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Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALLTEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 4813 34-0868285
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code number) Identification Number)
incorporation or
organization)
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One Allied Drive, Little Rock, Arkansas 72202
501-905-8000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Francis X. Frantz
Executive Vice President -- External Affairs
General Counsel and Secretary
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202
501-905-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies To:
Benjamin F. Garmer, III Richard N. Massey
Foley & Lardner Kutak Rock
777 E. Wisconsin Avenue 425 W. Capitol Avenue, Suite 1100
Milwaukee, Wisconsin 53202 Little Rock, Arkansas 72201-3409
(414) 271-2400 (501) 975-3000
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement is declared effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed
Amount maximum Proposed Amount of
Title of each class of to be offering price maximum aggregate registration
securities to be registered Registered(1) per unit offering price(2) fee(3)
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<S> <C> <C> <C> <C>
Common Stock, $1.00 par
value(4).............. 26,903,577 N/A $1,401,227,969 $389,541
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</TABLE>
(1) This Registration Statement relates to shares of common stock, $1.00 par
value, of ALLTEL Corporation issuable to holders of common stock, $0.25
par value, of Aliant Communications, Inc. in the proposed merger of a
wholly-owned subsidiary of ALLTEL into Aliant. The amount of ALLTEL common
stock to be registered is based on the maximum exchange ratio of .75 of a
share of ALLTEL common stock for each share of Aliant common stock and the
maximum aggregate number of shares of Aliant common stock to be converted
in the merger to shares of ALLTEL common stock (35,871,436), assuming for
purposes of calculating the registration fee that currently outstanding
rights and options to acquire 229,538 shares of Aliant common stock are
exercised prior to the effective time of the merger.
(2) The registration fee was calculated pursuant to Rules 457(f)(1) and 457(c)
under the Securities Act of 1933, as amended (the "Securities Act"), by
multiplying $39.0625, the average of the high and low prices of Aliant
common stock on March 17, 1999, as reported by the NASDAQ National Market,
by 35,871,436, the aggregate number of shares of Aliant common stock
calculated in note (1) above.
(3) Pursuant to Rule 457(b) under the Securities Act, the registration fee of
$389,541 is offset by the fee in the amount of $302,487 paid on February
9, 1999 in connection with Aliant's submission of Confidential Preliminary
Proxy materials on Schedule 14A. The net fee paid with this Form S-4 is
$87,054.
(4) Rights to purchase Series K Preferred Stock of ALLTEL are attached to and
trade with the ALLTEL Common Stock.
----------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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Aliant Communications Inc.
1440 M Street
P.O. Box 81309
Lincoln, NE 68501-1309
[ALIANT LOGO APPEARS HERE]
March 25, 1999
Dear Aliant Shareholders:
We invite you to attend our 1999 annual meeting of shareholders to be held
on April 27, 1999 at 10:30 a.m., Central Time, at The Cornhusker Hotel in
Lincoln, Nebraska.
At the meeting, you will be asked to consider and vote on a proposal to
approve and adopt an agreement and plan of merger among ALLTEL Corporation, a
wholly-owned subsidiary of ALLTEL, and Aliant. Under the terms of the merger
agreement, a wholly-owned subsidiary of ALLTEL will merge with and into Aliant
and Aliant will become a wholly-owned subsidiary of ALLTEL. As a result of the
merger, each share of Aliant will be exchanged for $39.13 worth of ALLTEL
stock. Based on ALLTEL's closing stock price as of the day immediately prior to
the date hereof, this equals an exchange ratio of .67 shares of ALLTEL stock
for each share of Aliant. This exchange ratio may change based on the average
closing price of ALLTEL common stock for ten randomly selected days over a
twenty-day period prior to closing. The agreement also provides for limited
upside and downside protection with respect to ALLTEL stock. If ALLTEL's final
stock price is $52.17 or less, then the exchange ratio will be 0.75. If
ALLTEL's final stock price is $58.40 or more, then the exchange ratio will be
0.67.
A detailed description of the merger agreement and the merger is contained
in the accompanying proxy statement/prospectus, which you should read
carefully.
At the meeting, you will also be asked
. to elect four directors for a term expiring at the earlier of the
closing of the merger, the date of our 2002 annual meeting of
shareholders or such time as their successors are elected and
qualified, and
. to transact any other business which may be properly brought before
the meeting or any adjournment or postponement of the meeting.
After careful consideration, your board of directors has determined that
the merger agreement is in the best interests of Aliant shareholders and has
unanimously approved the merger agreement. The Aliant board of directors
recommends that you vote to approve the merger agreement and for the proposed
slate of directors.
You have the right under Nebraska law to dissent from the merger
transaction and have the fair value of your shares paid to you in cash. For
more information regarding those dissenters' rights and the procedures to be
followed in exercising such rights, please read carefully the accompanying
Proxy Statement/Prospectus.
Your vote is important. Failure to vote your shares will have the same
effect as a vote against the merger. Therefore, whether or not you plan to
attend the meeting in person and regardless of the number of shares you own, I
urge you to complete, date, sign and return the accompanying proxy card in the
provided prepaid envelope as soon as possible. This will ensure that your
shares are voted as you wish and that a quorum will be present. You may attend
the meeting and vote in person, even if you have previously voted your shares.
Sincerely,
Thomas C. Woods, III, Chairman of the
Board
Neither the Securities and Exchange Commission nor any state securities
commission has approved the merger described in this proxy statement/prospectus
or the ALLTEL common stock to be issued in the merger, nor have they determined
if this proxy statement/prospectus is accurate or adequate. Any representation
to the contrary is a criminal offense.
See "RISK FACTORS" on page 15 for certain matters you should consider.
This proxy statement/prospectus is dated March 25, 1999, and is first being
mailed to shareholders on or about March 29, 1999.
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ALIANT COMMUNICATIONS INC.
1440 M STREET
LINCOLN, NEBRASKA 68508
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NOTICE OF MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 1999
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TO THE SHAREHOLDERS OF ALIANT COMMUNICATIONS INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Aliant
Communications Inc., a Nebraska corporation, will be held at The Cornhusker
Hotel, 333 South 13th Street, Lincoln, Nebraska, 68508, on Tuesday, April 27th,
1999, at 10:30 a.m. Central Time, for the following purposes:
1. To Approve and Adopt the Merger Agreement. To approve and adopt the
agreement and plan of merger, dated as of December 18, 1998, among ALLTEL
Corporation, a Delaware corporation, a wholly-owned subsidiary of ALLTEL, and
Aliant, and the transactions contemplated by the merger agreement. The merger
agreement contemplates, among other things, that:
. Aliant will become a wholly-owned subsidiary of ALLTEL;
. Each outstanding share of Aliant common stock will be converted into
the right to receive $39.13 worth of ALLTEL common stock, subject to
adjustments described in the accompanying proxy
statement/prospectus.
2. Election of Four Directors. To elect four directors for terms
expiring at the earlier of the effective time of the merger, the date of the
2002 annual meeting of Aliant shareholders or until their respective successors
are elected and qualified.
3. Transaction of Other Business. To transact any other business which
may be properly brought before the meeting or any adjournment or postponement
of the meeting.
The above items of business are more fully described in the proxy
statement/prospectus accompanying this notice. Please read the accompanying
proxy statement/prospectus carefully for a description of the merger agreement.
Under Nebraska law, you have the right to dissent from the merger and have
the "fair value" of your shares paid to you in cash. For more information
regarding your dissenters' rights and procedures, please read carefully the
accompanying proxy statement/prospectus.
Only shareholders of record at the close of business on March 8, 1999 are
entitled to notice of, and to vote at, the meeting or at any adjournments or
postponements of the meeting. A list of the shareholders entitled to vote at
the meeting will be available for inspection by any shareholder during usual
business hours at the principal offices of Aliant.
BY ORDER OF THE BOARD OF DIRECTORS,
ALIANT COMMUNICATIONS INC.
Michael J. Tavlin, Secretary
Lincoln, Nebraska -- March 25, 1999
Your vote is important. Whether or not you expect to attend the meeting,
please complete, date, sign and return the enclosed proxy card promptly in the
enclosed postage-prepaid envelope in order to ensure your representation at the
meeting. Even if you have given your proxy, you may still vote in person if you
attend the meeting. Please note, however, that if your shares are held in
"street name," you must instruct your broker in order to vote. Your vote is
very important. If you fail to vote or fail to instruct your broker to vote
your shares, the effect will be the same as a vote against the merger
agreement. Please do not send stock certificates with your proxy card.
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REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about each of ALLTEL and Aliant that is not included in or delivered with this
document. You may obtain documents that are filed with the Securities and
Exchange Commission and incorporated by reference in this document without
charge by requesting them in writing or by telephone from the appropriate party
at the following addresses:
For ALLTEL documents:
For Aliant documents:
ALLTEL Corporation Aliant Communications Inc.
One Allied Drive 1440 M Street
Little Rock, AR 72202 Lincoln, NE 68508
Attention: Corporate Secretary Attention: Corporate Secretary
Telephone: (501) 905-8000 Telephone: (402) 436-3737
If you would like to request documents for either company, you should do
so by April 20, 1999 in order to receive them before the Aliant annual meeting.
See "WHERE YOU CAN FIND MORE INFORMATION" (page 76).
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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QUESTIONS AND ANSWERS ABOUT
THE MERGER.............................................................. 4
SUMMARY.................................................................. 5
The Companies......................................................... 5
The Merger............................................................ 5
The Aliant Annual Meeting of Shareholders and Record Date............. 9
Election of Aliant Directors.......................................... 9
Required Vote......................................................... 9
Comparative Rights.................................................... 9
Market Prices and Dividends........................................... 9
Comparative Per Share Data............................................ 10
Selected Historical Financial Data.................................... 11
Selected Unaudited Pro Forma Financial Information.................... 13
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS................ 14
RISK FACTORS............................................................. 15
ALIANT ANNUAL MEETING OF SHAREHOLDERS.................................... 16
General............................................................... 16
Date, Time, and Place................................................. 16
Matters to be Considered at the Meeting............................... 16
Record Date........................................................... 16
Stock Entitled to Vote; Quorum........................................ 17
Vote Required......................................................... 17
Share Ownership of Management......................................... 17
Voting of Proxies..................................................... 18
Revocability of Proxies............................................... 18
Solicitation of Proxies............................................... 18
THE MERGER............................................................... 20
General............................................................... 20
Regulatory Approvals.................................................. 21
Background of the Merger.............................................. 21
Aliant's Reasons for the Merger; Recommendation of the Aliant Board... 24
Opinion of Financial Advisor to Aliant................................ 25
Interests of Certain Persons in the Merger............................ 30
Dissenters' Rights.................................................... 31
Certain United States Federal Income Tax Consequences of the Merger... 33
Anticipated Accounting Treatment...................................... 34
Percentage Ownership
Interest of Aliant Shareholders after the Merger..................... 35
Conversion of Shares; Procedures for Exchange of Certificates......... 35
NYSE Listing.......................................................... 36
Delisting and Deregistration of Aliant Common Stock................... 36
Conduct of Business of ALLTEL and Aliant if
Merger Is Not Consummated............................................ 36
Resales of ALLTEL Common Stock........................................ 36
</TABLE>
1
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<TABLE>
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OTHER TERMS OF THE MERGER AGREEMENT........................................ 38
Certain Representations and Warranties.................................. 38
Conduct of Business by Aliant and ALLTEL Pending the Merger............. 39
Acquisition Proposals................................................... 40
Information Supplied.................................................... 41
Shareholders' Meeting................................................... 42
Employee Benefits....................................................... 42
Charitable Contributions/Community Support.............................. 42
Operations and Employment in Lincoln, Nebraska.......................... 42
Conditions to Consummation of the Merger................................ 43
Termination............................................................. 46
Termination Fees........................................................ 47
Expenses................................................................ 49
Amendment and Modification.............................................. 49
CERTAIN REGULATORY FILINGS AND APPROVALS................................... 50
FCC Transfer Approvals.................................................. 50
Hart-Scott-Rodino Act Approval.......................................... 50
State Regulatory Approvals.............................................. 50
CERTAIN RELATED TRANSACTIONS............................................... 50
DESCRIPTION OF ALLTEL CAPITAL STOCK........................................ 51
General................................................................. 51
ALLTEL Common Stock..................................................... 51
Rights Agreement........................................................ 51
ALLTEL Preferred Stock.................................................. 53
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF ALIANT AND ALLTEL.............. 54
General................................................................. 54
Dividend Rights......................................................... 54
Voting Rights........................................................... 54
Number and Election of Directors........................................ 55
Call of Special Meetings................................................ 56
Action by Shareholders Without a Meeting................................ 56
Shareholder Proposals................................................... 56
Vote on Extraordinary Corporate Transactions............................ 57
Rights Plan............................................................. 57
Business Combination Restrictions....................................... 58
Rights of Appraisal..................................................... 60
Special Redemption Provisions........................................... 60
Preemptive Rights....................................................... 60
Limitation of Liability................................................. 61
Indemnification of Officers and Directors............................... 61
Liquidation Rights...................................................... 61
Amendment to Certificate of Incorporation............................... 62
Amendment to By-laws.................................................... 62
</TABLE>
2
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<TABLE>
<S> <C>
ELECTION OF ALIANT DIRECTORS.............................................. 63
General................................................................ 63
Nominees for Term to Expire in 2002.................................... 63
Present Term Expires in 2000........................................... 63
Present Term Expires in 2002........................................... 64
Board of Directors and Committee Meetings.............................. 64
Security Ownership of Certain Beneficial Owners........................ 65
Security Ownership of Management....................................... 65
Executive Compensation................................................. 67
Summary Compensation Table............................................. 67
Option Grants in 1998.................................................. 68
Option Exercises in Fiscal 1998 and Fiscal 1998 Year-End Option
Values................................................................ 69
Pension Plan Table..................................................... 69
Compensation of Directors.............................................. 70
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements................................................... 70
Executive Compensation Committee Report on Executive Compensation...... 71
Section 16(a) Beneficial Ownership Reporting Compliance................ 74
Relationship with Independent Certified Public Accountants............. 74
Other Business at the Annual Meeting of Shareholders................... 74
Date of Receipt of Proposals........................................... 74
LEGAL MATTERS............................................................. 75
EXPERTS................................................................... 75
WHERE YOU CAN FIND MORE INFORMATION....................................... 76
</TABLE>
ANNEX A -- Agreement and Plan of Merger
ANNEX B -- Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
ANNEX C -- Sections 21-20,137 to 21-20,150 of the Nebraska Business Corporation
Act (Relating to Dissenters' Rights)
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHAT WILL I RECEIVE IN THE MERGER?
As a result of the merger, ALLTEL will pay you $39.13 worth of ALLTEL
common stock for each share of Aliant common stock you own. The merger
agreement also provides for limited upside and downside protection with respect
to ALLTEL common stock. If ALLTEL's final stock price prior to the merger is
$52.17 or less, then ALLTEL will pay you 0.75 of a share of ALLTEL common stock
for each share of Aliant common stock you own. If ALLTEL's final stock price
prior to the merger is $58.40 or more, then ALLTEL will pay you 0.67 of a share
of ALLTEL common stock for each share of Aliant common stock you own. ALLTEL
will not issue fractional shares. You will instead be paid cash equal to the
market value of any fractional shares of ALLTEL common stock that you would
have received.
Q. WILL ALLTEL PAY DIVIDENDS ON ITS COMMON STOCK?
A. ALLTEL historically has paid a quarterly dividend to its common
shareholders and intends to continue paying a quarterly dividend.
Q. WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
A. We expect the exchange of shares by Aliant shareholders to be tax-
free to Aliant shareholders for federal income tax purposes. Aliant
shareholders may have to pay taxes on cash received for any fractional shares.
Your tax basis in the shares of ALLTEL common stock you receive in the merger
will equal your current tax basis in Aliant common stock reduced by an amount
allocable to a fractional share interest, if any, for which cash is received.
Q. WHAT SHAREHOLDER VOTE IS REQUIRED TO APPROVE THE MERGER?
A. The approval of the merger requires the affirmative vote of the
holders of 70% of the outstanding shares of Aliant common stock entitled to
vote at the Aliant annual meeting.
Q. SHOULD I RETURN A PROXY CARD EVEN IF I PLAN TO ATTEND THE SHAREHOLDERS'
MEETING?
A. Yes. After considering the information contained in this proxy
statement/prospectus, please complete, date, sign and return the accompanying
proxy card in the provided envelope. Failure to vote your shares will have the
same effect as a vote against the merger.
Q. SHOULD I SEND MY ALIANT STOCK CERTIFICATES NOW?
A. No. After the merger is completed, an exchange agent appointed by
ALLTEL and Aliant will send you written instructions for exchanging stock
certificates.
Q. WHEN WILL THE MERGER BE COMPLETED?
A. The Merger is expected to be completed in the second quarter of
1999.
4
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SUMMARY
This summary highlights selected information from this proxy
statement/prospectus. To understand the merger and related transactions more
fully, you should carefully read this entire document and the other documents
to which we refer.
The Companies
ALLTEL. ALLTEL is an information technology company that provides
wireline and wireless communications and information services. ALLTEL provides
wireline local, long-distance, network access and internet services, wireless
communications, wide-area paging service and information management services
and software. ALLTEL also sells telecommunications products and publishes
telephone directories for its affiliates and other telephone companies.
ALLTEL's principal executive offices are located at One Allied Drive, Little
Rock, Arkansas 72202, and its telephone number is (501) 905-8000.
Pinnacle MergerSub, Inc. Pinnacle MergerSub, Inc. is a wholly-owned
subsidiary of ALLTEL. Pinnacle was formed by ALLTEL solely for the purpose of
effecting this merger.
Aliant. Aliant is a diversified communications company that provides
wireline and wireless communications services and products to retail consumers,
businesses, educational institutions and government agencies as well as
wholesale network services to other communications companies. Aliant offers:
. local and long distance services;
. wireless services;
. enhanced telecommunications services, such as call waiting and
caller ID services;
. directory services;
. communications systems and equipment; and
. a full range of data communications services.
Aliant's principal wholly-owned subsidiary is Aliant Communications Co.
(formerly The Lincoln Telephone and Telegraph Company). Aliant's principal
executive offices are located at 1440 M Street, Lincoln, Nebraska 68508, and
its telephone number is (402) 436-3737.
