ALLTEL CORP
424B3, 1998-05-12
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>
 
                                               Filed pursuant to Rule 424(b)(3)
                                                         SEC File No. 333-51915
                                     
                        [LOGO OF ALLTEL APPEARS HERE]
                              ALLTEL CORPORATION
                               ONE ALLIED DRIVE
                          LITTLE ROCK, ARKANSAS 72202
                           TELEPHONE (501) 905-8000
 
                                                                   May 11, 1998
 
Dear Stockholder:
 
  The Board of Directors invites you to attend a Special Meeting of
Stockholders (the "ALLTEL Special Meeting") of ALLTEL Corporation ("ALLTEL")
to be held at 11:00 a.m., local time, on June 23, 1998, at One Allied Drive,
Building III, Little Rock, Arkansas 72202.
 
  At this important meeting, you will be asked to consider a proposal to
approve the issuance of shares of common stock of ALLTEL pursuant to an
Agreement and Plan of Merger, dated as of March 16, 1998 (the "Merger
Agreement"), by and among ALLTEL, Pinnacle Merger Sub, Inc., a Delaware
Corporation and a wholly-owned subsidiary of ALLTEL ("Merger Sub"), and
360(degrees) Communications Company ("360(degrees)"), and the transactions
contemplated thereby. Pursuant to the Merger Agreement, Merger Sub will merge
into 360(degrees) (the "Merger"), and 360(degrees) will become a wholly-owned
subsidiary of ALLTEL. As a result of the Merger, each outstanding share of
common stock of 360(degrees), $0.01 par value, will be converted into the
right to receive .74 of a share of common stock, par value $1.00 per share, of
ALLTEL ("ALLTEL Common Stock").
 
  At the ALLTEL Special Meeting, the stockholders of ALLTEL will also be asked
to approve separate proposals to (i) amend the restated Certificate of
Incorporation of ALLTEL to increase from 500,000,000 to 1,000,000,000 the
number of shares of ALLTEL Common Stock authorized to be issued by ALLTEL and
(ii) approve the ALLTEL 1998 Equity Incentive Plan.
 
  The Board of Directors of ALLTEL has unanimously approved the terms of the
Merger Agreement and the transactions contemplated thereby. The Board of
Directors has also unanimously approved the proposals to amend ALLTEL's
restated Certificate of Incorporation and approve ALLTEL's 1998 Equity
Incentive Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS OF
ALLTEL VOTE "FOR" EACH PROPOSAL LISTED ABOVE.
 
  It is important that your shares be represented at the ALLTEL Special
Meeting, whether or not you plan to attend the ALLTEL Special Meeting in
person. Please complete, sign and date the enclosed proxy card and return it
in the accompanying prepaid envelope to ensure that your shares will be
represented at the ALLTEL Special Meeting.
 
                                          Sincerely,
                                          
                                          /s/ JOE T. FORD
                                          Joe T. Ford
                                          Chairman and Chief Executive Officer
<PAGE>
 
                              ALLTEL CORPORATION
 
                   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                           TO BE HELD JUNE 23, 1998
 
To the Stockholders of ALLTEL Corporation:
 
  Notice is hereby given that a Special Meeting of Stockholders (the "ALLTEL
Special Meeting") of ALLTEL Corporation, a Delaware corporation ("ALLTEL"),
will be held at One Allied Drive, Building III, Little Rock, Arkansas, 72202,
on June 23, 1998 at 11:00 a.m., local time, for the following purposes:
 
    (1) To consider and vote upon a proposal to approve the issuance of
  common stock, par value $1.00 per share, of ALLTEL ("ALLTEL Common Stock"),
  pursuant to an Agreement and Plan of Merger, dated as of March 16, 1998
  (the "Merger Agreement"), by and among ALLTEL, Pinnacle Merger Sub, Inc., a
  Delaware corporation and a wholly-owned subsidiary of ALLTEL ("Merger
  Sub"), and 360(degrees) Communications Company, a Delaware corporation
  ("360(degrees)"), and the transactions contemplated thereby. Pursuant to
  the Merger Agreement, Merger Sub will merge into 360(degrees) (the
  "Merger") and 360(degrees) will become a wholly-owned subsidiary of ALLTEL.
  As a result of the Merger, each share of common stock, $0.01 par value, of
  360(degrees) will be converted into the right to receive .74 of a share of
  ALLTEL Common Stock.
 
    (2) To consider and vote upon a proposal to amend the restated
  Certificate of Incorporation of ALLTEL to increase from 500,000,000 to
  1,000,000,000 the number of shares of ALLTEL Common Stock authorized to be
  issued from time to time by ALLTEL.
 
    (3) To consider and vote upon a proposal to approve the ALLTEL 1998
  Equity Incentive Plan.
 
    (4) To transact such other business as may properly come before the
  ALLTEL Special Meeting and any adjournments or postponements thereof.
 
  The Board of Directors of ALLTEL has fixed at the close of business on May
4, 1998 as the record date for determination of ALLTEL stockholders entitled
to notice of and to vote at the ALLTEL Special Meeting. A complete list of
stockholders entitled to vote will be available for inspection at the offices
of ALLTEL at One Allied Drive, Little Rock, Arkansas for a period of ten days
prior to the ALLTEL Special Meeting.
 
                                          By Order of the Board of Directors
                                          Francis X. Frantz
                                          Secretary
 
Little Rock, Arkansas
May 11, 1998
 
  WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE FILL IN, SIGN, DATE,
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. PLEASE DO NOT SEND
STOCK CERTIFICATES WITH YOUR PROXY CARD.
<PAGE>
 
                                                                 Rule 424(b)(3)
                                                          File Number 333-51915
                           JOINT PROXY STATEMENT OF
                              ALLTEL CORPORATION
                                      AND
                      360(degrees) COMMUNICATIONS COMPANY
 
                                --------------
 
                                 PROSPECTUS OF
                              ALLTEL CORPORATION
 
  This Joint Proxy Statement/Prospectus ("Joint Proxy Statement/Prospectus")
is being furnished to the holders of common stock, par value $1.00 per share
("ALLTEL Common Stock"), of ALLTEL Corporation, a Delaware corporation
("ALLTEL"), and each series of ALLTEL voting cumulative preferred stock, par
value $25 per share ("ALLTEL Voting Preferred Stock" and, together with ALLTEL
Common Stock, "ALLTEL Voting Stock"), in connection with the solicitation of
proxies by the Board of Directors of ALLTEL ("ALLTEL Board") for use at the
Special Meeting of Stockholders of ALLTEL (including any and all adjournments,
postponements or continuations thereof, the "ALLTEL Special Meeting") to be
held on June 23, 1998. This Joint Proxy Statement/Prospectus is also being
furnished to the holders of common stock, $0.01 par value ("360(degrees)
Common Stock"), of 360(degrees) Communications Company, a Delaware corporation
("360(degrees)"), in connection with the solicitation of proxies by the Board
of Directors of 360(degrees) ("360(degrees) Board") for use at the Special
Meeting of Stockholders of 360(degrees) (including any and all adjournments,
postponements or continuations thereof, the "360(degrees) Special Meeting") to
be held on June 23, 1998. The ALLTEL Special Meeting and the 360(degrees)
Special Meeting are referred to collectively herein as the "Special Meetings."
 
  On March 16, 1998, ALLTEL, Pinnacle Merger Sub, Inc., a Delaware corporation
and wholly-owned subsidiary of ALLTEL ("Merger Sub"), and 360(degrees) entered
into an Agreement and Plan of Merger (the "Merger Agreement"), which provides
for, among other things, the merger (the "Merger") of Merger Sub into
360(degrees), with 360(degrees) becoming a wholly-owned subsidiary of ALLTEL.
Upon the terms and subject to the conditions set forth in the Merger
Agreement, each share of 360(degrees) Common Stock outstanding immediately
prior to the Effective Time (defined below) of the Merger will be converted
into the right to receive .74 of a share of ALLTEL Common Stock (the
"Conversion Fraction"). Cash will be paid in lieu of any fractional shares of
ALLTEL Common Stock. Each share of ALLTEL Common Stock issued pursuant to the
Merger Agreement will be accompanied by one Right (defined below) to purchase
1/1,000 of a share of Series K Stock (defined below). See "DESCRIPTION OF
ALLTEL COMMON STOCK--Rights Agreement."
 
  At the ALLTEL Special Meeting, holders of ALLTEL Voting Stock are being
asked to approve the issuance of up to approximately 92,092,338 shares of
ALLTEL Common Stock pursuant to the Merger Agreement (the "Issuance of ALLTEL
Common Stock"). Those shares are expected to be issued (i) pursuant to the
Merger Agreement and (ii) upon exercise of existing options to purchase
360(degrees) Common Stock to be assumed by ALLTEL as contemplated by the
Merger Agreement. The holders of ALLTEL Voting Stock are also being asked to
approve separate proposals to (i) amend the Amended and Restated Certificate
of Incorporation of ALLTEL (the "ALLTEL Certificate") to increase from
500,000,000 to 1,000,000,000 the number of shares of ALLTEL Common Stock
authorized to be issued by ALLTEL (the "Certificate Amendment"), and (ii)
approve the ALLTEL 1998 Equity Incentive Plan (the "Equity Incentive Plan").
The approval of the Issuance of ALLTEL Common Stock and the approval of the
Equity Incentive Plan each requires the affirmative vote by holders of record
at the close of business on May 4, 1998 (the "ALLTEL Record Date") of a
majority of shares of ALLTEL Voting Stock (voting together as a single class)
present, in person or by proxy and entitled to vote at the ALLTEL Special
Meeting (assuming a quorum is present). The approval of the Certificate
Amendment requires the affirmative vote of holders of record of a majority of
the shares of ALLTEL Voting Stock (voting together as a single class)
outstanding on the ALLTEL Record Date.
 
  At the 360(degrees) Special Meeting, holders of 360(degrees) Common Stock
are being asked to consider and vote upon a proposal to approve and adopt the
Merger Agreement and the transactions contemplated thereby (the "360(degrees)
Proposal"). The affirmative vote by holders of record at the close of business
on May 5, 1998 (the "360(degrees) Record Date") of a majority of outstanding
shares of 360(degrees) Common Stock is required to approve the 360(degrees)
Proposal.
 
  This Joint Proxy Statement/Prospectus also constitutes the Prospectus of
ALLTEL filed as part of a Registration Statement on Form S-4 (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the shares of ALLTEL Common Stock to be issued in the Merger.
 
  SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT STOCKHOLDERS SHOULD CONSIDER PRIOR TO VOTING AT THE SPECIAL MEETINGS.
 
  ALLTEL Common Stock and 360(degrees) Common Stock are each listed for
trading on the New York Stock Exchange ("NYSE") and the Pacific Exchange under
the symbols "AT" and "XO," respectively. The 360(degrees) Common Stock is also
listed for trading on the Chicago Stock Exchange. On March 13, 1998, the last
trading day prior to the execution of the Merger Agreement, the last reported
sale price of ALLTEL Common Stock, as reported by the NYSE Composite
Transactions Tape, was $45.81 per share and the last reported sale price of
360(degrees) Common Stock, as reported on the NYSE Composite Transactions
Tape, was $35.62 per share. On May 6, 1998, the last reported sale price of
ALLTEL Common Stock, as reported on the NYSE Composite Transactions Tape, was
$41.25 per share and the last reported sale price of 360(degrees) Common
Stock, as reported on the NYSE Composite Transactions Tape was $29.51563 per
share. It is expected that the shares of ALLTEL Common Stock to be issued to
360(degrees) stockholders pursuant to the Merger Agreement will be listed on
the NYSE and the Pacific Exchange.
 
  This Joint Proxy Statement/Prospectus and the accompanying forms of proxy
are first being mailed to stockholders of ALLTEL and 360(degrees) on or about
May 11, 1998.
 
  THE SECURITIES TO BE ISSUED PURSUANT TO THE MERGER AGREEMENT HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
 
      THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS MAY 11, 1998.
<PAGE>
 
  NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE
HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER ALLTEL OR 360(degrees). THIS
JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, NOR DOES IT CONSTITUTE THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF ALLTEL OR
360(degrees) SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
 
                             AVAILABLE INFORMATION
 
  ALLTEL and 360(degrees) are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the SEC. Such reports, proxy statements and other information may be inspected
and copied at prescribed rates at the public reference facilities maintained
by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the following Regional Offices of the SEC: Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. The SEC also maintains a
Web site at http://www.sec.gov that contains reports, proxy statements and
other information. Copies of such materials relating to ALLTEL and
360(degrees) can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005, and at the offices of the Pacific Exchange, Inc., 301
Pine Street, San Francisco, California 94104. Copies of such materials
relating to 360(degrees) can also be inspected at the offices of the Chicago
Stock Exchange, Incorporated, 440 LaSalle Street, Chicago, Illinois 60605.
 
  This Joint Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the SEC. Reference
is made to the Registration Statement and the exhibits thereto for further
information. Statements contained or incorporated by reference herein
concerning the provisions of any agreement or other document filed as an
exhibit to the Registration Statement or otherwise filed with the SEC are not
necessarily complete and reference is hereby made to the copy thereof so filed
for more detailed information, each such statement being qualified in its
entirety by such reference.
 
                    INCORPORATION OF DOCUMENTS BY REFERENCE
 
  The following ALLTEL documents are incorporated herein by reference:
 
    (1) ALLTEL's Annual Report on Form 10-K for the year ended December 31,
  1997, as amended by Form 10-K/A filed April 24, 1998 ("ALLTEL 1997 Form 10-
  K");
 
    (2) The description of ALLTEL Common Stock contained in ALLTEL's
  Registration Statement on Form 8-A (Commission file No. 1-4996);
 
    (3) The description of the Rights Agreement (defined below) contained in
  ALLTEL's Registration Statement on Form 8-A dated February 3, 1997; and
 
    (4) ALLTEL's Current Reports on Form 8-K dated March 16, 1998 and April
  21, 1998.
 
 
                                      ii
<PAGE>
 
  The following 360(degrees) documents are incorporated herein by reference:
 
    (1) 360(degrees)'s Annual Report on Form 10-K for the year ended December
  31, 1997 ("360(degrees) 1997 Form 10-K");
 
    (2) 360(degrees)'s Current Reports on Form 8-K dated November 1, 1996,
  January 24, 1997, March 16, 1998 and April 15, 1998; and
 
    (3) 360(degrees)'s Current Report on Form 8-K/A dated March 16, 1998.
 
  All reports and other documents filed with the SEC by either ALLTEL or
360(degrees) pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Joint Proxy Statement/Prospectus and prior to
the Effective Time of the Merger shall be deemed to be incorporated by
reference herein and to be a part hereof from the dates of filing of such
reports and documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Joint Proxy Statement/Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
 
  All information contained or incorporated by reference in this Joint Proxy
Statement/Prospectus relating to ALLTEL has been supplied by ALLTEL, and all
such information relating to 360(degrees) has been supplied by 360(degrees).
 
  THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS
THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF SUCH DOCUMENTS
(OTHER THAN EXHIBITS THERETO WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE HEREIN) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER OF SHARES OF 360(degrees) COMMON STOCK TO WHOM THIS JOINT
PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST, IN THE
CASE OF DOCUMENTS RELATING TO ALLTEL, TO ALLTEL CORPORATION, ONE ALLIED DRIVE,
LITTLE ROCK, ARKANSAS 72202, ATTENTION: SECRETARY, TELEPHONE NUMBER (501) 905-
8000, AND, IN THE CASE OF DOCUMENTS RELATING TO 360(degrees), TO 360(degrees)
COMMUNICATIONS COMPANY, 8725 W. HIGGINS ROAD, CHICAGO, ILLINOIS 60631-2702,
ATTENTION: INVESTOR RELATIONS, TELEPHONE NUMBER (773) 399-2150. IN ORDER TO
ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST FOR DOCUMENTS RELATING
TO ALLTEL SHOULD BE MADE BY JUNE 16, 1998 AND ANY REQUEST FOR DOCUMENTS
RELATING TO 360(degrees) SHOULD BE MADE BY JUNE 16, 1998.
 
                                      iii
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
AVAILABLE INFORMATION.....................................................  ii
INCORPORATION OF DOCUMENTS BY REFERENCE...................................  ii
QUESTIONS AND ANSWERS ABOUT THE MERGER.................................... vii
SUMMARY...................................................................   1
  Recent Events...........................................................   1
  The Companies...........................................................   1
  The Special Meetings....................................................   2
  The Merger..............................................................   3
  Market Prices and Dividends.............................................   7
  Comparative Per Share Data..............................................   9
  Selected Historical Financial Data......................................  10
  Selected Unaudited Pro Forma Financial Information......................  12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.................  13
RISK FACTORS..............................................................  14
THE SPECIAL MEETINGS......................................................  16
  General.................................................................  16
  Date, Time and Place....................................................  16
  Matters to be Considered at the Special Meetings........................  16
  Stock Entitled to Vote; Quorum..........................................  16
  Votes Required..........................................................  17
  Share Ownership of Management...........................................  17
  Voting of Proxies.......................................................  17
  Revocability of Proxies.................................................  18
  Solicitation of Proxies.................................................  18
THE MERGER................................................................  20
  General.................................................................  20
  Conversion of Shares; Procedures for Exchange of Certificates...........  20
  Background of the Merger................................................  21
  ALLTEL's Reasons for the Merger; Recommendation of the ALLTEL Board.....  24
  Opinion of Financial Advisors to ALLTEL.................................  26
  360(degrees)'s Reasons for the Merger; Recommendation of the 360(de-
   grees) Board...........................................................  32
  Opinion of 360(degrees)'s Financial Advisor.............................  33
  Ownership of 360(degrees) Common Stock; Stock Options; Company Awards...  38
  Executive Severance; Retention..........................................  38
  Director and Officer Indemnification and Insurance......................  39
  Board of Directors; Management..........................................  39
  Certain United States Federal Income Tax Consequences of the Merger.....  39
  Anticipated Accounting Treatment........................................  41
  Percentage Ownership Interest of 360(degrees) Stockholders after the
   Merger.................................................................  41
  Appraisal Rights........................................................  41
  NYSE Listing............................................................  41
  Delisting and Deregistration of 360(degrees) Common Stock...............  42
  Conduct of the Business of 360(degrees) and ALLTEL if the Merger Is Not
   Consummated............................................................  42
  Resales of ALLTEL Common Stock..........................................  42
</TABLE>
 
                                       iv
<PAGE>
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
OTHER TERMS OF THE MERGER AGREEMENT.......................................  43
  Certain Representations and Warranties..................................  43
  Conduct of Business by 360(degrees) Pending the Merger..................  43
  Employee Stock Options; Incentive and Benefit Plans.....................  44
  No Solicitation.........................................................  45
  Indemnification and Insurance...........................................  45
  Conditions to Consummation of the Merger................................  45
  Termination.............................................................  46
  Termination Fee.........................................................  47
  Expenses................................................................  47
  Amendment and Modification..............................................  48
  Waiver..................................................................  48
  Change of Control Provisions Contained in Certain of 360(degrees)'s Se-
   nior Debt Instruments..................................................  48
  Option Agreement........................................................  48
CERTAIN REGULATORY FILINGS AND APPROVALS..................................  50
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION..............  50
INFORMATION CONCERNING ALLTEL.............................................  57
  Security Ownership of Certain Beneficial Owners and Management..........  57
  Compensation of Directors...............................................  58
  Compensation of Named Executive Officers................................  60
  Option Grants in 1997...................................................  61
  Option Exercises in 1997 and 1997 Year-End Option Values................  61
  Long-Term Incentive Plan Awards in 1997.................................  62
  Executive Compensation Agreement........................................  62
  Change in Control Agreements............................................  62
  Defined Benefit Pension Plan............................................  63
  Benefit Restoration Plan................................................  63
  Supplemental Executive Retirement Plan..................................  63
  Grantor Trust...........................................................  64
DIRECTORS AND MANAGEMENT OF ALLTEL FOLLOWING THE MERGER...................  64
  Directors...............................................................  64
  Executive Officers......................................................  65
APPROVAL OF THE CERTIFICATE AMENDMENT.....................................  66
  Introduction............................................................  66
  Vote Required...........................................................  66
  Purpose.................................................................  66
APPROVAL OF THE 1998 EQUITY INCENTIVE PLAN................................  67
  Introduction............................................................  67
  Vote Required...........................................................  67
  Summary of the 1998 Equity Incentive Plan...............................  67
  Tax Aspects of the Equity Incentive Plan................................  69
  Equity Incentive Plan Benefits..........................................  70
CERTAIN RELATED TRANSACTIONS..............................................  70
DESCRIPTION OF ALLTEL CAPITAL STOCK.......................................  70
  General.................................................................  70
  ALLTEL Common Stock.....................................................  71
  Rights Agreement........................................................  71
  ALLTEL Preferred Stock..................................................  73
</TABLE>
 
                                       v
<PAGE>
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
COMPARISON OF THE RIGHTS OF STOCKHOLDERS OF ALLTEL AND 360(degrees)........  73
  Dividend Rights..........................................................  74
  Voting Rights............................................................  74
  Directors................................................................  74
  Call of Special Meetings.................................................  75
  Action by Stockholders Without a Meeting.................................  75
  Stockholder Proposals....................................................  75
  Vote on Extraordinary Corporate Transactions.............................  76
  Rights Plan..............................................................  76
  Business Combination Restrictions........................................  78
  Rights of Appraisal......................................................  79
  Special Redemption Provisions............................................  80
  Preemptive Rights........................................................  80
  Limitation of Liability..................................................  80
  Indemnification of Officers and Directors................................  80
  Liquidation Rights.......................................................  81
  Amendment to Certificate of Incorporation................................  81
  Amendment to By-laws.....................................................  81
CERTAIN PENDING LITIGATION.................................................  81
LEGAL MATTERS..............................................................  82
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE....................  82
EXPERTS....................................................................  82
</TABLE>
 
ANNEX A--Agreement and Plan of Merger
 
ANNEX B--Stock Option Agreement
 
ANNEX C--Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
 
ANNEX D--Opinion of Stephens Inc.
 
ANNEX E--Opinion of Lazard Freres & Co. LLC
 
ANNEX F--Form of Amendment No. 1 to Amended and Restated Certificate of
Incorporation of ALLTEL
 
ANNEX G--1998 Equity Incentive Plan
 
 
                                       vi
<PAGE>
 
                    QUESTIONS AND ANSWERS ABOUT THE MERGER
 
Q. WHY ARE THE TWO COMPANIES PROPOSING TO MERGE? HOW WILL STOCKHOLDERS
   BENEFIT?
 
A. In a press release, dated March 16, 1998, announcing the Merger, Joe T.
Ford, ALLTEL's Chairman and Chief Executive Officer said:
 
  The [Merger] . . .  creates a new, formidable competitor ideally positioned
  as one of the leading growth companies in the communications industry. The
  companies share a unique vision of the communications industry and what it
  will take to succeed in the future. The names of both companies are
  synonymous with quality, convenience, innovation and value. Our combination
  of people, products, networks, technology, and geographic footprint
  provides the perfect foundation for the communications company of the
  future.
 
In the same press release, Dennis E. Foster, 360(degrees)'s President and
Chief Executive Officer said:
 
  ALLTEL and 360(degrees) share a strategic objective to offer bundled
  communications services through tightly-focused geographic markets. This
  merger is a natural extension of that strategy. Both companies have focused
  their efforts on developing strong distribution channels and local presence
  in their operating areas. In addition, both companies primarily serve mid-
  sized cities and smaller communities. The combined company will have more
  than 3,000 points of distribution including 250 retail stores, 450 kiosks
  and 2,500 sales personnel, in addition to a strong agent and dealer
  network.
 
Q. EXPLAIN WHAT STOCKHOLDERS WILL RECEIVE IN THE MERGER.
 
A. ALLTEL Stockholders. After the Merger, each share of ALLTEL Common Stock
will remain outstanding. Holders of ALLTEL Common Stock will continue to hold
their same shares after the Merger.
 
  360(degrees) Stockholders. In the Merger, each share of 360(degrees) Common
Stock will be cancelled in exchange for the right to receive .74 of a share of
ALLTEL Common Stock. ALLTEL will not issue fractional shares of ALLTEL Common
Stock. 360(degrees) stockholders will instead be paid cash equal to the market
value on the Merger date of any fractional shares of ALLTEL Common Stock that
would have otherwise been received.
 
Q. WILL ALLTEL PAY DIVIDENDS ON ITS COMMON STOCK?
 
A.  ALLTEL historically has paid a quarterly dividend to its common
stockholders and intends to continue paying a quarterly dividend. For a
comparison of the dividends historically paid by ALLTEL and 360(degrees), see
"SUMMARY--Market Prices and Dividends."
 
Q. WHAT ARE THE TAX CONSEQUENCES TO STOCKHOLDERS OF THE MERGER?
 
A. The Merger is intended to qualify as a reorganization within the meaning of
the Internal Revenue Code of 1986, as amended (the "Code"). Assuming that the
Merger qualifies as a reorganization within the meaning of the Code, holders
of 360(degrees) Common Stock who exchange their 360(degrees) Common Stock for
ALLTEL Common Stock pursuant to the Merger will not recognize gain or loss for
United States federal income tax purposes, except with respect to any cash
they receive in lieu of fractional shares of ALLTEL Common Stock. For a more
detailed description of tax consequences see "SUMMARY--The Merger," and "THE
MERGER--Certain United States Federal Income Tax Consequences of the Merger."
 
Q. WHAT WILL 360(degrees) STOCKHOLDERS' TAX BASIS BE IN THE ALLTEL COMMON
   STOCK THEY RECEIVE IN THE MERGER?
 
A. The tax basis of a 360(degrees) stockholder in the shares of ALLTEL Common
Stock received in the Merger will equal such stockholder's current tax basis
in its 360(degrees) Common Stock reduced by an amount allocable to a
fractional share interest for which cash, if any, is received.
 
Q. WHAT REGULATORY APPROVALS ARE NEEDED?
 
A. The Merger must be approved by the Federal Communications Commission. See
"CERTAIN REGULATORY FILINGS AND APPROVALS".
 
                                      vii
<PAGE>
 
Q. SHOULD ALLTEL STOCKHOLDERS NOT ATTENDING THE ALLTEL SPECIAL MEETING IN
   PERSON RETURN THEIR PROXY CARD?
 
A. Yes. After considering the information contained in this Joint Proxy
Statement/Prospectus, please fill out and sign your proxy card. Then, return
the enclosed proxy card in the return envelope as soon as possible, so that
your shares may be represented at the ALLTEL Special Meeting.
 
Q. SHOULD 360(degrees) STOCKHOLDERS NOT ATTENDING THE 360(degrees) SPECIAL
   MEETING IN PERSON RETURN THEIR PROXY CARD?
 
A. Yes. After considering the information contained in this Joint Proxy
Statement/Prospectus, please complete, date, sign and return the accompanying
proxy card in the provided envelope (which is postage prepaid if mailed in the
United States) or, if you wish, vote your shares by telephone using the toll-
free number set forth on the accompanying proxy card. If you vote your shares
by telephone, there is no need to send in the proxy card. Failure to vote your
shares will have the same effect as a vote against the Merger.
 
Q. SHOULD 360(degrees) STOCKHOLDERS SEND STOCK CERTIFICATES NOW?
 
A. No. After the Merger is completed, First Union National Bank of North
Carolina, Charlotte, North Carolina, the exchange agent appointed by ALLTEL,
will send 360(degrees) stockholders written instructions for exchanging stock
certificates.
 
  ALLTEL stockholders will not exchange any stock certificates.
 
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
 
A. The Merger is expected to be completed in the third quarter of 1998.
 
  For additional questions about the Merger please contact:
 
  ALLTEL STOCKHOLDERS
 
                                          360(degrees) STOCKHOLDERS
 
  ALLTEL Corporation                      360(degrees) Communications Company
  Investor Relations Department           8725 W. Higgins Road
  One Allied Drive                        Chicago, Illinois 60631-2702
  Little Rock, Arkansas 72202             Attn: Investor Relations
  Telephone (501) 905-8000                Telephone (773) 399-2150
  ALLTEL Web Site:                        360(degrees) Web Site:
  http//www.alltel.com                    http//www.360.com
 
                                     viii
<PAGE>
 
                                    SUMMARY
 
  This section summarizes information contained elsewhere or incorporated by
reference in this Joint Proxy Statement/Prospectus. It is qualified in its
entirety by the more detailed information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus and the Annexes hereto.
Capitalized terms not defined in this Joint Proxy Statement/Prospectus have the
respective meanings specified in the Merger Agreement.
 
  Stockholders of ALLTEL and stockholders of 360(degrees) are urged to read
this Joint Proxy Statement/Prospectus and the Annexes hereto and consider the
information set forth below under the caption "RISK FACTORS."
 
RECENT EVENTS
 
  On April 21, 1998, ALLTEL announced first quarter 1998 results from its
current businesses. Revenues and earnings per share were $847 million and 55
cents per share, respectively, or 13% and 12% over the first quarter of 1997.
Operating income from current businesses for the first quarter of 1998 was $191
million, or 6% over the first quarter of 1997. On April 23, 1998, the ALLTEL
Board declared a $.29 per share regular quarterly dividend on ALLTEL Common
Stock. The dividend will be payable on July 3, 1998 to stockholders of record
on June 5, 1998. Regular quarterly dividends were also declared on all series
of ALLTEL Preferred Stock.
 
  On April 15, 1998, 360(degrees) announced operating results for the first
quarter of 1998. 360(degrees) reported net income of $44.1 million, or $0.36
per share, for the three months ended March 31, 1998, compared with $9.4
million, or $0.08 per share, for the three months ended March 31, 1997. Net
income for the first quarter of 1998 included an after-tax gain of $18.1
million, or $0.15 per share, from the sale of 360(degrees)'s 28% interest in
the Omaha, Nebraska cellular market. Excluding the Omaha transaction, net
income would have been $26 million. 360(degrees) also reported total operating
revenues of $355 million during the first quarter of 1998, up 15.6% from $307
million in the same period last year.
 
THE COMPANIES
 
  ALLTEL. ALLTEL is a customer-focused information technology company that
provides wireline and wireless communications and information services. ALLTEL
owns subsidiaries that provide wireline local, long-distance, network access
and internet services, wireless communications, wide-area paging service and
information processing management services and advanced applications software.
Telecommunications products are warehoused and sold by ALLTEL's distribution
subsidiary. A subsidiary also publishes telephone directories for affiliates
and other independent telephone companies. Merger Sub is a wholly-owned
subsidiary of ALLTEL and was formed by ALLTEL solely for the purpose of
effecting the Merger. ALLTEL's principal executive offices are located at One
Allied Drive, Little Rock, Arkansas 72202, and its telephone number is (501)
905-8000. For further information concerning ALLTEL, see "AVAILABLE
INFORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
 
  360(degrees). 360(degrees) is one of the leading and most established
wireless communications companies in the United States, serving approximately
2.6 million customers in more than 100 markets in 15 states. 360(degrees)'s
interests in these markets represent, as of December 31, 1997, approximately
21.4 million Net POPs. "Net POPs" refers to the estimated population with
respect to a given service area multiplied by the percentage interest that
360(degrees) owns in the entity licensed by the Federal Communications
Commission ("FCC") to operate a cellular communications system within that
service area. 360(degrees) also owns, as of December 31, 1997, minority
interests in 60 additional cellular telephone markets representing
approximately 4.7 million Net POPs, including markets located in New York, New
York; Chicago, Illinois; Houston, Texas; and Orlando, Florida. 360(degrees)
sells and markets wireless voice and data services and related products, as
well as residential long distance and paging services, through a distribution
network consisting of nationally recognized and local dealers, full service
retail stores and a direct sales force. 360(degrees) operates in four regions
in the United States: Mid-Atlantic, Midwest, Southeast and
 
                                       1
<PAGE>
 
West. 360(degrees)'s controlled markets comprising each region include a number
of geographic operating clusters which are primarily located in mid-sized
communities. 360(degrees)'s principal executive offices are located at 8725 W.
Higgins Road, Chicago, Illinois 60631-2702, and its telephone number is (773)
399-2500. For further information concerning 360(degrees), see "AVAILABLE
INFORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
 
THE SPECIAL MEETINGS
 
  ALLTEL. The ALLTEL Special Meeting will be held at One Allied Drive, Building
III, Little Rock, Arkansas on June 23, 1998, at 11:00 a.m., local time. At the
ALLTEL Special Meeting, holders of ALLTEL Voting Stock are being asked to
approve (i) the Issuance of ALLTEL Common Stock, (ii) the Certificate
Amendment, and (iii) the Equity Incentive Plan. See "THE SPECIAL MEETINGS--
Matters to be Considered at the Special Meetings." The close of business on May
4, 1998 (the "ALLTEL Record Date") is the record date for determining which
holders of ALLTEL Voting Stock are entitled to vote at the ALLTEL Special
Meeting. See "THE SPECIAL MEETINGS--Stock Entitled to Vote; Quorum." The
approval of the Issuance of ALLTEL Common Stock and the approval of the Equity
Incentive Plan each requires the affirmative vote of holders of record of a
majority of the shares of ALLTEL Voting Stock (voting together as a single
class) present in person or by proxy and entitled to vote at the ALLTEL Special
Meeting (assuming a quorum is present). The approval of the Certificate
Amendment requires the affirmative vote of holders of record of a majority of
shares of ALLTEL Voting Stock outstanding on the ALLTEL Record Date. See "THE
SPECIAL MEETINGS--Votes Required." Stockholders of ALLTEL will have one vote
for each share of ALLTEL Common Stock and one vote for each share of ALLTEL
Voting Preferred Stock owned on the ALLTEL Record Date. See "THE SPECIAL
MEETINGS--Votes Required."
 
  On May 1, 1998, directors and executive officers of ALLTEL and their
affiliates beneficially owned 977,318 shares of ALLTEL Common Stock (exclusive
of shares that may be acquired through the exercise of options), which
represented approximately .5% of the total shares of ALLTEL Voting Stock
outstanding on such date. Each such director and executive officer has
indicated his or her present intention to vote the ALLTEL Common Stock owned by
him or her for the approval of each of the Issuance of ALLTEL Common Stock, the
Certificate Amendment, and the Equity Incentive Plan. On May 1, 1998, no
directors, officers, or affiliates of ALLTEL owned ALLTEL Voting Preferred
Stock.
 
  360(degrees). The 360(degrees) Special Meeting will be held at the offices of
The Northern Trust Company, 6th Floor Assembly Room, 50 S. LaSalle Street,
Chicago, Illinois, on June 23, 1998, at 10:00 a.m. local time. At the
360(degrees) Special Meeting, holders of 360(degrees) Common Stock are being
asked to approve the 360(degrees) Proposal. See "THE SPECIAL MEETINGS--Matters
to be Considered at the Special Meetings." Holders of record of 360(degrees)
Common Stock at the close of business on May 5, 1998 (the "360(degrees) Record
Date") have the right to receive notice of and to vote at the 360(degrees)
Special Meeting. The approval of the 360(degrees) Proposal requires the
affirmative vote of holders of record of a majority of the shares of
360(degrees) Common Stock outstanding on the 360(degrees) Record Date.
360(degrees) stockholders will have one vote for each share of 360(degrees)
Common Stock owned on the 360(degrees) Record Date. See "THE SPECIAL MEETINGS--
Votes Required."
 
  On May 1, 1998, directors and executive officers of 360(degrees) and their
affiliates beneficially owned 6,746,868 shares of 360(degrees) Common Stock
(exclusive of shares that may be acquired through the exercise of options),
which represented approximately 5.56% of the shares of 360(degrees) Common
Stock outstanding on such date. Each such director and executive officer has
indicated his or her present intention to vote the 360(degrees) Common Stock
beneficially owned by him or her for the approval of the 360(degrees) Proposal.
See "THE SPECIAL MEETINGS--Share Ownership of Management."
 
 
                                       2
<PAGE>
 
THE MERGER
 
  General. At the Effective Time (defined below) of the Merger, Merger Sub will
merge into 360(degrees), and 360(degrees) will become a wholly-owned subsidiary
of ALLTEL. As a result of the Merger, the separate corporate existence of
Merger Sub will cease, and 360(degrees) will succeed to all the rights and be
responsible for all the obligations of Merger Sub in accordance with the
Delaware General Corporation Law (the "DGCL"). Subject to the terms and
conditions of the Merger Agreement, each share of 360(degrees) Common Stock
outstanding immediately prior to the Effective Time (other than shares owned by
360(degrees), ALLTEL or any of their subsidiaries) will be converted into the
right to receive .74 of a share of ALLTEL Common Stock. See "DESCRIPTION OF
ALLTEL CAPITAL STOCK--ALLTEL Common Stock." For a description of the certain
differences between the rights the holders of 360(degrees) Common Stock
currently have and those they will have as holders of ALLTEL Common Stock, see
"COMPARISON OF THE RIGHTS OF STOCKHOLDERS OF 360(degrees) AND ALLTEL." Cash
will be paid in lieu of any fractional share of ALLTEL Common Stock in an
amount determined by multiplying any such fraction by the closing price of
ALLTEL Common Stock as reported on the NYSE Composite Transactions Tape on the
day of the Effective Time. A copy of the Merger Agreement is set forth as Annex
A to this Joint Proxy Statement/Prospectus. See "THE MERGER--General."
 
  The Merger will become effective upon the filing of a certificate of merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware or at such subsequent time as ALLTEL and 360(degrees) may agree and is
specified in the Certificate of Merger (the "Effective Time"). The filing of
the Certificate of Merger will occur as soon as practicable following the
closing of the Merger, which will occur on the second business day after the
satisfaction or waiver of the conditions set forth in the Merger Agreement,
unless otherwise agreed by the parties.
 
  Board Recommendations. The Board of Directors of ALLTEL (the "ALLTEL Board")
has unanimously determined that the Merger and the Issuance of ALLTEL Common
Stock to 360(degrees) stockholders pursuant to the Merger Agreement are in the
best interests of ALLTEL and its stockholders and has unanimously approved the
Merger Agreement. The ALLTEL Board has also unanimously determined that each of
the Certificate Amendment and the Equity Incentive Plan is in the best
interests of ALLTEL and its stockholders. The ALLTEL Board recommends that the
ALLTEL stockholders vote in favor of the Issuance of ALLTEL Common Stock, the
Certificate Amendment and the Equity Incentive Plan at the ALLTEL Special
Meeting. See "THE MERGER--ALLTEL's Reasons for the Merger; Recommendation of
the ALLTEL Board."
 
  The Board of Directors of 360(degrees) (the "360(degrees) Board") has
unanimously determined that the Merger Agreement and the transactions
contemplated thereby are in the best interests of 360(degrees) and its
stockholders and has unanimously approved the Merger Agreement and the
transactions contemplated thereby. The 360(degrees) Board recommends that the
stockholders of 360(degrees) vote to approve the 360(degrees) Proposal. See
"THE MERGER--360(degrees)'s Reasons for the Merger; Recommendation of the
360(degrees) Board."
 
  Opinions of Financial Advisors to ALLTEL. On March 15, 1998, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") delivered its oral
opinion (which was subsequently confirmed in writing on March 16, 1998) to the
ALLTEL Board that, on the basis of and subject to the matters set forth
therein, as of the date thereof, the Conversion Fraction was fair from a
financial point of view to ALLTEL. Merrill Lynch subsequently confirmed its
opinion by delivering to the ALLTEL Board its written opinion, dated as of the
date of this Joint Proxy Statement/Prospectus, that, on the basis of and
subject to the matters set forth therein, as of the date thereof, the
Conversion Fraction is fair from a financial point of view to ALLTEL. A copy of
the written opinion of Merrill Lynch, dated as of the date of this Joint Proxy
Statement/Prospectus, which sets forth the assumptions made, matters considered
and the scope of review undertaken in connection therewith, is attached to this
Joint Proxy Statement/Prospectus as Annex C and is incorporated herein by
reference. Stockholders of ALLTEL should read the Merrill Lynch opinion in its
entirety. See "THE MERGER--Opinions of Financial Advisors to ALLTEL" and 
Annex C.

                                       3
<PAGE>
 
 
  On March 15, 1998, Stephens Inc. ("Stephens") delivered its oral opinion
(which was subsequently confirmed in writing on March 16, 1998) to the ALLTEL
Board that, on the basis of and subject to the matters set forth therein, as of
the date thereof, the Conversion Fraction was fair from a financial point of
view to ALLTEL. Stephens subsequently confirmed its opinion by delivering to
the ALLTEL Board its written opinion, dated as of the date of this Joint Proxy
Statement/Prospectus, that, on the basis of and subject to the matters set
forth therein, as of the date thereof, the Conversion Fraction is fair from a
financial point of view to ALLTEL. A copy of the written opinion of Stephens
dated as of the date of this Joint Proxy Statement/Prospectus, which sets forth
the assumptions made, matters considered and the scope of review undertaken in
connection therewith, is attached to this Joint Proxy Statement/Prospectus as
Annex D and is incorporated herein by reference. Stockholders of ALLTEL should
read the Stephens opinion in its entirety. See "THE MERGER--Opinion of
Financial Advisors to ALLTEL" and Annex D.
 
  Opinion of 360(degrees)'s Financial Advisor. Lazard Freres & Co. LLC ("Lazard
Freres") delivered its written opinion (the "Lazard Opinion") dated as of March
15, 1998 to the 360(degrees) Board, to the effect that, as of such date, the
Conversion Fraction was fair to 360(degrees) and its stockholders from a
financial point of view. Lazard Freres subsequently reconfirmed its opinion by
delivering to the 360(degrees) Board its written opinion, dated as of May 6,
1998, to the effect that, as of such date, the Conversion Fraction was fair to
360(degrees) and its stockholders from a financial point of view. See "THE
MERGER--Opinion of 360(degrees)'s Financial Advisor." A copy of the reconfirmed
Lazard Opinion, which sets forth the assumptions made, procedures followed,
matters considered and limitations on the scope of the review by Lazard Freres
in rendering such opinion, is attached as Annex E to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference. The Lazard
Opinion and the reconfirmed Lazard Opinion address only the fairness of the
Conversion Fraction pursuant to the Merger Agreement from a financial point of
view as of the respective dates of the Lazard Opinion and the reconfirmed
Lazard Opinion, as the case may be, and do not address any other aspect of the
Merger or constitute a recommendation to any holder of 360(degrees) Common
Stock as to how to vote with respect to the Merger. The summary of the Lazard
Opinion set forth in this Joint Proxy Statement/Prospectus is qualified in its
entirety by reference to the full extent of the reconfirmed Lazard Opinion.
360(degrees) STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE RECONFIRMED LAZARD
OPINION CAREFULLY AND IN ITS ENTIRETY IN CONJUNCTION WITH THIS JOINT PROXY
STATEMENT/PROSPECTUS.
 
  Forward-Looking Statements. ALLTEL and 360(degrees) have made forward-looking
statements in this document that are subject to certain risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of 360(degrees) and ALLTEL as
well as statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends," or similar expressions.
Certain important factors, in addition to those discussed elsewhere in this
document and in the documents incorporated by reference, could affect the
future results of ALLTEL and could cause those results to differ materially
from those expressed in the forward-looking statements. See "CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS."
 
  Certain Possible Risks of the Merger. In determining whether to vote for the
360(degrees) Proposal and the Issuance of ALLTEL Common Stock, there are
certain risks that should be considered. These risks relate to the integration
of ALLTEL and 360(degrees), the accounting treatment for the Merger, dilution
of the existing voting power of ALLTEL stockholders, certain industry risks
with respect to competition and regulation and technological changes, risks
related to regulatory approvals, and risks related to a fixed Conversion
Fraction. See "RISK FACTORS".
 
  Directors and Management of ALLTEL following the Merger. In the Merger
Agreement the parties have agreed that the ALLTEL Board will be expanded from
eleven members to fifteen members, with Frank E. Reed, Dennis E. Foster and
Michael Hooker, each a current director of 360(degrees), and Charles H. Goodman
being elected to fill such newly created directorships. In addition, pursuant
to the Merger Agreement, Dennis E. Foster, President and Chief Executive
Officer of 360(degrees), will become Vice-Chairman of ALLTEL. Michael J. Small,
Executive Vice President and Chief Financial Officer of 360(degrees), will
become Senior Vice President--Corporate Development of
 
                                       4
<PAGE>
 
ALLTEL and Kevin L. Beebe, Executive Vice President--Operations of
360(degrees), will become a member of the office of the President of ALLTEL's
Communications Group.
 
  Interests of Certain Persons in the Merger. In considering the 360(degrees)
Board's recommendation to the 360(degrees) stockholders to vote to approve the
360(degrees) Proposal, stockholders should be aware that a number of
360(degrees) officers, including Dennis E. Foster who is also a director, have
employment agreements, retention incentives or benefit plans that give them
interests in the Merger that are different from 360(degrees) stockholders. See
"THE MERGER--Executive Severance; Retention;" and "--Director and Officer
Indemnification and Insurance;" and "OTHER TERMS OF THE MERGER AGREEMENT--
Employee Stock Options; Incentive and Benefit Plans;" and "--Indemnification
and Insurance." The 360(degrees) Board recognized these interests and
determined that they neither supported nor detracted from the fairness of the
Merger to the 360(degrees) stockholders.
 
  Stock Exchange Listing. It is a condition to the closing that the shares of
ALLTEL Common Stock to be issued to the 360(degrees) stockholders pursuant to
the Merger Agreement have been approved for listing on the NYSE upon official
notice of issuance.
 
  Certain United States Federal Income Tax Consequences of the Merger. No
ruling has been (or will be) sought from the Internal Revenue Service (the
"IRS") as to the anticipated United States federal income tax consequences of
the Merger. It is a condition to the consummation of the Merger that
360(degrees) receive an opinion from its special tax counsel, Sonnenschein Nath
& Rosenthal, and that ALLTEL receive an opinion from its special tax counsel,
Skadden, Arps, Slate, Meagher & Flom LLP, substantially to the effect that,
based upon certain facts, representations and assumptions, the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The issuance of such
opinions is conditioned on, among other things, such tax counsels' receipt of
representation letters from each of ALLTEL, Merger Sub and 360(degrees), in
each case, in form and substance reasonably satisfactory to each such counsel.
Assuming the Merger qualifies as a reorganization within the meaning of Section
368(a) of the Code, no gain or loss will be recognized for United States
federal income tax purposes by a holder of 360(degrees) Common Stock with
respect to the exchange of 360(degrees) Common Stock for ALLTEL Common Stock
pursuant to the Merger Agreement (except with respect to cash, if any, received
in lieu of a fractional share of ALLTEL Common Stock). See "THE MERGER--Certain
United States Federal Income Tax Consequences of the Merger" and "OTHER TERMS
OF THE MERGER AGREEMENT--Conditions to Consummation of the Merger."
 
  Anticipated Accounting Treatment. The Merger is expected to be accounted for
by the pooling-of-interests method of accounting. Under this method of
accounting, ALLTEL will restate its consolidated financial statements at the
Effective Time to include the assets, liabilities, stockholders' equity and
results of operations of 360(degrees). It is a condition to the obligations of
each of ALLTEL and 360(degrees) to effect the Merger that they receive a letter
from ALLTEL's independent auditors to the effect that such auditors concur that
the Merger will qualify for pooling-of-interests accounting treatment. Also,
ALLTEL expects to incur substantial expenses relating to the Merger and the
integration of 360(degrees)'s operations after the Merger. See "THE MERGER--
Anticipated Accounting Treatment."
 
  Appraisal Rights. Under the DGCL, the holders of 360(degrees) Common Stock
are not entitled to appraisal or dissenter's rights in connection with the
approval of the Merger Agreement and the transactions contemplated thereby. The
transactions contemplated by the Merger Agreement, the Issuance of ALLTEL
Common Stock and the Certificate Amendment, and the approval of the Equity
Incentive Plan, do not give rise to any appraisal or dissenter's rights to the
holders of ALLTEL Voting Stock. See "THE MERGER--Appraisal Rights."
 
  Conditions to the Merger. ALLTEL and 360(degrees) will not complete the
Merger unless a number of conditions are satisfied or waived by them. These
include, among others:
 
    (a) approval of the 360(degrees) Proposal by the stockholders of
  360(degrees);
 
 
                                       5
<PAGE>
 
    (b) approval of the Issuance of ALLTEL Common Stock by stockholders of
  ALLTEL;
 
    (c) no statute, rule, order or injunction prohibiting the Merger;
 
    (d) the representations and warranties in the Merger Agreement being
  materially correct;
 
    (e) approval of the Merger by the FCC;
 
    (f) clearance from federal antitrust agencies;
 
    (g) receipt of a letter from ALLTEL's independent public accountants that
  the Merger may be accounted for as a pooling-of-interests; and
 
    (h) receipt of opinions from counsel to ALLTEL and to 360(degrees) to the
  effect that the Merger will qualify as a tax-free reorganization.
 
  The closing of the Merger is not subject to approval by the stockholders of
ALLTEL of either the Certificate Amendment or the Equity Incentive Plan. See
"OTHER TERMS OF THE MERGER AGREEMENT--Conditions to Consummation of the
Merger."
 
  Termination of the Merger Agreement. ALLTEL and 360(degrees) can mutually
agree to terminate the Merger Agreement at any time. Either ALLTEL or
360(degrees) can terminate the Merger Agreement if:
 
    (a) the Merger is not completed by November 30, 1998, except that if on
  November 30, 1998 all conditions to the parties' obligations have been
  satisfied or waived other than receipt of approval by the FCC, then either
  ALLTEL or 360(degrees) may extend the termination date to February 28,
  1999;
 
    (b) a governmental authority, such as a court, permanently prohibits the
  Merger or refuses to grant an approval that is required;
 
    (c) the ALLTEL stockholders fail to approve the Issuance of ALLTEL Common
  Stock;
 
    (d) the 360(degrees) stockholders fail to approve the 360(degrees)
  Proposal; or
 
    (e) the 360(degrees) Board reasonably determines that a Takeover Proposal
  (defined below) constitutes a Superior Proposal (defined below) (except
  that 360(degrees) may not terminate the Merger Agreement until it shall
  first have notified ALLTEL of the Takeover Proposal and, subject to
  applicable legal duties, afforded ALLTEL an opportunity to modify the terms
  of the Merger Agreement so that the Merger may be effected).
 
  ALLTEL can terminate the Merger Agreement if:
 
    (a) the 360(degrees) Board withdraws its approval or recommendation of
  the Merger (or modifies its recommendation in a manner that is adverse to
  ALLTEL);
 
    (b) the 360(degrees) Board approves a Takeover Proposal; or
 
    (c) a tender or exchange offer for 360(degrees) is commenced by a third
  party and the 360(degrees) Board fails to recommend against acceptance of
  the tender or exchange offer.
 
  A "Takeover Proposal" is defined in the Merger Agreement as a third party
proposal or offer made prior to the 360(degrees) Special Meeting for a merger
or other combination involving the purchase of all or substantially all of the
assets of 360(degrees) or more than 50% of 360(degrees)'s voting securities. A
"Superior Proposal" is defined in the Merger Agreement as a Takeover Proposal
that a majority of the members of 360(degrees)'s Board determines in good faith
to be more favorable than the Merger to 360(degrees) and its stockholders, and
for which financing is fully committed. See "OTHER TERMS OF THE MERGER
AGREEMENT--Termination."
 
  Termination Fee. 360(degrees) is required to pay ALLTEL a termination fee of
$100,000,000 if:
 
    (a) 360(degrees) or ALLTEL terminates the Merger Agreement because the
  360(degrees) Board has determined that a Takeover Proposal constitutes a
  Superior Proposal;
 
                                       6
<PAGE>
 
 
    (b) ALLTEL terminates the Merger Agreement because the 360(degrees) Board
  has withdrawn or adversely modified its approval of the Merger, or approved
  or recommended any Takeover Proposal;
 
    (c) Prior to termination of the Merger Agreement, (i) a Takeover Proposal
  is commenced, publicly proposed or publicly disclosed and not withdrawn,
  (ii) the Merger Agreement is thereafter terminated by 360(degrees) due to
  the failure or nonoccurrence of conditions at November 30, 1998 (or
  February 28, 1999 under certain circumstances set forth above) or is
  terminated by ALLTEL or 360(degrees) due to the failure of 360(degrees)'s
  stockholders to approve the Merger, and (iii) within 12 months after such
  termination a Takeover Proposal is consummated.
 
See "OTHER TERMS OF THE MERGER AGREEMENT--Termination Fee."
 
  Stock Option. As an inducement to ALLTEL to enter into the Merger Agreement,
360(degrees) (as issuer) and ALLTEL (as grantee) entered into the Stock Option
Agreement, dated as of March 16, 1998 (the "Option Agreement"), pursuant to
which 360(degrees) granted ALLTEL an irrevocable option (the "Option") to
purchase from 360(degrees) up to approximately 24,140,553 shares, subject to
certain adjustments (the "Option Shares"), of 360(degrees) Common Stock at a
price of $33.90 per share (the "Option Purchase Price"). The number of Option
Shares represents 19.9% of the shares of 360(degrees) Common Stock outstanding
on the date of the Option Agreement. The closing sale price of 360(degrees)
Common Stock on the last trading day preceding the execution of the Merger
Agreement was $35.62 per share. ALLTEL may exercise the Option only under
certain limited and specifically defined circumstances (principally related to
a Takeover Proposal). The Option Agreement gives ALLTEL a right to receive cash
upon exercise of the Option in an amount equal to the difference between the
average closing price of the Option Shares (as reported on the NYSE Composite
Transactions Tape) during a ten day period prior to the closing of the exercise
and the Option Purchase Price, except that 360(degrees)'s obligation to pay
such cash amount is limited to a maximum of $2.00 per share for each Option
Share exercised. The Option Agreement provides 360(degrees) with an option to
repurchase any Option Shares acquired by ALLTEL pursuant to an exercise of the
Option at a purchase price per share equal to the Option Purchase Price plus
$2.00.
 
  Certain aspects of the Option Agreement may have the effect of discouraging
parties who might now be interested in acquiring all of or a significant
interest in 360(degrees) from considering or proposing such an acquisition,
even if such persons, in the case of an acquisition with respect to
360(degrees) were prepared to offer to pay consideration to 360(degrees)
stockholders that had a higher current market price than the shares of ALLTEL
Common Stock to be received for each share of 360(degrees) Common Stock
pursuant to the Merger Agreement. See "OTHER TERMS OF THE MERGER AGREEMENT--
Option Agreement."
 
  Regulatory Approvals. The Merger cannot be completed unless the FCC approves
the transfer of control of 360(degrees) to ALLTEL. On March 26, 1998,
360(degrees) and ALLTEL jointly filed FCC applications, seeking the requisite
FCC approvals. The FCC will consider whether ALLTEL is qualified to control
360(degrees)'s FCC licenses and authorizations and whether the public interest,
convenience, and necessity will be served by the transfer of control to ALLTEL.
360(degrees) and ALLTEL believe that the joint applications demonstrate
compliance with these standards.
 
  Federal antitrust laws prohibit 360(degrees) and ALLTEL from completing the
Merger until after they have furnished certain information and materials to the
Antitrust Division of the Department of Justice ("DOJ") and the Federal Trade
Commission ("FTC") and specified waiting period requirements have been
satisfied. 360(degrees) and ALLTEL each filed notification and report forms
with the DOJ and the FTC on April 14, 1998. On April 29, 1998 ALLTEL and
360(degrees) each received notice from the FTC that early termination of the
specified waiting period had been granted.
 
MARKET PRICES AND DIVIDENDS
 
  ALLTEL Common Stock and 360(degrees) Common Stock are each traded on the NYSE
and the Pacific Exchange under the symbols "AT" and "XO", respectively.
360(degrees) Common Stock is also traded on the Chicago Stock
 
                                       7
<PAGE>
 
Exchange. The following table sets forth the dividends declared on the ALLTEL
Common Stock and the high and low intra-day sales prices per share for the
ALLTEL Common Stock and the 360(degrees) Common Stock, each as reported on the
NYSE Composite Transactions Tape for the periods indicated. No cash dividends
have ever been paid on the 360(degrees) Common Stock. The per share information
presented below and elsewhere in this Joint Proxy Statement/Prospectus has been
adjusted to reflect all stock splits and stock dividends of ALLTEL and
360(degrees).
 
<TABLE>
<CAPTION>
                                          ALLTEL            360(degrees) COMMON
                                       COMMON STOCK                STOCK
                                --------------------------- --------------------
FISCAL YEAR                       HIGH     LOW    DIVIDENDS    HIGH       LOW
- -----------                     -------- -------- --------- ---------- ---------
<S>                             <C>      <C>      <C>       <C>        <C>
1996
First Quarter.................  35 5/8   28 1/4     .26     27         21 1/2
Second Quarter................  33 1/8   29 1/4     .26     25 1/8     22 1/8
Third Quarter.................  30 7/8   26 5/8     .26     24 3/4     22
Fourth Quarter................  32 3/4   27 1/2     .275    25 7/8     22 1/4
1997
First Quarter.................  36 3/4   30 5/8     .275    24 3/8     16 7/8
Second Quarter................  34 3/8   29 3/4     .275    19 5/8     13 7/8
Third Quarter.................  35 1/2   30 15/16   .275    22         16 5/8
Fourth Quarter................  41 5/8   33 3/16    .29     22 3/8     18 5/8
1998
First Quarter.................  48 13/16 39 9/16    .29     36 1/4     18 1/8
Second Quarter (through May 6,
 1998)........................  46 1/4   40 15/16   .29     33 3/16    29 1/8
</TABLE>
 
  Set forth below are the last reported sale prices of ALLTEL Common Stock and
360(degrees) Common Stock on March 13, 1998, the last trading day prior to the
execution of the Merger Agreement, as reported on the NYSE Composite
Transactions Tape, and the equivalent pro forma sale price of 360(degrees)
Common Stock on such date, as determined by multiplying such last reported sale
price of ALLTEL Common Stock by the Conversion Fraction of .74:
 
<TABLE>
       <S>                                                            <C>
       360(degrees) Common Stock..................................... $  35.625
       ALLTEL Common Stock........................................... $ 45.8125
       360(degrees) Equivalent....................................... $33.90125
</TABLE>
 
  On May 6, 1998, the last reported sale prices of 360(degrees) Common Stock
and ALLTEL Common Stock, as reported on the NYSE Composite Transactions Tape,
were $29.51563 per share and $41.25 per share, respectively and the equivalent
pro forma sale price of 360(degrees) Common Stock on such date was $30.525 per
share.
 
  NO ASSURANCE CAN BE GIVEN AS TO THE MARKET PRICES OF ALLTEL COMMON STOCK OR
360(degrees) COMMON STOCK AT THE CLOSING OF THE MERGER. BECAUSE THE CONVERSION
FRACTION IS FIXED IN THE MERGER AGREEMENT, THE MARKET VALUE OF THE SHARES OF
ALLTEL COMMON STOCK THAT HOLDERS OF 360(degrees) COMMON STOCK WILL RECEIVE AT
THE EFFECTIVE TIME MAY VARY SIGNIFICANTLY FROM THE MARKET VALUE OF THE SHARES
OF ALLTEL COMMON STOCK THAT HOLDERS OF 360(degrees) COMMON STOCK WOULD HAVE
RECEIVED IF THE MERGER WERE CONSUMMATED ON THE DATE OF THE MERGER AGREEMENT OR
ON THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
 
 
 
                                       8
<PAGE>
 
COMPARATIVE PER SHARE DATA
 
  The following table shows actual ("historical") per share information and
unaudited information as if ALLTEL and 360(degrees) had been combined for the
periods shown ("pro forma combined"), calculated based on a Conversion Fraction
of .74 of a share of ALLTEL Common Stock for each share of 360(degrees) Common
Stock and assuming that the Merger is accounted for as a pooling-of-interests
transaction. No cash dividends have ever been paid on the 360(degrees) Common
Stock. The historical data are based on the historical consolidated financial
statements and related notes of each of ALLTEL and 360(degrees) incorporated by
reference in this document. This table should be read together with the
historical financial statements of ALLTEL and 360(degrees) and related notes
thereto. The data presented do not indicate ALLTEL's future results of
operations or the actual results that would have occurred if the Merger had
occurred at the beginning of the periods indicated. No adjustments have been
included for any anticipated costs savings or other synergies.
 
<TABLE>
<CAPTION>
                                    FOR THE YEARS ENDED AND AS OF DECEMBER 31,
                                    --------------------------------------------
                                        1997          1996          1995(1)
                                    ------------- ------------- ----------------
<S>                                 <C>           <C>           <C>
ALLTEL HISTORICAL
Basic earnings per common share...  $        2.72 $        1.53 $         1.87
Diluted earnings per common
 share............................           2.70          1.52           1.85
Book value per share..............          11.97         11.15          10.18
Cash dividends per share..........          1.115         1.055            .98
360(degrees) HISTORICAL
Basic earnings (loss) per common
 share............................  $         .67 $         .50 $         (.01)
Diluted earnings (loss) per common
 share............................            .67           .50           (.01)
Book value per share..............           4.20          3.75            .02
Cash dividends per share..........            --            --             --
PRO FORMA COMBINED
Basic earnings per common share...  $        2.13 $        1.27 $         1.28
Diluted earnings per common
 share............................           2.11          1.26           1.27
Book value per share..............           9.52          9.16           7.00
Cash dividends per share..........            .75           .72            .67
360(degrees) PRO FORMA PER SHARE
 EQUIVALENTS
Basic earnings per common share...  $        1.57 $         .94 $          .95
Diluted earnings per common
 share............................           1.56           .93            .94
Book value per share..............           7.05          6.78           5.18
Cash dividends per share..........            .56           .54            .50
</TABLE>
- --------
(1) 360(degrees) per share information for 1995 has been calculated based upon
    the number of Sprint Corporation weighted average shares outstanding,
    adjusted for a conversion ratio of one share of 360(degrees) Common Stock
    to three shares of Sprint Corporation common stock.
 
 
                                       9
<PAGE>
 
                       SELECTED HISTORICAL FINANCIAL DATA
 
  The summary below sets forth selected historical financial data for ALLTEL
and 360(degrees). These data should be read together with the historical
financial statements and notes thereto contained in the ALLTEL 1997 Form 10-K
and the 360(degrees) 1997 Form 10-K, incorporated by reference herein. See
"AVAILABLE INFORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
 
  Selected Historical Financial Data of ALLTEL. The selected historical
financial data of ALLTEL set forth below come from financial statements of
ALLTEL as they appeared in ALLTEL's Annual Reports on Form 10-K filed with the
SEC for each of the five fiscal years in the period ended December 31, 1997.
 
<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED AND AS OF DECEMBER 31,
                                       ------------------------------------------------------
                                          1997       1996       1995       1994       1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)  ---------- ---------- ---------- ---------- ----------
<S>                                    <C>        <C>        <C>        <C>        <C>
Total revenues and sales..             $3,263,563 $3,192,418 $3,109,725 $2,927,676 $2,321,890
Operating income..........             $  747,024 $  591,625 $  683,978 $  633,866 $  519,046
Net income................             $  507,886 $  291,737 $  354,616 $  271,753 $  262,017
Earnings per common share:
  Basic...................                  $2.72      $1.53      $1.87      $1.44      $1.40
  Diluted.................                  $2.70      $1.52      $1.85      $1.42      $1.38
Dividends per common
 share....................                 $1.115     $1.055      $ .98      $ .90      $ .82
Total assets..............             $5,633,445 $5,359,183 $5,073,105 $4,713,878 $4,270,458
Shareholders' equity......             $2,208,506 $2,097,107 $1,935,565 $1,625,369 $1,554,708
Long-term debt and
 redeemable preferred
 stock....................             $1,879,797 $1,762,597 $1,768,682 $1,853,979 $1,604,659
</TABLE>
- --------
(a) Net income for 1997 includes pretax gains of $206.6 million from the sale
    of certain investments and the sale of ALLTEL's healthcare operations.
    These gains increased net income by $119.9 million or $.64 per share. Net
    income for 1997 also includes a pretax write-down of $16.9 million to
    reflect the fair value less cost to sell ALLTEL's wire and cable
    operations. This write-down decreased net income $11.7 million or $.06 per
    share.
(b) Net income for 1996 includes pretax write-downs of $120.3 million to adjust
    the carrying value of certain software and other assets. The write-downs
    decreased net income $72.7 million or $.38 per share.
(c) Net income for 1995 includes a net pretax gain of $30.8 million primarily
    from the sale of certain wireline properties. The net gain increased net
    income by $19.8 million or $.10 per share.
(d) Net income for 1994 includes a pretax write-down of $54.2 million to
    reflect the estimated net realizable value of ALLTEL's community banking
    and check processing operations. The write-down decreased net income by
    $32.2 million or $.17 per share.
(e) On November 1, 1993, ALLTEL purchased substantially all of the assets of
    the wireline operations of GTE Corporation in the State of Georgia ("GTE
    Georgia"). This acquisition was accounted for as a purchase, and,
    accordingly, GTE Georgia's results have been included in the consolidated
    financial statements from the date of acquisition.
 
