of Spinco Financial Advisor. Spinco and AT Co., as the sole stockholder of Spinco, have received the written opinions of Merrill Lynch, Pierce, Fenner & Smith Incorporated, JP Morgan Securities Inc. and Stephens, Inc., to the effect that, as of the date hereof the Exchange Ratio (as defined therein) is fair from a financial point of view to holders of AT Co. Common Stock who become holders of Spinco Common Stock in the Distribution. Spinco has previously delivered a copy of such opinion to the Company.
	6.23     Company Common Stock. Neither AT Co. nor Spinco owns (directly or indirectly, beneficially or of record) nor is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of the Company (other than as contemplated by this Agreement).
	6.24     Affiliate Transactions. Except as specifically provided in this Agreement or any of the other Transaction Agreements or as disclosed in the AT Co. SEC Documents, there are no transactions or Contracts of the type that would be required to be disclosed by Spinco under Item 404 of Regulation S-K if Spinco were a company subject to such Item between or among (a) AT Co., Spinco or any Spinco Subsidiary, on the one hand, and (b) Jeffrey R. Gardner or Francis X. Frantz, on the other hand.

	7.1     Organization, Qualification.
	(a) The Company is a corporation duly organized, validly existing and in good standing under the Laws of Delaware, has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, and is duly qualified and licensed to do business and is in good standing in each jurisdiction in which the ownership or leasing of its property or the conduct of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or to be in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The copies of the Company’s Certificate of Incorporation and Bylaws and the Certificate of Incorporation and Bylaws (or analogous governing documents) of any Company Subsidiary that is a Significant Subsidiary of the Company, previously made available to AT Co. and Spinco are complete and correct copies of such documents as in full force and effect on the date hereof.
	(b) Section 7.1(b) of the Company Disclosure Letter sets forth a list of the Company Subsidiaries and their respective jurisdictions of incorporation or organization, together with a designation of those Company Subsidiaries constituting Significant Subsidiaries of the Company.

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	7.2     Capital Stock and Other Matters.
	(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock and 20,000,000 shares of preferred stock of the Company. At the close of business on December 6, 2005, (i) 71,130,634 shares of Company Common Stock were issued and outstanding, 342,469 shares of Company Common Stock were reserved for issuance pursuant to the Company Stock Plans; (ii) 3,400 shares of Company Common Stock were held by the Company in its treasury or by its Subsidiaries; and (iii) no shares of preferred stock of the Company were issued and outstanding. All of the issued and outstanding shares of Company Common Stock are validly issued, fully paid and nonassessable and free of preemptive rights.
	(b) No bonds, debentures, notes or other indebtedness of the Company or any of the Company Subsidiaries having the right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which holders of shares of capital stock of the Company (including Company Common Stock) may vote (“Company Voting Debt”) are, or at the Distribution Date will be, issued or outstanding.
	(c) Except as set forth in Section 7.2(a) above or as set forth in Section 7.2(c) of the Company Disclosure Letter, there are no outstanding securities, options, warrants, convertible securities, calls, rights, commitments, agreements, arrangements, undertakings or Contracts of any kind to which the Company or any of the Company Subsidiaries is a party or by which any of them is bound obligating the Company or any of the Company Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of Company Common Stock, Company Voting Debt or other voting securities of the Company or any of the Company Subsidiaries or obligating the Company or any of the Company Subsidiaries to issue, grant, extend, redeem, acquire or enter into any such security, option, warrant, convertible security, call, right, commitment, agreement, arrangement, undertaking or Contract.
	(d) Except for that certain Securityholders Agreement, dated February 14, 2005, by and among the Company and certain of its stockholders, there are no stockholder agreements, voting trusts or other Contracts to which the Company is a party or by which it is bound relating to voting or transfer of any shares of capital stock of the Company.
	7.3     Corporate Authority; No Violation.
	(a) The Company has the corporate power and authority to enter into this Agreement, and subject to obtaining the Requisite Approval, to carry out its obligations hereunder. The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company, subject to obtaining the Requisite Approval. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by AT Co., and Spinco, constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).
	(b) Neither the execution and delivery by the Company of this Agreement nor the consummation by the Company of the transactions contemplated hereby or compliance by the Company with any of the provisions hereof will (i) violate or conflict with any provisions of the Company’s Certificate of Incorporation or Bylaws; (ii) result in a default (or an event that, with notice or lapse of time or both, would become a default) or give rise to any right of termination by any third party, cancellation, amendment or acceleration of any obligation or the loss of any benefit under, any Contract to which the Company or any of the Company Subsidiaries is a party or by which the Company or any of the Company Subsidiaries is bound or affected; (iii) result in the creation of a Lien, pledge, security interest, claim or other encumbrance on any of the issued and outstanding shares of Company Common Stock or on any of the assets of the Company or any of the Company Subsidiaries pursuant to any Contract to which the Company or any of the Company Subsidiaries is a party or by which the Company or the Company

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	Subsidiaries is bound or affected; or (iv) assuming the consents and approvals contemplated by Section 7.3(c) below are obtained, violate or conflict with any order, writ, injunction, decree, Law, ordinance, rule or regulation applicable to the Company or any of the Company Subsidiaries, or any of the properties, business or assets of any of the foregoing, other than, in the case of each of clauses (i) through (iv), any such violation, conflict, default, right, loss or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	(c) Other than in connection with or in compliance with (i) the provisions of the DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the HSR Act, (v) the Communications Act and applicable rules and regulations thereunder, (vi) the approvals set forth on Section 7.3(c) of the Company Disclosure Letter; (vii) the rules and regulations of the NYSE, and (viii) the Requisite Approval (collectively, the “Company Approvals”), no authorization, consent or approval of, or filing with any Governmental Authority is necessary for the consummation by the Company of the transactions contemplated by this Agreement, except for such authorizations, consents, approvals or filings that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	7.4     Company Reports and Financial Statements.
	(a) The Company has previously made available to Spinco complete and correct copies of:

	(i) Company’s Annual Reports on Form 10-K filed with the SEC under the Exchange Act for the years ended December 31, 2004, and the Company’s audited consolidated balance sheet at December 31, 2003 and 2002, and the related audited consolidated statements of operations, cash flows and stockholder’s equity for the fiscal years ended December 31, 2003 and 2002 (the “Company Pre-IPO Financial Statements”);
	(ii) Company’s Quarterly Reports on Form 10-Q filed with the SEC under the Exchange Act for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005;
	(iii) each definitive proxy statement filed by the Company with the SEC under the Exchange Act prior to the date hereof;
	(iv) all current reports on Form 8-K filed by the Company with the SEC under the Exchange Act prior to the date hereof; and
	(v) each other form, report, schedule, registration statement and definitive proxy statement filed by the Company or any of its Subsidiaries with the SEC prior to the date hereof (collectively, and together with the items specified in clauses (i) through (iv) above, the “Company SEC Documents”).

(b) As of their respective dates, the Company SEC Documents complied in all material respects, and each other form, report, schedule, registration statement and definitive proxy statement filed by the Company or any of its Subsidiaries after the date hereof and prior to the Effective Time (the “Additional Company SEC Documents”) will comply in all material respects, with the requirements of the Securities Act or the Exchange Act, as the case may be, and none of such Company SEC Documents when filed contained, or will contain, an untrue statement of a material fact or omitted, or will omit, to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited consolidated interim financial statements included in the Company SEC Documents and the Additional Company SEC Documents and the Company Pre-IPO Financial Statements fairly present in all material respects, or will fairly present in all material respects, the financial position of the Company and its consolidated Subsidiaries as of the respective dates thereof and the results of operations and changes in cash flows, changes in stockholder’s equity or other information included therein for the periods or as of the respective dates then ended, subject, where appropriate, to normal year-end audit adjustments (none of which Company management expects to be material), in each case in accordance with past practice and GAAP, consistently applied, during the periods involved

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	(except as otherwise stated therein). Since its initial public offering in February 2005, the Company has timely filed all reports, registration statements and other filings required to be filed with the SEC under the rules and regulations of the SEC. Except as set forth in the Company SEC Documents filed prior to the date hereof or as set forth in Section 7.4 of the Company Disclosure Letter or liabilities incurred in the ordinary course of business, consistent with past practice, since the Interim Balance Sheet Date, the Company and its Subsidiaries have not incurred any liability or obligation that is of a nature that would be required to be disclosed on a consolidated balance sheet of the Company and its Subsidiaries or in the footnotes thereto prepared in conformity with GAAP, other than liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	(c) The Company and the Company Subsidiaries have designed and maintain a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company (A) has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of the Company required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act and (B) has disclosed, based on its most recent evaluation of such disclosure controls and procedures prior to the date hereof to the Company’s auditors and the audit committee of the Company’s Board of Directors, (x) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information with respect to the Company and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company has made available to AT Co. and Spinco any such disclosure made by management to the Company’s auditors and the audit committee of the Company’s Board of Directors.
	7.5     Absence of Certain Changes or Events. Except as specifically contemplated by this Agreement, since the Interim Balance Sheet Date, each of the Company and the Company Subsidiaries has conducted its business in the ordinary course, consistent with past practice, and there has not been any event, occurrence, development or state of circumstances or facts that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. From the Interim Balance Sheet Date to the date hereof, none of the Company or any of the Company Subsidiaries has taken any action or failed to take any action, which action or failure, as the case may be, would constitute a breach of Section 8.1 if taken without the consent of AT Co. and Spinco after the date hereof.
	7.6     Investigations; Litigation. Except as described in the Company SEC Documents:

	(a) There is no investigation or review pending (or, to the knowledge of the Company, threatened) by any Governmental Authority with respect to the Company or any of the Company Subsidiaries.
	(b) There are no actions, suits, inquiries, grievances, arbitrations, investigations or proceedings pending (or, to the knowledge of the Company, threatened) against or affecting the Company or any of the Company Subsidiaries or any of their respective properties at law or in equity before and there are no orders, judgments or decrees of or before any Governmental Authority, in each case which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

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	7.7     Compliance with Laws; Permits.
	(a) The Company and the Company Subsidiaries are, and since January 1, 2003 have been, in compliance with all, and have received no notice of any violation (as yet unremedied) of any, Laws, applicable to the Company, such Company Subsidiaries or any of their respective properties or assets, except where such non-compliance, default or violation has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Notwithstanding anything contained in this Section 7.7(a), no representation or warranty shall be deemed to be made in this Section 7.7(a) in respect of environmental, tax, employee benefits, labor or communications Laws matters, which are the subject of the representations and warranties made in Sections 7.10, 7.11, 7.12, 7.13 and 7.15 of this Agreement, respectively.
	(b) The Company and the Company Subsidiaries are in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for the Company and the Company Subsidiaries to own, lease and operate their properties and assets or to carry on their businesses as they are now being conducted (the “Company Permits”), except where the failure to have any of the Company Permits has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. All Company Permits are in full force and effect, except where the failure to be in full force and effect has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	7.8     Proxy Statement/ Prospectus; Registration Statement. None of the information regarding the Company or the Company Subsidiaries or the transactions contemplated by this Agreement provided by the Company specifically for inclusion in, or incorporation by reference into, the Proxy Statement/ Prospectus or the Registration Statement will, in the case of the definitive Proxy Statement/ Prospectus or any amendment or supplement thereto, at the time of the mailing of the definitive Proxy Statement/ Prospectus and any amendment or supplement thereto, and at the time of the Company Stockholders Meeting, or, in the case of the Registration Statement, at the time it becomes effective, at the time of the Company Stockholders Meeting and at the Effective Time, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Registration Statement will comply in all material respects with the provisions of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder, except that no representation is made by the Company with respect to information provided by AT Co. or Spinco specifically for inclusion in, or incorporation by reference into, the Registration Statement.
	7.9     Information Supplied. All documents that the Company is responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby or by any other Transaction Agreement will comply in all material respects with the provisions of applicable Law. All information supplied or to be supplied by the Company in any document, other than the Proxy Statements/ Prospectus and Registration Statement, which are addressed in Section 7.8, filed with any Governmental Authority in connection with the transactions contemplated hereby and by the other Transaction Agreements will be, at the time of filing, at the Distribution Date and at the Effective Time, true and correct in all material respects.
	7.10     Environmental Matters. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company:

	(a) The Company and each of the Company Subsidiaries is and since January 1, 2003 has been in compliance with all applicable Environmental Laws and the Company and the Company Subsidiaries possess all Company Permits that are required under applicable Environmental Laws, and are in compliance with the terms and conditions thereof;
	(b) neither the Company nor any of the Company Subsidiaries has received written notice of, or, is the subject of, any Environmental Claims;

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	(c) neither the Company nor any of the Company Subsidiaries is subject to any indemnification obligation with respect to Environmental Laws or Hazardous materials, including such obligations regarding businesses currently or formerly owned or operated by the Company or any of the Company Subsidiaries or regarding properties formerly owned or leased by the Company or any of the Company Subsidiaries;
	(d) there is no condition on, at, under or related to any property (including any release of a Hazardous Material into the air, soil, surface water, sediment or ground water at, under or migrating to or from such property), including related to property currently owned, leased or used by the Company or any of the Company Subsidiaries or created by the Company’s or any Company Subsidiary’s operations that, would give rise to liability for the Company or any of the Company Subsidiaries under applicable Environmental Laws, and, to the Company’s knowledge, the foregoing representation is true and correct with regard to property formerly owned, leased or used by the Company or any of the Company Subsidiaries; and
	(e) neither the Company nor any Company Subsidiary has any liability with respect to asbestos in any product or within any building or structure;
	(f) The Company has made available to AT Co. and Spinco all material site assessments, environmental compliance audits, and other documents relating to environmental matters, and relating to the Company or its current or former properties or facilities to the extent such documents are in the possession, custody or control of the Company or any of the Company Subsidiaries, including without limitation such documents relating to (i) the environmental conditions on, under or about the properties or assets currently or formerly owned, leased, operated or used by the Company, any of the Company Subsidiaries or any predecessor in interest thereto and (ii) any Hazardous Materials used, managed, handled, transported, treated, generated, stored, discharged, emitted, or otherwise released by the Company, any of the Company Subsidiaries or any other Person on, under, about or from any of the properties currently or formerly owned or leased by, or otherwise in connection with the use or operation of any of the properties owned or leased, or otherwise in connection with the use or operation of any of the properties and assets of the Company or any of the Company Subsidiaries, or its businesses and operations.
	(g) This Section 7.10 contains the sole and exclusive representations and warranties of AT Co. and Spinco with respect to environmental matters, including matters relating to Environmental Laws and Hazardous Materials.