The Merger
General. A wholly-owned subsidiary of ALLTEL will merge into Aliant. As a
result, Aliant will become a wholly-owned subsidiary of ALLTEL.
The merger agreement is attached as Annex A to this proxy
statement/prospectus and is the legal document that governs the merger. We
encourage you to read the entire merger agreement.
What Aliant Shareholders Will Receive. As a result of the merger, ALLTEL
will pay you $39.13 worth of ALLTEL common stock for each share of Aliant
common stock you own. The merger agreement also provides for limited upside and
downside protection with respect to ALLTEL common stock. If
5
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ALLTEL's final stock price prior to the merger is $52.17 or less, then ALLTEL
will pay you 0.75 of a share of ALLTEL common stock for each share of Aliant
common stock you own. If ALLTEL's stock price is $58.40 or more, then ALLTEL
will pay you 0.67 of a share of ALLTEL common stock for each share of Aliant
common stock you own.
You will receive cash in lieu of any fractional share of ALLTEL common
stock. The amount of cash that you will receive will be determined by
multiplying any fractional share of ALLTEL common stock you are entitled to
receive by the closing price of ALLTEL common stock on the day immediately
before the merger.
Recommendations to Aliant Shareholders. The Aliant board believes the
merger is in the best interests of Aliant and its shareholders and unanimously
recommends that you vote to approve the merger. There are four principal
reasons for this recommendation:
. First, the belief of the Aliant board that, as a result of the
merger, Aliant will be a part of a premier communications company
and will be better positioned to compete effectively in the rapidly
changing communications industry.
. Second, the relatively greater financial, technological, marketing
and sales resources of ALLTEL and the likelihood that the addition
of such resources to Aliant's operations would enable Aliant to
accelerate its long-term growth strategy, facilitate the
introduction of new products and compete more effectively in its
targeted markets.
. Third, the complementary nature of the operations of ALLTEL and
Aliant from the standpoint of geography and strategic fit.
. Fourth, the consideration to be received by Aliant shareholders,
based on the closing stock prices of Aliant and ALLTEL common stock
on December 16, 1998, represents a significant premium over
historical market prices for Aliant common stock. This premium of
29.4% compares favorably to comparable company transaction
valuations. In addition, under the terms of the merger agreement,
Aliant shareholders will share in certain increases and are
protected against certain decreases in the trading price of ALLTEL
common stock.
The Aliant board also unanimously recommends that you vote for the proposed
slate of directors.
Opinion of Aliant's Financial Advisor. Aliant's financial advisor,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, has given an oral opinion
(subsequently confirmed by delivery of a written opinion dated December 18,
1998) to the board of directors of Aliant as to the fairness, from a financial
point of view, of the exchange ratio set forth in the merger agreement. The
full text of the written opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated is attached to the back of this document as Annex B and should be
read carefully in its entirety. The opinion of Merrill Lynch, Pierce, Fenner &
Smith Incorporated is directed to the board of directors of Aliant and does not
constitute a recommendation to any shareholder with respect to matters relating
to the merger.
Interests of Certain Persons in the Merger. When considering the
recommendation of the Aliant board to approve the merger, you should be aware
that members of management of Aliant will have employment agreements, retention
incentives and/or benefit plans with ALLTEL that give them interests in the
merger that may be different from your interests as a shareholder.
6
<PAGE>
Conditions to the Merger. ALLTEL and Aliant will complete the merger only
if certain conditions, including the following, are satisfied or waived:
. Aliant shareholders approve the merger.
. The ALLTEL common stock to be delivered to shareholders of Aliant
is authorized for listing on the New York Stock Exchange.
. There is no statute, rule, order or injunction prohibiting the
merger.
. All required material governmental approvals and other consents are
received by ALLTEL and/or Aliant.
. The representations and warranties in the merger agreement are
materially correct.
. ALLTEL's independent auditor reconfirms at the closing that the
merger can be accounted for as a pooling-of-interests.
. ALLTEL and Aliant receive opinions from counsel to the effect that
the merger will qualify as a tax-free reorganization.
. Holders of not more than 9% of the outstanding shares of Aliant
common stock dissent from the merger.
The closing of the merger is not subject to approval by the shareholders
of ALLTEL. ALLTEL or Aliant may waive various conditions of the merger. If
either party waives any material conditions to closing the merger, we will
provide you supplemental disclosure of such waiver and a reasonable opportunity
to change your vote.
Termination of the Merger Agreement. ALLTEL and Aliant can mutually agree
to terminate the merger agreement at any time without completing the merger.
The merger agreement also may be terminated in certain other circumstances,
including the following:
. By ALLTEL or Aliant if the shareholders of Aliant do not approve
the merger.
. By ALLTEL or Aliant if the merger is not effected on or before May
31, 1999, except that such date may be extended to July 30, 1999 by
ALLTEL or Aliant in order to receive necessary consents.
. By ALLTEL or Aliant if a court or governmental authority has acted
to prevent the merger.
. By ALLTEL or Aliant if the other party materially breached the
merger agreement.
. By Aliant if it receives a superior proposal from another party
that is not matched or exceeded by ALLTEL and Aliant's board of
directors determines in its good faith judgment that a termination
of the merger agreement is appropriate to comply with its fiduciary
duties.
. By ALLTEL if Aliant's board withdraws its recommendation with
respect to the merger in a manner adverse to ALLTEL.
7
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. By Aliant if the final stock price of ALLTEL prior to the merger is
equal to or less than $43 and ALLTEL does not increase the exchange
ratio to provide $32.25 worth of ALLTEL common stock for each share
of Aliant common stock to be exchanged in the merger.
Termination Fees. Aliant is required to pay ALLTEL a termination fee of
2% of the value of all of the outstanding shares of Aliant common stock or
approximately $30 million as of the day immediately prior to this mailing if,
among other things:
. The Aliant shareholders do not approve the merger and Aliant enters
into a similar transaction within twelve months of the termination
of the merger agreement.
. Aliant terminates the merger agreement as a result of a superior
proposal.
. ALLTEL terminates the merger agreement as a result of Aliant's
willful or intentional material breach of the merger agreement.
ALLTEL is required to pay Aliant a termination fee of $12 million if:
. Aliant, within 10 business days of its request to ALLTEL, does not
receive a letter from ALLTEL's independent certified public
accounting firm confirming that the merger will qualify for
"pooling-of-interest" accounting treatment, provided that ALLTEL
does not have the right to terminate the merger agreement for
another reason or that failure to obtain the accountant's letter is
a circumstance or event related to Aliant, or
. the merger is terminated by ALLTEL because of failure to receive
certain special approvals from the Federal Communication
Commission.
Certain Federal Income Tax Consequences. The merger is conditioned on the
receipt of opinions from Kutak Rock, counsel to ALLTEL, and Foley & Lardner,
counsel to Aliant, that, among other things, an Aliant shareholder will not
recognize any income, gain or loss as a result or receipt of ALLTEL common
stock pursuant to the merger, except for any cash they receive in lieu of
fractional shares of ALLTEL common stock.
Kutak Rock and Foley & Lardner have rendered opinions as to the above
matters for purposes of this proxy statement/prospectus. Those opinions are
required to be delivered again at closing.
Tax matters are complicated, and the tax consequences of the proposed
transactions to you will depend on the facts of your own situation. You should
consult your own tax advisors for a full understanding of the tax consequences
to you 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, the
recorded assets and liabilities of ALLTEL and Aliant will be carried forward to
ALLTEL at their historical recorded amounts. Also, net income of ALLTEL after
the merger will include the net income of ALLTEL and Aliant for the year in
which the merger occurs. The historical reported net income of ALLTEL and
Aliant for periods ending before the merger generally will be combined and
restated as net income of ALLTEL. It is a condition to the obligations of each
of ALLTEL and Aliant to effect the merger that they receive a letter from
Arthur Andersen LLP, ALLTEL's independent auditors, to the effect that Arthur
Andersen concurs that the merger will qualify for pooling-of-interests
accounting treatment.
8
<PAGE>
Dissenters' Rights. Under Nebraska law, Aliant shareholders may dissent
from the merger and demand the fair value of their shares in cash. This fair
value may be more or less than the consideration to be received from ALLTEL in
the merger. To exercise this right, you may not vote your shares in favor of
the merger and you must take certain other actions that Nebraska law requires.
The Aliant Annual Meeting of Shareholders and Record Date
Aliant will hold its annual meeting of shareholders at 10:30 a.m.,
Central Time, on April 27, 1999 at The Cornhusker Hotel in Lincoln, Nebraska.
At the meeting, Aliant shareholders will be asked to consider and vote on the
merger. Only shareholders of record at the close of business on the record date
will be entitled to vote at the annual meeting.
The record date for the annual meeting is the close of business on March
8, 1999.
Election of Aliant Directors
Aliant shareholders will also be asked to elect four directors for a term
expiring at the earlier of the closing of the merger, the date of Aliant's 2002
annual meeting of shareholders or such time as their successors are elected and
qualified.
Required Vote
Holders of at least 70% of the outstanding shares of Aliant common stock
entitled to vote at the annual meeting must vote in favor of the merger for the
Aliant shareholders to approve the merger. The vote of a plurality of the votes
cast by the Aliant shareholders at the annual meeting is necessary for the
election of a director nominee. A majority of the votes cast by the Aliant
shareholders at the annual meeting is required to approve any other actions
properly submitted for approval at the annual meeting.
Comparative Rights
ALLTEL is a Delaware corporation and Aliant is a Nebraska corporation.
The laws of those jurisdictions vary. Following the merger, Aliant shareholders
will hold shares in ALLTEL and Delaware law will govern their rights instead of
Nebraska law. There also exist various differences between ALLTEL's certificate
of incorporation and by-laws and Aliant's articles of incorporation and by-
laws.
Market Prices and Dividends
ALLTEL common stock trades on the NYSE and the Pacific Exchange under the
symbol "AT." Aliant common stock trades on the NASDAQ National Market under the
symbol "ALNT." The following table sets forth the dividends per share declared
on the ALLTEL common stock and the Aliant common stock, and the high and low
trading prices per share of each of the ALLTEL common stock and Aliant common
stock as reported on the NYSE Composite Tape and NASDAQ, based on published
financial sources for the periods indicated. We have adjusted the per share
information below and throughout this document to reflect all stock splits and
stock dividends of ALLTEL and Aliant.
9
<PAGE>
<TABLE>
<CAPTION>
ALIANT COMMON
ALLTEL COMMON STOCK STOCK
------------------- -------------
FISCAL YEAR HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
----------- ---- ---- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter........... 36 3/4 30 5/8 .275 19 1/2 16 .16
Second Quarter.......... 34 3/8 29 3/4 .275 20 1/2 15 .16
Third Quarter........... 35 1/2 30 15/16 .275 24 7/8 18 1/4 .17
Fourth Quarter.......... 41 5/8 33 3/16 .290 33 1/5 23 3/4 .17
1998
First Quarter........... 48 13/16 39 9/16 .290 34 3/16 25 3/4 .18
Second Quarter.......... 46 1/2 39 7/16 .290 34 22 1/2 .18
Third Quarter........... 48 38 1/4 .290 29 7/8 22 .18
Fourth Quarter.......... 61 3/8 44 .305 41 1/4 23 1/4 .18
1999
First Quarter (through
March 24, 1999)........ [66 1/2] [59 11/16] .305 [44 1/4] [38] .18
</TABLE>
The last trading days prior to execution of the merger agreement and the
date of this proxy statement/prospectus were December 17, 1998 and March 24,
1999, respectively. For each of these dates, the table below shows the last
reported sales prices of ALLTEL common stock and Aliant common stock and the
equivalent sales price of Aliant common stock as determined by the indicated
exchange ratio:
<TABLE>
<CAPTION>
December 17, 1998 March 24, 1999
----------------- --------------
<S> <C> <C>
ALLTEL Common Stock $57.00 $00.00
Aliant Common Stock $30.875 $00.00
Exchange Ratio .6865 .6700
Aliant Equivalent $39.13 $00.00
</TABLE>
No assurance can be given as to the market prices of ALLTEL common stock
or Aliant common stock at the closing of the merger.
Comparative Per Share Data
The following table sets forth certain per share data for ALLTEL and
Aliant on a historical basis, ALLTEL and Aliant on a pro forma combined basis
and on a per share equivalent pro forma combined basis for Aliant. This
information gives effect to the proposed merger on a pooling of interests basis
at an assumed exchange ratio of .67 of a share of ALLTEL common stock for each
share of Aliant common stock. The unaudited pro forma combined and equivalent
financial data do not reflect any cost savings or other synergies anticipated
by ALLTEL or Aliant management as a result of the merger. The companies may
have performed differently if they had been combined during the periods
presented. You should not rely on the pro forma information as being indicative
of the results they will experience in the future.
You should read the information below together with the historical
financial statements (and related notes) of each of the companies contained in
their reports filed with the Securities and Exchange Commission. See "WHERE YOU
CAN FIND MORE INFORMATION."
10
<PAGE>
<TABLE>
<CAPTION>
For the Years
Ended and as of
December 31,
-----------------
1998 1997 1996
-----------------
<S> <C> <C> <C>
ALLTEL Historical
Basic earnings per common share........................... $1.91 $2.13 $1.27
Diluted earnings per common share......................... 1.89 2.11 1.26
Book value per share...................................... 11.86 9.91 9.16
Cash dividends per share.................................. 1.175 1.115 1.055
Aliant Historical
Basic earnings per common share........................... $1.61 $1.46 $1.22
Diluted earnings per common share......................... 1.61 1.46 1.22
Book value per share...................................... 9.00 8.37 7.65
Cash dividends per share.................................. .72 .66 .61
Pro Forma Combined
Basic earnings per common share........................... $1.95 $2.13 $1.31
Diluted earnings per common share......................... 1.93 2.12 1.30
Book value per share...................................... 11.97 10.12 9.34
Cash dividends per share.................................. .99 .77 .74
Aliant Pro Forma Per Share Equivalents
Basic earnings per common share........................... $1.31 $1.43 $ .88
Diluted earnings per common share......................... 1.29 1.42 .87
Book value per share...................................... 8.02 6.78 6.26
Cash dividends per share.................................. .66 .52 .50
</TABLE>
Selected Historical Financial Data
The following table sets forth selected historical financial data for
ALLTEL and Aliant. You should read this information together with the
historical financial statements (and related notes) of each of the companies
contained in their reports filed with the Securities and Exchange Commission.
See "WHERE YOU CAN FIND MORE INFORMATION."
Selected Historical Financial Data of ALLTEL.
<TABLE>
<CAPTION>
For the Years Ended and as of December 31,
---------------------------------------------------
1998 1997 1996 1995 1994
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
(In thousands, except
per share data)
Total revenues and
sales.................. $5,194,008 $4,545.140 $4,239,467 $3,898,432 $3,494,520
Operating income........ $889,026 $1,020,866 $811,470 $829,366 $719,444
Net income.............. $525,475 $589,381 $351,256 $352,921 $251,996
Earnings per common
share:
Basic.................. $1.91 $2.13 $1.27 $1.28 $.91
Diluted................ $1.89 $2.11 $1.26 $1.27 $.91
Dividends per common
share.................. $1.175 $1.115 $1.055 $.98 $.90
Total assets............ $9,374,226 $8,570,405 $8,168,174 $7,054,627 $6,454,239
Shareholders' equity.... $3,270,872 $2,717,807 $2,559,607 $1,937,633 $1,629,132
Long-term debt and
redeemable
preferred stock........ $3,496,760 $3,705,144 $3,462,375 $3,286,411 $3,208,095
</TABLE>
- ----------------------
11
<PAGE>
(a) Net income for 1998 includes pretax gains of $296.2 million from the sale
of certain investments, principally consisting of MCI WorldCom, Inc.
common stock. These gains increased net income by $179.8 million or $.65
per share. Net income also includes $307 million of transaction costs and
one-time charges related to the closing of the merger with 360
Communications Company and to changes in a customer care and billing
contract with a major customer. These transaction costs and one-time
charges decreased net income by $234.6 million or $.85 per share.
(b) Net income for 1997 includes pretax gains of $209.6 million from the sale
of certain investments, principally consisting of MCI WorldCom, Inc.
common stock and from the sale of ALLTEL's healthcare operations. These
gains increased net income by $121.5 million or $.44 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 $.04
per share.
(c) 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 $.25 per share.
(d) Net income for 1995 includes a net pretax gain of $49.8 million primarily
from the sale of certain wireline properties, partially offset by
termination fees of $14.0 million incurred due to the early retirement of
long-term debt and by an additional pretax write-down of $5.0 million in
the carrying value of ALLTEL's check processing operations. These
transactions increased net income by $19.8 million or $.07 per share.
(e) 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 $.12 per share.
Selected Historical Financial Data of Aliant.
<TABLE>
<CAPTION>
For the Years Ended and as of December 31,
-------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------
<S> <C> <C> <C> <C> <C>
(In thousands, except per
share data)
Total revenues and sales...... $338,007 $286,328 $264,225 $225,692 $196,646
Operating income.............. $105,356 $89,372 $77,802 $49,961 $58,293
Net income.................... $58,059 $53,039 $44,954 $12,513 $33,605
Earnings per common share:
Basic........................ $1.61 $1.46 $1.22 $.36 $1.03
Diluted...................... $1.61 $1.46 $1.22 $.36 $1.03
Dividends per common share.... $.72 $.66 $.61 $.57 $.53
Total assets.................. $624,668 $547,642 $521,402 $520,321 $393,184
Shareholders' equity.......... $320,758 $302,998 $278,567 $259,545 $196,435
Long-term debt and redeemable
preferred stock.............. $108,000 $98,499 $107,579 $122,207 $48,499
</TABLE>
(a) Net income for 1998 includes a pretax charge for premiums for retirement
of Series K Bonds of $3.5 million. These charges lowered net income by
$2.1 million or $.06 per share. Net income also includes a pretax gain
from litigation of $3.3 million, which increased net income by $2.0
million or $.06 per share.
(b) Net income for 1995 includes pretax charges for restructuring of operator
services and voluntary early retirement of $21.6 million and FASB 71
adjustment of $25.9 million. These charges lowered net income by $13.0
million or $.36 per share and $16.5 million or $.48 per share
respectively.