                                       10
<PAGE>
 
 
  Selected Historical Financial Data of 360(degrees). Set forth below are
selected historical financial data of 360(degrees) which has been derived from
and should be read in conjunction with 360(degrees)'s audited consolidated
financial statements, including the notes thereto.
 
<TABLE>
<CAPTION>
                                               FOR THE YEARS ENDED AND AS OF DECEMBER 31,
                                       ------------------------------------------------------------
                                          1997      1996(A)      1995         1994         1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)  ---------- ----------- -----------  -----------  -----------
<S>                                    <C>        <C>         <C>          <C>          <C>
Total revenues and sales..             $1,347,172 $ 1,095,872 $   834,415  $   626,475  $   410,480
Operating income..........             $  273,842 $   219,845 $   145,388  $    85,578  $    19,802
Net income (loss).........             $   81,495 $    59,519 $    (1,695) $   (19,757) $   (51,484)
Earnings (loss) per common
 share:(b)
  Basic...................                   $.67        $.50       $(.01)       $(.17)       $(.45)
  Diluted.................                   $.67        $.50       $(.01)       $(.17)       $(.45)
Dividends per common
 share....................                    --          --          --           --           --
Total assets..............             $2,941,924 $ 2,812,069 $ 1,973,246  $ 1,728,344  $ 1,505,221
Shareholders' equity......             $  509,301 $   462,500 $     2,068  $     3,763  $    23,520
Long-term debt(c).........             $1,825,347 $ 1,699,778 $ 1,517,729  $ 1,354,116  $ 1,246,822
</TABLE>
- --------
(a) On March 7, 1996, the spinoff from Sprint Corporation ("Sprint") was
    consummated. Additionally, on November 1, 1996, 360(degrees) completed its
    acquisition of Independent Cellular Network, Inc. and affiliated companies.
    See Notes to Consolidated Financial Statements contained in the
    360(degrees) 1997 Form 10-K for more information regarding these events.
(b) In 1995 and prior years, Earnings (loss) per common share has been
    calculated based upon the number of Sprint weighted average shares
    outstanding for each respective period, adjusted for a conversion ratio of
    one share of 360(degrees) Common Stock to three shares of Sprint common
    stock.
(c) Represents advances from and notes to affiliates for 1995 and prior years.
 
                                       11
<PAGE>
 
               SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION
 
  The following table sets forth certain selected unaudited pro forma financial
data for ALLTEL after giving effect to the Merger for the periods indicated.
The Merger is expected to be treated as a pooling-of-interests for financial
accounting purposes. The following table should be read together with the
consolidated financial statements and accompanying notes of ALLTEL and of
360(degrees) included in the documents described under "AVAILABLE INFORMATION"
and the unaudited pro forma condensed combined financial statements and
accompanying discussion and notes set forth under "UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION" included herein. The pro forma
amounts in the table below are presented for information and do not indicate
what the financial position or the results of operations of ALLTEL would have
been had the Merger occurred as of the dates or for the periods presented. The
pro forma amounts also do not indicate what the financial position or future
results of operations of ALLTEL will be. No adjustment has been included in the
pro forma amounts for any anticipated cost savings or other synergies. See
"UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION."
 
<TABLE>
<CAPTION>
                                         FISCAL YEAR ENDED AND AS OF DECEMBER 31,
                                         -----------------------------------------
                                             1997          1996          1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)    ------------- ------------- -------------
<S>                                      <C>           <C>           <C>
Total revenues and sales...............  $   4,575,597 $   4,255,756 $   3,912,705
Operating income.......................  $   1,020,866 $     811,470 $     829,366
Net income.............................  $     589,381 $     351,256 $     352,921
Earnings per common share:
  Basic................................          $2.13         $1.27         $1.28
  Diluted..............................          $2.11         $1.26         $1.27
Average number of common shares
 outstanding...........................    276,590,000   276,637,000   275,232,000
Total assets...........................  $   8,575,369 $   8,171,252 $   7,046,351
Long-term debt and redeemable preferred
 stock.................................  $   3,705,144 $   3,462,375 $   3,286,411
Shareholders' equity...................  $   2,612,807 $   2,559,607 $   1,937,633
Dividends per common share.............           $.75          $.72          $.67
Book value per common share............          $9.52         $9.16         $7.00
</TABLE>
 
                                       12
<PAGE>
 
           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
  The following statements are or may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"):
 
    Certain statements, including possible or assumed future results of
  operations of ALLTEL and 360(degrees) contained in "RISK FACTORS," "THE
  MERGER--Background of the Merger," "THE MERGER--ALLTEL's Reasons for the
  Merger; Recommendation of the ALLTEL Board," "THE MERGER--360(degrees)'s
  Reasons for the Merger; Recommendation of the 360(degrees) Board," "THE
  MERGER--Opinion of Financial Advisors to ALLTEL" and "THE MERGER--Opinion
  of 360(degrees)'s Financial Advisor," including (i) any forecasts,
  projections and descriptions of anticipated cost savings or other synergies
  referred to therein, and certain statements incorporated by reference from
  documents filed with the SEC by ALLTEL and 360(degrees) including any
  statements contained herein or therein regarding the development or
  possible or assumed future results of operations of ALLTEL's and
  360(degrees)'s businesses, the markets for ALLTEL's and 360(degrees)'s
  services and products, anticipated capital expenditures, regulatory
  developments, competition or the effects of the Merger, (ii) any statements
  preceded by, followed by or that include the words "believes," "expects,"
  "anticipates," "intends," "seeks," "estimates," "should," "plans" and
  variations of these words and similar expressions, and (iii) other
  statements contained or incorporated by reference herein regarding matters
  that are not historical facts.
 
  Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such forward-
looking statements. Factors that could cause actual results to differ
materially include, but are not limited to, those discussed under "RISK
FACTORS." ALLTEL and 360(degrees) stockholders are cautioned not to place undue
reliance on such statements, which speak only as of the date thereof.
 
  All subsequent written and oral forward-looking statements attributable to
ALLTEL or 360(degrees) or persons acting on its or their behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in the foregoing paragraphs. Neither ALLTEL nor 360(degrees) undertakes any
obligation to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
 
                                       13
<PAGE>
 
                                 RISK FACTORS
 
  Stockholders of 360(degrees) and of ALLTEL should consider all of the
information contained in this Joint Proxy Statement/Prospectus ("Joint Proxy
Statement/Prospectus"), including the following factors:
 
  Integration and Operation of the Companies. ALLTEL and 360(degrees) expect
certain benefits to arise from the Merger, including revenue and market
penetration improvements, and certain operating efficiencies and synergies.
See "THE MERGER--ALLTEL's Reason for the Merger; Recommendations of the ALLTEL
Board." Achievement of these benefits in the amounts and time periods expected
will depend in part upon how and when the businesses of ALLTEL and
360(degrees) are integrated. Although ALLTEL and 360(degrees) in the past have
completed significant acquisitions and successfully combined the acquired
operations, the Merger is substantially larger than any acquisition previously
completed by either ALLTEL or 360(degrees) and thus will present challenges to
management requiring increased time and resources. There can be no assurances
that the operations of ALLTEL and 360(degrees) will be successfully combined,
that such combination will occur in the time period anticipated or that the
anticipated benefits will be fully achieved.
 
  Anticipated Accounting Treatment. The Merger is expected to be accounted for
under the pooling-of-interests method of accounting. Under this method of
accounting, the recorded assets and liabilities of ALLTEL and 360(degrees)
will be carried forward to ALLTEL at their historical recorded amounts (after
addressing any conformity issues); net income of ALLTEL after the Merger will
include the net income of ALLTEL and 360(degrees) for the entire fiscal year
in which the Merger occurs, and the historical reported net income of ALLTEL
and 360(degrees) for prior periods will be combined and restated as net income
of ALLTEL after addressing any conformity issues. It is a condition to the
obligations of each of ALLTEL and 360(degrees) to effect the Merger that they
receive a letter from ALLTEL's independent auditors to the effect that such
auditors concur that the Merger will qualify for pooling-of-interests
accounting treatment. No assurance can be given, however, that ALLTEL or
360(degrees) would waive the foregoing condition and effect the Merger if
pooling-of-interests accounting were not available. If pooling-of-interests
accounting treatment were not available, the purchase method of accounting
would be applicable. Under purchase method accounting, the book value of
360(degrees)'s assets and liabilities would be adjusted to their fair values
and the excess of the purchase price over the fair value of 360(degrees)'s
assets would be capitalized and expensed, which would materially and adversely
affect ALLTEL's earnings.
 
  ALLTEL expects to incur certain non-recurring expenses related to the
Merger, presently estimated to be $120,000,000 ($105,000,000 after tax). These
expenses would include, but would not be limited to, professional fees, fees
of financial advisors, retention compensation expenses, relocation expenses,
and similar expenses. Although ALLTEL believes this estimate of non-recurring
expenses is accurate, certain material additional costs may be incurred in
connection with the Merger. Merger related expenses will be recorded in the
period in which the Merger is concluded, which is currently estimated to occur
in the third quarter of 1998.
 
  In addition, ALLTEL is developing a plan to integrate the operations of
360(degrees) after the Merger. In connection with that plan, ALLTEL
anticipates that certain non-recurring charges will be incurred in connection
with such integration. ALLTEL cannot identify the timing, nature and amount of
such charges as of the date of this Joint Proxy Statement/Prospectus. However,
any such charge could affect ALLTEL's results of operations in the period in
which such charges are recorded.
 
  Dilution of Voting Interests of ALLTEL Stockholders. Holders of ALLTEL
Common Stock and ALLTEL Voting Preferred Stock will own in the aggregate 68.7%
of the voting power of the outstanding shares of ALLTEL Voting Stock on a
fully-diluted basis following consummation of the Merger. Thus, existing
holders of ALLTEL Voting Stock will experience substantial dilution of their
voting power. Further, if the Certificate Amendment is approved, the ALLTEL
Certificate would permit the issuance of up to an additional 500,000,000
shares of ALLTEL Common Stock, which issuance would further dilute the voting
power of the existing holders of ALLTEL Common Stock.
 
 
                                      14
<PAGE>
 
  Industry Risks; Regulatory Matters and Approvals. The communications
industry in which ALLTEL and 360(degrees) operate is highly competitive, and
competition can be expected to intensify. Moreover, ALLTEL's and
360(degrees)'s operations are subject to substantial regulation. For a more
complete description of ALLTEL's and 360(degrees)'s competition and regulatory
environments, see ALLTEL's 1997 Form 10-K and 360(degrees)'s 1997 Form 10-K.
See "INCORPORATION OF DOCUMENTS BY REFERENCE." Consummation of the Merger is
conditioned upon, among other things, the approval of the FCC. There can be no
assurance that this approval will be granted in a timely fashion, or if
granted, will not contain conditions or restrictions that would impair the
ability of ALLTEL to fully realize the benefits of the Merger. See "CERTAIN
REGULATORY FILINGS AND APPROVALS."
 
  Rapid Technology Change. The communications industry is subject to rapid and
significant changes in technology. The effect of technological changes,
including changes relating to emerging wireline and wireless transmission and
switching technologies, on the business of ALLTEL after the Merger cannot be
predicted.
 
  Fixed Conversion Fraction Despite Changes in Relative Stock Prices. The
number of shares of ALLTEL Common Stock to be received by holders of
360(degrees) Common Stock in the Merger is fixed at the Conversion Fraction of
 .74 of a share of ALLTEL Common Stock for each share of 360(degrees) Common
Stock. Such number will not be adjusted in the event of any increase or
decrease in the price of either ALLTEL Common Stock or 360(degrees) Common
Stock. The price of ALLTEL Common Stock may be different at the Effective Time
from its price at the date of this Joint Proxy Statement/Prospectus and at the
date of the ALLTEL Special Meeting and the 360(degrees) Special Meeting. The
difference may be the result of changes in the business, operations, or
prospects of ALLTEL or 360(degrees), market assessments of the likelihood that
the Merger will be consummated and the timing thereof, regulatory
considerations, general market and economic conditions, and other factors.
There can be no assurance that the price of ALLTEL Common Stock on the date of
the ALLTEL Special Meeting or the 360(degrees) Special Meeting will be
indicative of its price at the Effective Time. The Effective Time will occur
as soon as practicable following the ALLTEL Special Meeting and the
360(degrees) Special Meeting and the satisfaction or waiver of the other
conditions set forth in the Merger Agreement.
 
 
                                      15
<PAGE>
 
                             THE SPECIAL MEETINGS
 
GENERAL
 
  This Joint Proxy Statement/Prospectus is being furnished to holders of
360(degrees) Common Stock and ALLTEL Voting Stock in connection with the
solicitation by the 360(degrees) Board and the ALLTEL Board, respectively, for
use at the 360(degrees) Special Meeting and the ALLTEL Special Meeting,
respectively.
 
DATE, TIME AND PLACE
 
  ALLTEL. The ALLTEL Special Meeting will be held at One Allied Drive,
Building III, Little Rock, Arkansas 72202, on June 23, 1998 at 11:00 a.m.
local time.
 
  360(degrees). The 360(degrees) Special Meeting will be held at the offices
of The Northern Trust Company, 6th Floor, Assembly Room, 50 S. LaSalle Street,
Chicago, Illinois, on June 23, 1998, at 10:00 a.m., local time.
 
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETINGS
 
  ALLTEL. At the ALLTEL Special Meeting, holders of record of ALLTEL Voting
Stock are being asked to approve (i) the Issuance of ALLTEL Common Stock, (ii)
the Certificate Amendment, and (iii) the Equity Incentive Plan. See "THE
MERGER--General," "APPROVAL OF THE CERTIFICATE AMENDMENT," and "APPROVAL OF
1998 EQUITY INCENTIVE PLAN."
 
  The ALLTEL Board has unanimously determined that the Merger and the Issuance
of ALLTEL Common Stock to 360(degrees) stockholders pursuant to the Merger
Agreement are in the best interests of ALLTEL and its stockholders and has
unanimously approved the Merger Agreement and the Issuance of ALLTEL Common
Stock. The ALLTEL Board has also unanimously determined that each of the
Certificate Amendment and the Equity Incentive Plan is in the best interests
of ALLTEL and its stockholders. THE ALLTEL BOARD RECOMMENDS THAT THE ALLTEL
STOCKHOLDERS VOTE "FOR" THE ISSUANCE OF ALLTEL COMMON STOCK, THE CERTIFICATE
AMENDMENT AND THE EQUITY INCENTIVE PLAN AT THE ALLTEL SPECIAL MEETING.
 
  360(degrees). At the 360(degrees) Special Meeting, holders of record of
360(degrees) Common Stock are being asked to approve the 360(degrees)
Proposal. See "THE MERGER--General." The 360(degrees) Board has unanimously
determined that the Merger Agreement and the transactions contemplated thereby
are in the best interests of 360(degrees) and its stockholders, and has
unanimously approved the Merger Agreement and the transactions contemplated
thereby. THE 360(degrees) BOARD RECOMMENDS THAT THE 360(degrees) STOCKHOLDERS
VOTE "FOR" THE 360(degrees) PROPOSAL.
 
STOCK ENTITLED TO VOTE; QUORUM
 
  ALLTEL. As of the ALLTEL Record Date, there were outstanding and entitled to
vote at the ALLTEL Special Meeting 184,327,921 shares of ALLTEL Common Stock
and 340,792 shares of outstanding ALLTEL Voting Preferred Stock; up to 21,222
additional shares of ALLTEL Common Stock would be entitled to vote in the
event unexchanged stock certificates of companies previously acquired by
ALLTEL were exchanged for ALLTEL certificates by June 23, 1998. The presence
in person or by properly executed proxy of holders of a majority of the issued
and outstanding shares of ALLTEL Common Stock and ALLTEL Voting Preferred
Stock (considered as a single class) is necessary to constitute a quorum at
the ALLTEL Special Meeting. In the event that a quorum is not present at the
ALLTEL Special Meeting, it is expected that such meeting will be adjourned or
postponed to solicit additional proxies. Holders of record of ALLTEL Voting
Stock on the ALLTEL Record Date are entitled to one vote per share on each
matter to be voted on at the ALLTEL Special Meeting.
 
  360(degrees). As of the 360(degrees) Record Date, there were 121,416,327
shares of 360(degrees) Common Stock issued and outstanding and entitled to
vote at the 360(degrees) Special Meeting. The presence in person or by
properly executed proxy of holders of a majority of the issued and outstanding
shares of 360(degrees) Common Stock is necessary to constitute a quorum at the
360(degrees) Special Meeting. In the event that a quorum is not present at the
360(degrees) Special
 
                                      16
<PAGE>
 
Meeting, it is expected that such meeting will be adjourned or postponed to
solicit additional proxies. Holders of record of 360(degrees) Common Stock on
the 360(degrees) Record Date are each entitled to one vote per share on each
matter to be voted on at the 360(degrees) Special Meeting.
 
VOTES REQUIRED
 
  ALLTEL. The approval of the Issuance of ALLTEL Common Stock and the approval
of the Equity Incentive Plan each requires the affirmative vote by holders of
record of a majority of the shares of ALLTEL Voting Stock (voting together as
a single class) present in person or by proxy, and entitled to vote on such
proposals at the ALLTEL Special Meeting (assuming a quorum is present). The
approval of the Certificate Amendment requires the affirmative vote by holders
of record of a majority of shares of ALLTEL Voting Stock (voting together as a
single class) outstanding on the ALLTEL Record Date. The approval of the
Issuance of ALLTEL Common Stock is a condition to the closing of the Merger.
Neither the approval of the Certificate Amendment nor the approval of the
Equity Incentive Plan is a condition to the Issuance of ALLTEL Common Stock or
the closing of the Merger. Neither the approval of the Issuance of Common
Stock nor the closing of the Merger is a condition to either the Certificate
Amendment or the Equity Incentive Plan.
 
  360(degrees). The approval of the 360(degrees) Proposal requires the
affirmative vote by holders of record of a majority of the shares of the
360(degrees) Common Stock outstanding on the 360(degrees) Record Date. The
approval of the 360(degrees) Proposal is a condition to the closing of the
Merger.
 
SHARE OWNERSHIP OF MANAGEMENT
 
  On May 1, 1998, directors and executive officers of ALLTEL and their
affiliates beneficially owned 977,318 shares of ALLTEL Common Stock (exclusive
of shares that may be acquired through the exercise of options), which
represented approximately .5% of the total shares of ALLTEL Voting Stock
outstanding on such date. Each such director and executive officer has
indicated his or her present intention to vote the ALLTEL Common Stock owned
by him or her for the approval of the Issuance of ALLTEL Common Stock, the
Certificate Amendment and the Equity Incentive Plan. On May 1, 1998, no
directors or officers of ALLTEL owned ALLTEL Voting Preferred Stock.
 
  On May 1, 1998, directors and executive officers of 360(degrees) and their
affiliates beneficially owned 6,746,868 shares of 360(degrees) Common Stock
(exclusive of shares that may be acquired through the exercise of options),
which represented approximately 5.56% of the shares of 360(degrees) Common
Stock outstanding on such date. Each such director and executive officer has
indicated his or her present intention to vote the 360(degrees) Common Stock
beneficially owned by him or her for the approval of the 360(degrees)
Proposal.
 
VOTING OF PROXIES
 
  Shares represented by all properly executed proxies received in time for the
Special Meetings will be voted at such Special Meetings in the manner
specified by the holders thereof. At the ALLTEL Special Meeting, properly
executed proxies that do not contain voting instructions will be voted in
favor of the Issuance of ALLTEL Common Stock and the approval of the
Certificate Amendment and the Equity Incentive Plan. At the 360(degrees)
Special Meeting, properly executed proxies that do not contain voting
instructions will be voted in favor of the approval of the 360(degrees)
Proposal.
 
  Shares of ALLTEL Voting Stock or 360(degrees) Common Stock represented at
the applicable Special Meeting but not voting, including (i) shares of ALLTEL
Common Stock or 360(degrees) Common Stock, as the case may be, for which
proxies have been received, but with respect to which holders of shares have
abstained on any matter, and (ii) broker nonvotes (defined below), will be
treated as present at the applicable Special Meeting for purposes of
determining the presence or absence of a quorum for the transaction of all
business.
 
  For voting purposes at the Special Meetings, only shares affirmatively voted
in favor of a proposal (including properly executed proxies not containing
voting instructions) will be counted as favorable votes for such proposal. The
failure of a stockholder of 360(degrees) to submit a proxy (or to vote in
person) or an abstention from voting at the 360(degrees) Special Meeting will
have the same effect as a vote against the 360(degrees) Proposal. The failure
 
                                      17
<PAGE>
 
of a stockholder of ALLTEL to submit a proxy (or to vote in person) at the
ALLTEL Special Meeting will have the effect of a vote against the Certificate
Amendment, but will have no effect on the vote to approve the Issuance of
ALLTEL Common Stock or the Equity Incentive Plan. An abstention from voting at
the ALLTEL Special Meeting will have the same effect as a vote against the
Certificate Amendment, Issuance of ALLTEL Common Stock and the Equity
Incentive Plan.
 
  Under the applicable rules of the NYSE, brokers who hold shares in street
name for customers who are the beneficial owners of such shares are prohibited
from giving a proxy to vote such customers' shares on "non-routine" matters in
the absence of specific instructions from such customers ("broker nonvotes").
With respect to the 360(degrees) Special Meeting, the 360(degrees) Proposal
will be deemed a non-routine matter, and with respect to the ALLTEL Special
Meeting, the proposals relating to the Issuance of ALLTEL Common Stock and the
Certificate Amendment will each be deemed non-routine matters. Because the
approval of the 360(degrees) Proposal at the 360(degrees) Special Meeting
requires the affirmative vote of majority of shares of 360(degrees) Common
Stock outstanding, a broker nonvote will have the same effect as an abstention
(i.e., a vote against the proposal). However, because the proposal to approve
the Issuance of ALLTEL Common Stock and the Certificate Amendment of the
ALLTEL Special Meeting requires the affirmative vote of a majority of shares
present in person or by proxy and entitled to vote at the ALLTEL Special
Meeting, broker nonvotes (although relevant for quorum purposes) will have no
effect on whether such proposals are adopted. The proposal to approve the
Equity Incentive Plan at the ALLTEL Special Meeting is considered a "routine"
matter under NYSE rules and, accordingly, broker nonvotes are not relevant to
the determination of whether such proposal is adopted by ALLTEL stockholders.
 
  The persons named as proxies by an ALLTEL or 360(degrees) stockholder may
propose and vote for one or more adjournments or postponements of the
applicable Special Meeting, including, without limitation, adjournments to
permit further solicitations of proxies in favor of any proposal; provided,
however, that no proxy that is voted against a proposal will be voted in favor
of any such adjournment or postponement.
 
  The ALLTEL Board, with respect to the ALLTEL Special Meeting, and the
360(degrees) Board, with respect to the 360(degrees) Special Meeting, are not
aware of any business to be brought before the applicable Special Meeting
other than as described herein. If, however, other matters are properly
brought before either Special Meeting or any adjournment or postponement
thereof, the persons appointed as proxies will have discretionary authority to
vote the shares represented by duly executed proxies in accordance with their
discretion and judgment as to the best interest of ALLTEL or 360(degrees), as
applicable.
 
REVOCABILITY OF PROXIES
 
  The grant of a proxy on the accompanying ALLTEL or 360(degrees) proxy card
does not preclude a stockholder from voting in person. A stockholder may
revoke a proxy at any time prior to its exercise by (i) filing with the
Secretary of ALLTEL (in the case of an ALLTEL stockholder) or the Secretary of
360(degrees) (in the case of a 360(degrees) stockholder) at ALLTEL's or
360(degrees)'s principal executive offices, as the case may be, a duly
executed revocation of proxy, (ii) submitting a duly executed proxy bearing a
later date, or (iii) appearing at the applicable Special Meeting and voting in
person at such Special Meeting. Attendance at a Special Meeting will not, in
and of itself, constitute revocation of a proxy.
 
SOLICITATION OF PROXIES
 
  ALLTEL and 360(degrees) will share equally the cost of printing and mailing
this Joint Proxy Statement/Prospectus and the fees associated with the filing
of this Joint Proxy Statement/Prospectus with the SEC. Except for the fees and
costs discussed in the preceding sentence, each of ALLTEL and 360(degrees)
will bear its own costs in connection with the solicitation of proxies
(including the fees and expenses of the proxy solicitors discussed below). In
addition to solicitation by mail, the directors, officers and employees of
each company and its subsidiaries may solicit proxies from stockholders of
such company by telephone or in person. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by those persons. ALLTEL and 360(degrees) will reimburse such
 
                                      18
<PAGE>
 
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses in connection therewith. In addition, ALLTEL and 360(degrees) have
retained Georgeson & Company, Inc. and ChaseMellon Shareholder Services,
L.L.C., respectively, to assist in the solicitation of proxies from their
respective stockholders. The fees to be paid to such firms for such services
by each of ALLTEL and 360(degrees) are not expected to exceed $15,000 and
$12,500, respectively, plus in each case reasonable out-of-pocket expenses.
 
  HOLDERS OF ALLTEL COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. PLEASE DO NOT SEND STOCK CERTIFICATES WITH THE PROXY CARD.
 
  HOLDERS OF 360(degrees) COMMON STOCK ARE REQUESTED EITHER TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT IN THE PROVIDED ENVELOPE
(WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) OR VOTE THEIR SHARES
BY TELEPHONE USING THE INSTRUCTIONS SET FORTH ON THE ACCOMPANYING PROXY CARD.
PLEASE DO NOT SEND STOCK CERTIFICATES WITH THE PROXY CARD.
 
                                      19
<PAGE>
 
                                  THE MERGER
 
  The description of the Merger and the Merger Agreement contained in this
Joint Proxy Statement/Prospectus describes the material terms of the Merger
Agreement but does not purport to be complete and is qualified in its entirety
by reference to the Merger Agreement, a copy of which is attached hereto as
Annex A and incorporated herein by reference.
 
GENERAL
 
  At the Effective Time of the Merger, Merger Sub will be merged into
360(degrees), and 360(degrees) will become a wholly-owned subsidiary of
ALLTEL. As a result of the Merger, the separate corporate existence of Merger
Sub will cease and 360(degrees) will succeed to all the rights and be
responsible for all the obligations of Merger Sub in accordance with the
Delaware General Corporation Law (the "DGCL"). Subject to the terms and
conditions of the Merger Agreement, each share of 360(degrees) Common Stock
outstanding immediately prior to the Effective Time will be converted into the
right to receive .74 of a share of ALLTEL Common Stock. Cash will be paid in
lieu of any fractional share of ALLTEL Common Stock in an amount determined by
multiplying any such fraction by the closing price for shares of ALLTEL Common
Stock as reported on the NYSE Composite Transactions Tape on the day of the
Effective Time.
 
  The Merger will become effective upon the filing of a certificate of merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware or at such subsequent time as ALLTEL and 360(degrees) may agree and
is specified in the Certificate of Merger (the "Effective Time"). The filing
of the Certificate of Merger will occur as soon as practicable following the
closing of the Merger, which will occur on the second business day after the
satisfaction or waiver of the conditions set forth in the Merger Agreement,
unless otherwise agreed by the parties (the "Closing Date"). Consummation of
the Merger, however, is dependent on the receipt of the requisite approvals
and authorizations for the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Communications Act
of 1934 (the "Communications Act"), and other applicable federal, state or
other applicable regulatory laws. Although on April 29, 1998 ALLTEL and
360(degrees) were notified that authorization under the HSR Act had been
obtained, there can be no assurance as to (i) if or when such other approvals
will be obtained or that, if obtained, whether such approvals will satisfy the
conditions to the consummation of the Merger set forth in the Merger Agreement
or (ii) whether all of the other conditions precedent to the Merger will be
satisfied or waived by the party permitted to do so. If the Merger is not
effected on or before November 30, 1998, the Merger Agreement can be
terminated by either 360(degrees) or ALLTEL, unless as of November 30, 1998,
all conditions have been satisfied or waived other than the receipt of the
approval of the FCC, in which case the termination date may be extended by
either ALLTEL or 360(degrees) to February 28, 1999. See "OTHER TERMS OF THE
MERGER AGREEMENT--Conditions to Consummation of the Merger" and "--
Termination."
 
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
 
  The conversion, at the Conversion Fraction, of 360(degrees) Common Stock
into the right to receive ALLTEL Common Stock will occur automatically at the
Effective Time.
 
  On the date of the Effective Time, ALLTEL will instruct First Union National
Bank of North Carolina or such other bank or trust company which may be
designated in accordance with the Merger Agreement (the "Exchange Agent") to
mail to each holder of record of 360(degrees) Common Stock within three
business days a transmittal letter and instructions for use in effecting the
surrender of certificates which represented shares of 360(degrees) Common
Stock. Upon receipt of such certificates, the Exchange Agent will deliver full
shares of ALLTEL Common Stock to such stockholder and cash in lieu of
fractional shares pursuant to the terms of the Merger Agreement and in
accordance with the transmittal letter, together with any dividends or other
distributions to which such stockholder is entitled, without interest.
 
  If any issuance of shares of ALLTEL Common Stock upon conversion of shares
of 360(degrees) Common Stock is to be made to a person other than the holder
of 360(degrees) Common Stock in whose name the certificate is registered
 
                                      20
<PAGE>
 
at the Effective Time, it will be a condition of such conversion that the
certificate so surrendered be properly endorsed or otherwise in proper form
for transfer and that the holder of 360(degrees) Common Stock requesting such
issuance either pay any transfer or other tax required or established to the
satisfaction of ALLTEL that such tax has been paid or is not payable.
 
  After the Effective Time, there will be no further transfers of 360(degrees)
Common Stock on the stock transfer books of 360(degrees). If a certificate
representing 360(degrees) Common Stock is presented for transfer, it will be
canceled and a certificate representing the appropriate number of full shares
of ALLTEL Common Stock and cash in lieu of fractional shares and any dividends
and distributions will be issued in exchange therefor, without interest.
 
  After the Effective Time and until surrendered, shares of 360(degrees)
Common Stock will be deemed for all corporate purposes, other than the payment
of dividends and distributions, to evidence ownership of the number of full
shares of ALLTEL Common Stock into which such shares of 360(degrees) Common
Stock were converted at the Effective Time. No dividends or other
distributions, if any, payable to holders of ALLTEL Common Stock will be paid
to the holders of any certificates for shares of 360(degrees) Common Stock
until such certificates are surrendered. Upon surrender of such certificates,
all such declared dividends and distributions payable after the Effective Time
will be paid to the holder of record of the full shares of ALLTEL Common Stock
represented by the certificate issued in exchange therefor, without interest.
 
  HOLDERS OF 360(degrees) COMMON STOCK SHOULD NOT FORWARD STOCK CERTIFICATES
TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. HOLDERS OF
360(degrees) COMMON STOCK SHOULD NOT RETURN STOCK CERTIFICATES WITH THE
ACCOMPANYING PROXY CARD.
 
BACKGROUND OF THE MERGER
 
  The action of the 360(degrees) Board to approve the Merger Agreement and the
transactions contemplated thereby was the outcome of a process which began in
the fall of 1997 in which management of 360(degrees) and the 360(degrees)
Board, in consultation with its financial and legal advisors, commenced
consideration of strategic alternatives available to 360(degrees) and its
stockholders. It was also a result of an evolution of 360(degrees)'s
historical growth strategy.
 
  360(degrees)'s growth strategy has been to maintain its strong revenue
growth and improvement in operating margins by continuing to add customers and
increase minutes of use per customer. In addition, a key part of
360(degrees)'s growth strategy has been to pursue favorable opportunities to
expand its regional market clusters and to develop new strategic market
clusters through acquisitions, trades or alliances with other cellular
carriers. 360(degrees)'s external growth strategy has historically been
designed to reinforce its position in its existing markets by increasing its
customer base and to improve operating margins by achieving significant
economies. To this end, 360(degrees) entered into transactions such as (i) the
November 1996 acquisition of Independent Cellular Network, Inc. and affiliated
companies and (ii) the 1997 agreements with BellSouth Corporation
("BellSouth") to combine ownership interests in two cellular partnerships in
which 360(degrees) had a noncontrolling interest and BellSouth had a
controlling interest, as well as other transactions completed in the past two
years. Additionally, 360(degrees) has sold, traded and considered selling or
trading operations in non-clustered markets in order to expand and grow its
clustered markets. 360(degrees)'s ability to issue stock in connection with or
as consideration to fund acquisitions, however, was limited because of the
terms of an agreement with Sprint Corporation ("Sprint"), entered into in
connection with 360(degrees)'s 1996 spinoff from Sprint. This agreement with
Sprint, which expired March 7, 1998, barred 360(degrees) from, among other
things, issuing any preferred stock or more than a limited number of
additional shares of 360(degrees) Common Stock.
 
  As part of this growth strategy, in April 1996, 360(degrees) and ALLTEL
created a marketing and technology alliance in North Carolina and South
Carolina which (i) enabled the companies to offer their customers an expanded
coverage area in North Carolina, South Carolina and parts of Georgia, (ii)
included an agreement to work together to enhance services, share technologies
and develop new features and (iii) provided for joint marketing activities and
cooperation to obtain distribution agreements with third party vendors in that
region. In
 
                                      21
<PAGE>
 
addition, on August 26, 1997, representatives of 360(degrees) had exploratory
discussions with representatives for ALLTEL regarding a possible business
combination between 360(degrees) and the stock or assets of one or more of
ALLTEL's subsidiaries which provide wireless telephone services. In connection
with those discussions, 360(degrees) and ALLTEL entered into a Confidentiality
and Standstill Agreement, pursuant to which, among other things, each of the
companies agreed that for one year it would not (unless approved in writing by
the board of directors of the other company), among other things, attempt to
acquire control of the other company. Although those discussions involved a
variety of possible strategic transactions and while there were follow-up
discussions on October 7, 1997, October 24, 1997 and November 21, 1997 which
included discussions regarding a potential combination of the two companies,
the parties did not then reach an agreement.
 
  On October 10, 1997, the Executive Committee of the ALLTEL Board met to
discuss various potential strategic transactions between ALLTEL and
360(degrees). At this meeting, members of ALLTEL management identified certain
strategic options, including a potential business combination with
360(degrees), and presented to the Executive Committee certain information
regarding 360(degrees). The Executive Committee authorized the ALLTEL
management to discuss a range of potential strategic transactions with
360(degrees) and requested that the ALLTEL management make a full presentation
regarding those potential transactions to the ALLTEL Board at its next meeting
to be held on October 22, 1997.
 
  At the ALLTEL Board's October 22, 1997 meeting, the ALLTEL management made a
presentation regarding a potential merger with 360(degrees) that included an
overview of significant financial and operating characteristics of
360(degrees) and an overview of the strategic and financial consequences of a
potential merger. After extensive discussion, the ALLTEL Board authorized the
ALLTEL management to conduct further discussions with 360(degrees), subject to
the limitation that no agreement or committment be made with respect to any
potential transaction until further authorization from the ALLTEL Board.
 
  At the regularly scheduled 360(degrees) Board meeting on December 9, 1997,
management of 360(degrees) and the 360(degrees) Board considered, as part of
the agenda of the meeting, evolving challenges in the telecommunications
industry, and the wireless industry in particular, and the means by which
360(degrees) could be best positioned to meet these challenges. In addition,
the 360(degrees) Board had a wide-ranging discussion of strategic
alternatives. Specifically, the 360(degrees) Board and management of
360(degrees) addressed concerns that 360(degrees) needed to react quickly to
the increased consolidation of the wireless market and the growing competition
from full service companies offering bundled services. Alternatives considered
included acquisitions, joint ventures, mergers and sales of assets. At that
meeting, it was concluded that 360(degrees)'s management should continue to
investigate strategic alternatives and opportunities and that the 360(degrees)
Board should discuss the topic further.
 
  From December 1997 through February 1998, management of 360(degrees)
continued to evaluate strategic alternatives and to update 360(degrees)'s
strategic plan with a goal of assisting the 360(degrees) Board in evaluating
strategic alternatives. In this regard, during this time 360(degrees) was in
contact with Lazard Freres & Co. LLC ("Lazard Freres").
 
  On February 17, 1998, the 360(degrees) Board met with 360(degrees)'s
management and representatives of Lazard Freres. At that meeting, the
360(degrees) Board concluded that although 360(degrees)'s fundamental business
is strong, with good operations and management in a growing industry,
360(degrees) should consider strategic alternatives to enhance 360(degrees)'s
competitive position and prospects for growth in light of the changing
landscape of the telecommunications market and the trend towards bundled
source offerings. The 360(degrees) Board's evaluation of these alternatives
included consideration of the fact that market consolidation had decreased the
number of attractive acquisition candidates in the wireless industry, and
increased the costs to acquire those candidates. Furthermore, the 360(degrees)
Board considered that diversification would entail significant capital risks.
Alternatively, because of these same market forces, 360(degrees) would be an
attractive merger partner, and may well be able to merge with a partner on
favorable terms because of its market position and presence. Based upon these
conclusions and discussions, the 360(degrees) Board instructed management to
continue discussions with ALLTEL and authorized the retention of Lazard Freres
as 360(degrees)'s financial advisor.
 
 
                                      22
<PAGE>
 
  At a special Board meeting on February 19, 1998, the ALLTEL management
updated the ALLTEL Board on discussions between the managements of ALLTEL and
of 360(degrees). The ALLTEL management advised the ALLTEL Board that no
specific proposal had been made by ALLTEL management, nor had the 360(degrees)
management submitted a specific proposal. The ALLTEL management reviewed with
the ALLTEL Board a package of financial information prepared by one of
ALLTEL's financial advisors. The ALLTEL Board took no action at this meeting
with respect to a potential transaction with 360(degrees). The ALLTEL
management advised the ALLTEL Board that discussions with 360(degrees) could
progress during the ensuing several weeks and that a meeting of the ALLTEL
Board might be necessary during that period to consider a specific proposal.
 
  On February 20, 1998, representatives of 360(degrees) and ALLTEL met to
discuss the merits of a merger, including the strategic implications, the
competitive position of the combined wireless operations and the financial
implications of a prospective transaction, as well as preliminary discussions
regarding management integration. On February 25, 1998, further discussions
were held between the companies' representatives, including discussions
regarding the potential timing of a transaction. 360(degrees) was also in
contact with two additional potential strategic partners that entered into
confidentiality and standstill agreements.
 
  During the week of March 3, 1998, ALLTEL distributed a draft merger
agreement, not including any financial terms, to 360(degrees). On March 8,
1998, representatives of ALLTEL and 360(degrees) again met to discuss the
terms of the proposed merger, timing for completion of negotiations of the
transaction and issues regarding the structure of the combined entity and its
regional operating units. On March 10, 1998, one of the two additional
strategic partners informed 360(degrees)'s financial advisor that, after
conducting due diligence, it did not intend to submit a proposal regarding a
strategic transaction with 360(degrees). On March 10, 1998, the 360(degrees)
Board met with 360(degrees)'s management and legal and financial advisors for
an update regarding recent developments. The 360(degrees) Board was informed
that ALLTEL had emerged as the principal potential strategic partner. The
360(degrees) Board was also informed of the status of contacts with the two
other potential strategic partners, including the potential partner that
declined to further explore a potential transaction. Based upon this
information, the 360(degrees) Board determined to proceed with negotiations
with ALLTEL, but on a non-exclusive basis.
 
  From March 11 to March 15, 1998, the management of ALLTEL and 360(degrees)
negotiated the terms of the proposed transaction, with principal issues
including financial terms, break-up fees and whether an option to purchase
360(degrees) Common Stock should be granted by 360(degrees) to ALLTEL. On
March 13, 1998, in the face of market rumors concerning a possible
ALLTEL/360(degrees) transaction, ALLTEL informed 360(degrees) that it did not
intend to continue negotiating beyond March 15, 1998, and accordingly, that if
there were not a final agreement on or before that date, ALLTEL would cease
further negotiations regarding the proposed transaction.
 
  On March 13, 1998, the 360(degrees) Board again met with 360(degrees)'s
management and 360(degrees)'s legal and financial advisors to discuss the
status of the negotiations. At that meeting, the 360(degrees) Board was
informed of ALLTEL's March 15 deadline, as well as the status of
communications from the other potential strategic partner. The 360(degrees)
Board encouraged 360(degrees)'s management and 360(degrees)'s financial
advisor to attempt to obtain a proposal, at least in preliminary form, from
the one other potential strategic partner before the March 15 deadline, but
that absent receipt of such a proposal, negotiations with ALLTEL should
continue with a goal of reaching final agreement on or before March 15, 1998.
 
  On March 15, 1998, management of both ALLTEL and 360(degrees) reached an
understanding as to the proposed terms of the Merger Agreement. A special
meeting of the 360(degrees) Board was called for the evening of March 15, 1998
to consider the Merger Agreement, the Option Agreement, and the transactions
contemplated thereby, including the financial terms, the proposed amendments
to the 360(degrees) Rights Plan (defined below), and certain employee benefit
arrangements. At the time of the 360(degrees) Board meeting, no alternative
proposal had been received from the other potential strategic partner.
 
  At the March 15, 1998 meeting of the 360(degrees) Board, 360(degrees)'s
legal and financial advisors made presentations to the 360(degrees) Board and
discussed with the 360(degrees) Board their views and analyses of various
aspects of the proposed transaction. The 360(degrees) Board reviewed and
considered the matters described below under "--360(degrees)'s Reasons for
 
                                      23
<PAGE>
 
the Merger; Recommendation of the 360(degrees) Board." 360(degrees)'s
financial advisor delivered its opinion to the 360(degrees) Board with respect
to the fairness, as of such date, of the Conversion Fraction to the
360(degrees) stockholders (see "--Opinion of 360(degrees)'s Financial
Advisor"). After deliberation, including with respect to the terms, conditions
and timing of ALLTEL's merger proposal, the 360(degrees) Board approved the
Merger Agreement and the Option Agreement, approved amendments to the
360(degrees) Rights Plan and certain employee benefit arrangements and
authorized the execution and delivery of the Merger Agreement and the Option
Agreement.
 
  A special meeting of the ALLTEL Board was convened on March 15, 1998, to
consider the proposed terms of the Merger Agreement and the Option Agreement.
The ALLTEL Board reviewed and considered matters described under "--ALLTEL's
Reasons for the Merger; Recommendations of the ALLTEL Board" set forth below.
The Board also considered a presentation by ALLTEL's financial advisors with
respect to the fairness to ALLTEL of the proposed Conversion Fraction from a
financial point of view and a presentation from ALLTEL's counsel concerning
the legal aspects of the Merger Agreement and the Option Agreement. See "--
Opinion of Financial Advisors to ALLTEL" set forth below. After these
presentations, the ALLTEL Board determined the Merger Agreement and the Option
Agreement, including the financial terms thereof, to be in the best interest
of ALLTEL and approved the Merger Agreement and the Issuance of ALLTEL Common
Stock.
 
ALLTEL'S REASONS FOR THE MERGER; RECOMMENDATION OF THE ALLTEL BOARD
 
  THE ALLTEL BOARD HAS UNANIMOUSLY DETERMINED THAT THE MERGER, THE MERGER
AGREEMENT AND THE ISSUANCE OF ALLTEL COMMON STOCK TO 360(degrees) STOCKHOLDERS
PURSUANT TO THE MERGER AGREEMENT ARE IN THE BEST INTEREST OF ALLTEL AND ITS
STOCKHOLDERS, AND HAS APPROVED THE MERGER AGREEMENT AND THE ISSUANCE OF ALLTEL
COMMON STOCK. THE ALLTEL BOARD UNANIMOUSLY RECOMMENDS THAT THE ALLTEL
STOCKHOLDERS VOTE IN FAVOR OF THE ISSUANCE OF ALLTEL COMMON STOCK.
 
  The ALLTEL Board believes that the Merger will result in the creation of a
communications company positioned for future growth. As a result of the
Merger, the combined company is expected to have annual revenues of $4.5
billion and total assets of $8.6 billion and would be one of the largest
wireless communications service providers in the United States, serving more
than 3.5 million customers and 33 million managed cellular POPs with average
market penetration of 10.7%. Markets potentially served by ALLTEL and
360(degrees) provide ALLTEL with approximately 50 million potential
communications customers.
 
  Because, like ALLTEL, 360(degrees) has emphasized the development of
multiple distribution channels for its wireless products and services (such as
dealer locations, retail stores, retail kiosks and via direct sales
representatives) the Merger also is expected to enhance ALLTEL's wireless
product and service distribution channels.
 
  Many of 360(degrees)'s wireless operations are contiguous to those of
ALLTEL's. Thus, the Merger would expand ALLTEL's wireless coverage, a factor
favorably distinguishing ALLTEL's network to wireless customers.
 
  ALLTEL is completing its 6,800 mile fiber-optic network. This network is
expected to provide a cost-effective backbone for delivering value-added
communications services as well as voice and data traffic. ALLTEL intends to
connect 360(degrees)'s contiguous markets (primarily in the Southeastern
United States) to this network. Once completed, this total network is expected
to substantially reduce transport costs while permitting substantial
additional traffic volume.
 
  Finally, the Merger presents opportunities for significant cost savings and
operating efficiencies. Set forth below are certain synergies estimated to be
obtainable as a result of the Merger.
 
  Cost Synergy Estimates. This section contains information regarding certain
operating efficiencies, or "synergies," estimated to be reasonably obtainable
as a result of the Merger. These estimates are based in part upon assumptions
with respect to future economic and industry conditions, including assumptions
regarding general economic conditions in ALLTEL's current and prospective
market areas, competition, regulation,
 
                                      24
<PAGE>
 
technology (both availability and cost) and the condition of financial
markets. These conditions are difficult to predict, if at all, and are beyond
ALLTEL's or 360(degrees)'s control. Moreover, this information does not
reflect any future changes to ALLTEL's business or any other transaction or
event that has occurred or may occur the effect of which is not anticipated.
These estimates also assume that the operations of ALLTEL and 360(degrees) are
successfully integrated, and that the anticipated benefits of integration are
fully realized. Accordingly, there can be no assurances that these synergies
will be achieved in the time and amounts set forth below. They should not be
viewed and are not intended as forecasts or predictions of future results.
Stockholders should not place undue reliance upon the information contained
herein in connection with their decision to approve the 360(degrees) Proposal
or the Issuance of ALLTEL Common Stock. Neither ALLTEL nor 360(degrees)
undertakes any duty to update or supplement this information. This section
contains "forward-looking statements" within the meaning of the PSLRA. The
following information is not intended to comply with guidelines of the SEC
regarding forward-looking statements. See "CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS" AND "RISK FACTORS".
 
<TABLE>
<CAPTION>
                                                            FISCAL YEAR ENDED
                                                              DECEMBER 31,
                                                            ------------------
                                                            1998  1999  2000
                                                            ----- ----- ------
                                                              (IN MILLIONS)
     <S>                                                    <C>   <C>   <C>
     Total estimated pre-tax cash operating synergies...... $  20 $  80 $  100
</TABLE>
 
  Estimated synergies would be derived primarily from the increased scale of
ALLTEL's operations after the Merger. Opportunities are expected to arise from
this scale through avoidance of duplicative or redundant activities and
through the adoption of "best practices" cost management throughout the
combined company resulting in reduced sales, general and administrative
expenses. ALLTEL's increased size can also be expected to result in improved
purchasing power and reduction of certain variable network and other costs.
These efficiencies can only be achieved if the combined company fully adopts
"best practices" cost management. In addition, the combined company must
eliminate duplicative or redundant activities and coordinate purchasing
activities to ensure that purchasing economies are achieved.
 
  The ALLTEL Board believes that the Merger and the Issuance of ALLTEL Common
Stock are in the best interests of ALLTEL and its stockholders. In reaching
its determination to approve the Merger Agreement and recommend approval of
the Issuance of ALLTEL Common Stock, the ALLTEL Board considered, among other
things, (i) the judgment, advice and analysis of its management, (ii) the
judgment, advice and analyses of Stephens and Merrill Lynch, (iii) the
financial condition, results of operations, business operations and prospects
of 360(degrees), (iv) the cost efficiencies and synergies expected to arise as
a result of the Merger, (v) the strategic benefits and opportunities expected
to occur as a result of the Merger, (vi) current industry conditions,
particularly the competitive nature of the industry in which ALLTEL and
360(degrees) operate and the advantages of scale and network ubiquity, (vii)
the terms and conditions of the Merger Agreement and related agreements,
including the Option Agreement, (viii) the percentage ownership in ALLTEL to
be owned by ALLTEL stockholders after the Merger, (ix) the likelihood that the
Merger would receive the requisite regulatory approvals, and (x) the
expectation that the Merger would constitute a "reorganization" under Section
368(a) of the Code that would be accounted for as a "pooling-of-interests" for
accounting and financial reporting purposes.
 
  The foregoing discussion of the information and factors considered by the
ALLTEL Board is not intended to be exhaustive but is believed to include all
material factors considered by the ALLTEL Board. In reaching its
determination, the ALLTEL Board did not assign any relative or specific
weights to the foregoing factors, and individual directors may have given
differing weights to differing factors. After deliberating with respect to the
Merger and the other transactions contemplated by the Merger Agreement and the
Option Agreement, and considering, among other things, the matters discussed
above, the ALLTEL Board unanimously approved the Merger Agreement and the
transactions contemplated thereby as being in the best interests of ALLTEL and
the ALLTEL stockholders.
 
                                      25
<PAGE>
 
OPINION OF FINANCIAL ADVISORS TO ALLTEL
 
  Opinion of Merrill Lynch. On March 15, 1998, Merrill Lynch delivered its
oral opinion (which was subsequently confirmed in writing on March 16, 1998)
to the ALLTEL Board that, on the basis of and subject to the matters set forth
therein, as of the date thereof, the Conversion Fraction was fair from a
financial point of view to ALLTEL. Merrill Lynch subsequently confirmed its
opinion by delivering to the ALLTEL Board its written opinion, dated as of the
date of this Joint Proxy Statement/Prospectus, that, on the basis of and
subject to the matters set forth therein, as of the date thereof, the
Conversion Fraction is fair from a financial point of view to ALLTEL.
 
  THE FULL TEXT OF THE OPINION OF MERRILL LYNCH DATED AS OF THE DATE OF THIS
JOINT PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AS ANNEX C AND IS INCORPORATED HEREIN BY
REFERENCE. MERRILL LYNCH'S OPINION IS NECESSARILY BASED ON ECONOMIC, MARKET
AND OTHER CONDITIONS IN EFFECT ON, AND THE INFORMATION MADE AVAILABLE TO IT AS
OF, THE DATE THEREOF. SUBSEQUENT DEVELOPMENTS MAY AFFECT SUCH OPINION. HOLDERS
OF ALLTEL VOTING STOCK SHOULD READ THE MERRILL LYNCH OPINION IN ITS ENTIRETY.
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF SUCH OPINION. THE OPINION OF MERRILL LYNCH WAS PROVIDED TO THE ALLTEL
BOARD FOR ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS FROM A
FINANCIAL POINT OF VIEW OF THE CONVERSION FRACTION TO ALLTEL AND DOES NOT
ADDRESS THE MERITS OF THE UNDERLYING DECISION BY ALLTEL TO ENGAGE IN THE
MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF ALLTEL
AS TO HOW SUCH STOCKHOLDER SHOULD VOTE ON THE MERGER OR ANY MATTER RELATED
THERETO.
 
  In arriving at its opinion, Merrill Lynch: (1) reviewed certain publicly
available business and financial information relating to 360(degrees) and
ALLTEL that Merrill Lynch deemed to be relevant; (2) reviewed certain
information, including financial forecasts, relating to the business,
earnings, cash flow, assets, liabilities and prospects of 360(degrees) and
ALLTEL, as well as the amount and timing of the cost savings and related
expenses and synergies expected to result from the Merger (the "Expected
Synergies") furnished to Merrill Lynch by 360(degrees) and ALLTEL; (3)
conducted discussions with members of senior management of 360(degrees) and
ALLTEL concerning the matters described in clauses 1 and 2 above, as well as
their respective businesses and prospects before and after giving effect to
the Merger and the Expected Synergies; (4) reviewed the market prices and
valuation multiples for the 360(degrees) Common Stock and the ALLTEL Common
Stock and compared them with those of certain publicly traded companies that
Merrill Lynch deemed to be relevant; (5) reviewed the results of operations of
360(degrees) and ALLTEL and compared them with those of certain publicly
traded companies that Merrill Lynch deemed to be relevant; (6) compared the
proposed financial terms of the Merger with the financial terms of certain
other transactions that Merrill Lynch deemed to be relevant; (7) participated
in certain discussions and negotiations among representatives of 360(degrees)
and ALLTEL and their financial and legal advisors; (8) reviewed the potential
pro forma impact of the Merger; (9) reviewed the Merger Agreement and the
Option Agreement; and (10) reviewed such other financial studies and analyses
and took into account such other matters as Merrill Lynch deemed necessary,
including its assessment of general economic, market and monetary conditions.
 
  Merrill Lynch assumed and relied on the accuracy and completeness of all
information supplied or otherwise made available to it, discussed with or
reviewed by or for it, or publicly available, and Merrill Lynch did not assume
any responsibility for independently verifying such information, did not
undertake an independent evaluation or appraisal of any of the assets or
liabilities of 360(degrees) or ALLTEL and was not furnished with any such
evaluation or appraisal. In addition, Merrill Lynch did not assume any
obligation to conduct, nor did Merrill Lynch conduct, any physical inspection
of the properties or facilities of 360(degrees) or ALLTEL. With respect to the
financial forecast information, including the amount and timing of the
Expected Synergies, furnished to or discussed with Merrill Lynch by
360(degrees) or ALLTEL, Merrill Lynch assumed that they were reasonably
prepared and reflected the best currently available estimates and judgments of
360(degrees)'s or ALLTEL's management as to the
 
                                      26
<PAGE>
 
expected future financial performance of 360(degrees) or ALLTEL, as the case
may be, and the Expected Synergies. Merrill Lynch further assumed that the
Merger will be accounted for as a pooling-of-interests under generally
accepted accounting principles and that it will qualify as a tax-free
reorganization for U.S. federal income tax purposes. Merrill Lynch did not
express any opinion as to the prices at which the ALLTEL Common Stock will
trade following the announcement or consummation of the Merger.
 
  In arriving at its opinion, Merrill Lynch performed a variety of financial
analyses, the material portions of which are summarized below. The summary set
forth below does not purport to be a complete description of the analyses
performed by Merrill Lynch. In addition, Merrill Lynch believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and of the factors considered by it, without considering all such
factors and analyses, could create a misleading view of the process underlying
its analyses. Merrill Lynch did not draw any specific conclusions from or with
regard to any one method of analysis. The matters considered by Merrill Lynch
in arriving at its opinion are based on numerous macroeconomic, operating and
financial assumptions with respect to industry performance, general business
and economic conditions and other matters, many of which are beyond
360(degrees)'s and ALLTEL's control. Any estimates incorporated in the
analyses performed by Merrill Lynch are not necessarily indicative of actual
past or future results or values, which may be significantly more or less
favorable than such estimates. Estimated values do not purport to be
appraisals and do not necessarily reflect the prices at which businesses or
companies may be sold in the future, and such estimates are inherently subject
to uncertainty. Arriving at a fairness opinion is a complex process not
necessarily susceptible to partial or summary description. No public company
utilized as a comparison is identical to 360(degrees) or ALLTEL. Accordingly,
an analysis of publicly traded comparable companies and comparable business
combinations is not mathematical; rather it involves complex considerations
and judgments concerning differences in financial and operating
characteristics of the comparable companies and other factors that could
affect the public trading value of the comparable companies or company to
which they are being compared.
 
  Merrill Lynch's opinion is necessarily based upon market, economic and other
conditions as they existed and could be evaluated on, and on the information
made available to Merrill Lynch as of, the date of such opinion. Merrill Lynch
assumed that in the course of obtaining the necessary regulatory or other
consents or approvals (contractual or otherwise) for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, would be imposed that would have a material adverse effect on
the contemplated benefits of the Merger. The ALLTEL Board did not impose any
limitations on the scope of Merrill Lynch's analyses.
 
  The ALLTEL Board retained Merrill Lynch as an independent contractor to act
as financial advisor with respect to the Merger. Merrill Lynch is an
internationally recognized investment banking and advisory firm. Merrill
Lynch, as part of its investment banking business, is continuously engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. Merrill Lynch has in the past
provided financial advisory and financing services to ALLTEL and financing
services to 360(degrees) and may continue to do so and has received, and may
receive, fees for the rendering of such services. In addition, in the ordinary
course of their businesses, Merrill Lynch and its affiliates may actively
trade in 360(degrees) Common Stock and other securities of 360(degrees), as
well as ALLTEL Common Stock and other securities of ALLTEL for their own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
 
  In consideration for Merrill Lynch's services as financial advisor to
ALLTEL, ALLTEL has agreed to pay to Merrill Lynch a fee equal to $4,750,000, a
significant portion of which is payable upon consummation of such business
combination. ALLTEL has also agreed to reimburse Merrill Lynch for its
reasonable out-of-pocket expenses, including fees and disbursements of its
legal counsel, incurred in connection with its activities as financial advisor
to ALLTEL, and to indemnify Merrill Lynch and certain related persons against
certain liabilities in connection with its engagement, including certain
liabilities under the federal securities laws.
 
 
                                      27
<PAGE>
 
  Opinion of Stephens. On March 15, 1998, Stephens delivered its oral opinion
(which was subsequently confirmed in writing on March 16, 1998) to the ALLTEL
Board that, on the basis of and subject to the matters set forth therein, as
of the date thereof, the Conversion Fraction was fair from a financial point
of view to ALLTEL. Stephens subsequently confirmed its opinion by delivering
to the ALLTEL Board its written opinion, dated as of the date of this Joint
Proxy Statement/Prospectus, that, on the basis of and subject to the matters
set forth therein, as of the date thereof, the Conversion Fraction is fair
from a financial point of view to ALLTEL.
 
  THE FULL TEXT OF THE OPINION OF STEPHENS DATED AS OF THE DATE OF THIS JOINT
PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED TO THIS JOINT
PROXY STATEMENT/PROSPECTUS AS ANNEX D AND IS INCORPORATED HEREIN BY REFERENCE.
STEPHENS' OPINION IS NECESSARILY BASED ON ECONOMIC, MARKET AND OTHER
CONDITIONS IN EFFECT ON, AND THE INFORMATION MADE AVAILABLE TO IT AS OF, THE
DATE THEREOF. SUBSEQUENT DEVELOPMENTS MAY AFFECT SUCH OPINION. HOLDERS OF
ALLTEL VOTING STOCK SHOULD READ THE STEPHENS OPINION IN ITS ENTIRETY. THE
FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION. THE OPINION OF STEPHENS WAS PROVIDED TO THE ALLTEL BOARD FOR
ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF
VIEW OF THE CONVERSION FRACTION TO ALLTEL AND DOES NOT ADDRESS THE MERITS OF
THE UNDERLYING DECISION BY ALLTEL TO ENGAGE IN THE MERGER AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER OF ALLTEL AS TO HOW SUCH
SHAREHOLDER SHOULD VOTE ON THE PROPOSED MERGER OR ANY MATTER RELATED THERETO.
 
  In connection with rendering its opinion, Stephens: (1) analyzed certain
publicly available financial statements and reports regarding 360(degrees) and
ALLTEL; (2) analyzed certain internal financial statements and other financial
and operating data (including financial projections) concerning 360(degrees)
and ALLTEL, as well as the amount and timing of the Expected Synergies,
prepared by managements of 360(degrees) and ALLTEL; (3) analyzed, on a pro
forma basis, the effect of the Merger; (4) reviewed the reported prices and
trading activity for 360(degrees) Common Stock and ALLTEL Common Stock; (5)
compared the financial performance of 360(degrees) and ALLTEL and the prices
and trading activity of 360(degrees) Common Stock and ALLTEL Common Stock with
that of certain other comparable publicly-traded companies and their
securities; (6) reviewed the financial terms, to the extent publicly
available, of certain comparable transactions; (7) reviewed the Merger
Agreement and related documents; (8) discussed with managements of
360(degrees) and ALLTEL the operations of and future business prospects for
360(degrees) and ALLTEL and the anticipated financial consequences of the
Merger; (9) assisted in deliberations regarding the material terms of the
Merger and negotiations with 360(degrees); and (10) performed such other
analyses and provided such other services as Stephens deemed appropriate.
 
  Stephens relied on the accuracy and completeness of the information and
financial data provided to it by 360(degrees) and ALLTEL, and Stephens'
opinion is based upon such information. Stephens inquired into the reliability
of such information and financial data only to the limited extent necessary to
provide a reasonable basis for its opinion, recognizing that Stephens rendered
only an informed opinion and not an appraisal or certification of value. With
respect to the financial projections prepared by managements of 360(degrees)
and ALLTEL, including the Expected Synergies, Stephens assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of 360(degrees) and ALLTEL as to the expected
future financial performance of 360(degrees) and ALLTEL. Stephens did not
express any opinion as to the prices at which the ALLTEL Common Stock will
trade following the announcement or consummation of the Merger.
 
  In arriving at its opinion, Stephens performed a variety of financial
analyses, the material portions of which are summarized below. The summary set
forth below does not purport to be a complete description of the analyses
performed by Stephens. In addition, Stephens believes that its analyses must
be considered as a whole and that selecting portions of its analyses and of
the factors considered by it, without considering all such factors and
analyses, could create a misleading view of the process underlying its
analyses. Stephens did not draw any
 
                                      28
<PAGE>
 
specific conclusions from or with regard to any one method of analysis. The
matters considered by Stephens in arriving at its opinion are based on
numerous macroeconomic, operating and financial assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond 360(degrees)'s and ALLTEL's control. Any
estimates incorporated in the analyses performed by Stephens are not
necessarily indicative of actual past or future results or values, which may
be significantly more or less favorable than such estimates. Estimated values
do not purport to be appraisals and do not necessarily reflect the prices at
which businesses or companies may be sold in the future, and such estimates
are inherently subject to uncertainty. Arriving at a fairness opinion is a
complex process not necessarily susceptible to partial or summary description.
No public company utilized as a comparison is identical to 360(degrees) or
ALLTEL. Accordingly, an analysis of publicly traded comparable companies and
comparable business combinations is not mathematical; rather it involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the comparable companies and other factors that
could affect the public trading value of the comparable companies or company
to which they are being compared.
 
  The Stephens opinion is necessarily based upon market, economic and other
conditions as they existed and could be evaluated on, and on the information
made available to Stephens as of, the date of such opinion. Stephens assumed
that in the course of obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the Merger, no restrictions,
including any divestiture requirements or amendments or modifications, would
be imposed that would have a material adverse effect on the contemplated
benefits of the Merger. The ALLTEL Board did not impose any limitations on the
scope of Stephens' analyses.
 