	7.11     Tax Matters.
	(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, (i) all Tax Returns relating to the Company and the Company Subsidiaries required to be filed have been filed, (ii) all such Tax Returns are true and correct in all respects, (iii) all Taxes shown as due and payable on such Tax Returns, and all Taxes (whether or not reflected on such Tax Returns) relating to the Company or any the Company Subsidiary required to be paid, have been paid, (iv) all Taxes relating to the Company and the Company Subsidiaries for any taxable period (or a portion thereof) beginning on or prior to the Closing Date (which are not yet due and payable) have been properly reserved for in the books and records of the Company, and (v) the Company and the Company Subsidiaries have duly and timely withheld all Taxes required to be withheld and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose and will be duly and timely paid to the proper Taxing Authority.
	(b) No written agreement or other written document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of any Taxes relating to the Company or any Company Subsidiary and no power of attorney with respect to any such Taxes has been filed or entered into with any Taxing Authority.
	(c) No audits or other administrative proceedings or proceedings before any Taxing Authority are presently pending with regard to any Taxes or Tax Return of the Company or any Company Subsidiary,

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	as to which any Taxing Authority has asserted in writing any claim which, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, and no Taxing Authority is now asserting in writing any deficiency or claim for Taxes or any adjustment to Taxes with respect to which the Company or any Company Subsidiary may be liable with respect to income or other material Taxes which has not been fully paid or finally settled.
	(d) Neither the Company nor any Company Subsidiary (i) is a party to or bound by or has any obligation under any Tax separation, sharing or similar agreement or arrangement, (ii) is or has been a member of any consolidated, combined or unitary group for purposes of filing Tax Returns or paying Taxes (other than a group of which the Company is the common parent corporation) or (iii) has entered into a closing agreement pursuant to Section 7121 of the Code, or any predecessor provision or any similar provision of state or local law.
	(e) None of the assets of the Company or any of the Company Subsidiaries is subject to any Tax lien (other than liens for Taxes that are not yet due and payable).
	(f) Section 7.11 of the Company Disclosure Letter lists all foreign jurisdictions in which the Company or any Company Subsidiary files a material Tax Return.
	(g) Neither the Company nor any Company Subsidiary has agreed to make or is required to make any adjustment for a taxable period ending after the Effective Time under Section 481(a) of the Code by reason of a change in accounting method or otherwise, except where such adjustments have not had, and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	(h) Neither the Company nor any Company Subsidiary has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (I) in the two years prior to the date of this Agreement or (II) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in connection with the Merger.
	(i) Neither the Company nor any of the Company Subsidiaries has taken or agreed to take any action that is reasonably likely to (nor are any of them aware of any agreement, plan or other circumstance that would) prevent the Tax-Free Status of the Transactions.
	(j) Neither the Company nor any Company Subsidiary has engaged in any listed transaction, or any reportable transaction the principal purpose of which was tax avoidance, within the meaning of Sections 6011, 6111 and 6112 of the Code.
	7.12     Benefit Plans.
	(a) Section 7.12(a) of the Company Disclosure Letter lists each “employee benefit plan” (as defined in Section 3(3) of ERISA), and all other benefit, bonus, incentive, deferred compensation, stock option (or other equity-based), severance, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans, whether or not subject to ERISA and whether written or oral, sponsored, maintained or contributed to or required to be contributed to by the Company or any of the Company Subsidiaries, to which the Company or any of the Company Subsidiaries is a party or in which any Person who is currently, has been or, prior to the Effective Time, is expected to become an employee of the Company or any of the Company Subsidiaries (a “Company Employee”) is a participant (the “Company Benefit Plans”), or with respect to which the Company or any of the Company Subsidiaries has or could have any material liability.
	(b) No material liability under Title IV (including Sections 4069 and 4212(c) of ERISA) or Section 302 of ERISA has been incurred by the Company, any of the Company Subsidiaries or any ERISA Affiliate of any of them, and no condition exists that would reasonably be expected to result in the Company, any of the Company Subsidiaries or any ERISA Affiliate of any of them of incurring any such liability, other than liability for premiums due the PBGC. The present value of accrued benefits

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	under each Company Benefit Plan that is subject to Title IV of ERISA, determined based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such plan’s actuary with respect to such plan, did not exceed, as of its latest valuation date, the then current value of the assets of such plan allocable to such accrued benefits.
	(c) (i) No Company Benefit Plan is a “multiemployer pension plan,” as defined in Section 3(37) of ERISA and (ii) none of the Company, any of the Company Subsidiaries or any ERISA Affiliate of any of them has made or suffered a “complete withdrawal” or a “partial withdrawal,” as such terms are respectively defined in Sections 4203 and 4205 of ERISA, which has not been satisfied in full.
	(d) Each Company Benefit Plan has been operated and administered in all material respects in accordance with its terms and applicable Law, including, ERISA and the Code. All contributions required to be made with respect to any Company Benefit Plan have been timely made, except for outstanding contributions in the ordinary course. There are no pending or, to the knowledge of the Company, threatened claims by, on behalf of or against any of the Company Benefit Plans or any assets thereof, other than routine benefit claim matters, that, if adversely determined would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and no matter is pending (other than routine qualification determination filings, copies of which have been furnished to the AT Co. and Spinco or will be promptly furnished to the AT Co. and Spinco when made) with respect to any of the Company Benefit Plans before the IRS, the United States Department of Labor or the PBGC.
	(e) Each Company Benefit Plan intended to be “qualified” within the meaning of Section 401(a) of the Code is so qualified and the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code, each trust maintained under any Company Benefit Plan intended to satisfy the requirements of Section 501(c)(9) of the Code has satisfied such requirements and, in either such case, no event has occurred or condition is known to exist that would reasonably be expected to have a material adverse effect on such tax-qualified status for any such Company Benefit Plan or any such trust.
	(f) No Company Benefit Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of Company or any Company Subsidiary for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any “pension plan,” or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary). The Company has the right, and will have the right after the Effective Time to terminate any Company Benefit Plan or to amend any such Company Benefit Plan to reduce future benefits, (including any Company Benefit Plan that provides post-retirement medical and life insurance benefits) without incurring or otherwise being responsible for any material liability with respect thereto.
	(g) No Company Benefit Plan or employment arrangement, and no contractual arrangements between the Company and any third party, exists that could result in the payment to any current, former or future director, officer, stockholder or employee of the Company or any of the Company Subsidiaries, or of any entity the assets or capital stock of which have been acquired by the Company or a Company Subsidiary, of any money or other property or rights or accelerate or provide any other rights or benefits to any such individual as a result of the consummation of the transactions contemplated by the Transaction Agreements whether or not (a) such payment, acceleration or provision would constitute a “parachute payment” (within the meaning of Section 280G of the Code) or (b) some other subsequent action or event would be required to cause such payment, acceleration or provision to be triggered.
	7.13     Labor Matters. Except to the extent listed in Section 7.13 of the Company Disclosure Letter, neither the Company nor any of the Company Subsidiaries is a party to, or bound by, any collective bargaining agreement or other Contract with employees, a labor union or labor organization. Except for such matters which have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (a) as of the date hereof, (i) there are no strikes or lockouts with respect to Company Employees, and (ii) there are not now and, to the knowledge of the Company, since January 1, 2003 there has not been, any union organizing effort pending or

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	threatened against the Company or any of the Company Subsidiaries; (b) there is no unfair labor practice, charges or complaint, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of the Company, threatened against the Company or any of the Company Subsidiaries; (c) there is no slowdown, or work stoppage in effect or, to the knowledge of Company, threatened with respect to Company Employees; and (d) the Company and the Company Subsidiaries are in compliance with all applicable Laws respecting (i) employment and employment practices, (ii) terms and conditions of employment and wages and hours, (iii) collective bargaining and labor relations practices, (iv) layoffs, (v) immigration, and (vi) the payments of taxes and other withholdings. As of the date hereof, neither the Company nor any of the Company Subsidiaries has any liabilities under the WARN Act as a result of any action taken by the Company and that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	7.14     Intellectual Property Matters. Section 7.14 of the Company Disclosure Letter contains a complete and accurate list of (i) all patented or registered Intellectual Property Rights (and pending applications therefor) owned by the Company or any of the Company Subsidiaries, and (ii) all other patented or registered Intellectual Property Rights (and pending applications therefor) used by the Company or any of the Company Subsidiaries and material to the business of the Company and the Company Subsidiaries in each case, to the extent material to the business of the Company as a whole. The Company and the Company Subsidiaries own and possess free and clear of any Liens except Permitted Encumbrances, all right, title and interest in and to, or have adequate licenses or other valid and enforceable rights to use all material Intellectual Property Rights used or held for use in connection with the business of the Company and the Company Subsidiaries taken as a whole as currently conducted and as proposed to be conducted immediately prior to Effective Time (including in connection with services provided by the Company and the Company Subsidiaries to third parties) (the “Company IP Rights”), except where the failure to own or possess such items would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. To the best of the Company’s knowledge, there is no assertion or claim challenging the validity, enforceability, ownership or use of any of the foregoing that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The conduct of the business of the Company and the Company Subsidiaries taken as a whole as currently conducted and as proposed to be conducted immediately after the Effective Time does not infringe, misappropriate or otherwise conflict in any way with any Intellectual Property Rights of any third party that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. To the best of the Company’s knowledge, there are no infringements or misappropriations of or other conflicts with, any Intellectual Property Rights owned by or licensed by or to the Company or any Company Subsidiary that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The transactions contemplated by this Agreement shall not impair the right, title or interest of the Company or any Company Subsidiary in and to the Company IP Rights, and all of the Company IP Rights shall be owned or available for use by the Surviving Corporation immediately after the Effective Time on terms and conditions identical in all material respects to those under which the Company and the Company Subsidiaries owned or used the Company IP Rights immediately prior to the Effective Time, except where such impairment or failure to be owned or available for use would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	7.15     Communications Regulatory Matters.
	(a) The Company and the Company Subsidiaries hold all approvals, authorizations, certificates and licenses issued by the FCC and State Regulators set forth in Section 7.15(e) of the Company Disclosure Letter, and all other material regulatory permits, approvals, licenses, and other authorizations, including but not limited to franchises, ordinances and other agreements granting access to public rights of way, issued or granted to the Company or any Company Subsidiary by a state or federal agency or commission or other federal, state or local or foreign regulatory bodies regulating competition and telecommunications businesses (the “Company Licenses”) that are required for the Company and the Company

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	Subsidiaries to conduct its business, as presently conducted and as proposed to be conducted, except such Company Licenses the failure of which to so hold would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	(b) Each Company License is valid and in full force and effect and has not been suspended, revoked, cancelled or adversely modified, except where the failure to be in full force and effect, or the suspension, revocation, cancellation or modification of which has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. No Company License is subject to (i) any conditions or requirements that have not been imposed generally upon licenses in the same service, unless such conditions or requirements would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, or (ii) any pending regulatory proceeding (other than those affecting the wireless industry generally) or judicial review before a Governmental Authority, unless such pending regulatory proceedings or judicial review would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The Company and the Company Subsidiaries have no knowledge of any event, condition or circumstance that would preclude any Company License from being renewed in the ordinary course (to the extent that such Company License is renewable by its terms), except where the failure to be renewed has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	(c) The licensee of each Company License is in compliance with each Company License and has fulfilled and performed all of its material obligations with respect thereto, including all reports, notifications and applications required by the Communications Act or the FCC Rules or similar rules, regulations, policies, instructions and orders of State Regulators, and the payment of all regulatory fees, except (i) for exemptions, waivers or similar concessions or allowances and (ii) where such failure to be in compliance, fulfill or perform its obligations or pay such fees or contributions has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	(d) The Company or a Company Subsidiary owns one hundred percent (100%) of the equity and controls one hundred percent (100%) of the voting power and decision-making authority of each licensee of the Company Licenses, except where the failure to own such equity or control such voting power and decision-making authority of such licensees would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
	7.16     Material Contracts.
	(a) Except for this Agreement, each other Transaction Agreement, the Company Benefit Plans and except as filed as an exhibit to any Company SEC Document or as disclosed in Section 7.16 of the Company Disclosure Letter, as of the date hereof, neither the Company nor any of the Company Subsidiaries is a party to or bound by any “material contract” (as such term is defined in item 601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in this Section 7.16 being referred to herein as “Company Material Contracts”).
	(b) Neither the Company nor any Company Subsidiary is in breach of or default under the terms of any Company Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. To the knowledge of the Company, no other party to any Company Material Contract is in breach of or in default under the terms of any Company Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Each Company Material Contract is a valid and binding obligation of the Company or any Company Subsidiary which is a party thereto and, to the knowledge of the Company, of each other party thereto, and is in full force and effect, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors’ rights generally and (ii) equitable remedies of specific performance and injunctive and other