12
<PAGE>
Selected Unaudited Pro Forma Financial Information
The following table sets forth certain selected unaudited pro forma
financial data for ALLTEL. This information gives effect to the proposed merger
on a pooling of interests basis at an exchange ratio of .67 of a share of
ALLTEL common stock for each share of Aliant common stock. The actual exchange
ratio may be different. The unaudited pro forma combined and equivalent
financial data do not reflect any cost savings or other synergies anticipated
by ALLTEL or Aliant management as a result of the merger. The companies may
have performed differently if they had been combined during the periods
presented. You should not rely on the pro forma information as being indicative
the results they will experience in the future.
You should read the information below together with the historical
financial statements (and related notes) of each of the companies contained in
their reports filed with the Securities and Exchange Commission. See "WHERE YOU
CAN FIND MORE INFORMATION."
<TABLE>
<CAPTION>
For the Years Ended and as of
December 31,
-----------------------------------
1998 1997 1996
-----------------------------------
<S> <C> <C> <C>
(In thousands, except per share data)
Total revenues and sales............... $5,532,015 $4,831,468 $4,503,692
Operating income....................... $994,382 $1,110,238 $889,272
Net income............................. $583,534 $642,420 $396,210
Earnings per common share:
Basic................................. $1.95 $2.13 $1.31
Diluted............................... $1.93 $2.12 $1.30
Average number of common shares
Outstanding........................... 298,345,000 300,884,000 301,160,000
Total assets........................... $9,998,894 $9,118,047 $8,689,576
Shareholders' equity................... $3,591,630 $3,020,805 $2,838,174
Long-term debt and redeemable
Preferred stock....................... $3,604,760 $3,803,643 $3,569,954
Dividends per common share............. $.99 $.77 $.74
Book value per common share............ $11.97 $10.12 $9.34
</TABLE>
13
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The following statements constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"):
(i) Certain statements, including possible or assumed future results of
operations of ALLTEL and Aliant contained in "RISK FACTORS," "THE MERGER --
Background of the Merger," "THE MERGER -- Aliant's Reasons for the Merger:
Recommendation of the Aliant Board," "THE MERGER --Opinion of Aliant's
Financial Advisor," including 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 Aliant including any statements contained herein or therein
regarding the development or possible or assumed future results of operations
of ALLTEL's and Aliant's businesses, the markets for ALLTEL's and Aliant'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." Aliant shareholders 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 Aliant 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 Aliant 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.
14
<PAGE>
RISK FACTORS
You should consider all information in this proxy statement/prospectus,
including particularly each of the following factors:
Integration of the Companies. We expect certain benefits to arise from
the merger, including revenue and market penetration improvements and certain
operating efficiencies and cost savings. The extent to which these benefits
will be achieved will depend on how and when the businesses of ALLTEL and
Aliant are integrated after the merger. In the past ALLTEL has successfully
combined acquired operations significantly larger than those of Aliant, but
there are risks that ALLTEL and Aliant will not successfully combine their
operations in the time anticipated or fully achieve the anticipated benefits.
If the integration of the businesses proves difficult, management may divert
their attention from other business concerns.
Rapidly Changing Telecommunications Industry. The communications industry
is subject to rapid and significant technological changes. The effect of these
changes, including changes relating to emerging transmission and switching
technologies in both wireline and wireless communications, is not predictable,
except that you can expect ALLTEL to continue to incur significant research,
development and capital expenses as it seeks to adapt to these changes.
Regulation of Telecommunications Industry. Despite some recent
deregulation of the communications industry, ALLTEL's operations are subject to
substantial regulation by the United States government and states (or
countries) in which it operates. The closing of the merger is conditioned on,
among other things, the approval of the Federal Communications Commission. It
is possible that the FCC will not grant this approval in a timely fashion, if
at all. It is also possible that even if approval is granted it will contain
conditions or restrictions that would impair the ability of ALLTEL to fully
realize the anticipated benefits of the merger.
The Effect of Stock Price Fluctuations on the ALLTEL Stock to be received
by Aliant Shareholders. The relative prices of shares of ALLTEL common stock
and Aliant common stock may vary significantly from prices on the date of the
merger agreement, this proxy statement/prospectus, and the merger. Aliant
shareholders have only limited protection from fluctuations in the prices for
ALLTEL stock. If the value of ALLTEL stock falls within a range with a low of
$52.17 and a high of $58.40, Aliant shareholders will receive $39.13 in ALLTEL
stock for each Aliant share they own. The value of the ALLTEL stock will be
based on the average closing prices for a randomly chosen ten days out of the
twenty days before the day the merger closes. If, however, this average is
$52.17 or less Aliant shareholders will receive .75 of an ALLTEL share for each
Aliant share owned and the value of the ALLTEL stock received would be less
than $39.13. For example, if the average price of ALLTEL stock is $50.00, then
each Aliant shareholder will receive $37.50 in ALLTEL stock for each Aliant
share owned. If this per share average is $43 or below, then Aliant can refuse
to close the merger unless ALLTEL agrees to deliver ALLTEL shares with a value,
based on its average price, of $32.25 for each Aliant share owned. On the other
hand, if the average price for ALLTEL stock is $58.40 or more Aliant
shareholders will receive .67 of an ALLTEL share for each Aliant share owned.
For example, if the average price of ALLTEL stock is $60.00, then each Aliant
shareholder will receive $40.20 in ALLTEL stock for each Aliant share owned.
The actual number of shares of ALLTEL stock to be issued in the merger will not
be determined until two days prior to the merger.
Aliant shareholders are urged to obtain current market quotations for
Aliant (NASDAQ:ALNT) and ALLTEL (NYSE:AT) stock.
15
<PAGE>
ALIANT ANNUAL MEETING OF SHAREHOLDERS
General
This proxy statement/prospectus is furnished to holders of Aliant common
stock in connection with the solicitation of proxies by the Aliant board for
use at the 1999 Aliant annual meeting of shareholders.
This proxy statement/prospectus and accompanying form of proxy were
mailed to shareholders of Aliant on or about March 26, 1999.
Date, Time, and Place
The Aliant annual meeting will be held at The Cornhusker Hotel, 333 South
13th Street, Lincoln, Nebraska 68508, on April 27, 1999, at 10:30 a.m. Central
Time.
Matters to be Considered at the Meeting
At the Aliant annual meeting, the holders of record of Aliant common
stock will be asked to consider and vote on proposals to
. approve and adopt the merger agreement and the transactions
contemplated thereby;
. elect four directors for a term expiring at the earlier of the
effective time of the merger, the date of Aliant's 2002 annual
meeting of shareholders or such time as their successors are
elected and qualified; and
. transact any other business which may be properly brought before
the meeting or any adjournment or postponement of the annual
meeting.
After careful consideration, the Aliant board determined that the
transactions contemplated by the merger agreement are in the best interests of
the shareholders of Aliant. Accordingly, the Aliant board unanimously approved
the merger agreement and recommends that all Aliant shareholders vote for its
approval. The board also unanimously recommends that Aliant shareholders vote
for the proposed slate of directors. See -- "THE MERGER -- Background of the
Merger" and "-- Aliant's Reasons for the Merger; Recommendation of the Aliant
Board." In considering the recommendation of the Aliant board with respect to
the merger agreement, Aliant shareholders should be aware that certain members
of Aliant's management and of the Aliant board have interests in the merger
that are different from and in addition to the interests of the shareholders of
Aliant common stock generally. See "THE MERGER -- Interests of Certain Persons
in the Merger."
Record Date
The close of business on March 8, 1999, is the date of record for the
determination of shareholders of Aliant common stock entitled to receive notice
of and to vote at the Aliant annual meeting and any adjournment or postponement
of the meeting. Accordingly, only shareholders of Aliant common stock of record
at the close of business on that date will be entitled to notice of and to vote
at the meeting. A list of the shareholders of Aliant common stock entitled to
vote at the meeting will be available for inspection by any shareholder of
Aliant common stock during usual business hours at the principal offices of
Aliant.
16
<PAGE>
Stock Entitled to Vote; Quorum
As of the record date, there were 35,640,644 shares of Aliant common
stock issued and outstanding and entitled to vote at the meeting. The holders
of a majority of the Aliant common stock issued and outstanding, present in
person, or represented by proxy, will constitute a quorum at the meeting. In
the event that a quorum is not present at the meeting, it is expected that such
meeting will be adjourned or postponed to solicit additional proxies. Holders
of record of Aliant common stock on the record date are each entitled to one
vote per share on each matter to be voted on at the meeting.
Under Nebraska law, holders of Aliant common stock are entitled to
cumulative voting rights in the election of directors. Cumulative voting
provides a shareholder with three options:
. first, a shareholder may vote the number of shares owned by the
shareholder for as many persons as there are directors to be
elected;
. second, a shareholder may cumulate such shares and give one
candidate as many votes as the number of directors to be elected
multiplied by the number of the shareholder's shares; or
. third, a shareholder may distribute said votes among as many
directors to be elected as the shareholder sees fit.
Vote Required
The approval of the merger agreement requires the affirmative vote of the
holders of 70% of the outstanding shares of Aliant common stock entitled to
vote at the Aliant annual meeting. The approval of the merger agreement is a
condition to the closing of the merger. Because the required vote of the
shareholders of Aliant common stock with respect to the merger agreement is
based on the total number of outstanding shares of Aliant common stock and not
on the number of shares which are actually voted, failure of a holder of record
of Aliant common stock to vote such shares will have the same effect as a vote
"against" the merger agreement.
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast by the holders of Aliant common stock entitled to vote for the
election of directors at the meeting is necessary for the election of a
director nominee.
Except as described above, action on matters submitted to a vote of the
shareholders of Aliant common stock will be approved if a quorum is present and
the votes cast in favor of the matter constitutes a majority of the shares of
Aliant common stock represented at the meeting and entitled to vote.
Share Ownership of Management
As of the record date, the directors and executive officers of Aliant and
their affiliates beneficially owned a total of 3,692,109 shares of Aliant
common stock (exclusive of shares that may be acquired through the exercise of
options), which represented approximately 10.4% of the shares of Aliant common
stock outstanding on such date. Each such director and executive officer has
indicated his or her present intention to vote all shares of the Aliant common
stock beneficially owned by him or her for the approval of the merger
agreement.
17
<PAGE>
Voting of Proxies
The shares of Aliant common stock represented by properly completed
proxies received at or before the time for the meeting will be voted as
directed by the shareholders of such shares unless revoked as described below.
If no instructions are given, executed proxies will be voted for approval of
the merger agreement and for the election of all nominees for director.
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. This is commonly referred to as a broker
nonvote. With respect to the meeting, the approval of the merger agreement will
be deemed a nonroutine matter. Because the approval of the merger agreement at
the meeting requires the affirmative vote of 70% of the shares of Aliant common
stock outstanding, a broker nonvote will have the same effect as a vote against
the merger agreement.
The persons named as proxies by any shareholder of Aliant common stock
may propose and vote for one or more adjournments or postponements of the
meeting, including, without limitation, adjournments to permit further
solicitations of proxies in favor of any proposal. No proxy that is voted
against a proposal will be voted in favor of any such adjournment or
postponement.
The Aliant board is not aware of any business to be brought before the
meeting other than as described in this proxy statement/prospectus. If,
however, other matters are properly brought before the meeting or any
adjournment or postponement of the meeting, 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 Aliant.
Revocability of Proxies
The grant of a proxy on the accompanying Aliant proxy card does not
preclude a shareholder from voting in person. A shareholder may revoke a proxy
at any time prior to its exercise by taking any of the following actions:
. filing with the Corporate Secretary of Aliant, at Aliant's
principal executive offices, a duly executed revocation of proxy;
. submitting a duly executed proxy bearing a later date; or
. appearing at the meeting and voting in person at the meeting.
Attendance at the meeting will not, in and of itself, constitute revocation of
a proxy.
Solicitation of Proxies
ALLTEL will pay for the cost of printing and mailing this proxy
statement/prospectus and the fees associated with the filing of this proxy
statement/prospectus with the SEC. Except for the fees and costs discussed in
the preceding sentence, Aliant will bear its own costs in connection with the
solicitation of proxies. In addition to solicitation by mail, the directors,
officers and employees of Aliant and its subsidiaries may solicit proxies from
shareholders 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 record of stock
held by those persons. Aliant will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses in connection
18
<PAGE>
therewith. In addition, Aliant has retained Georgeson & Company Inc. to assist
in the solicitation of proxies from its shareholders. The fees to be paid by
Aliant to such firms for such services are not expected to exceed $10,000 plus
reasonable out-of-pocket expenses.
Holders of Aliant common stock are requested to complete, date, sign and
return the accompanying proxy in the provided envelope using the instructions
set forth on the accompanying proxy card as soon as possible. Please do not
send stock certificates with the proxy card.
19
<PAGE>
THE MERGER
(Proposal One)
The following summary of material terms of the merger and the merger
agreement is qualified in its entirety by reference to the merger agreement, a
copy of which is attached as Annex A to this proxy statement/prospectus.
General
At the effective time of the merger, Pinnacle MergerSub, Inc.
("MergerSub") will merge into Aliant, and Aliant will become a wholly-owned
subsidiary of ALLTEL.
Except for fractional shares and shares for which dissenters' rights are
exercised under Nebraska law, each share of Aliant common stock outstanding
immediately prior to the effective time of the merger will be converted into
the right to receive the number of shares of ALLTEL common stock equal to the
Exchange Ratio, as defined in the following paragraph.
The "Exchange Ratio" is equal to $39.13 divided by the Final ALLTEL Stock
Price (as defined below); except that (a) if the Final ALLTEL Stock Price is
$52.17 or less, then the Exchange Ratio shall be equal to 0.75 and (b) if the
Final ALLTEL Stock Price is $58.40 or more, then the Exchange Ratio shall be
equal to 0.67 (the "Merger Consideration"). "Final ALLTEL Stock Price" means
the average of the closing sale price of a share of ALLTEL common stock on the
New York Stock Exchange ("NYSE") as reported in The Wall Street Journal, New
York City edition, for the ten trading days selected by lot out of the 20
consecutive trading days ending with the second complete trading day
immediately prior to the closing date of the merger (the "Random Trading
Days"). ALLTEL and Aliant will randomly select the Random Trading Days by lot
on the second trading day prior to the closing date of the merger.
If the Final ALLTEL Stock Price is equal to or less than $43, Aliant will
have the option to terminate the merger agreement unless, within 24 hours after
the second trading day prior to the closing date of the merger, ALLTEL
increases the Exchange Ratio to $32.25 divided by the Final ALLTEL Stock Price.
Aliant shareholders will not receive fractional shares. Instead, they will
receive cash in an amount determined by multiplying such fraction (rounded to
the nearest one-hundredth of a share) by the closing price of a share of ALLTEL
common stock, as reported in The Wall Street Journal, New York City edition, on
the trading day immediately prior to the effective time of the merger.
The table below illustrates the number of shares of ALLTEL common stock
issuable in the merger and the corresponding per share value of the Merger
Consideration at various assumed Final ALLTEL Stock Prices. The calculations
are based on the assumption that 35,640,644 shares of Aliant common stock are
outstanding as of the Aliant record date.
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<TABLE>
<CAPTION>
Aggregate ALLTEL
Final ALLTEL Exchange Common Stock Value of Merger
Stock Price Ratio Issuable Consideration
------------ -------- ---------------- ---------------
<S> <C> <C> <C>
$66 .6700 23,879,231 $44.22
65 .6700 23,879,231 43.55
64 .6700 23,879,231 42.88
63 .6700 23,879,231 42.21
62 .6700 23,879,231 41.54
61 .6700 23,879,231 40.87
60 .6700 23,879,231 40.20
59 .6700 23,879,231 39.53
58 .6747 24,046,743 39.13
57 .6865 24,467,302 39.13
56 .6988 24,905,682 39.13
55 .7115 25,358,318 39.13
54 .7246 25,825,211 39.13
53 .7383 26,313,487 39.13
52 .7500 26,730,483 39.00
51 .7500 26,730,483 38.25
50 .7500 26,730,483 37.50
49 .7500 26,730,483 36.75
48 .7500 26,730,483 36.00
47 .7500 26,730,483 35.25
</TABLE>
The merger will be effective when the companies file articles of merger
with the Secretary of State of Nebraska or at such later time as the companies
may specify in the articles of merger. The companies will file the articles of
merger as soon as practicable following the closing of the merger, which is
expected to occur on the second business day after the satisfaction or waiver
of the conditions set forth in the merger agreement.
Regulatory Approvals
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the merger may not be consummated until notifications
and certain information have been furnished to the Federal Trade Commission and
the Department of Justice and the applicable waiting period has terminated.
ALLTEL and Aliant each filed notification and report forms under the HSR Act,
and the specified waiting period has terminated. The completion of the merger
is also subject to the receipt of approvals and authorizations under the
Communications Act of 1934. There can be no assurance if or when the companies
will obtain such approvals or that, if obtained, whether such approvals will
satisfy the conditions to the merger. If the merger does not occur on or before
May 31, 1999, either Aliant or ALLTEL may terminate the merger agreement. If,
however, ALLTEL or Aliant determines that additional time is necessary in
connection with obtaining a required approval, consent or authorization from
any governmental entity, the termination date may be extended for up to 60 days
but not beyond July 30, 1999. See "OTHER TERMS OF THE MERGER AGREEMENT --
Conditions to Consummation of the Merger" and "-- Termination."
Background of the Merger
On July 23, 1998, Frank H. Hilsabeck, President and Chief Executive
Officer of Aliant, met with representatives of Aliant's financial advisor,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
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("Merrill Lynch") and Aliant's counsel, Foley & Lardner, to discuss strategic
alternatives available to Aliant to enhance shareholder value, including a
potential merger. At the meeting, Merrill Lynch reviewed with Mr. Hilsabeck a
number of potential strategic partners, one of which was ALLTEL.
At the regularly scheduled Aliant board meeting on August 26, 1998, the
Aliant board met with representatives of Foley & Lardner to consider and review
strategic alternatives, including a potential merger. The Aliant board
concluded that although Aliant's fundamental business is strong, with excellent
operations and management in a growing industry, Aliant should consider
strategic alternatives to enhance its competitive position and prospects for
growth in light of the consolidating landscape of the telecommunications
industry. The principal alternative to a business combination is to remain
independent and pursue strategic acquisitions both within and outside of
Aliant's traditional industry. However, the Aliant board considered the fact
that market consolidation decreased the number of attractive acquisition
candidates in the wireline and wireless industries, and increased the costs to
acquire those candidates. Alternatively, because of these same market forces,
the Aliant board determined that Aliant would be an attractive merger partner,
and might well be able to merge with a partner on favorable terms because of
its favorable operating characteristics and presence.