  The ALLTEL Board retained Stephens as an independent contractor to act as
financial advisor with respect to the Merger. Stephens is a nationally
recognized investment banking and advisory firm. Stephens, as part of its
investment banking business, is continually engaged in the valuation of
companies and their securities in connection with business reorganizations,
private placements, negotiated underwritings, mergers and acquisitions and
valuations for estate, corporate and other purposes. Stephens is familiar with
ALLTEL and 360(degrees) and regularly provides investment banking services to
ALLTEL and issues periodic research reports regarding its business activities
and prospects. In the ordinary course of their businesses, Stephens and its
affiliates may at any time hold long or short positions, and may trade or
otherwise effect transactions as principal or for the accounts of customers,
in debt or equity securities or options on securities of ALLTEL and
360(degrees). Certain affiliates of Stephens collectively own approximately
9.02% of the outstanding shares of ALLTEL Common Stock. See "INFORMATION
REGARDING ALLTEL--Security Ownership of Certain Beneficial Owners and
Management."
 
  In consideration for Stephens' services as financial advisor to ALLTEL,
ALLTEL has agreed to pay to Stephens a fee equal to $4,750,000, a significant
portion of which is payable upon consummation of such business combination.
ALLTEL has also agreed to reimburse Stephens for its reasonable out-of-pocket
expenses, including fees and disbursements of its legal counsel, incurred in
connection with its activities as financial advisor to ALLTEL, and to
indemnify Stephens and certain related persons against certain liabilities in
connection with its engagement, including certain liabilities under the
federal securities laws.
 
  Financial Analyses. The following is a summary of the material financial
analyses used by Merrill Lynch and Stephens in connection with their joint
presentation to the ALLTEL Board on March 15, 1998, and the preparation of
their opinions delivered to the ALLTEL Board.
 
  Historical Stock Price Analysis. Merrill Lynch and Stephens reviewed the
performance of the per share closing market prices of 360(degrees) Common
Stock and ALLTEL Common Stock over the period from March 7, 1996, the date of
360(degrees)'s spinoff from Sprint Corporation, through March 12, 1998.
Merrill Lynch and Stephens then compared the movement of such closing prices
for 360(degrees) Common Stock with the movement of a composite index of
certain cellular companies whose properties are predominantly MSA-based
(Metropolitan Statistical Area), specifically, AirTouch Communications, Inc.
and Vanguard Cellular Systems, Inc. and with the movement of a composite index
of certain cellular companies whose properties are predominantly RSA-based
(Rural Statistical Area), specifically, Centennial Cellular Corp., PriCellular
Corp. and United States Cellular Corporation. Merrill
 
                                      29
<PAGE>
 
Lynch and Stephens also compared the movement of the closing prices for ALLTEL
Common Stock over the period from April 1, 1996, through March 12, 1998, with
the movement of the Standard and Poor's 500 Index and with a composite index
of certain independent local exchange carrier companies, specifically, Aliant
Communications Co., Century Telephone Enterprises, Inc., Cincinnati Bell Inc.,
Telephone & Data Systems Inc. and GTE Corporation.
 
  Merrill Lynch and Stephens also reviewed the historical ratios of the
closing market prices of 360(degrees) Common Stock to ALLTEL Common Stock over
the period from March 7, 1996 through March 12, 1998 and compared such ratios
with the Conversion Fraction of 0.740x. Merrill Lynch and Stephens noted that
the ratio of the closing market prices of 360(degrees) Common Stock to ALLTEL
Common Stock over that period ranged from a high of 0.872x on September 5,
1996, to a low of 0.447x on January 8, 1998. Merrill Lynch and Stephens also
noted that the current ratio of the closing market prices of 360(degrees)
Common Stock to ALLTEL Common Stock was 0.622x as of March 12, 1998 and that,
as of that date, the average ratios over the previous 30, 60, 90, 180 and 365
day periods and since March 7, 1996, were 0.555x, 0.519x, 0.523x, 0.549x,
0.549x and 0.648x, respectively.
 
  Selected Comparable Companies Analysis. Merrill Lynch and Stephens compared
certain publicly available financial and operating data and projected
financial performance (based on Wall Street consensus estimates) of four
publicly traded corporations in the cellular industry, specifically,
Centennial Cellular Corp., United States Cellular Corporation, AirTouch
Communications, Inc. and Vanguard Cellular Systems, Inc. (collectively, the
"360(degrees) Selected Comparable Companies") with corresponding financial and
operating data and projected financial performance of 360(degrees). Such
analysis indicated, among other things, (a) the ratio of the market
capitalization, as of March 12, 1998, of cellular assets (i.e., market value
of common equity plus liquidation value of redeemable preferred stock,
minority interest and total debt less cash and cash equivalents and less the
value of non-domestic cellular assets, where applicable (such value as
estimated by Merrill Lynch)) (the "Market Capitalization") to the latest
twelve months' earnings before interest, taxes, depreciation and amortization
("EBITDA") as of December 31, 1997 (November 30, 1997 in the case of
Centennial) was 12.3x for 360(degrees) compared to maximum, mean and minimum
values for the 360(degrees) Selected Comparable Companies of 14.5x, 12.6x and
11.5x, respectively, (b) the ratio of the Market Capitalization to estimated
1998 EBITDA was 10.0x for 360(degrees) compared to maximum, mean and minimum
values for the 360(degrees) Selected Comparable Companies of 11.1x, 9.9x and
8.6x, respectively, (c) the ratio of the Market Capitalization to estimated
1999 EBITDA was 8.6x for 360(degrees) compared to maximum, mean and minimum
values for the 360(degrees) Selected Comparable Companies of 9.6x, 8.6x and
7.0x, respectively, and (d) the ratio of the Market Capitalization to Net POPs
was $233 for 360(degrees) compared to maximum, mean and minimum values for the
360(degrees) Selected Comparable Companies of $288, $191 and $133,
respectively.
 
  Merrill Lynch and Stephens compared certain publicly available financial and
operating data and projected financial performance (based on Wall Street
consensus estimates and data reported by First Call) of four publicly traded
independent local exchange carrier companies, specifically, Aliant
Communications Co., Cincinnati Bell Inc., Century Telephone Enterprises, Inc.
and GTE Corporation (collectively, the "ALLTEL Selected Comparable Companies")
with corresponding financial and operating data and projected financial
performance of ALLTEL. Such analysis indicated, among other things, (a) the
ratio of the Market Capitalization as of March 12, 1998, to the latest twelve
months' EBITDA as of December 31, 1997 was 9.0x for ALLTEL compared to
maximum, mean and minimum values for the ALLTEL Selected Comparable Companies
of 9.5x, 8.7x and 7.8x, respectively, (b) the ratio of Market Capitalization
to estimated 1998 EBITDA was 8.3x for ALLTEL compared to maximum, mean and
minimum values for the ALLTEL Selected Comparable Companies of 9.3x, 8.1x and
7.4x, respectively, (c) the ratio of the price of common equity, as of March
12, 1998, to the earnings per share for 1997 was 22.4x for ALLTEL compared to
maximum, mean and minimum values for the ALLTEL Selected Comparable Companies
of 24.5x, 21.6x and 18.4x, respectively, and (d) the ratio of the price of
common equity, as of March 12, 1998, to the estimated earnings per share for
1998 was 20.5x for ALLTEL compared to maximum, mean and minimum values for the
ALLTEL Selected Comparable Companies of 24.7x, 20.4x and 16.3x, respectively.
 
 
                                      30
<PAGE>
 
  Selected Comparable Transaction Analysis. Merrill Lynch and Stephens
analyzed the financial terms, to the extent publicly available, of twelve
transactions involving domestic cellular assets which were announced between
April 6, 1996 and March 9, 1998 (the "Selected Comparable Transactions"). The
Selected Comparable Transactions included American Cellular Corp./PriCellular
Corp., Rural Cellular Corp./Atlantic Cellular Co. L.P., AirTouch
Communications, Inc./U S WEST Media Group's domestic wireless operations,
Blackstone Capital Partners L.P./CommNet Cellular Inc., Price Communications
Corp./Palmer Wireless Inc., Western Wireless Corp./Triad Cellular Corp.,
Century Telephone Enterprises Inc./Pacific Telecom Inc., Rural Cellular
Corp./InterCel Inc., Dobson Communications Corp./Horizon Cellular Telephone
Co., Sygnet Wireless Inc./Horizon Cellular Telephone Co., 360(degrees)
Communications/Independent Cellular Network Inc. and AirTouch Communications,
Inc./Cellular Communications Inc. Merrill Lynch and Stephens estimated the
price paid for domestic cellular assets in such transactions (the "Transaction
Value"), as a multiple of the latest twelve months' EBITDA, one year projected
EBITDA, two year projected EBITDA and Net POPs. Transaction Value is defined
as fully diluted (on a treasury stock basis) shares outstanding for the target
company multiplied by the offer price per share plus net debt, liquidation
value of redeemable preferred stock and minority interest. Such analysis
indicated, among other things, (a) the ratio of the Transaction Value of the
Merger, based on the market price of ALLTEL Common Stock as of March 12, 1998
(the "Merger Transaction Value"), to 1997 EBITDA is 13.8x, compared to
maximum, mean, median and minimum values of the ratio of the Transaction Value
to the last twelve months' EBITDA for the Selected Comparable Transactions of
21.4x, 15.6x, 15.3x and 10.6x, respectively, (b) the ratio of the Merger
Transaction Value to estimated 1998 EBITDA is 11.3x, compared to maximum,
mean, median and minimum values of the ratio of the Transaction Value to the
one year projected EBITDA for the Selected Comparable Transactions of 13.6x,
11.9x, 11.6x and 9.5x, respectively, (c) the ratio of the Merger Transaction
Value to estimated 1999 EBITDA is 9.7x compared to maximum, mean, median and
minimum values of the ratio of the Transaction Value to the two year projected
EBITDA for the Selected Comparable Transactions of 10.7x, 9.6x, 9.9x and 8.6x,
respectively, and (d) the ratio of the Merger Transaction Value to Net POPs is
$262 compared to the maximum, mean, median and minimum values of the ratio of
the Transaction Value to the Net POPs for the Selected Comparable Transactions
of $331, $211, $208 and $121, respectively.
 
  Discounted Cash Flow Analysis. Merrill Lynch and Stephens performed a
discounted cash flow analysis of 360(degrees) based upon estimates of
projected financial performance prepared by the managements of 360(degrees)
and ALLTEL. Utilizing these projections, Merrill Lynch and Stephens calculated
a range of implied per share equity values based upon the discounted net
present value of the sum of the projected stream of unlevered free cash flows
from 1998 to the year 2002 and the projected terminal value at 2002 based upon
a range of multiples of projected EBITDA less net debt at December 31, 1997
and divided by the number of 360(degrees) fully diluted shares outstanding.
Merrill Lynch and Stephens applied several discount rates (ranging from 9.5%
to 11.5%) and multiples of EBITDA (ranging from 9.5x to 10.5x). Utilizing this
methodology, the implied present value per share of 360(degrees) Common Stock
ranged from $28.23 to $36.72.
 
  Relative Valuation Analysis. Merrill Lynch and Stephens reviewed the
relative valuations of 360(degrees) and ALLTEL using relative comparable
public companies analysis, relative contribution analysis and relative
discounted cash flow analysis, with and without Expected Synergies, and
compared such ratios with the Conversion Fraction of 0.740x. Such analysis
indicated, among other things, (a) the range of implied exchange ratios based
on the relative comparable public companies analysis (i.e. the ratios of the
equity values per fully diluted share of 360(degrees) Common Stock, implied by
the estimated 1998 EBITDA, estimated 1999 EBITDA and Net POPs of 360(degrees),
divided by the share price of ALLTEL Common Stock as of March 12, 1998) was
0.48x to 0.69x without synergies and 0.57x to 0.80x with synergies, and (b)
the range of implied exchange ratios based on the relative contribution
analysis (i.e. the ratio of the estimated 1998, 1999 and 2000 net income of
360(degrees) per fully-diluted 360(degrees) shares outstanding divided by the
estimated 1998, 1999 and 2000 net income of ALLTEL per fully-diluted ALLTEL
shares) was 0.40x to 0.58x without synergies and 0.45x to 0.76x with
synergies. Merrill Lynch and Stephens also observed that the 0.740x Conversion
Fraction was within the range implied by the relative discounted cash flow
analysis with synergies of 0.55x to 0.87x.
 
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<PAGE>
 
  Merger Consequences Analysis. Merrill Lynch and Stephens examined the pro
forma impact of the Merger on ALLTEL's earnings per share based upon estimates
of 360(degrees) projected financial performance prepared by the managements of
360(degrees) and of ALLTEL, and estimates of ALLTEL projected financial
performance and Expected Synergies prepared by the management of ALLTEL. This
analysis indicated that, compared to consensus analyst earnings estimates for
ALLTEL, the Merger would be dilutive in fiscal year 1998, earnings neutral in
1999 and accretive to ALLTEL's earnings per share in each of fiscal years 2000
to 2002.
 
360(degrees)'S REASONS FOR THE MERGER; RECOMMENDATION OF THE 360(degrees)
BOARD
 
  THE 360(degrees) BOARD HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE IN THE BEST INTERESTS OF
360(degrees) AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. THE 360(degrees) BOARD
RECOMMENDS THAT THE STOCKHOLDERS OF 360(degrees) VOTE TO APPROVE THE
360(degrees) PROPOSAL.
 
  360(degrees) believes that the ALLTEL transaction fulfills its fundamental
objectives of: (i) expanding 360(degrees)'s existing market clusters,
especially in the Southeast and Midwest, into powerful regional competitors;
(ii) providing 360(degrees) with the additional scale and resources necessary
to compete more effectively in the rapidly consolidating telecommunications
industry; and (iii) allowing 360(degrees) to expand its bundled service
offering to include a broader range of telecommunications services.
 
  360(degrees) sought out strategic alternatives which would capitalize upon
its strengths, while allowing its stockholders to benefit from the development
and future growth of the telecommunications industry. 360(degrees) sought out
a transaction which would allow it to diversify while maintaining its core
competence and furthering its principal goals. The criteria 360(degrees) used
in considering potential candidates included size, geographic coverage and
compatibility, combined company revenue and cost synergies, market segments
covered and regulatory issues.
 
  The combined company will be a diversified, full service provider with a
strong regional presence in the Southeast and Midwest. The transaction will
allow the combined company to grow in size in the increasingly competitive
wireless market by providing greater financial, technological, marketing and
sales resources. The two companies serve smaller metropolitan and rural
markets and are generally powerful in the same regions but without significant
overlap of service areas. The geographic fit and complimentary strategies of
360(degrees) and ALLTEL should permit the combined company to realize
significant competitive benefits and operational synergies. By leveraging
economies of scale in purchasing, network operations, information technology
and administration, management anticipates that the combined company will be
able to achieve significant annual cost savings.
 
  360(degrees) has recognized the increasing efforts by telecommunications
carriers, including incumbent local exchange and long distance carriers with
substantially greater financial resources, to offer comprehensive packages of
services so that a customer would be able to obtain most or all of its
telecommunications services from a single provider. Companies which offer
"bundled" services have the potential to increase customer loyalty, reduce
churn and more fully utilize distribution channels.
 
  The 360(degrees) Board has determined by the unanimous vote of the directors
that the terms of the Merger Agreement and the transactions contemplated
thereby are in the best interests of 360(degrees) and its stockholders. In
reaching its decision, the 360(degrees) Board considered among other things,
the following factors: (i) its knowledge of the business, operations,
financial condition and operating results of 360(degrees); (ii) its knowledge
of the strategic objective of 360(degrees); (iii) various presentations by
360(degrees)'s management and by its financial advisor with respect to the
national and world wide telecommunications industry, 360(degrees)'s strategic
objectives and growth strategies and the strategic fit with those of ALLTEL
and other potential merger partners; (iv) the relatively greater financial,
technological, marketing and sales resources of the combined company and the
likelihood that such resources would enable the combined entity to accelerate
its long-term growth strategy and to compete more effectively in its targeted
markets; (v) the rapid consolidation underway in the telecommunications
industry; (vi) the
 
                                      32
<PAGE>
 
relationship of the Conversion Fraction to the historical market prices for
360(degrees) Common Stock and ALLTEL Common Stock, including the fact that the
Conversion Fraction should provide a premium to 360(degrees)'s stockholders
based on historical trading prices; (vii) the terms of the Merger Agreement
which were the product of extensive arms-length negotiations; (viii) the
opportunity of 360(degrees)'s stockholders to participate as equity holders of
ALLTEL on a tax-free basis (see "THE MERGER--Certain Federal Income Tax
Consequences of the Merger"); (ix) the Lazard Opinion as to the fairness from
a financial point of view of the consideration to be received by the
stockholders of 360(degrees) in the Merger; (x) the ability to account for the
Merger as a pooling-of-interests; (xi) the likelihood that required regulatory
approvals should be obtainable in view of the absence of overlapping market
clusters; and (xii) the analysis by 360(degrees)'s management, with the
assistance of 360(degrees)'s financial advisor, of potential merger partners.
The 360(degrees) Board recognized that (i) other potential merger partners
might seek to make proposals; (ii) on March 13, 1998, in response to rumors
regarding a potential transaction, 360(degrees)'s stock price dramatically
increased and ALLTEL's stock price decreased, and that, because the Conversion
Fraction is fixed, there is the possibility that the value of the
consideration that would be received by 360(degrees)'s stockholders in the
Merger may further diminish prior to the closing of the Merger if the market
value of ALLTEL Common Stock further declines; and (iii) consummation of the
Merger requires regulatory approvals.
 
  The foregoing discussion of the information and factors considered by the
360(degrees) Board is not intended to be exhaustive but is believed to include
all material facts considered by the 360(degrees) Board. In view of the
variety of factors considered in connection with its evaluation of the Merger
Agreement, the 360(degrees) Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination.
 
OPINION OF 360(degrees)'S FINANCIAL ADVISOR
 
  360(degrees) has retained Lazard Freres to act as its financial advisor in
connection with the Merger. Lazard Freres was selected by the 360(degrees)
Board based on Lazard Freres' qualifications, expertise and reputation in
transactions similar to the Merger and its knowledge of the national and
worldwide telecommunications industry and business and affairs of
360(degrees). At the meeting of the 360(degrees) Board on March 15, 1998,
Lazard Freres rendered its opinion (the "Lazard Opinion") that as of such
date, based upon and subject to the various considerations set forth therein,
the Conversion Fraction was fair to 360(degrees) and its stockholders from a
financial point of view. Lazard Freres subsequently reconfirmed its opinion by
delivering to the 360(degrees) Board its written opinion, dated as of May 6,
1998, to the effect that, as of such date, the Conversion Fraction was fair to
360(degrees) and its stockholders from a financial point of view.
 
  THE FULL TEXT OF THE RECONFIRMED LAZARD OPINION, WHICH SETS FORTH, AMONG
OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS ON THE SCOPE OF THE REVIEW UNDERTAKEN BY LAZARD FRERES IN
RENDERING SUCH OPINION, IS ATTACHED AS ANNEX E TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE LAZARD
OPINION AND THE RECONFIRMED LAZARD OPINION ADDRESS ONLY THE FAIRNESS OF SUCH
CONVERSION FRACTION PURSUANT TO THE MERGER AGREEMENT FROM A FINANCIAL POINT OF
VIEW AS OF THE RESPECTIVE DATES OF THE LAZARD OPINION AND THE RECONFIRMED
LAZARD OPINION, AS THE CASE MAY BE, AND DO NOT ADDRESS ANY OTHER ASPECT OF THE
MERGER OR CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF 360(degrees) COMMON
STOCK AS TO HOW TO VOTE WITH RESPECT TO THE MERGER. THE SUMMARY OF THE LAZARD
OPINION SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE RECONFIRMED LAZARD OPINION.
360(degrees) STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE RECONFIRMED
LAZARD OPINION CAREFULLY AND IN ITS ENTIRETY IN CONJUNCTION WITH THIS JOINT
PROXY STATEMENT/PROSPECTUS.
 
  In connection with rendering the Lazard Opinion, Lazard Freres: (i) reviewed
the financial terms and conditions of the Merger Agreement; (ii) analyzed
certain publicly available historical business and financial information
relating to 360(degrees) and ALLTEL; (iii) reviewed various internal financial
forecasts and other financial and operating data provided to Lazard Freres by
360(degrees) and ALLTEL relating to their respective businesses; (iv) held
discussions with certain members of the senior managements of 360(degrees) and
ALLTEL with respect to the past and current business operations and financial
condition and the prospects of 360(degrees) and ALLTEL, respectively, the
strategic objectives of each, and certain possible strategic, financial and
operational benefits that might be
 
                                      33
<PAGE>
 
realized following the Merger; (v) reviewed the pro forma impact of the Merger
on the earnings per share and consolidated capitalization of 360(degrees) and
ALLTEL, respectively; (vi) reviewed public information with respect to certain
other companies in lines of businesses Lazard Freres believed to be generally
comparable to the businesses of 360(degrees) and ALLTEL; (vii) reviewed the
financial terms, to the extent publicly available, of certain business
combinations involving companies in lines of businesses Lazard Freres believed
to be generally comparable to those of 360(degrees)'s and ALLTEL's; (viii)
reviewed the historical stock prices and trading volumes of 360(degrees)'s and
ALLTEL's common stock; (ix) compared the financial performance of 360(degrees)
and ALLTEL and the prices and trading activity of 360(degrees)'s and ALLTEL's
common stock, respectively, with that of certain other comparable publicly
traded companies and their securities; (x) participated in discussions and
negotiations among representatives of 360(degrees) and ALLTEL and their
financial and legal advisors; and (xi) conducted such other financial studies,
analyses and investigations as Lazard Freres deemed appropriate. In connection
with its reconfirmation dated as of May 6, 1998 of the Lazard Opinion, Lazard
Freres also (a) reviewed a draft of this Joint Proxy Statement/Prospectus in
the form to be provided to the stockholders of 360(degrees) and ALLTEL in
connection with their consideration of the Merger and other matters described
therein, (b) received oral reconfirmation from certain members of the senior
managements of 360(degrees) and ALLTEL with respect to the information
described in item (iii) above and (c) held additional discussions with certain
members of the senior managements of 360(degrees) and ALLTEL with respect to
the matters described in item (iv) above.
 
  Lazard Freres relied with 360(degrees)'s consent upon the accuracy and
completeness of the foregoing information, and did not assume any
responsibility for any independent verification of such information, nor did
Lazard Freres make any independent valuation or appraisal of any of the
assets, liabilities or technologies of 360(degrees) or ALLTEL, or concerning
the solvency or fair value of either of the foregoing entities, nor was Lazard
Freres furnished with such valuations or appraisals. Lazard Freres relied
upon, without independent verification, the assessment by the managements of
360(degrees) and ALLTEL of 360(degrees)'s and ALLTEL's services and products,
the timing and risks associated with the integration of 360(degrees) with
ALLTEL, and the validity of, and risk associated with, 360(degrees)'s and
ALLTEL's existing and future services and products. With respect to internal
financial forecasts and any financial or operating information furnished by,
or disclosed during discussions with, the managements of 360(degrees) or
ALLTEL, including estimates of the strategic, financial and operational
benefits that might be realized following the Merger, Lazard Freres assumed
that such forecasts and information were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
managements of 360(degrees) and ALLTEL as to the competitive, operating and
regulatory environments and the related financial performance of 360(degrees)
and ALLTEL, respectively, for the relevant periods. Lazard Freres assumed no
responsibility for and expressed no view as to such forecasts or assessments
or the assumptions on which they are based. Further, the Lazard Opinion and
the reconfirmed Lazard Opinion were necessarily based on economic, monetary,
market and other conditions as in effect on, and the information made
available to Lazard Freres as of, the respective dates of the Lazard Opinion
and the reconfirmed Lazard Opinion.
 
  In rendering and reconfirming the Lazard Opinion, Lazard Freres assumed that
the Merger would be consummated on the terms described in the Merger
Agreement, without any waiver of any material terms or conditions by
360(degrees) or ALLTEL and that obtaining the necessary regulatory approvals
for the Merger would not materially affect 360(degrees) or ALLTEL. Lazard
Freres assumed that the Merger would be accounted for as a pooling-of-
interests business combination in accordance with the U.S. generally accepted
accounting principles and would be treated as a tax-free reorganization and/or
exchange pursuant to the Code.
 
  The following is a brief summary of the analysis performed by Lazard Freres
in connection with the Lazard Opinion.
 
  Historical Trading Analysis. Lazard Freres' examination included the
historical trading prices and volumes for 360(degrees) Common Stock during the
last two-year period and the indexed historical trading prices for
360(degrees) Common Stock during the last two-year period as compared to the
indexed historical trading prices for an index comprised of other comparable
cellular companies and the Standard & Poor's 500 Index. Lazard Freres also
examined historical trading prices and volumes for ALLTEL Common Stock during
the last one-year period and five-year period and the indexed historical
trading prices for ALLTEL Common Stock during the last five-year period as
compared to the indexed historical trading prices for an index comprised of
other comparable telecommunications companies and the Standard & Poor's 500
index.
 
                                      34
<PAGE>
 
  Lazard Freres also reviewed the historical trading prices for 360(degrees)
Common Stock and ALLTEL Common Stock in comparison to each other over various
periods of time ended on March 12, 1998. The Conversion Fraction as applied to
the ALLTEL closing price on March 12, 1998 represented a premium of 19%, 31%,
81% and 156%, respectively, over the 360(degrees) closing price on such date,
the 360(degrees) average closing price for the 30-day period and one-year
period ended on such date and the 52-week low stock price for 360(degrees)
Common Stock, respectively. Lazard Freres used closing prices as of March 12,
1998 because press reports on March 13, 1998 regarding a potential transaction
affected the stock prices of both ALLTEL and 360(degrees). The Conversion
Fraction as applied to the ALLTEL average closing price for the one-week
period ended on March 12, 1998 represented a premium of 18%, 30%, 80% and
154%, respectively, over the 360(degrees) closing price for each of the
aforementioned period or dates, respectively.
 
  Comparable Publicly Traded Companies Analysis. Lazard Freres reviewed and
compared certain actual and projected financial, operating and stock market
information of companies in lines of business believed to be comparable to
those of 360(degrees). Lazard Freres noted that, although there were no public
companies with precisely the same mix of businesses and financial conditions
as 360(degrees), Lazard Freres believed the most relevant comparable companies
to 360(degrees) to include AirTouch Communications, Inc., United States
Cellular Corporation, Vanguard Cellular Systems, Inc. and Western Wireless
Corporation (the "360(degrees) Comparable Companies").
 
  This analysis indicated that the domestic cellular control value (determined
as equity market value plus net debt, net of minority interests and other
asset adjustments, where applicable) of the 360(degrees) Comparable Companies
as a multiple of 1997 earnings before interest, taxes, depreciation and
amortization ("EBITDA") ranged from 11.2x to 16.8x and that the domestic
cellular control value of the 360(degrees) Comparable Companies as a multiple
of projected 1998 EBITDA ranged from 8.5x to 11.9x. Based on the foregoing
data and other data deemed relevant for the 360(degrees) Comparable Companies
and based on the projections provided by 360(degrees) management, Lazard
Freres performed a public market analysis. This analysis indicated equity
value reference ranges per share of 360(degrees) Common Stock of approximately
$24 to $36.
 
  Lazard Freres also reviewed and compared certain actual and projected
financial, operating and stock market information of companies in lines of
business believed to be comparable to those of individual business segments of
ALLTEL. Lazard Freres noted that, although there were no public companies with
precisely the same mix of businesses and financial condition as any of
ALLTEL's individual business segments, Lazard Freres believed the most
relevant comparable companies to ALLTEL's individual business segments to
include Aliant Communications, Inc., Century Telephone Enterprises, Inc.,
Cincinnati Bell, Inc. and Citizens Utilities Company in the independent local
telephone segment; 360(degrees), AirTouch Communications, Inc., United States
Cellular Corporation, Vanguard Cellular Systems, Inc., and Western Wireless
Corporation in the cellular segment; Affiliated Computer Services, Inc.,
American Management Systems, Inc., The BISYS Group, Inc., Computer Sciences
Corporation, Electronic Data Systems Corporation and Fiserv, Inc. in the
outsourcing and system integration segments; Billing Information Concepts
Corporation, CSG Systems International, Inc., International Telecommunication
Data Systems, Inc., LHS Group, Inc., Lightbridge, Inc., Saville Systems PLC
and USCS International, Inc. in the telecommunications industry billing
services segment; and certain other comparable companies for ALLTEL's product
distribution and publishing business segments (the "ALLTEL Business Segment
Comparable Companies"). Based on the foregoing and other data deemed relevant
for the ALLTEL Business Segment Comparable Companies and based on projections
and other financial data provided by ALLTEL management, Lazard Freres
performed a pre-tax "sum-of-the-parts" public market analysis. This analysis
indicated pre-tax "sum-of-the-parts" equity value reference ranges of
approximately $46 to $54 for each share of ALLTEL Common Stock.
 
  Selected Precedent Transactions Analysis. Lazard Freres reviewed and
analyzed selected financial, operating and stock market information relating
to selected acquisition transactions in the cellular industry, including the
following: Price Communications Corporation/Palmer Wireless, Inc.,
Blackstone/CommNet Cellular, Inc., AirTouch Communications, Inc./U S WEST,
Inc. and American Cellular Corporation/ PriCellular Corporation (the "Cellular
Transactions"). Lazard Freres noted that the reasons for, and circumstances
surrounding, each of the transactions analyzed were diverse and the
characteristics of such transactions and the companies involved were not
directly comparable to the Merger or to 360(degrees). Lazard Freres performed
a private
 
                                      35
<PAGE>
 
market valuation analysis based on the Cellular Transactions that they deemed
relevant. Among other factors, Lazard Freres indicated that the merger and
acquisition transaction environment varies over time because of macroeconomic
factors, such as interest rate and equity market fluctuations, and
microeconomic factors, such as industry results and growth expectations. As
noted above, no transaction reviewed was identical to the Merger and,
accordingly, an assessment of the results of this analysis necessarily
involves complex considerations and judgments concerning differences in
financial and operating characteristics of 360(degrees) and ALLTEL and other
factors that would affect the acquisition value of the companies to which
360(degrees) was compared. Based on the data for the Cellular Transactions,
and based on the projections provided by the management of 360(degrees), this
analysis indicated implied equity value reference ranges of approximately $26
to $38 for each share of 360(degrees) Common Stock.
 
  Discounted Cash Flow Analysis. Based upon forecasts provided by the
management of 360(degrees), Lazard Freres estimated the net present value of
the future cash flows of 360(degrees). Lazard Freres utilized discount rates
ranging from 9.5% to 11.5% and terminal multiples of estimated EBITDA in the
year 2003 ranging from 7.0x to 9.0x for 360(degrees)'s business. This analysis
indicated net present equity value reference ranges of approximately $24 to
$36 per share of 360(degrees) Common Stock.
 
  In addition, based upon forecasts provided by the management of ALLTEL,
Lazard Freres estimated the net present value of the future cash flows of
ALLTEL on a consolidated basis. Lazard Freres utilized discount rates ranging
from 9.0% to 10.0% and terminal multiples of estimated EBITDA in the year 2002
ranging from 7.0x to 9.0x for ALLTEL's business. This analysis indicated net
present equity value reference ranges of approximately $45 to $60 per share of
ALLTEL Common Stock.
 
  Contribution Analysis. Lazard Freres also considered the potential
contribution of each of 360(degrees) and ALLTEL to revenue, EBITDA and net
income of the combined company following the Merger, without taking into
account any operating, financial or accounting impacts resulting from the
Merger, any cost savings or other benefits projected by 360(degrees) and
ALLTEL to be realized from the Merger or any other pro forma impacts. This
analysis used 360(degrees) management's forecasts for 360(degrees) and ALLTEL
management's forecasts for ALLTEL, as well as public information with respect
to 360(degrees) and ALLTEL, for 1997 and for projected fiscal years 1998
through 2002. This analysis indicated that, for 1997 and for projected fiscal
years 1998 through 2002, 360(degrees)'s contribution to combined revenue
ranged from 28% to 30%; to combined EBITDA ranged from 27% to 32%; and to
combined net income ranged from 17% to 32%. Based on the Conversion Factor and
the closing price of ALLTEL Common Stock on March 12, 1998, current holders of
360(degrees) Common Stock would own approximately 33% of the combined company
upon consummation of the Merger.
 
  Pro Forma Merger Analysis. Lazard Freres considered the effect that the
Merger could have on the earnings per share ("EPS") of the combined company
following the Merger as compared with the EPS of ALLTEL on a stand-alone
basis. Using forecasts for 360(degrees) and ALLTEL provided by managements of
each respective company, as well as public information, the share price of
$47.94 for ALLTEL Common Stock on March 12, 1998 and after giving effect to
the assumptions discussed above and certain other assumptions, including the
Conversion Fraction but assuming the realization of none of the potential cost
savings projected by the managements of 360(degrees) and ALLTEL to be realized
for the Merger, this analysis indicated that the Merger would be dilutive to
the projected stand-alone EPS of ALLTEL in each of 1998, 1999 and 2000.
Assuming the realization of the potential cost savings following the Merger
projected by the management of 360(degrees), this analysis indicated that the
Merger would be dilutive to the projected stand-alone EPS of ALLTEL in 1998
and 1999 and modestly accretive in 2000.
 
  Special Considerations. In connection with the review of the Merger by the
360(degrees) Board, Lazard Freres performed a variety of financial and
comparative analyses for purposes of its opinion given in connection
therewith. While the foregoing summary describes the analyses and factors
reviewed by Lazard Freres in connection with its opinion, it does not purport
to be a complete description of all the analyses performed by Lazard Freres in
arriving at its opinion. The preparation of a fairness opinion is a complex
process and not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or the summary set forth
herein, without considering the analyses as a whole, could create an
incomplete or a misleading view of the process underlying the Lazard Opinion.
Lazard Freres did not attribute any particular
 
                                      36
<PAGE>
 
weight to any analysis or factor considered by them. No company or transaction
used in the analyses as a comparison is identical to 360(degrees) or ALLTEL or
the transaction contemplated by the Merger Agreement. The analyses were
prepared solely for the purpose of Lazard Freres in providing the Lazard
Opinion to the 360(degrees) Board in connection with its consideration of the
Merger and do not purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold, which may be significantly more
or less favorable than as set forth in the analyses. Similarly, any estimate
of values or forecast of future results contained in the analyses is not
necessarily indicative of actual values or actual results, which may be
significantly more or less favorable than suggested by such analyses. In
performing its analyses, Lazard Freres assumed that both 360(degrees) and
ALLTEL would perform substantially in accordance with earnings forecasts
provided to Lazard Freres by the managements of 360(degrees) and ALLTEL or
their representatives and that the potential cost savings to be realized in
connection with the Merger would be realized substantially in accordance with
the projections provided to Lazard Freres by the management of 360(degrees).
The actual results achieved by the combined company following the Merger could
vary from any projected results and the variations may be material. See
"CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS" and "RISK
FACTORS."
 
  The forecasts and other projections furnished to Lazard Freres for each of
360(degrees) and ALLTEL and estimates of potential cost savings resulting from
the Merger were prepared by the respective managements of each company and
constitute forward-looking statements within the meaning of PSLRA. As a matter
of policy, neither 360(degrees) nor ALLTEL publicly discloses internal
management forecasts, projections or estimates of the type furnished to Lazard
Freres in connection with its analysis of the Merger terms, and such
forecasts, projections and estimates were not prepared with a view towards
public disclosure. These forecasts, projections and estimates were based on
numerous variables and assumptions which are inherently uncertain and which
may not be in the control of the management of either 360(degrees) or ALLTEL,
including, without limitation, factors related to the integration of
360(degrees) and ALLTEL and general economic, regulatory and competitive
conditions. Accordingly, actual results could vary materially from those set
forth in such forecasts, projections and estimates. See "CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS" and "RISK FACTORS."
 
  In performing these analyses, Lazard Freres made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters. Because such analyses are inherently subject to uncertainty,
being based on numerous factors or events beyond the control of 360(degrees)
or ALLTEL or their respective advisors, none of 360(degrees), ALLTEL or Lazard
Freres or any other person assumes responsibility if future results or actual
values are materially different from those forecasts or estimates contained in
the analyses. Although, in connection with the delivery of the Lazard Opinion,
Lazard Freres also analyzed ALLTEL, the Lazard Opinion is not a valuation of
ALLTEL and does not represent Lazard Freres' view as to what the value of the
ALLTEL Common Stock will be prior to or after consummation of the Merger. In
addition, Lazard Freres noted that, notwithstanding the fact that holders of
360(degrees) Common Stock will receive ALLTEL Common Stock in the Merger, the
trading prices for ALLTEL Common Stock will be significantly affected by the
results of operations and other factors, such as the realization of potential
cost savings resulting from the Merger, relating to both ALLTEL and
360(degrees). The Lazard Opinion was one of many factors taken into
consideration by the 360(degrees) Board in making its determination to approve
the Merger Agreement. The foregoing summary does not purport to be a complete
description of the analyses performed by Lazard Freres.
 
  Lazard Freres is an internationally recognized investment banking and
advisory firm. Lazard Freres, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements, leveraged buyouts and valuations for estate,
corporate and other purposes. In the ordinary course of its business, Lazard
Freres and its affiliates may actively trade in the securities of 360(degrees)
for their own accounts and for the accounts of their customers and,
accordingly, may at any time hold a long or short position in such securities.
 
 
                                      37
<PAGE>
 
  360(degrees) has agreed to pay a fee to Lazard Freres for its financial
advisory services in connection with the Merger, including among other things,
rendering the Lazard Opinion and the reconfirmed Lazard Opinion discussed
above. Pursuant to a letter agreement dated February 17, 1998, 360(degrees)
has agreed to pay Lazard Freres a fee based on the aggregate value of the
transaction if the Merger is consummated and to reimburse Lazard Freres for
reasonable expenses as incurred. In addition, 360(degrees) has also agreed to
indemnify Lazard Freres and its affiliates, their respective directors,
officers, agents and employees and each person, if any, controlling Lazard
Freres or any of its affiliates against certain liabilities and expenses,
including certain liabilities under the federal securities laws, related to
Lazard Freres engagement. In the past, Lazard Freres and its affiliates have
provided financial advisory and financing services for 360(degrees) and have
been paid customary fees for the rendering of these services.
 
OWNERSHIP OF 360(degrees) COMMON STOCK; STOCK OPTIONS; COMPANY AWARDS
 
  As of March 16, 1998, directors and executive officers of 360(degrees)
beneficially owned an aggregate of 7,250,770 shares of 360(degrees) Common
Stock (or approximately 5.98% of the then outstanding 360(degrees) Common
Stock), excluding shares of 360(degrees) Common Stock that may be acquired
upon the exercise of outstanding stock options to purchase 360(degrees) Common
Stock ("360(degrees) Stock Options").
 
  As of March 11, 1998, directors and executive officers of 360(degrees) and
their affiliates held options to purchase an aggregate of 1,335,547 shares of
360(degrees) Common Stock, of which 486,647 were exercisable and 848,900 were
not exercisable. As of March 11, 1998, 11,900 Stock Appreciation Rights (or
SARs), with an aggregate value (assuming a 360(degrees) Common Stock price of
$33.90) of $263,475, had been granted to holders of these options. Also, as of
March 11, 1998, 111,826 shares of restricted stock (which were subject to
plan-based restrictions) had been granted to directors and executive officers
of 360(degrees) and their affiliates. Such shares of restricted stock have a
value (assuming a 360(degrees) Common Stock price of $33.90) of $3,790,901 and
will vest at the Effective Time.
 
  The Merger Agreement provides that each option to purchase shares of
360(degrees) Common Stock that remains outstanding at the Effective Time is to
be converted into an option (together with a related SAR, if the option to
acquire 360(degrees) Common Stock had a related SAR) to acquire that number of
shares of ALLTEL Common Stock determined by multiplying the number of shares
of 360(degrees) Common Stock into which such option is exercisable by the
Conversion Fraction, at a price per share equal to the per-share (rounded up
to the nearest cent) exercise price specified in such 360(degrees) Stock
Option divided by the Conversion Fraction. The Merger Agreement also provides
that all other awards will be converted into similar instruments of ALLTEL, in
each case with such adjustments as are appropriate to preserve the value
inherent in such awards. See "OTHER TERMS OF THE MERGER AGREEMENT--Employee
Stock Options, Incentive and Benefit Plans."
 
EXECUTIVE SEVERANCE; RETENTION
 
  The Merger Agreement provides that upon the consummation of the Merger,
ALLTEL shall assume all termination benefit agreements identified by
360(degrees) in the Merger Agreement. 360(degrees) currently maintains
severance or change of control agreements with its executive officers pursuant
to which 360(degrees) is required to pay certain severance benefits to each
such officer in the event of a termination of such officer's employment by
360(degrees) other than for "cause" (as defined in such agreements) or by the
officer for "good reason" (as defined in such agreements) within 30 days prior
to or the first 24 months after the "change of control" of 360(degrees) (which
would include the Merger). The benefits to which any such officer would be
entitled upon termination include: (i) base salary plus a prorated portion of
the officer's current year target incentive bonus through the termination
date; (ii) lump-sum cash benefits equal to three times the sum of his or her
base salary in effect on the date of termination plus his or her then current
target incentive bonus amount; (iii) continuation of health insurance at the
same cost and coverage level as in effect at the time of termination for the
greater of 36 months or until similar benefits are obtained from a subsequent
employer; and (iv) reimbursement for customary out-placement services.
Additionally, upon any such termination, all stock options and shares of
restricted stock held by any such officer will become fully vested.
 
 
                                      38
<PAGE>
 
  360(degrees) is a party to an Employment Agreement with Dennis E. Foster,
360(degrees)'s President and Chief Executive Officer, which provides for
various benefits, including the payment of severance benefits in the event of
Mr. Foster's termination. Mr. Foster's severance benefits provide for
substantially the same benefits as described above for other executive
officers, plus a requirement to pay certain severance benefits (i) in the case
of termination for any reason during the 13th full month following a change of
control, and (ii) full vesting of certain supplemental retirement benefits
that would have otherwise vested five years from the date of Mr. Foster's
Employment Agreement (equal to the actuarially computed value necessary to
provide an annual replacement of 40% of Mr. Foster's final compensation for
his expected life beginning at age sixty-five).
 
  Under 360(degrees)'s Change-In-Control Severance Pay Plan, most full-time
and part-time employees who are not covered by change of control agreements
are eligible to receive severance benefits in the event of a termination of
employment by 360(degrees) other than for "cause" (as defined in such Plan) or
by the employee following certain reductions in compensation or certain
changes in the employee's office location within one year after a "change of
control" of 360(degrees) (which would include the approval of the Merger).
Such severance benefits would consist of a continuation of salary for between
13 and 78 weeks after the date of termination and a lump sum payment after the
end of such period equal to between 25% and 150% of the target annual
incentive amount that the employee would have been eligible to receive under
360(degrees)'s Associate Incentive Plan for the year of termination.
 
  In addition, the 360(degrees) Board has adopted a retention incentive
proposal for 360(degrees) associates deemed critical to the successful
integration of 360(degrees) and ALLTEL. Under this proposal, retention
incentives will be paid to those associates who remain with 360(degrees)
during a stated transition period. Aggregate incentives under this proposal
are limited to $13,800,000.
 
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
 
  ALLTEL and Merger Sub have agreed that all rights to exculpation and
indemnification now existing in favor of any current or former directors or
officers of 360(degrees) and its subsidiaries (the "Indemnified Parties"), as
provided in their respective certificates of incorporation or by-laws, or in
any agreement between an Indemnified Party and 360(degrees) or one of its
subsidiaries as disclosed to ALLTEL, will survive the Merger and will continue
in full force and effect. In addition, for a period of six years after the
Effective Time, ALLTEL has agreed to indemnify the Indemnified Parties to the
same extent as such Indemnified Parties are entitled to indemnification as
discussed in the preceding sentence.
 
  Moreover, ALLTEL has agreed that, from and after the Effective Time, ALLTEL
will cause to be maintained in effect for five years after the Effective Time
the policies of the directors' and officers' liability insurance maintained by
360(degrees) on the date of the Merger Agreement or substitute policies of at
least the same coverage containing terms and conditions which are no less
advantageous to the Indemnified Parties, except that in no event will ALLTEL
be required to pay with respect to such insurance policies in any one year
more than $750,000.
 
BOARD OF DIRECTORS; MANAGEMENT
 
  Pursuant to the Merger Agreement, ALLTEL has agreed to take all actions
necessary to elect four 360(degrees) directors as additional directors of
ALLTEL. In addition, effective at the Effective Time, ALLTEL has agreed to
appoint certain officers of 360(degrees) as officers of ALLTEL. As of the date
hereof, the ALLTEL Board is composed of eleven directors. See "DIRECTORS AND
MANAGEMENT OF ALLTEL FOLLOWING THE MERGER--Directors", and "--Executive
Officers."
 
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
 
  In the opinions of Sonnenschein Nath & Rosenthal, special tax counsel to
360(degrees), and Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to ALLTEL, subject to the qualifications set forth below and contained
herein, the following summary sets forth the material United States federal
income tax consequences
 
                                      39
<PAGE>
 
of the Merger to holders of 360(degrees) Common Stock who exchange such stock
for ALLTEL Common Stock pursuant to the Merger Agreement. The following
summary addresses only such stockholders who hold their 360(degrees) Common
Stock as a capital asset, and does not address all of the United States
federal income tax consequences that may be relevant to particular
stockholders in light of their individual circumstances or to stockholders
that are subject to special rules (including, without limitation, financial
institutions, tax-exempt organizations, insurance companies, dealers in
securities or foreign currencies, foreign holders, persons that hold such
shares as a hedge against currency risk, or a constructive sale or conversion
transaction, or holders who acquired their shares pursuant to the exercise of
employee stock options or otherwise as compensation). Such opinions are not
binding on the IRS. The following summary is based upon the Code, laws,
regulations, rulings and decisions in effect as of the date hereof, all of
which are subject to change possibly with retroactive effect. Tax consequences
under state, local, and other foreign laws are not addressed herein.
 
  No ruling has been (or will be) sought from the IRS as to the United States
federal income tax consequences of the Merger. It is a condition to the
consummation of the Merger that 360(degrees) receive an opinion from its
special tax counsel, Sonnenschein Nath & Rosenthal, and that ALLTEL receive an
opinion from its special tax counsel, Skadden, Arps, Slate, Meagher & Flom
LLP, to the effect that, based upon certain facts, representations and
assumptions, the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code. The issuance of such opinions is conditioned on,
among other things, such tax counsels' receipt of representation letters from
each of ALLTEL, Merger Sub and 360(degrees), in each case, in form and
substance reasonably satisfactory to each such counsel. The following
discussion assumes that the Merger qualifies as a reorganization within the
meaning of Section 368(a) of the Code.
 
  Based on the above assumptions and qualifications, holders of 360(degrees)
Common Stock who exchange their 360(degrees) Common Stock for ALLTEL Common
Stock pursuant to the Merger Agreement will not recognize gain or loss for
United States federal income tax purposes, except with respect to cash, if
any, they receive in lieu of fractional shares of ALLTEL Common Stock. Holders
of 360(degrees) Common Stock who receive cash in lieu of fractional shares of
ALLTEL Common Stock in the Merger generally will be treated as if the
fractional shares of ALLTEL Common Stock had been distributed to them as part
of the Merger and then redeemed by ALLTEL in exchange for the cash actually
distributed in lieu of the fractional shares, with such redemption qualifying
as an exchange under Section 302 of the Code. Consequently, such holders
generally will recognize capital gain or loss with respect to cash payments
they receive in lieu of fractional shares. The tax rate applicable to capital
gains of an individual taxpayer varies depending on the taxpayer's holding
period for the shares. In the case of an individual stockholder, any such
capital gain will be subject to a maximum federal income tax rate of (A) 20%,
if the individual held his or her 360(degrees) Common Stock for more than 18
months at the Effective Time and (B) 28%, if the individual held his or her
360(degrees) Common Stock for more than one year but not more than 18 months
at the Effective Time. The deductibility of capital losses is subject to
limitations for both individuals and corporations.
 
  Each holder's aggregate tax basis in the ALLTEL Common Stock received in the
Merger will be the same as his or her aggregate tax basis in the 360(degrees)
Common Stock exchanged therefor, decreased by the amount of any tax basis
allocable to any fractional share interest for which cash is received. The
holding period of the ALLTEL Common Stock received by a 360(degrees)
stockholder pursuant to the Merger Agreement will include the holding period
of the 360(degrees) Common Stock surrendered in exchange therefor.
 
  THE DISCUSSION OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH
ABOVE IS FOR GENERAL INFORMATION ONLY AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS THAT MAY APPLY TO A HOLDER OF
360(degrees) COMMON STOCK. STOCKHOLDERS OF 360(degrees) COMMON STOCK ARE
STRONGLY URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
 
 
                                      40
<PAGE>
 
ANTICIPATED ACCOUNTING TREATMENT
 
  The Merger is expected to be accounted for as a pooling-of-interests under
generally accepted accounting principles. Under this method of accounting, the
recorded assets and liabilities of ALLTEL and 360(degrees) will be carried
forward to ALLTEL at their historical recorded amounts after addressing any
conformity issues; net income of ALLTEL after the Merger will include the net
income of ALLTEL and 360(degrees) for the entire fiscal year in which the
Merger occurs, and the historical reported net income of the separate
companies for prior periods will be combined and restated as net income of
ALLTEL after addressing any conformity issues. The Merger Agreement provides
that a condition to the consummation of the Merger is the receipt of a letter
from Arthur Andersen LLP (ALLTEL's independent auditors) to the effect that
such auditor concurs with ALLTEL's determination that the Merger qualifies for
pooling-of-interests accounting treatment.
 
  ALLTEL expects to incur certain non-recurring expenses related to the
Merger, presently estimated to be $120,000,000 ($105,000,000 after tax). These
expenses would include, but would not be limited to, professional fees, fees
of financial advisors, retention compensation expenses, relocation expenses,
and similar expenses. Although ALLTEL believes this estimate of non-recurring
expenses is accurate, certain material additional costs may be incurred in
connection with the Merger. Merger related expenses will be recorded in the
period in which the Merger is concluded, which is currently estimated to occur
in the third quarter of 1998.
 
  In addition, ALLTEL is developing a plan to integrate the operations of
360(degrees) after the Merger. In connection with that plan, ALLTEL
anticipates that certain non-recurring charges will be incurred in connection
with such integration. ALLTEL cannot identify the timing, nature and amount of
such charges as of the date of this Joint Proxy Statement/Prospectus. However,
any such charge could affect ALLTEL's results of operations in the period in
which such charges are recorded.
 
PERCENTAGE OWNERSHIP INTEREST OF 360(degrees) STOCKHOLDERS AFTER THE MERGER
 
  Assuming that there will be 184,327,921 shares of ALLTEL Common Stock and
121,416,327 shares of 360(degrees) Common Stock outstanding immediately prior
to the Effective Time, the number of shares of ALLTEL Common Stock to be
issued in the Merger would be approximately 89,848,082 (not including any
shares of ALLTEL Common Stock issued after the Effective Time of the Merger
under 360(degrees) Option Plans assumed by ALLTEL), which would represent
32.8% of the outstanding shares of ALLTEL Common Stock immediately after the
Effective Time.
 
APPRAISAL RIGHTS
 
  Under the DGCL, the transactions contemplated by the Merger Agreement, the
Issuance of the ALLTEL Common Stock pursuant to the Merger Agreement, and the
Certificate Amendment, and the approval of the Equity Incentive Plan, do not
give rise to any appraisal or dissenter's rights to holders of ALLTEL Voting
Stock.
 
  Under the DGCL, the 360(degrees) stockholders are not entitled to appraisal
or dissenters' rights in connection with the Merger because the 360(degrees)
Common Stock is listed on a national securities exchange and the consideration
to which such stockholders will be entitled to receive in the Merger will
consist solely of ALLTEL Common Stock, which will also be listed on a national
securities exchange, and cash in lieu of fractional shares.
 
NYSE LISTING
 
  It is a condition to the consummation of the Merger that the shares of
ALLTEL Common Stock to be issued pursuant to the Merger Agreement be
authorized for listing on the NYSE, subject only to official notice of
issuance. In addition, it is expected that the shares of ALLTEL Common Stock
to be issued pursuant to the Merger Agreement be authorized for listing on the
Pacific Exchange.
 
 
                                      41
<PAGE>
 
DELISTING AND DEREGISTRATION OF 360(degrees) COMMON STOCK
 
  If the Merger is consummated, the 360(degrees) Common Stock will be delisted
from the NYSE, the Pacific Exchange and the Chicago Stock Exchange and will be
deregistered under the Exchange Act.
 
CONDUCT OF THE BUSINESS OF 360(degrees) AND ALLTEL IF THE MERGER IS NOT
CONSUMMATED
 
  If the Merger is not consummated, it is expected that the respective
businesses and operations of 360(degrees) and ALLTEL will continue to be
conducted substantially as they currently are being conducted.
 
RESALES OF ALLTEL COMMON STOCK
 
  The shares of ALLTEL Common Stock to be issued to stockholders of
360(degrees) pursuant to the Merger Agreement have been registered under the
Securities Act, thereby allowing such shares to be freely traded without
restriction by persons who will not be "affiliates" of ALLTEL after the Merger
or who were not "affiliates" of 360(degrees) on the date of the 360(degrees)
Special Meeting. All directors and certain officers and stockholders of
360(degrees) may be deemed to have been "affiliates" of 360(degrees) within
the meaning of such rules. Any such person may resell the ALLTEL Common Stock
received by him or her in the Merger only if such shares are registered for
such resale under the Securities Act or an exemption from such registration
under the Securities Act is available. Such persons may be permitted to effect
resales under the safe harbor provisions of Rule 145 under the Securities Act
(or Rule 144 in the case of such persons who become "affiliates" of ALLTEL) or
as otherwise permitted under the Securities Act. Persons who may be deemed
affiliates of 360(degrees) or ALLTEL generally include individuals or entities
that control, are controlled by, or are under common control with, such party,
and may include certain officers and directors of such party as well as
principal stockholders of such party. It is recommended that any such person
obtain advice of securities counsel prior to effecting any resales.
 
  The Merger Agreement provides that, on or prior to the date of the
360(degrees) Special Meeting, 360(degrees) will deliver to ALLTEL a letter
identifying all persons who are "affiliates" of 360(degrees) for purposes of
Rule 145 under the Securities Act. The Merger Agreement also provides that, on
or prior to the date of the ALLTEL Special Meeting, ALLTEL will deliver to
360(degrees) a letter identifying all persons who are "affiliates" of ALLTEL
for purposes of Rule 145 under the Securities Act.
 
  SEC guidelines regarding qualifying for the "pooling-of-interests" method of
accounting also limit sales of shares of the acquiring and acquired company by
affiliates of either company in a business combination. SEC guidelines also
indicate that the "pooling-of-interests" method of accounting generally will
not be challenged on the basis of sales by affiliates of the acquiring or
acquired company if affiliates do not dispose of any of the shares of the
corporation they own or shares of a corporation they receive in connection
with a merger, during the period beginning 30 days before the merger is
consummated and ending when financial results covering at least 30 days of
post-merger operations of the combined companies have been published.
 
  Each of ALLTEL and 360(degrees) has agreed to use its reasonable best
efforts to cause each person who is an affiliate (for purposes of Rule 145
under the Securities Act and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of such party to deliver to the
other party a written agreement intended to ensure compliance with the
Securities Act (in the case of 360(degrees) affiliates) and to preserve the
ability of the Merger to be accounted for as a "pooling-of-interests."
 
  This Joint Proxy Statement/Prospectus does not cover resales of ALLTEL
Common Stock received by any person who may be deemed to be an affiliate of
ALLTEL or 360(degrees).
 
                                      42
<PAGE>
 
                      OTHER TERMS OF THE MERGER AGREEMENT
 
  The description of the Merger, the Merger Agreement and the Option Agreement
contained in this Joint Proxy Statement/Prospectus does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement
and the Option Agreement, copies of which are attached hereto as Annex A and
Annex B, respectively, and are incorporated herein by reference.
 
CERTAIN REPRESENTATIONS AND WARRANTIES
 
  The Merger Agreement contains various representations and warranties of
360(degrees) and ALLTEL relating, among other things, to: (i) their
organization, existence, good standing and authority and qualification to do
business; (ii) their capitalization; (iii) their subsidiaries; (iv) their
authorization, execution, delivery and performance of the Merger Agreement and
related matters; (v) compliance with applicable law; (vi) the absence of
conflicts, violations or defaults under their certificates of incorporation
and by-laws and certain other agreements and documents; (vii) government
approvals and required consents; (viii) the documents and reports filed with
the SEC and the accuracy of the information contained therein; (ix) the
absence of certain changes or events; (x) the absence of undisclosed pending
or threatened litigation; (xi) the absence of undisclosed liabilities; (xii)
certain tax matters; (xiii) material contracts; (xiv) the absence of
undisclosed employee benefit plan liabilities; (xv) the inapplicability of the
360(degrees) Rights Plan or Delaware's anti-takeover statute to the Merger;
(xvi) the lack of ownership of ALLTEL Common Stock by 360(degrees) or its
subsidiaries; (xvii) the receipt of opinions of financial advisors regarding
the fairness of the transaction from a financial point of view, (xviii) the
absence of actions adversely affecting pooling-of-interest accounting
treatment; (xix) the absence of undisclosed finders, brokers or investment
bankers; (xx) certain environmental matters and compliance with environmental
laws; and (xxi) the accuracy and correctness of certain information contained
in this Joint Proxy Statement/Prospectus. The representations of 360(degrees),
ALLTEL and Merger Sub do not survive the Effective Time.
 
CONDUCT OF BUSINESS BY 360(degrees) PENDING THE MERGER
 
  Each of ALLTEL and 360(degrees) has agreed that, during the period from the
date of the Merger Agreement to the Effective Time, unless agreed in writing
by 360(degrees) and ALLTEL (i) it will, and will cause each of its respective
subsidiaries to, conduct its operations according to its ordinary and usual
course of business in substantially the same manner as previously conducted
(except that ALLTEL may authorize or enter into agreements with respect to
certain acquisitions or dispositions or issue debt or equity securities); (ii)
it will notify the other party of any emergency or other change in the normal
course of its or its subsidiaries' respective businesses or in the operation
of its or its subsidiaries' respective properties and of any complaints,
investigations or hearings of any governmental body or authority if such
emergency, change, complaint, investigation or hearing could have a Material
Adverse Effect (as defined in the Merger Agreement) on it; (iii) it will not
(except in the ordinary course of business consistent with past practice)
permit any of its subsidiaries that is not wholly owned to, authorize or pay
any dividends on or make any distributions with respect to its outstanding
shares of stock (except that ALLTEL may continue to pay dividends on ALLTEL
Common Stock at times consistent with past practice and in per share amounts
not in excess of 150% of the per share amount of the most recent dividend paid
on the ALLTEL Common Stock prior to the date of the Merger Agreement); (iv) it
will not propose or adopt any amendment to its corporate charter or by-laws;
and (v) it will not, and will not permit any of its subsidiaries to, take any
action or fail to take any action which would, or would be reasonably likely
to, prevent ALLTEL and 360(degrees) from accounting for the Merger in
accordance with the pooling-of-interests method of accounting.
 
  In addition to the foregoing, 360(degrees) has agreed that, unless agreed in
writing by ALLTEL, it (i) will use its reasonable best efforts, and will cause
each of its subsidiaries to use its reasonable best efforts, to preserve
intact its business organization and goodwill, keep available the services of
its current officers and other key employees and preserve its relationship
with those persons having business dealings with it and its subsidiaries; and
(ii) will confer at such times as ALLTEL may reasonably request with one or
more representatives of ALLTEL to report material operational matters and the
general status of ongoing operations. 360(degrees) has also agreed that,
unless agreed in writing by ALLTEL, it will not, and will not permit any of
its subsidiaries to (i) split, combine, reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
to shares of its capital stock (except for certain transactions by wholly-
owned subsidiaries); (ii) except in the ordinary course of
 
                                      43
<PAGE>
 
business consistent with past practice, enter into or amend any employment,
severance or similar agreement with any directors or executive officers; (iii)
authorize or propose, or enter into an agreement with respect to (a) any
merger, consolidation, or business combination, or any acquisition or
disposition of assets or securities that is not in the ordinary course of
business consistent with past practice or which the consideration paid or
received exceeds $25 million in any single transaction or $100 million in all
such transactions, or (b) any release of material contract rights not in the
ordinary course of business consistent with past practice; (iv) (a) issue or
sell any shares of their capital stock, (b) grant or award any options,
conversions or other rights to acquire such stock, or (c) purchase or redeem
any shares of such stock, or any rights, warrants or options to acquire such
shares; (iv) amend any of their employee benefit plans or severance
arrangements or adopt new employee benefit plans or severance arrangements;
(v) other than in the ordinary course of business consistent with past
practice, incur, assume or prepay any indebtedness or other material
liabilities, make any loans or capital contributions to or investments in any
other person (other than 360(degrees) or a wholly-owned subsidiary of
360(degrees)), discharge any claims, liabilities or obligations, sell, lease,
license, mortgage or otherwise encumber, or dispose of any of its properties;
(vi) make any tax election or settle or compromise any tax liability or change
its fiscal year; or (vii) except as previously disclosed or as required by a
governmental body, or as required by GAAP (as defined in the Merger Agreement)
as concurred in by 360(degrees)'s auditors, change its method of accounting.
 
  ALLTEL has agreed that, unless agreed to in writing by 360(degrees), it will
use its reasonable best efforts, and will cause its subsidiaries to use their
reasonable best efforts, to preserve intact its business organization and
preserve its relationships with those persons having business dealings with it
and its subsidiaries.
 
  The Merger Agreement provides that each of ALLTEL and 360(degrees) will
afford the other and its representatives full and complete access through the
Effective Time to all of its books and records, properties, plants and
personnel. In addition, each of ALLTEL and 360(degrees) have agreed to hold in
confidence all non-public information acquired as a result of such access.
 
EMPLOYEE STOCK OPTIONS; INCENTIVE AND BENEFIT PLANS
 
  The Merger Agreement provides that, simultaneously with the Merger, (i) each
outstanding option and related stock appreciation right, if any, to purchase
or acquire a share of 360(degrees) Common Stock under employee incentive or
benefits plans, programs or arrangements and non-employee director plans
presently maintained by 360(degrees) (the "360(degrees) Option Plans") will be
converted into an option (together with a related stock appreciation right of
ALLTEL, if applicable) to purchase the number of shares of ALLTEL Common Stock
equal to the product of (a) the Conversion Fraction (.74) multiplied by (b)
the number of shares of 360(degrees) Common Stock which could have been
obtained prior to the Effective Time upon the exercise of each such option (if
such option were fully vested), at an exercise price per share (rounded upward
to the nearest cent) equal to the exercise price for each share of
360(degrees) Common Stock subject to an option (and related stock appreciation
right, if any) under the 360(degrees) Option Plans divided by the Conversion
Fraction, and all references in each such option (and related stock
appreciation right, if any) to 360(degrees) will be deemed to refer to ALLTEL
where appropriate, and (ii) ALLTEL will assume the obligations of 360(degrees)
under the 360(degrees) Option Plans. The other terms of each such option and
stock appreciation right, and the plans under which they were issued, will
continue to apply in accordance with their terms, including any provisions
providing for acceleration. See "THE MERGER--Ownership of 360(degrees) Common
Stock; Stock Options; Company Awards."
 
  In addition, simultaneously with the Merger, each outstanding award,
including restricted stock, stock equivalents, and stock units, under any
employee incentive or benefit plans, programs or arrangements, and non-
employee director plans presently maintained by 360(degrees) which provide for
grants of equity-based awards will be amended or converted into a similar
instrument of ALLTEL, in each case with such adjustments to the terms of such
awards as are appropriate to preserve the value inherent in such awards with
no detrimental effects on the holders thereof resulting from such conversion.
The other terms of each 360(degrees) award, and the plans or agreements under
which they were issued, will continue to apply in accordance with their terms,
including any provisions providing for acceleration. 360(degrees) agrees to
use its reasonable best efforts to obtain any consents (in a form acceptable
to ALLTEL) required of the holders of 360(degrees) stock options or
360(degrees) awards to the conversion described above. See "THE MERGER--
Ownership of 360(degrees) Common Stock; Stock Options; Company Awards."
 