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	forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
	7.17     Company Real Property.
	(a) Section 7.17(a) of the Company Disclosure Letter sets forth the address and description of all Company Owned Real Property, the loss of which would be material and adverse to the business of the Company as a whole. With respect to such Company Owned Real Property: (A) except as set forth in Section 7.17(a) of the Company Disclosure Letter or as would not reasonably be expected to have a Material Adverse Effect on the Company, the Company or Company Subsidiaries have not leased or otherwise granted to any Person the right to use or occupy such Company Owned Real Property or any material portion thereof; and (B) other than the right of the Company pursuant to this Agreement, there are no outstanding options, rights of first offer or rights of first refusal to purchase such Company Owned Real Property or any material portion thereof or interest therein.
	(b) Section 7.17(b) of the Company Disclosure Letter sets forth the address of all Company Leased Real Property, the loss of which would be material and adverse to the business of the Company as a whole, and a true and complete list of all Company Leases for such property (including all amendments, extensions, renewals, guaranties and other agreements with respect thereto) for each such Company Leased Real Property. The Company has made available to AT Co. a true and complete copy of each such Company Lease document, and in the case of any such Lease that is an oral Lease, a written summary of the material terms of such Lease. Except as set forth in Section 7.17(b) of the Company Disclosure Letter or as would not reasonably be expected to have a Material Adverse Effect on the Company, with respect to each such Spinco Lease: (i) the Company’s or Company Subsidiaries’ possession and quiet enjoyment of the Company Leased Real Property under such Company Lease has not been disturbed, and to Company’s knowledge, there are no disputes with respect to such Company Lease; (ii) Company or Company Subsidiaries have not subleased, licensed or otherwise granted any Person the right to use or occupy such Company Leased Real Property or any portion thereof; (iii) the Company or Company Subsidiaries have not collaterally assigned or granted any other security interest in such Company Lease or any interest therein; and (iv) there are no Liens on the estate or interest created by such Company Lease other than Permitted Encumbrances.
	(c) Except as would not reasonably be expected to have a Material Adverse Effect on the Company, the Company Leasehold Improvements and all buildings, structures, improvements, fixtures, building systems and equipment, and all components thereof, included in the Company Owned Real Property are in good condition and repair and sufficient for the operation of the Company Business.
	7.18     Opinion of Company Financial Advisors. The Company has received the written opinions of Wachovia Capital Markets, LLC and Bear Stearns & Co., Inc., to the effect that, as of the date hereof, the financial effects of the Merger are fair, from a financial point of view, to the Company and its stockholders. The Company has previously delivered a copy of such opinion to AT Co.
	7.19     Brokers or Finders. Except for Wachovia Capital Markets, LLC and Bear Stearns & Co., Inc., a copy of whose engagement agreement has been provided to AT Co., no agent, broker, investment banker, financial advisor or other similar Person is or will be entitled, by reason of any agreement, act or statement by the Company, or any of the Company Subsidiaries, directors, officers or employees, to any financial advisory, broker’s, finder’s or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement or any other Transaction Agreement.
	7.20     Takeover Statutes. Other than Section 203 of the DGCL, no “fair price,” “moratorium,” “control share acquisition,” “business combination,” “stockholder protection” or other similar antitakeover statute or regulation enacted under Delaware law, or, to the knowledge of the Company, under the law of any other jurisdiction, will apply to this Agreement, the Voting Agreement, the Merger or the transactions contemplated hereby or thereby. Assuming the accuracy of the representation and warranty set forth in Section 7.3, the action of the Board of Directors of the Company in approving this Agreement

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	and the transactions provided for herein is sufficient to render inapplicable to this Agreement, the Voting Agreement, the Merger and the transactions contemplated hereby or thereby and the transactions provided for herein, the restrictions on “business combinations” (as defined in Section 203 of the DGCL) as set forth in Section 203 of the DGCL.
	7.21     Certain Board Findings. The Board of Directors of the Company, at a meeting duly called and held, (i) has determined that this Agreement and the transactions contemplated hereby, including the Merger, and the issuance of shares of Company Common Stock pursuant to the Merger, are advisable, fair to and in the best interests of the Company and the stockholders of the Company, (ii) approved this Agreement and the transactions contemplated hereby, including the Merger and (iii) has resolved to recommend that the stockholders of the Company entitled to vote thereon adopt this Agreement at the Company Stockholders Meeting.
	7.22     Vote Required. The only vote of the stockholders of the Company required under any of the DGCL, the NYSE rules or the Company’s Certificate of Incorporation for adoption of this Agreement, is the affirmative vote of the holders of a majority in voting power of all outstanding shares of Company Common Stock at the Company Stockholders Meeting (sometimes referred to herein as the “Requisite Approval”).
	7.23     Affiliate Transactions. Except as specifically provided in this Agreement or any of the other Transaction Agreements or as disclosed in the Company SEC Reports, there are no transactions or Contracts of the type required to be disclosed by the Company under Item 404 of Regulation S-K between or among (a) the Company or any Company Subsidiary, on the one hand, and (b) any individual who is a “named executive officer” of the Company (as such term is defined in Section 402 of Regulation S-K), on the other hand.

(a) (i) declare or pay any dividends on or make other distributions in respect of any shares of its capital stock or partnership interests (whether in cash, securities or property), except for the declaration and payment of cash dividends or distributions paid on or with respect to a class of capital stock all of which shares of capital stock, as the case may be, of the applicable corporation are owned directly or indirectly by the Company and the payment of regular quarterly dividends each in an amount not to exceed $0.36 per share at times consistent with the past dividend payment practices of the Company (including a final partial regular quarterly dividend to be declared and paid to pre-Closing Company stockholders, pro rated for the number of days elapsed between (x) the beginning of the quarterly period

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	in which the Effective Time occurs and (y) the day immediately preceding the Effective Time); (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock; or (iii) redeem, repurchase or otherwise acquire, or permit any Subsidiary to redeem, repurchase or otherwise acquire, any shares of its capital stock (including any securities convertible or exchangeable into such capital stock), except as required by the terms of the securities outstanding on the date hereof or as required by the terms of a Company Benefit Plan;
	(b) issue, deliver or sell, or authorize any shares of its capital stock of any class, any Company Voting Debt or any securities convertible into, or any rights, warrants or options to acquire, any such shares, Company Voting Debt or convertible securities, other than (i) the issuance of shares of Company Common Stock upon the exercise of stock options that are outstanding on the date hereof pursuant to the Company Benefit Plans; and (ii) issuances by a wholly owned Subsidiary of the Company of its capital stock to such Subsidiary’s parent or another wholly owned Subsidiary of the Company;
	(c) amend its Certificate of Incorporation or Bylaws (or other similar organizational documents) in any manner that would prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement;
	(d) acquire or agree to acquire by merger or consolidation, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, limited liability entity, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any material assets, (excluding the acquisition of assets used in the operations of the business of the Company and its Subsidiaries in the ordinary course consistent with past practice, which assets do not constitute a business unit, division or all or substantially all of the assets of the transferor);
	(e) except in the ordinary course of business, consistent with past practice, sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, any of its assets (including capital stock of Subsidiaries of the Company but excluding inventory and obsolete equipment, in each case, in the ordinary course of business consistent with past practice).
	(f) except in the ordinary course of business, consistent with past practice, incur any indebtedness for borrowed money or guarantee or otherwise become contingently liable for any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or any of its Subsidiaries or guarantee any debt securities of others or enter into any material lease (whether such lease is an operating or capital lease) or otherwise incur any material obligation or liability (absolute or contingent) other than (i) the incurrence of additional indebtedness under the Company Credit Agreement in an amount not to exceed $5,000,000, (ii) pursuant to any customer Contract or vendor Contract entered into in the ordinary course of business consistent with past practice, and (iii) in connection with equipment leasing in the ordinary course of business consistent with past practice;
	(g) except in the ordinary course of business, consistent with past practice, incur or commit to any individual capital expenditure or any obligation or liability in connection with any capital expenditure in excess of $2,000,000 or incur or commit to aggregate capital expenditures or obligations or liabilities in connection with any capital expenditure in excess of $5,000,000, in each case, other than capital expenditures or obligations or liabilities in connection therewith to repair or replace facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance), or as contemplated by the Company’s 2005 or 2006 capital expenditure budget, copies of which have been previously provided to AT Co. and Spinco;
	(h) except to the extent provided in subsection (h) of Section 8.1 of the Company Disclosure Letter, (i) other than in the ordinary course of business, consistent with past practice, grant any material increases in the compensation of any of its directors, officers or employees, except in the ordinary course of business consistent with past practice; (ii) pay or agree to pay to any director, officer or employee,

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	whether past or present, any pension, retirement allowance or other employee benefit not required or contemplated by any of the existing benefit, severance, termination, pension or employment plans, Contracts or arrangements as in effect on the date hereof; (iii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend any existing, employment or severance or termination, Contract with any director, officer or employee; (iv) accelerate the vesting of, or the lapsing of restrictions with respect to, any stock options or other stock-based compensation; or (v) become obligated under any new pension plan, welfare plan, multiemployer plan, employee benefit plan, severance plan, benefit arrangement or similar plan or arrangement that was not in existence on the date hereof, or amend any such plan or arrangement in existence on the date hereof if such amendment would have the effect of materially enhancing any benefits thereunder;
	(i) establish, adopt, enter into, terminate or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers, employees or any of their beneficiaries, except, in each case, as would not result in a material increase in the cost of maintaining such collective bargaining agreement, plan, trust, fund, policy or arrangement;
	(j) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Company or any of the Company Subsidiaries;
	(k) make any material change in its methods of accounting in effect at the Interim Balance Sheet Date or change its fiscal year;
	(l) enter into or amend any agreement or arrangement with any Affiliate of the Company or any such Company Subsidiary, other than with wholly owned Company Subsidiaries, on terms less favorable to the Company or such Company Subsidiary, as the case may be, than could be reasonably expected to have been obtained with an unaffiliated third party on an arm’s-length basis;
	(m) except in the ordinary course of business, consistent with past practice, modify, amend, terminate, renew or fail to use reasonable best efforts to renew any Material Contract to which the Company or any of the Company Subsidiaries is a party or waive, release or assign any material rights or claims thereunder or enter into any Material Contract not in the ordinary course of business consistent with past practice and not terminable by the Company or the Company Subsidiary party thereto without penalty on ninety (90) days’ or less notice;
	(n) except as would not be expected to materially and adversely affect the Company or any of its Affiliates or the Surviving Corporation on a going-forward basis after the Effective Time, (i) make or rescind any material express or deemed election relating to Taxes, including elections for any and all joint ventures, partnerships, limited liability companies or other investments where the Company has the capacity to make such binding election, (ii) settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, (iii) amend any material Tax Returns or (iv) change in any material respect any of its methods of reporting income or deductions for federal income tax purposes from those expected to be employed in the preparation of its federal income tax return for the taxable year ending December 31, 2005 (unless such change is required by Law); provided, however, that the Company may make or rescind any such election, settle or compromise any such claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy, change any such method of reporting or amend any such Tax Return without AT Co.’s and Spinco’s prior written consent if the amount of Tax liabilities relating to such action does not exceed $2,000,000; and further provided that the Company may make elections under Section 754 of the Code and under IRS Notice 2003-65 in respect of its Subsidiaries;
	(o) except in the ordinary course of business, consistent with past practice, pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (which includes the payment of final and unappealable judgments) or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended

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	December 31, 2004, or incurred in the ordinary course of business since the date of such financial statements;
	(p) subject to the terms and conditions of this Agreement, intentionally take or agree or commit to take any action that would result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect, or in any of the conditions set forth in Article IX not being satisfied at the Effective Time; or
	(q) agree or commit to do any of the foregoing actions.