On or about October 2, 1998, Mr. Hilsabeck contacted the chief executive
officers of ALLTEL and one other party to discuss their interest in acquiring
Aliant. The parties contacted by Mr. Hilsabeck were chosen, after consultation
with Aliant's financial and legal advisors, based, among other factors, on
their strategic and geographic fit with Aliant. In making its decision to
contact such parties, Aliant and its advisors also considered the parties'
historical commitments to the communities in which they operated, as well as
their commitments to the communities where they had previously made
acquisitions. In addition, the style of management of the parties contacted was
similar to that of Aliant's. Finally, the management of the parties contacted
had a history of effectively integrating acquisitions.
On October 4, 1998, Mr. Hilsabeck met with the chief executive officer of
ALLTEL and on October 8, 1998, Mr. Hilsabeck met with the chief executive
officer of the other interested party. Both parties expressed an interest in
acquiring Aliant. Mr. Hilsabeck asked each party to submit in writing a
non-binding indication of interest to Merrill Lynch on or prior to October 26,
1998. Thereafter, each of the two parties were provided with public information
regarding Aliant. On October 22, 1998 and October 26, 1998, Merrill Lynch, on
behalf of Aliant, received non-binding indications of interest from ALLTEL and
the other interested party, respectively, which indications of interest were
based on public information regarding Aliant.
The Aliant board met on October 30, 1998 with representatives of Merrill
Lynch and Foley & Lardner and reviewed both non-binding indications of
interest. At the meeting, the Aliant board determined that neither indication
of interest was acceptable. The Aliant board then authorized Mr. Hilsabeck to
pursue further discussions with the interested parties.
ALLTEL and the other interested party attended separate management
meetings and presentations which were held on November 9, 1998 and November 10,
1998 at the Milwaukee office of Foley & Lardner. Immediately prior to each
meeting, the interested parties executed confidentiality agreements. At the
management presentations, the interested parties received confidential business
and financial information regarding Aliant. In addition, Aliant management,
with the assistance of Merrill Lynch and Foley & Lardner, commenced due
diligence on ALLTEL and the other interested party, which continued until the
merger agreement was executed. On November 16, 1998, Aliant received revised
indications of interest from ALLTEL and the other interested party. The Aliant
board reviewed the revised proposals with Aliant's legal and financial advisors
on November 18, 1998.
On November 30, 1998, Aliant requested that ALLTEL and the other
interested party submit their final offers to Aliant by December 10, 1998 and
distributed a draft agreement and plan of merger to the potential bidders.
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<PAGE>
On December 10, 1998, Aliant received offers from the two interested
parties including their comments to the draft agreement and plan of merger
previously distributed.
From December 10, 1998 to December 16, 1998, Aliant and its legal and
financial advisors reviewed each proposal and sought and received clarification
from each of the interested parties regarding their respective offers.
On December 15, 1998, the Aliant board met with Aliant's management and
its legal and financial advisors and was informed of the two proposals received
by Aliant. Merrill Lynch and Foley & Lardner reviewed the terms of each
proposal with the Aliant board. The discussion included an overview of a wide
variety of topics, including purchase price, accounting treatment, tax
treatment, conditions to consummation, termination fees, board representation,
walkaway rights, and certain other issues including continued charitable
contributions and the importance of continued operations and employment in
Lincoln, Nebraska. At the meeting, Merrill Lynch also reviewed with the Aliant
board the financial aspects of the two proposals. The Aliant board did not find
either proposal to be acceptable and Mr. Hilsabeck requested that he, certain
members of Aliant's management and Aliant's financial and legal advisors be
authorized to continue discussions with the two parties and they were so
authorized by the Aliant board.
The December 15 meeting was recessed and subsequently reconvened by
telephone conference call on Wednesday, December 16, 1998. At that time,
Merrill Lynch again reported on the status of discussions with the two parties,
noting in particular that both parties had increased their bids, with ALLTEL's
bid being higher. In addition, the Aliant board and Aliant's financial and
legal advisors reviewed the differences between the revised proposals received
from the two candidates and the principal issues, including financial terms,
break-up fees and related terms of the merger agreement. Following the
discussion, Mr. Hilsabeck recommended that he, certain members of Aliant's
management and Aliant's financial and legal advisors again be authorized to
continue discussions with the two parties and they were so authorized by the
Aliant board. The meeting of the Board was then recessed and was reconvened
once again by telephone conference call later that same evening to discuss the
status of negotiations.
On the telephone conference call, Merrill Lynch again reported on the
status of the most recent discussions with the two parties and reviewed the
differences between the parties' revised proposals. Foley & Lardner reported on
certain technical matters related to the proposed transaction including the
ability to account for the merger as a pooling-of-interests and the importance
of that issue to the proposed merger. Based on this information, the Aliant
board determined that Aliant should continue with negotiations with ALLTEL and
the meeting was recessed.
On December 17, 1998, ALLTEL and Aliant continued to negotiate the
specific terms of the merger agreement with ALLTEL. On the evening of December
17, the Aliant board reconvened telephonically with Aliant's management and
Aliant's legal and financial advisors to review the status of negotiations with
ALLTEL. A special meeting of the Aliant board was called for the morning of
December 18, 1998 to consider the merger agreement and the transactions
contemplated by the merger.
At the December 18, 1998 special meeting of the Aliant board, Aliant's
legal and financial advisors reviewed with the Aliant board the terms of the
proposed transaction. The Aliant board reviewed and considered the matters
described below under "-- Aliant's Reasons for the Merger; Recommendation of
the Aliant Board." At that meeting, Aliant's financial advisor delivered an
oral opinion to the Aliant board (subsequently confirmed by delivery of a
written opinion dated December 18, 1998) with respect to the fairness, from a
financial point of view, of the Exchange Ratio to the holders of Aliant common
stock. After deliberation with respect to the terms, conditions and timing of
ALLTEL's merger proposal, the Aliant board approved the merger agreement and
authorized the execution and delivery of the merger agreement.
23
<PAGE>
Aliant's Reasons for the Merger; Recommendation of the Aliant Board
The Aliant board unanimously determined that the merger agreement and the
transactions contemplated thereby are in the best interests of Aliant and its
shareholders and unanimously approved the merger agreement and the transactions
contemplated by the merger agreement. The Aliant board unanimously recommends
that the shareholders of Aliant vote for its approval.
In reaching its conclusion, the Aliant board consulted with its
management team and advisors and carefully considered a variety of factors. The
principal factors considered by the Aliant board are listed below:
. The Aliant board's belief that, as a result of the merger, Aliant
will be a part of a premier communications company that will be
better positioned to compete effectively in the rapidly changing
communications industry. The Aliant board believes that the
telecommunications industry has begun to, and will continue to,
experience rapid consolidation in response to regulatory and other
developments and that this consolidation has increased the
importance of economies of scale, the ability to rapidly introduce
new products to market and the ability to provide a wide variety
of telecommunications services to the same customer.
. The relatively greater financial, technological, marketing and
sales resources of ALLTEL and the likelihood that the addition of
such resources to Aliant's operations would enable Aliant to
accelerate its long-term growth strategy, facilitate the
introduction of new products and services and compete more
effectively in its targeted markets.
. The complementary nature of the operations of ALLTEL and Aliant in
terms of geographic and strategic fit, including the similarity of
their operating philosophies and their focus on building
shareholder value through the maintenance of a strong local
community presence.
. The exchange ratio of 0.710x, calculated based on the offer price
of $39.13 and the Aliant and ALLTEL closing stock prices as of
December 16, 1998, represents a significant premium over
historical market prices for Aliant common stock. In addition, the
merger agreement contains provisions designed to allow Aliant
shareholders to share in any increase in the ALLTEL trading price
above $58.40 and to protect the value of the consideration to be
received by Aliant shareholders if the ALLTEL trading price
decreases below $52.17. Specifically, if the ALLTEL price
increases to $58.40 or more, then Aliant shareholders will receive
0.670x shares of ALLTEL for each share of Aliant; and if the
ALLTEL price decreases to $52.17 or below, then Aliant
shareholders will receive 0.750x shares of ALLTEL for each share
of Aliant. Furthermore, if the ALLTEL stock price decreases to
$43.00 or below, then Aliant shareholders will have the right to
terminate the merger agreement if ALLTEL does not increase the
exchange ratio so that each share of Aliant will be exchanged for
$32.25 worth of ALLTEL stock.
. The premium to be received by Aliant shareholders, measured as
29.4% if calculated as of December 16, 1998, compares favorably to
comparable company and transaction valuations.
. The likelihood that, based on existing trends, the amount of the
regular quarterly dividend to be paid on ALLTEL common stock would
exceed the regular quarterly dividend to be paid on Aliant common
stock.
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<PAGE>
. The ability of Aliant shareholders to participate as equity
holders of ALLTEL on a tax-free basis and the potential for Aliant
shareholders through their ownership of ALLTEL common stock to
realize future equity appreciation based on the favorable
prospects for the combined company.
. The ability of Aliant shareholders to sell their shares of ALLTEL
common stock following the merger.
. ALLTEL's expressed commitment to make Lincoln, Nebraska the
headquarters of the combined company's Nebraska-Iowa market area
Communication Group's consolidated operations and to continue
agreed to levels of employment at such operations as well as to
continue agreed to levels of charitable contributions in the
communities served by Aliant.
. The terms and conditions of the merger agreement and the
likelihood that the conditions to the merger will be satisfied.
. The strength and expertise of ALLTEL's senior management team and
experience in successfully completing business combinations and
integrating geographically diverse businesses.
. The willingness of Aliant's management to support the merger.
. The oral opinion of Merrill Lynch (subsequently confirmed by
delivery of a written opinion dated December 18, 1998) to the
effect that as of such date and based on and subject to certain
matters stated therein, the Exchange Ratio was fair, from a
financial point of view, to the holders of Aliant common stock.
The foregoing discussion of the information and factors considered by the
Aliant board is not intended to be exhaustive but is believed to include all
material facts considered by the Aliant board.
Opinion of Financial Advisor to Aliant
Aliant retained Merrill Lynch to act as its exclusive financial advisor
in connection with the merger. On December 18, 1998, Merrill Lynch rendered to
the Aliant board an oral opinion, which opinion was subsequently confirmed by
delivery of a written opinion dated December 18, 1998 (the "Merrill Lynch
Opinion"), to the effect that, as of such date and based on and subject to the
factors and assumptions set forth therein, the Exchange Ratio was fair, from a
financial point of view, to the holders of shares of Aliant common stock.
The full text of the Merrill Lynch Opinion, which sets forth the
assumptions made, matters considered, and qualifications and limitations on the
review undertaken by Merrill Lynch, is attached as Annex B to this proxy
statement/prospectus and is incorporated herein by reference. The summary of
the Merrill Lynch Opinion set forth in this proxy statement/prospectus is
qualified in its entirety by reference to the full text of the Merrill Lynch
Opinion. Aliant shareholders are urged to read such opinion carefully in its
entirety. The Merrill Lynch Opinion was provided to Aliant's board for its
information and is directed only to the fairness from a financial point of view
of the Exchange Ratio to the holders of Aliant common stock, does not address
any other aspect of the merger, including the merits of the underlying decision
by Aliant to engage in the merger, and does not constitute a recommendation to
any Aliant shareholder as to how such shareholder should vote on the proposed
merger or any matter related thereto.
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<PAGE>
In preparing its opinion to the Aliant board, Merrill Lynch performed a
variety of financial and comparative analyses, including those described below.
The summary set forth below does not purport to be a complete description of
the analyses underlying the Merrill Lynch Opinion or the presentation made by
Merrill Lynch to the Aliant board. The preparation of a fairness opinion is a
complex analytic process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances and, therefore, such an opinion
is not readily susceptible to partial analysis or summary description. In
arriving at its opinion, Merrill Lynch did not attribute any particular weight
to any analysis or factor considered by it, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor.
Accordingly, Merrill Lynch believes that its analyses must be considered as a
whole and that selecting portions of its analyses, without considering all
analyses, would create an incomplete view of the process underlying its
opinion. In performing its analyses, numerous assumptions were made with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Merrill Lynch or Aliant. Any estimates contained in the analyses performed by
Merrill Lynch are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. Additionally, estimates of the value of businesses or securities
do not purport to be appraisals or to reflect the prices at which such
businesses or securities might actually be sold. Accordingly, such analyses and
estimates are inherently subject to substantial uncertainty. In addition, as
described above, the Merrill Lynch Opinion was only one of many factors taken
into consideration by the Aliant board in making its determination to approve
the merger agreement and the merger. Consequently, the Merrill Lynch analyses
described below should not be viewed as determinative of the decision of the
Aliant board or Aliant's management with respect to the Exchange Ratio in the
Merger.
In arriving at its opinion, Merrill Lynch, among other things, (a)
reviewed certain publicly available business and financial information relating
to Aliant and ALLTEL that Merrill Lynch deemed to be relevant, (b) reviewed
certain information, including financial forecasts relating to the business,
earnings, cash flow, assets, liabilities and prospects of each of Aliant 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 Aliant and ALLTEL, (c) conducted
discussions with members of senior management and representatives of Aliant and
ALLTEL concerning the matters described in clauses (a) and (b) above, as well
as their respective businesses and prospects before and after giving effect to
the merger, and the Expected Synergies, (d) reviewed the market prices and
valuation multiples for Aliant's common stock and ALLTEL's common stock and
compared them with those of certain publicly traded companies that Merrill
Lynch deemed to be relevant, (e) reviewed the results of operations of Aliant
and ALLTEL and compared them with those of certain publicly traded companies
which Merrill Lynch deemed to be relevant, (f) compared the proposed financial
terms of the merger with the financial terms of certain other transactions
which Merrill Lynch deemed to be relevant, (g) participated in certain
discussions and negotiations among representatives of Aliant and ALLTEL and
their financial and legal advisors, (h) reviewed the potential pro forma impact
of the merger, (i) reviewed a draft of the merger agreement, dated December 17,
1998, and (j) reviewed such other financial studies and analyses and took into
account such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the
accuracy and completeness of all information supplied or otherwise made
available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch,
or publicly available, and Merrill Lynch did not assume any responsibility for
independently verifying such information and Merrill Lynch has not undertaken
an independent evaluation or appraisal of any of the assets or liabilities of
Aliant or ALLTEL. In addition, Merrill Lynch did not assume any obligation to
conduct, nor did it conduct, any physical inspection of the properties or
facilities of Aliant or ALLTEL. With respect to the financial forecast
information and the Expected Synergies furnished to or discussed with Merrill
Lynch by Aliant or ALLTEL, Merrill Lynch assumed that they were reasonably
prepared and reflect the best currently available estimates and judgments of
Aliant's or ALLTEL's
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<PAGE>
respective managements as to the expected future financial performance of
Aliant 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
also assumed that the final form of the merger agreement would be substantially
similar to the draft last reviewed by Merrill Lynch.
The Merrill Lynch Opinion is necessarily based on 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, will be imposed that will have a material adverse effect on the
contemplated benefits of the merger. Merrill Lynch did not express any opinion
as to the value of ALLTEL common stock when issued pursuant to the merger or
the prices at which ALLTEL common stock will trade subsequent to the merger. In
connection with the preparation of its opinion, Merrill Lynch was not
authorized by Aliant or the Aliant board to solicit, nor did Merrill Lynch
solicit, third-party indications of interest, other than with respect to ALLTEL
and one additional third party, for the acquisition of all or any part of
Aliant. Although Merrill Lynch evaluated the Exchange Ratio from a financial
point of view to the holders of Aliant common stock, Merrill Lynch was not
requested to, and did not, recommend the specific consideration payable in the
merger, which consideration was determined through negotiations between ALLTEL
and Aliant and approved by the Aliant board. No other limitations were imposed
on Merrill Lynch with respect to the investigations made or procedures followed
by Merrill Lynch in rendering the Merrill Lynch Opinion.
The following is a summary of the material analyses performed by Merrill
Lynch in connection with the Merrill Lynch Opinion.
Historical Stock Price Performance and Premium Analysis. Merrill Lynch
reviewed the average daily closing per share prices of Aliant common stock over
the one-day, ten-day, thirty-day and one-year periods ended December 10, 1998.
The average closing per share prices of Aliant common stock for such periods
were $30.25, $30.21, $29.47 and $28.15, respectively. In addition, Merrill
Lynch reviewed the premiums implied by the Exchange Ratio for the one-day, ten-
day and three-month periods ended December 16, 1998. The premiums implied by
the Exchange Ratio based on a closing price of $55.13 per share of ALLTEL
common stock for such periods were 29.4%, 28.0% and 39.4%, respectively. The
high and low closing per share prices for Aliant common stock during the 12-
month period were $34.00 and $22.50, respectively, and the corresponding
premiums implied by the Exchange Ratio for the same period were 15.1% and
73.9%, respectively.
Historical Exchange Ratio Analysis. Merrill Lynch analyzed the ratio of
the daily closing share prices of Aliant common stock to the corresponding
share prices of ALLTEL common stock for the 12-month period ended December 16,
1998. This analysis indicated maximum and minimum implied exchange ratios of
0.795x and 0.521x, and a mean of 0.639x, for such period.
Analysis of Selected Publicly Traded Companies. Merrill Lynch compared
certain financial, operating and stock market data of Aliant to corresponding
data of the following selected publicly traded independent local exchange
carriers: ALLTEL, Century Telephone Enterprises, Inc., Cincinnati Bell Inc.
(pro forma for its spin-off of Convergys Corporation) and Commonwealth
Telephone Enterprises, Inc. (collectively, the "ILECs"). Merrill Lynch compared
equity values as a multiple of estimated calendar year 1998 earnings per share
("P/E") to Total Return (the five-year estimated earnings growth rate plus the
dividend yield). Estimated financial data for the ILECs other than ALLTEL was
based on estimates of selected securities firms as compiled by First Call and
Merrill Lynch equity research analyst estimates and estimated financial data
for Aliant and ALLTEL was provided by Aliant and ALLTEL management,
respectively. All multiples were based on closing stock prices on December 16,
1998. Applying a range of
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<PAGE>
selected multiples for the ILECs of estimated calendar year 1998 P/E to Total
Return to corresponding financial data of Aliant indicated an implied equity
reference range for Aliant of approximately $25.61 to $35.97 per share.