                                      44
<PAGE>
 
NO SOLICITATION
 
  360(degrees) has agreed that, from and after the date of the Merger
Agreement, it will not, and will use its reasonable best efforts not to permit
any of its or its subsidiaries' officers, directors, employees, attorneys,
financial advisors, agents or other representatives to, directly or indirectly
(i) solicit, initiate or knowingly encourage any bona fide proposal or offer
made by any third party prior to the stockholder vote at the 360(degrees)
Special Meeting for a merger, consolidation or other business combination
involving any purchase of all or substantially all the assets or more than 50%
of the voting securities of 360(degrees) (a "Takeover Proposal") or (ii)
engage in or continue discussions or negotiations relating to a Takeover
Proposal; except that 360(degrees) may engage in discussion or negotiations
with, and furnish information concerning 360(degrees) and its subsidiaries,
business, properties or assets to, any third party which has made an
unsolicited Takeover Proposal if, and only to the extent that, the
360(degrees) Board concludes in good faith after consultation with its outside
counsel at a meeting of the 360(degrees) Board that the failure to take such
action would present a reasonable possibility of violating the obligations of
the 360(degrees) Board to the 360(degrees) stockholders under applicable law.
 
  360(degrees) will promptly (but in no case later than 36 hours) notify
ALLTEL of the receipt of any Takeover Proposal, including the material terms
and conditions thereof (and any change in the material terms and conditions
thereof) and the identity of the person making such Takeover Proposal, and
will promptly (but in no case later than 36 hours) notify ALLTEL of any
determination by the 360(degrees) Board that a Superior Proposal has been
made. As used in the Merger Agreement, "Superior Proposal" means a bona fide
Takeover Proposal made by a third party on terms that a majority of the
members of the 360(degrees) Board determines in their good faith reasonable
judgment (based on the advice of an independent financial advisor) is more
favorable to 360(degrees) and to its stockholders than the transactions
contemplated by the Merger Agreement and for which any required financing is
fully committed.
 
INDEMNIFICATION AND INSURANCE
 
  ALLTEL and Merger Sub have agreed that all rights to exculpation and
indemnification now existing in favor of any current or former directors or
officers of 360(degrees) and its subsidiaries (the "Indemnified Parties"), as
provided in their respective certificates of incorporation or by-laws, or in
any agreement between an Indemnified Party and 360(degrees) or one of its
subsidiaries as disclosed to ALLTEL, will survive the Merger and will continue
in full force and effect. In addition, for a period of six years after the
Effective Time ALLTEL has agreed to indemnify the Indemnified Parties to the
same extent as such Indemnified Parties are entitled to indemnification as
discussed in the preceding sentence.
 
  Moreover, ALLTEL has agreed that, from and after the Effective Time, ALLTEL
will cause to be maintained in effect for five years after the Effective Time
the policies of the directors' and officers' liability insurance maintained by
360(degrees) on the date of the Merger Agreement or substitute policies of at
least the same coverage containing terms and conditions which are no less
advantageous to the Indemnified Parties, except that in no event will ALLTEL
be required to pay with respect to such insurance policies in any one year
more than $750,000.
 
CONDITIONS TO CONSUMMATION OF THE MERGER
 
  The respective obligations of ALLTEL, 360(degrees) and Merger Sub to effect
the Merger are subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions: (i) the approval and adoption of the
Merger Agreement by the requisite vote of 360(degrees)'s stockholders and the
approval of the Issuance of ALLTEL Common Stock by the requisite vote of
ALLTEL's stockholders; (ii) the absence of any action by any court or other
tribunal or governmental body or authority enacting, entering, promulgating or
enforcing any statute, rule, regulation, executive order, decree, ruling or
injunction which prohibits the consummation of the Merger substantially on the
terms contemplated by the Merger Agreement; (iii) the absence of any stop
order suspending the effectiveness of the Registration Statement; (iv)
approval for the listing of shares of ALLTEL Common Stock issuable in the
Merger on the NYSE; (v) the receipt of all necessary governmental approvals
and consents including the FCC; (vi) the termination or expiration of the
waiting period under the HSR Act; and
 
                                      45
<PAGE>
 
(vii) the receipt by ALLTEL and 360(degrees) of a letter of ALLTEL's
independent public accountants stating that such accountants concur with the
ALLTEL management's conclusion that the Merger will qualify as a transaction
to be accounted for in accordance with the pooling-of-interests method of
accounting.
 
  The obligations of ALLTEL to effect the Merger are also subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by ALLTEL: (i) the representations and
warranties of 360(degrees) contained in the Merger Agreement shall be true and
correct in all respects (but without regard to any materiality qualifications
or references to Material Adverse Effect contained in any specific
representation or warranty) as of the Effective Time with the same effect as
though made as of the Effective Time except (a) for changes specifically
permitted by the terms of the Merger Agreement, (b) that the accuracy of
representations and warranties that by their terms speak as of the date of the
Merger Agreement or some other date will be determined as of such date, and
(c) where any such failure of the representations and warranties in the
aggregate to be true and correct in all respects would not have a Material
Adverse Effect on 360(degrees); (ii) 360(degrees) shall have performed in all
material respects all obligations and complied with all covenants required by
the Merger Agreement to be performed or complied with by it prior to the
Effective Time; and (iii) ALLTEL shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, special tax counsel to ALLTEL, dated as of
the Effective Time, relating to certain tax matters.
 
  The obligation of 360(degrees) to effect the Merger is subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by 360(degrees): (i) the representations
and warranties of ALLTEL contained in the Merger Agreement shall be true and
correct in all respects (but without regard to any materiality qualifications
or references to Material Adverse Effect contained in any specific
representation or warranty) as of the Effective Time with the same effect as
though made as of the Effective Time except (a) for changes specifically
permitted by the terms of the Merger Agreement, (b) that the accuracy of
representations and warranties that by their terms speak as of the date of the
Merger Agreement or some other date will be determined as of such date, and
(c) where any such failure of the representations and the warranties in the
aggregate to be true and correct in all respects would not have a Material
Adverse Effect on ALLTEL; (ii) ALLTEL shall have performed in all material
respects all obligations and complied with all covenants required by the
Merger Agreement to be performed or complied with by it prior to the Effective
Time; and (iii) 360(degrees) shall have received an opinion of Sonnenschein
Nath & Rosenthal, special tax counsel to 360(degrees), dated as of the
Effective Time, relating to certain tax matters.
 
TERMINATION
 
  The Merger Agreement may be terminated and abandoned at any time prior to
the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the respective stockholders of
360(degrees) and ALLTEL:
 
    (i) by mutual written consent of 360(degrees) and ALLTEL;
 
    (ii) by either 360(degrees) or ALLTEL if (i) the Effective Time shall not
  have occurred on or before November 30, 1998 (the "Termination Date") and
  (ii) the party seeking to terminate the Merger Agreement did not breach in
  any material respect its obligations under the Merger Agreement or the
  Option Agreement in any manner that shall have proximately contributed to
  the failure to consummate the Merger on or before such date; except that,
  if as of November 30, 1998, all conditions to the closing of the Merger
  Agreement have been satisfied or waived, other than receipt of the
  requisite approval of the FCC, then either ALLTEL or 360(degrees) may
  extend the Termination Date to February 28, 1999, by providing written
  notice to the other party on November 30, 1998;
 
    (iii) by either ALLTEL or 360(degrees) if (i) a statute, rule, regulation
  or executive order shall have been enacted, entered or promulgated
  prohibiting the consummation of the Merger substantially on the terms
  contemplated by the Merger Agreement, or (ii) an order, decree, ruling or
  injunction shall have been entered permanently restraining, enjoining or
  otherwise prohibiting the consummation of the merger substantially on the
  terms contemplated by the Merger Agreement and such order, decree, ruling
  or injunction shall have
 
                                      46
<PAGE>
 
  become final and non-appealable, and the party seeking to terminate the
  Merger Agreement shall have used its reasonable best efforts to remove such
  injunction, order or decree;
 
    (iv) by either ALLTEL or 360(degrees) if the approvals of the
  stockholders of either ALLTEL or 360(degrees) contemplated by the Merger
  Agreement shall not have been obtained by reason of the failure to obtain
  the required vote at a duly held meeting of stockholders or of any
  adjournment thereof;
 
    (v) by either ALLTEL or 360(degrees) if the 360(degrees) Board reasonably
  determines that a Takeover Proposal constitutes a Superior Proposal, except
  that 360(degrees) may not terminate the Merger Agreement unless and until
  (i) three business days have elapsed following delivery to ALLTEL of a
  written notice of such determination by the 360(degrees) Board and during
  such three business day period 360(degrees) (a) informs ALLTEL of the terms
  and conditions of the Takeover Proposal and the identity of the person
  making the Takeover proposal, and (b) otherwise cooperates with ALLTEL with
  respect thereto (subject, in such case to the condition that the
  360(degrees) Board is not required to take any action that it believes,
  after consultation with outside legal counsel, would present a reasonable
  possibility of violating its obligations to 360(degrees) or 360(degrees)'s
  stockholders under applicable law) with the intent of enabling ALLTEL to
  agree to a modification of the terms and conditions of the Merger Agreement
  so that the Merger may be effected; (ii) at the end of such three business
  day period the 360(degrees) Board continues reasonably to believe that the
  Takeover proposal constitutes a Superior Proposal; (iii) simultaneously
  with such termination 360(degrees) enters into a definitive acquisition,
  merger, or similar agreement to effect the Superior Proposal; and (iv)
  360(degrees) pays to ALLTEL the Termination Fee (see "--Termination Fee");
 
    (vi) by ALLTEL if the 360(degrees) Board shall have (i) withdrawn or
  modified in a manner adverse to ALLTEL its approval or recommendation of
  the Merger Agreement and the Merger or (ii) approved or recommended, or
  proposed publicly to approve or recommend, any Takeover Proposal;
 
    (vii) by ALLTEL if a tender offer or exchange offer for 50% or more of
  the outstanding shares of capital stock of 360(degrees) is commenced prior
  to the 360(degrees) Special Meeting, and the 360(degrees) Board fails to
  recommend against acceptance of such tender offer or exchange offer by the
  360(degrees) stockholders (including by taking no position with respect to
  the acceptance of such tender offer or exchange offer by the 360(degrees)
  stockholders) within a specified time period; or
 
    (viii) by either 360(degrees) or ALLTEL if there shall have been a
  material breach by the other of any of its representations, warranties,
  covenants or agreements contained in the Merger Agreement or the Option
  Agreement, which if not cured would have a Material Adverse Effect on
  360(degrees) or ALLTEL, and such breach was not cured within 30 days after
  notice thereof was received by the party alleged to be in breach.
 
TERMINATION FEE
 
  The Merger Agreement provides that 360(degrees) is required to pay ALLTEL a
termination fee of $100,000,000 if: (i) 360(degrees) or ALLTEL terminates the
Merger Agreement because the 360(degrees) Board has determined that a Takeover
Proposal constitutes a Superior Proposal; (ii) ALLTEL terminates the Merger
Agreement because the 360(degrees) Board has withdrawn or adversely modified
its approval of the Merger or approved or recommended any Takeover Proposal;
or (iii) prior to termination of the Merger Agreement, (a) a Takeover Proposal
is commenced, (b) the Merger Agreement is thereafter terminated by
360(degrees) because of the nonfulfillment of conditions as of November 30,
1998 (or February 28, 1999, under certain circumstances set forth under "--
Termination" above) or is terminated by ALLTEL or 360(degrees) because of the
failure of 360(degrees)'s stockholders to approve the 360(degrees) Proposal
and (c) concurrent with or within 12 months after such termination, a Takeover
Proposal is consummated.
 
EXPENSES
 
  Whether or not the Merger is consummated, each of ALLTEL and 360(degrees)
shall bear its own costs and expenses incurred in connection with the Merger,
the Merger Agreement and the transaction contemplated thereby, except that
expenses incurred in connection with the printing, filing and mailing of this
Joint Proxy Statement/Prospectus (including the SEC registration fee) shall be
borne equally.
 
 
                                      47
<PAGE>
 
AMENDMENT AND MODIFICATION
 
  The Merger Agreement may be amended, modified or supplemented at any time
prior to the Effective Time only by written agreement (referring specifically
to the Merger Agreement) of ALLTEL and 360(degrees) with respect to any of the
terms contained in the Merger Agreement; provided, however, that after any
approval and adoption of the Merger Agreement by the stockholders of
360(degrees) and ALLTEL, no such amendment, modification or supplementation
will be made which, under applicable law or the rules of any relevant stock
exchange, requires the approval of such stockholders, without the further
approval of such stockholders.
 
WAIVER
 
  At any time prior to the Effective Time, each of ALLTEL and 360(degrees) may
(i) extend the time for the performance of any of the obligations or other
acts of the other, (ii) waive any inaccuracies in the representations and
warranties of the other contained in the Merger Agreement or in any documents
delivered pursuant thereto and (iii) waive compliance by the other with any of
the agreements or conditions contained in the Merger Agreement which may
legally be waived. Any such extension or waiver will be valid only if set
forth in an instrument in writing specifically referring to the Merger
Agreement and signed on behalf of such party.
 
CHANGE OF CONTROL PROVISIONS CONTAINED IN CERTAIN OF 360(degrees)'S SENIOR
DEBT INSTRUMENTS
 
  The 360(degrees) Credit Facility (defined below) and the 360(degrees)
Indentures (defined below) contain provisions that may require 360(degrees) to
repay the indebtedness outstanding thereunder prior to maturity as a result of
the Merger. Under the 360(degrees) Credit Facility, consummation of the Merger
will constitute an event of default thereby permitting the lenders thereunder
to require 360(degrees) to immediately repay the indebtedness outstanding
under the 360(degrees) Credit Facility. Under the 360(degrees) Indentures, in
the event that during (i) the 90 day period commencing on March 16, 1998 or
(ii) the 90 day period commencing at the Effective Time, the rating assigned
to the senior notes outstanding thereunder is downgraded to below BBB- (or the
equivalent) by at least two of the three rating agencies currently rating such
senior notes (a "360(degrees) Rating Decline"), then, after consummation of
the Merger, the holders of such senior notes will have the right to require
360(degrees) to purchase all or a portion of such senior notes at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest. As of March 31, 1998, approximately $520 million in borrowings were
outstanding under the Second Amended and Restated Credit Agreement dated as of
December 5, 1997 among 360(degrees) and a number of banks and institutional
lenders (the "360(degrees) Credit Facility") and $1.2 billion in aggregate
principal amount of senior notes were outstanding under the indentures dated
as of March 7, 1996 and March 1, 1997, respectively, between 360(degrees) and
Citibank, N.A., as trustee (collectively, the "360(degrees) Indentures").
 
  360(degrees) and ALLTEL expect that at or prior to the Effective Time,
either (i) 360(degrees) will obtain the consent of the lenders under the
360(degrees) Credit Facility to consummate the Merger or (ii) ALLTEL will
refinance the indebtedness outstanding under the 360(degrees) Credit Facility
through new, amended or existing credit facilities. Because the ratings
currently assigned to ALLTEL's senior indebtedness are significantly higher
than those assigned to the senior notes outstanding under the 360(degrees)
Indentures, 360(degrees) and ALLTEL do not expect a 360(degrees) Rating
Decline to occur. Neither the consent of the lenders under the 360(degrees)
Credit Facility to consummate the Merger nor the ability of ALLTEL to
refinance the indebtedness outstanding under the 360(degrees) Credit Facility
through its existing credit facility are conditions to the consummation of the
Merger.
 
OPTION AGREEMENT
 
  As an inducement to ALLTEL to enter into the Merger Agreement, 360(degrees)
(as issuer) and ALLTEL (as grantee) entered into the Option Agreement,
pursuant to which 360(degrees) granted ALLTEL an irrevocable option (the
"Option") to purchase from 360(degrees) at any one time up to approximately
24,140,553 shares, subject to certain adjustments (the "Option Shares"), of
360(degrees) Common Stock, at a purchase price of $33.90 per share, subject to
certain adjustments (the "Option Purchase Price"). The number of Option Shares
represents 19.9% of the shares of 360(degrees) Common Stock outstanding on the
date of the Option Agreement. The closing sale price of 360(degrees) Common
Stock on the last trading day preceding the execution of the Merger Agreement
was $35.62 per share.
 
                                      48
<PAGE>
 
ALLTEL may exercise the Option only upon the occurrence of an event (an
"Option Purchase Event") as a result of which ALLTEL becomes entitled under
the Merger Agreement to the Termination Fee (none of which has occurred as of
the date hereof).
 
  The Option will terminate and be of no further force and effect upon the
earliest to occur of (a) the Effective Time, (b) six months after the date on
which an Option Purchase Event occurs and (c) termination of the Merger
Agreement in accordance with its terms prior to the occurrence of an Option
Purchase Event; provided that, in the case of clause (c), if ALLTEL has the
right to receive a Termination Fee following such termination upon the
occurrence of certain events, the Option does not terminate until the later of
(x) six months following the time such Termination Fee becomes payable and (y)
the expiration of the period in which ALLTEL has such right to receive a
Termination Fee. Notwithstanding the termination of the Option, ALLTEL will
remain entitled to purchase Option Shares if it has properly exercised the
Option prior to the termination of the Option.
 
  The Option Agreement provides ALLTEL with a cash-out-right (the "Option
Cash-Out-Right") which would allow ALLTEL to receive cash upon exercise of the
Option in an amount equal to the number of Option Shares subject to the Option
exercise, multiplied by the difference between (i) the average closing price
per share of 360(degrees) Common Stock as reported on the NYSE Composite
Transactions Tape for the ten NYSE trading days commencing on the 12th NYSE
trading day immediately preceding the date of ALLTEL's election to exercise
the Option and (ii) the Option Purchase Price. 360(degrees)'s obligation,
however, to pay cash to ALLTEL under the Option Cash-Out-Right is limited to
an amount equal to the product of (a) $2.00 and (b) the number of Option
Shares subject to such exercise.
 
  The Option Agreement also provides 360(degrees) with a repurchase option
that would allow 360(degrees) to purchase from ALLTEL any Option Shares
acquired by ALLTEL pursuant to an exercise of the Option at a purchase price
per share equal to the Option Purchase Price plus $2.00. 360(degrees) must
exercise this repurchase option by delivering notice to ALLTEL prior to the
closing of an exercise of the Option, and the repurchase must take place
immediately following the consummation of the sale of Option Shares to ALLTEL
pursuant to an exercise of the Option.
 
  The Option Agreement contains provisions governing the procedure for
exercise of the Option and payment for the Option Shares purchased upon such
exercise and other provisions that adjust the number of Option Shares and
Option Purchase Price therefor upon the occurrence of (i) certain changes in
the 360(degrees) Common Stock by reason of a stock dividend, reverse stock
split, merger, recapitalization, combination, exchange of shares or similar
transaction or (ii) certain consolidations or mergers that do not involve
ALLTEL or its subsidiaries, or the sale or transfer of substantially all of
the assets of 360(degrees) to any person or entity other than ALLTEL or its
subsidiaries.
 
  Finally, the Option Agreement contains provisions obligating 360(degrees),
if requested by ALLTEL and subject to certain limitations and conditions, to
prepare, file and cause to be made effective up to two registration statements
("Demand Registration Statements") for the purpose of registering under the
Securities Act the sale or other disposition pursuant to a bona fide, firm
commitment underwritten public offering of shares of 360(degrees) Common Stock
acquired by ALLTEL upon exercise of the Option. In addition, if 360(degrees)
effects a registration statement under the Securities Act of 360(degrees)
Common Stock for its own account or for any other 360(degrees) stockholders
(other than on Form S-4, S-8 or successor forms), the Option Agreement
provides ALLTEL the right to participate in such registration subject to
certain limitations that may be imposed by the managing underwriter with
respect to such offering, and such participation will not affect the
obligation of 360(degrees) to effect any Demand Registration Statement. A
registration effected under the foregoing provisions would be at
360(degrees)'s expense, except for any underwriting discounts and commissions
and expenses of ALLTEL's counsel.
 
                                      49
<PAGE>
 
                   CERTAIN REGULATORY FILINGS AND APPROVALS
 
  FCC Transfer Approvals. Certain activities of ALLTEL and 360(degrees) are
regulated by the FCC. The Communications Act requires the prior approval of
the FCC for the acquisition of control of a company such as 360(degrees) that
holds various licenses and authorizations issued by the FCC. The FCC
traditionally grants approval of such transactions if it determines that the
transfer of control is consistent with the public interest, convenience and
necessity, without consideration of the relative merits of such a transfer of
control in relation to those of any other possible transfers of control that
may be pending or contemplated. ALLTEL and its subsidiaries already hold
certain similar authorizations issued by the FCC, and ALLTEL believes it is
likely that the transfer applications will be granted; however the transfer
applications are subject to public comment, petitions to deny and informal
objections by third parties, which may interpose objections in an attempt to
delay or impede approval by the FCC. Accordingly, there can be no assurance
that the FCC will timely grant the transfer applications or that the FCC will
not condition its approval upon various conditions and restrictions. The
Merger is conditioned on receipt of FCC approval of the transfer applications.
 
  Hart-Scott-Rodino Act Approval. Under the HSR Act and the rules promulgated
thereunder, the Merger may not be consummated until notifications have been
given and certain information has been furnished to the FTC and the DOJ and
specified waiting period requirements have been satisfied. ALLTEL and
360(degrees) each filed notification and report forms under the HSR Act with
the FTC and the DOJ on April 14, 1998 and on April 29, 1998 received notice
from the FTC that early termination of the specified waiting period had been
granted.
 
  At any time before or after the Effective Time of the Merger, and
notwithstanding that the HSR Act waiting period may have been terminated or
the Merger may have been consummated, the DOJ, or any state could take such
action under the applicable laws as it deems necessary or desirable. Such
action could include seeking to enjoin the consummation of the Merger or
seeking divestiture of 360(degrees) or businesses of ALLTEL or 360(degrees)
acquired as a result of the Merger. Private parties may also bring legal
actions under the antitrust laws under certain circumstances.
 
  Certain stockholders of 360(degrees) may also be subject to the HSR Act and
required to file a notification and report form with the FTC and the DOJ in
connection with the Merger. In general, if (i) a 360(degrees) stockholder is
entitled to receive, pursuant to the Merger Agreement, shares of ALLTEL Common
Stock with a value that exceeds $15 million; (ii) certain jurisdictional
requirements are met; and (iii) no exemption applies, then the HSR Act would
require that ALLTEL and such stockholder file notification and report forms
with the FTC and the DOJ and observe the applicable waiting period. If such
waiting period has not expired or been terminated by the Effective Time, the
Exchange Agent may be required to deliver such stockholder's shares of ALLTEL
Common Stock into an escrow facility pending the expiration or termination of
such waiting period. Persons with significant holdings of 360(degrees) Common
Stock are urged to consult their legal counsel to determine whether the
requirements of the HSR Act will apply to their receipt of ALLTEL Common Stock
pursuant to the Merger Agreement.
 
         UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
  The following unaudited pro forma condensed combined balance sheet as of
December 31, 1997, and unaudited pro forma condensed combined statements of
income for the years ended December 31, 1997, 1996 and 1995 give effect to the
Merger using the pooling-of-interests method of accounting. For a description
of pooling-of-interests accounting with respect to the Merger and certain
other accounting matters, see "THE MERGER--Anticipated Accounting Treatment."
The unaudited pro forma condensed combined financial statements have been
prepared from, should be read in conjunction with and are qualified in their
entirety by reference to the historical consolidated financial statements and
notes thereto of ALLTEL and 360(degrees), which are incorporated by reference
in this Joint Proxy Statement/Prospectus (see "INCORPORATION OF DOCUMENTS BY
REFERENCE").
 
                                      50
<PAGE>
 
  The unaudited pro forma condensed combined financial information gives
effect to the Merger as if it had been consummated, with respect to statements
of income, at the beginning of the periods presented, or, with respect to
balance sheet, as of the date presented. The unaudited pro forma condensed
combined financial information has been included for illustrative purposes
only and is not necessarily indicative of the results of operations or
financial position that would have occurred had the Merger been consummated at
the dates indicated, nor is it necessarily indicative of future results of
operations or financial position of the merged companies.
 
  ALLTEL expects to incur certain non-recurring expenses related to the
Merger, presently estimated to be $120,000,000 ($105,000,000 after tax). These
expenses would include, but would not be limited to, professional fees, fees
of financial advisors, retention compensation expenses, relocation expenses,
and similar expenses. Although ALLTEL believes this estimate of non-recurring
expenses is accurate, certain material additional costs may be incurred in
connection with the Merger. Merger related expenses will be recorded in the
period in which the Merger is concluded, which is currently estimated to occur
in the third quarter of 1998. In addition, ALLTEL is developing a plan to
integrate the operations of 360(degrees) after the Merger. In connection with
that plan, ALLTEL anticipates that certain non-recurring charges will be
incurred in connection with such integration. ALLTEL cannot identify the
timing, nature and amount of such charges as of the date of this Joint Proxy
Statement/Prospectus. However, any such charge could affect ALLTEL's results
of operations in the period in which such charges are recorded. Because the
foregoing charges are non-recurring in nature, they have not been reflected in
the pro forma combined statements of income.
 
                                      51
<PAGE>
 
                  ALLTEL CORPORATION AND SUBSIDIARY COMPANIES
 
              UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
 
<TABLE>
<CAPTION>
                                     AS REPORTED
                                  DECEMBER 31, 1997           PRO FORMA
                               ----------------------- --------------------------
                                                       ADD (DEDUCT)
                                 ALLTEL   360(degrees) ADJUSTMENTS      COMBINED
                               ---------- ------------ ------------    ----------
(IN THOUSANDS)
<S>                            <C>        <C>          <C>             <C>
           ASSETS
Current assets...............  $  665,844  $  230,167   $     --       $  896,011
Investments..................     775,647     459,669         --        1,235,316
Goodwill and other intangible
 assets......................     606,484   1,045,007         --        1,651,491
Property, plant and equip-
 ment:
  Wireline...................   4,068,502         --          --        4,068,502
  Wireless...................     692,490   1,420,853         --        2,113,343
  Information services.......     539,743         --          --          539,743
  Other......................      11,008     189,872         --          200,880
  Under construction.........     218,951     139,372         --          358,323
                               ----------  ----------   ---------      ----------
  Total property, plant and
   equipment.................   5,530,694   1,750,097         --        7,280,791
  Less accumulated deprecia-
   tion......................   2,340,242     561,140         --        2,901,382
                               ----------  ----------   ---------      ----------
  Net property, plant and
   equipment.................   3,190,452   1,188,957         --        4,379,409
Other assets.................     395,018      18,124         --          413,142
                               ----------  ----------   ---------      ----------
    Total assets.............  $5,633,445  $2,941,924   $     --       $8,575,369
                               ==========  ==========   =========      ==========
LIABILITIES AND SHAREHOLDERS'
            EQUITY
Current liabilities..........  $  637,281  $  367,211   $     --       $1,004,492
Long-term debt...............   1,874,172   1,825,347         --        3,699,519
Deferred income taxes........     665,473      60,470     (15,000)(2)     710,943
Other liabilities............     242,388     179,595     120,000 (2)     541,983
Preferred stock, redeemable..       5,625         --          --            5,625
Shareholders' equity:
  Preferred stock............       9,155         --          --            9,155
  Common stock...............     183,673       1,233      88,505 (3)     273,411
  Additional capital.........     152,936     774,938    (125,938)(3)     801,936
  Unrealized holding gain on
   investments...............     300,671         --          --          300,671
  Retained earnings (defi-
   cit)......................   1,562,071    (229,437)   (105,000)(2)   1,227,634
  Treasury stock.............         --      (37,433)     37,433 (3)         --
                               ----------  ----------   ---------      ----------
    Total shareholders' equi-
     ty......................   2,208,506     509,301    (105,000)      2,612,807
                               ----------  ----------   ---------      ----------
    Total liabilities and
     shareholders' equity....  $5,633,445  $2,941,924   $     --       $8,575,369
                               ==========  ==========   =========      ==========
</TABLE>
 
                                       52
<PAGE>
 
                  ALLTEL CORPORATION AND SUBSIDIARY COMPANIES
 
           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
 
<TABLE>
<CAPTION>
                                                         AS REPORTED
                                                      DECEMBER 31, 1997               PRO FORMA
                                                  --------------------------  ---------------------------
                                                                              ADD (DEDUCT)
                                                     ALLTEL     360(degrees)  ADJUSTMENTS      COMBINED
                                                  ------------  ------------  ------------   ------------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S>                                               <C>           <C>           <C>            <C>
Revenues and sales:
  Service revenues..........                      $  2,700,907  $  1,296,669    $(35,138)(4) $  3,962,438
  Product sales.............                           562,656        50,503         --           613,159
                                                  ------------  ------------    --------     ------------
    Total revenues and
     sales..................                         3,263,563     1,347,172     (35,138)       4,575,597
                                                  ------------  ------------    --------     ------------
Costs and expenses:
  Operations................                         1,686,739       772,172     (35,138)(4)    2,423,773
  Cost of products sold.....                           362,164       116,456         --           478,620
  Depreciation and amortiza-
   tion.....................                           450,762       184,702         --           635,464
  Provision to reduce
   carrying value of certain
   assets...................                            16,874           --          --            16,874
                                                  ------------  ------------    --------     ------------
    Total costs and ex-
     penses.................                         2,516,539     1,073,330     (35,138)       3,554,731
                                                  ------------  ------------    --------     ------------
Operating income............                           747,024       273,842         --         1,020,866
Other income, net...........                             5,236        13,071         --            18,307
Interest expense............                          (130,181)     (131,589)        --          (261,770)
Gain on disposal of assets
 and other..................                           206,622           --          --           206,622
                                                  ------------  ------------    --------     ------------
Income before taxes.........                           828,701       155,324         --           984,025
Income taxes................                           320,815        73,829         --           394,644
                                                  ------------  ------------    --------     ------------
Net income..................                           507,886        81,495         --           589,381
Preferred dividends.........                             1,008           --          --             1,008
                                                  ------------  ------------    --------     ------------
Net income applicable to
 common shares..............                      $    506,878  $     81,495    $    --      $    588,373
                                                  ============  ============    ========     ============
Earnings per Share of Common
 Stock:(5)
  Basic.....................                             $2.72          $.67                        $2.13
  Diluted...................                             $2.70          $.67                        $2.11
Average number of shares
 outstanding--basic.........                       186,059,000   122,339,000                  276,590,000
Average number of shares
 outstanding--diluted.......                       187,689,000   122,399,000                  278,531,000
</TABLE>
 
                                       53
<PAGE>
 
                  ALLTEL CORPORATION AND SUBSIDIARY COMPANIES
 
           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
 
<TABLE>
<CAPTION>
                                                         AS REPORTED
                                                      DECEMBER 31, 1996               PRO FORMA
                                                  --------------------------  ---------------------------
                                                                              ADD (DEDUCT)
                                                     ALLTEL     360(degrees)  ADJUSTMENTS      COMBINED
                                                  ------------  ------------  ------------   ------------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S>                                               <C>           <C>           <C>            <C>
Revenues and sales:
  Service revenues..........                      $  2,524,845  $  1,052,726    $(32,534)(4) $  3,545,037
  Product sales.............                           667,573        43,146         --           710,719
                                                  ------------  ------------    --------     ------------
    Total revenues and
     sales..................                         3,192,418     1,095,872     (32,534)       4,255,756
                                                  ------------  ------------    --------     ------------
Costs and expenses:
  Operations................                         1,607,942       624,859     (32,534)(4)    2,200,267
  Cost of products sold.....                           448,456       104,327         --           552,783
  Depreciation and amortiza-
   tion.....................                           424,115       146,841         --           570,956
  Provision to reduce carry-
   ing value of certain as-
   sets.....................                           120,280           --          --           120,280
                                                  ------------  ------------    --------     ------------
    Total costs and ex-
     penses.................                         2,600,793       876,027     (32,534)       3,444,286
                                                  ------------  ------------    --------     ------------
Operating income............                           591,625       219,845         --           811,470
Other income, net...........                             2,925         3,867         --             6,792
Interest expense............                          (130,832)     (106,364)        --          (237,196)
Gain on disposal of assets
 and other..................                            (2,278)          --          --            (2,278)
                                                  ------------  ------------    --------     ------------
Income before taxes.........                           461,440       117,348         --           578,788
Income taxes................                           169,703        57,829         --           227,532
                                                  ------------  ------------    --------     ------------
Net income..................                           291,737        59,519         --           351,256
Preferred dividends.........                             1,071           --          --             1,071
                                                  ------------  ------------    --------     ------------
Net income applicable to
 common shares..............                      $    290,666  $     59,519    $    --      $    350,185
                                                  ============  ============    ========     ============
Earnings per Share of Common
 Stock:(5)
  Basic.....................                             $1.53          $.50                        $1.27
  Diluted...................                             $1.52          $.50                        $1.26
Average number of shares
 outstanding--basic.........                       189,378,000   117,917,000                  276,637,000
Average number of shares
 outstanding--diluted.......                       191,026,000   118,136,000                  278,415,000
</TABLE>
 
                                       54
<PAGE>
 
                  ALLTEL CORPORATION AND SUBSIDIARY COMPANIES
 
           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
 
<TABLE>
<CAPTION>
                                                         AS REPORTED
                                                      DECEMBER 31, 1995               PRO FORMA
                                                  --------------------------  ---------------------------
                                                                              ADD (DEDUCT)
                                                     ALLTEL     360(degrees)  ADJUSTMENTS      COMBINED
                                                  ------------  ------------  ------------   ------------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S>                                               <C>           <C>           <C>            <C>
Revenues and sales:
  Service revenues..........                      $  2,441,826  $    789,459    $(31,435)(4) $  3,199,850
  Product sales.............                           667,899        44,956         --           712,855
                                                  ------------  ------------    --------     ------------
    Total revenues and
     sales..................                         3,109,725       834,415     (31,435)       3,912,705
                                                  ------------  ------------    --------     ------------
Costs and expenses:
  Operations................                         1,566,829       464,855     (31,435)(4)    2,000,249
  Cost of products sold.....                           449,119       109,441         --           558,560
  Depreciation and amortiza-
   tion.....................                           409,799       114,731         --           524,530
                                                  ------------  ------------    --------     ------------
    Total costs and ex-
     penses.................                         2,425,747       689,027     (31,435)(4)    3,083,339
                                                  ------------  ------------    --------     ------------
Operating income............                           683,978       145,388         --           829,366
Other income, net...........                             2,481         5,562         --             8,043
Interest expense............                          (145,428)     (127,240)        --          (272,668)
Gain on disposal of assets
 and other..................                            30,775           --          --            30,775
                                                  ------------  ------------    --------     ------------
Income before taxes.........                           571,806        23,710         --           595,516
Income taxes................                           217,190        25,405         --           242,595
                                                  ------------  ------------    --------     ------------
Net income (loss)...........                           354,616        (1,695)        --           352,921
Preferred dividends.........                             1,158           --          --             1,158
                                                  ------------  ------------    --------     ------------
Net income (loss) applicable
 to common shares...........                      $    353,458  $     (1,695)   $    --      $    351,763
                                                  ============  ============    ========     ============
Earnings (loss) per Share of
 Common Stock:(5)
  Basic.....................                             $1.87         ($.01)                       $1.28
  Diluted...................                             $1.85         ($.01)                       $1.27
Average number of shares
 outstanding--basic.........                       188,870,000   116,706,000                  275,232,000
Average number of shares
 outstanding--diluted.......                       190,675,000   116,706,000                  277,037,000
</TABLE>
 
                                       55
<PAGE>
 
                  ALLTEL CORPORATION AND SUBSIDIARY COMPANIES
 
                         NOTES TO UNAUDITED PRO FORMA
                    COMBINED CONDENSED FINANCIAL STATEMENTS
 
1. PRO FORMA FINANCIAL STATEMENT PRESENTATION
 
  The unaudited pro forma financial data do not give effect to any potential
cost savings or other synergies that could result from the Merger. The pro
forma data are not necessarily indicative of the operating results or
financial position that would have occurred had the Merger been consummated at
the dates indicated, nor are they necessarily indicative of future operating
results or financial position.
 
2. MERGER AND INTEGRATION EXPENSES
 
  ALLTEL expects to incur certain non-recurring expenses related to the
Merger, presently estimated to be $120,000,000 ($105,000,000 after tax). These
expenses would include, but would not be limited to, professional fees, fees
of financial advisors, retention compensation expenses, relocation expenses,
and similar expenses. Although ALLTEL believes this estimate of non-recurring
expenses is accurate, certain material additional costs may be incurred in
connection with the Merger. Merger related expenses will be recorded in the
period in which the Merger is concluded, which is currently estimated to occur
in the third quarter of 1998. In addition, ALLTEL and 360(degrees) are
developing a plan to integrate the operations of ALLTEL and 360(degrees) after
the Merger. In connection with that plan, ALLTEL anticipates that certain non-
recurring charges will be incurred in connection with such integration. ALLTEL
cannot identify the timing, nature and amount of such charges as of the date
of this Joint Proxy Statement/Prospectus. However, any such charge could
affect ALLTEL's results of operations in the period in which such charges are
recorded. The unaudited pro forma combined consolidated financial statements
do not reflect any such charges.
 
3. OTHER PRO FORMA ADJUSTMENTS
 
  The excess of par value of the ALLTEL Common Stock issued in this
transaction over the par value of the 360(degrees)'s Common Stock outstanding
on the Effective Date will be transferred from Additional Capital.
 
4. ELIMINATION OF TRANSACTIONS BETWEEN COMPANIES
 
  To eliminate the revenues and corresponding operating costs attributable to
transactions between ALLTEL and 360(degrees).
 
5. CONVERSION FRACTION
 
  Pro forma combined earnings per share amounts as presented in the
accompanying Unaudited Pro Forma Combined Condensed Statements of Income are
based upon the combined average number of shares outstanding of ALLTEL Common
Stock and 360(degrees)'s Common Stock for each period, adjusted, in the case
of 360(degrees)'s Common Stock, to reflect the conversion of each share of
360(degrees)'s Common Stock into .74 of a share of ALLTEL Common Stock.
 
                                      56
<PAGE>
 
                         INFORMATION CONCERNING ALLTEL
 
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  Set forth below is certain information, as of May 1, 1998, with respect to
any person known to ALLTEL to be the beneficial owner of more than 5% of any
class of ALLTEL's voting securities, all of which are shares of ALLTEL Common
Stock:
 
<TABLE>
<CAPTION>
                NAME AND ADDRESS                AMOUNT AND NATURE               PERCENT OF
TITLE OF CLASS  OF BENEFICIAL OWNER             OF BENEFICIAL OWNERSHIP           CLASS
- --------------  -------------------             -----------------------         ----------
<S>             <C>                             <C>                             <C>
Common Stock    Stephens Group, Inc.            16,627,920 shares (sole            9.02
                111 Center Street               voting and investment
                Little Rock, AR 72201           power)
Common Stock    Cincinnati Financial            12,962,388 shares (sole            7.03
                Corporation                     voting and investment
                P.O. Box 14596                  power)
                Cincinnati, OH 45250
</TABLE>
 
  Set forth below is certain information, as of May 1, 1998, as to shares of
each class of ALLTEL equity securities beneficially owned by each of the
directors, each of the executive officers identified in the Summary
Compensation Table on page 60, and by all directors and executive officers of
ALLTEL as a group. Except as otherwise indicated by footnote, all shares
reported below are shares of ALLTEL Common Stock, and the nature of the
beneficial ownership is sole voting and investment power:
 
<TABLE>
<CAPTION>
               NAME OF                            AMOUNT AND NATURE    PERCENT OF CLASS
               BENEFICIAL OWNER                OF BENEFICIAL OWNERSHIP (IF 1% OR MORE)
               ----------------                ----------------------- ----------------
<S>            <C>                             <C>                     <C>
DIRECTORS      Michael D. Andreas                       56,871(a)             --
               John R. Belk                             16,400(a)             --
               Lawrence L. Gellerstedt, III             18,725(a)             --
               W. W. Johnson                            33,567(a)             --
               Emon A. Mahony, Jr.                      72,200(b)(c)          --
               John P. McConnell                        19,500(b)             --
               Josie C. Natori                          17,038(a)             --
               Ronald Townsend                          16,000(a)             --
               William H. Zimmer, Jr.                   24,394(a)             --
NAMED          Joe T. Ford                             915,801(d)             --
EXECUTIVE      Scott T. Ford                            87,214(d)             --
OFFICERS       Tom T. Orsini                            71,846(d)             --
               Francis X. Frantz                       186,725(d)             --
               Dennis J. Ferra                         113,315(d)             --
ALL DIRECTORS
AND EXECUTIVE
OFFICERS                                             1,996,878(e)            1.08
AS A GROUP
</TABLE>
 
- --------
(a) Includes shares that the indicated persons have the right to acquire
    (through the exercise of options) on or within 60 days after May 1, 1998,
    as follows: Michael D. Andreas (16,871); John R. Belk (15,500); Lawrence
    L. Gellerstedt, III (18,725); W.W. Johnson (33,567); Josie C. Natori
    (17,038); Ronald Townsend (15,500); and William H. Zimmer, Jr. (15,500).
 
(b) Includes 17,500 shares that each of the indicated persons has the right to
    acquire (through the exercise of options) on or within 60 days after May
    1, 1998.
 
 
                                      57
<PAGE>
 
(c) Includes 1,500 shares held by Mr. Mahony's spouse, with respect to which
    Mr. Mahony has shared investment power and no voting power.
 
(d) Includes shares that the indicated persons have the right to acquire
    (through the exercise of options) on or within 60 days after May 1, 1998,
    as follows: Joe T. Ford (337,000), Scott T. Ford (41,000), Tom T. Orsini
    (-0-), Francis X. Frantz (168,000), and Dennis J. Ferra (54,000).
 
(e) Includes a total of 1,019,560 shares that members of the group have the
    right to acquire (through the exercise of options) on or within 60 days
    after February 23, 1998.
 
COMPENSATION OF DIRECTORS
 
  Directors who are not officers of ALLTEL receive $24,000 as an annual base
fee and $1,500 for each Board meeting and each Committee meeting attended.
Each Director who is not an officer of ALLTEL and serves as chairman of a
Board Committee receives an additional annual fee of $3,000. Directors may
elect to defer all or a part of their compensation under ALLTEL's deferred
compensation plan for directors.
 
  Under the 1994 Stock Option Plan for Nonemployee Directors, as amended (the
"Director Plan"), immediately following the 1994 Annual Meeting of
Stockholders on April 21, 1994, each nonemployee director received the initial
grant of an option to purchase 10,000 shares of ALLTEL Common Stock at an
exercise price of $26.25 per share (the closing market price of the ALLTEL
Common Stock on that date). Similarly, each nonemployee director who first
becomes a director after April 21, 1994, also automatically receives the
initial grant of an option to purchase 10,000 shares of ALLTEL Common Stock on
the date the person first becomes a nonemployee director, at an exercise price
equal to the closing market price of the ALLTEL Common Stock on that date. The
Director Plan also provides for the automatic grant, following the conclusion
of each annual meeting of stockholders, of an option to purchase 4,500 shares
of ALLTEL Common Stock to each nonemployee director (other than a director who
was elected at an annual meeting).
 
  The option price of options granted under the Director Plan is the fair
market value of the ALLTEL Common Stock on the date the option is granted and
is payable in cash, already-owned ALLTEL Common Stock, or a combination of
both. The options vest and become exercisable on the day immediately preceding
the next annual meeting of stockholders following the date of grant or, if
earlier, on the death or disability of the holder or the occurrence of a
"change of control".
 
  If a person ceases to be a nonemployee director, all vested options held by
the person continue to be exercisable for a period of six months or the
earlier expiration of the ten-year term of the option. Any options that have
not vested by the time the person ceases to be a nonemployee director may not
thereafter be exercised. The Director Plan will continue until the 1,000,000
shares of ALLTEL Common Stock available under the plan are issued, unless the
plan is earlier terminated by the ALLTEL Board.
 
  ALLTEL's Directors' Retirement Plan was terminated effective January 30,
1997. Under the terms of that termination, each director who was a director on
January 30, 1997, and retires thereafter is entitled to receive, commencing on
his retirement, an annual benefit, payable for his life only, equal to 10% of
the $24,000 annual base directors' fee in effect at the time the plan was
terminated for each year of his service prior to January 30, 1997 (rounded up
to the next whole year) up to five years and 5% of the $24,000 annual base fee
for each year of that service in excess of five years, up to a maximum annual
benefit of $24,000. A director is considered to have "retired" if he ceases to
be a director for any reason other than death or removal in accordance with
applicable law. The termination of the Directors' Retirement Plan did not
affect the benefits payable to any director who retired prior to January 30,
1997.
 
  In lieu of the foregoing future retirement benefit, each director who was a
director on January 30, 1997, had the opportunity to elect to receive either a
one-time grant of a fully-vested option to purchase Common Stock under the
Director Plan at an option price of $33.875 per share (the closing price of
the Common Stock on February 14, 1997) with a value at the time of grant
(calculated using the Black-Sholes method) approximately
 
                                      58
<PAGE>
 
equal to the value of the director's retirement benefit under the Directors'
Retirement Plan or a credit to his account under ALLTEL's deferred
compensation plan for directors in an amount approximately equal to the value
of the director's retirement benefit under the Directors' Retirement Plan.
 
  Michael D. Andreas, Lawrence L. Gellerstedt, III, W.W. Johnson, and Josie C.
Natori elected to receive stock options under the Director Plan in lieu of a
benefit under the terminated Directors' Retirement Plan and were granted
options to purchase 1,371, 1,225, 16,067, and 1,538 shares of Common Stock,
respectively. John R. Belk, Emon A. Mahony, John P. McConnell, Ronald
Townsend, and William H. Zimmer elected to receive credits of $3,625, $65,186,
$7,850, $31,794, and $134,522, respectively, to their accounts under ALLTEL's
deferred compensation plan for directors in lieu of a benefit under the
terminated Directors' Retirement Plan.
 
 
                                      59
<PAGE>
 
COMPENSATION OF NAMED EXECUTIVE OFFICERS
 
  The following table shows the compensation, for each of the last three
years, of ALLTEL's Chief Executive Officer and of ALLTEL's other four most
highly compensated executive officers as of December 31, 1997:
 
                          SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                      ANNUAL COMPENSATION          LONG-TERM COMPENSATION
                                               ---------------------------------- -------------------------
                                                                                    AWARDS      PAYOUTS
                                                                                  ---------- --------------
                                                                                  SECURITIES   LONG-TERM
                                                                   OTHER ANNUAL   UNDERLYING INCENTIVE PLAN    ALL OTHER
NAME                PRINCIPAL POSITION    YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)   PAYOUTS($)   COMPENSATION($)
- ----                ------------------    ---- --------- -------- --------------- ---------- -------------- ---------------
<S>              <C>                      <C>  <C>       <C>      <C>             <C>        <C>            <C>
Joe T. Ford..... Chairman & CEO           1997  650,000  715,000        -0-        525,000      390,000        1,481,930(a)
                 Chairman & CEO           1996  650,000  682,500        -0-         80,000      390,000          192,185
                 Chairman & CEO           1995  650,000  585,000        -0-            -0-      234,375          251,818
Scott T. Ford... President                1997  375,000  386,719        -0-        465,000      160,000           78,290(b)
                 Executive Vice President 1996  320,000  380,000        -0-         70,000          -0-              -0-
Tom T. Orsini... Executive Vice President 1997  275,000  226,875        -0-        230,000      130,500          663,907(b)
                 Executive Vice President 1996  320,000  240,000        -0-         20,000      126,750           73,497
                 Senior Vice President--  1995  275,000  185,625        -0-            -0-       72,442           92,270
                 Fin. and Corp. Dev.
Francis X.       Senior Vice President-   1997  300,000  247,500        -0-        230,000      132,000          594,432(b)
 Frantz......... External Affairs and
                 General Counsel
                 Senior Vice President--  1996  295,000  199,125        -0-         20,000      126,000           69,242
                 External Affairs and
                 General Counsel
                 Senior Vice President--  1995  285,000  192,375        -0-            -0-       78,000           86,380
                 External Affairs and
                 General Counsel
Dennis J.        Senior Vice President--
 Ferra.......... CFO                      1997  300,000  247,500        -0-        180,000      127,500          316,156(b)
                 Senior Vice President--
                 CFO                      1996  285,000  192,375        -0-         20,000      118,500           51,764
                 Senior Vice President--  1995  265,000  178,875        -0-            -0-       72,500           63,024
                 Acct. and Admin.
</TABLE>
- -------
(a) Includes the following amounts for Mr. Joe T. Ford: employer contributions
    to the ALLTEL Profit Sharing Plan and ALLTEL Thrift Plan in the amount of
    $12,800, allocated benefits under the ALLTEL Benefit Restoration Plan in
    the amount of $125,000, dollar amount of premiums paid under supplemental
    split dollar life insurance policies in the amount of $10,395, and "above-
    market" earnings on deferred compensation in the amount of $1,333,735
    (payment of which is deferred until the deferred compensation is paid).
    The amount of "above market" earnings on deferred compensation was
    substantially higher for 1997 than in 1996 and 1995 because of ALLTEL's
    large stock price appreciation during 1997 of 30.9%
 
(b) Includes the following amounts for Messrs. Scott T. Ford, Orsini, Frantz,
    and Ferra: allocated benefits under the ALLTEL Benefit Restoration Plan in
    the respective amounts of $47,481, $38,637, $37,199, and $36,038, employer
    contributions under the ALLTEL Profit Sharing Plan and ALLTEL Thrift Plan
    in the amount of $12,800 in each case, dollar amount of premiums paid
    under supplemental split dollar life insurance policies in the respective
    amounts of $-0-, $682, $561, and $525, and "above-market" earnings on
    deferred compensation in the respective amounts of $18,009, $611,788,
    $543,872, and $266,793 (payment of which is deferred until the deferred
    compensation is paid). The amount of "above market" earnings on deferred
    compensation was substantially higher for 1997 than in 1996 and 1995
    because of ALLTEL's large stock price appreciation during 1997 of 30.9%.
 
                                      60
<PAGE>
 
OPTION GRANTS IN 1997
 
  The following table shows information concerning stock option grants during
1997 to ALLTEL's Chief Executive Officer and to ALLTEL's other four most
highly compensated executive officers:
 
<TABLE>
<CAPTION>
                                                                                           POTENTIAL REALIZABLE VALUE AT
                                                                                              ASSUMED ANNUAL RATES OF
                                                                                              STOCK PRICE APPRECIATION
                                                                                                  FOR OPTION TERM
                                                                                       --------------------------------------
                                           INDIVIDUAL GRANTS                                   5%                 10%
                 --------------------------------------------------------------------- ------------------ -------------------
                 NUMBER OF SECURITIES  % OF TOTAL OPTIONS
                  UNDERLYING OPTIONS  GRANTED TO EMPLOYEES EXERCISE OR BASE EXPIRATION  STOCK    DOLLAR    STOCK     DOLLAR
NAME                  GRANTED(#)            IN 1997          PRICE($/SH)       DATE    PRICE($) GAINS($)  PRICE($)  GAINS($)
- ----             -------------------- -------------------- ---------------- ---------- -------- --------- -------- ----------
<S>              <C>                  <C>                  <C>              <C>        <C>      <C>       <C>      <C>
Joe T. Ford.....        75,000                1.49              32.00        1/29/07    52.125  1,509,347  83.000   3,824,982
                       450,000               11.73              34.50        9/30/07    56.197  9,763,589  89.484  24,742,852
Scott T. Ford...        65,000                1.69              32.00        1/29/07    52.125  1,308,101  83.000   3,314,984
                       400,000               10.43              34.50        9/30/07    56.197  8,678,746  89.484  21,993,646
Tom T. Orsini...        30,000                 .78              32.00        1/29/07    52.125    603,739  83.000   1,529,993
                       200,000                5.22              34.50        9/30/07    56.197  4,339,373  89.484  10,996,823
Francis X.
 Frantz.........        30,000                 .78              32.00        1/29/07    52.125    603,739  83.000   1,529,993
                       200,000                5.22              34.50        9/30/07    56.197  4,339,373  89.484  10,996,823
Dennis J.
 Ferra..........        30,000                 .78              32.00        1/29/07    52.125    603,739  83.000   1,529,993
                       150,000                3.91              34.50        9/30/07    56.197  3,254,530  89.484   8,247,617
Dollar Gains of
 All ALLTEL                                                                                $3,696,417,000     $ 9,367,317,000
 Stockholders*..                                                                           $3,985,150,000     $10,099,070,000
</TABLE>
- --------
* Total dollar gains are based on the indicated assumed annual rates of
  appreciation in the two option exercise prices, in each case calculated on
  the 183,672,880 shares of Common Stock outstanding as of December 31, 1997.
 
OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
 
  The following table shows information concerning stock option exercises
during 1997 by ALLTEL's Chief Executive Officer and by ALLTEL's other four
most highly compensated executive officers:
 
<TABLE>
<CAPTION>
                                                                NUMBER OF SECURITIES        VALUE OF UNEXERCISED
                                                               UNDERLYING UNEXERCISED     IN-THE-MONEY OPTIONS AT
                         SHARES ACQUIRED ON                   OPTIONS AT 1997 YEAR-END         1997 YEAR-END
NAME                        EXERCISE(#)     VALUE REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE($)
- ----                     ------------------ ----------------- ------------------------- ----------------------------
<S>                      <C>                <C>               <C>                       <C>
Joe T. Ford.............       90,405           1,941,784          312,595/609,000          6,151,637/4,478,063
Scott T. Ford...........          -0-                 -0-           14,000/521,000            135,625/3,756,563
Tom T. Orsini...........       88,016           1,064,829           14,000/256,000            158,375/1,856,000
Francis X. Frantz.......       16,000             364,687          158,000/256,000          3,169,813/1,856,000
Dennis J. Ferra.........        9,984             184,080          112,016/206,000          2,000,432/1,527,875
</TABLE>
 
                                      61
<PAGE>
 
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
 
  The following table shows information concerning the awards made during 1997
with respect to the three-year measurement period 1997 through 1999 to
ALLTEL's Chief Executive Officer and to ALLTEL's other four most highly
compensated executive officers under the ALLTEL Long-Term Performance
Incentive Plan:
 
<TABLE>
<CAPTION>
                                                    ESTIMATED FUTURE PAYOUTS*
                                                    ----------------------------
                     PERFORMANCE PERIOD
NAME                    UNTIL PAYOUT    MINIMUM ($)  TARGET ($)     MAXIMUM ($)
- ----                 ------------------ ----------- ------------   -------------
<S>                  <C>                <C>         <C>            <C>
Joe T. Ford........       3 years         227,500         455,000         682,500
Scott T. Ford......       3 years         112,500         225,000         337,500
Tom T. Orsini......       3 years          68,750         137,500         206,250
Francis X. Frantz..       3 years          75,000         150,000         225,000
Dennis J. Ferra....       3 years          75,000         150,000         225,000
</TABLE>
- --------
* Awards will be paid upon completion of the 1999 year on the basis of
  ALLTEL's performance during the three year period 1997-1999 as determined by
  ALLTEL's attainment of prescribed corporate and unit performance targets. In
  January 1997, the Compensation Committee of the Board of Directors specified
  those corporate and unit performance targets and the award levels for the
  indicated executive officers (which are stated as a percentage of each
  executive officer's average base salary during the 1997-99 period). The
  estimated future payouts shown above assume that each executive officer's
  average base salary during the 1997-99 period would be the same as his base
  salary during 1997.
 
EXECUTIVE COMPENSATION AGREEMENT
 
  Mr. Joe T. Ford is employed by ALLTEL for a period extending to July 1,
2002, under a contract with ALLTEL that provides for a minimum base annual
salary plus any incentive awards made under the Incentive Plan and the Long-
Term Incentive Plan (the "Incentive Plans"). If the Board of Directors
discontinues either or both of the Incentive Plans (or the application of
either or both of them to Mr. Ford) or should a change of control of ALLTEL
occur, the contract provides that Mr. Ford will receive, in the year in which
such event occurs, an annual salary equal to the greater of his minimum base
annual salary plus the average incentive awards made under the Incentive Plans
over the preceding three years or his 1991 base annual salary compounded at an
annual rate of 3% from January 1, 1991, to the beginning of the year in which
such event occurs; thereafter Mr. Ford will receive an annual salary equal to
the compensation paid during the preceding year, compounded by minimum annual
increases of 3%. The contract provides for payment of disability benefits in
amounts unaffected by that disability through the end of the calendar year
following the calendar year in which the disability occurs and of a death
benefit in the amount equal to Mr. Ford's compensation for one year. Assuming
compensation at the 1997 level and retirement at the expiration of the
contract period, the estimated annual benefit to be received by Mr. Ford is
$1,099,798. The contract also provides that Mr. Ford may retire any time prior
to the expiration of the contract period. If Mr. Ford were to elect early
retirement, he would be entitled to retirement benefits under his contract
reduced in accordance with a formula. The contract provides that those
retirement benefits are in lieu of payments under ALLTEL's defined benefit
pension plan described below. The contract provides for payment of
survivorship benefits to Mr. Ford's wife, who would receive for her life 50%
of the annual retirement compensation to which Mr. Ford is entitled.
 
CHANGE IN CONTROL AGREEMENTS
 
  ALLTEL is a party to agreements with each of Messrs. Scott T. Ford, Tom T.
Orsini, Francis X. Frantz and Dennis J. Ferra which provide that if, following
a "change in control", the executive's employment terminates within twelve
months (unless the termination is as a result of death, by ALLTEL as a result
of the executive's disability or for "cause," or by the executive without
"good reason") or if, after remaining employed for twelve months, the
executive's employment terminates during the following three-month period
(unless the termination is a result of death or is by ALLTEL as a result of
the executive's disability) (each of the foregoing events being referred to as
a "Payment Trigger"), ALLTEL is required to pay the executive an amount equal
to three times
 
                                      62
<PAGE>
 
the sum of his base salary as in effect immediately prior to the change in
control or Payment Trigger and the maximum amounts he could have received
under the Incentive Plans for the period commencing coincident with or most
recently prior to the period in which the change in control or Payment Trigger
occurs, but reduced by any other cash severance paid to him. ALLTEL also is
required to make an additional payment to the executive in the amount of any
excise tax under Section 4999 of the Internal Revenue Code as a result of any
payments or distributions by ALLTEL plus the amount of all additional income
tax payable by him as a result of such additional payments. Payments under the
agreements are covered by ALLTEL's "grantor trust" described below.
 
DEFINED BENEFIT PENSION PLAN
 
  ALLTEL maintains a trusteed, noncontributory, defined benefit pension plan
covering salaried and non-salaried employees under which benefits are not
determined primarily by final compensation (or average final compensation).
Under this pension plan, each of Messrs. Scott T. Ford, Orsini, Frantz and
Ferra would have each period of post-January 1, 1988, service credited at 1%
of compensation, plus .4% of that part of his compensation that exceeds the
Social Security Taxable Wage Base for such year. Service prior to 1988, if
any, would be credited on the basis of a percentage of his highest consecutive
five-year average annual base salary, equal to 1% for each year of service
prior to 1982 and thereafter increasing by .05% each year until 1988, but only
prospectively, i.e., with respect to service earned in such succeeding year;
in addition, each of Messrs. Frantz, Orsini and Ferra would receive an
additional credit of .25% for each pre-1988 year of service after age 55,
subject to a maximum of 10 years' such credit, and would have added to his
annual pension benefits an amount equal to .4% of the amount by which his pre-
1988 career average annual base salary (three highest years) exceeds his
Social Security covered compensation, multiplied by his years of pre-1988
credited service. Various benefit payment options are available on an
actuarially equivalent basis, including joint and survivor benefits.
Compensation included in the pension base includes cash awards under the
Incentive Plans.
 
  Assuming annual increases in compensation in future years of 5% per year,
continuation in the position he held during 1997, and retirement at age 65,
the estimated annual benefit under the pension plan for each of Messrs. Scott
T. Ford, Orsini, Frantz and Ferra is $55,629, $63,615, $55,010 and $61,674,
respectively. (Mr. Joe T. Ford, the only other executive included in the
Summary Compensation Table on page 60, is not a participant in and is not
entitled to benefits under the pension plan.) Amounts shown are straight life
annuity amounts and include amounts payable under the defined benefit portion
of the ALLTEL Benefit Restoration Plan.
 
BENEFIT RESTORATION PLAN
 
  Federal laws place certain limitations on pensions that may be paid under
federal income tax qualified plans. The ALLTEL Benefit Restoration Plan
provides for the payment to certain employees outside tax-qualified plans of
any amounts not payable under the tax-qualified plans by reason of limitations
specified in the Internal Revenue Code. Currently, under the ALLTEL Benefit
Restoration Plan, Messrs. Joe T. Ford, Scott T. Ford, Orsini, Frantz, and
Ferra are eligible for accruals with respect to benefits not payable under
ALLTEL's defined contribution plans, and Messrs. Scott T. Ford, Orsini, Frantz
and Ferra are eligible for accruals with respect to benefits not payable under
ALLTEL's defined benefit pension plan. Amounts accrued under the defined
contribution portion of these plans in 1997 for each of these executives are
included in the Summary Compensation Table on page 60.
 
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
 
  ALLTEL maintains a non-qualified supplemental executive retirement plan (the
"SERP") in which certain employees designated by the Board of Directors,
including Messrs. Scott T. Ford, Orsini, Frantz and Ferra, participate. The
SERP provides with respect to Messrs. Scott T. Ford, Orsini, Frantz and Ferra
that, upon normal retirement at age 65 (or, if earlier, following a Payment
Trigger that occurs after the participant's early retirement date), the
executive will receive an annual benefit under the SERP, payable as a single
life annuity, equal to 60% of (A) if a Payment Trigger has not occurred, the
greater of (i) his total compensation for the calendar year
 
                                      63
<PAGE>
 
preceding his retirement, or (ii) his average annual total compensation for
the three calendar years preceding his retirement; or (B) if a Payment Trigger
has occurred, the greater of (i) the amount determined under (A) above (as if
a Payment Trigger had not occurred), or (ii) the sum of (a) his annual base
salary in effect immediately prior to the change in control (as defined in the
change in control agreements described above), the Payment Trigger, or his
retirement date, whichever is greatest, plus (b) the maximum amounts payable
to him under specified incentive compensation plans for the period coincident
with or most recently prior to the change in control, the Payment Trigger, or
his retirement date, whichever is greatest. The amount of the normal
retirement benefit under the SERP is not determined based on years of service.
 
  Each of Messrs. Scott T. Ford, Orsini, Frantz and Ferra also is entitled to
an early retirement benefit under the SERP if he retires before becoming
entitled to the normal retirement benefit but after attaining the age of 60
with 15 or more years of service or age 55 with 20 or more years of service or
after a Payment Trigger occurs (regardless of his years of service). The early
retirement benefit is calculated the same as the normal retirement benefit,
except that the percentage used in the calculation is 45% (increased ratably
for the number of years of his service after the early retirement date, up to
a maximum of 60%) rather than 60%.
 
  If Messrs. Scott T. Ford, Orsini, Frantz or Ferra dies after benefits
commence, his surviving spouse will receive 50% of the amount that he was
receiving prior to his death. If he dies while employed, his surviving spouse
will receive 50% of the amount that he would have received if he had retired
on the day before death. Following retirement, each of Messrs. Scott T. Ford,
Orsini, Frantz, and Ferra (and his spouse and dependents) also is entitled to
receive post-retirement medical benefits under the SERP together with
reimbursement for any additional taxes incurred as a result of the benefits
being taxed less favorably than they would have been if received by other
retired employees. Payments to Messrs. Scott T. Ford, Orsini, Frantz, and
Ferra under the SERP are covered by ALLTEL's "grantor trust" described below.
 