	(a) (i) declare or pay any dividends on or make other distributions in respect of any shares of its capital stock or partnership interests (whether in cash, securities or property), except for the declaration and payment of cash dividends or distributions paid on or with respect to a class of capital stock or partnership interests all of which shares of capital stock or partnership interests, as the case may be, of the applicable corporation or partnership are owned directly or indirectly by AT Co. or Spinco or as contemplated by the Distribution Agreement or required in connection with the Contribution; (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock, except as contemplated by the Distribution Agreement; or (iii) redeem, repurchase or otherwise acquire, or permit any Subsidiary to redeem, repurchase or otherwise acquire, any shares of its capital stock (including any securities convertible or exchangeable into such capital stock), except as required by the terms of the securities of AT Co. outstanding on the date hereof or as required by any Spinco Benefit Plan.
	(b) issue, deliver or sell, or authorize any shares of Spinco’s capital stock or capital stock of any Spinco Subsidiary of any class, any Spinco Voting Debt or any securities convertible into, or any rights, warrants or options to acquire, any such shares, Spinco Voting Debt or convertible securities including additional options or other equity-based awards that could be converted into any option to acquire Spinco Common Stock pursuant to the Employee Benefits Agreement, other than (i) pursuant to this Agreement, pursuant to the Distribution Agreement and (ii) issuances by a wholly owned Subsidiary of Spinco of its capital stock to such Subsidiary’s parent or another wholly owned Subsidiary of Spinco;
	(c) acquire or agree to acquire by merger or consolidation, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, limited liability entity, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any material assets (excluding the acquisition of assets used in the operations of the business of Spinco and its Subsidiaries in the ordinary course

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	consistent with past practice, which assets do not constitute a business unit, division or all or substantially all of the assets of the transferor);
	(d) except in the ordinary course of business, consistent with past practice, sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, any of its assets (including capital stock of Spinco Subsidiaries but excluding inventory and obsolete equipment, in each case, in the ordinary course of business consistent with past practice);
	(e) incur any indebtedness for borrowed money or guarantee or otherwise become contingently liable for any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of Spinco or any of its Subsidiaries or guarantee any debt securities of others or enter into any material lease (whether such lease is an operating or capital lease) or otherwise incur any material obligation or liability (absolute or contingent), other than (i) the incurrence of additional indebtedness under the Spinco Credit Agreement or other sources to fund ordinary course capital requirements of Spinco and the Spinco Subsidiaries, (ii) pursuant to any customer Contract or vendor Contract entered into in the ordinary course of business consistent with past practice, and (iii) in connection with equipment leasing in the ordinary course of business, consistent with past practice;
	(f) except in the ordinary course of business, consistent with past practice, incur or commit to any individual capital expenditure or any obligation or liability in connection with any capital expenditure, or incur or commit to aggregate capital expenditures or obligations or liabilities in connection with any capital expenditure, in each case, other than capital expenditures or obligations or liabilities in connection therewith to repair or replace facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance), or as contemplated by the 2005 or 2006 capital expenditure budget of AT Co. or Spinco, copies of which have been previously provided to the Company;
	(g) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of Spinco or any of its Subsidiaries;
	(h) make any material change in AT Co.’s methods of accounting with respect to the Spinco Business in effect at the Interim Balance Sheet Date;
	(i) except as would not be expected to materially and adversely affect Spinco or any of its Subsidiaries or the Spinco Business, or the Surviving Corporation on a going-forward basis after the Effective Time, (i) make or rescind any material express or deemed election relating to Taxes of Spinco or any of its Subsidiaries or the Spinco Business, including elections for any and all joint ventures, partnerships, limited liability companies or other investments where AT Co. or Spinco has the capacity to make such binding election (other than any election necessary in order to obtain the IRS Contribution Ruling, the IRS Distribution Ruling, the IRS Debt Exchange Ruling, the IRS Special Dividend Ruling and/or the Distribution Tax Opinion), (ii) settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes of Spinco or any of its Subsidiaries or the Spinco Business, (iii) amend any material Tax Returns of Spinco or any of its Subsidiaries or relating to the Spinco Business or (iv) change in any material respect any method of reporting income or deductions of Spinco or any of its Subsidiaries or the Spinco Business for federal income tax purposes from those expected to be employed in the preparation of its federal income tax return for the taxable year ending December 31, 2005 (unless such change is required by Law), provided, however, that Spinco may make or rescind any such election, settle or compromise any such claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy, change any such method of reporting or amend any such Tax Return without the Company’s prior written consent if the amount of Tax liabilities relating to such action does not exceed $2,000,000;
	(j) except in the ordinary course of business, consistent with past practice, pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business, consistent with past practice (which includes the payment of final and unappealable judgments) or in

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	accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Interim Financial Statements (or the notes thereto) of Spinco included in the Spinco Financial Statements, or incurred in the ordinary course of business since the date of such financial statements;
	(k) subject to the terms and conditions of this Agreement, intentionally take or agree or commit to take any action that would result in any of its representations and warranties set forth in this Agreement or the other Transaction Agreements being or becoming untrue in any material respect, or in any of the conditions set forth in Article IX not being satisfied at the Effective Time; or
	(l) agree to commit to take any of the foregoing actions.

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	(a) Each of the Contribution, the Distribution and the Debt Exchange shall have been consummated, in each case, in accordance with the Distribution Agreement, the IRS Contribution Ruling, the IRS Distribution Ruling, the IRS Debt Exchange Ruling, the IRS Special Dividend Ruling and the Distribution Tax Opinion; provided that this Section 9.1(a) shall not be a condition to the consummation of the Merger by any party whose failure to comply with its obligations and/or covenants set forth in this Agreement or the Distribution Agreement gives rise to the failure of the Contribution, the Distribution or the Debt Exchange to have been consummated.
	(b) Any applicable waiting period under the HSR Act shall have expired or been terminated; and the other Company Approvals, AT Co. Approvals and Spinco Approvals set forth on Schedule 9.1(b) hereto shall have been obtained.
	(c) Unless waived in writing by the Company, AT Co., and Spinco, all Telecommunications Regulatory Consents other than any Telecommunications Regulatory Consents, the failure of which to be obtained would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, AT Co. or Spinco (i) shall have been granted without the imposition of any condition that Spinco or the Company would not be required to agree to pursuant to Section 8.6, and (ii) all such Telecommunications Regulatory Consents shall be in full force and effect.
	(d) The Registration Statement shall have become effective in accordance with the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order; all necessary permits and authorizations under state securities or “blue sky” laws, the Securities Act and the Exchange Act relating to the issuance and trading of shares of Company Common Stock to be issued pursuant to the Merger shall have been obtained and shall be in effect; and such shares of Company Common Stock and such other shares required to be reserved for issuance pursuant to the Merger shall have been Approved for Listing.
	(e) The Requisite Approval shall have been obtained, in accordance with applicable Law and the rules and regulations of the NYSE.
	(f) No court of competent jurisdiction or other Governmental Authority shall have issued an Order that is still in effect restraining, enjoining or prohibiting the Contribution, the Distribution or the Merger.
	(g) No action shall have been taken, and no statute, rule, regulation or executive order shall have been enacted, entered, promulgated or enforced by any Governmental Authority with respect to the

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	Contribution, the Distribution and the Merger or the other transactions contemplated hereby or by the Distribution Agreement that, individually or in the aggregate, would (i) restrain, enjoin or prohibit the consummation of the Contribution, the Distribution or the Merger or the other transactions contemplated hereby or by the Distribution Agreement or (ii) impose any restrictions or requirements thereon or on AT Co., Spinco or the Company with respect thereto that would reasonably be expected to have a Material Adverse Effect on AT Co. or the Surviving Corporation following the Merger (collectively, a “Restraint”), and no Governmental Authority shall have instituted any proceeding seeking any such Restraint.
	(h) Spinco shall have consummated the Spinco Financing (with respect to the Spinco Credit Agreement and, if applicable, the bridge financing for the Spinco Notes, substantially on the terms set forth in the Senior Debt Commitment Letter or such other terms as are more favorable in the aggregate or not less favorable in the aggregate) and Spinco shall have received the proceeds therefrom in an amount sufficient to pay the Special Dividend and consummate the other transactions contemplated hereby and by the Distribution Agreement.
	(i) AT Co. and Spinco (and, to the extent applicable, the Company) shall have received the IRS Contribution Ruling, the IRS Distribution Ruling, the IRS Debt Exchange Ruling, the IRS Special Dividend Ruling, the IRS 357(c) Ruling and the Distribution Tax Opinion, each in form and substance reasonably satisfactory to AT Co., Spinco and the Company, and such rulings shall continue to be valid and in full force and effect.
	(j) The Company shall have received a Merger Tax Opinion from Company Tax Counsel, in form and substance reasonably satisfactory to the Company, and AT Co. and Spinco shall have received a Merger Tax Opinion from AT Co. Tax Counsel, in form and substance reasonably satisfactory to AT Co. and Spinco.
	(k) The Boards of Directors of AT Co. and Spinco shall have received customary “solvency” and “surplus” opinions of a nationally recognized investment banking or appraisal firm in form and substance reasonably satisfactory to such Boards and, to the extent relating to Spinco, reasonably satisfactory to the Company (such opinions to be dated as of the date the Board of Directors of AT Co. declares the Distribution and the Distribution Date, the date on which the Board of Directors of Spinco declares the Special Dividend, the distribution of the Spinco Exchange Notes to AT Co. for purposes of effecting the Debt Exchange and, if applicable, a dividend payable to AT Co. in shares of Spinco Common Stock pursuant to Section 3.2 of the Distribution Agreement, and the date on which each such dividend or distribution is paid).

	(a) The Company shall have performed in all material respects all obligations and complied in all material respects with all covenants required by this Agreement to be performed or complied with by it prior to the Effective Time.
	(b) Each of the representations and warranties of the Company (i) set forth in Article VII (other than Sections 7.2(a), 7.3(a) and 7.5) of this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though such representations and warranties were made on and as of such date, except for representations and warranties that speak as of an earlier date or period which shall be true and correct as of such date or period; provided, however, that for purposes of this clause, such representations and warranties shall be deemed to be true and correct unless the failure or failures of all such representations and warranties to be so true and correct, without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and (ii) set forth in Sections 7.2(a), 7.3(a) and 7.5 of this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on

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	and as of the Closing Date, except for representations and warranties that speak as of an earlier date or period which shall be true and correct as of such date or period.
	(c) The Company shall have delivered to AT Co. a certificate, dated as of the Effective Time, of a senior officer of the Company certifying the satisfaction by the Company of the conditions set forth in subsection (a) and (b) of this Section 9.2.
	(d) Except as disclosed in the Company Disclosure Letter or as expressly contemplated by this Agreement, since the Interim Balance Sheet Date, there shall have been no event, occurrence, development or state of circumstances or facts that has had, individually or in the aggregate, a Material Adverse Effect on the Company.
	(e) The Company, each of the WCAS Persons, the Vestar Persons and, if required, each of the other stockholders party thereto shall have delivered evidence, in form and substance reasonably satisfactory to AT Co. and Spinco, demonstrating that the Company Securityholders Agreement has been amended, effective as of the Effective Time, without any cost or liability to the Company, such that from and after the Effective Time, the Company Securityholders Agreement shall have substantially the terms set forth on Exhibit G hereto.

	(a) Spinco and AT Co. shall have performed in all material respects and complied in all material respects with all covenants required by this Agreement to be performed or complied with at or prior to the Effective Time.
	(b) Each of the representations and warranties of AT Co. and Spinco (i) set forth in Article V and VI (other than Sections 5.2(a), 6.3(a), 6.3(a) and 6.5) of this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though such representations and warranties were made on and as of such date, except for representations and warranties that speak as of an earlier date or period which shall be true and correct as of such date or period; provided, however, that for purposes of this clause, such representations and warranties shall be deemed to be true and correct unless the failure or failures of all such representations and warranties to be so true and correct, without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on AT Co. or Spinco and (ii) set forth in Sections 5.2(a), 6.2(a), 6.3(a) and 6.5 of this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except for representations and warranties that speak as of an earlier date or period which shall be true and correct as of such date or period.
	(c) AT Co. and Spinco shall have delivered to the Company a certificate, dated as of the Effective Time, of a senior officer of each of AT Co. and Spinco certifying the satisfaction of the conditions set forth in subsection (a) and (b) of this Section 9.3.
	(d) Spinco and AT Co. shall have entered into the Tax Sharing Agreement, the Employee Benefits Agreement, the Shared Assets Agreement, the Shared Contracts Agreement and the Transition Services Agreement and each such agreement shall be in full force and effect.
	(e) Except as disclosed in the Spinco Disclosure Letter or as expressly contemplated by this Agreement, since the Interim Balance Sheet Date, there shall have been no event, occurrence, development or state of circumstances or facts that has or would have, individually or in the aggregate, a Material Adverse Effect on Spinco.
	(f) Spinco shall have delivered to the Company an affidavit, dated as of the Closing Date, in form and substance required under the Treasury Regulations issued pursuant to Section 1445(b) of the Code.

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	(i) the Surviving Corporation may issue additional shares of common stock of the Surviving Corporation to a person in a transaction to which Section 83 or Section 421(a) or (b) of the Code applies (or options to acquire stock in such a transaction) in connection with the person’s performance of services as an employee, director or independent contractor of AT Co., the Company, the Surviving Corporation, any of their respective Subsidiaries, or any other person that is related to AT Co., the Company or the Surviving Corporation under Section 355(d)(7)(A) of the Code or a corporation the assets of which the Surviving Corporation or Subsidiary acquires in a reorganization under Section 368 of the Code (including Spinco or any of its Subsidiaries), provided that such stock is not excessive by reference to the services performed by such person and such person or a coordinating group of which the person is a member will not be a controlling shareholder or a ten-percent shareholder of the Surviving Corporation (within the meaning of Treasury Regulations Section 1.355-7(h)(3) and (8)) immediately after the issuance of such common stock; and
	(ii) the Surviving Corporation may issue additional shares of common stock of the Surviving Corporation to a retirement plan of the Surviving Corporation or any other person that is treated as the same employer as the Surviving Corporation under Section 414(b), (c), (m), or (o) of the Code that qualifies under Section 401(a) or 403(a) of the Code, provided that the stock acquired by all of the qualified plans of the Surviving Corporation and such other persons during the four-year period beginning two years before the Distribution Date does not, in the aggregate, represent more than ten percent of the total combined voting power of all classes of stock of the Surviving Corporation entitled to vote or more than ten percent of the total value of shares of all classes of stock of the Surviving Corporation.