No company among the ILECs is identical to Aliant. Accordingly, an
analysis of the results of the foregoing is not mathematical; rather, it
necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies and
other factors that could affect the public trading value of Aliant and the
ILECs.
Analysis of Selected Acquisition Transactions. Merrill Lynch analyzed
the purchase prices paid, or proposed to be paid, and implied transaction
multiples, in the following selected transactions in the local exchange
carriers industry: SBC Communications Inc./Ameritech Corporation; SBC
Communications Inc./The Southern New England Telephone Company; Bell Atlantic
Corporation/GTE Corporation; Bell Atlantic Corporation/NYNEX Corporation; and
SBC Communications Inc./Pacific Telesis Group (collectively, the "Selected LEC
Transactions"). Merrill Lynch compared enterprise values as a multiple of
EBITDA, P/Es and premium to market price. All multiples were calculated based
both on actual latest twelve months ("LTM") financial data and estimated
forward calendar year financial data, as of the date of the announcement of
the transaction. Applying a range of selected multiples of forward year P/E to
corresponding financial data of Aliant indicated an implied equity reference
range for Aliant of approximately $25.94 to $39.69 per share.
No transaction used in the above analysis is identical to Aliant or
ALLTEL or the merger. Accordingly, an analysis of the results of the foregoing
is not mathematical; rather, it necessarily involves complex considerations
and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the
acquisition value of such companies and Aliant.
Discounted Cash Flow Analysis. Merrill Lynch estimated the present value
of the future streams of annual after-tax free cash flows that Aliant could
produce on a stand-alone basis for the period from 1999 through 2003 based on
estimates provided by and/or discussed with Aliant management. Ranges of
terminal values were estimated using multiples of 2003 projected EBITDA of
7.5x to 8.5x. The free cash flow streams and estimated terminal values were
then discounted to present value using discount rates ranging from 10.0% to
12.0%. This analysis indicated an equity reference range for Aliant of
approximately $30.29 to $37.20 per share.
Sum-of-the-Parts Analysis. Merrill Lynch analyzed each business segment
of Aliant separately and then together to reach an aggregate value for Aliant.
The value of the wireline, wireless and long distance operations of Aliant
were based on private market multiples of 7.25x to 8.00x estimated 1998
calendar year EBITDA, 10.0x to 11.0x estimated 1998 calendar year EBITDA and
0.75x to 1.00x estimated 1998 calendar year revenue, respectively. The value
of the CLEC and fiber business segments of Aliant were based on a 1.75x to
2.25x multiple of the capital invested in those businesses in calendar years
1997 and 1998. This analysis was based on Aliant management estimates of the
projected operating performance of each business segment and the cost of
Aliant's investment in CLEC and fiber operations. This analysis indicated an
implied equity reference range for Aliant of approximately $35.44 to $39.92
per share on a pre-tax basis and $23.14 to $25.82 per share on an after-tax
basis.
Relative Contribution Analysis. Using estimated financial data for
Aliant and ALLTEL, Merrill Lynch analyzed the relative contributions of Aliant
and ALLTEL to the estimated revenue, EBITDA and net income of the combined
company for calendar years 1998, 1999 and 2000. The analysis was based on
estimates for Aliant and ALLTEL provided by the managements of Aliant and
ALLTEL, respectively. The analysis indicated that, in calendar years 1998,
1999 and 2000, Aliant would contribute approximately: (a) 6.1%, 6.0% and 5.8%,
respectively, of the combined company's revenue, (b) 7.7%, 7.6% and 7.4%,
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respectively, of the combined company's EBITDA and (c) 8.9%, 8.5% and 8.1%,
respectively, of the combined company's net income. Based on an Exchange Ratio
of 0.710x, current shareholders of Aliant would own approximately 8.1% of the
combined company's equity value.
Relative Exchange Ratio Analysis. For purposes of deriving an implied
exchange ratio reference range against which the Exchange Ratio of 0.710x could
be compared, Merrill Lynch performed the following financial analyses on
ALLTEL: (a) Merrill Lynch compared certain financial, operating and stock
market data of ALLTEL to corresponding data of selected publicly traded
independent local exchange carriers; (b) Merrill Lynch analyzed the purchase
prices paid, or proposed to be paid, and implied transaction multiples, in the
Selected LEC Transactions and applied a range of selected multiples of forward
year P/E implied in such transactions to corresponding data of ALLTEL; (c)
Merrill Lynch estimated the present value of the future streams of annual
after-tax free cash flows that ALLTEL could produce on a stand-alone basis for
the period from 1999 through 2003 based on estimates provided by and/or
discussed with ALLTEL management (Ranges of terminal values were estimated
using multiples of 2003 projected EBITDA of 7.5x to 8.5x. The free cash flow
streams and estimated terminal values were then discounted to present value
using discount rates ranging from 10% to 12%); (d) Merrill Lynch analyzed each
business segment of ALLTEL separately and then together to reach an intrinsic
value for ALLTEL; and (e) Merrill Lynch analyzed the relative contribution of
Aliant and ALLTEL to certain operational measures of the combined company. On
the basis of these analyses, Merrill Lynch derived an implied exchange ratio
reference range of approximately 0.29x to 1.10x, as compared with the Exchange
Ratio in the merger of 0.710x.
Pro Forma Merger Consequences Analysis. Merrill Lynch analyzed the
potential pro forma effect of the merger on ALLTEL's EPS during calendar years
1999 through 2003. The analysis was based on estimates provided by the
managements of Aliant and ALLTEL. Based on certain potential synergies and cost
savings anticipated by the managements of Aliant and ALLTEL to result from the
merger, this analysis indicated that the merger would be accretive to ALLTEL's
EPS in 1999 and 2000, neutral in 2001 and dilutive in 2002 and 2003. The actual
operating or financial results achieved by the pro forma combined company may
vary from projected results and variations may be material as a result of
business and operational risks, the timing and amount of synergies, the costs
associated with achieving such synergies and other factors.
Pursuant to the terms of Merrill Lynch's engagement, Aliant agreed to pay
Merrill Lynch for its financial advisory services in connection with the merger
an aggregate fee in an amount equal to 0.51% of the aggregate purchase price
(including liabilities assumed) paid in the merger, payable in cash on the
closing of the merger. Aliant also has agreed to reimburse Merrill Lynch for
all out-of-pocket expenses incurred by Merrill Lynch in performing its
services, including the reasonable fees and expenses for legal counsel, and to
indemnify Merrill Lynch and certain related persons and entities against
certain liabilities, including certain liabilities under the federal securities
laws, arising out of Merrill Lynch's engagement.
The Aliant board retained Merrill Lynch as an independent contractor to
act as its 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 regularly 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 Aliant and ALLTEL and may
continue to do so and has received, and may receive, fees for the rendering of
such services.
In the ordinary course of business, Merrill Lynch and its affiliates may
actively trade in the securities of Aliant and ALLTEL for their own accounts
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities.
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Interests of Certain Persons in the Merger
Certain members of Aliant's management, including certain directors, have
certain interests in the merger in addition to their interests as shareholders
of Aliant generally. The Aliant board was aware of these factors and considered
them, among other factors, before approving the merger agreement.
Employment Agreements. In connection with the merger, ALLTEL will enter
into a two-year employment agreement with Frank H. Hilsabeck and a four-year
employment agreement with each of James W. Strand, Michael J. Tavlin and Bryan
C. Rickertsen. The employment agreements will provide for the executives'
employment with ALLTEL's Nebraska-Iowa market area Communications Group as
follows: (i) Mr. Hilsabeck as President and Chief Executive Officer, (ii) Mr.
Strand as Vice President and Chief Operating Officer, (iii) Mr. Tavlin as Vice
President -- Finance and Administration, and (iv) Mr. Rickertsen as Vice
President -- Technology.
The employment agreements will provide that the executives will receive
minimum annual base salaries of $400,000 for Mr. Hilsabeck; $250,000 for Mr.
Strand; $128,000 for Mr. Tavlin; and $180,000 for Mr. Rickertsen (which are
equal to each executive's base salary immediately prior to the merger), in each
case with a potential annual increase each year based on the contribution of
the executive to ALLTEL. The executives will receive retention bonuses for each
year during the terms of their agreements, in the amount of $1,000,000 for Mr.
Hilsabeck; $375,000 for Mr. Strand; $187,500 for Mr. Tavlin; and $150,000 for
Mr. Rickertsen. In addition, if Aliant achieves certain performance criteria
during any year during the terms of their employment agreements, the executives
also will receive annual cash bonuses with respect to each of those years in
which the performance criteria are achieved in the amounts of $2,000,000 for
Mr. Hilsabeck; $500,000 for Mr. Strand; $125,000 for Mr. Tavlin; and $75,000
for Mr. Rickertsen. The applicable performance criteria have not been
determined as of the date of this proxy statement/prospectus. Each executive
will also participate in ALLTEL's short-term and long-term incentive plans at
the levels of similarly situated executives of ALLTEL. The executives will also
be included, on the same basis as similarly situated executives of ALLTEL, in
all plans providing general benefits to similarly situated executives of ALLTEL
and will receive compensatory fringe benefits of the type received immediately
prior to the merger.
Each executive's employment agreement provides that, if ALLTEL terminates
his employment other than for death, disability or cause or the executive
terminates his employment for good reason, the executive will, if he complies
with certain noncompetition provisions, receive certain accrued benefits as
well as a termination payment from ALLTEL or Aliant and will continue to be
covered, at the expense of ALLTEL or Aliant by the same general insurance as he
was prior to such termination until the expiration of the original term of his
employment agreement or until the executive has obtained new employment. In
addition, all stock options granted to the executive by ALLTEL or Aliant prior
to the date of the employment agreement will be fully vested. Under the terms
of the employment agreements, accrued benefits include the executive's earned
salary and bonus, expense reimbursement, and all other earned cash or other
benefits. The executive's termination payment will include the remainder of the
executive's annual salary for the original term of his employment agreement
plus unpaid bonuses. Such termination payment will be payable to the executive
in a lump sum within ten days of the executive's termination.
As part of the employment agreements, each executive will terminate the
Key Executive Employment and Severance Agreement that he has previously entered
into with Aliant but will retain all benefits payable under their existing
Aliant Executive Benefit Plans.
In exchange for agreeing to cancel their Key Executive Employment and
Severance Agreements and all other compensation rights or claims such persons
may have, on the completion of the merger ALLTEL will pay Robert L. Tyler,
Senior Vice President and Chief Financial Officer of Aliant, $772,350, and
Thomas C. Woods III, Chairman of the Board of Aliant, $348,000. In addition,
Mr. Tyler and Mr. Woods will each enter into a non-competition and
confidentiality agreement with ALLTEL pursuant to which each person will agree
to hold certain information confidential and, for one year, refrain from
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competition with ALLTEL. In return for such agreements, ALLTEL will pay to
Messrs. Tyler and Woods $175,000 and $112,000 respectively.
Indemnification of Directors and Officers. The merger agreement provides
that Aliant will purchase, and keep in force for a period of six years after
the merger, directors' and officers' liability insurance providing coverage to
directors and officers of Aliant for acts or omissions occurring before the
merger. This insurance will provide at least the same coverage and amounts as
contained in Aliant's director's and officer's liability insurance policy in
effect immediately prior to the merger. In addition, ALLTEL has agreed to
indemnify (and advance expenses to) all individuals who are or have been
officers or directors of Aliant prior to the merger from any matters existing
or occurring prior to the merger, to the fullest extent that such
indemnification is allowed pursuant to Nebraska law. See "COMPARISON OF THE
RIGHTS OF SHAREHOLDERS OF ALLTEL AND ALIANT -- Indemnification of Officers and
Directors."
Dissenters' Rights
General. Under Nebraska law, shareholders of Aliant common stock as of
the record date who hold such shares continually through the effective date of
the merger and follow the procedures set forth in Sections 21-20,137 to 21-
20,150 of the Nebraska Business Corporation Act (the "Dissenters' Rights
Statute") will be entitled to receive payment in cash of the "fair value" of
their Aliant common stock. This "fair value" could be more than, the same as,
or less than the value of the merger consideration to be received by Aliant
shareholders who do not dissent from the merger.
The Dissenters' Rights Statute is set forth in its entirety as Annex C to
this proxy statement/prospectus. The following discussion is not a complete
statement of the law relating to dissenters' rights and is qualified in its
entirety by reference to Annex C. Any holder who wishes to exercise statutory
dissenters' rights or wishes to preserve the right to do so should carefully
review this discussion and Annex C because failure to comply with the
applicable procedures may result in a loss of such dissenters' rights.
Procedure. An Aliant shareholder may dissent from the consummation of the
merger if he or she is entitled to vote at the meeting. Shareholders who
properly exercise their right to dissent are entitled to obtain payment of the
fair value of their shares of Aliant common stock.
Where a proposed merger for which dissenters' rights exist is submitted
to a vote at a shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters' rights, and a copy of
the Dissenters' Rights Statute must accompany the notice. This proxy
statement/prospectus constitutes such notice to the holders of Aliant common
stock and attaches the Dissenters' Rights Statute as Annex C.
Any holder of Aliant common stock wishing to assert his or her
dissenters' rights:
. must deliver to Aliant, before the vote is taken on the proposal
to approve the merger agreement, a written notice of his or her
intent to demand payment of his or her shares if the proposed
merger is effectuated; and
. must not vote in favor of the merger agreement.
Shareholders of Aliant who do not satisfy these requirements will not be
entitled to exercise their dissenters' right.
A holder of Aliant common stock is entitled to assert dissenters' rights
only for the Aliant common stock registered in his or her name. A beneficial
shareholder may assert dissenters' rights as to shares held on his or her
behalf only if:
. he or she submits to Aliant the record shareholder's written
consent to dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
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. he or she does so with respect to all shares of which he or she is
the beneficial shareholder or over which he or she has power to
vote.
Shareholders who elect to exercise dissenters' rights must mail or
deliver their written demands to: Aliant Communications Inc., 1440 M Street,
Lincoln, Nebraska 68508, Attention: Corporate Secretary. The written demand for
dissenters' rights should specify that the holder is demanding dissenters'
rights for his or her shares.
Within ten days after the effective time of the merger, Aliant must send
a notice to each holder of Aliant common stock who properly exercised his or
her dissenters' rights. The notice must:
. state where the payment demand must be sent and where and when
certificates must be deposited;
. supply a form for demanding payment;
. set a date by which Aliant must receive the payment demand, which
may not be fewer than 30 nor more than 60 days after the date the
notice is delivered; and
. include a copy of the Dissenters' Rights Statute.
A shareholder who was sent such a dissenters' notice must, among other
actions, demand payment and deposit his or her certificates in accordance with
the terms of the notice. A shareholder who does not demand payment or does not
deposit his or her share certificates where required, each by the date set in
the dissenters' notice, will not be entitled to payment for his or her shares
under the Dissenters' Rights Statute.
On receipt of a proper and timely demand for payment, Aliant will pay
each dissenter who complied with the Dissenters' Right Statute the amount
estimated by Aliant to be the fair value of his or her shares, plus accrued
interest. The payment will be accompanied by certain financial statements,
information concerning Aliant's estimate of the fair value of the shares, an
explanation of how the interest was calculated, a statement regarding the right
to protest the calculated fair value and a copy of the Dissenters' Rights
Statute.
A dissenter may notify Aliant in writing of his or her own estimate of
the fair value of his or her shares and the amount of interest due and demand
payment of his or her estimate, less any amount already paid for such shares,
if:
. the dissenter believes that the amount paid is less than the fair
value of his or her shares or that the interest due is incorrectly
calculated; or
. Aliant fails to make payment within 60 days after the date set for
demanding payment.
A dissenter waives his or her right to protest the payment unless he or
she notifies Aliant of his or her demand in writing within 30 days after Aliant
made or offered payment for his or her shares. If a demand for payment remains
unsettled, Aliant shall commence a proceeding within 60 days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If Aliant does not commence the proceeding within
the sixty-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
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If any holder of Aliant common stock who demands dissenters' rights fails
to perfect, or effectively withdraws or loses his or her right to dissent, then
the shares of Aliant common stock of such holder will be converted into and
become the right to receive the merger consideration in accordance with the
merger agreement.
Cash received pursuant to the exercise of dissenters' rights may be
subject to federal or state income tax. See "-- Certain United States Federal
Income Tax Consequences at the Merger."
The foregoing summary of the applicable provisions of Sections 21-20,137
to 21-20,150 of the Nebraska Business Corporation Act is qualified in its
entirety by reference to such Sections which are attached as Annex C to this
proxy statement/prospectus.
Certain United States Federal Income Tax Consequences of the Merger
The following discussion summarizes the material United States federal
income tax consequences of the merger. This summary is based on the code, laws,
regulations, rulings and judicial authority in effect as of the date of this
document, all of which are subject to change, possibly with retroactive effect.
The discussion is for general information only and addresses only shareholders
who hold their Aliant common stock as a capital asset. An Aliant shareholder's
tax treatment may vary depending on his or her individual circumstances, and
certain shareholders (including 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) may be subject to special rules not discussed below.
It is a condition to the merger that Aliant receive an opinion from its
counsel, Foley & Lardner, and that ALLTEL receive an opinion from its counsel,
Kutak Rock, to the effect that the merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code and that each of ALLTEL,
Aliant and MergerSub will be a party to the reorganization within the meaning
of Section 368(b) of the Code. Each opinion will be based on, among other
things, certain factual representations made by Aliant and ALLTEL reasonably
satisfactory in form and substance to each counsel dated as of the closing date
of the merger. Each opinion will also assume that the merger occurs in
accordance with the terms of the merger agreement and as described in this
document. Any failure of the factual representations or assumptions to be true,
correct and complete in all material respects, could jeopardize the conclusions
reached in the opinions and the validity of the following discussion.
Any opinion of counsel does not bind the IRS or the courts. Aliant and
ALLTEL have not sought and will not seek a ruling from the IRS as to the United
States federal income tax consequences of the merger.
Based on the opinions (and assumptions) set forth above, the material
United States federal income tax consequences of the merger are as follows:
. An Aliant shareholder will not recognize any income, gain or loss
as a result of receipt of ALLTEL common stock pursuant to the
merger, except for any cash they receive in lieu of fractional
shares of ALLTEL common stock.