  The retirement benefits payable under the SERP are reduced by benefits
(other than benefits attributable to employee contributions) paid under other
ALLTEL qualified and nonqualified benefit plans other than the Allied
Telephone Company Profit Sharing Plan. The benefits under the SERP are not
subject to offset for Social Security. Assuming annual increases in
compensation in future years of 5% per year, retirement at age 65 and based on
estimates of the benefits that reduce the retirement benefits payable under
the SERP, the estimated normal retirement benefit under the SERP payable for
each of Messrs, Scott T. Ford, Orsini, Frantz and Ferra is $24,889, $163,743,
$124,225 and $90,577, respectively.
 
GRANTOR TRUST
 
  ALLTEL maintains a "grantor trust" under Section 671 of the Internal Revenue
Code (the "Trust") to provide certain participants in designated compensation
and supplemental retirement plans and arrangements with greater assurance that
the benefits and payments to which those participants are entitled under those
plans and arrangements will be paid. Contributions by ALLTEL to the Trust are
discretionary. Prior to a "change of control" of ALLTEL (as defined in the
trust agreement for the Trust), benefits may not be paid from the Trust.
Following a "change of control" of ALLTEL, benefits and payments may be paid
from the Trust to the extent those benefits and payments are not paid by
ALLTEL or its successor. The assets of the Trust are subject to the claims of
the creditors of ALLTEL in the event ALLTEL becomes "insolvent" (as defined in
the trust agreement for the Trust).
 
            DIRECTORS AND MANAGEMENT OF ALLTEL FOLLOWING THE MERGER
 
DIRECTORS
 
  As of the date hereof, the ALLTEL Board is comprised of eleven members
divided in three classes, two of which consist of four members (with terms
ending in 2000 and 2001) and one of which consists of three members (with a
term ending in 1999).
 
 
                                      64
<PAGE>
 
  Pursuant to the terms of the Merger Agreement, ALLTEL has agreed that,
effective at the Effective Time, it will take all actions necessary to
increase the authorized number of directors in each of its three classes of
directors as necessary and will elect the following directors of 360(degrees)
as directors of ALLTEL (to the classes indicated):
 
    (a) Frank E. Reed and Charles H. Goodman as directors of ALLTEL in the
  class whose term expires in 1999;
 
    (b) Dennis E. Foster as a director of ALLTEL in the class whose term
  expires in 2000; and
 
    (c) Michael Hooker as a director of ALLTEL in the class whose term
  expires in 2001.
 
  Additional information about the persons listed above follows:
 
  Dennis E. Foster. Dennis E. Foster, age 57, has served as a director of
360(degrees) since March 7, 1996. He was elected President of 360(degrees) in
March 1993 and President and Chief Executive Officer of 360(degrees) in
February 1996. Mr. Foster had been President and Chief Operating Officer of
the Cellular and Wireless Division of Sprint Corporation since 1993, a
position he resigned from effective with the spinoff of 360(degrees) from
Sprint Corporation on March 7, 1996, and prior to that he was Senior Vice
President of the Local Telecommunications Division of Sprint Corporation
beginning in May 1992. Prior to joining Sprint Corporation, Mr. Foster was
President and Chief Operating Officer of GTE Mobilnet, a position he had held
since June 1991. Mr. Foster had been Area Vice President and General Manager
of GTE North since September 1989.
 
  Michael Hooker. Michael Hooker, age 52, has served as a director of
360(degrees) since April 9, 1996. He is currently Chancellor of the University
of North Carolina, a position he has held since 1995. Mr. Hooker had served as
President of Bennington College in Vermont, as President of the University of
Maryland-Baltimore County and as President of the University of Massachusetts.
He also currently serves as a director of Centura Bank, located in Rocky
Mount, North Carolina.
 
  Frank E. Reed. Frank E. Reed, age 63, has served as the non-management
Chairman of the Board of Directors of 360(degrees) since March 7, 1996. He is
former President and Chief Executive Officer of Philadelphia National Bank and
currently serves as a director of Harleysville Group, Inc. Mr. Reed had been
President and Chief Executive Officer of Philadelphia National Bank for more
than five years. Mr. Reed resigned as a director of Sprint Corporation
effective with the spinoff of 360(degrees) from Sprint Corporation on March 7,
1996. Prior to becoming a director of Sprint Corporation in 1993, Mr. Reed had
been a director of Centel Corporation, a predecessor corporation, since 1978.
 
  Charles H. Goodman. Charles H. Goodman, age 65, is currently Vice President
of Henry Crown and Company (a diversified investment company), a position he
has held since 1987. Mr Goodman also serves as a director of General Dynamics
Corporation, a position he has held since 1991.
 
  After the Merger, the ALLTEL Board will be comprised of fifteen members. The
obligations of ALLTEL (and of the ALLTEL Board) to elect the persons listed
above as directors of ALLTEL are subject to acceptance of the foregoing
persons of the appointment to the positions specified.
 
EXECUTIVE OFFICERS
 
  Pursuant to the terms of the Merger Agreement, the ALLTEL Board and ALLTEL's
Chief Executive Officer have agreed that, effective at the Effective Time, the
following individuals will be appointed in the management positions specified
below:
 
    (a) Dennis E. Foster will become Vice-Chairman of ALLTEL;
 
    (b) Michael J. Small will become Senior Vice President-Corporate
  Development of ALLTEL; and
 
    (c) Kevin L. Beebe will become a member of the Office of the President of
  ALLTEL's Communications Group.
 
                                      65
<PAGE>
 
  Such obligations of ALLTEL (and of the ALLTEL Board and ALLTEL's Chief
Executive Officer) are subject to acceptance of the foregoing persons of the
appointment to the positions specified.
 
  Information about the existing officers of ALLTEL is contained in the ALLTEL
1997 Form 10-K. Information about Michael J. Small and Kevin L. Beebe is
contained in the 360(degrees) 1997 Form 10-K.
 
                     APPROVAL OF THE CERTIFICATE AMENDMENT
 
INTRODUCTION
 
  At the ALLTEL Special Meeting, the stockholders will be asked to approve the
Certificate Amendment, which amends Section 1 of Article IV of the ALLTEL
Certificate by increasing by 500,000,000 to 1,000,000,000 the number of shares
of Common Stock authorized under ALLTEL's Certificate. The Certificate
Amendment has been approved by the ALLTEL Board and is set forth in Annex F.
 
VOTE REQUIRED
 
  The approval of the Certificate Amendment requires the affirmative vote of
holders of record of a majority of the shares of ALLTEL Voting Stock
outstanding on the ALLTEL Record Date. The approval of the Certificate
Amendment is not a condition to the Issuance of ALLTEL Common Stock or the
adoption of the Equity Incentive Plan.
 
  THE ALLTEL BOARD RECOMMENDS THAT ALLTEL STOCKHOLDERS VOTE IN FAVOR OF THE
CERTIFICATE AMENDMENT.
 
PURPOSE
 
  The ALLTEL Certificate will be amended to increase the number of authorized
shares of ALLTEL Common Stock to 1,000,000,000. No change will be made with
respect to the number of authorized shares of preferred stock.
 
  The ALLTEL Certificate currently authorizes the issuance of 500,000,000
shares of ALLTEL Common Stock. On the ALLTEL Record Date, 201,848,212 shares
of ALLTEL Common Stock were either issued and outstanding or reserved for
issuance. ALLTEL expects to issue approximately 89,848,082 shares of ALLTEL
Common Stock to holders of 360(degrees) Common Stock in the Merger and to
reserve approximately 2,244,256 additional shares for issuance upon exercise
of the Assumed Options. After taking into account the shares of ALLTEL Common
Stock either issued or reserved for issuance, the number of shares remaining
for issuance would be sufficient to complete the Merger if the ALLTEL
Certificate were not amended. However, the ALLTEL Board believes it is
desirable to authorize additional shares of ALLTEL Common Stock so that there
will be sufficient shares available for issuance after completion of the
Merger and for purposes that the ALLTEL Board may hereafter determine to be in
the best interests of ALLTEL and its stockholders. Such purposes could include
the offer of shares for cash, acquisitions, employee benefit programs and
other general corporate purposes. In many situations, prompt action may be
required which would not allow sufficient time to seek stockholder approval to
authorize additional shares for the specific transaction. The terms of any
future issuance of shares of ALLTEL Common Stock will be dependent largely on
market and financial conditions and other factors existing at the time of
issuance. In the Merger Agreement, ALLTEL has agreed unless agreed to in
writing by 360(degrees), not to propose or adopt any amendment to its
corporate charter, and 360(degrees) has provided its written consent to the
Certificate Amendment.
 
  ALLTEL currently has no plans, understandings, agreements or arrangements
concerning the issuance of additional shares of ALLTEL Common Stock, except
for the shares to be issued in connection with the Merger and shares reserved
or to be reserved for issuance by ALLTEL as described herein, including
(without limitation)
 
                                      66
<PAGE>
 
as further described below. ALLTEL expects to continue to pursue acquisition
opportunities consistent with the best interests of ALLTEL and its
stockholders and may, in connection with any such acquisitions, issue
additional shares of ALLTEL Common Stock. In addition, ALLTEL expects to
continue to issue additional shares of ALLTEL Common Stock upon exercise of
options granted under existing stock option plans, and under the Equity
Incentive Plan. If any other plans, understandings, arrangements or agreements
are made concerning the issuance of any such shares, holders of the then
outstanding shares of ALLTEL's capital stock may or may not be given the
opportunity to vote thereon, depending upon the nature of any such
transaction, the law applicable thereto, the policy of the NYSE and the
judgment of the ALLTEL Board. The current rules of the NYSE, however, would
require stockholder approval if the number of shares of ALLTEL Common Stock to
be issued would equal or exceed 20% of the number of shares of ALLTEL Common
Stock outstanding immediately prior to the such issuance.
 
  It is not presently contemplated that additional shares of ALLTEL Common
Stock would be issued for the purpose of making the acquisition by an unwanted
suitor of a controlling interest in ALLTEL more difficult, time-consuming or
costly. However, it should be noted that shares of ALLTEL Common Stock could
be issued for that purpose and to that effect, and the ALLTEL Board reserves
its right (if consistent with its fiduciary responsibilities) to issue ALLTEL
Common Stock for such purpose. For a description of certain antitakeover
effects of the ALLTEL Rights which are attached to the existing ALLTEL Common
Stock and will be attached to any additional shares of ALLTEL Common Stock
when issued, see "DESCRIPTION OF ALLTEL CAPITAL STOCK--Rights Agreement."
 
                  APPROVAL OF THE 1998 EQUITY INCENTIVE PLAN
 
INTRODUCTION
 
  At the ALLTEL Special Meeting, the stockholders of ALLTEL will be asked to
approve the Equity Incentive Plan, which was adopted by the ALLTEL Board on
April 23, 1998, subject to approval by ALLTEL's stockholders.
 
VOTE REQUIRED
 
  The approval of the Equity Incentive Plan requires the affirmative vote of
holders of record on the ALLTEL Record Date of a majority of shares of ALLTEL
Voting Stock (voting together as a single class) present in person or by
proxy, and entitled to vote on such proposal at the ALLTEL Special Meeting.
 
  THE ALLTEL BOARD RECOMMENDS THAT ALLTEL STOCKHOLDERS VOTE IN FAVOR OF THE
EQUITY INCENTIVE PLAN.
 
SUMMARY OF THE 1998 EQUITY INCENTIVE PLAN
 
  The principal terms and provisions of the Equity Incentive Plan are
summarized below. This summary is not a complete description of all of the
terms of the Equity Incentive Plan. A copy of the Equity Incentive Plan is
attached as Annex G to this Joint Proxy Statement/Prospectus. Stockholders
should review the Equity Incentive Plan in its entirety.
 
  Purpose. ALLTEL believes that the Equity Incentive Plan provides key
incentives for ALLTEL to attract new personnel, retain existing personnel and
stimulate personnel towards furthering the interests of ALLTEL and its
stockholders.
 
  Types of Awards. The Equity Incentive Plan permits the granting of any or
all of the following types of awards to employees of ALLTEL: (1) stock
options, including incentive stock options ("ISOs") and options other than
ISOs ("non-qualified options"); (2) stock appreciation rights ("SARs") (either
in tandem with stock options or free-standing); (3) restricted stock; (4)
performance shares conditioned upon meeting performance criteria; and (5)
bonus shares (collectively, the "Awards").
 
                                      67
<PAGE>
 
  Number of Shares. Subject to adjustment as described below, the number of
shares of ALLTEL Common Stock available under the Equity Incentive Plan for
grants of Awards is 9,000,000.
 
  Eligibility. All employees of ALLTEL and its subsidiaries are eligible to be
participants.
 
  Administration. The Equity Incentive Plan is administered by the
Compensation Committee of the ALLTEL Board (the "Committee"). The Committee
has the authority to select employees to whom Awards are granted, to determine
the types of Awards and the number of shares covered and to set the terms,
conditions and provisions of such Awards and to cancel or suspend Awards. The
Committee is authorized to interpret the Equity Incentive Plan, to establish,
amend and rescind any rules and regulations relating to the Equity Incentive
Plan, and to make all determinations which may be necessary or advisable for
the administration of the Equity Incentive Plan.
 
  Power to Amend Equity Incentive Plan. The Board may amend or terminate the
Equity Incentive Plan at any time without the approval of the stockholders of
ALLTEL, except (i) as such stockholder approval may be required by stock
exchange listing requirements and (ii) that no amendment shall be made without
stockholder approval which shall increase the total number of shares available
for issuance under the Equity Incentive Plan.
 
  Stock Options. The exercise price per share of ALLTEL Common Stock
purchasable under any stock option will be determined by the Committee. The
Committee shall determine the term of each stock option (subject to a maximum
of 10 years), and the time or times when it may be exercised. The grant and
the terms of ISOs shall be restricted to the extent required for qualification
as ISOs by the Internal Revenue Code. Options may be exercised by payment of
the exercise price made (i) in cash, (ii) in shares with a fair market value
equal to the exercise price of either ALLTEL Common Stock, or at the
discretion of the Committee, restricted stock, (iii) pursuant to a "cashless
exercise" under an arrangement approved by ALLTEL or (iv) at the discretion of
the Committee, in a promissory note.
 
  Stock Appreciation Rights. An SAR may be granted free-standing or in tandem
with the grant of new options or outstanding non-qualified options. Upon
exercise of an SAR, the holder thereof is entitled to receive the excess of
the fair market value of the shares for which the right is exercised over the
grant price of the SAR. The grant price and other provisions of the SAR shall
be determined by the Committee. Payment by ALLTEL upon such exercise will be
in cash unless the Committee determines that it is to be paid wholly or partly
in ALLTEL Common Stock.
 
  Restricted Stock. Restricted stock may not be disposed of by the recipient
until certain restrictions established by the Committee lapse. Recipients of
restricted stock are not required to provide consideration other than the
rendering of services or the payment of any minimum amount required by law.
The participant shall have all of the rights of a stockholder with respect to
restricted stock, including the right to vote the shares and the right to
receive any dividends, unless the Committee shall otherwise determine. Upon
termination of employment during the restriction period, all restricted stock
shall be forfeited, subject to such exceptions, if any, made by the Committee.
 
  Performance Awards. From time to time, the Committee may select a period
during which one or more performance criteria designated by the Committee are
measured for the purpose of determining the extent to which a performance
award has been earned. The performance criteria which the Committee may
designate are (i) earnings (either in the aggregate or on a per share basis),
(ii) operating income, (iii) cash flow, including EBITDA (earnings before
interest, taxes, depreciation and amortization), (iv) return on equity, (v)
per share rate of return on shares of ALLTEL Common Stock (including
dividends), (vi) market share, (vii) customer retention rates, (viii) market
penetration rates, (ix) revenues, (x) reductions in expense levels, (xi)
indices related to EVA* (economic value added), (xii) general indices relative
to levels of general customer service satisfaction, as measured through
various randomly generated customer service surveys, and (xiii) the attainment
by shares of ALLTEL Common Stock of a specified market value for a specified
period of time.
 
- --------
* EVA is a registered trademark of Stern Stewart & Co.

                                      68
<PAGE>
 
  Performance awards may be in the form of performance shares (valued by
reference to shares of stock), or performance units (valued by reference to
cash or property other than stock). Performance awards may be paid in cash,
ALLTEL Common Stock, other property or a combination thereof. Recipients of
performance awards are not required to provide consideration other than the
rendering of services and any minimum exercise price required by applicable
law.
 
  Bonus Shares. Bonus shares can be awarded to a grantee without cost and
without restrictions or as an incentive to become an employee of ALLTEL or a
subsidiary of ALLTEL.
 
  Adjustments. In the event of any change affecting the shares of ALLTEL
Common Stock by reason of any stock dividend or split, recapitalization,
merger, consolidation, spinoff, combination or exchange of shares or other
corporate change or any distribution to stockholders other than cash
dividends, the Committee shall make such substitution or adjustment in the
aggregate number or class of shares which may be distributed under the Equity
Incentive Plan and in the number, class and option price or other price of
shares subject to the outstanding Awards granted under the Equity Incentive
Plan as it deems to be appropriate in order to maintain the purpose of the
original grant.
 
  Change in Control. Awards granted under the Equity Incentive Plan will vest
upon a change in control of ALLTEL. A change in control of ALLTEL is deemed to
occur if (i) a person (other than ALLTEL or a person acting on behalf of an
ALLTEL employee benefit plan) becomes the beneficial owner of (A) 15% or more,
but not greater than 50%, of the voting capital stock of ALLTEL unless the
Continuing Directors (defined below) approve the subject transaction, or (B)
more than 50% of the voting capital stock of ALLTEL; or (ii) a majority of
Continuing Directors cease to be directors of ALLTEL; or (iii) the ALLTEL
Board fixes a record date for determining stockholders entitled to vote upon
(A) a merger (or similar exchange) of ALLTEL into another company or in which
ALLTEL shares will be exchanged for cash, securities (other than ALLTEL
shares) or other property, (B) the sale of all or substantially all of
ALLTEL's assets, or (C) the dissolution of ALLTEL; or (iv) ALLTEL enters into
any agreement to consummate a transaction specified in (i), (ii), or (iii)
above. "Continuing Directors" means ALLTEL directors who were directors at the
beginning of a 24 month period ending upon a date a determination is made or
whose election or nomination for election by ALLTEL's stockholders was
approved by at least a majority of the directors who are in office at the time
of the election and who either were directors at the beginning of the period
or were elected or nominated for election by at least a majority of directors
who were in office at the time of the election or nomination and were
directors at the beginning of the period.
 
  Other. The Equity Incentive Plan will terminate on April 23, 2008. Awards
(other than ISOs) may be transferred as permitted by the Equity Incentive
Plan. ALLTEL intends to seek to register under the Securities Act the shares
of ALLTEL Common Stock subject to the Equity Incentive Plan and to list such
shares on the New York Stock Exchange and the Pacific Stock Exchange.
 
TAX ASPECTS OF THE EQUITY INCENTIVE PLAN
 
  The following are the federal tax consequences generally arising under
present law with respect to Awards granted under the Equity Incentive Plan.
The grant of an option or SAR will create no tax consequences for a grantee or
ALLTEL. In general, the grantee will have no taxable income upon exercising an
ISO if the applicable ISO holding period is satisfied (except that the
alternative minimum tax may apply), and ALLTEL will receive no income tax
deduction when an ISO is exercised. Upon exercising a non-qualified option or
a SAR, the optionee must recognize ordinary income equal to the difference
between the exercise price and the fair market value of shares of ALLTEL
Common Stock on the date of the exercise; ALLTEL will be entitled to an income
tax deduction for the same amount, subject to the possible applicability of
the $1,000,000 compensation deductibility limit of Section 162(m) of the Code.
Generally, there will be no tax consequence to ALLTEL in connection with a
disposition of shares acquired by exercise of an option, except that ALLTEL
may be entitled to a tax deduction in the case of a disposition of shares
acquired by exercise of an ISO before the applicable ISO holding periods have
been satisfied.
 
 
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<PAGE>
 
  With respect to other Awards granted under the Equity Incentive Plan that
are settled either in cash or in stock or other property that is either
transferable or not subject to substantial risk of forfeiture, the participant
generally must recognize ordinary income equal to the cash or the fair market
value of shares or other property received, and ALLTEL will be entitled to a
deduction for the same amount. With respect to Awards that are settled in
stock or other property that is restricted as to transferability and subject
to substantial risk of forfeiture, the participant generally must recognize
ordinary income equal to the fair market value of the shares or other property
received at the first time the shares or other property become transferable or
not subject to substantial risk of forfeiture, whichever occurs earlier, and
ALLTEL will be entitled to a deduction for the same amount, subject to
possible limitation under Section 162(m) of the Code.
 
EQUITY INCENTIVE PLAN BENEFITS
 
  No options, SARs, shares of restricted stock, performance shares, bonus
shares or other awards have been granted under the Equity Incentive Plan or
are contemplated as of the date of this Joint Proxy Statement/Prospectus.
Grants under the Equity Incentive Plan would be made at the discretion of the
Compensation Committee.
 
                         CERTAIN RELATED TRANSACTIONS
 
  As of the date hereof, neither ALLTEL nor 360(degrees) is aware of any
material relationship between ALLTEL or its directors or executive officers
and 360(degrees) or its directors or executive officers, except as
contemplated by the Merger Agreement or as described herein or in the
documents incorporated by reference herein.
 
  In the ordinary course of their businesses, ALLTEL and 360(degrees) have
entered into reciprocal agreements which allow the customers of one carrier
traveling in the market served by the other carrier to send and receive calls
in the roaming carrier's market. In addition, in ALLTEL's local exchange
markets where 360(degrees) provides cellular service, 360(degrees) and ALLTEL
have entered into interconnection agreements whereby each company compensates
the other company for the use of its network. ALLTEL and 360(degrees) are also
partners in partnerships that provide cellular service in twelve markets in
Florida, Missouri, North Carolina and Texas.
 
  A subsidiary of ALLTEL and 360(degrees) have entered into a five year
Association Agreement dated February 6, 1996. The Association Agreement
provides for the following: (i) technical interoperability of the cellular
systems of ALLTEL and 360(degrees), (ii) the establishment of service
standards of delivery as contemplated by the MobiLink coalition of cellular
carriers, (iii) the establishment of reciprocal wholesale roaming rates
between 360(degrees) and ALLTEL, and (iv) the establishment of fraud
protection specifications.
 
                      DESCRIPTION OF ALLTEL CAPITAL STOCK
 
  The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the DGCL, the ALLTEL Certificate and
the Rights Agreement (defined below). The ALLTEL Certificate and Rights
Agreement are included or incorporated by reference as exhibits to the
Registration Statement of which this Joint Proxy Statement/Prospectus is a
part.
 
GENERAL
 
  The ALLTEL Certificate provides that the authorized capital stock of ALLTEL
consists of 500,000,000 shares of ALLTEL Common Stock, 50,000,000 shares of
ALLTEL Voting Preferred Stock and 50,000,000 shares of cumulative non-voting
preferred stock, no par value (the "ALLTEL Non-Voting Preferred Stock"). If
the ALLTEL stockholders approve the Certificate Amendment, the authorized
capital stock of ALLTEL will consist of 1,000,000,000 shares of ALLTEL Common
Stock, 50,000,000 shares of ALLTEL Voting Preferred Stock and 50,000,000
shares of ALLTEL Non-Voting Preferred Stock. Upon consummation of the Merger,
 
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<PAGE>
 
ALLTEL expects that approximately 274,176,003 shares of ALLTEL Common Stock
will be issued and outstanding (with an additional 19,764,547 shares of ALLTEL
Common Stock reserved), approximately 340,792 shares of ALLTEL Voting
Preferred Stock will be issued and outstanding, and approximately 123,137
shares of ALLTEL Non-Voting Preferred Stock will be issued and outstanding.
 
ALLTEL COMMON STOCK
 
  The holders of the ALLTEL Common Stock are entitled to one vote for each
share owned of record on matters submitted to a vote of stockholders. The
holders of ALLTEL's Common Stock vote as a class together with the holders of
ALLTEL Voting Preferred Stock. Subject to the preferential rights applicable
to the holders of preferred stock, as described below, all shares of ALLTEL
Common Stock rank equally as to participation in any property that may be
available for distribution after satisfaction of all other claims in the event
of liquidation, dissolution or winding up of the affairs of ALLTEL, whether
voluntary or involuntary or otherwise, and as to all dividends declared from
time to time by the ALLTEL Board in its discretion from funds legally
available therefor. The outstanding shares of ALLTEL Common Stock are fully
paid and non-assessable. The ALLTEL Common Stock has no preemptive rights, no
cumulative voting rights and no redemption, sinking fund or conversion
provisions.
 
RIGHTS AGREEMENT
 
  ALLTEL is party to a Rights Agreement (the "Rights Agreement"), dated
January 30, 1997 (the "Dividend Declaration Date") pursuant to which the
ALLTEL Board declared a dividend of one right ("Right") for each share of
ALLTEL Common Stock outstanding at the close of business on February 9, 1997
(the "Record Date") and for each share of ALLTEL Common Stock issued between
the Record Date and the Distribution Date (defined below). Each Right entitles
the registered holder thereof to purchase from ALLTEL, upon the occurrence of
certain events 1/1000 of a share of Series K Cumulative Voting Preferred
Stock, par value $25 per share ("Series K Stock"), of ALLTEL at a price of
$100.00 per 1/1000 of a share (the "Purchase Price"). The number of Rights per
share of ALLTEL Common Stock, the number of shares of Series K Stock for which
each Right is exercisable and the Purchase Price are subject to adjustment as
described below.
 
  The Rights are evidenced by the certificates for the ALLTEL Common Stock
registered in the names of the holders of the ALLTEL Common Stock and not by
separate certificates. Upon the earlier of (i) the close of business on the
tenth business day after the first date of public announcement that any person
(other than ALLTEL, any subsidiary of ALLTEL or any employee benefit plan of
ALLTEL) together with all affiliates and associates (an "Acquiring Person"),
shall be the beneficial owner of 15% or more of the shares of ALLTEL Common
Stock then outstanding, or (ii) the close of business on the tenth business
day after the date that a tender or exchange offer by any person is first
published or sent, if upon consummation thereof, such person would be the
beneficial owner of 15% or more of the shares of ALLTEL Common Stock then
outstanding (the earlier of such dates being called the "Distribution Date"),
the rights agent will transmit to each record holder of the ALLTEL Common
Stock as of the close of business on such Distribution Date a rights
certificate (the "Rights Certificate") evidencing one right for each share of
ALLTEL Common Stock so held, subject to adjustment as described below. The
Rights Agreement provides that, until the Distribution Date, the Rights will
be transferred with and only with the ALLTEL Common Stock. The Rights are not
exercisable until the Distribution Date and will expire at the close of
business on January 31, 2007 (the "Final Right Expiration Date"), unless
earlier redeemed by ALLTEL as described below. In the event any person (other
than ALLTEL, any subsidiary of ALLTEL or any employee benefit plan of ALLTEL)
alone or together with its affiliates and associates, shall, at any time after
the Dividend Declaration Date, become the beneficial owner of 15% of the
shares of ALLTEL Common Stock then outstanding (the "Stock Acquisition Date")
then, promptly following the occurrence of such event, each holder of a Right
shall thereafter have the right to receive, upon exercise of each Right at the
then-current Purchase Price, in lieu of a number of 1/1000 of a share of
Series K Stock, such number of shares of ALLTEL Common Stock having a value
equal to two times the Purchase Price.
 
  If a person becomes a beneficial owner of 15% of the shares of ALLTEL Common
Stock because of an acquisition pursuant to a tender offer or an exchange
offer for all outstanding shares of ALLTEL Common Stock
 
                                      71
<PAGE>
 
at a price and on terms determined by at least a majority of the Rights
Agreement Continuing Directors (defined below) to be in the best interest of
ALLTEL and its stockholders (a "Qualifying Offer"), then Rights holders shall
not be entitled to exercise the Rights. The term "Rights Agreement Continuing
Director" means (i) any member of the ALLTEL Board who is not an Acquiring
Person or an affiliate or associate of such person, and who was a member of
the ALLTEL Board prior to the date of the Rights Agreement, or (ii) any person
who subsequently becomes a member of the ALLTEL Board prior to the date of the
Rights Agreement if the member's election to the ALLTEL Board is recommended
or approved by a majority of the Rights Agreement Continuing Directors.
 
  In the event that, following the Stock Acquisition Date, (i) ALLTEL engages
in a merger or other business combination transaction in which ALLTEL is not
the surviving corporation, (ii) ALLTEL engages in a merger or other business
combination transaction with another person in which ALLTEL is a surviving
corporation, but in which ALLTEL Common Stock is changed or exchanged, or
(iii) 50% or more of ALLTEL's assets or earning power is sold or transferred,
the Rights Agreement provides that a proper provision shall be made so that
each holder of a Right will thereafter have the right to receive, upon
exercise of each Right thereof at the then-current Purchase Price, common
stock of the acquiring company having a value equal to two times the Purchase
Price. The rights set forth in (i) and (ii) of the preceding paragraph shall
not be applicable to a transaction described therein if (x) such transaction
is consummated with a person who acquired shares of ALLTEL Common Stock
pursuant to a Qualifying Offer, (y) the price per share of common stock
offered in such transaction is not less than the price per share of common
stock paid to all holders of shares of ALLTEL Common Stock whose shares were
purchased pursuant to such offer, and (z) the form of consideration being
offered to the remaining holders of shares of ALLTEL Common Stock pursuant to
such transaction is the same as that paid pursuant to such offer.
 
  The Purchase Price payable, and the number of shares of Series K Stock or
other securities or property issuable, upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of,
the Series K Stock, (ii) upon the grant to holders of the Series K Stock of
certain rights or warrants to subscribe for ALLTEL Common Stock or of
convertible securities at less than the current market price of the Series K
Stock, or (iii) upon the distribution to holders of the Series K Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings, and dividends payable in Series K Stock)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at lease 1% in such
Purchase Price.
 
  If ALLTEL, prior to the Distribution Date, (i) declares a dividend on the
outstanding shares of ALLTEL Common Stock payable in shares of ALLTEL Common
Stock (ii) subdivides the outstanding shares of ALLTEL Common Stock, or (iii)
combines the outstanding shares of ALLTEL Common Stock into a smaller number
of shares, then the number of Rights associated with each share of ALLTEL
Common Stock shall be proportionately adjusted in such a manner that the total
number of outstanding Rights is unchanged.
 
  At any time after the date of the Rights Agreement until the close of
business on the tenth business day following the Stock Acquisition Date,
ALLTEL may redeem all (but not less than all) of the Rights at a price of
$0.01 per Right (the "Right Redemption Price"). ALLTEL may, at its option, pay
the Right Redemption Price in cash, ALLTEL Common Stock, or any other form of
consideration deemed appropriate by the ALLTEL Board. Immediately upon the
action of the ALLTEL Board ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Right Redemption Price.
 
  Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of ALLTEL, including, without limitation, the right to vote
or to receive dividends.
 
  Prior to the Distribution Date, ALLTEL may amend any provision of the Rights
Agreement without the approval of the holders of certificates representing
ALLTEL Common Stock. Following the Distribution Date, ALLTEL may amend the
Rights Agreement without the approval of any holders of Rights Certificates in
order
 
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<PAGE>
 
to (i) cure any ambiguity, (ii) correct or supplement any defective or
inconsistent provision, (iii) shorten or lengthen any time period thereunder,
or (iv) change any provisions in the Rights Agreement in any manner which
ALLTEL deems necessary or desirable and which does not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring
Person or its affiliates and associates). However, the Rights Agreement may
not be amended to lengthen a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or any other time
period unless such lengthening is for the purpose of protecting the rights of,
and/or the benefits to, the holders of Rights. Additionally, ALLTEL may not
make any amendment to the Rights Agreement that changes the Redemption Price,
the Final Expiration Date, the Purchase Price or the number of 1/1000 of a
share of Series K Stock for which a Right is exercisable; provided, however,
that at any time prior to the Distribution Date the ALLTEL Board may amend the
Rights Agreement to increase the Purchase Price or extend the Final Expiration
Date.
 
  The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or a group that attempts to acquire ALLTEL
without conditioning the offer on (i) the Rights being redeemed, (ii) a
substantial number of Rights being acquired or (iii) an offer being deemed a
Qualifying Offer under the Rights Agreement. However, the Rights should not
interfere with any merger or business combination in connection with a
Qualifying Offer or that is approved by ALLTEL because the Rights are
redeemable under certain circumstances.
 
ALLTEL PREFERRED STOCK
 
  The ALLTEL Board is authorized from time to time to issue (without the
necessity of obtaining stockholder approval) shares of preferred stock in such
series as it deems appropriate in its discretion, and to fix from time to time
before issuance the number of shares to be included in any such series and the
designation, relative powers, preferences, and rights and qualifications,
limitations or restrictions of all shares of such series, including, without
limitation, voting powers, redemption provisions, dividend rates, rights upon
dissolution, conversion rights and sinking fund provisions. As of the ALLTEL
Record Date, there were a total of 340,792 shares of ALLTEL Voting Preferred
Stock and 123,137 shares of ALLTEL Non-Voting Preferred Stock issued and
outstanding in various series and at various dividend rates and with various
features, including shares which are convertible into shares of ALLTEL Common
Stock and shares of which are redeemable at the option of the holder. ALLTEL
has reserved 500,000 shares of Series K Stock for future issuance under the
Rights Agreement. See "--Rights Agreement" above.
 
  For a more detailed description of ALLTEL's outstanding preferred stock, see
Note 5 to the Consolidated Financial Statements of ALLTEL contained in
ALLTEL's Annual Report to Stockholders for the year ended December 31, 1997,
incorporated by reference into the exhibits to the Registration Statement of
which this Joint Proxy Statement/Prospectus is a part.
 
      COMPARISON OF THE RIGHTS OF STOCKHOLDERS OF ALLTEL AND 360(degrees)
 
  The statements set forth under this heading with respect to the DGCL, the
ALLTEL Certificate, the ALLTEL By-laws, the Amended and Restated Certificate
of Incorporation of 360(degrees), as amended (the "360(degrees) Certificate")
and the Amended and Restated Bylaws of 360(degrees) (the "360(degrees)
Bylaws") (copies of which are included or incorporated by reference as
exhibits to the Registration Statement and are incorporated herein by
reference) are brief summaries thereof and do not purport to be complete. Such
statements are qualified in their entirety by reference to the full text of
the DGCL, the ALLTEL Certificate, the ALLTEL By-laws, the 360(degrees)
Certificate and the 360(degrees) By-laws. See "AVAILABLE INFORMATION."
 
  The following summary compares certain rights of the holders of 360(degrees)
Common Stock to the rights of the holders of ALLTEL Common Stock. The rights
of 360(degrees) stockholders are governed principally by the DGCL, the
360(degrees) Certificate and the 360(degrees) By-laws. Upon consummation of
the Merger, such stockholders will become holders of ALLTEL Common Stock, and
their rights will be governed principally by the DGCL, the ALLTEL Certificate
and the ALLTEL By-laws.
 
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<PAGE>
 
DIVIDEND RIGHTS
 
  Subject to any restrictions contained in a corporation's certificate of
incorporation, Delaware law generally provides that a corporation may declare
and pay dividends out of "surplus" (defined as the excess, if any, of net
assets (total assets less total liabilities) over capital) or, when no surplus
exists, out of net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year, except that dividends may not be
paid out of net profits if the net assets of the corporation are less than the
amount of capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets.
 
  Subject to the preferential rights of holders of preferred stock (of which
there were 340,792 shares of Voting Preferred Stock and 123,137 shares of Non-
Voting Preferred Stock outstanding with respect to ALLTEL and no shares
outstanding with respect to 360(degrees) as of May 4, 1998), the rights of the
360(degrees) stockholders and ALLTEL stockholders with respect to the receipt
of dividends are substantially the same. Both company's debt agreements and
instruments contain certain limitations on the amount of dividends payable to
stockholders. See "SUMMARY--Market Prices and Dividends."
 
VOTING RIGHTS
 
  Each share of 360(degrees) Common Stock and each share of ALLTEL Common
Stock is entitled to one vote per share on all matters submitted to a vote of
stockholders. Except as otherwise may be provided by the DGCL, the holders of
ALLTEL Common Stock vote together as a single class with the holders of the
ALLTEL Voting Preferred Stock.
 
  The directors of both 360(degrees) and ALLTEL are elected by a plurality of
the votes cast if a quorum is present. Except as otherwise provided by the
DGCL, or as described below under the captions "--Vote on Extraordinary
Corporate Transactions" and "--Business Combination Provisions," and provided
a quorum is present, approval of all other matters submitted to a vote of
stockholders of 360(degrees) requires the affirmative vote of a majority of
shares cast by such stockholders, while approval of such matters submitted to
a vote of stockholders of ALLTEL requires the affirmative vote of the majority
of shares present, in person or by proxy, and entitled to vote on such
matters.
 
DIRECTORS
 
  Number and Election of Directors. Under the DGCL, directors, unless their
terms are staggered, are elected at each annual stockholders' meeting.
Vacancies on the board of directors may be filled by the stockholders or
directors, unless the certificate of incorporation or a bylaw provides
otherwise. The certificate of incorporation of a Delaware corporation may
authorize the election of certain directors by one or more classes or series
of shares and the certificate of incorporation, an initial bylaw or a bylaw
adopted by a vote of the stockholders may provide for staggered terms for the
directors. The certificate of incorporation or the bylaws also may allow the
stockholders or the board of directors to fix or change the number of
directors, but a corporation must have at least one director. Under the DGCL,
stockholders do not have cumulative voting rights unless the certificate of
incorporation so provides.
 
  The 360(degrees) Certificate provides that the number of directors of
360(degrees) shall not be less than three nor more than twelve as determined
from time to time by the affirmative vote of the majority of the 360(degrees)
Board. The 360(degrees) Certificate provides for a classified board consisting
of three classes of directors, each class elected for a term of three years.
The 360(degrees) Certificate does not provide for cumulative voting rights. If
the number of directors on the 360(degrees) Board is changed, any increase or
decrease shall be apportioned among the classes as nearly equal as possible
and any additional director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class. Any director elected to fill a
vacancy not resulting from an increase in a class (including vacancies filled
by removal, resignation, death or disqualification of any director) may be
filled by the affirmative vote of the majority of the remaining directors and
any such successor shall have the same remaining term as his or her
predecessor. The 360(degrees) Certificate provides that (i) no person shall be
eligible to stand for election as a director if such person has been convicted
 
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<PAGE>
 
of a felony by a court of competent jurisdiction where such conviction is no
longer subject to direct appeal, (ii) if such person is an "alien" and such
person's service would result in the total number of aliens on the
360(degrees) Board to exceed the maximum number of aliens allowed to serve
under Section 310 of the Communications Act, or (iii) if a determination is
made by Continuing Director Action (defined below) that such person's service
on the 360(degrees) Board could reasonably be anticipated to cause or result
in the loss, or prevent the reinstatement or renewal, of any license or
franchise from any governmental agency held by 360(degrees) or its
subsidiaries. The 360(degrees) By-laws provide that nominations of persons for
election to the 360(degrees) Board of Directors at a meeting of stockholders
may be made by or at the direction of the 360(degrees) Board or by any
stockholder, provided that, the stockholder gives timely notice thereof (such
notice being in proper form) to the 360(degrees) Secretary. To be timely, a
stockholder's notice of nomination must be received by 360(degrees) not less
than 50 nor more than 75 days prior to the date set for the meeting; provided,
however, that in the event that less than 65 days' prior notice or public
disclosure of the date of the meeting is given or made to the 360(degrees)
stockholders, notice by the stockholder to be timely must be received within
15 days after the notice of the date of the meeting was mailed or such public
disclosure was made.
 
  The ALLTEL Bylaws also provide for a classified board consisting of three
classes of directors with each class being elected for a term of three years.
ALLTEL stockholders do not have cumulative voting rights. The number of
directors in each class may be fixed or changed from time to time by either
(i) a majority of stockholders represented and entitled to vote at a meeting
called for the purpose of electing directors or (ii) the affirmative vote of
the majority of directors then in office. Vacancies resulting from increases
in the size of any class of directors or otherwise from the removal,
resignation, death or disqualification of any director shall be filled in the
same manner as vacancies filled on the 360(degrees) Board. The ALLTEL Bylaws
also provide that no person shall be elected as a director of ALLTEL in or
after the calendar year in which he or she attains the age of 70, nor shall
any such director be qualified to serve as a director beyond the annual
meeting of stockholders next following his or her attainment of age 70. The
ALLTEL Bylaws provide that nominations of persons for election to ALLTEL's
Board at a meeting of stockholders may be made by or at the direction of the
ALLTEL Board or by any stockholder, provided that, the stockholder gives
timely notice thereof (such notice being in proper form) to ALLTEL's
Secretary. To be timely, a stockholder's notice of nomination must be received
by ALLTEL not less than 90 nor more than 120 days prior to the one year
anniversary of the annual meeting in the immediately preceding year.
 
CALL OF SPECIAL MEETINGS
 
  The 360(degrees) By-laws provide that special meetings of stockholders may
be called at any time and place only by the Chairman, President or the
360(degrees) Board. The ALLTEL Bylaws contain a substantially similar
provision. A special meeting of the stockholders of either 360(degrees) or
ALLTEL may be called for any purpose or purposes.
 
ACTION BY STOCKHOLDERS WITHOUT A MEETING
 
  Both the 360(degrees) Certificate and ALLTEL Certificate provide that
stockholders may act on matters by written consent, in lieu of voting on such
matter at an annual or special meeting of stockholders, only if such written
consent is unanimous.
 
STOCKHOLDER PROPOSALS
 
  The 360(degrees) By-laws provide that for business to be brought at any
meeting, such business must be either (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the 360(degrees)
Board, (b) otherwise properly brought before the meeting at the direction of
the 360(degrees) Board or (c) otherwise properly brought before the meeting by
a stockholder. To be properly brought before a meeting by a stockholder, the
stockholder must give timely notice thereof (such notice being in proper form)
to the 360(degrees) Secretary. To be timely, a stockholder's notice must be
received by 360(degrees) not less than 50 nor more than 75 days prior to the
date set for the meeting; provided, however, that in the event that less than
65 days' prior notice or public disclosure of the date of the meeting is given
or made to the 360(degrees) stockholders, notice by the stockholder to be
timely must be received within 15 days after the notice of the date of the
meeting was mailed or such public disclosure was made.
 
                                      75
<PAGE>
 
  The ALLTEL By-laws provide that for the business to be brought at any annual
meeting such business must be either (a) in accordance with a notice of annual
meeting, (b) by or at the direction of the ALLTEL Board or (c) otherwise
properly brought before the annual meeting by a stockholder. To be properly
brought before an annual meeting by a stockholder, the stockholder must give
timely notice thereof (such notice being in proper form) to ALLTEL's
Secretary. To be timely, a stockholder's notice must be received by ALLTEL not
less than 90 nor more than 120 days prior to the one year anniversary of the
annual meeting in the immediately preceding year. Other than the limitations
described above relating to the call of special meetings, ALLTEL's Bylaws
contain no provision regarding the manner in which actions may be brought by
stockholders before a special meeting.
 
VOTE ON EXTRAORDINARY CORPORATE TRANSACTIONS
 
  Under the DGCL, unless a greater vote of stockholders is required by a
corporation's certificate of incorporation or unless the provisions of the
DGCL relating to "business combinations" (See "--Business Combination
Restrictions--Delaware Anti-Takeover Statute" below) are applicable, a sale,
lease or exchange of all or substantially all of a corporation's assets, a
merger, or consolidation of a corporation with another corporation or a
dissolution of a corporation, requires the affirmative vote of the board of
directors (except in certain limited circumstances), plus with certain
exceptions the affirmative vote of a majority of the outstanding stock
entitled to vote thereon. Except for certain provisions contained in the
ALLTEL Certificate relating to "business combinations," the foregoing
provisions are applicable to ALLTEL. See "--Business Combination
Restrictions--Fair Price Provisions" below.
 
  The 360(degrees) Certificate contains a provision which provides that any
merger or consolidation of 360(degrees) or any sale, lease or exchange of all
or substantially all of the property and assets of 360(degrees) shall not be
consumated without (i) the affirmative vote of the holders of at least two-
third's of the combined voting power of the then outstanding shares of stock
of all classes and series of the 360(degrees) and (ii) the affirmative vote of
a majority of "Disinterested Stockholders" (as defined below), unless such
transaction either (a) is approved by "Continuing Director Action" (defined
below) or (b) involves 360(degrees) and a subsidiary of 360(degrees) none of
whose stock is beneficially owned by a 360(degrees) Interested Stockholder
(defined below). In addition to the foregoing, 360(degrees)'s ability to
engage in these types of transactions may also be restricted by certain
provisions of the DGCL and the 360(degrees) Certificate relating to
360(degrees) Business Combinations (defined below). See "--Business
Combination Restrictions--Fair Price Provisions" below.
 
RIGHTS PLAN
 
  The 360(degrees) Board has previously adopted a rights plan pursuant to
which 360(degrees) distributed a dividend of one right (a "360(degrees)
Right") to purchase certain shares of capital stock of 360(degrees) under
certain circumstances, for each outstanding share of 360(degrees) Common Stock
(the "360(degrees) Rights Plan"). The 360(degrees) Rights are currently traded
with the 360(degrees) Common Stock and detach and become exercisable only if,
in a transaction not approved by the 360(degrees) Board a person or entity
acquires 15% or more of the outstanding shares of the 360(degrees) Common
Stock or announces a tender offer the consummation of which would result in
ownership by a person or group of 15% or more of such shares.
 
  Once the 360(degrees) Rights detach and become exercisable, unless
subsequently redeemed, each 360(degrees) Right then entitles its holder to
purchase one one-hundredth of a share of First Series Junior Participating
Preferred Stock (the "First Series Preferred Stock"), for an exercise price of
$100.00, subject to certain adjustments. If 360(degrees) is involved in a
merger or other business combination transaction after the 360(degrees) Rights
become exercisable, each 360(degrees) Right will entitle its holder to
purchase, for the 360(degrees) Right's exercise price, a number of the
acquiring or surviving company's shares of common stock having a market value
equal to twice the exercise price. 360(degrees) will be entitled to redeem the
360(degrees) Rights at $.01 per 360(degrees) Right at any time until ten
business days following a public announcement that a person or group of
persons has acquired beneficial ownership of 15% or more of the outstanding
shares of 360(degrees) Common Stock ("Acquiring Person"); provided, however,
that a person who acquires beneficial ownership of 15% or more of the
outstanding shares of 360(degrees) Common Stock solely as a result
 
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<PAGE>
 
of repurchases by 360(degrees) of 360(degrees) Common Stock is not considered
an Acquiring Person under the 360(degrees) Rights Plan unless such person
purchases or otherwise becomes the beneficial owner of an additional 1% of the
then outstanding shares of 360(degrees) Common Stock. Following such an
announcement, or, subject to certain exceptions, the acquisition of beneficial
ownership of 15% or more of the outstanding shares of 360(degrees) Common
Stock by the Acquiring Person or certain related persons, the 360(degrees)
Rights acquired by such person or persons shall be null and void. Prior to the
date upon which the 360(degrees) Rights detach, the terms of the 360(degrees)
Rights Plan may be amended by the 360(degrees) Board without the consent of
the holders of the 360(degrees) Rights. The 360(degrees) Rights will expire in
2006, unless earlier redeemed by 360(degrees).
 
  Effective March 16, 1998, the 360(degrees) Board amended the 360(degrees)
Rights Plan to (i) exclude from the definition of Acquiring Person, ALLTEL and
its affiliates; provided that, ALLTEL or any of its affiliates does not
acquire beneficial ownership of 15% or more of the outstanding shares of
360(degrees) Common Stock other than pursuant to the Merger Agreement or the
Option Agreement and (ii) amend the expiration date of the 360(degrees) Rights
to the earlier of March 5, 2006 and the time immediately prior to the
Effective Time.
 
  The 360(degrees) Rights Plan is not intended to deter all takeover bids for
360(degrees). To the extent an acquirer is discouraged by the 360(degrees)
Rights Plan from acquiring an equity position in 360(degrees), 360(degrees)
stockholders may be deprived from receiving a premium for their shares. The
issuance of additional shares of the 360(degrees) Common Stock prior to the
time the 360(degrees) Rights become exercisable will result in an increase in
the number of 360(degrees) Rights outstanding.
 
  The First Series Preferred Stock, if issued, will rank junior to all other
series of 360(degrees)'s preferred stock, $0.01 par value (the "360(degrees)
Preferred Stock"), none of which such series were outstanding as of the date
of this Proxy Statement/Prospectus, as to the payment of dividends and the
distribution of assets in liquidation, unless the terms of any such other
series shall provide otherwise. Each share of the First Series Preferred Stock
will have a quarterly dividend rate per share equal to the greater of $1.00 or
100 times the per share amount of any dividend (other than a dividend payable
in shares of 360(degrees) Common Stock or a subdivision of 360(degrees) Common
Stock) declared from time to time on the 360(degrees) Common Stock, subject to
certain adjustments. The holders of the First Series Preferred Stock will be
entitled to receive a preferred liquidation payment per share of $10.00 (plus
accrued and unpaid dividends) or, if greater, an amount equal to 100 times the
payment to be made per share of the 360(degrees) Common Stock. Generally, the
holder of each share of the First Series Preferred Stock will vote together
with the 360(degrees) Common Stock (and any other series of the 360(degrees)
Preferred Stock entitled to vote on such matter) on any matter as to which the
360(degrees) Common Stock is entitled to vote, including the election of
directors. The holder of each share of the First Series Preferred Stock will
be entitled to 100 votes. In the event of any merger, consolidation,
combination or other transaction in which shares of 360(degrees) Common Stock
are exchanged for or changed into other stock, securities, cash and/or
property, the holder of each share of the First Series Preferred Stock will be
entitled to receive 100 times the aggregate amount of stock, securities, cash
and/or property into which or for which each share of 360(degrees) Common
Stock is changed or exchanged. The foregoing dividend, voting and liquidation
rights of the First Series Preferred Stock are protected against dilution in
the event that additional shares of the 360(degrees) Common Stock are issued
pursuant to a stock split or stock dividend. Because of the nature of the
First Series Preferred Stock's dividend, voting, liquidation and other rights,
the value of the one one-hundredths of a share of the First Series Preferred
Stock purchasable with each 360(degrees) Right is intended to approximate the
value of two shares of 360(degrees) Common Stock.
 
  The foregoing summary descriptions of the 360(degrees) Rights and the
360(degrees) Rights Plan do not purport to be complete and are qualified in
their entirety by reference to the 360(degrees) Rights Agreement, dated as of
March 5, 1996, between 360(degrees) and Chemical Bank, as rights agent, and
the First Amendment to 360(degrees) Rights Agreement dated as of March 16,
1998 between 360(degrees) and The Chase Manhattan Bank, as successor in
interest to Chemical Bank, as rights agent.
 
  For a description of the ALLTEL Rights Agreement, see "DESCRIPTION OF ALLTEL
CAPITAL STOCK--Rights Agreement."
 
 
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<PAGE>
 
BUSINESS COMBINATION RESTRICTIONS
 
  Delaware Anti-Takeover Statute. Section 203 of the DGCL, a statutory
provision restricting business combinations with certain interested
stockholders (defined as persons who beneficially own or acquire 15% or more
of a Delaware corporation's voting stock, with the exception of any person who
owned and has continued to own shares in excess of the 15% limitation since
December 23, 1987, hereinafter a "Section 203 Interested Stockholder") is
applicable to both 360(degrees) and ALLTEL. Section 203 prohibits certain
business combination transactions (defined broadly to include mergers,
consolidations, sales or other disposition of assets having an aggregate value
in excess of 10% of the consolidated assets of the corporation, and certain
transactions that would increase a Section 203 Interested Stockholder's
proportionate share ownership in the corporation, hereinafter a "Section 203
Business Combination") between a publicly held Delaware corporation and any
Section 203 Interested Stockholder for a period of three years after the date
on which the Section 203 Interested Stockholder became an interested
stockholder, unless (a) prior to that date the corporation's board of
directors approved either the proposed business combination or the transaction
which resulted in the Section 203 Interested Stockholder becoming an
interested stockholder, (b) upon consummation of the transaction which
resulted in the Section 203 Interested Stockholder becoming an interested
stockholder, the Section 203 Interested Stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are directors and also
officers and (ii) by employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer, or (c) on or
subsequent to such date the business combination is approved by the
corporation's board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote
of at least two-thirds of the outstanding voting stock which is not owned by
the Section 203 Interested Stockholder. The 360(degrees) Board has taken all
necessary and appropriate action to render Section 203 inapplicable to the
approval, execution and delivery of the Merger Agreement and the Option
Agreement and the consummation of the transactions contemplated thereby,
including the Merger.
 
  Fair Price Provisions. In addition to the provisions of Section 203, each of
the 360(degrees) Certificate and ALLTEL Certificate contain certain "fair
price" provisions which impose further conditions on the consummation of
business combination transactions.
 
  The 360(degrees) Certificate contains a provision (the "360(degrees) Fair
Price Provision") that requires the approval by (i) the holders of at least
80% of the voting power of the outstanding shares of any class of stock of
360(degrees) entitled to vote generally in the election of directors and (ii)
a majority of the voting power of outstanding shares held by Disinterested
Stockholders as a condition for certain 360(degrees) Business Combinations
(defined below) involving 360(degrees) and a 360(degrees) Interested
Stockholder or its Affiliates or Associates (defined below), or in which a
360(degrees) Interested Stockholder or its Affiliates or Associates has an
interest, unless (a) the 360(degrees) Business Combination is approved by at
least a majority of 360(degrees) Continuing Directors (defined below) by
Continuing Director Action (defined below) or (b) certain minimum price and
procedural requirements are met. A "360(degrees) Business Combination" is
defined to mean: (i) any merger or consolidation of 360(degrees) or any
subsidiary; (ii) any sale, lease, exchange, mortgage, pledge, transfer, or
other disposition (in one transaction or a series of transactions) of any
assets of 360(degrees) or any subsidiary having an aggregate fair market value
equal to the greater of $1,000,000 or more, or 5% or more of the consolidated
stockholders' equity of 360(degrees) as shown in the most recent audited
consolidated balance sheet of 360(degrees) (the "360(degrees) Equity"); (iii)
the issuance, sale or transfer by 360(degrees) or any subsidiary (in one
transaction or a series of transactions) of any securities of 360(degrees) or
any subsidiary in exchange for cash, securities or other property (or a
combination thereof) having an aggregate fair market value equal to the
greater of $1,000,000 or more, or 5% or more of the 360(degrees) Equity; (iv)
the adoption of any plan or proposal for the liquidation or dissolution of
360(degrees) proposed by or on behalf on any 360(degrees) Interested
Stockholder or any Affiliate or Associate of any 360(degrees) Interested
Stockholder; or (v) any reclassification of securities (including any reverse
stock split), or recapitalization of 360(degrees), or any merger or
consolidation of 360(degrees) with any of its subsidiaries, or any other
transaction which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class or series of stock
or securities convertible into stock of 360(degrees) or any subsidiary
 
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<PAGE>
 
which is directly or indirectly beneficially owned by any 360(degrees)
Interested Stockholder or any Affiliate or Associate of any 360(degrees)
Interested Stockholder.
 
  A "360(degrees) Interested Stockholder" is any person who or which together
with its Affiliates and Associates is (a) the beneficial owner, directly or
indirectly, of 10% or more of the combined voting power of the then
outstanding shares of voting stock of 360(degrees); or (b) is an Affiliate of
the 360(degrees) and at any time within the two-year period immediately prior
to the date in question was the beneficial owner, directly or indirectly, of
10% or more of the combined voting power of the then outstanding shares of
voting stock of 360(degrees); or (c) is an assignee of or has otherwise
succeeded to the beneficial ownership of any shares of voting stock of
360(degrees) which were at any time within the two-year period immediately
prior to the date in question beneficially owned by any 360(degrees)
Interested Stockholder, if such assignment or succession shall have occurred
in the course of a transaction or series of transactions not involving a
public offering. A "Disinterested Stockholder" is any stockholder other than a
360(degrees) Interested Stockholder or its Affiliates and Associates.
"360(degrees) Continuing Director" is any member of 360(degrees) Board in
office at the applicable time who is unaffiliated with, and not a nominee of,
the 360(degrees) Interested Stockholder and was a member of the 360(degrees)
Board prior to the time that the 360(degrees) Interested Stockholder became an
interested stockholder. "Continuing Director Action" means an action taken
which is approved by a majority of the 360(degrees) Continuing Directors at a
meeting of directors at which at least 80% of the 360(degrees) Continuing
Directors then in office are present. The 360(degrees) Board has taken all
necessary and appropriate action to render the 360(degrees) Fair Price
Provision inapplicable to the approval, execution and delivery of the Merger
Agreement and the Option Agreement and the consummation of the transactions
contemplated thereby, including the Merger.
 
  The ALLTEL Certificate also contains a fair price provision (the "ALLTEL
Fair Price Provision") that requires the approval by the holders of at least
85% of the voting power of the outstanding shares of any class of stock of
ALLTEL entitled to vote generally in the election of directors as a condition
for all Section 203 Business Combinations involving ALLTEL and a Section 203
Interested Stockholder; unless (a) subsequent to the Section 203 Interested
Stockholder becoming an interested stockholder such Section 203 Interested
Stockholder shall (i) have taken steps to ensure the ALLTEL Continuing
Directors (as defined) maintain representation on the ALLTEL Board
proportionate to the stockholdings of the holders of ALLTEL Voting Stock not
affiliated with the Section 203 Interested Stockholder, (ii) the Section 203
Interested Stockholder shall not have acquired newly issued securities for
ALLTEL (except in certain limited circumstances) and (iii) the Section 203
Interested Stockholder shall not have acquired any additional outstanding
voting stock, or securities convertible into voting stock, except as part of
the transaction that resulted in the Section 203 Interested Stockholder
becoming an interested stockholder, and (b) certain minimum price and other
procedural requirements are met in connection with the proposed transaction
with the Section 203 Interested Stockholder. ALLTEL Continuing Directors is
defined as any person who was a member of the ALLTEL Board and elected by
stockholders prior to the time when the Section 203 Interested Stockholder
acquired in excess of 5% of the voting stock of ALLTEL, or any person
recommended to succeed a ALLTEL Continuing Director by a majority of the
ALLTEL Continuing Directors.
 
  Although neither Section 203, nor the 360(degrees) Fair Price Provision or
ALLTEL Fair Price Provision or ALLTEL Certificate, would preclude the holders
of a controlling interest from exercising control over 360(degrees) or ALLTEL
and would not prevent a hostile takeover or hostile acquisition of control of
360(degrees) or ALLTEL, such provisions may have the effect of discouraging or
making more difficult a hostile takeover or acquisition of control.
 
RIGHTS OF APPRAISAL
 
  The DGCL provides for appraisal rights only in the case of certain mergers
or consolidations and not (unless the certificate of incorporation of a
corporation so provides, which neither the 360(degrees) Certificate nor the
ALLTEL Certificate does) in the case of other mergers, a sale or transfer of
all or substantially all of its assets or an amendment to its certificate of
incorporation. Moreover, the DGCL does not provide appraisal rights in
connection with a merger or consolidation (unless the certificate of
incorporation so provides, which neither the 360(degrees) Certificate nor the
ALLTEL Certificate does) to the holders of shares of a constituent corporation
listed on
 
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<PAGE>
 
a national securities exchange (or designated as a national market system
security by the National Association of Securities Dealers, Inc.) or held of
record by more than 2,000 stockholders, unless the applicable agreement of
merger or consolidation requires the holders of such shares to receive, in
exchange for such shares, any property other than shares of stock of the
resulting or surviving corporation, shares of stock of any other corporation
listed on a national securities exchange (or designated as described above) or
held of record by more than 2,000 holders, cash in lieu of any fractional
shares or any combination of the foregoing. In addition, the DGCL denies
appraisal rights to the stockholders of the surviving corporation in a merger
if such merger did not require for its approval the vote of the stockholders
of such surviving corporation. The holders of 360(degrees) Common Stock will
not be entitled to receive appraisal rights in connection with the Merger.
 
SPECIAL REDEMPTION PROVISIONS
 
  Under the DGCL, a corporation may purchase or, if so provided in the
corporation's certificate of incorporation, redeem shares of any class of its
capital stock, but subject generally to the availability of sufficient lawful
funds therefor and provided that at all times, at the time of any such
redemption, the corporation generally must have outstanding shares of one or
more classes or series of capital stock which have full voting rights that are
not subject to redemption. The 360(degrees) Certificate provides that
outstanding shares of stock of 360(degrees) held by "Disqualified Holders" are
subject to redemption to the extent necessary, in the judgment of the
360(degrees) Board, to prevent the loss or secure the renewal or reinstatement
of any license or franchise from any governmental agency held by 360(degrees)
or any of its subsidiaries. The redemption price shall be the highest closing
price of such stock on the NYSE for the 30 calendar day period immediately
preceding the redemption date. A "Disqualified Holder" is defined as any
person whose holding of shares of stock of 360(degrees), either individually
or when taken together with the holding of shares of stock of 360(degrees) by
any other persons, may result, in the judgment of the 360(degrees) Board, in
the loss of or the failure to secure the reinstatement or renewal of, any
license or franchise from any governmental agency held by the 360(degrees) or
any of its subsidiaries to conduct any portion of the business of 360(degrees)
or any of its subsidiaries. No similar redemption provision is contained in
the ALLTEL Certificate.
 
PREEMPTIVE RIGHTS
 
  Unless specifically provided for in a corporation's certificate of
incorporation, the DGCL does not provide for stockholder preemptive rights.
Neither the 360(degrees) Certificate, nor the ALLTEL Certificate, provides for
preemptive rights.
 
LIMITATION OF LIABILITY
 
  Section 102(b)(7) of the DGCL allows a Delaware corporation to limit or
eliminate the personal liability of directors to a corporation and its
stockholders for monetary damages for breach of fiduciary duty as a director,
subject to certain limitations. The 360(degrees) Certificate and the ALLTEL
Certificate provide for the limitation of liability as permitted by Section
102(b)(7).
 
  While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate
such duty. Accordingly, these provisions will have no effect on the
availability of equitable remedies such as an injunction or rescission based
on a director's breach of his or her duty of care. Also, these provisions do
not eliminate or limit the liability of a director for breach of the duty of
loyalty, acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, unlawful dividends or stock
repurchases, or any transaction from which the director derived an improper
personal benefit. The provisions described above apply to an officer of a
corporation only if he or she is a director of such corporation and is acting
in his or her capacity as director, and do not apply to officers of the
corporation who are not directors.
 
INDEMNIFICATION OF OFFICERS AND DIRECTORS
 
  Section 145 of the DGCL provides that a Delaware corporation may indemnify
its officers and directors who are a party, or threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding by reason
of the fact that he or she is or was a director, officer, or employee of the
corporation by,
 
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<PAGE>
 
among other things, a majority vote of directors who were not parties to such
action, suit or proceeding (whether or not a quorum), provided that such
officers and directors acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation. The
360(degrees) Certificate, the 360(degrees) By-laws, and the ALLTEL Certificate
each provide for indemnification of officers and directors to the fullest
extent permitted by Section 145 of the DGCL.
 
LIQUIDATION RIGHTS
 
  The rights of the holders of 360(degrees) Common Stock upon the liquidation
or dissolution of 360(degrees) are substantially the same as the holders of
ALLTEL Common Stock upon the liquidation or dissolution of ALLTEL. See
"DESCRIPTION OF ALLTEL CAPITAL STOCK--ALLTEL Common Stock."
 