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	(a) by the mutual written consent of each party hereto, which consent shall be effected by action of the Board of Directors of each such party;
	(b) by any party hereto if the Effective Time shall not have occurred on or before the one year anniversary of the date of this Agreement, provided that the right to terminate this Agreement pursuant to this clause 11.1(b) shall not be available to any party whose failure to perform any of its obligations under this Agreement required to be performed by it at or prior to such date has been a substantial cause of, or substantially contributed to, the failure of the Merger to have become effective on or before such date;
	(c) by any party hereto if, (i) a statute, rule, regulation or executive order shall have been enacted, entered or promulgated prohibiting the consummation of the Merger or (ii) an Order, decree, ruling or injunction shall have been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger and such Order, decree, ruling or injunction shall have become final and

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	non-appealable and the party seeking to terminate this Agreement pursuant to this clause 11.1(c)(ii) shall have used all reasonable best efforts to remove such injunction, order, decree or ruling;
	(d) by the Company, if either AT Co. or Spinco shall have breached or failed to perform in any material respect any of its respective representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in a failure of a condition set forth in Section 9.1 or 9.3 and (ii) cannot be cured by the Termination Date, provided that the Company shall have given AT Co. and Spinco written notice, delivered at least thirty (30) days prior to such termination, stating the Company’s intention to terminate this Agreement pursuant to this Section 11.1(d) and the basis for such termination;
	(e) by AT Co. and Spinco, if the Company shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in a failure of a condition set forth in Section 9.1 or 9.2 and (ii) cannot be cured by the Termination Date, provided that AT Co. and Spinco shall have given the Company written notice, delivered at least thirty (30) days prior to such termination, stating AT Co. and Spinco’s intention to terminate the Agreement pursuant to this Section 11.1(e) and the basis for such termination;
	(f) by AT Co. and Spinco or the Company if, at the Company Stockholders’ Meeting (including any adjournment, continuation or postponement thereof), the Requisite Approval shall not be obtained; except that the right to terminate this Agreement under this Section 11.1(f) shall not be available to the Company where the failure to obtain the Requisite Approval shall have been caused by the action or failure to act of the Company and such action or failure to act constitutes a material breach by the Company of this Agreement or a material breach of the Voting Agreement by any party thereto other than Spinco.
	(g) by AT Co. and Spinco, if (i) the Board of Directors of the Company (or any committee thereof), shall have withdrawn or modified its approval or recommendation of the Merger or this Agreement, approved or recommended to the Company stockholders a Company Acquisition Proposal or resolved to do any of the foregoing, or (ii) the Company fails to call and hold the Company Stockholders Meeting within sixty (60) days after the effectiveness of the Registration Statement.
	(h) by the Company if the Board of Directors of the Company determines in good faith that a Company Acquisition Proposal constitutes a Company Superior Proposal, except that the Company may not terminate this Agreement pursuant to this Section 11.1(h) unless and until (i) three business days have elapsed following delivery to AT Co. of a written notice of such determination by the Board of Directors of the Company and during such three business day period the Company (x) informs AT Co. of the terms and conditions of the Company Acquisition Proposal and identity of the person making the Company Acquisition Proposal and (y) otherwise cooperates with AT Co. with respect thereto with the intent of enabling AT Co. and Spinco to agree to a modification of the terms and conditions of this Agreement so that the transactions contemplated hereby may be effected, (ii) at the end of such three business day period the Board of Directors of the Company continues to determine in good faith that the Company Acquisition Proposal constitutes a Company Superior Proposal, (iii) simultaneously with such termination the Company enters into a definitive acquisition, merger or similar agreement to effect the Company Superior Proposal and (iv) the Company pays to AT Co. the amount specified and within the time period specified in Section 11.3.

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	If to: Spinco (prior to the Effective Time) or AT Co., to:
	ALLTEL Holding Corp.
	One Allied Drive
	Little Rock, Arkansas 72202
	Attn: Chief Executive Officer
	(With a copy to the Chairman)
	Telecopy: (501) 905-0962

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	If to the Company, to:
	Valor Communications Group, Inc.
	201 E. John Carpenter Freeway, Suite 200
	Irving, Texas 75062
	Attn: Chief Executive Officer
	(With a copy to the Corporate Secretary)
	Telecopy: (972) 373-1812

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	ALLTEL CORPORATION

	By:	/s/ Scott T. Ford

	Name: Scott T. Ford
	Title:   CEO & President
	ALLTEL HOLDING CORP.

	By:	/s/ Jeffery R. Gardner

	Name: Jeffery R. Gardner
	Title:   President
	VALOR COMMUNICATIONS GROUP, INC.

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

	Name: William M. Ojile, Jr.

	Title:	Senior Vice President, Chief Legal

	Officer and Secretary

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				Page
ARTICLE I Definitions
Section 1.1		General			B-2
Section 1.2		References to Time			B-8
ARTICLE II Preliminary Transactions
Section 2.1		Business Separation			B-8
Section 2.2		Conveyancing and Assumption Agreements			B-9
Section 2.3		Certain Resignations			B-9
Section 2.4		Other Agreements			B-9
Section 2.5		Transfers Not Effected Prior to the Distribution; Transfers Deemed Effective as of the Distribution Date			B-9
Section 2.6		Special Dividend; Spinco Financing; Debt Exchange			B-10
Section 2.7		Financial Instruments			B-11
Section 2.8		Coordination of Asset Separation Transactions			B-11
ARTICLE III The Distribution
Section 3.1		Record Date and Distribution Date			B-12
Section 3.2		Spinco Reclassification			B-12
Section 3.3		Net Spinco Indebtedness			B-12
Section 3.4		The Agent			B-12
Section 3.5		Delivery of Shares to the Agent			B-12
Section 3.6		The Distribution			B-12
ARTICLE IV Net Debt Adjustment
Section 4.1		Post-Closing Adjustment to Net Spinco Indebtedness			B-13
ARTICLE V Employee Benefit Matters
Section 5.1		Employee Benefit Matters			B-14
ARTICLE VI Tax Sharing
Section 6.1		Tax Sharing			B-15
ARTICLE VII Survival and Indemnification
Section 7.1		Survival of Agreements			B-15
Section 7.2		Mutual Release			B-15
Section 7.3		Indemnification			B-15
Section 7.4		Procedures for Indemnification for Third-Party Claims			B-16
Section 7.5		Reductions for Insurance Proceeds, Tax Benefits and Other Recoveries			B-17
Section 7.6		Consequential Damages			B-17
Section 7.7		Survival of Indemnities			B-17
ARTICLE VIII Certain Additional Covenants
Section 8.1		Notices to Third Parties			B-18
Section 8.2		Licenses and Permits			B-18

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				Page
Section 8.3		Intercompany Agreements; Intercompany Accounts			B-18
Section 8.4		Further Assurances			B-18
Section 8.5		Guarantee Obligations and Liens			B-18
Section 8.6		Insurance			B-19
Section 8.7		Use of Names			B-20
Section 8.8		Non Solicitation of Employees			B-21
Section 8.9		Subsequent Transfers			B-21
ARTICLE IX Access to Information
Section 9.1		Provision of Corporate Records			B-21
Section 9.2		Access to Information			B-22
Section 9.3		Production of Witnesses			B-23
Section 9.4		Retention of Records			B-23
Section 9.5		Confidentiality			B-23
Section 9.6		Cooperation with Respect to Government Reports and Filings			B-23
Section 9.7		Tax Sharing Agreement			B-24
ARTICLE X No Representations or Warranties
Section 10.1		No Representations or Warranties			B-24
ARTICLE XI Conditions
Section 11.1		Conditions to the Distribution			B-24
Section 11.2		Waiver of Conditions			B-24
Section 11.3		Disclosure			B-24
ARTICLE XII Miscellaneous
Section 12.1		Complete Agreement			B-24
Section 12.2		Expenses			B-25
Section 12.3		Governing Law			B-25
Section 12.4		Notices			B-25
Section 12.5		Amendment and Modification			B-25
Section 12.6		Successors and Assigns; No Third-Party Beneficiaries			B-26
Section 12.7		Counterparts			B-26
Section 12.8		Interpretation			B-26
Section 12.9		Severability			B-26
Section 12.10		References; Construction			B-26
Section 12.11		Termination			B-26
Section 12.12		Consent to Jurisdiction and Service of Process			B-26
Section 12.13		Waivers			B-26
Section 12.14		Specific Performance			B-27
Section 12.15		Waiver of Jury Trial			B-27

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	(i) AT Co. or an AT Co. Subsidiary, as appropriate, will be responsible for the Claims Administration with respect to claims of AT Co. and the AT Co. Subsidiaries under the Policies; and
	(ii) Spinco or a Spinco Subsidiary, as appropriate, will be responsible for the Claims Administration with respect to claims of Spinco and the Spinco Subsidiaries under the Policies.

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	(a) Each party hereto acknowledges that: (i) each of AT Co. and Spinco (and the members of the AT Co. Group and the Spinco Group, respectively) has or may obtain Privileged Information; (ii) there are and/or may be a number of Litigation Matters affecting each or both of AT Co. and Spinco; (iii) both AT Co. and Spinco have a common legal interest in Litigation Matters, in the Privileged Information and in the preservation of the confidential status of the Privileged Information, in each case relating to the pre-Distribution business of the AT Co. Group or the Spinco Group or relating to or arising in connection with the relationship between the Groups on or prior to the Distribution Date; and (iv) both AT Co. and Spinco intend that the transactions contemplated hereby and by the Merger Agreement and the other Transaction Agreements and any transfer of Privileged Information in connection therewith shall not operate as a waiver of any potentially applicable privilege.
	(b) Each of AT Co. and Spinco agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose or otherwise waive any privilege attaching to any Privileged Information relating to the pre-Distribution business of the other Group or relating to or arising in connection with the relationship between the Groups on or prior to the Distribution Date, without providing prompt written notice to and obtaining the prior written consent of the other, which consent shall not be unreasonably

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	withheld, conditioned or delayed and shall not be withheld, conditioned or delayed if the other party certifies that such disclosure is to be made in response to a likely threat of suspension or debarment or similar action; provided, however, that AT Co. and Spinco shall not be required to give any such notice or obtain any such consent and may make such disclosure or waiver with respect to Privileged Information if such Privileged Information relates solely to the pre-Distribution business of the AT Co. Group in the case of AT Co. or the Spinco Group in the case of Spinco. In the event of a disagreement between any member of the AT Co. Group and any member of the Spinco Group concerning the reasonableness of withholding such consent, no disclosure shall be made prior to a resolution of such disagreement by a court of competent jurisdiction, provided that the limitations in this sentence shall not apply in the case of disclosure required by law and so certified as provided in the first sentence of this paragraph.
	(c) Upon any member of the AT Co. Group or any member of the Spinco Group receiving any subpoena or other compulsory disclosure notice from a court, other governmental agency or otherwise which requests disclosure of Privileged Information, in each case relating to pre-Distribution business of the Spinco Group or the AT Co. Group, respectively, or relating to or arising in connection with the relationship between the Groups on or prior to the Distribution Date, the recipient of the notice shall as promptly as practicable provide to the other Group (following the notice provisions set forth herein) a copy of such notice, the intended response, and all materials or information relating to the other Group that might be disclosed. In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in paragraph (b) of this Section, the parties shall cooperate to assert all defenses to disclosure claimed by either party’s Group, and shall not disclose any disputed documents or information until all legal defenses and claims of privilege have been finally determined, except as otherwise required by a court order requiring such disclosure.

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	ALLTEL Corporation
	One Allied Drive
	Little Rock, Arkansas 72202
	Attention: Chief Executive Officer
	(with a copy to the Corporate Secretary)
	Facsimile: (501) 905-5444

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	ALLTEL Holding Corp.
	One Allied Drive
	Little Rock, Arkansas 72202
	Attention: Chief Executive Officer
	(with a copy to the Chairman)
	Facsimile: (501) 905-0962

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	ALLTEL CORPORATION

	By:	/s/ Scott T. Ford

	Name: Scott T. Ford
	Title:   CEO & President
	ALLTEL HOLDING CORP.

	By:	/s/ Jeffery R. Gardner

	Name: Jeffery R. Gardner
	Title:   President

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	(a) Due Authorization and Organization. Such Stockholder is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization (as applicable). Such Stockholder has all requisite legal power (corporate or other) and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by such Stockholder and constitutes a valid and binding obligation of such Stockholder enforceable in accordance with its terms subject to (i) bankruptcy, insolvency, moratorium and other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, and (ii) general principles of equity (regardless of whether considered in a proceeding at law or in equity).
	(b) No Conflicts. (i) No filing by such Stockholder with any governmental body or authority, and no authorization, consent or approval of any other person is necessary for the execution of this Agreement by such Stockholder and the consummation by such Stockholder of the transactions contemplated hereby

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	and (ii) none of the execution and delivery of this Agreement by such Stockholder, the consummation by such Stockholder of the transactions contemplated hereby or compliance by such Stockholder with any of the provisions hereof shall (A) conflict with or result in any breach of the organizational documents of such Stockholder, (B) result in, or give rise to, a violation or breach of or a default under (with or without notice or lapse of time, or both) any of the terms of any material contract, trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease, permit, understanding, agreement or other instrument or obligation to which such stockholder is a party or by which such Stockholder or any of its Subject Shares or assets may be bound, or (C) violate any applicable order, writ, injunction, decree, judgment, statute, rule or regulation, except for any of the foregoing as would not reasonably be expected to prevent such Stockholder from performing its obligations under this Agreement.
	(c) The Subject Shares. Schedule A sets forth, opposite such Stockholder’s name, the number of Subject Shares over which such Stockholder has record or beneficial ownership as of the date hereof. As of the date hereof, such Stockholder is the record or beneficial owner of the Subject Shares denoted as being owned by such Stockholder on Schedule A and has the sole power to vote (or cause to be voted) such Subject Shares. Except as set forth on such Schedule A, neither such Stockholder nor any controlled affiliate of such Stockholder owns or holds any right to acquire any additional shares of any class of capital stock of the Company or other securities of the Company or any interest therein or any voting rights with respect to any securities of the Company. Such Stockholder has good and valid title to the Subject Shares denoted as being owned by such Stockholder on Schedule A, free and clear of any and all pledges, mortgages, liens, charges, proxies, voting agreements, encumbrances, adverse claims, options, security interests and demands of any nature or kind whatsoever, other than those created by this Agreement, as disclosed on Schedule A, or as would not prevent such Stockholder from performing its obligations under this Agreement.
	(d) Reliance By Spinco. Such Stockholder understands and acknowledges that Spinco is entering into the Merger Agreement in reliance upon such Stockholder’s execution and delivery of this Agreement.
	(e) Litigation. As of the date hereof, there is no action, proceeding or investigation pending or threatened against such Stockholder that questions the validity of this Agreement or any action taken or to be taken by such Stockholder in connection with this Agreement.