. Each Aliant shareholder's tax basis in the ALLTEL common stock
received in the merger will be the same as his or her tax basis in
the exchanged shares of Aliant common stock, 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 an
Aliant shareholder in the merger will include the holding period
of the exchanged shares of Aliant common stock.
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. Aliant shareholders 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, these
shareholders generally will recognize capital gain or loss with
respect to cash payments they receive in lieu of fractional
shares. The capital gain or loss will be long term capital gain or
loss if the holder's holding period in the fractional share
interest is more than one year. Long term capital gain of an
individual holder is generally subject to a maximum tax rate of
20%. The deductibility of capital losses is subject to limitations
for both individuals and corporations.
The receipt of cash by Aliant shareholders who perfect dissenters' rights
under the Nebraska Business Corporation Act with respect to the shares of
Aliant common stock owned by them will be a taxable event for United States
federal income tax purposes. Any shareholder considering the exercise of
dissenters' rights should consult with his or her tax advisor.
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
Aliant common stock. Shareholders of Aliant 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.
Anticipated Accounting Treatment
ALLTEL and Aliant expect that the merger will 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 Aliant
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 Aliant 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 by ALLTEL and
Aliant of a letter from Arthur Andersen, ALLTEL's independent auditors, to the
effect that the merger will qualify for pooling-of-interests accounting
treatment.
ALLTEL expects to incur certain non-recurring expenses related to the
merger, presently estimated to be $25,000,000. These expenses would include,
but would not be limited to, professional fees, fees of financial advisors,
severance and other employee costs, 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. ALLTEL will
record merger-related expenses in the period in which the merger is concluded,
which is currently estimated to occur in the second quarter of 1999.
In addition, ALLTEL is developing a plan to integrate the operations of
Aliant after the merger. In connection with that plan, ALLTEL anticipates that
certain non-recurring charges will be incurred. ALLTEL cannot identify the
timing, nature and amount of such charges as of the date of this proxy
statement/prospectus. However, any such charge could adversely affect ALLTEL's
results of operations in the period in which such charges are incurred.
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Percentage Ownership Interest of Aliant Shareholders after the Merger
The number of shares of ALLTEL common stock to be issued in the merger
will depend on the actual Exchange Ratio, which will not be known until the
close of business on the second trading day prior to the closing date of the
merger. If the minimum Exchange Ratio (.67) is applicable, the number of shares
of ALLTEL common stock to be issued in the merger would be 23,879,231, which
would represent approximately 7.8% of the outstanding shares of ALLTEL common
stock immediately after the effective time of the merger. If the maximum
Exchange Ratio (.75) is applicable, the number of shares of ALLTEL common stock
to be issued in the merger would be 26,730,483, which would represent
approximately 8.7% of the outstanding shares of ALLTEL common stock immediately
after the effective time of the merger. These calculations assume that there
will be 281,132,812 shares of ALLTEL common stock and 35,640,644 shares of
Aliant common stock outstanding immediately prior to the effective time of the
merger. These share numbers are based on the number of shares of ALLTEL common
stock and Aliant common stock outstanding on February 22, 1999 and the Aliant
record date, respectively.
Conversion of Shares; Procedures for Exchange of Certificates
Promptly after the effective time of the merger, ALLTEL will instruct the
exchange agent appointed by ALLTEL and Aliant in accordance with the merger
agreement to mail promptly to each holder of record of Aliant common stock a
transmittal letter and instructions for use in surrendering certificates that
represented Aliant common stock. On receipt of such certificates, the exchange
agent will deliver full shares of ALLTEL common stock to such shareholder and
cash in lieu of fractional shares pursuant to the terms of the merger
agreement, together with any dividends or other distributions to which such
shareholder is entitled, without interest.
If any issuance of shares of ALLTEL common stock on conversion of shares
of Aliant common stock is to be made to a person other than the holder of
Aliant common stock in whose name the certificate is registered at the
effective time of the merger, it will be a condition to the conversion that the
certificate be properly endorsed for transfer and that the holder of Aliant
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 of the merger, there will be no further
transfers of Aliant common stock on the stock transfer books of Aliant. If a
certificate representing Aliant 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.
Except as provided in the next paragraph, after the effective time of the
merger and until surrendered, shares of Aliant 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 Aliant common stock were converted on the effective time.
No dividends or other distributions, if any, payable to holders of ALLTEL
common stock will be paid to the holders of certificates for shares of Aliant
common stock until such certificates are surrendered. On surrender of
certificates, ALLTEL will pay all declared dividends and distributions payable
after the effective time of the merger to the holder of record of shares of
ALLTEL common stock represented by the certificate issued in exchange therefor,
without interest.
The merger agreement provides that shares for which dissenters' rights
are perfected under Nebraska law shall not be converted as of the effective
time of the merger into a right to receive the Merger Consideration, but
instead, shall entitle the holder of such shares to the rights available under
the Dissenters' Rights Statute of the Nebraska Business Corporation Act. If,
however, such holder fails to
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perfect or withdraws or otherwise loses his rights under the Dissenters' Rights
Statute, the shares of Aliant common stock owned by such holder immediately
prior to the effective time of the merger shall be treated as if they had been
converted as of the effective time of the merger into the right to receive the
merger consideration, without interest. See "THE MERGER -- Dissenters' Rights."
Holders of Aliant common stock should not send stock certificates to the
exchange agent until they have received transmittal letters. Holders of Aliant
common stock should not send stock certificates with the enclosed proxy card.
NYSE Listing
The shares of ALLTEL common stock to be issued in the merger will be
approved for listing on the NYSE prior to the effective time of the merger,
subject to official notice of issuance. ALLTEL expects that the shares of
ALLTEL common stock to be issued in the merger will also be approved for
listing on the Pacific Stock Exchange.
Delisting and Deregistration of Aliant Common Stock
If the merger occurs, ALLTEL will delist the Aliant common stock from the
NASDAQ National Market and deregister such stock under the Exchange Act. No
trading market for Aliant common stock will exist after the effective time of
the merger.
Conduct of the Business of ALLTEL and Aliant if the Merger Is Not Consummated
If the merger does not occur, ALLTEL and Aliant each expects that its
respective business and operations 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 received by most Aliant
shareholders in the merger will be freely transferable. Shares of ALLTEL common
stock received by persons who are deemed to be affiliates of Aliant prior to
the merger or to be affiliates of ALLTEL after the merger may be sold by them
only in transactions permitted by the resale provisions of Rule 145 under the
Securities Act or as otherwise permitted under the Securities Act.
All directors and certain officers and shareholders of Aliant may be
deemed to be "affiliates" of Aliant within the meaning of these rules. Persons
who may be deemed affiliates of Aliant 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 shareholders of such party. ALLTEL recommends 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 Aliant
annual meeting, Aliant will deliver to ALLTEL a letter identifying all persons
who are "affiliates" of Aliant 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 a specified period. This period begins 30 days before the
merger is
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consummated and ends when financial results covering at least 30 days of post-
merger operations of the combined companies have been published.
Aliant has agreed to use its reasonable best efforts to deliver to ALLTEL
a written agreement of 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. Such agreements are intended to
ensure compliance with the Securities Act and to preserve the ability of the
merger to be accounted for as a "pooling-of-interests."
This 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
Aliant.
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OTHER TERMS OF THE MERGER AGREEMENT
The following summary of other material terms of the merger and the
merger agreement is qualified in its entirety by reference to the merger
agreement, a copy of which is attached as Annex A to this proxy
statement/prospectus.
Certain Representations and Warranties
The merger agreement contains representations and warranties of Aliant
and ALLTEL relating, among other things, to the following matters:
<TABLE>
<S> <C>
. their organization, existence, good . their capital structure;
standing, authority and similar
corporate matters;
. their subsidiaries; . their authorization, execution, delivery
and performance of the merger agreement
and related matters;
. the receipt by the board of directors of . government approvals and required
Aliant of an opinion of Merrill Lynch as consents;
to the fairness, from a financial point
of view, of the merger consideration to
the holders of Aliant common stock;
. the absence of conflicts, violations or . the documents and reports, including
defaults under their certificates of financial statements, filed with the SEC
incorporation and by-laws and certain since December 31, 1996, and the
agreements and documents; accuracy of the information contained
therein;
. the absence of certain changes or . the absence of undisclosed pending or
events; threatened litigation;
. the absence of undisclosed pending or . the absence of undisclosed liabilities;
threatened litigation;
. compliance with laws; . the inapplicability of the Aliant Rights
Plan (defined below) or Nebraska's anti-
takeover statute to the merger;
. the lack of ownership of ALLTEL common . material contracts;
stock or Aliant common stock by the
other party, its subsidiaries or (in the
case of ALLTEL) its affiliates;
. the absence of actions adversely . the absence of undisclosed fees for
affecting pooling-of-interests finders, brokers or investment bankers;
accounting treatment or tax-free and
reorganization treatment under Section
368(a) of the Code;
. certain employee benefit, environmental,
tax, accounting, intellectual property
and labor matters.
</TABLE>
The representations and warranties of Aliant, ALLTEL and MergerSub will
expire at the effective time of the merger.
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Conduct of Business by Aliant and ALLTEL Pending the Merger
Each of ALLTEL and Aliant has agreed that, during the period from the
date of the merger agreement to the effective time of the merger, unless agreed
to in writing by the other party:
. it will, and will cause its subsidiaries to, conduct its
operations in the ordinary and usual course of business and, use
all reasonable efforts to preserve its business organization
intact and maintain its existing relations and goodwill with
customers, suppliers, regulators, distributors, creditors,
lessors, employees and business associates,
. it will not declare, set aside or pay any dividend or distribution
payable in cash, stock or property in respect of any capital
stock, other than regular quarterly cash dividends in amounts
consistent with its past practice or rights to purchase capital
stock pursuant to any successor agreement to its existing rights
agreement (in the case of Aliant, adopted in accordance with the
terms of the merger agreement),
. it will not repurchase or redeem, or permit its subsidiaries to
purchase or redeem, outstanding shares of its capital stock or any
securities convertible into or exchangeable or exercisable for its
capital stock (except in the case of ALLTEL for open market
transactions in connection with its existing stock purchase or
similar plans),
. neither it nor its subsidiaries will take any action that would
reasonably be expected to prevent the merger from qualifying for
pooling-of-interests accounting treatment or as a tax-free
reorganization or that would cause its representations and
warranties in the merger agreement to become untrue in any
material respect, and
. neither it nor any of its subsidiaries will enter into any
business other than its existing businesses and those businesses
traditionally associated with its existing businesses.
Aliant has also agreed that, unless agreed in writing by ALLTEL, it will
not, and will not permit any of its subsidiaries to, take the following
actions:
. propose or adopt any amendment to its corporate charter or by-
laws, except for certain amendments to the Aliant shareholder
rights plan or the adoption of a new rights plan which are not
inconsistent with the transactions contemplated by the merger
agreement;
. split, combine, subdivide or reclassify its outstanding shares of
capital stock;
. terminate, adopt, enter into, make any new grants or awards of
stock-based compensation or other benefits under, amend or
otherwise modify, any employee compensation or benefit plans of it
or its subsidiaries existing on the date of the merger agreement
subject to certain exceptions consistent with Aliant's past
practice or in the normal and usual course of its business,
. neither it nor any of its subsidiaries will make any capital
expenditures in any 12 consecutive months in an aggregate amount
in excess of 5% of the aggregate amount reflected in its capital
expenditure budget for such year,
. neither it nor any of its subsidiaries will transfer, lease,
license, sell, mortgage, pledge, encumber or otherwise dispose of
any of its or its subsidiaries' property or assets (including
capital stock of any of its subsidiaries) with a fair market value
in excess of
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$1,000,000 individually or $5,000,000 in the aggregate except for
such actions in the ordinary course of business consistent with
past practice,
. neither it nor any of its subsidiaries will issue, deliver, sell,
or encumber shares of its common stock or any securities
convertible into, or any rights, warrants or options to acquire,
any such shares except options outstanding on the date of the
merger agreement under its stock option plans (the "Stock Plans"),
awards of options and restricted stock granted after such date
under the Stock Plans in accordance with the merger agreement and
shares issuable pursuant to such awards,
. other than the proposed purchase by Aliant of the Nebraska
operations and access lines of General Telephone & Electronics
Corp. on terms reasonably satisfactory to ALLTEL and the exercise
of Aliant's option to purchase the remaining 18.75% of the Omaha
Cellular Limited Partnership which Aliant does not currently own,
neither it nor any of its subsidiaries will spend in excess of $5
million in the aggregate in any calendar year to acquire any
business, whether by merger, consolidation, purchase of property
or assets or otherwise; except (A) no such acquisition would
prevent, delay or impair its ability to consummate the
transactions contemplated by the merger agreement and (B) no such
acquisition would subject ALLTEL and its subsidiaries following
the consummation of the merger to any Commercial Mobile Radio
Service spectrum aggregation limit restriction pursuant to the
provisions of 47 C.F.R. Section 20.6 or place ALLTEL and its
subsidiaries following the consummation of the merger in violation
of the Cellular Cross Ownership limits contained in 47 C.F.R.
Section 22.942, and
. neither it nor any of its subsidiaries shall authorize or enter
into any agreement to do any of the preceding matters.
ALLTEL has also agreed that, unless agreed to in writing by Aliant, it
will not propose or adopt any amendment to its corporate charter or by-laws in
any manner which would prohibit or hinder, impede or delay in any material
respect the transactions contemplated by the merger agreement. ALLTEL may,
however, amend its charter to increase the number of shares of any class or
series of its capital stock.
Acquisition Proposals
Aliant has agreed that neither it nor any of its subsidiaries, nor any
of its or its subsidiaries' employees, agents or representatives (including
any investment banker, attorney or accountant retained by it or any of its
subsidiaries), will, and that it will direct and use its best efforts to cause
its and its subsidiaries' representatives not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the
making of any inquiries or the making of any proposal or offer with respect to
a merger, reorganization, share exchange, consolidation or similar transaction
involving, or any purchase of or tender offer for, any of the assets of it or
any of its subsidiaries or its voting securities if, as a result of such
transaction:
. the shareholders of Aliant would not hold more than fifty percent
of the voting securities of the surviving corporation or its
ultimate parent,
. the directors of Aliant would not constitute a majority of the
board of directors of the surviving corporation or its ultimate
parent, or
. another person would acquire more than fifty percent of the assets
of Aliant and its subsidiaries.
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Each of the above is referred to as an "Acquisition Proposal." Aliant has
further agreed that neither it nor any of its subsidiaries nor any of its or
its subsidiaries' representatives will, and that it will direct and use its
best efforts to cause its and its subsidiaries' representatives not to,
directly or indirectly, discuss an Acquisition Proposal, or share any related
confidential information or data, with any person or engage in any negotiations
concerning an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal.
The merger agreement does not, however, prevent Aliant or the Aliant
board from:
. responding to a tender offer in compliance with the Exchange Act;
. engaging in any discussions or negotiations with or providing any
information to, any person in response to an unsolicited bona fide
written Acquisition Proposal; or
. recommending such an unsolicited bona fide written Acquisition
Proposal to the shareholders of Aliant,
if in case of each of the last two of the three immediately preceding clauses,
. the Aliant board at a meeting determines in good faith (upon the
advice of its financial advisor) that such Acquisition Proposal is
reasonably likely to be completed, taking into account all legal,
financial, regulatory and other aspects of the proposal and the
person making the proposal, and would, if consummated, result in a
transaction more favorable to Aliant's shareholders from a
financial point of view than the merger with ALLTEL (any such more
favorable Acquisition Proposal being referred to as a "Superior
Proposal"),
. the Aliant board at a meeting determines in good faith upon the
advice of outside legal counsel that such action is necessary for
the board to satisfy its fiduciary duty under applicable law, and
. prior to providing any information or data to any person regarding
an Acquisition Proposal by any such person, the Aliant board shall
receive from such person a confidentiality agreement in customary
form.
In addition, Aliant has agreed to notify ALLTEL immediately if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of Aliant's representatives. This notice
should indicate the name of the person making the proposal or inquiry and the
terms and conditions of any proposals or offers. After such time, Aliant shall
inform ALLTEL of any material modification of the terms of any such proposal or
offer or its withdrawal.
Information Supplied
Aliant and ALLTEL each agree that it, and its subsidiaries, will not
supply any information for inclusion or incorporation by reference in the
registration statement for this proxy statement/prospectus that contains an
untrue statement of a material fact, or omits a material fact necessary to make
the statements that were made, in the light of the circumstances under which
they were made, not misleading.
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Shareholders' Meeting
Aliant agrees to take all action necessary to convene the Aliant annual
meeting as promptly as practicable after the registration statement for this
proxy statement/prospectus is declared effective. Subject to applicable law and
the terms of the merger agreement, Aliant has also agreed that the Aliant board
will recommend that the shareholders of Aliant adopt the merger agreement and
will take all lawful action to solicit such adoption.
Employee Benefits
Stock Options. The merger agreement provides that at the effective time
of the merger, each Aliant option under the Aliant stock option plans, whether
vested or unvested, will be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Aliant Option (except
to the extent such terms and conditions are altered in accordance with their
terms as a result of the consummation of the merger), the same number of shares
of ALLTEL common stock as the holder of such Aliant option would have been
entitled to receive pursuant to the merger had such holder exercised such
Aliant option in full immediately prior to the effective time of the merger (a
"Substitute Option"). The Substitute Option will have an exercise price per
share (the "Substitute Option Price") equal to:
. the aggregate exercise price for the shares of Aliant common stock
otherwise purchasable pursuant to the original Aliant option
divided by
. the number of full shares of ALLTEL common stock deemed
purchasable pursuant to such Aliant option in accordance with the
previous sentence.
ALLTEL has agreed to use its best efforts to register under the Securities Act,
and to maintain the effectiveness of such registration, shares of ALLTEL common
stock issuable pursuant to these Substitute Options.
Benefit Plans. For at least two years after the effective time of the
merger, ALLTEL has agreed to cause Aliant to provide or cause to be provided to
employees of Aliant and its subsidiaries compensation and benefit plans that
are no less favorable, in the aggregate, than the existing Aliant compensation
and benefit plans. If during this period, however, ALLTEL implements any
widespread increase or decrease in benefits under compensation and benefit
plans or in the cost thereof to participants under compensation and benefit
plans applicable to employees of ALLTEL and its subsidiaries (other than Aliant
and its subsidiaries), Aliant will proportionately adjust the benefits under
the Aliant compensation and benefit plans or the cost thereof to participants,
and with respect to employees who are subject to collective bargaining, all
benefits will be provided in accordance with the applicable collective
bargaining agreement.