AMENDMENT TO CERTIFICATE OF INCORPORATION
 
  Under the DGCL, unless a higher vote is required in the certificate of
incorporation of a corporation, an amendment to such certificate of
incorporation generally may be approved by a majority of the outstanding
shares entitled to vote on the proposed amendment. Notwithstanding any
provision of a corporation's certificate of incorporation to the contrary,
pursuant to Section 242(b) of the DGCL, holders of a class of a corporation's
stock are entitled to vote as a class on the approval and adoption of any
amendment to the corporation's certificate of incorporation which would: (i)
increase or decrease the aggregate number of authorized shares of such class;
(ii) increase or decrease the par value of the shares of such class; or (iii)
alter or change the powers, preferences or rights of such class so as to
affect them adversely.
 
  Under the 360(degrees) Certificate, the affirmative vote of the holders of
not less than (i) two-thirds (66 2/3%) of the combined voting power of the
outstanding shares of voting stock of 360(degrees) is required to amend, among
other things, the provisions relating to the calling of special meetings,
shareholder actions by unanimous written consent, classification of the
360(degrees) Board, special redemptions, approval of mergers and assets sales,
and certain amendments to the 360(degrees) Certificate which are inconsistent
with the 360(degrees) By-laws and (ii) 80% of the combined voting power of the
outstanding shares of voting stock of 360(degrees) (unless approved by
Continuing Director Action), plus a majority of Disinterested Stockholders, is
necessary to approve an amendment to the 360(degrees) Fair Price Provision.
 
  Under the ALLTEL Certificate, the affirmative vote of the holders of at
least 85% of the voting stock of ALLTEL shall be required to approve an
amendment to the ALLTEL Fair Price Provision, unless such amendment is
recommended to ALLTEL stockholders by a majority of the members of the ALLTEL
Board and two-thirds of the ALLTEL Continuing Directors.
 
AMENDMENT TO BY-LAWS
 
  The 360(degrees) By-laws and the ALLTEL By-laws may each be altered, amended
or repealed by the stockholders of 360(degrees) or ALLTEL, respectively, or by
the respective boards of directors of 360(degrees) or ALLTEL. New by-laws may
also be adopted by the stockholders of either corporation and by either
corporation's board of directors. The alteration, amendment or repeal of the
360(degrees) By-laws or the ALLTEL By-laws, as the case may be, or the
adoption of new by-laws, can be effected at any annual meeting of
stockholders, any meeting of the 360(degrees) Board or the ALLTEL Board,
respectively, or at any special meeting of the stockholders of either
corporation.
 
                          CERTAIN PENDING LITIGATION
 
  In March 1998, 360(degrees) and all of its current directors were named as
defendants in two complaints filed in the Court of Chancery in the State of
Delaware. A third complaint was filed in April 1998. The complaints were
brought by purported stockholders of 360(degrees), individually and
purportedly as class actions on behalf of all other stockholders of
360(degrees). The complaints allege breaches of fiduciary duty by
360(degrees)'s directors in connection with the Merger and seek to enjoin the
consummation of the Merger and other unspecified damages. The defendants
believe the complaints to be without merit and 360(degrees) does not believe
that these proceedings will have a material adverse effect on the results of
operations or financial position of 360(degrees).
 
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<PAGE>
 
                                 LEGAL MATTERS
 
  Certain legal matters in connection with the ALLTEL Common Stock to be
issued in connection with the Merger will be passed upon for ALLTEL by Kutak
Rock. Certain tax matters with respect to the Merger will be passed upon for
ALLTEL by Skadden, Arps, Slate, Meagher and Flom LLP, special tax counsel to
ALLTEL. Certain tax matters in connection with the Merger will be passed upon
for 360(degrees) by Sonnenschein Nath & Rosenthal, special tax counsel to
360(degrees). Certain partners of Kutak Rock's Little Rock office (the
location of attorneys participating on ALLTEL's behalf) beneficially owned as
of May 6, 1998 14,260 shares of ALLTEL Common Stock.
 
            SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
  Section 16(a) of the Exchange Act requires ALLTEL's directors and executive
officers, and persons who own more than ten percent of the outstanding shares
of ALLTEL Common Stock, to file with the SEC and the NYSE initial reports of
ownership and reports of changes in ownership of ALLTEL Common Stock. To
ALLTEL's knowledge, based solely upon a review of copies of reports provided
by those individuals to ALLTEL and written representations of those
individuals that no other reports were required with respect to the year ended
December 31, 1997, ALLTEL believes that all of the foregoing filing
requirements applicable to its directors, executive officers, and greater-
than-ten percent beneficial owners have been met.
 
                                    EXPERTS
 
  The consolidated financial statements and schedule of ALLTEL as of December
31, 1997, and for each of the years in the five-year period ended December 31,
1997, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included in ALLTEL's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, and are incorporated herein by reference, in reliance upon
the authority of such firm as experts in accounting and auditing in giving
said reports.
 
  The consolidated financial statements and schedule of 360(degrees) appearing
in the 360(degrees) 1997 Form 10-K have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference which, as to certain equity investees of
360(degrees) (GTE Mobilnet of South Texas Limited Partnership, New York SMSA
Limited Partnership, Orlando SMSA Limited Partnership and Chicago MSA Limited
Partnership) is based in part on the reports of other independent auditors.
The financial statements and schedule of 360(degrees) referred to above are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
 
 
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<PAGE>
 
                                                                         ANNEX A
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                          AGREEMENT AND PLAN OF MERGER
 
                                     AMONG
 
                              ALLTEL CORPORATION,
 
                           PINNACLE MERGER SUB, INC.
 
                                      AND
 
                      360(degrees) COMMUNICATIONS COMPANY
 
                           DATED AS OF MARCH 16, 1998
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
 
                               TABLE OF CONTENTS
 
                                   ARTICLE I
                                   The Merger
<TABLE>
 <C>           <S>                                                         <C>
 Section 1.1.  The Merger................................................    1
 Section 1.2.  Closing...................................................    1
 Section 1.3.  Effective Time............................................    1
 Section 1.4.  Effects of the Merger.....................................    2
               Certificate of Incorporation and By-Laws of the Surviving
 Section 1.5.  Corporation...............................................    2
 Section 1.6.  Directors.................................................    2
 Section 1.7.  Officers..................................................    2
                                   ARTICLE II
                 Conversion of Shares; Exchange of Certificates
 Section 2.1.  Effect on Stock...........................................    2
 Section 2.2.  Exchange of Certificates..................................    2
                                  ARTICLE III
                 Representations and Warranties of The Company
 Section 3.1.  Organization, Qualification, Etc..........................    5
 Section 3.2.  Capital Stock.............................................    5
               Corporate Authority Relative to this Agreement; No
 Section 3.3.  Violation.................................................    6
 Section 3.4.  Reports and Financial Statements..........................    7
 Section 3.5.  No Undisclosed Liabilities................................    8
 Section 3.6.  No Violation of Law.......................................    8
 Section 3.7.  Environmental Laws and Regulations........................    8
               No Undisclosed Employee Benefit Plan Liabilities or
 Section 3.8.  Severance Arrangements....................................    8
 Section 3.9.  Absence of Certain Changes or Events......................    9
 Section 3.10. Investigations; Litigation................................    9
               Joint Proxy Statement; Registration Statement; Other
 Section 3.11. Information...............................................    9
 Section 3.12. The Company Rights Plan...................................    9
 Section 3.13. Lack of Ownership of Parent Common Stock..................    9
 Section 3.14. Tax Matters...............................................   10
 Section 3.15. Opinion of Financial Advisor..............................   11
 Section 3.16. Required Vote of the Company Stockholders.................   11
 Section 3.17. Material Contracts........................................   11
 Section 3.18. Takeover Statute..........................................   11
 Section 3.19. Finders or Brokers........................................   11
 Section 3.20. Pooling of Interests......................................   11
                                   ARTICLE IV
                    Representations and Warranties of Parent
 Section 4.1.  Organization, Qualification, Etc..........................   12
 Section 4.2.  Capital Stock.............................................   12
               Corporate Authority Relative to this Agreement; No
 Section 4.3.  Violation.................................................   13
 Section 4.4.  Reports and Financial Statements..........................   13
 Section 4.5.  No Undisclosed Liabilities................................   14
 Section 4.6.  No Violation of Law.......................................   14
 Section 4.7.  Environmental Laws and Regulations........................   14
               No Undisclosed Employee Benefit Plan Liabilities or
 Section 4.8.  Severance Arrangements....................................   14
 Section 4.9.  Absence of Certain Changes or Events......................   14
</TABLE>
 
                                      A-i
<PAGE>
 
<TABLE>
 <C>           <S>                                                         <C>
 Section 4.10. Investigations; Litigation................................   15
               Joint Proxy Statement; Registration Statement; Other
 Section 4.11. Information...............................................   15
 Section 4.12. Lack of Ownership of the Company Common Stock.............   15
 Section 4.13. Required Vote of Parent Stockholders......................   15
 Section 4.14. Finders or Brokers........................................   15
 Section 4.15. Pooling of Interests......................................   15
 Section 4.16. Opinions of Financial Advisors............................   15
 Section 4.17. Tax Matters...............................................   16
 Section 4.18. Material Contracts........................................   16
                                   ARTICLE V
                            Covenants and Agreements
 Section 5.1.  Conduct of Business by the Company or Parent..............   16
 Section 5.2.  Investigation.............................................   19
 Section 5.3.  Joint Proxy Material; Registration Statement..............   19
 Section 5.4.  Affiliate Agreements......................................   20
 Section 5.5.  Employee Stock Options, Incentive and Benefit Plans.......   21
 Section 5.6.  Filings; Other Action.....................................   21
 Section 5.7.  Further Assurances........................................   22
 Section 5.8.  Takeover Statute..........................................   22
 Section 5.9.  No Solicitation...........................................   22
 Section 5.10. Public Announcements......................................   23
 Section 5.11. Indemnification and Insurance.............................   23
 Section 5.12. Accountants' "Comfort" Letters............................   23
 Section 5.13. Additional Reports........................................   23
 Section 5.14. Company Rights Plans......................................   24
 Section 5.15. Control of Other Party's Business.........................   24
 Section 5.16. Board Seats and Officers..................................   24
                                   ARTICLE VI
                            Conditions to The Merger
               Conditions to Each Party's Obligation to Effect the
 Section 6.1.  Merger....................................................   24
               Conditions to Obligation of the Company to Effect the
 Section 6.2.  Merger....................................................   25
 Section 6.3.  Conditions to Obligation of Parent to Effect the Merger...   25
                                  ARTICLE VII
                                  Termination
 Section 7.1.  Termination or Abandonment................................   26
 Section 7.2.  Termination Fee...........................................   27
 Section 7.3.  Amendment or Supplement...................................   27
 Section 7.4.  Extension of Time, Waiver, Etc............................   27
                                  ARTICLE VIII
                                 Miscellaneous
 Section 8.1.  No Survival of Representations and Warranties.............   28
 Section 8.2.  Expenses..................................................   28
 Section 8.3.  Counterparts; Effectiveness...............................   28
 Section 8.4.  Governing Law.............................................   28
 Section 8.5.  Jurisdiction..............................................   28
 Section 8.6.  Notices...................................................   28
</TABLE>
 
                                      A-ii
<PAGE>
 
<TABLE>
 <C>           <S>                                                           <C>
 Section 8.7.  Assignment; Binding Effect..................................   29
 Section 8.8.  Severability................................................   29
 Section 8.9.  Enforcement of Agreement....................................   29
 Section 8.10. Entire Agreement; No Third-Party Beneficiaries..............   29
 Section 8.11. Headings....................................................   29
 Section 8.12. Definitions.................................................   29
 Exhibit A     Form of the Company Affiliate Agreement
 Exhibit B     Form of Parent Affiliate Agreement
 Exhibit C     Form of Amendment to the Company Rights Plan
</TABLE>
 
                                     A-iii
<PAGE>
 
  AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1998 (the "Agreement"),
among ALLTEL Corporation, a Delaware corporation ("Parent"), Pinnacle Merger
Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and 360(degrees) Communications Company, a Delaware
corporation (the "Company").
 
                             W I T N E S S E T H :
 
  WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved the acquisition of the Company by Parent upon the terms
and subject to the conditions set forth in this Agreement;
 
  WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved this Agreement and the merger of Merger Sub with and
into the Company (the "Merger") in accordance with the General Corporation Law
of the State of Delaware (the "DGCL") and upon the terms and subject to the
conditions set forth in this Agreement;
 
  WHEREAS, for United States federal income tax purposes, the Merger is
intended to qualify as a reorganization within the meaning of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code"),
and this Agreement is hereby adopted as a plan of reorganization for purposes
of Section 368 of the Code;
 
  WHEREAS, for financial accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests transaction; and
 
  WHEREAS, immediately following the execution and delivery of this Agreement,
the Company and Parent will enter into a stock option agreement (the "Option
Agreement"), pursuant to which the Company will grant Parent the option to
purchase shares of Company Common Stock (as hereinafter defined), upon the
terms and subject to the conditions set forth therein.
 
  NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company agree as follows:
 
                                   ARTICLE I
 
                                  The Merger
 
  Section 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the DGCL, Merger Sub shall be
merged with and into the Company at the Effective Time (as defined in Section
1.3) of the Merger. Following the Merger, the separate corporate existence of
Merger Sub shall cease, and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Merger Sub in accordance with the DGCL.
 
  Section 1.2. Closing. The closing of the Merger shall take place at 10:00
a.m. on a date to be specified by the parties (the "Closing Date") which shall
be no later than the second business day after the satisfaction or waiver of
the conditions set forth in Article VI at the offices of Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York, unless another date or place is agreed
to in writing by the parties hereto.
 
  Section 1.3. Effective Time. On the Closing Date, the parties shall execute
and file in the office of the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") executed in accordance
with the DGCL and shall make all other filings or recordings, if any, required
under the DGCL. The Merger shall become effective at the time of filing of the
Certificate of Merger, or at such later time as is agreed upon by the parties
hereto and set forth therein (such time as the Merger becomes effective is
referred to herein as the "Effective Time").
 
                                      A-1
<PAGE>
 
  Section 1.4. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
 
  Section 1.5. Certificate of Incorporation and By-Laws of the Surviving
Corporation.
 
  (a) The certificate of incorporation of the Company as in effect immediately
prior to the Effective Time shall become the certificate of incorporation of
the Surviving Corporation after the Effective Time, until thereafter amended
as provided by the DGCL and such certificate of incorporation.
 
  (b) The by-laws of the Company as in effect immediately prior to the
Effective Time shall become the by-laws of the Surviving Corporation after the
Effective Time, until thereafter amended as provided by the DGCL, the
certificate of incorporation of the Surviving Corporation and such by-laws.
 
 Section 1.6. Directors. The directors of Merger Sub immediately prior to the
Effective Time shall become the directors of the Surviving Corporation, until
the earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified.
 
  Section 1.7. Officers. The officers of the Company immediately prior to the
Effective Time shall become the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified.
 
                                  ARTICLE II
 
                Conversion of Shares; Exchange of Certificates
 
  Section 2.1. Effect on Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the Company, Merger Sub or the holders
of any securities of the Company or Merger Sub:
 
    (a) Each share of common stock, par value $0.01 per share, of the Company
  (the "Company Common Stock") issued and held, immediately prior to the
  Effective Time, in the Company's treasury or by any of the Company's direct
  or indirect wholly owned subsidiaries, and each share of Company Common
  Stock that is owned by Parent, Merger Sub or any other subsidiary of
  Parent, shall automatically be cancelled and retired and shall cease to
  exist, and no consideration shall be delivered in exchange therefor.
 
    (b) Subject to Section 2.2(e), each issued and outstanding share of
  Company Common Stock (other than shares to be cancelled in accordance with
  Section 2.1(a)) shall thereupon be converted into and shall thereafter
  represent .74 (the "Conversion Fraction") fully paid and nonassessable
  share of Parent Common Stock (the "Merger Consideration"). As of the
  Effective Time, all such shares of Company Common Stock shall no longer be
  outstanding and shall automatically be cancelled and retired and shall
  cease to exist, and each holder of a certificate or certificates which
  immediately prior to the Effective Time represented outstanding shares of
  Company Common Stock (the "Certificates") shall cease to have any rights
  with respect thereto, except the right to receive (i) certificates
  representing the number of whole shares of Parent Common Stock into which
  such shares have been converted (the "Parent Certificates"), (ii) certain
  dividends and other distributions in accordance with Section 2.2(c), and
  (iii) cash in lieu of fractional shares of Parent Common Stock in
  accordance with Section 2.2(e), without interest.
 
    (c) Each issued and outstanding share of common stock, par value $0.01
  per share, of Merger Sub shall be converted into one validly issued, fully
  paid and nonassessable share of common stock of the Surviving Corporation.
 
  Section 2.2. Exchange of Certificates.
 
  (a) Exchange Agent. As of the Effective Time, Parent shall enter into an
agreement with First Union National Bank of North Carolina or such other bank
or trust company as may be designated by Parent and as shall be reasonably
satisfactory to the Company (the "Exchange Agent"), which shall provide that
Parent shall deposit with the Exchange Agent as necessary from time to time
following the Effective Time, for the benefit of
 
                                      A-2
<PAGE>
 
the holders of shares of Company Common Stock, for exchange in accordance with
this Article II, through the Exchange Agent, the Parent Certificates. The
Parent Certificates (together with any dividends or distributions with respect
thereto with a record date after the Effective Time) and any cash payable in
lieu of any fractional shares of Parent Common Stock are hereinafter referred
to as the "Exchange Fund."
 
  (b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted into the Merger Consideration,
pursuant to Section 2.1, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as the Company and Parent
may reasonably specify), and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a Parent
Certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article II, certain dividends or other distributions in accordance with
Section 2.2(c) and cash in lieu of any fractional share in accordance with
Section 2.2(e), and the Certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of the Company, a Parent
Certificate representing the proper number of shares of Parent Common Stock
may be issued to a person other than the person in whose name the Certificate
so surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such
issuance shall pay any transfer or other non-income taxes required by reason
of the issuance of shares of Parent Common Stock to a person other than the
registered holder of such Certificate or establish to the satisfaction of
Parent that any such tax has been paid or is not applicable. Parent or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as Parent or the Exchange Agent are required to withhold or
deduct under the Code or any provision of state, local or foreign tax law with
respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of the Company Common Stock in respect of whom such deduction and withholding
were made by Parent or the Exchange Agent. Until surrendered as contemplated
by this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
Parent Certificates representing the number of whole shares of Parent Common
Stock into which the shares of Company Common Stock formerly represented by
such Certificate have been converted, certain dividends or other distributions
in accordance with Section 2.2(c) and cash in lieu of any fractional share in
accordance with Section 2.2(e). No interest will be paid or will accrue on any
cash payable to holders of Certificates pursuant to the provisions of this
Article II.
 
  (c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e), and all such dividends, other distributions and
cash in lieu of fractional shares of Parent Common Stock shall be paid by
Parent to the Exchange Agent and shall be included in the Exchange Fund, in
each case until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable escheat or similar laws and
laws with respect to the withholding of Taxes (as defined in Section 3.14),
following surrender of any such Certificate there shall be paid to the holder
of the Parent Certificate representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Parent Common Stock and the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to such surrender
 
                                      A-3
<PAGE>
 
and with a payment date subsequent to such surrender payable with respect to
such whole shares of Parent Common Stock. Parent shall make available to the
Exchange Agent cash for these purposes.
 
  (d) No Further Ownership Rights in Company Common Stock. The transfer of
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II (including
distributions and dividends paid pursuant to Section 2.2(c) and any cash paid
in lieu of fractional shares pursuant to Section 2.2(e)) shall be deemed
payment in full satisfaction of all rights pertaining to the shares of Company
Common Stock theretofore represented by such Certificates, subject, however,
to the Surviving Corporation's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective Time which may
have been authorized or made by the Company on such shares of Company Common
Stock which remain unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the applicable
Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be cancelled and exchanged as provided in
this Article II, except as otherwise provided by law.
 
  (e) No Fractional Shares. (i) No Parent Certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution of Parent shall
relate to such fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder
of Parent.
 
  (ii) As promptly as practicable following the Effective Time, the Surviving
Company shall pay to each holder of Company Common Stock an amount in cash, if
any, equal to the product obtained by multiplying (A) the fractional share
interest to which such holder (after taking into account all shares of Company
Common Stock held at the Effective Time by such holder) would otherwise be
entitled by (B) the closing price for a share of Parent Common Stock as
reported on the NYSE Composite Transactions Tape (as reported in The Wall
Street Journal, or, if not reported thereby, any other authoritative source)
on the day of the Effective Time.
 
  (iii) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Company Common Stock with respect to any
fractional share interests, the Exchange Agent will make available such
amounts to such holders of Company Common Stock subject to the terms of
Section 2.2(c).
 
  (f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Parent upon demand, and any holders
of the Certificates who have not theretofore complied with this Article II
shall thereafter look only to Parent for payment of their claim for Merger
Consideration, any cash in lieu of fractional shares of Parent Common Stock
and any dividends or distributions with respect to Parent Common Stock.
 
  (g) No Liability. None of the Company, Parent, Merger Sub, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund in each case delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law. If any Certificate shall not have been surrendered prior to one year
after the Effective Time (or immediately prior to such earlier date on which
any Merger Consideration, any cash payable to the holder of such Certificate
pursuant to this Article II or any dividends or distributions payable to the
holder of such Certificate would otherwise escheat to or become the property
of any governmental body or authority) any such Merger Consideration or cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
 
  (h) Investment of Exchange Fund. The Exchange Agent shall invest all cash
included in the Exchange Fund, as directed by Parent. Any interest and other
income resulting from such investments shall be paid to Parent.
 
                                      A-4
<PAGE>
 
  (i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate
the Merger Consideration and, if applicable, any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, pursuant to this Agreement.
 
  (j) Adjustments. If at any time during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
capital stock of Parent or the Company shall occur as a result of any
reclassification, recapitalization, stock split (including a reverse stock
split) or combination, exchange or readjustment of shares, or any stock
dividend or stock distribution with a record date during such period, the
Merger Consideration shall be equitably adjusted.
 
                                  ARTICLE III
 
                 Representations and Warranties of the Company
 
  Except as set forth on the Disclosure Schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Parent and Merger Sub as
follows:
 
  Section 3.1. Organization, Qualification, Etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect (as hereinafter defined) on the
Company. As used in this Agreement, any reference to any state of facts,
event, change or effect having a "Material Adverse Effect" on or with respect
to the Company or Parent, as the case may be, means such state of facts,
event, change or effect that has had, or would reasonably be expected to have,
a material adverse effect on the business, results of operations or financial
condition of the Company and its Subsidiaries (as defined in Section 8.12),
taken as a whole, or Parent and its Subsidiaries, taken as a whole, as the
case may be. The copies of the Company's certificate of incorporation and by-
laws which have been delivered to Parent are complete and correct and in full
force and effect. Each of the Company's Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has the power and
authority to own its properties and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good standing
in each jurisdiction in which the ownership of its property or the conduct of
its business requires such qualification, except for jurisdictions in which
the failure to be so qualified or in good standing would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. All the
outstanding shares of capital stock of, or other ownership interests in, the
Company's Subsidiaries which are corporations are validly issued, fully paid
and non-assessable and all the outstanding shares of capital stock of, or
other ownership interests in, the Company's Subsidiaries are owned by the
Company, directly or indirectly, free and clear of all liens, claims,
mortgages, encumbrances, pledges, security interests, equities or charges of
any kind (each, a "Lien"). Other than as set forth in partnership agreements
relating to partnerships involving the Company or any of its Subsidiaries,
there are no existing options (other than the Option Agreement), rights of
first refusal, preemptive rights, calls, claims or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Subsidiary of the Company.
 
  Section 3.2. Capital Stock.
 
  (a) The authorized stock of the Company consists of 1,000,000,000 shares of
Company Common Stock and 100,000,000 shares of preferred stock, par value
$0.01 per share ("Company Preferred Stock"), of which
 
                                      A-5
<PAGE>
 
4,000,000 shares have been designated as First Series Junior Participating
Preferred Stock ("Company Series B Preferred Stock"). As of March 10, 1998,
121,300,000 shares of Company Common Stock were issued and outstanding and no
shares of Company Preferred Stock were issued or outstanding. All the
outstanding shares of Company Common Stock have been validly issued and are
fully paid and non-assessable. There are no outstanding subscriptions,
options, warrants, rights or other arrangements or commitments obligating the
Company to issue any shares of its stock other than:
 
    (i) rights to acquire shares of Company Series B Preferred Stock pursuant
  to the Rights Agreement, dated as of March 5, 1996, between the Company and
  The Chase Manhattan Bank, as successor in interest to Chemical Bank (the
  "Company Rights Plan");
 
    (ii) rights to acquire an undetermined number of shares of Company Common
  Stock pursuant to the Company Employee Stock Purchase Plan, which options
  are completely and accurately listed as of March 6, 1998 (the most recent
  withholding date) by plan participant, payroll withholding percentage, and
  cumulative amount withheld on Section 3.2(a)(ii) of the Company Disclosure
  Schedule, it being understood that the actual number of shares to be
  acquired pursuant to such rights will equal the aggregate amount credited
  to participants' accounts (and not withdrawn) through April 30, 1998
  divided by a purchase price equal to the lesser of (x) 85% of the closing
  price of the Company Common Stock on May 1, 1997 (for the six-month
  purchase period commencing on such date) or October 31, 1997 (for the six-
  month purchase period commencing on November 1, 1997) or (y) 85% of such
  closing price on April 30, 1998;
 
    (iii) options to acquire 2,157,135 shares of Company Common Stock
  pursuant to the Company Amended and Restated 1996 Equity Incentive Plan,
  which options are completely and accurately listed by optionee, price per
  share, date of grant and number of shares covered thereby on Section
  3.2(a)(iii) of the Company Disclosure Schedule;
 
    (iv) options to acquire, or stock appreciation rights in respect of,
  878,936 shares of Company Common Stock pursuant to the Company 1996
  Replacement Stock Option Plan, which options and stock appreciation rights
  are completely and accurately listed by optionee, exercise or strike price
  per share, date of grant and number of shares covered thereby on Section
  3.2(a)(iv) of the Company Disclosure Schedule;
 
    (v) restricted stock awards (as to which the restrictions have not
  lapsed) relating to 106,900 shares of Company Common Stock pursuant to the
  Company Amended and Restated 1996 Equity Incentive Plan, which awards are
  completely and accurately listed by grantee, date of grant and number of
  shares covered thereby on Section 3.2(a)(v) of the Company Disclosure
  Schedule;
 
    (vi) restricted stock awards (as to which the restrictions have not
  lapsed) relating to 5,626 shares of Company Common Stock pursuant to the
  Company Director Equity and Deferred Compensation Plan, which awards are
  completely and accurately listed by grantee, date of grant and number of
  shares covered thereby on Section 3.2(a)(vi) of the Company Disclosure
  Schedule;
 
    (vii) "phantom stock" units equivalent to 2,559 shares of Company Common
  Stock awarded through March 6, 1998 (the most recent withholding date)
  pursuant to the Company Retirement Savings Restoration Plan, the Company
  Deferred Compensation Plan and the Company Director Equity and Deferred
  Compensation Plan, which units are completely and accurately listed by
  grantee and number of shares covered thereby on Section 3.2(a)(vii) of the
  Company Disclosure Schedule, it being understood that the actual number of
  such units to be awarded pursuant to such Plans will reflect deferrals
  through the Effective Time; and
 
    (viii) the Option Agreement.
 
  (b) As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of the Company having the right to vote on any matters on which
stockholders may vote are issued or outstanding.
 
  Section 3.3. Corporate Authority Relative to this Agreement; No Violation.
 
  (a) The Company has the corporate power and authority to enter into this
Agreement and the Option Agreement and to carry out its obligations hereunder
and thereunder. The execution and delivery of this
 
                                      A-6
<PAGE>
 
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of the Company and by Continuing Director Action (as
defined in Article EIGHTH of the Company's Amended and Restated Certificate of
Incorporation) and, except for the approval and adoption of this Agreement by
its stockholders, no other corporate proceedings on the part of the Company
are necessary to authorize the consummation of the transactions contemplated
hereby and thereby. The Board of Directors of the Company has taken all
necessary and appropriate action so that Section 203 of the DGCL will be
inapplicable to this Agreement and the Option Agreement and the transactions
contemplated hereby and thereby. The Board of Directors of the Company has
determined that the transactions contemplated by this Agreement and the Option
Agreement are in the best interest of the Company and its stockholders and to
recommend to such stockholders that they approve and adopt this Agreement.
This Agreement and the Option Agreement have been duly and validly executed
and delivered by the Company and, assuming this Agreement and the Option
Agreement constitute valid and binding agreements of the other parties hereto
and thereto, this Agreement and the Option Agreement constitute valid and
binding agreements of the Company, enforceable against the Company in
accordance with their terms (except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally, or by principles
governing the availability of equitable remedies).
 
  (b) The Company is not subject to or obligated under any charter, by-law or
contract provision or any license, franchise or permit, or subject to any
order or decree, which, by its terms, would be breached or violated or would
accelerate any payment or obligation, trigger any right of first refusal or
other purchase right as a result of the Company executing or, subject to the
adoption of this Agreement by its stockholders, carrying out the transactions
contemplated by this Agreement and the Option Agreement, except for any
breaches or violations which would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. Other than in connection with or in
compliance with (i) the provisions of the DGCL, (ii) the Securities Act of
1933, as amended (the "Securities Act"), (iii) the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (iv) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (v) Section 4043 of
ERISA (as defined in Section 3.8), (vi) the Communications Act of 1934, as
amended (the "Communications Act") and applicable rules, regulations,
practices and policies promulgated by the Federal Communications Commission
(the "FCC"), (vii) any applicable laws, rules, regulations, practices and
orders of any state public utility commissions ("PUCs") or similar state or
foreign regulatory bodies, (viii) any applicable non-United States
competition, antitrust and investment laws and (ix) the securities or blue sky
laws of the various states (collectively, the "Company Required Approvals"),
no authorization, consent or approval of, or filing with, any governmental
body or authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement and the Option Agreement, except
for such authorizations, consents, approvals or filings, the failure to obtain
or make which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or substantially impair or delay the
consummation of the transactions contemplated hereby and thereby.
 
  Section 3.4. Reports and Financial Statements. The Company has previously
furnished to Parent true and complete copies of:
 
    (a) the Company's Annual Reports on Form 10-K filed with the Securities
  and Exchange Commission (the "SEC") for each of the years ended December
  31, 1995 and 1996;
 
    (b) each definitive proxy statement filed by the Company with the SEC
  since February 14, 1996;
 
    (c) each final prospectus filed by the Company with the SEC since
  February 14, 1996, except any final prospectus on Form S-8; and
 
    (d) all Current Reports on Form 8-K and Quarterly Reports on Form 10-Q
  filed by the Company with the SEC since January 1, 1997.
 
  As of their respective dates, such reports, proxy statements and
prospectuses (collectively, the "Company SEC Reports") (i) complied as to form
in all material respects with the applicable requirements of the Securities
 
                                      A-7
<PAGE>
 
Act, the Exchange Act and the rules and regulations promulgated thereunder and
(ii) did not contain any untrue statement of a material fact or omit 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. Except to the extent that information contained in any Company
SEC Report has been revised or superseded by a later filed Company SEC Report,
none of the Company SEC Reports contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order 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 Company SEC Reports (including any related notes
and schedules) fairly present the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods or as of the dates then ended
(subject, in the case of the unaudited interim financial statements, to normal
recurring year-end adjustments), in each case in accordance with past practice
and generally accepted accounting principles in the United States ("GAAP")
consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since March 7, 1996, the Company has timely
filed all reports, registration statements and other filings required to be
filed by it with the SEC under the rules and regulations of the SEC. None of
the Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC.
 
  Section 3.5. No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances which would reasonably be expected to result
in such a liability or obligation, except (a) liabilities or obligations
reflected in the Company SEC Reports and (b) liabilities or obligations which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
 
  Section 3.6. No Violation of Law. The businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 3.6 with respect to
Environmental Laws (as hereinafter defined)) except (a) as described in the
Company SEC Reports and (b) for violations or possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
 
  Section 3.7. Environmental Laws and Regulations. Except as described in the
Company SEC Reports, (a) the Company and each of its Subsidiaries is in
compliance with all applicable international, federal, state, local and
foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), which compliance includes, but is not limited to, the
possession by the Company and its Subsidiaries of all material permits and
other governmental authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof, except for non-
compliance which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company; (b) neither the Company nor any of its
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 to conduct investigations or clean-up
activities under Environmental Law or alleging liability under or non-
compliance with any Environmental Law (collectively, "Environmental Claims")
which would, individually or in the aggregate, have a Material Adverse Effect
on the Company; and (c) there are no facts, circumstances or conditions in
connection with the operation of its business or any currently or formerly
owned, leased or operated facilities that are reasonably likely to lead to any
Environmental Claims in the future which would, individually or in the
aggregate, have a Material Adverse Effect on the Company.
 
  Section 3.8. No Undisclosed Employee Benefit Plan Liabilities or Severance
Arrangements.
 
  (a) Except as described in the Company SEC Reports, all "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), maintained or contributed to by the Company
or its Subsidiaries are in compliance with all applicable provisions of each
of the Code and ERISA and the rules and regulations thereunder, and the
Company and its Subsidiaries do not have any liabilities or obligations with
respect to any such employee benefit plans, whether or not accrued, contingent
 
                                      A-8
<PAGE>
 
or otherwise, except as described in the Company SEC Reports. No employee of
the Company will be entitled to any additional benefits or any acceleration of
the time of payment or vesting of any benefits under any employee incentive or
benefit plan, program or arrangement as a result of the transactions
contemplated by this Agreement.
 
  (b) Any amount or other entitlement that could be received (whether in cash
or property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of the
Company or any of its affiliates who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
employee benefit plan or other compensation arrangement currently in effect
would not be characterized as an "excess parachute payment" or a "parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
 
  Section 3.9. Absence of Certain Changes or Events. Other than the
transactions contemplated by this Agreement or as disclosed in the Company SEC
Reports, since December 31, 1996, the businesses of the Company and its
Subsidiaries have 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 have, a Material Adverse
Effect on the Company.
 
  Section 3.10. Investigations; Litigation. Except as described in the Company
SEC Reports:
 
    (a) there is no investigation or review pending by any governmental body
  or authority with respect to the Company or any of its Subsidiaries which
  would, individually or in the aggregate, have a Material Adverse Effect on
  the Company, nor has any governmental body or authority notified the
  Company of an intention to conduct the same; and
 
    (b) there are no actions, suits or proceedings pending (or, to the
  Company's knowledge, threatened) against or affecting the Company or its
  Subsidiaries, or any of their respective properties at law or in equity, or
  before any federal, state, local or foreign governmental body or authority,
  which, individually or in the aggregate, are reasonably likely to have a
  Material Adverse Effect on the Company.
 
  Section 3.11. Joint Proxy Statement; Registration Statement; Other
Information. None of the information with respect to the Company or its
Subsidiaries to be included in the Joint Proxy Statement (as defined below) or
the Registration Statement (as defined in Section 5.3(a)(i)) will, in the case
of the Joint Proxy Statement or any amendments thereof or supplements thereto,
at the time of the mailing of the Joint Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting and the Parent
Meeting, or, in the case of the Registration Statement, at the time it becomes
effective, contain any 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 light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company
with respect to information supplied in writing by Parent or any affiliate of
Parent specifically for inclusion in the Joint Proxy Statement. The Joint
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder. The letters to stockholders, notices of meeting, joint proxy
statement and forms of proxies to be distributed to stockholders in connection
with the Merger and any schedules required to be filed with the SEC in
connection therewith are collectively referred to herein as the "Joint Proxy
Statement."
 
  Section 3.12. The Company Rights Plan. The Board of Directors of the Company
has adopted a resolution authorizing the Company Rights Plan to be duly
amended to effect the changes thereto contemplated by the form of amendment
attached hereto as Exhibit C, and as a result thereof, the rights provided
thereunder will be inapplicable to this Agreement and the Option Agreement,
and the consummation of the Merger and the other transactions contemplated by
this Agreement and the Option Agreement.
 
  Section 3.13. Lack of Ownership of Parent Common Stock. Neither the Company
nor any of its Subsidiaries owns any shares of Parent Common Stock or other
securities convertible into shares of Parent Common Stock (exclusive of any
shares owned by the Company's employee benefit plans).
 
                                      A-9
<PAGE>
 
  Section 3.14. Tax Matters. (a) All federal, state, local and foreign Tax
Returns required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries (i) is a member (a "Current
Company Group") or (ii) has been a member within six years prior to the date
hereof but is not currently a member, but only insofar as any such Tax Return
relates to a taxable period ending on a date within the last six years (a
"Past Company Group," together with Current Company Groups, a "Company
Affiliated Group") have been timely filed, and all such Tax Returns are
complete and accurate except to the extent any failure to file or any
inaccuracies in filed returns would not, individually or in the aggregate,
have a Material Adverse Effect on the Company (it being understood that the
representations made in this Section, to the extent that they relate to Past
Company Groups, are made to the knowledge of the Company). All Taxes due and
owing by the Company, any Subsidiary of the Company or any Company Affiliated
Group have been timely paid, or adequately reserved for, except to the extent
any failure to pay or reserve would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. There is no audit examination,
deficiency, refund litigation, proposed adjustment or matter in controversy
with respect to any Taxes due and owing by the Company, any Subsidiary of the
Company or any Affiliated Group which would, individually or in the aggregate,
have a Material Adverse Effect on the Company. All assessments for Taxes due
and owing by the Company, any Subsidiary of the Company or any Company
Affiliated Group with respect to completed and settled examinations or
concluded litigation have been paid. Prior to the date of this Agreement, the
Company has provided Parent with written schedules of (i) the taxable years of
the Company for which the statutes of limitations with respect to federal
income Taxes have not expired, and (ii) with respect to federal income Taxes,
for all taxable years for which the statute of limitations has not yet
expired, those years for which examinations have been completed, those years
for which examinations are presently being conducted, and those years for
which examinations have not yet been initiated. The Company and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the payment and withholding of Taxes, except to the
extent any such failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries is a party to, bound by, or has any obligation under any Tax
sharing, allocation, indemnity, or similar contract or arrangement (other than
(i) the tax sharing agreement, dated as of March 7, 1996, between Sprint
Corporation and the Company (the "Tax Sharing Agreement") or (ii) the tax
assurance agreement, dated as of March 7, 1996, between Sprint Corporation and
the Company (the "Tax Assurance Agreement")).
 
  (b) Neither the Company nor any of its Subsidiaries knows of any fact or has
taken any action that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
 
  (c) Neither the Company nor any of its Subsidiaries knows of any fact or has
taken (or failed to take) any action that could constitute a breach of its
obligations or otherwise result in a liability to the Company or any of its
Subsidiaries under (i) the Tax Sharing Agreement or (ii) the Tax Assurance
Agreement. Neither the Company nor any of its Subsidiaries is a party to or
bound by (or has any obligation under) any Tax sharing, allocation, indemnity,
or similar contract or arrangement with Sprint Corporation or any affiliate of
Sprint Corporation other than the Tax Sharing Agreement and the Tax Allocation
Agreement (or under either such agreement). To the knowledge of the Company,
without independent investigation, the private letter ruling issued on
February 14, 1996 to Sprint Corporation, Centel Corporation, Sprint Cellular
Company and various other parties in response to the request filed with the
Internal Revenue Service on September 8, 1995, as supplemented, and any
supplemental rulings issued with respect thereto have not been modified,
amended or supplemented and continue to be valid in all respects.
 
  (d) For purposes of this Agreement: (i) "Taxes" means any and all federal,
state, local, foreign, provincial, territorial or other taxes, imposts, rates,
levies, assessments and other charges of any kind whatsoever whether imposed
directly or through withholding (together with any and all interest,
penalties, additions to tax and additional amounts applicable with respect
thereto), including, without limitation, income, franchise, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
net worth, excise, withholding, ad valorem and value added taxes;
 
                                     A-10
<PAGE>
 
(ii) "Tax Return" means any declaration, return, report, schedule,
certificate, statement or other similar document (including relating or
supporting information) required to be filed or, where none is required to be
filed with a taxing authority, the statement or other document issued by a
taxing authority in connection with any Tax, including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax; and (iii) "Material State" means any state for which the
average allocation percentage of the Company and its Subsidiaries for the past
three years exceeds ten percent (10%).
 
  Section 3.15. Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Lazard Freres & Company LLC, dated the
date of this Agreement, substantially to the effect that, as of such date, the
Merger Consideration is fair to the holders of the Company Common Stock from a
financial point of view. The Company has delivered a complete and accurate
copy of such opinion to the Parent.
 
  Section 3.16. Required Vote of the Company Stockholders. The affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock (the "Company Stockholder Approval") is required to approve and adopt
this Agreement. No other vote of the stockholders of the Company, or of the
holders of any other securities of the Company (equity or otherwise), is
required by law, the certificate of incorporation or by-laws of the Company or
otherwise in order for the Company to consummate the Merger and the
transactions contemplated hereby and by the Option Agreement.
 
  Section 3.17. Material Contracts. Except as set forth in the Company SEC
Reports, neither the Company nor any of its 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 3.17 being referred to herein as "Company Material Contracts"). Each
Company Material Contract is valid and binding on the Company and is in full
force and effect, and the Company and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by them
to date under each Company Material Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries knows of, or has
received notice of, any violation or default under any Company Material
Contract except for such violations or defaults as would not in the aggregate
have a Material Adverse Effect on the Company.
 
  Section 3.18. Takeover Statute. The Board of Directors of the Company has
approved this Agreement and the transactions contemplated hereby and, assuming
the accuracy of the representation and warranty contained in Section 4.12,
such approval constitutes approval of the Merger and the other transactions
contemplated hereby by the Board of Directors of the Company under the
provisions of Section 203 of the DGCL such that Section 203 of the DGCL does
not apply to this Agreement and the transactions contemplated hereby. To the
knowledge of the Company, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby.
 
  Section 3.19. Finders or Brokers. Except for Lazard Freres & Company LLC, a
copy of whose engagement agreement has been or will be provided to Parent,
neither the Company nor any of its Subsidiaries has employed any investment
banker, broker, finder or intermediary in connection with the transactions
contemplated hereby who might be entitled to any fee or any commission in
connection with or upon consummation of the Merger.
 
  Section 3.20. Pooling of Interests. Neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action which action or
failure (without giving effect to any actions or failures to act by Parent or
any of its Subsidiaries) would prevent the treatment of the Merger as a
pooling of interests for accounting purposes.
 
                                     A-11
<PAGE>
 
                                  ARTICLE IV
 
                   Representations and Warranties of Parent
 
  Except as set forth on the Disclosure Schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule," and together with the Company Disclosure Schedule, the "Disclosure
Schedule"), Parent and Merger Sub represent and warrant to the Company as
follows:
 
  Section 4.1. Organization, Qualification, Etc. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority to own its properties
and assets and to carry on its business as it is now being conducted and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business requires
such qualification, except for jurisdictions in which the failure to be so
qualified or in good standing would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. The copies of the Parent's
certificate of incorporation and by-laws which have been delivered to the
Company are complete and correct and in full force and effect. Each of the
Parent's Subsidiaries (including Merger Sub) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the power and authority to own its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires
such qualification, except for jurisdictions in which the failure to be so
qualified or in good standing would not, individually or in the aggregate,
have a Material Adverse Effect on the Parent. All the outstanding shares of
capital stock of, or other ownership interests in, the Parent's Subsidiaries
are validly issued, fully paid and non-assessable and are owned by Parent,
directly or indirectly, free and clear of all Liens. There are no existing
options, rights of first refusal, preemptive rights, calls, claims or
commitments of any character relating to the issued or unissued capital stock
or other securities of, or other ownership interests in, any Subsidiary of
Parent.
 
  Section 4.2. Capital Stock.
 
  (a) The authorized capital stock of Parent consists of 500,000,000 shares of
common stock, par value $1.00 per share ("Parent Common Stock"), 50,000,000
shares of cumulative preferred stock, par value $25.00 per share ("Par
Preferred Stock"), and 50,000,000 shares of no par cumulative preferred stock
("No Par Preferred Stock," and together with Par Preferred Stock, "Parent
Preferred Stock"). As of February 23, 1998, 184,263,179 shares of Parent
Common Stock, 340,792 shares of Par Preferred Stock and 123,490 shares of No
Par Preferred Stock were issued and outstanding. All the outstanding shares of
Parent Common Stock and Parent Preferred Stock have been validly issued and
are fully paid and non-assessable. As of February 23, 1998, there are no
outstanding subscriptions, options, warrants, rights or other arrangements or
commitments obligating Parent to issue any shares of its capital stock other
than:
 
    (i) rights to acquire shares of Parent's Series K Cumulative Voting
  Preferred Stock pursuant to the Rights Agreement, dated as of January 30,
  1997, between Parent and First Union National Bank of North Carolina;
 
    (ii) options and other rights to receive or acquire 291,169 shares of
  Parent Common Stock pursuant to the Amended and Restated 1975 Incentive
  Stock Option Plan;
 
    (iii) options and other rights to receive or acquire 2,464,841 shares of
  Parent Common Stock pursuant to the 1991 Stock Option Plan;
 
    (iv) options and other rights to receive or acquire 6,032,161 shares of
  Parent Common Stock pursuant to the 1994 Employee Stock Option Plan;
 
    (v) options and other rights to receive or acquire 167,701 shares of
  Parent Common Stock pursuant to the 1994 Non-Employee Directors Stock
  Option Plan, as amended; and
 
    (vi) options and other rights (including restricted stock awards as to
  which the restrictions have not lapsed) to receive or acquire 11,730 shares
  of Parent Common Stock pursuant to other employee incentive or benefit
  plans, programs and arrangements and non-employee director plans.
 
                                     A-12
<PAGE>
 
  (b) As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of Parent having the right to vote on any matters on which
stockholders may vote are issued or outstanding.
 
  Section 4.3. Corporate Authority Relative to this Agreement; No Violation.
 
  (a) Each of Parent and Merger Sub has the corporate power and authority to
enter into this Agreement and the Option Agreement and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Directors of Parent and Merger Sub and, except for the approval by
its stockholders of the issuance by Parent of the Merger Consideration, no
other corporate proceedings on the part of Parent or Merger Sub are necessary
to authorize the consummation of the transactions contemplated hereby and
thereby. The Board of Directors of Parent has determined that the transactions
contemplated by this Agreement and the Option Agreement are in the best
interest of Parent and its stockholders and to recommend to such stockholders
that they approve the issuance of the Merger Consideration. This Agreement and
the Option Agreement have been duly and validly executed and delivered by
Parent and Merger Sub and, assuming this Agreement and the Option Agreement
constitute valid and binding agreements of the other parties hereto, this
Agreement and the Option Agreement constitute valid and binding agreements of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with their terms (except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally, or by principles governing the
availability of equitable remedies).
 
  (b) Neither Parent nor Merger Sub is subject to or obligated under any
charter, by-law or contract provision or any license, franchise or permit, or
subject to any order or decree, which, by its terms, would be breached or
violated or would accelerate any payment or obligation, trigger any right of
first refusal or other purchase right as a result of Parent or Merger Sub
executing or, subject to approval of the issuance of the Merger Consideration
by Parent's stockholders, carrying out the transactions contemplated by this
Agreement and the Option Agreement, except for any breaches or violations
which would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. 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) Section 4043 of ERISA, (vi) the Communications Act and
applicable rules, regulations, practices and policies promulgated by the FCC,
(vii) any applicable laws, rules, regulations, practices and orders of any
PUCs or similar state or foreign regulatory bodies, (viii) any applicable non-
United States competition, antitrust and investments laws, (ix) the securities
or blue sky laws of the various states and (x) the rules and regulations of
the NYSE (collectively, the "Parent Required Approvals"), no authorization,
consent or approval of, or filing with, any governmental body or authority is
necessary for the consummation by Parent of the transactions contemplated by
this Agreement and the Option Agreement, except for such authorizations,
consents, approvals or filings, the failure to obtain or make which would not,
individually or in the aggregate, have a Material Adverse Effect on Parent or
substantially impair or delay the consummation of the transactions
contemplated hereby and thereby.
 
  Section 4.4. Reports and Financial Statements. Parent has previously
furnished to the Company true and complete copies of:
 
  (a) Parent's Annual Reports on Form 10-K filed with the SEC for each of the
years ended December 31, 1995 through 1997;
 
  (b) each definitive proxy statement filed by Parent with the SEC since
December 31, 1995;
 
  (c) each final prospectus filed by Parent with the SEC since December 31,
1995, except any final prospectus on Form S-8; and
 
  (d) all Current Reports on Form 8-K filed by Parent with the SEC since
January 1, 1998.
 
  As of their respective dates, such reports, proxy statements and
prospectuses (collectively, "Parent SEC Reports") (i) complied as to form in
all material respects with the applicable requirements of the Securities Act,
 
                                     A-13
<PAGE>
 
the Exchange Act, and the rules and regulations promulgated thereunder and
(ii) did not contain any untrue statement of a material fact or omit 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. Except to the extent that information contained in any Parent
SEC Report has been revised or superseded by a later filed Parent SEC Report,
none of the Parent SEC Reports contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order to make the statement 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 Parent SEC Reports (including any related notes and
schedules) fairly present the financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the results of their
operations and their cash flows for the periods or as of the dates then ended
(subject, in the case of the unaudited interim financial statements, to normal
recurring year-end adjustments), in each case in accordance with past practice
and GAAP consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since January 1, 1996, Parent has timely
filed all reports, registration statements and other filings required to be
filed by it with the SEC under the rules and regulations of the SEC. None of
Parent's Subsidiaries is required to file any forms, reports or other
documents with the SEC.
 
  Section 4.5. No Undisclosed Liabilities. Neither Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances which would reasonably be expected to result
in such a liability or obligation, except (a) liabilities or obligations
reflected in the Parent SEC Reports and (b) liabilities or obligations which
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent.
 
  Section 4.6. No Violation of Law. The businesses of Parent and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 4.6 with respect to
Environmental Laws) except (a) as described in the Parent SEC Reports and (b)
for violations or possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
 
  Section 4.7. Environmental Laws and Regulations. Except as described in the
Parent SEC Reports, (a) Parent and each of its Subsidiaries is in compliance
with all applicable Environmental Laws, which compliance includes, but is not
limited to, the possession by Parent and its Subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof,
except for non-compliance which would not, individually or in the aggregate,
have a Material Adverse Effect on Parent; (b) neither Parent nor any of its
Subsidiaries has received written notice of, or, is the subject of, any
Environmental Claims which would, individually or in the aggregate, have a
Material Adverse Effect on Parent; and (c) there are no facts, circumstances
or conditions in connection with the operation of its business or any
currently or formerly owned, leased or operated facilities that are reasonably
likely to lead to any Environmental Claims in the future which would,
individually or in the aggregate, have a Material Adverse Effect on Parent.
 
  Section 4.8. No Undisclosed Employee Benefit Plan Liabilities or Severance
Arrangements. Except as described in the Parent SEC Reports, all "employee
benefit plans," as defined in Section 3(3) of ERISA, maintained or contributed
to by Parent or its Subsidiaries are in compliance with all applicable
provisions of each of the Code and ERISA and the rules and regulations
thereunder, and Parent and its Subsidiaries do not have any liabilities or
obligations with respect to any such employee benefit plans, whether or not
accrued, contingent or otherwise, except as described in the Parent SEC
Reports. No employee of Parent will be entitled to any additional benefits or
any acceleration of the time of payment or vesting of any benefits under any
employee incentive or benefit plan, program or arrangement as a result of the
transactions contemplated by this Agreement.
 
  Section 4.9. Absence of Certain Changes or Events. Other than the
transactions contemplated by this Agreement or as disclosed in the Parent SEC
Reports, since December 31, 1997, the businesses of Parent and its
Subsidiaries have been conducted in the ordinary course consistent with past
practice, and there has not been
 
                                     A-14
<PAGE>
 
any event, occurrence, development or state of circumstances or facts that has
had, or would have, a Material Adverse Effect on Parent.
 
  Section 4.10. Investigations; Litigation. Except as described in the Parent
SEC Reports:
 
  (a) there is no investigation or review pending by any governmental body or
authority with respect to Parent or any of its Subsidiaries which would,
individually or in the aggregate, have a Material Adverse Effect on Parent,
nor has any governmental body or authority notified Parent of an intention to
conduct the same; and
 
  (b) there are no actions, suits or proceedings pending (or, to Parent's
knowledge, threatened) against or affecting Parent or its Subsidiaries, or any
of their respective properties at law or in equity, or before any federal,
state, local or foreign governmental body or authority which, individually or
in the aggregate, are reasonably likely to have a Material Adverse Effect on
Parent.
 
  Section 4.11. Joint Proxy Statement; Registration Statement; Other
Information. None of the information with respect to Parent to be included in
the Joint Proxy Statement or the Registration Statement will, in the case of
the Joint Proxy Statement or any amendments thereof or supplements thereto, at
the time of the mailing of the Joint Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Meeting and the Parent
Meeting, or, in the case of the Registration Statement, at the time it becomes
effective, contain any 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 light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent with
respect to information supplied in writing by the Company or any affiliate of
the Company specifically for inclusion in the Joint Proxy Statement. The Joint
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder.
 
  Section 4.12. Lack of Ownership of the Company Common Stock. Neither Parent
nor any of its Subsidiaries owns any shares of the Company Common Stock or
other securities convertible into shares of the Company Common Stock
(exclusive of any shares owned by Parent's employee benefit plans).
 
  Section 4.13. Required Vote of Parent Stockholders. The affirmative vote of
the holders of a majority of the shares of Parent Common Stock and Par
Preferred Stock (voting together as a single class) present in person or
represented by proxy at the Parent Meeting (as hereinafter defined) and
entitled to vote (the "Parent Stockholder Approval") is required to approve
the issuance of the Merger Consideration by Parent. No other vote of the
stockholders of Parent, or of the holders of any other securities of Parent
(equity or otherwise), is required by law, the certificate of incorporation or
by-laws of Parent or otherwise in order for Parent to consummate the Merger
and the transactions contemplated hereby and by the Option Agreement.
 
  Section 4.14. Finders or Brokers. Except for Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Stephens Inc., a copy of whose engagement agreements
have been or will be provided to the Company, neither Parent nor any of its
Subsidiaries has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to any fee or any commission in connection with or upon
consummation of the Merger.
 
  Section 4.15. Pooling of Interests. Neither Parent nor any of its
Subsidiaries has taken any action or failed to take any action which action or
failure (without giving effect to any actions or failures to act by the
Company or any of its Subsidiaries) would prevent the treatment of the Merger
as a pooling of interests for accounting purposes.
 
  Section 4.16. Opinions of Financial Advisors. The Board of Directors of
Parent has received the opinions of Merrill Lynch, Pierce, Fenner & Smith
Incorporated and of Stephens Inc., dated the date of this Agreement,
substantially to the effect that, as of such date, the Conversion Fraction is
fair to Parent from a financial point of view. Parent has delivered a complete
and accurate copy of such opinion to the Company.
 
                                     A-15
<PAGE>
 
  Section 4.17. Tax Matters. (a) All federal, state, local and foreign Tax
Returns required to be filed by or on behalf of Parent, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Parent or any of its Subsidiaries (i) is a member (a "Current Parent
Group") or (ii) has been a member within six years prior to the date hereof
but is not currently a member, but only insofar as any such Tax Return relates
to a taxable period ending on a date within the last six years (a "Past Parent
Group," together with Current Parent Groups, a "Parent Affiliated Group") have
been timely filed, and all such Tax Returns are complete and accurate except
to the extent any failure to file or any inaccuracies in filed returns would
not, individually or in the aggregate, have a Material Adverse Effect on
Parent (it being understood that the representations made in this Section, to
the extent that they relate to Past Parent Groups, are made to the knowledge
of Parent). All Taxes due and owing by Parent, any Subsidiary of Parent or any
Parent Affiliated Group have been timely paid, or adequately reserved for,
except to the extent any failure to pay or reserve would not, individually or
in the aggregate, have a Material Adverse Effect on Parent. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by Parent, any Subsidiary
of Parent or any Affiliated Group which would, individually or in the
aggregate, have a Material Adverse Effect on Parent. All assessments for Taxes
due and owing by Parent, any Subsidiary of Parent or any Parent Affiliated
Group with respect to completed and settled examinations or concluded
litigation have been paid. Parent and each of its Subsidiaries have complied
in all material respects with all rules and regulations relating to the
payment and withholding of Taxes, except to the extent any such failure to
comply would not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
 
  (b) Neither Parent nor any of its Subsidiaries knows of any fact or has
taken any action that could reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
 
  (c) Neither Parent nor any of its Subsidiaries is a party to or bound by (or
has any obligation under) any Tax sharing, allocation, indemnity, or similar
contract.
 
  Section 4.18. Material Contracts. Except as set forth in the Parent SEC
Reports, neither Parent nor any of its 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 4.18 being referred to herein as "Parent Material Contracts"). Each
Parent Material Contract is valid and binding on Parent and is in full force
and effect, and Parent and each of its Subsidiaries have in all material
respects performed all obligations required to be performed by them to date
under each Parent Material Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. Neither Parent nor any of its Subsidiaries knows of, or has received
notice of, any violation or default under any Parent Material Contract except
for such violations or defaults as would not in the aggregate have a Material
Adverse Effect on the Parent.
 
                                   ARTICLE V
 
                           Covenants and Agreements
 
  Section 5.1. Conduct of Business by the Company or Parent. From and after
the date hereof and prior to the Effective Time or the date, if any, on which
this Agreement is earlier terminated pursuant to Section 7.1 (the "Termination
Date"), and except (i) as may be required by law (provided that any party
availing itself of such exception must first consult with the other party),
(ii) as may be agreed in writing by Parent and the Company, (iii) as may be
expressly permitted pursuant to this Agreement, or (iv) as set forth in
Section 5.1 of the Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be:
 
    (a) the Company:
 
      (i) shall, and shall cause each of its Subsidiaries to, conduct its
    operations according to their ordinary and usual course of business in
    substantially the same manner as heretofore conducted;
 
                                     A-16
<PAGE>
 
      (ii) shall use its reasonable best efforts, and shall cause each of
    its Subsidiaries to use its reasonable best efforts, to preserve intact
    its business organization and goodwill (except that any of its
    Subsidiaries may be merged with or into, or be consolidated with any of
    its other Subsidiaries or may be liquidated into the Company or any of
    its Subsidiaries), keep available the services of its current officers
    and other key employees and preserve its relationships with those
    persons having business dealings with the Company and its Subsidiaries;
 
      (iii) shall confer at such times as Parent may reasonably request
    with one or more representatives of Parent to report material
    operational matters and the general status of ongoing operations (to
    the extent Parent reasonably requires such information);
 
      (iv) shall notify Parent of any emergency or other change in the
    normal course of its or its Subsidiaries' respective businesses or in
    the operation of its or its Subsidiaries' respective properties and of
    any complaints, investigations or hearings (or communications
    indicating that the same may be contemplated) of any governmental body
    or authority if such emergency, change, complaint, investigation or
    hearing could have a Material Adverse Effect on the Company;
 
      (v) shall not, and shall not (except in the ordinary course of
    business consistent with past practice) permit any of its Subsidiaries
    that is not wholly owned to, authorize or pay any dividends on or make
    any distribution with respect to its outstanding shares of stock;
 
      (vi) shall not, and shall not permit any of its Subsidiaries to,
    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 for any such transaction by a wholly owned Subsidiary of the
    Company which remains a wholly owned Subsidiary after consummation of
    such transaction;
 
      (vii) shall not, and shall not permit any of its Subsidiaries to,
    except in the ordinary course of business consistent with past
    practice, enter into or amend any employment, severance or similar
    agreements or arrangements with any of their respective directors or
    executive officers;
 
      (viii) shall not, and shall not permit any of its Subsidiaries to,
    authorize, propose or announce an intention to authorize or propose, or
    enter into an agreement with respect to, any merger, consolidation or
    business combination (other than (A) the Merger and (B) any mergers,
    consolidations or business combinations with the Company's Subsidiaries
    entered into in the ordinary course of business consistent with past
    practice or which comply with the size of transactions limitations set
    forth at the end of this clause (viii)), any acquisition of assets or
    securities, any disposition of assets or securities or any release or
    relinquishment of material contract rights, in each case not in the
    ordinary course of business consistent with past practice, except that
    the Company may acquire or dispose of assets or securities in
    transactions where the fair market value of the consideration paid or
    received does not exceed $25 million in any single transaction or $100
    million in all such transactions;
 
      (ix) shall not propose or adopt any amendments to its corporate
    charter or by-laws;
 
      (x) shall not, and shall not permit any of its Subsidiaries to, issue
    or authorize the issuance of, or agree to issue or sell any shares of
    their capital stock of any class (whether through the issuance or
    granting of options, warrants, commitments, subscriptions, rights to
    purchase or otherwise);
 
      (xi) shall not, and shall not permit any of its Subsidiaries to,
    grant, confer or award any options, warrants, conversion rights or
    other rights, not existing on the date hereof, to acquire any shares of
    its capital stock;
 
      (xii) shall not, and shall not permit any of its Subsidiaries to,
    purchase or redeem any shares of its stock or any rights, warrants or
    options to acquire any such shares;
 
      (xiii) shall not, and shall not permit any of its Subsidiaries to,
    amend in any respect the terms of their respective employee benefit
    plans, programs or arrangements or any severance or similar agreements
    or arrangements in existence on the date hereof, or adopt any new
    employee benefit plans, programs or arrangements or any severance or
    similar agreements or arrangements;
 
                                     A-17
<PAGE>
 
      (xiv) shall not, and shall not permit any of its Subsidiaries to,
    incur, assume or prepay any indebtedness or any other material
    liabilities, other than in the ordinary course of business consistent
    with past practice;
 
      (xv) shall not, and shall not permit any of its Subsidiaries to, (i)
    make any loans, advances or capital contributions to, or investments
    in, any other person, other than by the Company or a Subsidiary of the
    Company to or in the Company or any wholly-owned Subsidiary of the
    Company or (ii) pay, discharge or satisfy any claims, liabilities or
    obligations (absolute, accrued, asserted or unasserted, contingent or
    otherwise), other than indebtedness, issuances of debt securities,
    guarantees, loans, advances, capital contributions, investments,
    payments, discharges or satisfactions incurred or committed to in the
    ordinary course of business consistent with past practice;
 
      (xvi) shall not sell, lease, license, mortgage or otherwise encumber
    or subject to any Lien or otherwise dispose of any of its properties or
    assets (including securitizations), other than in the ordinary course
    of business consistent with past practice;
 
      (xvii) shall not, and shall not permit any of its Subsidiaries to,
    (i) make any Tax election or settle or compromise any Tax liability or
    (ii) change its fiscal year;
 
      (xviii) except as disclosed in the Company SEC Reports filed prior to
    the date of this Agreement, or as required by a governmental body or
    authority, shall not change its methods of accounting (including,
    without limitation, make any material write-off or reduction in the
    carrying value of any assets) in effect at December 31, 1997, except as
    required by changes in GAAP as concurred in by the Company's
    independent auditors;
 
      (xix) shall not, and shall not permit any of its Subsidiaries to,
    take any action or fail to take any action which action or failure to
    act would, or would be reasonably likely to, prevent the parties hereto
    from accounting for the Merger in accordance with the pooling of
    interests method of accounting under the requirements of Opinion No. 16
    "Business Combinations" of the Accounting Principles Board of the
    American Institute of Certified Public Accountants, as amended by
    applicable pronouncements by the Financial Accounting Standards Board
    ("APB No. 16"); and
 
      (xx) shall not, and shall not permit any of its Subsidiaries to,
    agree, in writing or otherwise, to take any of the foregoing actions or
    take any action which would (x) make any representation or warranty in
    Article III hereof untrue or incorrect or (y) result in any of the
    conditions to the Merger set forth in Article VI not being satisfied;
    and
 
    (b) the Parent:
 
      (i) shall, and shall cause each of its Subsidiaries to, conduct its
    operations according to their ordinary and usual course of business in
    substantially the same manner as heretofore conducted, except that
    nothing contained in this subsection 5.1(b)(i) shall limit Parent's
    ability to authorize or propose, or enter into, an agreement with
    respect to any (A) acquisitions in which the aggregate value of the
    consideration paid does not exceed $900 million, (B) dispositions of
    assets held for sale and other assets in which the aggregate value of
    the consideration received does not exceed 10% of Parent's total
    assets, or (C) issuance of debt or equity securities;
 
      (ii) shall use its reasonable best efforts, and shall cause each of
    its Subsidiaries to use its reasonable best efforts, to preserve intact
    its business organization (except that any of its Subsidiaries may be
    merged with or into, or be consolidated with any of its other
    Subsidiaries or may be liquidated into Parent or any of its
    Subsidiaries), and to preserve its relationships with those person
    having business dealings with Parent and its Subsidiaries;
 
      (iii) shall notify the Company of any emergency or other change in
    the normal course of its or its Subsidiaries' respective businesses or
    in the operation of its or its Subsidiaries' respective properties and
    of any complaints, investigations or hearings (or communications
    indicating that the same may be contemplated) of any governmental body
    or authority if such emergency, change, complaint, investigation or
    hearing would reasonably be expected to have a Material Adverse Effect
    on Parent;
 
                                     A-18
<PAGE>
 
      (iv) shall not, and shall not (except in the ordinary course of
    business consistent with past practice) permit any of its Subsidiaries
    that is not wholly owned to, authorize or pay any dividends on or make
    any distribution with respect to its outstanding shares of stock,
    except that Parent may continue to pay dividends on the Parent Common
    Stock at times consistent with past practice and in per share amounts
    not in excess of 150% of the per share amount of the most recent
    dividend paid on the Parent Common Stock prior to the date of this
    Agreement;
 
      (v) shall not propose or adopt any amendments to its corporate
    charter or by-laws;
 
      (vi) shall not, and shall not permit any of its Subsidiaries to, take
    any action or fail to take any action which action or failure to act
    would, or would be reasonably likely to, prevent the parties hereto
    from accounting for the Merger in accordance with the pooling of
    interests method of accounting under the requirements of APB No. 16;
    and
 
      (vii) shall not, and shall not permit any of its Subsidiaries to
    agree, in writing or otherwise, to take any of the foregoing actions or
    to take any action which would (x) make any representation or warranty
    in Article IV hereof untrue or incorrect or (y) result in any of the
    conditions to the Merger set forth in Article VI not being satisfied.
 