	(a) Due Authorization and Organization. Spinco is duly organized, validly existing and in good standing under the laws of the State of Delaware. Spinco has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by Spinco and constitutes a valid and binding obligation of Spinco enforceable in accordance with its terms subject to (i) bankruptcy, insolvency, moratorium and other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, and (ii) general principles of equity (regardless of whether considered in a proceeding at law or in equity).
	(b) Conflicts. (i) No filing by Spinco with any governmental body or authority, and no authorization, consent or approval of any other person is necessary for the execution of this Agreement by Spinco and the consummation by Spinco of the transactions contemplated hereby and (ii) none of the execution and delivery of this Agreement by Spinco, the consummation by Spinco of the transactions contemplated hereby or compliance by Spinco with any of the provisions hereof shall (A) conflict with or result in any breach of the certificate of incorporation or by-laws of Spinco, (B) result in, or give rise to, a violation or breach of or a default under (with or without notice or lapse of time, or both) any of the terms of any material contract, loan or credit agreement, note, bond, mortgage, indenture, lease, permit, understanding, agreement or other instrument or obligation to which Spinco is a party or by which Spinco or any of its assets may be bound, or (C) violate any applicable order, writ, injunction, decree, judgment,

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	statute, rule or regulation, except for any of the foregoing as would not prevent Spinco from performing its obligations under this Agreement.
	(c) Reliance by the Stockholders. Spinco understands and acknowledges that the Stockholders are entering into this Agreement in reliance upon the execution and delivery of the Merger Agreement by Spinco.

	(a) At the Company Stockholders Meeting or at any adjournment, postponement or continuation thereof or in any other circumstances occurring prior to the Company Stockholders Meeting upon which a vote or other approval with respect to the Merger and the Merger Agreement is sought, each Stockholder shall vote (or cause to be voted) the Subject Shares (and each class thereof) held by such Stockholder (i) in favor of the approval of the Merger and the approval and adoption of the Merger Agreement; and (ii) except with the written consent of Spinco, against any Company Acquisition Proposal. Any such vote shall be cast in accordance with such procedures relating thereto so as to ensure that it is duly counted for purposes of determining that a quorum is present and for purposes of recording the results of such vote. Each Stockholder agrees not to enter into any agreement or commitment with any person the effect of which would be inconsistent with or violative of the provisions and agreements contained in this Section 3(a).
	(b) Each Stockholder agrees not to, directly or indirectly, (i) sell, transfer, tender, pledge, encumber, assign or otherwise dispose of (collectively, a “Transfer”) or enter into any agreement, option or other arrangement with respect to, or consent to a Transfer of, or convert or agree to convert, any or all of the Subject Shares to any person, other than in accordance with the Merger Agreement, except in each case for Transfers to such Stockholder’s affiliates as agree to be bound hereby, or (ii) grant any proxies (other than the Company proxy card in connection with the Company Stockholders Meeting if and to the extent such proxy is consistent with the Stockholder’s obligations under Section 3(a) hereof), deposit any Subject Shares into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to any of the Subject Shares, other than pursuant to this Agreement. Such Stockholder further agrees not to commit or agree to take any of the foregoing actions or take any action that would have the effect of preventing, impeding, interfering with or adversely affecting its ability to perform its obligations under this Agreement.
	(c) Such Stockholder shall not, nor shall such Stockholder permit any controlled affiliate of such Stockholder to, nor shall such Stockholder act in concert with or permit any controlled affiliate to act in concert with any person to make, or in any manner participate in, directly or indirectly, a “solicitation” (as such term is used in the rules of the Securities and Exchange Commission) of proxies or powers of attorney or similar rights to vote, or seek to advise or influence any person with respect to the voting of, any shares of Common Stock intended to facilitate any Company Acquisition Proposal or to cause stockholders of the Company not to vote to approve and adopt the Merger Agreement. Such Stockholder shall not, and shall direct any investment banker, attorney, agent or other adviser or representative of such Stockholder not to, directly or indirectly, through any officer, director, agent or otherwise, enter into, solicit, initiate, conduct or continue any discussions or negotiations with, or knowingly encourage or respond to any inquiries or proposals by, or provide any information to, any person, other than Spinco, relating to any Company Acquisition Proposal. Each Stockholder hereby represents that, as of the date hereof, it is not engaged in discussions or negotiations with any party other than Spinco and AT Co. with respect to any Company Acquisition Proposal.

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	If to Spinco, to:
	AT Holding Corp.
	One Allied Drive
	Little Rock, Arkansas 72202
	Attention: Chief Executive Officer
	(with a copy to the Chairman)
	Telecopy: (501) 905-0962

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	ALLTEL HOLDING CORP.

	By:	/s/ Jeffery R. Gardner

	Name: Jeffery R. Gardner
	Title:   President
	WCAS MANAGEMENT CORPORATION

	By:	/s/ Jonathan M. Rather

	Name: Jonathan M. Rather
	Title:   Treasurer
	Russell L. Carson
	Andrew M. Paul
	Pondfield Holdings, L.P.
	Thomas E. McInerney
	Robert A. Municucci
	Anthony J. de Nicola
	Paul B. Queally
	Lawrence B. Sorrel
	D. Scott Mackesy
	John Clark
	Sean M. Traynor
	John Almeida, Jr.
	Sanjay Swani
	Eric Lee
	Jonathan M. Rather

	By:	/s/ Jonathan M. Rather

	Jonathan M. Rather, Individually and as
	Attorney-in-Fact

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	THE PATRICK WELSH 2004 IRREVOCABLE
	TRUST

	By:	/s/ Carol Welsh

	Name: Carol Welsh
	Title:   Trustee
	THE BRUCE K. ANDERSON 2004
	IRREVOCABLE TRUST

	By:	/s/ Mary A. Anderson

	Name: Mary A. Anderson
	Title:   Trustee
	/s/ Jill Hanau
	JILL HANAU
	/s/ Lauren Melkus
	LAUREN MELKUS
	ESTATE OF RUDOLPH E. RUPERT

	By:	/s/ Claudia de Dominicis

	Claudia de Dominicis, Executor
	WELSH CARSON ANDERSON &
	STOWE IX, L.P.

	By:	WCAS IX Associates LLC,

	Its General Partner

	By:	/s/ Jonathan M. Rather

	Name: Jonathan M. Rather
	Title:   Managing Member

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	WCAS CAPITAL PARTNERS III, L.P.

	By:	WCAS CP III Associates LLC,

	Its General Partner

	By:	/s/ Jonathan M. Rather

	Name: Jonathan M. Rather
	Title:   Managing Member
	WELSH CARSON ANDERSON &
	STOWE VIII, L.P.

	By:	WCAS VIII Associates LLC,

	Its General Partner

	By:	/s/ Jonathan M. Rather

	Name: Jonathan M. Rather

	Title:	Managing Member

	/s/ Michael Donovan
	MICHAEL DONOVAN
	VESTAR CAPITAL PARTNERS III, L.P.

	By:	Vestar Associates III, L.P.,

	Its General Partner

	By:	Vestar Associates Corporation III,

	Its General Partner

	By:	/s/ Norman W. Alpert

	Name: Norman W. Alpert
	Title:   Managing Director

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	VESTAR CAPITAL PARTNERS IV, L.P.,

	By:	Vestar Associates IV, L.P.

	Its General Partner

	By:	Vestar Associates Corporation IV,

	Its General Partner

	By:	/s/ Norman W. Alpert

	Name: Norman W. Alpert
	Title:   Managing Director
	VESTAR/ VALOR, LLC

	By:	Vestar Associates IV, L.P.,

	Its Managing Member

	By:	Vestar Associates Corporation IV,

	Its General Partner

	By:	/s/ Norman W. Alpert

	Name: Norman W. Alpert

	Title:	Managing Director

	/s/ Norman W. Alpert
	NORMAN W. ALPERT
	/s/ Frederico Pena
	FREDERICO PENA

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	•	Reviewed the Agreement, including the financial terms of the Merger, and the agreements contemplated thereby;
	•	Reviewed Annual Reports on Form 10-K of AT Co. for the three fiscal years ended December 31, 2004; Annual Reports on Form 10-K of the Company for the fiscal year ended December 31, 2004; certain interim reports to stockholders and Quarterly Reports on Form 10-Q of AT Co. and the Company; and certain business, financial, and other information regarding each of AT Co. and the Company that was publicly available;
	•	Reviewed certain business, financial, and other information regarding the Company and its prospects that was furnished to us by, and we have discussed with, the management of the Company;

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	•	Reviewed certain business, financial, and other information regarding AT Co. and Spinco and their prospects that were furnished to us by, and we have discussed with, the management of AT Co. and Spinco;
	•	Reviewed the stock price and trading history of the Company Common Stock;
	•	Compared the available business, financial, and other information regarding each of the Company and Spinco with similar information regarding certain publicly traded companies that we deemed relevant;
	•	Compared the proposed financial terms of the Agreement with the financial terms of certain other business combinations and transactions that we deemed relevant;
	•	Developed discounted cash flow models for each of the Company and Spinco based upon estimates provided by the management of each of the Company and Spinco, as to each of the Company and Spinco respectively, and certain estimates discussed with the management of the Company;
	•	Reviewed the potential pro forma impact of the Merger on the Company’s financial statements;
	•	Considered other information such as financial, economic and market criteria that we deemed relevant; and
	•	Participated in the discussions and negotiations among representatives of the Company and AT Co. and their respective financial and legal advisors that resulted in the Agreement.

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	Very truly yours,
	/s/ WACHOVIA CAPITAL MARKETS, LLC

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	•	reviewed the Merger Agreement and the Distribution Agreement;
	•	reviewed the Voting Agreement, dated as of December 8, 2005, among SpinCo and the stockholders of Valor named therein;
	•	reviewed Valor’s Annual Reports on Form 10-K for the year ended December 31, 2004, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 and its Current Reports on Form 8-K filed since January 1, 2005;
	•	reviewed SpinCo’s Draft Audited Financial Statements for the years ended December 31, 2002, 2003 and 2004, its unaudited interim consolidated balance sheet as of September 30, 2005, and the related

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		unaudited interim consolidated income statement and statement of cash flows for the nine months ended September 30, 2005;
	•	reviewed Alltel’s Annual Reports on Form 10-K for the years ended December 31, 2002, 2003 and 2004, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 and its Current Reports on Form 8-K filed since January 1, 2005;
	•	reviewed certain operating and financial information relating to Valor’s and SpinCo’s businesses and prospects (as prepared and furnished to us by Valor’s and Alltel’s senior managements, respectively), including projections for Valor for the six years ended December 31, 2010 as prepared by Valor’s senior management and projections for SpinCo for the three years ended December 31, 2007 as prepared by Alltel’s management as well as certain publicly available research analyst projections for Alltel/ SpinCo for the years ended December 31, 2008, 2009 and 2010 (which research analyst projections were reviewed by and discussed with the senior management of Valor);
	•	reviewed certain estimates of cost savings and other synergies estimates expected to result from the Merger, as prepared and provided to us by Valor’s senior management and discussed with Alltel’s senior management, including persons who will become members of SpinCo’s senior management;
	•	met with certain members of Valor’s and Alltel’s senior management, including persons who will become members of SpinCo’s senior management, to discuss Valor’s and SpinCo’s respective businesses, operations, historical and projected financial results and future prospects;
	•	reviewed the historical prices, trading multiples and trading volume of the common shares of Valor;
	•	reviewed publicly available financial data, stock market performance data and trading multiples of companies which we deemed generally comparable to Valor and SpinCo, as appropriate;
	•	reviewed the terms of recent mergers and acquisitions involving companies which we deemed generally comparable to Valor;
	•	performed discounted cash flow analyses based on the projections for Valor and SpinCo and the synergy estimates for the combined company, including certain tax attributes available to Valor and SpinCo;
	•	reviewed the pro forma financial results, financial condition and capitalization of the combined company giving effect to the Merger; and
	•	conducted such other studies, analyses, inquiries and investigations as we deemed appropriate.

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	Very truly yours,
	BEAR, STEARNS & CO. INC.

	By:	/s/ Fred J. Turpin Jr.

	Fred J. Turpin Jr.
	Senior Managing Director

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	(a) 200,000,000 shares of Preferred Stock, par value $.0001 per share (“Preferred Stock”); and
	(b) 2,000,000,000 shares of Common Stock, par value $.0001 per share (“Common Stock”).