Charitable Contributions/Community Support
ALLTEL has agreed that after the effective time of the merger, subject to
the fiduciary obligations of the Aliant board, Aliant shall, and ALLTEL shall
cause Aliant to, continue to provide charitable contributions and community
support within the service areas of Aliant and its subsidiaries at levels
consistent with Aliant's historic practice.
Operations and Employment in Lincoln, Nebraska
ALLTEL and MergerSub have delivered to Aliant a written plan that
establishes Lincoln, Nebraska as headquarters of the Nebraska-Iowa market area
of the Communications Group's consolidated operations of ALLTEL and Aliant.
ALLTEL has agreed to implement this plan on a timely basis following the
effective time of the merger. Pursuant to this plan, ALLTEL has agreed that its
and Aliant's consolidated
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employment for the two years following the effective time of the merger shall
be no less than 900 at such operations in Lincoln, Nebraska.
Conditions to Consummation of the Merger
The obligations of Aliant, ALLTEL, and MergerSub to effect the merger are
subject to the satisfaction or waiver of each of the following conditions:
. the Aliant shareholders and ALLTEL, as sole shareholder of Merger
Sub, will each have duly adopted the merger agreement;
. the NYSE will approve for listing, subject to official notice of
issuance, the shares of ALLTEL common stock issuable to the
shareholders of Aliant in the merger;
. the waiting period applicable to the merger under the HSR Act will
have expired or been terminated and all Aliant required consents
(other than those consents relating to agreements subject to
rights of first refusal) and ALLTEL required consents from or with
the any governmental entity shall have been made or obtained
pursuant to a Final Order (as defined below), free of any
conditions (other than conditions that are not reasonably likely,
either individually or in the aggregate, to have a Regulatory
Material Adverse Effect (as defined below));
. no governmental entity of competent jurisdiction will have
enacted, issued, promulgated, enforced or entered any law (whether
temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the
merger or the other transactions contemplated by the merger
agreement or that is, individually or in the aggregate with all
other such laws, reasonably likely to have a Material Adverse
Effect (as defined below) on ALLTEL or Aliant (collectively, an
"Order"), and no governmental entity will have instituted any
proceeding, or, in the case of a federal governmental entity,
threatened in writing, to institute any proceeding seeking any
such Order,
. the registration statement that contains this proxy
statement/prospectus will have become effective under the
Securities Act and no stop order suspending its effectiveness will
have been issued, and no proceedings for that purpose shall have
been initiated or threatened by ALLTEL,
. each of ALLTEL and Aliant will have received letters of its
independent auditors, dated (1) the date on which the registration
statement became effective and (2) the closing date, and addressed
to the other party and its directors, in form and substance
customary for "comfort" letters reasonably satisfactory to the
recipient delivered by independent public accountants in
connection with registration statements similar to the
Registration Statement,
. ALLTEL and Aliant will have received a letter dated as of the
effective time of the merger from ALLTEL's independent public
accounting firm to the effect that the merger will qualify for
"pooling-of-interests" accounting treatment and
. the number of shares of Aliant common stock for which dissenters'
rights are perfected under the Nebraska Business Corporation Act
shall not have exceeded 9% of the shares of Aliant common stock
outstanding immediately prior to the effective time of the merger.
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The merger agreement provides specific definitions for the following
terms:
. ""Regulatory Material Adverse Effect" means any conditions to the
granting of a consent, registration, approval, permit or
authorization by any governmental entity required by the merger
agreement if compliance with such conditions, individually or in
the aggregate, would be reasonably likely to have a Material
Adverse Effect on Aliant or ALLTEL following the effective time of
the merger,
. however, any divestiture by either ALLTEL or Aliant or any
of their respective subsidiaries reasonably required to
cause Aliant to be in compliance with the Commercial Mobile
Radio Service spectrum aggregation limits established by the
FCC in 47 C.F.R. Section 20.6 and the Cellular Cross
Ownership limits contained in 47 C.F.R. Section 22.942 shall
be deemed not to have any adverse effect on either Aliant or
ALLTEL following the effective time of the merger,
. ""Final Order" means an action or decision that has been granted
as to which:
. no request for a stay or any similar request is pending, no
stay is in effect, the action or decision has not been
vacated, reversed, set aside, annulled or suspended and any
deadline for filing such a request that may be designated by
statute or regulation has passed,
. no petition for rehearing or reconsideration or application
for review is pending and the time for the filing of any
such petition or application has passed,
. no governmental entity has undertaken to reconsider the
action on its own motion and the time within which it may
effect such reconsideration has passed, and
. no appeal is pending (including other administrative or
judicial review) or in effect and any deadline for filing
any such appeal that may be specified by statute or rule has
passed, which in any case is reasonably likely to result in
vacating, reversing, setting aside, annulling, suspending or
modifying such action or decision (in any case in a manner
which would have a Regulatory Material Adverse Effect
following the effective time of the merger), and
. ""Material Adverse Effect" means a material adverse effect on the
business, results of operation or financial condition of ALLTEL or
Aliant, as the case may be.
The obligations of ALLTEL to effect the merger are also subject to the
satisfaction or waiver by ALLTEL of the following conditions:
. the representations and warranties of Aliant in the merger
agreement shall be true and correct in all material respects, and
ALLTEL will have received a certificate to such effect;
. Aliant will have performed in all material respects all
obligations required to be performed by it under the merger
agreement at or prior to the closing date of the merger, and
ALLTEL will have received a certificate to such effect;
. Aliant will have obtained the consent or approval of each person
whose consent or approval shall be required in order to consummate
the transactions contemplated by the merger agreement under any
contract to which Aliant or any of its subsidiaries is a party,
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except those for which the failure to obtain such consent or
approval, individually or in the aggregate, is not reasonably likely
to have, a Material Adverse Effect on Aliant;
. ALLTEL will have received the opinion of Kutak Rock, counsel to
ALLTEL, dated the closing date of the merger, to the effect that the
merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and
that each of ALLTEL, MergerSub and Aliant will be a party to that
reorganization within the meaning of Section 368(b) of the Code; and
. the FCC will have issued any required waivers under Section 61.41 of
the FCC's Rules so that:
. ALLTEL's existing local exchange properties will not become
subject to the FCC's "price cap" regulations;
. ALLTEL can continue to operate Aliant's local exchange
properties under the FCC's "price cap" regulations, or, in
ALLTEL's discretion, to operate Aliant's local exchange
properties under "rate-of-return" regulation; and
. no other ALLTEL local exchange properties participating in the
National Exchange Carrier Association pools will be required
to leave the pools as a result of the transaction contemplated
by the merger agreement (the "Special FCC Approvals").
The obligation of Aliant to effect the merger is also subject to the
satisfaction or waiver by Aliant of the following conditions:
. the representations and warranties of ALLTEL and MergerSub set forth
in the merger agreement will be true and correct in all material
respects, and Aliant shall have received a certificate to such
effect;
. ALLTEL and MergerSub will have performed in all material respects
all obligations required to be performed by it under the merger
agreement at or prior to the closing date of the merger, and Aliant
will have received a certificate to such effect; and
. Aliant will have received the opinion of Foley & Lardner, counsel to
Aliant, dated the closing date of the merger, to the effect that the
merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and
that each of ALLTEL, MergerSub and Aliant will be a party to that
reorganization within the meaning of Section 368(b) of the Code.
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Termination
The merger agreement may be terminated and abandoned at any time prior to
the effective time of the merger, whether before or after any approval of the
matters presented in connection with the merger by the shareholders of Aliant:
. by mutual written consent of Aliant and ALLTEL, by action of their
boards of directors;
. by action of the board of directors of either ALLTEL or Aliant if:
(a) the merger has not occurred by May 31, 1999 (the
"Termination Date"), whether such date is before or after
the date of approval by the Aliant shareholders; except if
ALLTEL or Aliant reasonably determines that additional time
is needed to obtain an ALLTEL required consent or Aliant
required consent from or with any governmental entity, the
termination date may be extended for up to 60 calendar days
at any one time by ALLTEL or Aliant by written notice to the
other party up to a date not beyond July 30, 1999, which
date shall be deemed to be the termination date. The right
to terminate the merger agreement pursuant to this clause is
not available to a party that has breached its obligations
under the merger agreement in a manner that contributes to
the failure of the merger,
(b) the Aliant shareholders shall not have duly adopted the
merger agreement at the Aliant annual meeting or at any
adjournment or postponement thereof, or
(c) any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the merger shall become final
and non-appealable (whether before or after the adoption or
approval by the Aliant shareholders);
. by action of the board of directors of Aliant if:
(a) the Aliant board determines that a proposed transaction
constitutes a Superior Proposal (as previously defined) and
Aliant desires to enter into an agreement with respect to
such proposal,
(b) ALLTEL does not make, within three business days after
receipt of Aliant's written notification of its desire to
enter into a binding agreement for a Superior Proposal, an
offer that the Aliant board believes, in good faith after
consultation with its financial advisor, is at least as
favorable, from a financial point of view, to the Aliant
shareholders as the Superior Proposal,
(c) on such date of termination Aliant enters into a definitive
agreement with respect to such Superior Proposal, and
(d) Aliant pays to ALLTEL the Termination Fee (as defined
below);
. by action of the board of directors of Aliant if:
(a) ALLTEL or MergerSub has materially breached any
representation, warranty, covenant or agreement contained in
the merger agreement which would result in a failure of a
condition relating to either the representations and
warranties of ALLTEL or the performance of its obligations
under the merger agreement and has not or cannot be cured
prior to the Termination Date, or
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(b) a change, event, development or combination of developments
has occurred after the date of the merger agreement with
respect to ALLTEL which, individually or in the aggregate,
has had or could have a Material Adverse Effect;
. by action of the board of directors of Aliant if the Final ALLTEL
Stock Price is equal to or less than $43, and ALLTEL does not
increase the Exchange Ratio to equal an amount equal to $32.25
divided by the Final ALLTEL Stock Price; or
. by action of the board of directors of ALLTEL if:
(a) if the Aliant board withdraws or adversely modifies its
approval or recommendation of the merger agreement or fails
to reconfirm its recommendation of the merger agreement
within five business days after a written request by ALLTEL
to do so (provided that such a request is made after the
Aliant board has taken certain actions relating to an
Acquisition Proposal and such Acquisition Proposal has not
been rejected by the Aliant board or withdrawn),
(b) Aliant has committed a material breach of any
representation, warranty, covenant or agreement contained in
the merger agreement which would result in a failure of a
condition relating to either the representations and
warranties of Aliant or the performance of its obligations
under the merger agreement and has not or cannot be cured
prior to the Termination Date,
(c) Aliant or any of its representatives takes any of the
actions that would be proscribed by the non-solicitation
provisions of the merger agreement described above under "--
Acquisition Proposals" but for the exception allowing
certain actions to be taken in response to a bona fide
written unsolicited Superior Proposal,
(d) a tender offer or exchange offer for 50% or more of the
outstanding shares of capital stock of Aliant is commenced
prior to the effective date and the Aliant board fails to
recommend against acceptance of such tender offer or
exchange offer by its shareholders, or
(e) a change, event, development or combination of developments
has occurred after the date of the merger agreement with
respect to Aliant which, individually or in the aggregate,
could have a Material Adverse Effect.
Termination Fees
Under certain circumstances if the merger agreement is terminated, Aliant
must pay ALLTEL, or ALLTEL must pay Aliant, certain termination fees as
described below.
The merger agreement provides that Aliant must pay ALLTEL a termination
fee in the event the merger agreement is terminated under certain
circumstances. This termination fee (the "Termination Fee") is equal to two
percent (2%) of the aggregate market value of the outstanding shares of Aliant
common stock, as determined by multiplying the closing price of the Aliant's
shares on the NASDAQ National Market on the termination date times the total
outstanding shares of Aliant common stock on such date. If the Termination Fee
were payable by either party on March 8, 1999, on which date the closing price
of Aliant common stock was $39 per share and the total outstanding shares of
Aliant common stock were 35,640,644, the Termination Fee would be $27,799,702.
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Aliant must pay the Termination Fee to ALLTEL in the following
circumstances:
. a bona fide Acquisition Proposal with respect to Aliant shall have
been made to Aliant and made known to shareholders generally or
shall have been made directly to shareholders generally or any
person shall have publicly announced an intention (whether or not
conditional) to make a bona fide Acquisition Proposal with respect
to Aliant and such Acquisition Proposal or announced intention has
not been withdrawn prior to the annual meeting and after such time
Aliant or ALLTEL terminates the merger agreement because either
the Aliant shareholders failed to approve the merger agreement or
Aliant has committed a material breach (but solely with respect to
a willful and intentional breach) of any representation, warranty,
covenant or agreement contained in the merger agreement which
would result in a failure of a condition relating to either the
representations and warranties of Aliant or the performance of its
obligations under the merger agreement and such breach has not or
cannot be cured prior to the termination date, and within twelve
months after such termination Aliant enters into an agreement to
consummate an Acquisition Proposal within the meaning of such term
in the merger agreement;
. Aliant terminates the merger agreement pursuant to the terms of
the merger agreement permitting it to terminate in order to enter
into an agreement concerning a transaction that constitutes a
Superior Proposal; or
. ALLTEL terminates the merger agreement pursuant to any provision
of the merger agreement which provides ALLTEL the sole right to
terminate except that:
(A) no Termination Fee is payable if the termination is due to
the occurrence of an event or development after the date of
the merger agreement with respect to Aliant which,
individually or in the aggregate, could have a Material
Adverse Effect; and
(B) any termination by ALLTEL due to a material breach by Aliant
of any representation, warranty, covenant or agreement
contained in the merger agreement must relate solely to a
willful and intentional breach.
On or after the occurrence of any one of these circumstances, Aliant must
promptly, but no later than two days after the date of such termination, or the
closing date of any Acquisition Proposal for which a Termination Fee is payable
pursuant to the foregoing provisions, pay ALLTEL the Termination Fee.
ALLTEL must pay the Termination Fee to Aliant if the merger agreement is
terminated by Aliant due to a material breach by ALLTEL (but solely with
respect to a willful and intentional breach) of any representation, warranty,
covenant or agreement contained in the merger agreement which would result in a
failure of a condition relating to either the representations and warranties of
ALLTEL or the performance of its obligations under the merger agreement and
such breach has not or cannot be cured prior to the Termination Date. ALLTEL
must pay the Termination Fee promptly but in no event later than two days after
the date of termination of the merger agreement.
ALLTEL must pay Aliant a different termination fee in the amount of $12
million in the following circumstances:
. in the event that within 10 business days after Aliant's written
request to ALLTEL after April 30, 1999, Aliant does not receive a
letter from ALLTEL's independent public accounting firm to the
effect that such accountants concur with ALLTEL's conclusion that
the merger will qualify for "pooling-of-interests" accounting
treatment as required by the merger agreement; provided, that no
termination fee is payable by ALLTEL in this event if
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ALLTEL, when the termination fee would otherwise be payable, has a
right to terminate the merger agreement (other than a right to
terminate for failure of the condition relating to the
qualification of the merger for "pooling-of-interest" accounting
treatment), or the principal reason for failure to obtain such
accountant's letter is either a circumstance, event or condition
related to Aliant (other than arising out of the transactions
contemplated by the merger agreement or any of its exhibits (as
distinguished from the schedules) or a change in applicable
accounting rules (as specified by the Financial Accounting
Standards Board or the SEC);
. the merger agreement is terminated because of failure to receive
any of the Special FCC Approvals.
ALLTEL must pay this $12 million termination fee promptly but in no
event later than two days after the failure to receive the accountant's letter
or the date of the termination of the merger agreement due to failure to
receive the Special FCC Approvals, as applicable.
In all instances any termination fee excludes any expenses to be paid
pursuant to the merger agreement.
Expenses
Whether or not the merger occurs, all costs and expenses incurred in
connection with the merger agreement and the merger and the other transactions
contemplated by the merger agreement shall be paid by the party incurring such
expense, except that ALLTEL shall pay the filing fee for the registration
statement, the filing fee under the HSR Act and the expenses to print and mail
this proxy statement/prospectus and the Registration Statement.
Amendment and Modification
At any time prior to the effective time of the merger Aliant, ALLTEL and
the MergerSub may, by written agreement, modify or amend the merger agreement.
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CERTAIN REGULATORY FILINGS AND APPROVALS
FCC Transfer Approvals
The FCC regulates certain activities of ALLTEL and Aliant. The
Communications Act requires the FCC's prior approval for the acquisition of
control of Aliant because it holds various licenses and authorizations issued
by the FCC. The FCC traditionally has granted approval of such transactions if
it determines that the transfer of control is consistent with the public
interest, convenience and necessity. In reviewing these transactions, the FCC
generally does not consider the relative merits of such a transfer of control
in relation to those of any other transfers of control that may be pending or
contemplated. ALLTEL and its subsidiaries already hold certain similar
authorizations from the FCC, and ALLTEL believes it is likely that the transfer
applications will be granted. Third parties, however, may subject the transfer
applications to public comment, petitions to deny and informal objections in an
attempt to delay or impede the FCC's approval. Accordingly, there can be no
assurance that the FCC will timely grant the transfer applications or that it
will not place various conditions and restrictions upon its approval. It is a
condition to the merger that the FCC approve the transfer applications.
Hart-Scott-Rodino Act Approval
Under the HSR Act and the related rules of the FTC, ALLTEL and Aliant may
not consummate the merger until they have furnished certain notifications and
information to the FTC and have satisfied certain waiting periods. ALLTEL and
Aliant filed notification and report forms under the HSR Act with the FTC and
the DOJ on January 29, 1999, and the specified waiting period has terminated.
At any time before or after the effective time of the merger, and even if
the HSR Act waiting period has expired or the merger has 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 Aliant or businesses of
ALLTEL or Aliant acquired as a result of the merger. Private parties may also
bring legal actions under the antitrust laws under certain circumstances.