  Section 5.2. Investigation. Each of the Company and Parent shall afford to
one another and to one another's officers, employees, accountants, counsel and
other authorized representatives full and complete access during normal
business hours, throughout the period prior to the earlier of the Effective
Time or the Termination Date, to its and its Subsidiaries' properties,
contracts, commitments, books and records and any report, schedule or other
document filed or received by it pursuant to the requirements of federal or
state securities laws and shall use their reasonable best efforts to cause
their respective representatives to furnish promptly to one another such
additional financial and operating data and other information as to its and
its Subsidiaries' respective businesses and properties as the other or its
duly authorized representatives may from time to time reasonably request,
except that nothing herein shall require either the Company or Parent or any
of their respective Subsidiaries to disclose any information to the other that
would cause significant competitive harm to such disclosing party or its
affiliates if the transactions contemplated by this Agreement are not
consummated. The parties hereby agree that each of them will treat any such
information in accordance with the Confidentiality and Standstill Agreement,
dated as of August 26, 1997, between the Company and Parent (the
"Confidentiality Agreement"). Notwithstanding any provision of this Agreement
to the contrary, no party shall be obligated to make any disclosure in
violation of applicable laws or regulations, including any such laws or
regulations pertaining to the treatment of classified information.
 
  Section 5.3. Joint Proxy Material; Registration Statement. (a) The Company
and Parent shall together, or pursuant to an allocation of responsibility to
be agreed upon between them:
 
    (i) prepare and file with the SEC as soon as is reasonably practicable
  the Joint Proxy Statement and a registration statement on Form S-4 under
  the Securities Act with respect to the Parent Common Stock issuable in the
  Merger (the "Registration Statement"), and shall use their reasonable best
  efforts to have the Joint Proxy Statement cleared by the SEC under the
  Exchange Act and the Registration Statement declared effective by the SEC
  under the Securities Act;
 
    (ii) as soon as is reasonably practicable take all such action as may be
  required under state blue sky or securities laws in connection with the
  transactions contemplated by this Agreement;
 
    (iii) promptly prepare and file with the NYSE and such other stock
  exchanges as shall be agreed upon listing applications covering the shares
  of Parent Common Stock issuable in the Merger and use their reasonable best
  efforts to obtain, prior to the Effective Time, approval for the listing of
  such Parent Common Stock, subject only to official notice of issuance;
 
    (iv) cooperate with one another in order to lift any injunctions or
  remove any other impediment to the consummation of the transactions
  contemplated herein; and
 
                                     A-19
<PAGE>
 
    (v) cooperate with one another in obtaining opinions of Sonnenschein Nath
  & Rosenthal, counsel to the Company, and Skadden, Arps, Slate, Meagher &
  Flom LLP, counsel to Parent, dated as of the Effective Time, to the effect
  that the Merger will qualify as a reorganization within the meaning of
  Section 368(a) of the Code. In connection therewith, each of the Company,
  Parent and Merger Sub shall deliver to Sonnenschein Nath & Rosenthal and
  Skadden, Arps, Slate, Meagher & Flom LLP, respectively, representation
  letters in form and substance reasonably satisfactory to such tax counsel.
 
  (b) Subject to the limitations contained in Section 5.2, the Company and
Parent shall each furnish to one another and to one another's counsel all such
information as may be required in order to effect the foregoing actions and
each represents and warrants to the other that no information furnished by it
in connection with such actions or otherwise in connection with the
consummation of the transactions contemplated by this Agreement will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in order to make any information so furnished, in light
of the circumstances under which it is so furnished, not misleading.
 
  (c) The Company and Parent shall cause the Joint Proxy Statement to be
mailed to their respective stockholders, in each case as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act.
 
  (d) The Company shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Meeting") for the purpose of obtaining the Company
Stockholder Approval and shall, through its Board of Directors, recommend to
its stockholders the adoption of this Agreement, the Merger and the other
transactions contemplated hereby. Without limiting the generality of the
foregoing but subject to its rights to terminate this Agreement pursuant to
Section 7.1, the Company agrees that its obligations pursuant to the first
sentence of this Section 5.3(d) shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any
Takeover Proposal (as defined in Section 5.9).
 
  (e) Parent shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Parent Meeting") for the purpose of obtaining the Parent
Stockholder Approval and shall, through its Board of Directors, recommend to
its stockholders that they approve the issuance of the Merger Consideration.
 
  (f) Each of the Company and Parent will use their reasonable best efforts to
hold the Company Meeting and the Parent Meeting on the same date and as soon
as practicable after the date hereof.
 
  Section 5.4. Affiliate Agreements.
 
  (a) The Company shall, prior to the Effective Time, deliver to Parent a list
(reasonably satisfactory to counsel for Parent), setting forth the names and
addresses of all persons who are, at the time of the Company Meeting, in the
Company's reasonable judgment, "affiliates" of the Company for purposes of
Rule 145 under the Securities Act or under applicable SEC accounting releases
with respect to pooling of interests accounting treatment. The Company shall
furnish such information and documents as Parent may reasonably request for
the purpose of reviewing such list. The Company shall use its reasonable best
efforts to cause each person who is identified as an "affiliate" in the list
furnished pursuant to this Section 5.4 to execute a written agreement on or
prior to the mailing of the Joint Proxy Statement, substantially in the form
of Exhibit A hereto.
 
  (b) Parent shall, prior to the Effective Time, deliver to the Company a list
(reasonably satisfactory to counsel for the Company), setting forth the names
and addresses of all persons who are, at the time of the Parent Meeting, in
Parent's reasonable judgment, "affiliates" of Parent for purposes of Rule 145
under the Securities Act or under applicable SEC accounting releases with
respect to pooling of interests accounting treatment. Parent shall furnish
such information and documents as the Company may reasonably request for the
purpose of reviewing such list. Parent shall use its reasonable best efforts
to cause each person who is identified as an "affiliate" in the list furnished
pursuant to this Section 5.4 to execute a written agreement on or prior to the
mailing of the Joint Proxy Statement, substantially in the form of Exhibit B
hereto.
 
                                     A-20
<PAGE>
 
  Section 5.5. Employee Stock Options, Incentive and Benefit Plans.
 
  (a) Simultaneously with the Merger, (i) each outstanding option (the
"Company Stock Options"), and related stock appreciation right (the "Company
SAR"), if any, to purchase or acquire a share of Company Common Stock under
employee incentive or benefit plans, programs or arrangements and non-employee
director plans presently maintained by the Company (the "Company Option
Plans") shall be converted into an option (together with a related stock
appreciation right of Parent, if applicable) to purchase the number of shares
of Parent Common Stock equal to the product of (x) the Conversion Fraction
multiplied by (y) the number of shares of Company Common Stock which could
have been obtained prior to the Effective Time upon the exercise of each such
option, at an exercise price per share (rounded upward to the nearest cent)
equal to the exercise price for each such share of Company Common Stock
subject to an option (and related Company SAR, if any) under the Company
Option Plans divided by the Conversion Fraction, and all references in each
such option (and related Company SAR, if any) to the Company shall be deemed
to refer to Parent, where appropriate, and (ii) Parent shall assume the
obligations of the Company under the Company Option Plans. The other terms of
each such option and Company SAR, and the plans under which they were issued,
shall continue to apply in accordance with their terms, including any
provisions providing for acceleration.
 
  (b) Simultaneously with the Merger, each outstanding award, including
restricted stock, stock equivalents and stock units (each, a "Company Award"),
under any employee incentive or benefit plans, programs or arrangements and
non-employee director plans presently maintained by the Company which provide
for grants of equity-based awards shall be amended or converted into a similar
instrument of Parent, in each case with such adjustments to the terms of such
Company Awards as are appropriate to preserve the value inherent in such
Company Awards with no detrimental effects on the holders thereof resulting
from such conversion. The other terms of each Company Award, and the plans or
agreements under which they were issued, shall continue to apply in accordance
with their terms, including any provisions providing for acceleration. With
respect to any restricted stock awards as to which the restrictions shall have
lapsed on or prior to the Effective Time in accordance with the terms of the
applicable plans or award agreements, shares of such previously restricted
stock shall be converted into the Merger Consideration in accordance with the
provisions of Section 2.1(b). The Company agrees to use its reasonable best
efforts to obtain any consents (in a form acceptable to Parent) required of
the holders of Company Stock Options or Company Awards to the conversion
described in Sections 5.5(a) and (b) hereof.
 
  (c) Simultaneously with the Merger, Parent shall assume and agree to perform
the Company's obligations under the termination benefit agreements (the
"Termination Benefit Agreements")(complete and accurate copies of which have
been provided to Parent) listed in Section 5.5(c) of the Company Disclosure
Schedule. This Section 5.5(c) shall satisfy any requirement in the Termination
Benefit Agreements that Parent expressly assume and agree to perform the
Company's obligations under such Termination Benefit Agreements.
 
  Section 5.6. Filings; Other Action.
 
  (a) Subject to the terms and conditions herein provided, the Company and
Parent shall (i) promptly make their respective filings and thereafter make
any other required submissions under the HSR Act, (ii) promptly make their
respective filings and thereafter make any other required submissions under
the Communications Act, (iii) use their reasonable best efforts to cooperate
with one another in (x) determining whether any filings are required to be
made with, or consents, permits, authorizations or approvals are required to
be obtained from, any third party or other governmental or regulatory bodies
or authorities of federal, state, local and foreign jurisdictions in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (y) timely making all
such filings and timely seeking all such consents, permits, authorizations or
approvals, (iv) use their reasonable best efforts to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby, including, without limitation, taking all
such further action as reasonably may be necessary to resolve such objections,
if any, as the Federal Trade Commission, the Antitrust Division of the
Department of Justice, state antitrust enforcement authorities or competition
authorities of any other nation or other jurisdiction or any other person may
assert under relevant antitrust or competition laws
 
                                     A-21
<PAGE>
 
with respect to the transactions contemplated hereby and to ensure that each
of the Company and Parent is a "poolable entity" eligible to participate in a
transaction to be accounted for under the pooling of interests method of
accounting.
 
  (b) In furtherance and not in limitation of the covenants of the parties
contained in this Section 5.6, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Regulatory Law (as defined below), each of the
Company and Parent shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement,
nothing in this Section 5.6 shall limit a party's right to terminate this
Agreement pursuant to Section 7.1(b) or 7.1(c) so long as such party has up to
then complied in all respects with its obligations under this Section 5.6.
 
  (c) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by
any governmental body or authority or any private party challenging any of the
transactions contemplated hereby as violative of any Regulatory Law, each of
the Company and Parent shall use its reasonable best efforts to resolve any
such objections or challenge as such governmental body or authority or private
party may have to such transactions under such Regulatory Law so as to permit
consummation of the transactions contemplated hereby. For purposes of this
Agreement, "Regulatory Law" means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended,
the Communications Act and all other federal, state or foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening competition, whether in the communications
industry or otherwise, through merger or acquisition.
 
  Section 5.7. Further Assurances. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers of the Company and Parent shall take all
such necessary action.
 
  Section 5.8. Takeover Statute. If any "fair price," "moratorium," "control
share acquisition" or other form of antitakeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of the Company
and Parent and the members of their respective Boards of Directors shall grant
such approvals and take such actions as are reasonably necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize
the effects of such statute or regulation on the transactions contemplated
hereby.
 
  Section 5.9. No Solicitation. From and after the date hereof, the Company
will not, and shall use its reasonable best efforts not to permit, any of its
officers, directors, employees, attorneys, financial advisors, agents or other
representatives or those of any of its Subsidiaries to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing information) any Takeover Proposal from any person or engage in or
continue discussions or negotiations relating thereto, except that, so long as
the Company is in compliance with its obligations under this Section 5.9, the
Company may engage in discussions or negotiations with, and furnish
information concerning the Company and its Subsidiaries, businesses,
properties or assets to, any third party which has made an unsolicited
Takeover Proposal if and only to the extent that the Board of Directors of the
Company concludes in good faith after consultation with, and based upon the
advice of, its outside counsel (who may be its regularly engaged outside
counsel) at a meeting of the Board that the failure to take such action would
present a reasonable possibility of violating the obligations of such Board to
the Company or to the Company's stockholders under applicable law. The Company
will promptly (but in no case later than 36 hours) notify Parent of the
receipt of any Takeover Proposal, including the material terms and conditions
thereof (and any change in the material terms and conditions thereof) and the
identity of the person making such Takeover Proposal, and
 
                                     A-22
<PAGE>
 
will promptly (but in no case later than 36 hours) notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal (as
hereinafter defined) has been made. As used in this Agreement, (i) "Takeover
Proposal" shall mean any bona fide proposal or offer made by any third party
prior to the stockholder vote at the Company Meeting (other than a proposal or
offer by Parent or any of its Subsidiaries) for a merger, consolidation or
other business combination involving, or any purchase of, all or substantially
all of the assets or more than 50% of the voting securities of, the Company,
and (ii) "Superior Proposal" shall mean a bona fide Takeover Proposal made by
a third party on terms that a majority of the members of the Board of
Directors of the Company determines in their good faith reasonable judgment
(based on the advice of an independent financial advisor) is more favorable to
the Company and to its stockholders than the transactions contemplated hereby
and for which any required financing is fully committed.
 
  Section 5.10. Public Announcements. The Company and Parent will consult with
and provide each other the opportunity to review and comment upon any press
release or other public statement or comment prior to the issuance of such
press release or other public statement or comment relating to this Agreement
or the transactions contemplated herein and shall not issue any such press
release or other public statement or comment prior to such consultation except
as may be required by law or by obligations pursuant to any listing agreement
with any national securities exchange.
 
  Section 5.11. Indemnification and Insurance. Parent and Merger Sub agree
that all rights to exculpation and indemnification for acts or omissions
occurring prior to the Effective Time now existing in favor of the current or
former directors or officers (the "Indemnified Parties") of the Company as
provided in its certificate of incorporation or by-laws or in any agreement
shall survive the Merger and shall continue in full force and effect in
accordance with their terms. For six years from the Effective Time, Parent
shall indemnify the Indemnified Parties to the same extent as such Indemnified
Parties are entitled to indemnification pursuant to the preceding sentence.
For a period of five years from the Effective Time, Parent shall either cause
to be maintained in effect the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the
Company or provide substitute policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured with respect to claims arising from facts or
events that occurred on or before the Effective Time, except that in no event
shall Parent be required to pay with respect to such insurance policies in any
one year more than $750,000.
 
  Section 5.12. Accountants' "Comfort" Letters. The Company and Parent will
each use reasonable best efforts to cause to be delivered to each other
letters from their respective independent accountants, dated as of a date
within two business days before the date of the Registration Statement, in
form reasonably satisfactory to the recipient and customary in scope for
comfort letters delivered by independent accountants in connection with
registration statements on Form S-4 under the Securities Act.
 
  Section 5.13. Additional Reports and Information.
 
  (a) The Company and Parent shall each furnish to the other copies of any
reports of the type referred to in Sections 3.4 and 4.4 which it files with
the SEC on or after the date hereof, and each of the Company and Parent, as
the case may be, represents and warrants that as of the respective dates
thereof, such reports will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statement therein, in light of the circumstances under which they
were made, not misleading. Any unaudited consolidated interim financial
statements included in such reports (including any related notes and
schedules) will fairly present the financial position of the Company and its
consolidated Subsidiaries or Parent and its consolidated Subsidiaries, as the
case may be, as of the dates thereof and the results of operations and changes
in financial position or other information included therein for the periods or
as of the date then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto).
 
  (b) The financial statements and management's discussion and analysis
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Company 1997 10-K"), when filed with the
 
                                     A-23
<PAGE>
 
SEC, will not vary in any material respect from the financial statements and
management's discussion and analysis contained in the draft of the Company's
Annual Report to Stockholders provided to Parent prior to the date hereof.
 
  (c) The Company shall provide Parent with a copy of the Company 1997 10-K no
less than three business days prior to filing it with the SEC and provide as
soon as practicable any changes thereto.
 
  (d) Within seven days of the date hereof, the Company shall provide a
written schedule to Parent setting forth (i) the taxable years of the Company
for which the statute of limitations with respect to Material State income
Taxes have not expired, and (ii) with respect to Material State income Taxes,
for all taxable years for which the statute of limitations has not expired,
those years for which examinations have been completed, those years for which
examinations are presently being conducted, and those years for which
examinations have not yet been initiated.
 
  Section 5.14. Company Rights Plans. No later than the date hereof, the
Company shall amend the Company Rights Plan to effect the changes thereto
contemplated by the form of amendment attached hereto as Exhibit C. Except as
set forth in Exhibit C, the Company shall not amend, modify or supplement the
Company Rights Plan without the prior written consent of Parent.
 
  Section 5.15. Control of Other Party's Business. Nothing contained in this
Agreement shall give the Company, directly or indirectly, the right to control
or direct the Parent's operations prior to the Effective Time. Nothing
contained in this Agreement shall give the Parent, directly or indirectly, the
right to control or direct the Company's operations prior to the Effective
Time. Prior to the Effective Time, each of the Company and the Parent shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its respective operations.
 
  Section 5.16. Board Seats and Officers. Prior to the Effective Time, Parent
will take all actions necessary to elect certain Company directors as
directors of Parent and certain Company officers as officers of Parent (or of
a Subsidiary of Parent), in the manner specified in Section 5.16 of the Parent
Disclosure Schedule.
 
                                  ARTICLE VI
 
                           Conditions to the Merger
 
  Section 6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
 
    (a) The Company Stockholder Approval and the Parent Stockholder Approval
  shall have been obtained all in accordance with applicable law and the
  rules of the NYSE.
 
    (b) No statute, rule, regulation, executive order, decree, ruling or
  injunction shall have been enacted, entered, promulgated or enforced by any
  court or other tribunal or governmental body or authority which prohibits
  the consummation of the Merger substantially on the terms contemplated
  hereby and shall continue to be in effect.
 
    (c) The Registration Statement shall have become effective in accordance
  with the provisions of the Securities Act and no stop order suspending such
  effectiveness shall have been issued and remain in effect.
 
    (d) The shares of Parent Common Stock issuable in the Merger shall have
  been approved for listing on the NYSE, subject only to official notice of
  issuance.
 
    (e) Any applicable waiting period under the HSR Act shall have expired or
  been terminated and any other Company Required Approvals and Parent
  Required Approvals shall have been obtained, except where the failure to
  obtain such other Company Required Approvals and Parent Required Approvals
  would not have a Material Adverse Effect on the Company or Parent, as the
  case may be.
 
                                     A-24
<PAGE>
 
    (f) Parent and the Company shall have received a letter of Parent's
  independent public accountants, dated as of the Effective Time, in form and
  substance reasonably satisfactory to Parent, stating that Parent's
  independent public accountants concur with management's conclusion that the
  Merger will qualify as a transaction to be accounted for by the parties
  hereto in accordance with the pooling of interests method of accounting
  under the requirements of APB No. 16.
 
  Section 6.2. Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject
to the fulfillment of the following conditions:
 
    (a)(i) The representations and warranties of Parent contained herein
  shall be true and correct in all respects (but without regard to any
  materiality qualifications or references to Material Adverse Effect
  contained in any specific representation or warranty) as of the Effective
  Time with the same effect as though made as of the Effective Time except
  (x) for changes specifically permitted by the terms of this Agreement, (y)
  that the accuracy of representations and warranties that by their terms
  speak as of the date of this Agreement or some other date will be
  determined as of such date and (z) where any such failure of the
  representations and warranties in the aggregate to be true and correct in
  all respects would not have a Material Adverse Effect on Parent, (ii)
  Parent shall have performed in all material respects all obligations and
  complied with all covenants required by this Agreement to be performed or
  complied with by it prior to the Effective Time and (iii) Parent shall have
  delivered to the Company a certificate, dated the Effective Time and signed
  by its Chief Executive Officer or President certifying to both such
  effects.
 
    (b) The Company shall have received an opinion of Sonnenschein Nath &
  Rosenthal, tax counsel to the Company, dated as of the Effective Time, to
  the effect that the Merger will qualify as a reorganization within the
  meaning of Section 368(a) of the Code. The issuance of such opinion shall
  be conditioned upon the receipt by such tax counsel of representation
  letters from each of Parent, Merger Sub and the Company, in each case, in
  form and substance reasonably satisfactory to such tax counsel. The
  specific provisions of each such representation letter shall be in form and
  substance reasonably satisfactory to such tax counsel, and each such
  representation letter shall be dated on or before the date of such opinion
  and shall not have been withdrawn or modified in any material respect.
 
  Section 6.3. Conditions to Obligation of Parent to Effect the Merger. The
obligation of Parent to effect the Merger is further subject to the
fulfillment of the following conditions:
 
    (a)(i) The representations and warranties of the Company contained herein
  shall be true and correct in all respects (but without regard to any
  materiality qualifications or references to Material Adverse Effect
  contained in any specific representation or warranty) as of the Effective
  Time with the same effect as though made as of the Effective Time except
  (x) for changes specifically permitted by the terms of this Agreement, (y)
  that the accuracy of representations and warranties that by their terms
  speak as of the date of this Agreement or some other date will be
  determined as of such date and (z) where any such failure of the
  representations and warranties in the aggregate to be true and correct in
  all respects would not have a Material Adverse Effect on the Company, (ii)
  the Company shall have performed in all material respects all obligations
  and complied with all covenants required by this Agreement to be performed
  or complied with by it prior to the Effective Time and (iii) the Company
  shall have delivered to Parent a certificate, dated the Effective Time and
  signed by its Chief Executive Officer or Executive Vice President
  certifying to both such effects.
 
    (b) Parent shall have received an opinion of Skadden, Arps, Slate,
  Meagher & Flom LLP, tax counsel to Parent, dated as of the Effective Time,
  to the effect that the Merger will qualify as a reorganization within the
  meaning of Section 368(a) of the Code. The issuance of such opinion shall
  be conditioned upon the receipt by such tax counsel of representation
  letters from each of Parent, Merger Sub and the Company, in each case, in
  form and substance reasonably satisfactory to such tax counsel. The
  specific provisions of each such representation letter shall be in form and
  substance reasonably satisfactory to such tax counsel, and each such
  representation letter shall be dated on or before the date of such opinion
  and shall not have been withdrawn or modified in any material respect.
 
                                     A-25
<PAGE>
 
                                  ARTICLE VII
 
                                  Termination
 
  Section 7.1. Termination or Abandonment. Notwithstanding anything contained
in this Agreement to the contrary, this Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after any
approval of the matters presented in connection with the Merger by the
respective stockholders of the Company and Parent:
 
    (a) by the mutual written consent of the Company and Parent;
 
    (b) by either the Company or Parent if (i) the Effective Time shall not
  have occurred on or before November 30, 1998 and (ii) the party seeking to
  terminate this Agreement pursuant to this clause 7.1(b) shall not have
  breached in any material respect its obligations under this Agreement or
  the Option Agreement in any manner that shall have proximately contributed
  to the failure to consummate the Merger on or before such date, except that
  if, as of November 30, 1998, all conditions set forth in Section 6.1, 6.2
  and 6.3 of this Agreement have been satisfied or waived other than receipt
  of the requisite approval of the FCC, then either Parent or the Company may
  extend the Termination Date to February 28, 1999, by providing written
  notice to the other party on November 30, 1998;
 
    (c) by either the Company or Parent if (i) a statute, rule, regulation or
  executive order shall have been enacted, entered or promulgated prohibiting
  the consummation of the Merger substantially on the terms contemplated
  hereby or (ii) an order, decree, ruling or injunction shall have been
  entered permanently restraining, enjoining or otherwise prohibiting the
  consummation of the Merger substantially on the terms contemplated hereby
  and such order, decree, ruling or injunction shall have become final and
  non-appealable and the party seeking to terminate this Agreement pursuant
  to this clause 7.1(c)(ii) shall have used its reasonable best efforts to
  remove such injunction, order or decree;
 
    (d) by either the Company or Parent if the approvals of the stockholders
  of either the Company or Parent contemplated by this Agreement shall not
  have been obtained by reason of the failure to obtain the required vote at
  a duly held meeting of stockholders or of any adjournment thereof;
 
    (e) by either the Company or Parent if the Board of Directors of the
  Company reasonably determines that a Takeover Proposal constitutes a
  Superior Proposal, except that the Company may not terminate this Agreement
  pursuant to this clause 7.1(e) unless and until (i) three business days
  have elapsed following delivery to Parent 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 Parent of the terms and
  conditions of the Takeover Proposal and the identity of the person making
  the Takeover Proposal and (y) otherwise cooperates with Parent with respect
  thereto (subject, in the case of this clause (y), to the condition that the
  Board of Directors of the Company shall not be required to take any action
  that it believes, after consultation with outside legal counsel, would
  present a reasonable possibility of violating its obligations to the
  Company or the Company's stockholders under applicable law) with the intent
  of enabling Parent 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 reasonably to believe that the Takeover
  Proposal constitutes a Superior Proposal, (iii) simultaneously with such
  termination the Company enters into a definitive acquisition, merger or
  similar agreement to effect the Superior Proposal and (iv) the Company pays
  to Parent the amount specified and within the time period specified in
  Section 7.2;
 
    (f) by Parent if the Board of Directors of the Company shall have (i)
  withdrawn or modified in a manner adverse to Parent its approval or
  recommendation of this Agreement and the transactions contemplated hereby
  or (ii) approved or recommended, or proposed publicly to approve or
  recommend, any Takeover Proposal;
 
    (g) by Parent if a tender offer or exchange offer for 50% or more of the
  outstanding shares of capital stock of the Company is commenced prior to
  the Company Meeting, and the Board of Directors of the Company fails to
  recommend against acceptance of such tender offer or exchange offer by its
  stockholders
 
                                     A-26
<PAGE>
 
  (including by taking no position with respect to the acceptance of such
  tender offer or exchange offer by its stockholders) within the time period
  specified by Rule 14e-2; or
 
    (h) by either the Company or Parent if there shall have been a material
  breach by the other of any of its representations, warranties, covenants or
  agreements contained in this Agreement or the Option Agreement, which if
  not cured would cause the conditions set forth in Sections 6.2(a) or
  6.3(a), as the case may be, not to be satisfied, and such breach shall not
  have been cured within 30 days after notice thereof shall have been
  received by the party alleged to be in breach.
 
  In the event of termination of this Agreement pursuant to this Section 7.1,
this Agreement shall terminate (except for the confidentiality agreement
referred to in Section 5.2 and the provisions of Sections 7.2, 8.2, 8.4 and
8.5), and there shall be no other liability on the part of the Company or
Parent to the other except liability arising out of an intentional breach of
this Agreement or as provided for in the Confidentiality Agreement.
 
  Section 7.2. Termination Fee. Notwithstanding any provision in this
Agreement to the contrary, if (i) this Agreement is terminated by the Company
or Parent pursuant to Section 7.1(e), (ii) this Agreement is terminated by
Parent pursuant to Section 7.1(f), or (iii) (x) prior to the termination of
this Agreement, a bona fide Takeover Proposal is commenced, publicly proposed
or publicly disclosed and not withdrawn, (y) this Agreement is terminated by
the Company pursuant to Section 7.1(b) or by Parent or the Company pursuant to
Section 7.1(d) (but only due to the failure of the Company stockholders to
approve the Merger) or by Parent pursuant to Section 7.1(g) and (z)
concurrently with or within twelve months after such termination a Takeover
Proposal shall have been consummated, then, in each case, the Company shall
(without prejudice to any other rights of Parent against the Company) pay to
Parent a fee (the "Termination Fee") of $100 million in cash, such payment to
be made simultaneously with such termination in the case of a termination by
the Company pursuant to Section 7.1(e) and promptly, but in no event later
than the second business day following a termination by Parent pursuant to
Section 7.1(e) or 7.1(f) and, in the case of clause (iii), upon the
consummation of such Takeover Proposal.
 
  Section 7.3. Amendment or Supplement. At any time before or after approval
of the matters presented in connection with the Merger by the respective
stockholders of the Company and Parent and prior to the Effective Time, this
Agreement may be amended or supplemented in writing by the Company and Parent
with respect to any of the terms contained in this Agreement, except that
following approval by the stockholders of the Company and Parent there shall
be no amendment or change to the provisions hereof which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further approval nor any amendment
or change not permitted under applicable law.
 
  Section 7.4. Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, the Company and Parent may:
 
    (a) extend the time for the performance of any of the obligations or acts
  of the other party;
 
    (b) waive any inaccuracies in the representations and warranties of the
  other party contained herein or in any document delivered pursuant hereto;
  or
 
    (c) waive compliance with any of the agreements or conditions of the
  other party contained herein.
 
Notwithstanding the foregoing, no failure or delay by the Company or Parent in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise of
any other right hereunder. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
 
                                     A-27
<PAGE>
 
                                 ARTICLE VIII
 
                                 Miscellaneous
 
  Section 8.1. No Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger.
 
  Section 8.2. Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring or
required to incur such expenses, except expenses incurred in connection with
the printing and filing of the Registration Statement and the printing and
mailing of the Joint Proxy Statement (including applicable SEC filing fees)
shall be shared equally by the Company and Parent.
 
  Section 8.3. Counterparts; Effectiveness. This Agreement may be executed in
two or more consecutive counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered (by telecopy or otherwise) to the
other parties.
 
  Section 8.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
 
  Section 8.5. Jurisdiction. Each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any Federal court located in the State
of Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, and (iii) agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a Federal
court sitting in the State of Delaware or a Delaware state court.
 
  Section 8.6. Notices. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective
(a) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section 8.6 and the appropriate telecopy confirmation
is received or (b) if given by any other means, when delivered at the address
specified in this Section 8.6:
 
  To Parent or Merger Sub:
 
   ALLTEL Corporation
   One Allied Drive
   Little Rock, Arkansas 72202
   Attention: Chief Executive Officer
   (with a copy to the General Counsel)
   Telecopy: (501) 905-0962
 
  copy to:
 
   Skadden, Arps, Slate, Meagher & Flom LLP
   919 Third Avenue
   New York, New York 10022
   Attention: J. Michael Schell, Esq.
   Telecopy: (212) 735-2000
 
                                     A-28
<PAGE>
 
  To the Company:
 
   360(degrees) Communications Company
   8725 West Higgins Road
   Chicago, Illinois 60631
   Attention: Kevin C. Gallagher, Esq.
   Telecopy: (773) 693-7432
 
  copy to:
 
   Sonnenschein Nath & Rosenthal
   8000 Sears Tower
   Chicago, Illinois 60606
   Attention: Donald G. Lubin, Esq.
   Telecopy: (312) 876-7934
 
  Section 8.7. Assignment; Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
 
  Section 8.8. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only
so broad as is enforceable.
 
  Section 8.9. Enforcement of Agreement. The parties hereto agree that money
damages or other remedy at law would not be a sufficient or adequate remedy
for any breach or violation of, or a default under, this Agreement by them and
that in addition to all other remedies available to them, each of them shall
be entitled to the fullest extent permitted by law to an injunction
restraining such breach, violation or default or threatened breach, violation
or default and to any other equitable relief, including, without limitation,
specific performance, without bond or other security being required.
 
  Section 8.10. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Option Agreement and the Confidentiality Agreement constitute
the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, between the parties, or any of them,
with respect to the subject matter hereof and thereof and except for the
provisions of Section 5.11 hereof, is not intended to and shall not confer
upon any Person other than the parties hereto any rights or remedies
hereunder.
 
  Section 8.11. Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
 
  Section 8.12. Definitions. (a) References in this Agreement to
"Subsidiaries" of any party shall mean any corporation, partnership,
association, trust or other form of legal entity of which (i) more than 50% of
the outstanding voting securities are on the date hereof directly or
indirectly owned by such party, or (ii) such party or any Subsidiary of such
party is a general partner (excluding partnerships in which such party or any
Subsidiary of such party does not have a majority of the voting interests in
such partnership). References in this Agreement (except as specifically
otherwise defined) to "affiliates" shall mean, as to any person, any other
person which, directly or indirectly, controls, or is controlled by, or is
under common control with, such person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management or policies of a person,
whether through the ownership of securities or partnership of other
 
                                     A-29
<PAGE>
 
ownership interests, by contract or otherwise. References in the Agreement to
"person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity, group (as such term is used in
Section 13 of the Exchange Act) or organization, including, without
limitation, a governmental body or authority.
 
  (b) Each of the following terms is defined on the pages set forth opposite
such term:
 
<TABLE>
<S>                                                                          <C>
affiliates..................................................................  29
Agreement...................................................................   1
APB No. 16..................................................................  18
Certificate of Merger.......................................................   1
Certificates................................................................   2
Closing Date................................................................   1
Code........................................................................   1
Communications Act..........................................................   7
Company.....................................................................   1
Company Affiliated Group....................................................  10
Company Award...............................................................  21
Company Common Stock........................................................   2
Company Disclosure Schedule.................................................   5
Company Material Contracts..................................................  11
Company Meeting.............................................................  20
Company Option Plans........................................................  21
Company Preferred Stock.....................................................   5
Company Required Approvals..................................................   7
Company Rights Plan.........................................................   6
Company SAR.................................................................  21
Company SEC Reports.........................................................   7
Company Series B Preferred Stock............................................   6
Company Stockholder Approval................................................  11
Company Stock Options.......................................................  21
Company 1997 10-K...........................................................  23
Confidentiality Agreement...................................................  19
control.....................................................................  29
Conversion Fraction.........................................................   2
Current Company Group.......................................................  10
Current Parent Group........................................................  16
DGCL........................................................................   1
Disclosure Schedule.........................................................  12
Effective Time..............................................................   1
Environmental Claims........................................................   8
Environmental Laws..........................................................   8
ERISA.......................................................................   8
Exchange Act................................................................   7
Exchange Agent..............................................................   2
Exchange Fund...............................................................   3
FCC.........................................................................   7
GAAP........................................................................   8
HSR Act.....................................................................   7
Indemnified Parties.........................................................  23
Joint Proxy Statement.......................................................   9
Lien........................................................................   5
Material Adverse Effect.....................................................   5
</TABLE>
 
                                     A-30
<PAGE>
 
<TABLE>
<S>                                                                          <C>
Material State..............................................................  11
Merger......................................................................   1
Merger Consideration........................................................   2
Merger Sub..................................................................   1
No Par Preferred Stock......................................................  12
Option Agreement............................................................   1
Par Preferred Stock.........................................................  12
Parent......................................................................   1
Parent Affiliated Group.....................................................  16
Parent Certificates.........................................................   2
Parent Common Stock.........................................................  12
Parent Disclosure Schedule..................................................  12
Parent Material Contracts...................................................  16
Parent Meeting..............................................................  20
Parent Preferred Stock......................................................  12
Parent Required Approvals...................................................  13
Parent SEC Reports..........................................................  13
Parent Stockholder Approval.................................................  15
Past Company Group..........................................................  10
Past Parent Group...........................................................  16
PUCs........................................................................   7
Registration Statement......................................................  19
Regulatory Law..............................................................  22
SEC.........................................................................   7
Securities Act..............................................................   7
Subsidiaries................................................................  29
Superior Proposal...........................................................  23
Surviving Corporation.......................................................   1
Takeover Proposal...........................................................  23
Tax Assurance Agreement.....................................................  10
Tax Return..................................................................  11
Tax Sharing Agreement.......................................................  10
Taxes.......................................................................  10
Termination Benefit Agreements..............................................  21
Termination Date............................................................  16
Termination Fee.............................................................  27
</TABLE>
 
                                      A-31
<PAGE>
 
  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
 
                                          360 COMMUNICATIONS COMPANY
 
                                                   /s/ Dennis E. Foster
                                          By: _________________________________
                                            NAME: DENNIS E. FOSTER TITLE:
                                            PRESIDENT AND CHIEF EXECUTIVE
                                            OFFICER
 
                                          ALLTEL CORPORATION
 
                                                       /s/ Joe Ford
                                          By: _________________________________
                                            NAME: JOE FORD TITLE: CHAIRMAN AND
                                            CHIEF EXECUTIVE OFFICER
 
                                          PINNACLE MERGER SUB, INC.
 
                                                       /s/ Joe Ford
                                          By: _________________________________
                                            NAME: JOE FORD
                                            TITLE: CHAIRMAN AND CHIEF
                                            EXECUTIVE OFFICER
 
                                     A-32
<PAGE>
 
                                                                        ANNEX B
 
                            STOCK OPTION AGREEMENT
 
  STOCK OPTION AGREEMENT, dated as of March 16, 1998 (the "Agreement"),
between 360(degrees) Communications Company, a Delaware corporation
("Issuer"), and ALLTEL Corporation, a Delaware corporation ("Grantee").
 
                                   RECITALS
 
  A. Issuer and Grantee have entered into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"; defined terms used but
not defined herein have the meanings set forth in the Merger Agreement),
providing for, among other things, the merger of Merger Sub with and into
Issuer pursuant to the terms of the Merger; and
 
  B. As a condition and inducement to Grantee's willingness to enter into the
Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below).
 
  NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
 
  1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 19.9% of the number of shares (the "Option Shares") of common
stock, par value $0.01 per share ("Issuer Common Stock"), of Issuer issued and
outstanding immediately prior to the grant of the Option at a purchase price
of $33.90 (as adjusted as set forth herein) per Option Share (the "Purchase
Price").
 
  2. Exercise of Option. (a) Grantee may exercise the Option, with respect to
any or all of the Option Shares at any one time, subject to the provisions of
Section 2(c), upon the occurrence of a Purchase Event (as defined in Section
7(c)), except that (i) subject to the last sentence of this Section 2(a), the
Option will terminate and be of no further force and effect upon the earliest
to occur of (A) the Effective Time, (B) six months after the date on which a
Purchase Event (as defined herein) occurs, and (C) termination of the Merger
Agreement in accordance with its terms prior to the occurrence of a Purchase
Event, unless, in the case of clause (C), the Grantee has the right to receive
a Termination Fee following such termination upon the occurrence of certain
events, in which case the Option will not terminate until the later of (x) six
months following the time such Termination Fee becomes payable and (y) the
expiration of the period in which the Grantee has such right to receive a
Termination Fee, and (ii) any purchase of Option Shares upon exercise of the
Option will be subject to compliance with the HSR Act and the obtaining or
making of any consents, approvals, orders, notifications or authorizations,
the failure of which to have obtained or made would have the effect of making
the issuance of Option Shares illegal (the "Regulatory Approvals") and no
preliminary or permanent injunction or other order by any court of competent
jurisdiction prohibiting or otherwise restraining such issuance shall be in
effect. Notwithstanding the termination of the Option, Grantee will be
entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option, and
the termination of the Option will not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such termination.
 
  (b) In the event that Grantee wishes to exercise the Option, it will send to
Issuer a written notice (an "Exercise Notice"; the date of which being herein
referred to as the "Notice Date") to that effect which Exercise Notice also
specifies the number of Option Shares, if any, Grantee wishes to purchase
pursuant to this Section 2(b), the number of Option Shares, if any, with
respect to which Grantee wishes to exercise its Cash-Out Right (as defined
herein) pursuant to Section 7(c), the denominations of the certificate or
certificates evidencing the Option Shares which Grantee wishes to purchase
pursuant to this Section 2(b) and a date not earlier than 20 business days nor
later than 30 business days from the Notice Date for the closing of such
purchase (an "Option
 
                                      B-1
<PAGE>
 
Closing Date"). Any Option Closing will be at an agreed location and time in
New York, New York on the applicable Option Closing Date or at such later date
as may be necessary so as to comply with clause (ii) of Section 2(a).
 
  (c) Notwithstanding anything to the contrary contained herein, any exercise
of the Option and purchase of Option Shares shall be subject to compliance
with applicable laws and regulations, which may prohibit the purchase of all
the Option Shares specified in the Exercise Notice without first obtaining or
making certain Regulatory Approvals. In such event, if the Option is otherwise
exercisable and Grantee wishes to exercise the Option, the Option may be
exercised in accordance with Section 2(b) and Grantee shall acquire the
maximum number of Option Shares specified in the Exercise Notice that Grantee
is then permitted to acquire under the applicable laws and regulations, and if
Grantee thereafter obtains the Regulatory Approvals to acquire the remaining
balance of the Option Shares specified in the Exercise Notice, then Grantee
shall be entitled to acquire such remaining balance. Issuer agrees to use its
reasonable best efforts to assist Grantee in seeking the Regulatory Approvals.
 
  In the event (i) Grantee receives official notice that a Regulatory Approval
required for the purchase of any Option Shares will not be issued or granted
or (ii) such Regulatory Approval has not been issued or granted within six
months of the date of the Exercise Notice, Grantee shall have the right to
exercise its Cash-Out Right pursuant to Section 7(c) with respect to the
Option Shares for which such Regulatory Approval will not be issued or granted
or has not been issued or granted.
 
  3. Payment and Delivery of Certificates. (a) At any Option Closing, Grantee
will pay to Issuer in immediately available funds by wire transfer to a bank
account designated in writing by Issuer an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased at such Option
Closing.
 
  (b) At any Option Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer will deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Option Closing, which Option Shares will be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. If at the time of
issuance of Option Shares pursuant to an exercise of the Option hereunder,
Issuer shall not have issued any securities similar to rights under a
shareholder rights plan, then each Option Share issued pursuant to such
exercise will also represent such a corresponding right with terms
substantially the same as and at least as favorable to Grantee as are provided
under any Issuer shareholder rights agreement or any similar agreement then in
effect.
 
  (c) Certificates for the Option Shares delivered at an Option Closing will
have typed or printed thereon a restrictive legend which will read
substantially as follows:
 
  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
  UNDER THE SECURITIES ACT OF 1993, AND MAY BE OFFERED, SOLD, PLEDGED OR
  OTHERWISE TRANSFERRED ONLY IF SO REGISTERED OR IF ANY EXEMPTION FROM SUCH
  REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL
  RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED
  AS OF MARCH 16, 1998, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF
  360(degrees) COMMUNICATIONS COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES."
 
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have
been sold in compliance with the registration and prospectus delivery
requirements of the Securities Act, such Option Shares have been sold in
reliance on and in accordance with Rule 144 under the Securities Act or
Grantee has delivered to Issuer a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act and (ii) the reference to restrictions pursuant
to this Agreement in the above legend will be removed by delivery of
substitute certificate(s) without such reference if the Option Shares
evidenced by
 
                                      B-2
<PAGE>
 
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do
not require the retention of such reference.
 
  4. Incorporation of Representations and Warranties of Issuer. The
representations and warranties of Issuer contained in Article III of the
Merger Agreement are hereby incorporated by reference herein with the same
force and effect as though made pursuant to this Agreement.
 
  5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
 
    (a) Corporate Authorization. Issuer has the corporate power and authority
  to enter into this Agreement and to carry out its obligations hereunder.
  The execution and delivery of this Agreement and the consummation of the
  transactions contemplated hereby have been duly and validly authorized by
  the Board of Directors of Issuer, and no other corporate proceedings on the
  part of Issuer are necessary to authorize this Agreement and the
  transactions contemplated hereby. This Agreement has been duly and validly
  executed and delivered by Issuer, and assuming this Agreement constitutes a
  valid and binding agreement of Grantee, this Agreement constitutes a valid
  and binding agreement of Issuer, enforceable against Issuer in accordance
  with its terms (except insofar as 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) Authorized Stock. Issuer has taken all necessary corporate and other
  action to authorize and reserve and, subject to the expiration or
  termination of any required waiting period under the HSR Act, to permit it
  to issue, and, at all times from the date hereof until the obligation to
  deliver Option Shares upon the exercise of the Option terminates, shall
  have reserved for issuance, upon exercise of the Option, shares of Issuer
  Common Stock necessary for Grantee to exercise the Option, and Issuer will
  take all necessary corporate action to authorize and reserve for issuance
  all additional shares of Issuer Common Stock or other securities which may
  be issued pursuant to Section 7 upon exercise of the Option. The shares of
  Issuer Common Stock to be issued upon due exercise of the Option, including
  all additional shares of Issuer Common Stock or other securities which may
  be issuable upon exercise of the Option or any other securities which may
  be issued pursuant to Section 7, upon issuance pursuant hereto, will be
  duly and validly issued, fully paid and nonassessable, and will be
  delivered free and clear of all liens, claims, charges and encumbrances of
  any kind or nature whatsoever, including without limitation any preemptive
  rights of any stockholder of Issuer.
 
  6. Representations and Warranties of Grantee. Grantee hereby represents and
warrants to Issuer that:
 
    (a) Corporate Authorization. Grantee has the corporate power and
  authority to enter into this Agreement and to carry out its obligations
  hereunder. The execution and delivery of this Agreement and the
  consummation of the transactions contemplated hereby have been duly and
  validly authorized by the Board of Directors of Grantee, and no other
  corporate proceedings on the part of Grantee are necessary to authorize
  this Agreement and the transactions contemplated hereby. This Agreement has
  been duly and validly executed and delivered by Grantee, and assuming this
  Agreement constitutes a valid and binding agreement of Issuer, this
  Agreement constitutes a valid and binding agreement of Grantee, enforceable
  against Grantee in accordance with its terms (except insofar as
  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) Purchase Not For Distribution. Any Option Shares or other securities
  acquired by Grantee upon exercise of the Option will not be, and the Option
  is not being, acquired by Grantee with a view to the public distribution
  thereof. Neither the Option nor any of the Option Shares will be offered,
  sold, pledged or otherwise transferred except in compliance with, or
  pursuant to an exemption from, the registration requirements of the
  Securities Act.
 
                                      B-3
<PAGE>
 
  7. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any
changes in Issuer Common Stock by reason of a stock dividend, reverse stock
split, merger, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares or securities subject to the
Option, and the Purchase Price therefor, will be adjusted appropriately, and
proper provision will be made in the agreements governing such transaction, so
that Grantee will receive upon exercise of the Option the number and class of
shares or other securities or property that Grantee would have received with
respect to Issuer Common Stock if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable.
 
  (b) Without limiting the parties' relative rights and obligations under the
Merger Agreement, in the event that the Issuer enters into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving corporation
in such consolidation or merger, (ii) to permit any person, other than Grantee
or one of its subsidiaries, to merge into Issuer and Issuer will be the
continuing or surviving corporation, but in connection with such merger, the
shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger will be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property,
or the shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger will, after such merger represent less than 50% of
the outstanding voting securities of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction will make proper provision so that the
Option will, upon the consummation of any such transaction and upon the terms
and condition set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such consolidation, merger, sale, or transfer, or the record date
therefor, as applicable and make any other necessary adjustments.
 
  (c) If, at any time during the period commencing on the occurrence of an
event as a result of which Grantee is entitled to receive the Termination Fee
pursuant to Section 7.2 of the Merger Agreement (the "Purchase Event") and
ending on the termination of the Option in accordance with Section 2, Grantee
sends to Issuer an Exercise Notice indicating Grantee's election to exercise
its right (the "Cash-Out-Right") pursuant to this Section 7(c), then Issuer
shall pay to Grantee, on the Option Closing Date, in exchange for the
cancellation of the Option with respect to such number of Option Shares as
Grantee specifies in the Exercise Notice, an amount in cash equal to such
number of Option Shares multiplied by the difference between (i) the average
closing price for the 10 NYSE trading days commencing on the 12th NYSE trading
day immediately preceding the Notice Date, per share of Issuer Common Stock as
reported on the NYSE Composite Transactions Tape (or, if not listed on the
NYSE, as reported on any other national securities exchange or national
securities quotation system on which the Issuer Common Stock is listed or
quoted, as reported in The Wall Street Journal (Northeast edition), or, if not
reported thereby, any other authoritative source) (the "Closing Price") and
(ii) the Purchase Price, except that in no event shall the Issuer be required
to pay to the Grantee pursuant to this Section 7(c) an amount exceeding the
product of (x) $2.00 and (y) such number of Option Shares. Notwithstanding the
termination of the Option, Grantee will be entitled to exercise its rights
under this Section 7(c) if it has exercised such rights in accordance with the
terms hereof prior to the termination of the Option.
 
  8. Repurchase Option. In the event that Grantee notifies Issuer of its
intention to exercise the Option pursuant to Section 2(a), Issuer may require
Grantee upon the delivery to Grantee of written notice during the period
beginning on the Notice Date and ending two days prior to the Option Closing
Date, to sell to Issuer the Option Shares acquired by Grantee pursuant to such
exercise of the Option at a purchase price per share for such sale equal to
the Purchase Price plus $2.00. The Closing of any repurchase of Option Shares
pursuant to this Section 8 shall take place immediately following consummation
of the sale of the Option Shares to Grantee on the Option Closing Date at the
location and time agreed upon with respect to such Option Closing Date.
 
  9. Registration Rights.
 
  (a) Grantee may by written notice (a "Registration Notice") to Issuer
request Issuer to register under the Securities Act all or any part of the
Option Shares or other securities acquired by Grantee pursuant to this
 
                                      B-4
<PAGE>
 
Agreement (collectively, the "Registrable Securities") in order to permit the
sale or other disposition of such securities pursuant to a bona fide, firm
commitment underwritten public offering in which Grantee and the underwriters
shall effect as wide a distribution of such Registrable Securities as is
reasonably practicable and shall use reasonable efforts to prevent any person
or group from purchasing through such offering shares representing more than
3% of the shares of Issuer Common Stock then outstanding on a fully-diluted
basis; provided, however, that any such Registration Notice must relate to a
number of shares equal to at least 2% of the shares of Issuer Common Stock
then outstanding on a fully-diluted basis and that any rights to require
registration hereunder shall terminate with respect to any shares that may be
sold pursuant to Rule 144(k) under the Securities Act.
 
  (b) Issuer shall use reasonable best efforts to effect, as promptly as
practicable, the registration under the Securities Act of the Registrable
Securities requested to be registered in the Registration Notice; provided,
however, that (i) Grantee shall not be entitled to more than an aggregate of
two effective registration statements hereunder and (ii) Issuer will not be
required to file any such registration statement during any period of time
(not to exceed 40 days after a Registration Notice in the case of clause (A)
below or 90 days after a Registration Notice in the case of clauses (B) and
(C) below) when (A) Issuer is in possession of material non-public information
which it reasonably believes would be detrimental to be disclosed at such time
and, based upon the advice of outside securities counsel to Issuer, such
information would have to be disclosed if a registration statement were filed
at that time; (B) Issuer would be required under the Securities Act to include
audited financial statements for any period in such registration statement and
such financial statements are not yet available for inclusion in such
registration statement; or (C) Issuer determines, in its reasonable judgment,
that such registration would interfere with any financing, acquisition or
other material transaction involving Issuer. If the consummation of the sale
of any Registrable Securities pursuant to a registration hereunder does not
occur within 180 days after the filing with the Securities and Exchange
Commission of the initial registration statement therefor, the provisions of
this Section shall again be applicable to any proposed registration, it being
understood that Grantee shall not be entitled to more than an aggregate of two
effective registration statements hereunder. Issuer will use reasonable
efforts to cause each such registration statement to become effective, to
obtain all consents or waivers of other parties which are required therefor,
and to keep such registration statement effective for such period not in
excess of 180 calendar days from the day such registration statement first
becomes effective as may be reasonably necessary to effect such sale or other
disposition. Issuer shall use reasonable best efforts to cause any Registrable
Securities registered pursuant to this Section to be qualified for sale under
the securities or blue sky laws of such jurisdictions as Grantee may
reasonably request and shall continue such registration or qualification in
effect in such jurisdictions; provided, however, that Issuer shall not be
required to qualify to do business in, or consent to general service of
process in, any jurisdiction.
 
  (c) If Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), it will allow
Grantee the right to participate in such registration, and such participation
will not affect the obligation of Issuer to effect demand registration
statements for Grantee under this Section 9, except that, if the managing
underwriters of such offering advise Issuer in writing that in their opinion
the number of shares of Issuer Common Stock requested to be included in such
registration exceeds the number which can be sold in such offering, Issuer
will include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer.
 
  (d) The registration rights set forth in this Section are subject to the
condition that Grantee shall provide Issuer with such information with respect
to Grantee Registrable Securities, the plan for distribution thereof, and such
other information with respect to Grantee as, in the reasonable judgment of
counsel for Issuer, is necessary to enable Issuer to include in a registration
statement all material facts required to be disclosed with respect to a
registration hereunder.
 
  (e) A registration effected under this Section shall be effected at Issuer's
expense, except for underwriting discounts and commissions and the fees and
expenses of Grantee's counsel, and Issuer shall provide to the
 
                                      B-5
<PAGE>
 
underwriters such documentation (including certificates, opinions of counsel
and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, Grantee and Issuer agree to enter into an
underwriting agreement reasonably acceptable to each such party, in form and
substance customary for transactions of this type.
 
  10. Transfers. The Option Shares may not be sold, assigned, transferred, or
otherwise disposed of except (i) pursuant to Section 8 hereof, (ii) in an
underwritten public offering as provided in Section 9 or (iii) to any
purchaser or transferee who would not, to the knowledge of the Grantee after
reasonable inquiry, immediately following such sale, assignment, transfer or
disposal beneficially own more than 4.9% of the then-outstanding voting power
of the Issuer, except that Grantee shall be permitted to sell any Option
Shares if such sale is made pursuant to a tender or exchange offer that has
been approved or recommended by a majority of the members of the Board of
Directors of Issuer (which majority shall include a majority of directors who
were directors as of the date hereof).
 
  11. Listing. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then listed on the NYSE (or any other national
securities exchange or national securities quotation system), Issuer, upon the
request of Grantee, will promptly file an application to list the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option on the NYSE (and any such other national securities exchange or
national securities quotation system) and will use reasonable efforts to
obtain approval of such listing as promptly as practicable.
 
  12. Miscellaneous. (a) Expenses. Except as otherwise provided in the Merger
Agreement, each of the parties hereto will pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
 
  (b) Amendment. This Agreement may not be amended, except by an instrument in
writing signed on behalf of each of the parties.
 
  (c) Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
 
  (d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
Merger Agreement (including the documents and instruments attached thereto as
exhibits or schedules or delivered in connection therewith) and the
Confidentiality Agreement (i) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter of this Agreement, and (ii) except
as provided in Section 8.10 of the Merger Agreement, are not intended to
confer upon any person other than the parties any rights or remedies.
 
  (e) Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws
thereof.
 
  (f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and will be deemed
given if delivered personally, telecopied (which is confirmed), or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
 
                                      B-6
<PAGE>
 
  If to Issuer to:
 
    360(degrees) Communications Company
    8725 West Higgins Road
    Chicago, Illinois 60631
    Attention: Kevin C. Gallagher, Esq.
    Telecopy: (773) 693-7432
 
  with a copy to:
 
    Sonnenschein Nath & Rosenthal
    8000 Sears Tower
    Chicago, Illinois 60606
    Attention: Donald G. Lubin, Esq.
    Telecopy: (312) 876-7934
 
  If to Grantee to:
 
    ALLTEL Corporation
    One Allied Drive
    Little Rock, Arkansas 72202
    Attention: Chief Executive Officer
    (with a copy to the General Counsel)
    Telecopy: (501) 905-0962
 
  with a copy to:
 
    Skadden, Arps, Slate, Meagher & Flom LLP
    919 Third Avenue
    New York, New York 10022
    Attention: J. Michael Schell
    Telecopy: (212) 735-2000
 
  (g) Assignment. Neither this Agreement, the Option nor any of the rights,
interests, or obligations under this Agreement may be assigned, transferred or
delegated, in whole or in part, by operation of law or otherwise, by Issuer or
Grantee without the prior written consent of the other. Any assignment,
transfer or delegation in violation of the preceding sentence will be void.
Subject to the first and second sentences of this Section 12(g), this
Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
 
  (h) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
 
  (i) Enforcement. The parties agree that irreparable damage would occur and
that the parties would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties will be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any Federal court located in the State of
Delaware or in Delaware state court, the foregoing being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (ii) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of Delaware or a Delaware state court.
 
                                      B-7
<PAGE>
 
  IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day
and year first written above.
 
                                          360(degrees) Communications Company
 
                                             /s/ Dennis E. Foster
                                          By: _________________________________
                                             Name: Dennis E. Foster
                                             Title: President and Chief
                                              Executive Officer
 
                                          ALLTEL Ccorporation
 
                                             /s/ Joe Ford
                                          By: _________________________________
                                             Name: Joe Ford
                                             Title: Chairman and Chief
                                              Executive Officer
 
                                      B-8
<PAGE>
 
                                                                        ANNEX C
                                     LOGO
        [LETTER OF MERRILL, LYNCH, PIERCE, FENNER & SMITH APPEARS HERE]
 
                                                                   May 11, 1998
 
Board of Directors
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202
 
Members of the Board of Directors:
 
  360(degrees) Communications Company ("360(degrees) Communications"), ALLTEL
Corporation ("ALLTEL") and Pinnacle Merger Sub, Inc., a wholly owned
subsidiary of ALLTEL (the "Merger Sub"), have entered into an Agreement and
Plan of Merger (together with the Option Agreement between 360(degrees)
Communications and ALLTEL, the "Agreements") pursuant to which the Merger Sub
will be merged with and into 360(degrees) Communications in a transaction (the
"Merger") in which each outstanding share of 360(degrees) Communications'
common stock, par value $0.01 per share (the "360(degrees) Communications
Shares"), will be converted into the right to receive 0.74 shares (the
"Exchange Ratio") of the common stock of ALLTEL (the "ALLTEL Shares").
 
  You have asked us whether, in our opinion, the Exchange Ratio is fair from a
financial point of view to ALLTEL.
 
  In arriving at the opinion set forth below, we have, among other things:
 
   (1) Reviewed certain publicly available business and financial information
     relating to 360(degrees) Communications and ALLTEL that we deemed to be
     relevant;
 
   (2) Reviewed certain information, including financial forecasts, relating
     to the business, earnings, cash flow, assets, liabilities and prospects
     of 360(degrees) Communications and ALLTEL, as well as the amount and
     timing of the cost savings and related expenses and synergies expected
     to result from the Merger (the "Expected Synergies") furnished to us by
     360(degrees) Communications and ALLTEL;
 
   (3) Conducted discussions with members of senior management of
     360(degrees) Communications and ALLTEL concerning the matters described
     in clauses 1 and 2 above, as well as their respective businesses and
     prospects before and after giving effect to the Merger and the Expected
     Synergies;
 
   (4) Reviewed the market prices and valuation multiples for the
     360(degrees) Communications Shares and the ALLTEL Shares and compared
     them with those of certain publicly traded companies that we deemed to
     be relevant;
 
   (5) Reviewed the results of operations of 360(degrees) Communications and
     ALLTEL and compared them with those of certain publicly traded companies
     that we deemed to be relevant;
 
   (6) Compared the proposed financial terms of the Merger with the financial
     terms of certain other transactions that we deemed to be relevant;
 
                                      C-1
<PAGE>
 
   (7) Participated in certain discussions and negotiations among
     representatives of 360(degrees) Communications and ALLTEL and their
     financial and legal advisors;
 
   (8) Reviewed the potential pro forma impact of the Merger;
 
   (9) Reviewed the Agreements; and
 
  (10) Reviewed such other financial studies and analyses and took into
     account such other matters as we deemed necessary, including our
     assessment of general economic, market and monetary conditions.
 
  In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and
we have not assumed any responsibility for independently verifying such
information or undertaken an independent evaluation or appraisal of any of the
assets or liabilities of 360(degrees) Communications or ALLTEL or been
furnished with any such evaluation or appraisal. In addition, we have not
assumed any obligation to conduct, nor have we conducted, any physical
inspection of the properties or facilities of 360(degrees) Communications or
ALLTEL. With respect to the financial forecast information and the Expected
Synergies furnished to or discussed with us by 360(degrees) Communications or
ALLTEL, we have assumed that they have been reasonably prepared and reflect
the best currently available estimates and judgment of 360(degrees)
Communications' or ALLTEL's management as to the expected future financial
performance of 360(degrees) Communications or ALLTEL, as the case may be, and
the Expected Synergies. We have further assumed that the Merger will be
accounted for as a pooling of interests under generally accepted accounting
principles and that it will qualify as a tax-free reorganization for U.S.
federal income tax purposes.
 
  Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available
to us as of, the date hereof. We have assumed that in the course of obtaining
the necessary regulatory or other consents or approvals (contractual or
otherwise) for the Merger, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse effect on the contemplated benefits of the Merger.
 
  We are acting as financial advisor to ALLTEL in connection with the Merger
and will receive a fee from ALLTEL for our services, a significant portion of
which is contingent upon the consummation of the Merger. In addition, ALLTEL
has agreed to indemnify us for certain liabilities arising out of our
engagement. We have, in the past, provided financial advisory and financing
services to ALLTEL and financing services to 360(degrees) Communications and
may continue to do so and have received, and may receive, fees for the
rendering of such services. In addition, in the ordinary course of our
business, we may actively trade the 360(degrees) Communications Shares and
other securities of 360(degrees) Communications, as well as the ALLTEL Shares
and other securities of ALLTEL, for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. This opinion is for the use and benefit of the Board of
Directors of ALLTEL. Our opinion does not address the merits of the underlying
decision by ALLTEL to engage in the Merger and does not constitute a
recommendation to any shareholder of ALLTEL as to how such shareholder should
vote on the proposed Merger.
 
  We are not expressing any opinion herein as to the prices at which the
ALLTEL Shares will trade following the announcement or consummation of the
Merger.
 
  On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Exchange Ratio is fair from a financial point of view
to ALLTEL.
 