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1. Purpose of the Plan			G-1
2. Definitions			G-1
3. Shares Available Under the Plan			G-4
4. Option Rights			G-5
5. Appreciation Rights			G-6
6. Performance Units and Performance Shares			G-6
7. Restricted Shares			G-7
8. Restricted Stock Units			G-8
9. Awards to Non-Employee Directors			G-8
10. Other Awards			G-9
11. Transferability			G-9
12. Adjustments			G-9
13. Fractional Shares			G-10
14. Withholding Taxes			G-10
15. Foreign Employees			G-10
16. Administration of the Plan			G-10
17. Amendments and Other Matters			G-11
18. Compliance with Section 409A of the Code			G-12
19. Applicable Laws			G-12
20. Termination			G-12

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	a. The acquisition by any individual, entity or “group,” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities of the Company where such acquisition causes any such Person to own fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this definition, any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subparagraph c. below shall not be deemed to result in a Change in Control;
	b. Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
	c. The consummation of a reorganization, merger or consolidation or sale or other disposition of more than fifty percent (50%) of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, at least fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, as the

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	case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, fifty percent (50%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or
	d. Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

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	a. Subject to adjustment as provided in Section 12 of this Plan, the number of Common Shares that may be issued or transferred (i) upon the exercise of Option Rights or Appreciation Rights, (ii) as Restricted Shares, (iii) in payment of Restricted Stock Units, (iv) in payment of Performance Units or Performance Shares that have been earned, (v) as awards to Non-Employee Directors, (vi) in payment of awards granted under Section 10 of this Plan or (vii) in payment of dividend equivalents paid with respect to awards made under the Plan shall not exceed in the aggregate 10,000,000 Common Shares, plus any shares relating to awards that expire or are forfeited or are cancelled. Common Shares covered by an award granted under the Plan shall not be counted as used unless and until they are actually issued and delivered to a Participant. Without limiting the generality of the foregoing, upon payment in cash of the benefit provided by any award granted under the Plan, any Common Shares that were covered by that award will be available for issue or transfer hereunder. Notwithstanding anything to the contrary contained herein: (A) Common Shares tendered in payment of the Option Price of an Option Right shall not be added to the aggregate Plan limit described above; (B) Common Shares withheld by the Company to satisfy the tax withholding obligation shall not be added to the aggregate Plan limit described above; (C) Common Shares that are repurchased by the Company with Option Right proceeds shall not be added to the aggregate Plan limit described above; and (D) all Common Shares covered by an Appreciation Right, to the extent that it is exercised and settled in Common Shares, and whether or not Common Shares are actually issued to the Participant upon exercise of the right, shall be considered issued or transferred pursuant to the Plan. Such Common Shares may be shares of original issuance or treasury shares or a combination of the foregoing.
	b. If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Common Shares based on fair market value, such Common Shares will not count against the number of shares available in Section 3(a) above.
	c. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to adjustment as provided in Section 12 of this Plan, (i) the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options shall not exceed 10,000,000 Common Shares; (ii) no Participant shall be granted Option Rights and Appreciation Rights, in the aggregate, for more than 1,000,000 Common Shares during any calendar year; and (iii) the

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	number of shares issued as Appreciation Rights, Restricted Shares and Restricted Stock Units (after taking forfeitures into account) shall not exceed, in the aggregate, 8,500,000 Common Shares.
	d. Notwithstanding any other provision of this Plan to the contrary, in no event shall any Participant in any calendar year receive an award of (i) Performance Shares or Restricted Shares that specify Management Objectives, in the aggregate, for more than 1,000,000 Common Shares or (ii) Performance Units having an aggregate maximum value as of their respective Dates of Grant in excess of $12,000,000.

	a. Each grant shall specify the number of Common Shares to which it pertains.
	b. Each grant shall specify an Option Price per share, which may not be less than the Market Value per Share on the Date of Grant.
	c. Each grant shall specify whether the Option Price shall be payable (i) in cash or by check acceptable to the Company, (ii) by the actual or constructive transfer to the Company of nonforfeitable, unrestricted Common Shares owned by the Optionee having a value at the time of exercise equal to the total Option Price, on such basis as the Board may determine, (iii) in any other legal consideration that the Board may deem appropriate, on such basis as the Board may determine, or (iv) by a combination of such methods of payment.
	d. To the extent permitted by law, any grant may provide for (i) deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates; (ii) payment of the Option Price, at the election of the Optionee, in installments, with or without interest, upon terms determined by the Board; or (iii) any combination of such methods.
	e. Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.
	f. Each grant shall specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable and may provide for the earlier exercise of such Option Rights in the event of a Change in Control, retirement, death or disability of the Optionee or other similar transaction or event as approved by the Board.
	g. Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights.
	h. Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) “nonqualified stock options” that are not intended so to qualify, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code on the Date of Grant.
	i. The exercise of an Option Right shall result in the cancellation on a share-for-share basis of any Tandem Appreciation Right authorized under Section 5 of this Plan.
	j. No Option Right shall be exercisable more than 10 years from the Date of Grant.
	k. Each grant of Option Rights shall be evidenced by an Evidence of Award which shall contain such terms and provisions, consistent with this Plan and applicable sections of the Code, as the Board may approve.
	l. The Board may, at the Date of Grant of any Option Rights (other than Incentive Stock Options), provide for the payment of dividend equivalents to the Optionee on either a current or deferred or contingent basis or may provide that such equivalents shall be credited against the Option Price.

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	a. The Board may authorize the granting (i) to any Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation Right shall be a right of the Optionee, exercisable by surrender of the related Option Right, to receive from the Company an amount determined by the Board, which shall be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the related Option Rights; provided, however, that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right shall be a right of the Participant to receive from the Company an amount determined by the Board, which shall be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.
	b. Each grant of Appreciation Rights may utilize any or all of the authorizations, and shall be subject to all of the requirements, contained in the following provisions:

	(i) Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by the Company in cash, in Common Shares or in any combination thereof and may either grant to the Participant or retain in the Board the right to elect among those alternatives.
	(ii) Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Board at the Date of Grant.
	(iii) Each grant shall specify the period or periods of continuous service by the Participant with the Company or any Subsidiary that is necessary before the Appreciation Right or installments thereof will become exercisable and may provide for the earlier exercise of such Appreciation Rights in the event of a Change in Control, retirement, death or disability of the Participant or other similar transaction or event as approved by the Board.
	(iv) Each grant of an Appreciation Right shall be evidenced by an Evidence of Award, which shall describe such Appreciation Right, identify any related Option Right, state that such Appreciation Right is subject to all the terms and conditions of this Plan, and contain such other terms and provisions, consistent with this Plan and applicable sections of the Code, as the Board may approve.
	(v) Any grant may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis.

	c. Any grant of Tandem Appreciation Rights shall provide that such Rights may be exercised only at a time when the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation.
	d. Regarding Free-Standing Appreciation Rights only:

	(i) Each grant shall specify in respect of each Free-Standing Appreciation Right a Base Price, which shall not be less than the Market Value per Share on the Date of Grant;
	(ii) Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and
	(iii) No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.

	e. Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition to exercise such rights.

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	a. Each grant shall specify the number of Performance Units or Performance Shares to which it pertains, which number may be subject to adjustment to reflect changes in compensation or other factors; provided, however, that no such adjustment shall be made in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.
	b. The Performance Period with respect to each Performance Unit or Performance Share shall be such period of time commencing with the Date of Grant as shall be determined by the Board at the time of grant. Each grant may provide for the earlier lapse or other modification of such Performance Period in the event of a Change in Control, retirement, or death or disability of the Participant or other similar transaction or event as approved by the Board.
	c. Any grant of Performance Units or Performance Shares shall specify Management Objectives which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives a minimum acceptable level of achievement and shall set forth a formula for determining the number of Performance Units or Performance Shares that will be earned if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives. The grant of Performance Units or Performance Shares shall specify that, before the Performance Shares or Performance Units shall be earned and paid, the Board must determine that the Management Objectives have been satisfied.
	d. Each grant shall specify the time and manner of payment of Performance Units or Performance Shares that have been earned. Any grant may specify that the amount payable with respect thereto may be paid by the Company to the Participant in cash, in Common Shares or in any combination thereof, and may either grant to the Participant or retain in the Board the right to elect among those alternatives.
	e. Any grant of Performance Units may specify that the amount payable or the number of Common Shares issued with respect thereto may not exceed maximums specified by the Board at the Date of Grant. Any grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified by the Board at the Date of Grant.
	f. Each grant of Performance Units or Performance Shares shall be evidenced by an Evidence of Award, which shall contain such terms and provisions, consistent with this Plan and applicable sections of the Code, as the Board may approve.
	g. The Board may, at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof on either a current or deferred or contingent basis, either in cash or in additional Common Shares.

	a. Each such grant or sale shall constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights (unless otherwise determined by the Board), but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.
	b. Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than Market Value per Share at the Date of Grant.
	c. Each such grant or sale shall provide that the Restricted Shares covered by such grant or sale shall be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Board at the Date of Grant and may provide for the earlier lapse of such

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	substantial risk of forfeiture in the event of a Change in Control, retirement, or death or disability of the Participant or other similar transaction or event as approved by the Board.
	d. Each such grant or sale shall provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited or restricted in the manner and to the extent prescribed by the Board at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee).
	e. Any grant of Restricted Shares may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such shares. Each grant may specify in respect of such Management Objectives a minimum acceptable level of achievement and may set forth a formula for determining the number of Restricted Shares on which restrictions will terminate if performance is at or above the minimum level, but falls short of full achievement of the specified Management Objectives.
	f. Any such grant or sale of Restricted Shares may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional Restricted Shares, which may be subject to the same restrictions as the underlying award.
	g. Each grant or sale of Restricted Shares shall be evidenced by an Evidence of Award, which shall contain such terms and provisions, consistent with this Plan and applicable sections of the Code, as the Board may approve. Unless otherwise directed by the Board, all certificates representing Restricted Shares shall be held in custody by the Company until all restrictions thereon shall have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Shares.

	a. Each such grant or sale shall constitute the agreement by the Company to deliver Common Shares to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions during the Restriction Period as the Board may specify.
	b. Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.
	c. Each such grant or sale shall be subject to a Restriction Period as determined by the Board at the Date of Grant, and may provide for the earlier lapse or other modification of such Restriction Period in the event of a Change in Control, retirement, or death or disability of the Participant or other similar transaction or event as approved by the Board.
	d. During the Restriction Period, the Participant shall have no right to transfer any rights under his or her award and shall have no rights of ownership in the Restricted Stock Units and shall have no right to vote them, but the Board may, at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares.
	e. Each grant or sale of Restricted Stock Units shall be evidenced by an Evidence of Award, which shall contain such terms and provisions, consistent with this Plan and applicable sections of the Code, as the Board may approve.

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	a. The Board is authorized, subject to limitations under applicable law, to grant to any Participant such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Shares or factors that may influence the value of Common Shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Board, and awards valued by reference to the book value of Common Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of, the Company. The Board shall determine the terms and conditions of such awards. Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 10 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Common Shares, other awards, notes or other property, as the Board shall determine.
	b. Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 10 of this Plan.
	c. The Board is authorized to grant Common Shares as a bonus, or to grant Common Shares or other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Board.

	a. Except as otherwise determined by the Board, no Option Right, Appreciation Right or other derivative security granted under the Plan shall be transferable by a Participant other than by will or the laws of descent and distribution. Except as otherwise determined by the Board, Option Rights and Appreciation Rights shall be exercisable during the Optionee’s lifetime only by him or her or by his or her guardian or legal representative.
	b. The Board may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Units or Performance Shares or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 7 of this Plan, shall be subject to further restrictions on transfer.