                                        Very truly yours,
 
                                      /s/ MERRILL LYNCH, PIERCE, FENNER & SMITH
                                                       INCORPORATED
 
                                      C-2
<PAGE>
 
                                                                        ANNEX D
 
                                     LOGO
                     [Logo of Stephens Inc. appears here]
 
                                                                   May 11, 1998
 
Members of the Board of Directors
 of ALLTEL CORPORATION
One Allied Drive
Little Rock, Arkansas 72202
 
Members of the Board:
 
  We have acted as your financial advisor in connection with the proposed
merger of Pinnacle Merger Sub, Inc., a wholly owned subsidiary of ALLTEL
Corporation ("Parent"), with and into 360o Communications Company (the
"Company") in a transaction (the "Transaction") in which each outstanding
share of the Company's common stock, par value $0.01 per share (the "Company
Shares"), will be converted into the right to receive 0.74 shares (the
"Exchange Ratio") of common stock of Parent (the "Parent Shares").
 
  You have requested our opinion as to whether the Exchange Ratio is fair from
a financial point of view to the Parent.
 
  In connection with rendering our opinion we have:
 
  (i) analyzed certain publicly available financial statements and reports
      regarding the Parent and the Company;
 
  (ii) analyzed certain internal financial statements and other financial and
       operating data (including financial projections) concerning the Parent
       and the Company as well as the amount and timing of the cost savings
       and related expenses and synergies expected to result from the
       Transaction (the "Expected Synergies") prepared by managements of the
       Parent and the Company;
 
  (iii) analyzed, on a pro forma basis, the effect of the Transaction;
 
  (iv) reviewed the reported prices and trading activity for the Parent
       Shares and Company Shares;
 
  (v) compared the financial performance of the Parent and the Company and
      the prices and trading activity of the Parent Shares and Company Shares
      with that of certain other comparable publicly-traded companies and
      their securities;
 
  (vi) reviewed the financial terms, to the extent publicly available, of
       certain comparable transactions;
 
  (vii) reviewed the Agreement and Plan of Merger among the Parent, Merger
        Sub and the Company and related documents;
 
  (viii) discussed with managements of the Parent and the Company the
         operations of and future business prospects for the Parent and the
         Company and the anticipated financial consequences of the
         Transaction;
 
  (ix) assisted in your deliberations regarding the material terms of the
       Transaction and your negotiations with the Company; and
 
  (x) performed such other analyses and provided such other services as we
      have deemed appropriate.
 
  We have relied on the accuracy and completeness of the information and
financial data provided to us by the Parent and the Company, and our opinion
is based upon such information. We have inquired into the reliability of such
information and financial data only to the limited extent necessary to provide
a reasonable basis for our opinion, recognizing that we are rendering only an
informed opinion and not an appraisal or certification of value. With respect
to the financial projections prepared by managements of the Parent and the
Company, including the Expected Synergies, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of the Parent and the Company as to the
future financial performance of the Parent and the Company.
 
                                      D-1
<PAGE>
 
  As part of our investment banking business, we regularly issue fairness
opinions and are continually engaged in the valuation of companies and their
securities in connection with business reorganizations, private placements,
negotiated underwritings, mergers and acquisitions and valuations for estate,
corporate and other purposes. We are familiar with the Parent and the Company
and regularly provide investment banking services to the Parent and issue
periodic research reports regarding its business activities and prospects. In
the ordinary course of business, Stephens Inc. and its affiliates at any time
may hold long or short positions, and may trade or otherwise effect
transactions as principal or for the accounts of customers, in debt or equity
securities or options on securities of the Parent and the Company. Certain
affiliates of Stephens Inc. collectively own approximately 9.02% of the
outstanding shares of the Parent's common stock. We are acting as financial
advisor to the Parent in connection with the Transaction and will receive a
fee from the Parent for our services, a significant portion of which is
contingent upon the consummation of the Transaction.
 
  Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available
to us as of, the date hereof. We have assumed that in the course of obtaining
the necessary regulatory or other consents or approvals (contractual or
otherwise) for the Transaction, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse effect on the contemplated benefits of the Transaction.
 
  This opinion is for the use and benefit of the Board of Directors of the
Parent. Our opinion does not address the merits of the underlying decision by
the Parent to engage in the Transaction and does not constitute a
recommendation to any shareholder of the Parent as to how such shareholder
should vote on the proposed Transaction.
 
  We are not expressing any opinion herein as to the prices at which the
Parent Shares will trade following the announcement or consummation of the
Transaction.
 
  Based on the foregoing and our general experience as investment bankers, and
subject to the qualifications stated herein, we are of the opinion on the date
hereof that the Exchange Ratio is fair from a financial point of view to the
Parent.
 
  This opinion and a summary discussion of our underlying analyses and role as
your financial advisor may be included in communications to the Parent's
shareholders provided that we approve of such disclosures prior to
publication.
 
                                          Very truly yours,
                                          LOGO
 
                                      D-2
<PAGE>
 
                                                                        ANNEX E
LOGO
 
                                                                    May 6, 1998
 
The Board of Directors
360(degrees) Communications Company
8725 W. Higgins Road
Chicago, Illinois 60631
 
Dear Members of the Board:
 
  We understand that 360(degrees) Communications Company (the "Company"),
ALLTEL Corporation ("ALLTEL") and Pinnacle Merger Sub, Inc. ("Merger Sub"), a
wholly-owned subsidiary of ALLTEL, have entered into an Agreement and Plan of
Merger dated as of March 15, 1998 (the "Agreement"), pursuant to which Merger
Sub will be merged with and into the Company in a transaction (the "Merger")
in which each issued and outstanding share of the Company's common stock, $.01
par value per share, other than shares held in treasury or by ALLTEL or any
subsidiary of ALLTEL or the Company, will be converted into the right to
receive 0.74 of a share (the "Exchange Ratio") of the common stock, par value
$1.00 per share, of ALLTEL. The terms and conditions of the Merger are more
fully set forth in the Agreement.
 
  At the time the Agreement was initially executed, you had requested our
opinion as to the fairness, from a financial point of view, to the Company and
its shareholders of the Exchange Ratio. We delivered to you our opinion to
that effect by letter dated March 15, 1998. You have requested that we
reconfirm our opinion as of the date hereof. In connection with this
reconfirmed opinion, we have:
 
  (i) Reviewed the Joint Proxy Statement/Prospectus in the form to be
      provided to the shareholders of the Company and ALLTEL in connection
      with their consideration of the Merger;
 
  (ii) Reviewed the financial terms and conditions of the Agreement;
 
  (iii) Analyzed certain publicly available historical business and financial
        information relating to the Company and ALLTEL;
 
  (iv) Reviewed various internal financial forecasts and other financial and
       operating data provided to us prior to execution of the Agreement and
       subsequently reconfirmed orally to us by the Company and ALLTEL
       relating to their respective businesses;
 
  (v) Held discussions prior to and subsequent to execution of the Agreement
      with certain members of the senior managements of the Company and
      ALLTEL with respect to the past and current business operations and
      financial condition and the prospects of the Company and ALLTEL,
      respectively, the strategic objectives of each, certain possible
      strategic, financial and operational benefits that might be realized
      following the Merger;
 
  (vi) Reviewed the pro forma impact of the Merger on the earnings per share
       and consolidated capitalization of the Company and ALLTEL,
       respectively;
 
  (vii) Reviewed public information with respect to certain other companies
        in lines of businesses we believe to be generally comparable to the
        businesses of the Company and ALLTEL;
 
                                      E-1
<PAGE>
 
LOGO
 
The Board of Directors of
360(degrees) Communications Company
May 6, 1998
Page 2
 
  (viii) Reviewed the financial terms, to the extent publicly available, of
         certain business combinations involving companies in lines of
         businesses we believe to be generally comparable to those of the
         Company and ALLTEL;
 
  (ix) Reviewed the historical stock prices and trading volumes of the
       Company's and ALLTEL's common stock;
 
  (x) Compared the financial performance of the Company and ALLTEL and the
      prices and trading activity of the Company's and ALLTEL's common stock,
      respectively, with that of certain other comparable publicly traded
      companies and their securities;
 
  (xi) Participated in discussions and negotiations among representatives of
       the Company and ALLTEL and their financial and legal advisors; and
 
  (xii) Conducted such other financial studies, analyses and investigations
        as we deemed appropriate.
 
  We have relied with your consent upon the accuracy and completeness of the
foregoing information, and have not assumed any responsibility for any
independent verification of such information, nor have we made any independent
valuation or appraisal of any of the assets, liabilities or technologies of
the Company or ALLTEL, or concerning the solvency or fair value of either of
the foregoing entities, nor have we been furnished with such valuations or
appraisals. We have relied upon, without independent verification, the
assessment by the managements of the Company and ALLTEL of the Company's and
ALLTEL's services and products, the timing and risks associated with the
integration of the Company with ALLTEL, and the validity of, and risks
associated with, the Company's and ALLTEL's existing and future services and
products. With respect to internal financial forecasts and any financial or
operating information furnished by, or during discussions with the managements
of the Company or ALLTEL, including estimates of the strategic, financial and
operational benefits that might be realized following the Merger, we have
assumed that such forecasts and information have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
managements of, the Company and ALLTEL as to the competitive, operating and
regulatory environments and the related financial performance of the Company
and ALLTEL, respectively, for the relevant periods. We assume no
responsibility for and express no view as to such forecasts or assessments or
the assumptions on which they are based.
 
  Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
 
  In rendering our opinion, we have assumed that the Merger will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by the Company or ALLTEL and that obtaining the
necessary regulatory approvals for the Merger will not materially affect the
Company or ALLTEL. We have assumed that the Merger will be accounted for as a
pooling of interests business combination in accordance with U.S. generally
accepted accounting principles and will be treated as a tax-free
reorganization and/or exchange pursuant to the Internal Revenue Code of 1986.
 
  Lazard Freres & Co. llc is acting as financial advisor to the Board of
Directors of the Company in connection with the Merger and will receive a fee
for our services, a substantial portion of which is contingent upon the
consummation of the Merger. In the past, we have provided financial advisory
and financing services for the Company and have received fees for the
rendering of these services.
 
                                      E-2
<PAGE>
 
LOGO
 
The Board of Directors of
360(degrees) Communications Company
May 6, 1998
Page 3
 
  Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors. Our opinion does not address the underlying
decision by the Company to engage in the Merger or the prices at which the
Company's or ALLTEL's common stock will actually trade at any time and we
express no recommendation or opinion to any shareholder of the Company as to
how such shareholder should vote with respect to the Merger. It is understood
that this letter is for the information of the Board of Directors of the
Company and may not be used for any other purpose or be disclosed or otherwise
referred to without our prior consent, except in any filing with the
Securities and Exchange Commission with respect to the transactions
contemplated by the Agreement or as may otherwise be required by law or by a
court of competent jurisdiction.
 
  Based on and subject to the foregoing, we are of the opinion that the
Exchange Ratio is fair to the Company and its shareholders from a financial
point of view.
 
                                          Very truly yours,
 
                                          Lazard Freres & Co. llc
                                          By ______________________________
 
                                                David C. Lee
                                          LOGO  Managing Director
 
                                      E-3
<PAGE>
 
                                                                        ANNEX F
 
                          FORM OF AMENDMENT NO. 1 TO
             AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
                              ALLTEL CORPORATION
 
ARTICLE IV
 
  "Section 1. Number of Shares of Stock. The number of shares of stock that
ALLTEL is authorized to have outstanding is one billion one hundred million
(1,100,000,000), which shall be divided into three classes as follows: fifty
million (50,000,000) shares of Cumulative Preferred Stock, par value $25.00
per share, fifty million (50,000,000) shares of No Par Cumulative Preferred
Stock and one billion (1,000,000,000) shares of Common Stock, par value $1.00
per share."
<PAGE>
 
                                                                         ANNEX G
 
                               ALLTEL CORPORATION
 
                           1998 EQUITY INCENTIVE PLAN
 
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                        PAGE NO.
                                                                        --------
<S>                                                                     <C>
Purpose................................................................     1
Definitions............................................................     1
Scope of the Plan......................................................     4
Administration.........................................................     4
Eligibility............................................................     5
Conditions to Grants...................................................     5
Non-transferability....................................................     8
Exercise...............................................................     8
Loans and Guarantees...................................................    10
Notification under Section 83(b).......................................    10
Mandatory Tax Withholding..............................................    10
Elective Share Withholding.............................................    11
Termination of Employment..............................................    11
Plans of Foreign Subsidiaries..........................................    13
Substituted Awards.....................................................    13
Securities Law Matters.................................................    13
No Employment Rights...................................................    14
No Rights as a Stockholder.............................................    14
Nature of Payments.....................................................    14
Non-uniform Determination..............................................    14
Adjustments............................................................    14
Amendment of the Plan..................................................    15
Termination of the Plan................................................    15
No Illegal Transactions................................................    15
Controlling Law........................................................    15
Severability...........................................................    15
</TABLE>
<PAGE>
 
  This 1998 Equity Incentive Plan (the "Plan") is established by ALLTEL
Corporation, a Delaware corporation ("ALLTEL"), effective as of April 23,
1998, subject to the approval of the stockholders of ALLTEL within 12 months
thereafter.
 
  1. PURPOSE. The Plan is intended to provide qualifying employees with equity
ownership in ALLTEL, thereby strengthening their commitment to the success of
ALLTEL and stimulating their efforts on behalf of ALLTEL, and to assist ALLTEL
in attracting and retaining talented personnel.
 
  2. DEFINITIONS.
 
  The terms set forth below have the indicated meanings which are applicable
to both the singular and plural forms:
 
  (a) "Award" means options, including incentive stock options (ISOs),
Restricted Shares, Bonus Shares, stock appreciation rights (SARs), or
Performance Shares granted under the Plan.
 
  (b) "Award Agreement" means the written agreement by which an Award shall be
evidenced.
 
  (c) "Board" means the Board of Directors of ALLTEL.
 
  (d) "Bonus Shares" means Shares that are awarded to a Grantee without cost
and without restrictions or as an incentive to become an employee of ALLTEL or
a Subsidiary.
 
  (e) "Cause" means (i) before the occurrence of a Change in Control, any one
or more of the following, as determined by the Committee (in the case of a
Section 16 Grantee) or the Chief Executive Officer or President of ALLTEL (in
the case of any other Grantee):
 
      (A) a Grantee's commission of a crime that is likely to result in
    injury to ALLTEL or a Subsidiary;
 
      (B) the material violation by the Grantee of written policies of
    ALLTEL or a Subsidiary;
 
      (C) the habitual neglect by the Grantee in the performance of his or
    her duties to ALLTEL or a Subsidiary; or
 
      (D) the action or inaction in connection with his or her duties to
    ALLTEL or a Subsidiary resulting in a material injury to ALLTEL or a
    Subsidiary; and
 
    (ii) from and after the occurrence of a Change in Control, the occurrence
  of any one or more of the following, as determined in the good faith and
  reasonable judgment of the Committee (in the case of a Section 16 Grantee)
  or the Chief Executive Officer or President of ALLTEL (in the case of any
  other Grantee):
 
      (A) Grantee's conviction for committing an act of fraud,
    embezzlement, theft, or any other act constituting a felony involving
    moral turpitude or causing material harm, financial or otherwise, to
    ALLTEL;
 
      (B) a demonstrably willful and deliberate act or failure to act
    committed in bad faith, without reasonable belief that such action or
    inaction is in the best interests of ALLTEL, which causes material
    harm, financial or otherwise, to ALLTEL (but only if the act or failure
    to act is not remedied within ten business days after Grantee's receipt
    of written notice from ALLTEL describing in reasonable detail the act
    of inaction); or
 
      (C) the consistent gross neglect of duties or wanton negligence by
    the Grantee in the performance of the Grantee's duties.
 
  (f) "Change in Control" means:
 
    (i) Any "person," as defined in Sections 13(d) and 14(d) of the
  Securities 1934 Act, other than ALLTEL, any of its subsidiaries, or any
  employee benefit plan maintained by ALLTEL or any of its
 
                                      G-1
<PAGE>
 
  subsidiaries, becomes the "beneficial owner" (as defined in Rule 13d-3
  under the 1934 Act) of (A) 15% or more, but no greater than 50%, of the
  outstanding voting capital stock of ALLTEL, unless prior thereto, the
  Continuing Directors (as defined in this Section 2(f)) approve the
  transaction that results in the person becoming the beneficial owner of 15%
  or more, but no greater than 50%, of the outstanding voting capital stock
  of ALLTEL or (B) more than 50% of the outstanding voting capital stock of
  ALLTEL, regardless whether the transaction or event by which the foregoing
  50% level is exceeded is approved by the Continuing Directors;
 
    (ii) At any time Continuing Directors no longer constitute a majority of
  the directors of ALLTEL; or
 
    (iii) A record date is fixed for determining stockholders entitled to
  vote upon (A) a merger or consolidation of ALLTEL, statutory share
  exchange, or other similar transaction with another corporation,
  partnership, or other entity or enterprise in which either ALLTEL is not
  the surviving or continuing corporation or shares of common stock of ALLTEL
  are to be converted into or exchanged for cash, securities other than
  common stock of ALLTEL, or other property, (B) a sale or disposition of all
  or substantially all of the assets of ALLTEL, or (C) the dissolution of
  ALLTEL; or
 
    (iv) ALLTEL enters into an agreement with any person the consummation of
  which would result in the occurrence of an event described in clause (i),
  (ii) or (iii) above of this paragraph (f).
 
Notwithstanding the foregoing, in no event shall a "Change in Control" be
deemed to have occurred with respect to a Grantee if the Grantee is part of a
purchasing group that consummates the Change in Control transaction. A Grantee
shall be deemed "part of a purchasing group" for purposes of the immediately
preceding sentence if the Grantee is an equity participant in the purchasing
company or group other than as a result of (y) passive ownership of less than
five percent of the voting capital stock or voting equity interests of the
purchasing company or (z) equity participation in the purchasing company or
group that is otherwise not significant, as determined prior to the Change in
Control by a majority of the Continuing Directors. For purposes of this
Section 2(f), "Continuing Directors" means directors who were directors of
ALLTEL at the beginning of the 24-month period ending on the date the
determination is made or whose election, or nomination for election, by
ALLTEL's stockholders was approved by at least a majority of the directors who
are in office at the time of the election or nomination and who either (a)
were directors at the beginning of the period or (b) were elected, or
nominated for election, by at least a majority of the directors who were in
office at the time of the election or nomination and were directors at the
beginning of the period.
 
  (g) "Change in Control Value" means the Fair Market Value of a Share on the
date of a Change in Control.
 
  (h) "Code" means the Internal Revenue Code of 1986, as amended or
superseded, and the regulations and rulings thereunder. References to a
particular section of the Code include references to successor provisions.
 
  (i) "Committee" means the committee of the Board appointed pursuant to
Section 4(a).
 
  (j) "Common Stock" means the common stock, $1.00 par value, of ALLTEL.
 
  (k) "Disability" means a mental or physical condition rendering a Grantee
unable to perform his or her regular duties (as determined by the Committee,
in the case of a Section 16 Grantee, or by the Chief Executive Officer or
President in the case of any other Grantee).
 
  (l) "Effective Date" means April 23, 1998.
 
  (m) "Eligible Employee" means any employee (including any officer) of ALLTEL
or any Subsidiary, including any employee on an approved leave of absence or
layoff, if such leave or layoff does not qualify as a Disability.
 
                                      G-2
<PAGE>
 
  (n) "Fair Market Value" of an equity security as of any date means the
closing price of a share of such equity security on the New York Stock
Exchange (or such other exchange on which such security is principally traded)
on the relevant date or, if there were no sales on that date, the closing
price on the next preceding date on which there were sales.
 
  (o) "Good Reason" means the occurrence after a Change in Control without a
Grantee's prior written consent, of any one or more of the following:
 
    (i) the assignment to the Grantee of any duties which result in a
  material adverse change in the Grantee's position (including status,
  offices, titles, and reporting requirements), authority, duties, or other
  responsibilities with ALLTEL, or any other action of ALLTEL which results
  in a material adverse change in such position, authority, duties, or
  responsibilities, other than an insubstantial and inadvertent action which
  is remedied by ALLTEL promptly after receipt of notice thereof given by the
  Grantee;
 
    (ii) any relocation of the Grantee's primary business office more than 35
  miles from the location of the Grantee's primary business office at the
  time of the Change in Control; or
 
    (iii) (y) a material reduction or elimination of the base salary that the
  Grantee was receiving immediately prior to a Change in Control or (z) a
  material reduction or elimination of any incentive compensation, benefits,
  or perquisites that the Grantee was receiving immediately prior to a Change
  in Control, unless the Grantee receives additional or substitute incentive
  compensation, benefits, or perquisites that are comparable in the aggregate
  to the incentive compensation, benefits, and perquisites reduced or
  eliminated.
 
  (p) "Grantee" means an individual who has been granted an Award or any
Permitted Transferee.
 
  (q) "Immediate Family" means, with respect to a particular Grantee, the
Grantee's spouse, children, and grandchildren.
 
  (r) "Mature Shares" means Shares for which the holder thereof has good
title, free and clear of all liens and encumbrances, and which such holder
either (i) has held for at least six months or (ii) has purchased on the open
market.
 
  (s) "Minimum Consideration" means $1.00 per Share or such other amount that
is from time to time considered to be capital for purposes of Section 154 of
the Delaware General Corporation Law.
 
  (t) "1934 Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under, the 1934 Act include
references to successor provisions.
 
  (u) "Option Price" means the per share exercise price of an option.
 
  (v) "Option Term" means the period beginning on the Grant Date of an option
and ending on the expiration date of such option, as specified in the Award
Agreement for such option and as may, in the discretion of the Committee and
consistent with the provisions of the Plan, be extended from time to time.
 
  (w) "Performance Shares" means an Award to a Grantee pursuant to Section
6(e).
 
  (x) "Permitted Transferee" means a person to whom an Award may be
transferred or assigned in accordance with Section 7.
 
  (y) "Restricted Shares" means Shares that are subject to forfeiture if the
Grantee does not satisfy the conditions specified in the Award Agreement
applicable to those Shares.
 
  (z) "Rule 16b-3" means Rule 16b-3 of the SEC under the 1934 Act, as amended
from time to time, together with any successor rule.
 
                                      G-3
<PAGE>
 
  (aa) "Retirement" means a termination of employment by a Grantee after
attaining (in each case, as determined under the provisions of the ALLTEL
Corporation Profit-Sharing Plan as in effect on the Effective Date) either (i)
age 55 with at least 20 years of vesting service as an employee of ALLTEL or a
Subsidiary; (ii) age 60 with at least 15 years of vesting service as an
employee of ALLTEL or a Subsidiary; or (iii) age 65 with at least five years
of vesting service as an employee of ALLTEL or a Subsidiary.
 
  (bb) "SAR" means a stock appreciation right.
 
  (cc) "SEC" means the Securities and Exchange Commission.
 
  (dd) "Section 16 Person" means a person who is subject to potential
liability under Section 16(b) of the 1934 Act with respect to transactions
involving equity securities of ALLTEL.
 
  (ee) "Share" means a share of Common Stock.
 
  (ff) "Subsidiary" means, for purposes of grants of incentive stock options,
a corporation as defined in Section 424(f) of the Code (with ALLTEL being
treated as the employer corporation for purposes of this definition) and, for
all other purposes, a United States or foreign corporation with respect to
which ALLTEL owns, directly or indirectly, more than 50% or more of the then-
outstanding common stock.
 
  (gg) "10% Owner" means a person who owns capital stock (including stock
treated as owned under Section 424(d) of the Code) possessing more than 10% of
the total combined voting power of all classes of capital stock of ALLTEL or
any Subsidiary.
 
  (hh) "Voting Power" means the combined voting power of the then-outstanding
securities of a corporation entitled to vote generally in the election of
directors.
 
  3. SCOPE OF THE PLAN. Subject to adjustment in accordance with Section 21,
the total number of Shares for which grants under the Plan shall be available
is 9,000,000. To the extent the Committee intends any Award to satisfy the
requirements of Section 162(m) of the Code, the number of Shares for which
Awards may be granted to any individual Grantee in any calendar year shall not
exceed 1,000,000. If any Shares subject to any Award granted hereunder are
forfeited or such Award otherwise terminates without the issuance of such
Shares or of other consideration in lieu of such Shares, the Shares subject to
such Award, to the extent of any such forfeiture or termination, shall again
be available for grant under the Plan. If any outstanding ISOs under the Plan
for any reason expire or are terminated, the Shares allocable to the
unexercised portion of all of such ISOs may again be subject to ISOs under the
Plan. Shares awarded under the Plan may be treasury shares or newly-issued
shares.
 
  4. ADMINISTRATION.
 
  (a) The Plan shall be administered by a committee (the "Committee") which
shall consist of two or more directors of ALLTEL, all of whom qualify as
"outside directors" as defined for purposes of the regulations under Section
162(m) of the Code and satisfy one of the conditions of Rule 16b-3 in respect
of the exemption of grants to Section 16 Persons from potential liability
under Section 16(b) of the 1934 Act. The number of members of the Committee
shall from time to time be increased or decreased, and shall be subject to
such conditions, in each case as the Board deems appropriate to permit
transactions in Shares pursuant to the Plan to satisfy such conditions of Rule
16b-3 and Section 162(m) of the Code as then in effect.
 
  (b) Subject to the express provisions of the Plan, the Committee has full
and final authority and discretion as follows:
 
    (i) to determine when and to whom Awards should be granted and the terms
  and conditions applicable to each Award, including the benefit payable
  under any SAR or Performance Share, and whether or not
 
                                      G-4
<PAGE>
 
  specific Awards shall be identified with other specific Awards, and if so
  whether they shall be exercisable cumulatively with, or alternatively to,
  such other specific Awards;
 
    (ii) to determine the amount, if any, that a Grantee shall pay for
  Restricted Shares, whether to permit or require the payment of cash
  dividends thereon to be deferred and the terms related thereto, when
  Restricted Shares (including Restricted Shares acquired upon the exercise
  of an option) shall be forfeited and whether such shares shall be held in
  escrow;
 
    (iii) to interpret the Plan and to make all determinations necessary or
  advisable for the administration of the Plan;
 
    (iv) to make, amend and rescind rules relating to the Plan, including
  rules with respect to the exercisability and nonforfeitability of Awards
  upon the termination of employment of a Grantee;
 
    (v) to determine the terms and conditions of all Award Agreements (which
  need not be identical) and, with the consent of the Grantee, to amend any
  such Award Agreement at any time, among other things, to permit transfers
  of such Awards to the extent permitted by the Plan, except that the consent
  of the Grantee shall not be required for any amendment which (A) does not
  adversely affect the rights of the Grantee or (B) is necessary or advisable
  (as determined by the Committee) to carry out the purpose of the Award as a
  result of any change in applicable law;
 
    (vi) to cancel, with the consent of the Grantee, outstanding Awards and
  to grant new Awards in substitution therefor;
 
    (vii) to accelerate the exercisability (including exercisability within a
  period of less than one year after the Grant Date) of, and to accelerate or
  waive any or all of the terms and conditions applicable to, any Award or
  any group of Awards for any reason and at any time, including in connection
  with a termination of employment (other than for Cause);
 
    (viii) subject to Section 6(c), to extend the time during which any Award
  or group of Awards may be exercised;
 
    (ix) to make such adjustments or modifications to Awards to Grantees
  working outside the United States as are advisable to fulfill the purposes
  of the Plan;
 
    (x) to impose such additional terms and conditions upon the grant,
  exercise or retention of Awards as the Committee may, before or concurrent
  with the grant thereof, deem appropriate.
 
    (xi) The Committee may, in its discretion, permit an employee to elect to
  be granted an Award in lieu of receiving such compensation if, in the
  judgment of the Committee, the value of such Award on the Grant Date equals
  the amount of compensation foregone by such employee; and
 
    (xii) to take any other action with respect to any matters relating to
  the Plan for which it is responsible.
 
  The determination of the Committee on all matters relating to the Plan or
any Award Agreement shall be final. No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Award.
 
  5. ELIGIBILITY. The Committee may, in its discretion, grant Awards to any
Eligible Employee, whether or not he or she has previously received an Award.
 
  6. CONDITIONS TO GRANTS.
 
  (a) GENERAL CONDITIONS.
 
    (i) The Grant Date of an Award shall be the date on which the Committee
  grants the Award or such later date as specified in advance by the
  Committee;
 
    (ii) The Option Term shall under no circumstances extend more than ten
  years after the Grant Date and shall be subject to earlier termination as
  herein provided; and
 
                                      G-5
<PAGE>
 
    (iii) Any terms and conditions of an Award not set forth in the Plan
  shall be set forth in the Award Agreement related to that Award.
 
  (b) GRANT OF OPTIONS. No later than the Grant Date of any option, the
Committee shall determine the Option Price of such option. The Option Price of
an option may be the Fair Market Value of a Share on the Grant Date or may be
less than or more than that Fair Market Value. An option shall be exercisable
for unrestricted Shares, unless the Award Agreement provides that it is
exercisable for Restricted Shares.
 
  (c) GRANT OF ISOS. At the time of the grant of any option, the Committee
may, in its discretion, designate that such option shall be made subject to
additional restrictions to permit the option to qualify as an "incentive stock
option" under the requirements of Section 422 of the Code. Any option
designated as an ISO:
 
    (i) shall, if granted to a 10% Owner, have an Option Price not less than
  110% of the Fair Market Value of a Share on the Grant Date;
 
    (ii) shall be for a period of not more than ten years (five years in the
  case of an ISO granted to a 10% Owner) from the Grant Date and shall be
  subject to earlier termination as provided herein or in the applicable
  Award Agreement;
 
    (iii) shall meet the limitations of this subparagraph 6(c)(iii). If the
  aggregate Fair Market Value of Shares with respect to which ISOs first
  become exercisable by a Grantee in any calendar year exceeds the limit
  determined in accordance with the provisions of Section 422 of the Code
  (the "Limit") taking into account Shares subject to all ISOs granted by
  ALLTEL which are held by the Grantee, the excess will be treated as
  nonqualified options. To determine whether the Limit is exceeded, the Fair
  Market Value of Shares subject to options shall be determined as of the
  Award dates of the options. In reducing the number of options treated as
  ISOs to meet the Limit, the most recently granted Options will be reduced
  first. If a reduction of simultaneously granted options is necessary to
  meet the Limit, the Committee may designate which Shares are to be treated
  as Shares acquired pursuant to an ISO.
 
    (iv) shall be granted within ten years from the Effective Date;
 
    (v) shall require the Grantee to notify the Committee of any disposition
  of any Shares issued upon the exercise of the ISO under the circumstances
  described in Section 421(b) of the Code (relating to certain disqualifying
  dispositions) (a "Disqualifying Disposition"), within ten business days
  after such Disqualifying Disposition; and
 
    (vi) unless otherwise permitted by the Code, shall by its terms not be
  assignable or transferable other than by will or the laws of descent and
  distribution and may be exercised, during the Grantee's lifetime, only by
  the Grantee; except that the Grantee may, in accordance with Section 7,
  designate in writing a beneficiary to exercise his or her ISOs after the
  Grantee's death.
 
  (d) GRANT OF SARS.
 
    (i) When granted, SARs may, but need not, be identified with a specific
  option, specific Restricted Shares, or specific Performance Shares of the
  Grantee (including any option, Restricted Shares, or Performance Shares
  granted on or before the Grant Date of the SARs) in a number equal to or
  different from the number of SARs so granted. If SARs are identified with
  Shares subject to an option, with Restricted Shares, or with Performance
  Shares, then, unless otherwise provided in the applicable Award Agreement,
  the Grantee's associated SARs shall terminate upon (x) the expiration,
  termination, forfeiture, or cancellation of such option, Restricted Shares,
  or Performance Shares, (y) the exercise of such option or Performance
  Shares, or (z) the date such Restricted Shares become nonforfeitable; and
 
    (ii) The strike price ("Strike Price") of any SAR shall equal, for any
  SAR that is identified with an option, the Option Price of such option, or
  for any other SAR, 100% of the Fair Market Value of a Share on the Grant
  Date of such SAR; except that the Committee may (x) specify a higher Strike
  Price in the Award Agreement or (y) provide that the benefit payable upon
  exercise of any SAR shall not exceed such percentage of the Fair Market
  Value of a Share on such Grant Date as the Committee shall specify.
 
                                      G-6
<PAGE>
 
  (e) GRANT OF PERFORMANCE SHARES.
 
    (i) Before the grant of Performance Shares, the Committee shall:
 
      (A) determine objective performance goals, which may consist of any
    one or more of the following goals deemed appropriate by the Committee:
    earnings (either in the aggregate or on a per-share basis), operating
    income, cash flow, including EBITDA (earnings before interest, taxes,
    depreciation and amortization), return on equity, indices related to
    EVA (economic value added), per share rate of return on the Common
    Stock (including dividends), general indices relative to levels of
    general customer service satisfaction, as measured through various
    randomly-generated customer service surveys, market share (in one or
    more markets), customer retention rates, market penetration rates,
    revenues, reductions in expense levels, and the attainment by the
    Common Stock of a specified market value for a specified period of
    time, in each case where applicable to be determined either on a
    company-wide basis or in respect of any one or more business units, and
    the amount of compensation under the goals applicable to such grant;
 
      (B) designate a period for the measurement of the extent to which
    performance goals are attained, which may begin prior to the Grant Date
    (the "Performance Period"); and
 
      (C) assign a "Performance Percentage" to each level of attainment of
    performance goals during the Performance Period, with the percentage
    applicable to minimum attainment being zero percent and the percentage
    applicable to maximum attainment to be determined by the Committee from
    time to time, but not in excess of 250%;
 
    (ii) If a Grantee is promoted, demoted, or transferred to a different
  business unit of ALLTEL during a Performance Period, then, to the extent
  the Committee determines any one or more of the performance goals,
  Performance Period, or Performance Percentage are no longer appropriate,
  the Committee may make any changes thereto as it deems appropriate in order
  to make them appropriate; and
 
    (iii) When granted, Performance Shares may, but need not, be identified
  with Shares subject to a specific option, specific Restricted Shares, or
  specific SARs of the Grantee granted under the Plan in a number equal to or
  different from the number of the Performance Shares so granted. If
  Performance Shares are so identified, then, unless otherwise provided in
  the applicable Award Agreement, the Grantee's associated Performance Shares
  shall terminate upon (A) the expiration, termination, forfeiture, or
  cancellation of the option, Restricted Shares, or SARs with which the
  Performance Shares are identified, (B) the exercise of such option or SARs,
  or (C) the date Restricted Shares become nonforfeitable.
 
  (f) GRANT OF RESTRICTED SHARES.
 
    (i) The Committee shall determine the amount, if any, that a Grantee
  shall pay for Restricted Shares, subject to the following sentence. Except
  with respect to Restricted Shares that are treasury shares, for which no
  payment need be required, the Committee shall require the Grantee to pay at
  least the Minimum Consideration for each Restricted Share. Such payment
  shall be made in full by the Grantee before the delivery of the shares and
  in any event no later than ten business days after the Grant Date. In the
  discretion of the Committee and to the extent permitted by law, payment may
  also be made in accordance with Section 9;
 
    (ii) The Committee may, but need not, provide that all or any portion of
  a Grantee's Restricted Shares, or Restricted Shares acquired upon exercise
  of an option, shall be forfeited:
 
      (A) except as otherwise specified in the Plan or the Award Agreement,
    upon the Grantee's termination of employment within a specified time
    period after the Grant Date; or
 
      (B) if ALLTEL or the Grantee does not achieve specified performance
    goals (if any) within a specified time period after the Grant Date and
    before the Grantee's termination of employment; or
 
      (C) upon failure to satisfy such other restrictions as the Committee
    may specify in the Award Agreement;
 
                                      G-7
<PAGE>
 
    (iii) If Restricted Shares are forfeited and the Grantee was required to
  pay for such shares or acquired such Restricted Shares upon the exercise of
  an option, the Grantee shall be deemed to have resold such Restricted
  Shares to ALLTEL at a price equal to the lesser of (x) the amount paid by
  the Grantee for such Restricted Shares or (y) the Fair Market Value of the
  Restricted Shares on the date of forfeiture, which shall be paid to the
  Grantee in cash as soon as administratively practicable. Such Restricted
  Shares shall cease to be outstanding and shall no longer confer on the
  Grantee thereof any rights as a Stockholder of ALLTEL, from and after the
  date the event causing the forfeiture, whether or not the Grantee accepts
  ALLTEL's tender of payment for such Restricted Shares; and
 
    (iv) The Committee may provide that the certificates for any Restricted
  Shares (x) shall be held (together with a stock power executed in blank by
  the Grantee) in escrow by the Secretary of ALLTEL until such Restricted
  Shares become nonforfeitable or are forfeited or (ii) shall bear an
  appropriate legend restricting the transfer of such Restricted Shares. If
  any Restricted Shares become nonforfeitable, ALLTEL shall cause
  certificates for such shares to be issued without such legend.
 
  (g) GRANT OF STOCK BONUSES. The Committee may grant Bonus Shares to any
Eligible Employee.
 
  7. NON-TRANSFERABILITY. An Award granted hereunder shall not be assignable
or transferable other than by will or the laws of descent and distribution and
may be exercised during the Grantee's lifetime only by the Grantee or his or
her guardian or legal representative, except that, subject to Section 6(c) (in
respect of ISOs), a Grantee may, if permitted by the Committee, in its
discretion, (i) designate in writing a beneficiary to exercise an Award after
his or her death (if that designation has been received by ALLTEL prior to the
Grantee's death) and (ii) transfer the Award to one or more members of the
Grantee's Immediate Family.
 
  8. EXERCISE.
 
  (a) EXERCISE OF OPTIONS.
 
    (i) Subject to Section 6 and except as otherwise provided in the
  applicable Award Agreement, each option shall become exercisable at such
  time or times as may be specified by the Committee from time to time;
 
    (ii) An option shall be exercised by the delivery to ALLTEL during the
  Option Term of (y) written notice of intent to purchase a specific number
  of Shares subject to the option and (z) payment in full of the Option Price
  of such specific number of Shares;
 
    (iii) Payment of the Option Price may be made by any one or more of the
  following means:
 
      (A) cash, personal check, or wire transfer;
 
      (B) Mature Shares, valued at their Fair Market Value on the date of
    exercise;
 
      (C) with the approval of the Committee, Restricted Shares held by the
    Grantee for at least six months prior to the exercise of the option,
    each such share valued at the Fair Market Value of a Share on the date
    of exercise;
 
      (D) in accordance with procedures previously approved by ALLTEL,
    through the sale of the Shares acquired on exercise of the Option
    through a bank or broker-dealer to whom the Grantee has submitted an
    irrevocable notice of exercise and irrevocable instructions to deliver
    promptly to ALLTEL the amount of sale or loan proceeds sufficient to
    pay for such Shares, together with, if requested by ALLTEL, the amount
    of federal, state, local, or foreign withholding taxes payable by
    Grantee by reason of such exercise; or
 
      (E) in the discretion of the Committee, payment may also be made in
    accordance with Section 9.
 
  The Committee may in its discretion specify that, if any Restricted Shares
  ("Tendered Restricted Shares") are used to pay the Option Price, (x) all
  the Shares acquired on exercise of the option shall be subject to the same
  restrictions as the Tendered Restricted Shares, determined as of the date
  of exercise of the option or
 
                                      G-8
<PAGE>
 
  (y) a number of Shares acquired on exercise of the option equal to the
  number of Tendered Restricted Shares shall be subject to the same
  restrictions as the Tendered Restricted Shares, determined as of the date
  of exercise of the option.
 
  (b) EXERCISE OF SARS.
 
    (i) Subject to Sections 6(d) and 8(f), and except as otherwise provided
  in the applicable Award Agreement, (x) each SAR not identified with any
  other Award shall become exercisable with respect to 25% of the Shares
  subject thereto on each of the first four year anniversaries of the Grant
  Date of such SAR unless the Committee provides otherwise in the Award
  Agreement and (y) each SAR which is identified with any other Award shall
  become exercisable as and to extend that the option or Restricted Shares
  with which such SAR is identified may be exercised or becomes
  nonforfeitable, as the case may be;
 
    (ii) SARs shall be exercised by delivery to ALLTEL of written notice of
  intent to exercise a specific number of SARs. Unless otherwise provided in
  the applicable Award Agreement, the exercise of SARs which are identified
  with Shares subject to an option or Restricted Shares shall result in the
  cancellation or forfeiture of such option or Restricted Shares, as the case
  may be, to the extent of such exercise; and
 
    (iii) The benefit for each SAR exercised shall be equal to (x) the Fair
  Market Value of a Share on the date of such exercise, minus (y) the Strike
  Price of such SAR. Such benefit shall be payable in cash, except that the
  Committee may provide in the Award Agreement that benefits may be paid
  wholly or partly in Shares.
 
  (c) PAYMENT OF PERFORMANCE SHARES. Unless otherwise provided in the Award
Agreement with respect to an Award of Performance Shares, if the minimum
performance goals applicable to such Performance Shares have been achieved
during the applicable Performance Period, then ALLTEL shall pay to the Grantee
of such Award that number of Shares equal to the product of:
 
    (i) the sum of (x) number of Performance Shares specified in the
  applicable Award Agreement and (y) the number of Shares that would have
  been issuable if such Performance Shares had been Shares outstanding
  throughout the Performance Period and the stock dividends, cash dividends
  (except as otherwise provided in the Award Agreement), and other property
  paid in respect of such shares had been reinvested in additional Shares as
  of each dividend payment date,
 
  multiplied by
 
    (ii) the Performance Percentage achieved during such Performance Period.
 
The Committee may, in its discretion, determine that cash be paid in lieu of
some or all of such Shares. The amount of cash payable in lieu of a Share
shall be determined by valuing such shares at its Fair Market Value on the
business day next preceding the date such cash is to be paid. Payments
pursuant to this Section shall be made as soon as administratively practical
after the end of the applicable Performance Period. Any Performance Shares
with respect to which the performance goals shall not have been achieved by
the end of the applicable Performance Period shall expire.
 
  (e) CHANGE IN CONTROL. If, within 12 months after a Change in Control, the
employment of a Grantee is terminated by ALLTEL without Cause or by the
Grantee for Good Reason, then all unvested Awards shall immediately become
fully exercisable or payable, as applicable; except that the benefit payable
with respect to any Performance Share with respect to which the Performance
Period has not ended as of the date of such termination of employment shall be
equal to the product of the Change in Control Value multiplied successively by
each of the following:
 
    (i) a fraction, the numerator of which is the number of whole and partial
  months that have elapsed between the beginning of such Performance Period
  and the date of such Change in Control and the denominator of which is the
  number of whole and partial months in the Performance Period; and
 
    (ii) a percentage equal to the greater of (y) the target percentage, if
  any, specified in the applicable Award Agreement or (z) the maximum
  percentage, if any, that would be earned under the terms of the
 
                                      G-9
<PAGE>
 
  applicable Award Agreement assuming that the rate at which the performance
  goals have been achieved as of the date of such Change in Control would
  continue until the end of the Performance Period.
 
  (f) POOLING CONSIDERATIONS. Any provision of the Plan to the contrary
notwithstanding, if the Committee determines, on the basis of advice from
ALLTEL's independent auditors received prior to a business combination
involving ALLTEL, that the exercise or payment of any Award would be likely to
preclude the use of pooling-of-interests accounting ("pooling") with respect
to that transaction the effect of which would be materially adverse to such
business combination, the Committee may unilaterally cancel such Award prior
to the Change in Control if the Committee grants a substitute Award or ALLTEL
pays a substitute benefit in the form of Shares or other benefits that are as
comparable in form and value to the canceled Award as practicable and the
Committee determines, on the basis of advice from ALLTEL's independent
auditors, that such substitute grant or payment would not cause the
transaction to become ineligible for pooling-of-interests accounting
treatment.
 
  9. LOANS AND GUARANTEES. The Committee may in its discretion allow a Grantee
to defer payment to ALLTEL of all or any portion of (i) the Option Price of an
option, (ii) the purchase price of Restricted Shares, or (iii) any taxes
associated with the exercise, nonforfeitability of, or payment of benefits in
connection with, an Award, or cause ALLTEL to guarantee a loan from a third
party to the Grantee, in an amount equal to all or any portion of such Option
Price, or any related taxes. Any such payment deferral or guarantee by ALLTEL
shall be on such terms and conditions as the Committee may determine, except
that a Grantee shall not be entitled to defer the payment of such Option
Price, purchase price, or any related taxes unless the Grantee (i) enters into
a binding obligation to pay the deferred amount and (ii) other than treasury
shares, pays upon exercise of an option or grant of Restricted Shares, as
applicable, an amount at least equal to the Minimum Consideration therefor. If
the Committee has permitted a payment deferral or caused ALLTEL to guarantee a
loan in accordance with this Section, then the Committee may require the
immediate payment of such deferred amount or the immediate release of such
guarantee upon the Grantee's termination of employment or if the Grantee sells
or otherwise transfers his or her Shares purchased pursuant to such deferral
or guarantee. The Committee may at any time in its discretion forgive the
repayment of any or all of the principal of, or interest on, any such deferred
payment obligation.
 
  10. NOTIFICATION UNDER SECTION 83(B). If the Grantee, in connection with the
exercise of any option or the grant of Restricted Shares, makes the election
permitted under Section 83(b) of the Code to include in such Grantee's gross
income in the year of transfer the amounts specified in Section 83(b) of the
Code, then such Grantee shall notify ALLTEL, in writing, of such election
within ten days after filing the notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant
to regulations issued under Section 83(b) of the Code. The Committee may, in
connection with the grant of an Award or at any time thereafter, prohibit a
Grantee from making the election described in this Section 10.
 
  11. MANDATORY TAX WITHHOLDING.
 
  (a) Whenever under the Plan Shares are to be delivered upon exercise or
payment of an Award or upon Restricted Shares becoming nonforfeitable, or any
other event with respect to rights and benefits hereunder, ALLTEL shall be
entitled to require (i) that the Grantee remit an amount in cash, or in
ALLTEL's discretion, Mature Shares, sufficient to satisfy all federal, state,
and local tax withholding requirements related thereto ("Required
Withholding"), (ii) the withholding of such Required Withholding from
compensation otherwise due to the Grantee or from any Shares due to the
Grantee under the Plan, or (iii) any combination of the foregoing.
 
  (b) Any Grantee who makes a Disqualifying Disposition or an election under
Section 83(b) of the Code shall remit to ALLTEL an amount sufficient to
satisfy all resulting Required Withholding; except that in lieu of or in
addition to the foregoing, ALLTEL shall have the right to withhold such
Required Withholding from compensation otherwise due to the Grantee or from
any Shares or other payment due to the Grantee under the Plan.
 
                                     G-10
<PAGE>
 
  12. ELECTIVE SHARE WITHHOLDING.
 
  (a) Subject to the provisions of this Section 12, a Grantee may elect the
withholding ("Share Withholding") by ALLTEL of a portion of the Shares
otherwise deliverable to such Grantee upon the exercise of an Award or upon
Restricted Shares becoming nonforfeitable (each, a "Taxable Event") having a
Fair Market Value equal to (i) the minimum amount necessary to satisfy
Required Withholding liability attributable to the Taxable Event or (ii) with
the Committee's prior approval, a greater amount, not to exceed the estimated
total amount of such Grantee's tax liability with respect to the Taxable
Event.
 
  (b) Each Share Withholding election shall be subject to the following
conditions:
 
    (i) any Grantee's election shall be subject to the Committee's discretion
  to revoke the Grantee's right to elect Share Withholding at any time before
  the Grantee's election if the Committee has reserved the right to do so in
  the Award Agreement;
 
    (ii) the Grantee's election must be made before the date on which the
  amount to be withheld is determined; and
 
    (iii) the Grantee's election shall be irrevocable.
 
  13. TERMINATION OF EMPLOYMENT.
 
  (a) FOR CAUSE. If a Grantee's employment is terminated for Cause, (i) the
Grantee's Restricted Shares that are then forfeitable shall thereupon be
forfeited, subject to the provisions of Section 6(f)(iii) regarding repayment
of certain amounts to the Grantee; and (ii) any unexercised option or
Performance Share shall terminate effective immediately upon such termination
of employment.
 
  (b) ON ACCOUNT OF RETIREMENT. Except as otherwise provided by the Committee
in the Award Agreement, if a Grantee's employment terminates on account of
Retirement, then:
 
    (i) the Grantee's Restricted Shares that were forfeitable shall thereupon
  become nonforfeitable;
 
    (ii) any unexercised option or SAR, whether or not exercisable on the
  date of such termination of employment, may be exercised, in whole or in
  part, within the first three years after such termination of employment
  (but only during the Option Term) by the Grantee or a Permitted Transferee;
  and
 
    (iii) any unexercised Performance Shares may be exercised in whole or in
  part, at any time within six months after such termination of employment on
  account of Retirement by the Grantee; except that the benefit payable with
  respect to any Performance Shares for which the Performance Period has not
  ended as of the date of such termination of employment on account of
  Retirement shall be equal to the product of the Fair Market Value of a
  Share Value multiplied successively by each of the following:
 
      (A) a fraction, the numerator of which is the number of months
    (including as a whole month any partial month) that have elapsed since
    the beginning of such Performance Period until the date of such
    termination of employment and the denominator of which is the number of
    months (including as a whole month any partial month) in the
    Performance Period; and
 
      (B) a percentage determined in the discretion of the Committee that
    would be earned under the terms of the applicable Award Agreement
    assuming that the rate at which the performance goals have been
    achieved as of the date of such termination of employment would
    continue until the end of the Performance Period, or, if the Committee
    elects to compute the benefit after the end of the Performance Period,
    the Performance Percentage, as determined by the Committee, attained
    during the Performance Period for the Performance Share.
 
  (c) ON ACCOUNT OF DEATH. Except as otherwise provided by the Committee in
the Award Agreement, if a Grantee's employment terminates on account of death,
then:
 
    (i) the Grantee's Restricted Shares that were forfeitable shall thereupon
  become nonforfeitable;
 
                                     G-11
<PAGE>
 
    (ii) any unexercised option or SAR, whether or not exercisable on the
  date of such termination of employment, may be exercised, in whole or in
  part, within the first 12 months after such termination of employment (but
  only during the Option Term) after the death of the Grantee by (A) his or
  her personal representative or by the person to whom the option or SAR, as
  applicable, is transferred by will or the applicable laws of descent and
  distribution, (B) the Grantee's designated beneficiary, or (C) a Permitted
  Transferee; and
 
    (iii) any unexercised Performance Shares may be exercised in whole or in
  part, at any time within six months after such termination of employment on
  account of the death of the Grantee, by (A) his or her personal
  representative or by the person to whom the Performance Shares are
  transferred by will or the applicable laws of descent and distribution, (B)
  the Grantee's designated beneficiary, or (C) a Permitted Transferee; except
  that the benefit payable with respect to any Performance Shares for which
  the Performance Period has not ended as of the date of such termination of
  employment on account of death shall be equal to the product of the Fair
  Market Value of Share Value multiplied successively by each of the
  following:
 
      (A) a fraction, the numerator of which is the number of months
    (including as a whole month any partial month) that has elapsed since
    the beginning of such Performance Period until the date of such
    termination of employment and the denominator of which is the number of
    months (including as a whole month any partial month) in the
    Performance Period; and
 
      (B) a percentage determined in the discretion of the Committee that
    would be earned under the terms of the applicable Award Agreement
    assuming that the rate at which the performance goals have been
    achieved as of the date of such termination of employment would
    continue until the end of the Performance Period, or, if the Committee
    elects to compute the benefit after the end of the Performance Period,
    the Performance Percentage, as determined by the Committee, attained
    during the Performance Period for the Performance Share.
 
  (d) ON ACCOUNT OF DISABILITY. Except as otherwise provided by the Committee
in the Award Agreement, if a Grantee's employment terminates on account of
Disability, then:
 
    (i) the Grantee's Restricted Shares that were forfeitable shall thereupon
  become nonforfeitable;
 
    (ii) any unexercised option or SAR, whether or not exercisable on the
  date of such termination of employment, may be exercised in whole or in
  part, within the first 12 months after such termination of employment (but
  only during the Option Term) by the Grantee, by (A) his or her personal
  representative or by the person to whom the option or SAR, as applicable,
  is transferred by will or the applicable laws of descent and distribution,
  (B) the Grantee's designated beneficiary, or (C) a Permitted Transferee;
  and
 
    (iii) any unexercised Performance Shares may be exercised in whole or in
  part, at any time within six months after such termination of employment on
  account of Disability by the Grantee or by (A) his personal representative
  or by the person to whom the Performance Shares are transferred by will or
  the applicable laws of descent and distribution, (B) the Grantee's
  designated beneficiary, or (C) a Permitted Transferee; except that the
  benefit payable with respect to any Performance Shares for which the
  Performance Period has not ended as of the date of such termination of
  employment on account of Disability shall be equal to the product of the
  Fair Market Value of a Share Value multiplied successively by each of the
  following:
 
      (A) a fraction, the numerator of which is the number of months
    (including as a whole month any partial month) that have elapsed since
    the beginning of such Performance Period until the date of such
    termination of employment and the denominator of which is the number of
    months (including as a whole month any partial month) in the
    Performance Period; and
 
      (B) a percentage determined in the discretion of the Committee that
    would be earned under the terms of the applicable Award Agreement
    assuming that the rate at which the performance goals have been
    achieved as of the date of such termination of employment would
    continue until the end of the Performance Period, or, if the Committee
    elects to compute the benefit after the end of the Performance
 
                                     G-12
<PAGE>
 
    Period, the Performance Percentage, as determined by the Committee,
    attained during the Performance Period for the Performance Share.
 
  (e) ANY OTHER REASON. Except as otherwise provided by the Committee in the
Award Agreement, if a Grantee's employment terminates for any reason other
than for Cause, Retirement, death, or Disability, then:
 
    (i) the Grantee's Restricted Shares (and any SARs identified therewith),
  to the extent forfeitable on the date of the Grantee's termination of
  employment), shall be forfeited on such date;
 
    (ii) any unexercised option or SAR (other than a SAR identified with a
  Restricted Share or Performance Share), to the extent exercisable
  immediately before the Grantee's termination of employment, may be
  exercised in whole or in part, not later than three months after such
  termination of employment (but only during the Option Term); and
 
    (iii) the Grantee's Performance Shares (and any SARs identified
  therewith) shall become nonforfeitable and may be exercised in whole or in
  part, but only if and to the extent determined by the Committee.
 
  (f) EXTENDED EXERCISABILITY. If the Grantee has entered into an agreement
with ALLTEL not to sell any Shares (or the capital stock of a successor to
ALLTEL) for a specified period after the consummation of a business
combination between ALLTEL and another corporation or entity (the "Specified
Period"), such option may be exercised in whole or in part until the later of
the end of the post-termination period specified in subparagraph (b), (c), or
(d) of this Section, as applicable, or ten business days after the end of the
Specified Period.
 
  (g) EXTENSION OF TERM. In the event of a termination of the Grantee's
employment other than for Cause, the term of any Award (whether or not
exercisable immediately before such termination) which would otherwise expire
after the Grantee's termination of employment but before the end of the period
following such termination of employment described in subparagraphs (b), (c),
and (d) of this Section for exercise of Awards may, in the Committee's
discretion, be extended so as to permit any unexercised portion thereof to be
exercised at any time within such period. The Committee may further extend the
period of exercisability to permit any unexercised portion thereof to be
exercised within a specified period provided by the Committee.
 
  14. PLANS OF FOREIGN SUBSIDIARIES. The Committee may authorize any foreign
Subsidiary to adopt a plan for granting Awards ("Foreign Plan"). All Awards
granted under such Foreign Plan shall be treated as grants under the Plan.
Such Foreign Plans shall have such provisions as the Committee permits not
inconsistent with the provisions of the Plan. Awards granted under a Foreign
Plan shall be governed by the terms of the Plan, except to the extent that the
provisions of the Foreign Plan are more restrictive than the provisions of the
Plan, in which case the Foreign Plan shall control.
 
  15. SUBSTITUTED AWARDS. If the Committee cancels any Award (whether granted
under this Plan or any plan of any entity acquired by ALLTEL or a Subsidiary),
the Committee may, in its discretion, substitute a new Award therefor upon
such terms and conditions consistent with the Plan as the Committee may
determine; except that (a) the Option Price of any new option, and the Strike
Price of any new SAR, shall not be less than 100% (110% in the case of an
incentive stock option granted to a 10% Owner) of the Fair Market Value of a
Share on the date of grant of the new Award; and (b) the Grant Date of the new
Award shall be the date on which such new Award is granted.
 
  16. SECURITIES LAW MATTERS. If the Committee deems necessary to comply with
any applicable securities law, the Committee may require a written investment
intent representation by the Grantee and may require that a restrictive legend
be affixed to certificate for Shares. If, based upon the advice of counsel to
ALLTEL, the Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of (i) federal or state securities laws or (ii) the listing
requirements of any national securities exchange or national market system on
which are listed any of ALLTEL's equity securities, then the Committee may
postpone any such exercise, nonforfeitability or delivery, as
 
                                     G-13
<PAGE>
 
applicable, but ALLTEL shall use all reasonable efforts to cause such
exercise, nonforfeitability or delivery to comply with all such provisions at
the earliest practicable date.
 
  17. NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the
grant of any Award shall (a) give any Grantee the right to remain employed by
ALLTEL or any Subsidiary or to any benefits not specifically provided by the
Plan or (b) modify the right of ALLTEL or any Subsidiary to modify, amend, or
terminate any employee benefit plan.
 
  18. NO RIGHTS AS A STOCKHOLDER. A Grantee shall not have any rights as a
stockholder of ALLTEL with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such shares have been delivered to him or her. Restricted Shares, whether held
by a Grantee or in escrow by the Secretary of ALLTEL, shall confer on the
Grantee all rights of a stockholder of ALLTEL, except as otherwise provided in
the Plan. At the time of a grant of Restricted Shares, the Committee may
require the payment of cash dividends thereon to be deferred and, if the
Committee so determines, reinvested in additional Restricted Shares. Stock
dividends and deferred cash dividends issued with respect to Restricted Shares
shall be subject to the same restrictions and other terms as apply to the
Restricted Shares with respect to which such dividends are issued. The
Committee may in its discretion provide for payment of interest on deferred
cash dividends.
 
  19. NATURE OF PAYMENTS. Awards shall be special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary
or compensation of the Grantee for purposes of determining any pension,
retirement, death, or other benefit under (a) any pension, retirement, profit-
sharing, bonus, insurance, or other employee benefit plan of ALLTEL or any
Subsidiary or (b) any agreement between (i) ALLTEL or any Subsidiary and (ii)
the Grantee, except as such plan or agreement shall otherwise expressly
provide.
 
  20. NON-UNIFORM DETERMINATIONS. The Committee's determinations under the
Plan need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards, whether or not such
persons are similarly situated. Without limiting the generality of the
foregoing, the Committee shall be entitled, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the
terms and provisions of Awards, and (c) the treatment of terminations of
employment
 
  21. ADJUSTMENTS.
 
  (a) The Committee shall make equitable adjustment of:
 
    (i) the aggregate number of Shares available under the Plan for Awards;
 
    (ii) the number of Shares, SARs, or Performance Shares covered by an
  Award; and
 
    (iii) the Option Price of all outstanding options and the Strike Price of
  all outstanding SARs;
 
to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, spin-off, split-off,
reorganization, rights offering, liquidation, or similar event, of or by
ALLTEL.
 
  (b) Notwithstanding any provision in this Plan or any Award Agreement, in
the event of a Change in Control in connection with which the holders of
Common Stock receive shares of common stock of the surviving or successor
corporation that are registered under Section 12 of the 1934 Act:
 
    (i) there shall be substituted for each option and SAR outstanding on the
  date of the consummation of corporate transaction relating to such Change
  in Control, a new option or SAR, as the case may be, reflecting the number
  and class of shares into which each outstanding Share shall be converted
  pursuant to such Change in Control and providing each Grantee with rights
  that are substantially identical to those under this Plan in all material
  respects; and
 
                                     G-14
<PAGE>
 
    (ii) in the event of any such substitution, the purchase price per share
  in the case of an option and the Strike Price in the case of an SAR shall
  be appropriately adjusted by the Committee, such adjustments to be made in
  the case of outstanding options and SARs without a change in the aggregate
  purchase price or Strike Price.
 
  22. AMENDMENT OF THE PLAN. The Board may from time to time, in its
discretion, amend the Plan without the approval of ALLTEL's stockholders,
except (i) as such stockholder approval may be required under the listing
requirements of any securities exchange or national market system on which are
listed ALLTEL's equity securities and (ii) that the Board may not without the
approval of ALLTEL's stockholders amend the Plan to increase the total number
of shares reserved for the purposes of the Plan.
 
  23. TERMINATION OF THE PLAN. The Plan shall terminate on the ten year
anniversary of the Effective Date or at such earlier time as the Board may
determine. No termination shall affect any Award then outstanding under the
Plan.
 
  24. NO ILLEGAL TRANSACTIONS. The Plan and all Awards granted pursuant to it
are subject to all applicable laws and regulations. Notwithstanding any
provision of the Plan or any Award, Grantees shall not be entitled to
exercise, or receive benefits under, any Award, and ALLTEL shall not be
obligated to deliver any Shares or deliver benefits to a Grantee, if such
exercise or delivery would constitute a violation by the Grantee or ALLTEL of
any applicable law or regulation.
 
  25. CONTROLLING LAW. The law of the State of Delaware, except its law with
respect to choice of law, shall control all matters relating to the Plan.
 
  26. SEVERABILITY. If any part of the Plan is declared by any court of
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or
part of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will given effect to the terms of such Section to
the fullest extent possible while remaining lawful and valid.
 
                                     G-15
<PAGE>
 

                               ALLTEL CORPORATION

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
            FOR THE SPECIAL MEETING OF STOCKHOLDERS, JUNE 23, 1998.

The undersigned hereby appoints Joe T. Ford and Francis X. Frantz, or either of
them, with full power of substitution, as proxies to vote all of the
undersigned's shares of voting stock at the Special Meeting of Stockholders on
June 23, 1998, and at any and all adjournments thereof, in accordance with and
as more fully described in the Notice of the Special Meeting and the Joint Proxy
Statement/Prospectus, receipt of which is acknowledged.

This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder.  If no direction for voting is given, this proxy
will be voted:  (i) "FOR" Proposal No. 1, the approval of the issuance of common
stock, par value $1.00 per share, of ALLTEL ("ALLTEL Common Stock"), pursuant to
an Agreement and Plan of Merger, dated as of March 16, 1998, by and among
ALLTEL, Pinnacle Merger Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of ALLTEL, and 360 Communications Company, a Delaware corporation,
and the transactions contemplated thereby (the "Issuance of ALLTEL Common
Stock"); (ii) "FOR" Proposal No. 2, the approval of Amendment No. 1 to the
Amended and Restated Certificate of Incorporation of ALLTEL (the "Certificate
Amendment") to increase the authorized number of shares of ALLTEL Common Stock
from 500,000,000 to 1,000,000,000; (iii) "FOR" Proposal No. 3, the approval of
the ALLTEL 1998 Equity Incentive Plan; and (iv) in accordance with the judgment
of the person or persons voting the proxy with respect to any other business
that may properly come before the Special Meeting.

The effectiveness of each proposal listed above is not conditioned upon the
approval of any other proposal listed above.


               (continued and to be signed on the reverse side)

<PAGE>
 
The Board of Directors recommends a vote "FOR" Proposal No. 1

1.  Approval of the Issuance of ALLTEL                     FOR  AGAINST  ABSTAIN
    Common Stock.                                          [ ]    [ ]      [ ]

The Board of Directors recommends a vote "FOR" Proposal No. 2
 
2.  Approval of Amendment No. 1 to the Amended and         FOR  AGAINST  ABSTAIN
    Restated Certificate of Incorporation of ALLTEL        [ ]    [ ]      [ ]
    to increase the authorized number of shares of
    ALLTEL Common Stock to 1,000,000,000.

The Board of Directors recommends a vote "FOR" Proposal No. 3
 
3.  Approval of the ALLTEL 1998 Equity Incentive Plan.     FOR  AGAINST  ABSTAIN
                                                           [ ]    [ ]      [ ]

Dated:                 , 1998.
       ----------------


- ------------------------------------
Signature



- ------------------------------------
Signature



PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.  JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.



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