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	a. This Plan shall be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to the Compensation Committee (or a subcommittee thereof), or such other committee as designated by the Board performing similar functions as required by the listing standards of the New York Stock Exchange, as constituted from time to time. To the extent of any such delegation, references in this Plan to the Board shall be deemed to be references to any such committee or subcommittee. A majority of the committee (or subcommittee) shall constitute a quorum, and the action of the members of the committee (or subcommittee) present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the committee (or subcommittee).
	b. The interpretation and construction by the Board of any provision of this Plan or of any Evidence of Award and any determination by the Board pursuant to any provision of this Plan or of any such Evidence of Award shall be final and conclusive. No member of the Board shall be liable for any such action or determination made in good faith.
	c. To the extent permitted by applicable law, the Board or, to the extent of any delegation as provided in Section 16(a), the committee, may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Board, the committee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Board, the committee or such person may have under the Plan. To the extent permitted by applicable law, the Board or the committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Board or the committee: (i) designate employees to be recipients of awards under this Plan; (ii) determine the size of any such awards; provided, however, that (A) the Board or the committee shall not delegate such responsibilities

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to any such officer for awards granted to an employee who is an officer, Director, or more than 10% beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act; (B) the resolution providing for such authorization sets forth the total number of Common Shares such officer(s) may grant; and (iii) the officer(s) shall report periodically to the Board or the committee, as the case may be, regarding the nature and scope of the awards granted pursuant to the authority delegated.

	a. The Board may at any time and from time to time amend the Plan in whole or in part; provided, however, that any amendment which must be approved by the stockholders of the Company in order to comply with applicable law or the rules of the New York Stock Exchange or, if the Common Shares are not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Shares are traded or quoted, shall not be effective unless and until such approval has been obtained. Presentation of this Plan or any amendment thereof for stockholder approval shall not be construed to limit the Company’s authority to offer similar or dissimilar benefits under other plans or otherwise with or without stockholder approval. Without limiting the generality of the foregoing, the Board may amend this Plan to eliminate provisions which are no longer necessary as a result in changes in tax or securities laws or regulations, or in the interpretation thereof.
	b. The Board shall not, without the further approval of the stockholders of the Company, authorize the amendment of any outstanding Option Right or Appreciation Right to reduce the Option Price or Base Price. Furthermore, no Option Right or Appreciation Right shall be cancelled and replaced with awards having a lower Option Price or Base Price, respectively, without further approval of the stockholders of the Company. This Section 17(b) is intended to prohibit the repricing of “underwater” Option Rights and Appreciation Rights and shall not be construed to prohibit the adjustments provided for in Section 12 of this Plan.
	c. The Board also may permit Participants to elect to defer the issuance of Common Shares or the settlement of awards in cash under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan. The Board also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.
	d. The Board may condition the grant of any award or combination of awards authorized under this Plan on the deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.
	e. If permitted by Section 409A of the Code, in case of termination of employment by reason of death, disability or normal or early retirement, or in the case of hardship or other special circumstances, of a Participant who holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Shares as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Performance Shares or Performance Units which have not been fully earned, or any other awards made pursuant to Section 10 subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 11(b) of this Plan, the Board may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award.
	f. This Plan shall not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor shall it interfere in any way with

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	any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.
	g. To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision shall be null and void with respect to such Option Right. Such provision, however, shall remain in effect for other Option Rights and there shall be no further effect on any provision of this Plan.
	h. Subject to Section 20, this Plan shall continue in effect until the date on which all Common Shares available for issuance or transfer under this Plan have been issued or transferred and the Company has no further obligation hereunder.
	i. Neither a Participant nor any other person shall, by reason of participation in the Plan, acquire any right or title to any assets, funds or property of the Company or any Subsidiary, including without limitation, any specific funds, assets or other property which the Company or any Subsidiary may set aside in anticipation of any liability under the Plan. A Participant shall have only a contractual right to an award or the amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
	j. This Plan and each Evidence of Award shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction.
	k. If any provision of the Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any award under any law deemed applicable by the Board, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Board, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

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	(i)	the integrity of the Company’s financial statements;
	(ii)	the independent auditor’s qualifications and independence;
	(iii)	the performance of the Company’s internal audit function and independent auditors;
	(iv)	the Company’s compliance with legal and regulatory requirements; and
	(v)	the preparation of an audit committee report as required by the Securities and Exchange Commission (the “SEC”) to be included in the Company’s annual proxy statement.

	Committee Members

	Qualifications

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	Independence

	Other Service

	Committee Meetings

	Separate Meetings

	Professional Advisors

	Investigations

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	Independent Auditors

	Appointment and Oversight of Independent Auditor

	Appointment and Oversight of Additional Audit Firm

	Preapproval of Services

	(i)	Committee preapproval of audit and non-audit services will not be required if the engagement for the services is entered into pursuant to preapproval policies and procedures established by the Committee regarding the Company’s engagement of the independent auditing firm; provided the policies and procedures are detailed as to the particular service, the Committee is informed of each service provided and such policies and procedures do not include delegation of the Committee’s responsibilities under the Exchange Act to the Company’s management.
	(ii)	Committee preapproval of non-audit services (other than review and attestation services) also will not be required if such services fall within an available exception established by the SEC.

	Independence

	(i)	the Committee shall obtain and review a report prepared by the independent auditor describing (a) the independent auditing firm’s internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditing firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditing firm, and any steps taken to deal with any such issues and (c) to assess the independent auditing firm’s independence, all relationships between the independent auditor and the Company;
	(ii)	the Committee shall obtain and review a formal written statement prepared by the independent auditor describing the fees billed in each of the last two fiscal years in each of the categories required to be disclosed in the Company’s annual proxy statement;
	(iii)	the Committee shall (a) actively engage in dialogue with the independent auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditor from the Company, and obtain, (b) review on a periodic basis a formal written statement prepared by the independent auditor delineating all relationships between the indepen-

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		dent auditor and the Company, consistent with Independence Standards Board Standard 1, and (c) recommend that the Board take appropriate action in response to the independent auditor’s report as may be necessary or advisable to comply with applicable rules and regulations;
	(iv)	the Committee shall review and evaluate the qualifications, performance and independence of the independent auditing firm, including without limitation a review and evaluation of the lead partner of the independent auditor;
	(v)	the Committee, in addition to assuring the regular rotation of the lead audit partner as required by law, shall consider whether, in order to assure continuing auditor independence, the Company should adopt a regular rotation of the independent audit firm; and
	(vi)	the Committee shall, if applicable, consider whether the independent auditor’s provision of any permitted non-audit services to the Company is compatible with maintaining the independence of the independent auditor.

	Audit Resources

	Audit Principles

	Review of Reports

	Communication with Independent Auditors

	(i)	The Committee shall discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit Committees,” as then in effect.
	(ii)	The Committee shall regularly review with the independent auditor any problems or difficulties the independent auditor may have encountered during the course of audit work, including any restrictions imposed on the scope of activities or access to requested information, any significant disagreements with management, and management’s responses to such matters. Among the items that the Committee should consider reviewing with the independent auditor are: (a) any accounting adjustments that were noted or proposed by the auditor but were “passed” (as immaterial or otherwise); (b) any communications between the independent audit team and the independent auditing firm’s national office respecting auditing or accounting issues presented by the engagement; and (c) any “management” or “internal control” letter issued, or proposed to be issued, by the

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		independent auditing firm to the Company. The review should also include discussion of the responsibilities, budget and staffing of the Company’s internal audit function.

	Review of Independent Auditor Report to Audit Committee

	Recommendation to Include Financial Statements in Annual Report

	Risk Management

	Communication with Board

	Hiring Practices

	10A(b) Implications

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	Whistleblower Procedures

	Press Releases and Analyst Communications

	Disclosure Controls and Procedures

	Preparation of Audit Committee Report

	Attorney Reporting

	Committee Self-Assessment

	Other Matters

	Charter Modifications/ Updating

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Item 20.	Indemnification of Directors and Officers.

Item 21.	Exhibits and Financial Statements

	2	.1		Agreement and Plan of Merger, dated as of December 8, 2005, by and among Alltel Corporation, Alltel Holding Corp. and Valor Communications Group, Inc. (included as Annex A to the Proxy Statement/ Prospectus-Information Statement forming a part of this registration statement). Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules, exhibits and similar attachments to this Agreement have not been filed with this exhibit. The schedules contain various items relating to the assets of the business being acquired and the representations and warranties made by the parties to the Agreement. The Registrant agrees to furnish supplementally any omitted schedule, exhibit or similar attachment to the SEC upon request.
	2	.2		List of exhibits and schedules to Agreement and Plan of Merger.
	3	.1		Form of Amended and Restated Certificate of Incorporation of Newco (attached as Annex E to the proxy statement/prospectus-information statement which is a part of this Registration Statement)
	3	.3		Form of Amended and Restated Bylaws of Newco (attached as Annex F to the proxy statement/prospectus-information statement which is a part of this Registration Statement)
	4	.1		Form of Amended Securityholders’ Agreement by and among Valor Communications Group, Inc., Welsh, Carson, Anderson & Stowe and certain individuals affiliated therewith, Vestar Capital Partners and individuals affiliated therewith, and certain of other stockholders of Valor.*
	5	.1		Opinion of Kirkland & Ellis LLP as to the legality of the securities to be issued*

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	8	.1		Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding certain Federal income tax matters*
	8	.2		Opinion of Kirkland & Ellis LLP regarding certain Federal income tax matters*
	10	.1		Distribution Agreement, dated as of December 8, 2005, between Alltel Corporation and Alltel Holding Corp. (attached as Annex B to the proxy statement/ prospectus-information statement which is a part of this Registration Statement)
	10	.2		Employee Benefits Agreement, dated as of December 8, 2005, between Alltel Corporation and Alltel Holding Corp.
	10	.3		Form of Tax Sharing Agreement among Alltel Corporation, Alltel Holding Corp. and Valor Communications Group, Inc.
	10	.4		Form of Transition Services Agreement among Alltel Corporation and Alltel Holding Corp.
	10	.5		Form of Reverse Transition Services Agreement between Alltel Corporation and Alltel Holding Corp.
	21	.1		Subsidiaries of the Registrant
	23	.1		Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm of the wireline division of Alltel Corporation
	23	.2		Consent of Deloitte & Touche LLP, independent registered public accounting firm of Valor Communications Group, Inc.
	23	.3		Consent of Kirkland & Ellis LLP (included in Exhibit 5.1)*
	23	.4		Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1)*
	23	.5		Consent of Kirkland & Ellis LLP (included in Exhibit 8.2)*
	24	.1		Powers of Attorney
	99	.1		Voting Agreement, dated as of December 8, 2005, between Alltel Corporation and certain stockholders of Valor Communications Group, Inc. named therein. (included as Annex C to the proxy statement/ prospectus-information statement forming a part of this registration statement)
	99	.2		Form of Proxy Card of Valor Communications Group, Inc.*
	99	.3		Consent of Wachovia Securities
	99	.4		Consent of Bear, Stearns & Co. Inc.

*	To be filed by amendment

Item 22.	Undertakings.

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

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Provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
	(4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

	(A) Each prospectus filed by a Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
	(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

(6) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

	(A) Any preliminary prospectus or prospectus of an undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
	(B) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

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	(C) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
	(D) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

	(7) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
	(8) The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
	(9) The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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	VALOR COMMUNICATIONS GROUP, INC.
	/s/ John J. Mueller
	Name: John J. Mueller

	Title:	President and Chief Executive Officer

Signature				Title
/s/ John J. Mueller John J. Mueller				President and Chief Executive Officer, Director (Principal Executive Officer)
/s/ Jerry E. Vaughn Jerry E. Vaughn				Senior Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ Randal S. Dumas Randal S. Dumas				Vice President — Accounting and Controller (Principal Accounting Officer)
/s/ Anthony J. de Nicola Anthony J. de Nicola				Chairman and Director
/s/ Kenneth R. Cole Kenneth R. Cole				Vice Chairman and Director
/s/ Sanjay Swani Sanjay Swani				Director
/s/ Norman W. Alpert Norman W. Alpert				Director
/s/ Stephen Brodeur Stephen Brodeur				Director
/s/ Edward L. Lujan Edward L. Lujan				Director
/s/ M. Ann Padilla M. Ann Padilla				Director
/s/ Frederico Pena Frederico Pena				Director
/s/ Edward J. Heffernan Edward J. Heffernan				Director
/s/ Michael Donovan Michael Donovan				Director

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	2	.1		Agreement and Plan of Merger, dated as of December 8, 2005, by and among Alltel Corporation, Alltel Holding Corp. and Valor Communications Group, Inc. (included as Annex A to the Proxy Statement/ Prospectus-Information Statement forming a part of this registration statement). Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules, exhibits and similar attachments to this Agreement have not been filed with this exhibit. The schedules contain various items relating to the assets of the business being acquired and the representations and warranties made by the parties to the Agreement. The Registrant agrees to furnish supplementally any omitted schedule, exhibit or similar attachment to the SEC upon request.
	2	.2		List of exhibits and schedules to Agreement and Plan of Merger.
	3	.1		Form of Amended and Restated Certificate of Incorporation of Newco (attached as Annex E to the proxy statement/ prospectus-information statement which is a part of this Registration Statement)
	3	.3		Form of Amended and Restated Bylaws of Newco (attached as Annex F to the proxy statement/ prospectus-information statement which is a part of this Registration Statement)
	4	.1		Form of Amended Securityholders’ Agreement by and among Valor Communications Group, Inc., Welsh, Carson, Anderson & Stowe and certain individuals affiliated therewith, Vestar Capital Partners and individuals affiliated therewith, and certain of other stockholders of Valor.*
	5	.1		Opinion of Kirkland & Ellis LLP as to the legality of the securities to be issued*
	8	.1		Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding certain Federal income tax matters*
	8	.2		Opinion of Kirkland & Ellis LLP regarding certain Federal income tax matters*
	10	.1		Distribution Agreement, dated as of December 8, 2005, between Alltel Corporation and Alltel Holding Corp. (attached as Annex B to the proxy statement/ prospectus-information statement which is a part of this Registration Statement)
	10	.2		Employee Benefits Agreement, dated as of December 8, 2005, between Alltel Corporation and Alltel Holding Corp.
	10	.3		Form of Tax Sharing Agreement among Alltel Corporation, Alltel Holding Corp. and Valor Communications Group, Inc.
	10	.4		Form of Transition Services Agreement between Alltel Corporation and Alltel Holding Corp.
	10	.5		Form of Reverse Transition Services Agreement between Alltel Corporation and Alltel Holding Corp.
	21	.1		Subsidiaries of the Registrant
	23	.1		Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm of the wireline division of Alltel Corporation
	23	.2		Consent of Deloitte & Touche LLP, independent registered public accounting firm of Valor Communications Group, Inc.
	23	.3		Consent of Kirkland & Ellis LLP (included in Exhibit 5.1)*
	23	.4		Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1)*
	23	.5		Consent of Kirkland & Ellis LLP (included in Exhibit 8.2)*
	24	.1		Powers of Attorney
	99	.1		Voting Agreement, dated as of December 8, 2005, between Alltel Corporation and certain stockholders of Valor Communications Group, Inc. named therein. (included as Annex C to the proxy statement/ prospectus-information statement forming a part of this registration statement)
	99	.2		Form of Proxy Card of Valor Communications Group, Inc.*
	99	.3		Consent of Wachovia Securities
	99	.4		Consent of Bear, Stearns & Co. Inc.

*	To be filed by amendment