State Regulatory Approvals
After consideration of applicable state statutes, regulations and case
law, including but not limited to, the Order of the Nebraska Public Service
Commission ("NPSC") in Application No. C-1746/PI-19 which specified those
circumstances in which the NPSC has jurisdiction to approve, condition or deny
proposed acquisitions, mergers or transfers of ownership or control of
regulated common carriers, no approvals of any state regulatory commission are
required for consummation of the merger. On March 23, 1999 the NPSC entered an
order to investigate the impact of the merger. If, however, one or more state
regulatory commissions require the filing of an application to approve the
merger, the parties will make such filing and seek such approval as a condition
to the closing of the merger.
CERTAIN RELATED TRANSACTIONS
As of the date hereof, neither ALLTEL nor Aliant is aware of any material
relationship between ALLTEL or its directors or executive officers and Aliant
or its directors or executive officers, except as contemplated by the merger
agreement or as described in this proxy statement/prospectus or in the
documents incorporated by reference herein.
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DESCRIPTION OF ALLTEL CAPITAL STOCK
The following summary is qualified in its entirety by the Delaware
General Corporation Law (the "Delaware Law"), the Amended and Restated
Certificate of Incorporation of ALLTEL (the "ALLTEL Certificate") and ALLTEL's
Rights Agreement (described below). The ALLTEL Certificate and Rights Agreement
are included as exhibits to the Registration Statement relating to this proxy
statement/prospectus on file with the Commission. See "WHERE YOU CAN FIND MORE
INFORMATION."
General
The authorized capital stock of ALLTEL consists of 1,000,000,000 shares
of ALLTEL common stock, 50,000,000 shares of voting cumulative preferred stock,
par value $25 per share (the "ALLTEL Voting Preferred Stock") and 50,000,000
shares of cumulative non-voting preferred stock, no par value (the "ALLTEL Non-
Voting Preferred Stock"). Following the merger, ALLTEL expects that
approximately 305,012,043 shares of ALLTEL common stock will be issued and
outstanding, approximately 340,792 shares of ALLTEL Voting Preferred Stock will
be issued and outstanding, and approximately 115,073 shares of ALLTEL Non-
Voting Preferred Stock will be issued and outstanding.
ALLTEL Common Stock
The holders of the ALLTEL common stock have one vote per share on matters
submitted to a vote of shareholders. Such holders vote as a class together with
the holders of ALLTEL Voting Preferred Stock. All shares of ALLTEL common stock
will participate equally in the distribution of remaining property, after
satisfaction of all other claims, on liquidation, dissolution or winding up of
the affairs of ALLTEL. Such shares will also equally participate in all
dividends declared by the ALLTEL board. 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 ALLTEL's
board declared a dividend of one right ("Right") for each share of ALLTEL
common stock outstanding 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 holder of a Right may purchase from
ALLTEL, upon the occurrence of certain events, 1/1000 of a share of ALLTEL's
Series K Cumulative Voting Preferred Stock, par value $25 per share (the
"Series K Stock") 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 certificates for the ALLTEL common stock evidence the Rights. A
separate certificate for each Right will be issued on the earliest to occur of
either of the following two events: (a) the close of business on the tenth
business day after the public announcement that any person (other than ALLTEL,
any subsidiary of ALLTEL or any employee benefit plan of ALLTEL) together with
its affiliates and associates (an "Acquiring Person"), beneficially owns 15% or
more of ALLTEL common stock or (b) the close of business on the tenth business
day after any person commences a tender or exchange offer if upon completion
that person would beneficially own 15% or more of ALLTEL common stock (the
earlier of such dates being called the "Distribution Date"). The Rights
Agreement provides that, until the Distribution Date, the Rights will only be
transferred 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 ("Final Expiration Date"), unless earlier redeemed by ALLTEL as described
below. If an Acquiring Person acquires 15% or more of ALLTEL common stock (the
"Stock Acquisition Date") then each holder of a Right shall have the
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right to purchase at the then current Purchase Price and in lieu of Series K
Stock, shares of ALLTEL common stock having a value equal to two times the
Purchase Price.
If an Acquiring Person acquires 15% or more of ALLTEL common stock
pursuant to a tender offer or an exchange offer 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 shareholders
(a "Qualifying Offer"), then Rights holders shall not be entitled to exercise
the Rights. The term "Rights Agreement Continuing Director" means: (a) 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 (b) any person who subsequently becomes a
member of the ALLTEL board if the member's election to the ALLTEL board is
recommended or approved by a majority of the Rights Agreement Continuing
Directors.
Except for certain transactions involving a Qualifying Offer, if
following the Stock Acquisition Date either (a) ALLTEL engages in a merger or
other business combination transaction in which ALLTEL does not survive, (b)
ALLTEL engages in a merger or other business combination transaction with
another person in which ALLTEL survives, but in which ALLTEL common stock is
changed or exchanged or (c) 50% or more of ALLTEL's assets, cash flow or
earning power is sold or transferred, the Rights Agreement provides that each
holder of a Right will thereafter have the right to purchase at the then
current Purchase Price, common stock of the acquiring company having a value
equal to two times the Purchase Price.
The Purchase Price payable, and the number of shares of Series K Stock or
other securities or property issuable, on exercise of the Rights, are subject
to adjustment from time to time to prevent dilution following stock dividends,
subdivisions, combinations, reclassifications, warrant or right grants or
distributions. Also, if prior to the Distribution Date ALLTEL declares a
dividend on, subdivides or combines into a smaller number the outstanding
shares of ALLTEL common stock, 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.
Until the close of business on the tenth business day following the Stock
Acquisition Date, the ALLTEL board of directors by majority vote may redeem and
terminate 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.
Until a Right is exercised, a Right holder has no rights as a shareholder
of ALLTEL, including, the right to vote or to receive dividends and such Rights
have no dilutive effect on the earnings of ALLTEL.
Prior to the Distribution Date, ALLTEL may amend the Rights Agreement
without the approval of Rights holders. Following the Distribution Date, ALLTEL
may amend the Rights Agreement without the approval of Rights holders to (a)
cure any ambiguity, (b) correct or supplement any defective or inconsistent
provision, (c) shorten or lengthen any required time period or (d) change any
provisions in the Rights Agreement in any manner which does not adversely
affect the interests of the Rights holders (other than an Acquiring Person).
However, the Rights Agreement may not be amended to lengthen a time period
relating to when the Rights may be redeemed if the Rights are not then
redeemable, or to lengthen any other time period unless such lengthening is for
the purpose of protecting the Rights holders. Additionally, after the
Distribution Date ALLTEL may not make any amendment to the Rights Agreement
that changes the Rights 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.
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 (a) the Rights being redeemed, (b) a
substantial number of Rights being acquired or (c) being deemed a Qualifying
Offer under
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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.
ALLTEL Preferred Stock
The ALLTEL Board may issue (without obtaining shareholder approval)
shares of preferred stock in such series as it deems appropriate. The ALLTEL
board may also establish 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 February 22, 1999, there were a total of 340,792 shares of ALLTEL Voting
Preferred Stock and 115,073 shares of ALLTEL Non-Voting Preferred Stock issued
and outstanding in various series and with various dividend rates and features,
including shares which are convertible into shares of ALLTEL common stock and
shares 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.
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COMPARISON OF THE RIGHTS OF SHAREHOLDERS
OF ALIANT AND ALLTEL
The following summaries are qualified in their entirety by the Nebraska
Business Corporation Act (the "Nebraska Law"), the Delaware Law, the Articles
of Incorporation of Aliant, as amended (the "Aliant Articles"), the Amended and
Restated By-laws of Aliant (the Aliant By-laws"), the ALLTEL Certificate, and
the By-laws of ALLTEL (the "ALLTEL By-laws"). The Aliant Articles, the Aliant
By-laws, the ALLTEL Certificate and the ALLTEL By-laws are included as exhibits
to the Registration Statement relating to this proxy statement/prospectus. See
"WHERE YOU CAN FIND MORE INFORMATION."
General
This summary compares certain rights of the holders of Aliant common
stock to the rights of the holders of ALLTEL common stock. The rights of Aliant
shareholders are governed principally by Nebraska Law, the Aliant Articles and
the Aliant By-laws. On consummation of the merger, such shareholders (other
than those who perfect their dissenters' rights) will become holders of ALLTEL
common stock, and their rights will be governed principally by Delaware Law,
the ALLTEL Certificate and the ALLTEL By-laws.
Dividend Rights
Under Nebraska law, a corporation may declare and pay dividends unless,
following such declaration or payment, either the corporation would not be able
to pay its debts as they become due or the corporation's total assets would be
less than the sum of its total liabilities, plus the amount that would be
needed (assuming the corporation were to be dissolved at the time of the
declaration or payment) to satisfy the preferential rights of any shareholders
that are superior to the rights of the holders receiving the payment or
declaration.
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. 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 on the distribution of assets.
Subject to the preferential rights of preferred stock (of which there
were no shares outstanding with respect to Aliant, and 340,792 shares of Voting
Preferred Stock and 115,073 shares of Non-Voting Preferred Stock outstanding
with respect to ALLTEL as of February 22, 1999), the rights of the Aliant
shareholders and ALLTEL shareholders with respect to the receipt of dividends
are substantially the same. Both companies' debt agreements and instruments
contain certain limitations on the amount of dividends payable to shareholders.
See "SUMMARY -- Market Prices and Dividends."
Voting Rights
Each share of Aliant common stock and each share of ALLTEL common stock
is entitled to one vote per share on all matters submitted to a vote of
shareholders. Except as otherwise provided by Delaware Law, the holders of
ALLTEL common stock vote together as a single class with the holders of the
ALLTEL Voting Preferred Stock. There are no shares of Aliant preferred stock
outstanding.
The directors of both Aliant and ALLTEL are elected by a plurality of the
votes cast. Except as otherwise provided by Nebraska Law or Delaware Law or as
described below under the captions "-- Vote on Extraordinary Corporate
Transactions" and "-- Business Combination Provisions," approval of all
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other matters submitted to a vote of shareholders of Aliant requires the
affirmative vote of a majority of shares cast by such shareholders, while
approval of such matters submitted to a vote of shareholders of ALLTEL requires
the affirmative vote of the majority of shares present, in person or by proxy,
and entitled to vote.
Number and Election of Directors
Under Nebraska Law and Delaware Law, directors, unless their terms are
staggered, are elected at each annual shareholders' meeting. Vacancies on the
board of directors may be filled by the shareholders or directors, unless the
articles or certificate of incorporation or a bylaw provides otherwise. The
articles or certificate of incorporation of both a Nebraska and Delaware
corporation may authorize the election of certain directors by one or more
classes or series of shares. The articles or certificate of incorporation or
the by-laws of a Nebraska and Delaware corporation also may allow the
shareholders or the board of directors to fix or change the number of
directors, but under each State's law such corporation must have at least one
director. Under Nebraska Law, shareholders are afforded cumulative voting
rights with respect to the election of directors. Cumulative voting allows a
shareholder to vote the number of shares owned by such shareholder for as many
persons as there are directors to be elected, or to cumulate such votes and
give one person as many votes as the number of directors to be elected
multiplied by the number of such shareholder's shares, or to distribute such
votes among as many directors to be elected as such shareholder sees fit. Under
Delaware Law, shareholders do not have cumulative voting rights unless the
certificate of incorporation so provides.
The Aliant By-Laws provide for a classified board consisting of three
classes of directors, with each class elected for a term of three years. The
Aliant Articles provide for cumulative voting rights as required by Nebraska
Law. If the number of directors on the Aliant 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 coinciding 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 Aliant By-Laws provide that nominations for election to the Aliant
Board of Directors at a meeting of shareholders may be made by or at the
direction of the Aliant board or by any shareholder, provided that the
shareholder gives timely notice thereof (such notice being in proper form) to
the Aliant Corporate Secretary. To be timely, a shareholder's notice of
nomination must be received by Aliant not less than 90 days in advance of the
annual meeting. However, if such annual meeting is held earlier than the fourth
Wednesday of April or the number of directors to be elected to the Aliant board
at the annual meeting is increased without certain specified prior public
announcement, then such notice must be given within 10 days after the first
public disclosure of the date of said meeting.
The ALLTEL By-laws also provide for a classified board consisting of
three classes of directors with each class elected for a term of three years.
ALLTEL shareholders do not have cumulative voting rights. The number of
directors in each class may be fixed or changed from time to time by either a
majority of shareholders represented and entitled to vote at a meeting called
for the purpose of electing directors or 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 Aliant Board as described above. The ALLTEL By-laws
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
shareholders next following his or her attainment of age 70. The ALLTEL By-laws
provide that nominations of persons for election to ALLTEL's board at a meeting
of shareholders may be made by or at the direction of the ALLTEL board or by
any shareholder,
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provided that, the shareholder gives timely notice thereof (such notice being
in proper form) to ALLTEL's Corporate Secretary. To be timely, a shareholder'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 Aliant By-laws provide that special meetings of shareholders may be
called at any time and place by the President, CEO or the Aliant board.
Further, a special meeting must be called on the demand of the holders of not
less than 10% of the shares of Aliant entitled to vote on the matters to be
considered at the special meeting. Each shareholder soliciting a special
meeting must agree to pay Aliant's costs of holding the special meeting,
including the costs of mailing proxy materials, in the event the proposal
submitted by the soliciting shareholders is not adopted at the special meeting.
To be valid, a written demand for a special meeting must be delivered in proper
form to the Aliant Corporate Secretary within 70 days following the "Demand
Record Date" as established by the Aliant board.
The ALLTEL By-laws provide that special meetings of shareholders may be
called at any time and place but only by the Chairman, the President, the
Corporate Secretary or the ALLTEL board.
A special meeting of the shareholders of either Aliant or ALLTEL may be
called for any purpose or purposes.
Action by Shareholders Without a Meeting
Under Nebraska Law, action may only be taken by the shareholders of
Aliant without a meeting if such action is taken by all of the shareholders
entitled to vote on the action. Similarly, the ALLTEL Certificate provides that
shareholders may act on matters by written consent, in lieu of voting on such
matter at an annual or special meeting of shareholders, only if such written
consent is unanimous.
Shareholder Proposals
The Aliant By-laws provide that for business to be properly brought
before an annual 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 Aliant board,
(b) otherwise properly brought before the meeting at the direction of
the Aliant board, or
(c) otherwise properly brought before the meeting by a shareholder.
To be properly brought before an annual meeting by a shareholder, the
shareholder must give timely notice (such notice being in proper form) to the
Aliant Corporate Secretary. To be timely, a shareholder's notice must be
received by Aliant not less than 75 nor more than 100 days prior to (x) the
fourth Wednesday of April in the applicable year, in the case of an annual
meeting scheduled to be held on such fourth Wednesday or (y) the first
anniversary of the immediately preceding annual meeting in the case of any
other annual meeting. If the date for which the annual meeting is called is
advanced by more than 30 days or delayed by more than 60 days from the date
specified in clause (x) or (y) above, as applicable, notice to be timely made
must be delivered not earlier than the close of business on the 100th day prior
to the date of the meeting and not later than the close of business on the 75th
day prior to the date of such meeting, or the 10th day following the first
public announcement of such meeting, whichever is later. The Aliant By-laws
contain certain limitations on the ability of shareholders to call and bring
matters before a special meeting. See "-- Call of Special Meetings."
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The ALLTEL By-laws provide that for 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 shareholder. To be properly
brought before an annual meeting by a shareholder, the shareholder must give
timely notice (such notice being in proper form) to ALLTEL's Corporate
Secretary. To be timely, a shareholder'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 By-laws
contain no provision regarding the manner in which actions may be brought by
shareholders before a special meeting. See "-- Call of Special Meetings."
Vote on Extraordinary Corporate Transactions
Under Nebraska Law, unless a greater vote of shareholders is required by
a corporation's articles of incorporation, or unless the board of directors
conditions its approval of an extraordinary transaction on attaining a higher
vote, 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, plus with certain exceptions, the affirmative vote of two-thirds of
the outstanding stock entitled to vote thereon. The Aliant Articles contain a
provision which increases this threshold to 70%. This provision is applicable
to the Aliant shareholders' approval of the merger agreement. See "ALIANT
ANNUAL MEETING OF SHAREHOLDERS -- Vote Required." In addition, Aliant's ability
to engage in these types of extraordinary transactions may also be restricted
by certain provisions of Nebraska Law relating to business combinations. See
"-- Business Combination Restrictions" below.
Under Delaware Law, unless a greater vote of shareholders is required by
a corporation's certificate of incorporation or unless the provisions of
Delaware Law 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. This provision is applicable to ALLTEL. In addition certain
provisions contained in the ALLTEL Certificate relating to certain business
combinations may also apply to ALLTEL. See "-- Business Combination
Restrictions -- Fair Price Provisions" below.
Rights Plan
The Aliant board has adopted a rights plan (the "Aliant Rights Plan")
pursuant to which Aliant aexecuted a Rights Agreement, dated as of June 21,
1989, as amended, with Mellon Securities Trust Company, as successor rights
agent (the "Aliant Rights Agreement"). Under the Aliant Rights Agreement, one
Common Stock Purchase Right (an "Aliant Right") attaches to each share of
Aliant common stock issued and outstanding at any time prior to the expiration
of the Rights Agreement. Under certain circumstances described below, the
Aliant Rights will entitle each holder to purchase additional shares of Aliant
common stock. The Aliant Rights trade with and are represented by the
certificates for the Aliant common stock. If the Aliant Rights become
exercisable, such right (unless held by a person or group, which beneficially
owns more than 10% of the outstanding Aliant common stock) entitles the holder
to purchase for $21.875 an amount of the Aliant common stock having a market
value of $43.75. The Aliant Rights only become exercisable if a person or group
has acquired, or announced an intention to acquire, 10% or more of the
outstanding shares of Aliant common stock. If Aliant is acquired by another
corporation subsequent to a party acquiring 10% or more of the Aliant common
stock, each holder of an Aliant Right will be entitled to receive the acquiring
corporation's common shares having a market value of two times the exercise
price per Aliant Right. The Aliant Rights may be redeemed at a price of $.0025
per Aliant Right prior to the existence of a 10% acquiring party, and
thereafter may be exchanged for one share of common stock per Aliant Right
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prior to the existence of a 50% acquiring party. Until they become exercisable,
the Aliant Rights have no voting or dividend rights and no dilutive effect on
the earnings of Aliant.
Effective February 17, 1999, the Aliant board amended the Aliant Rights
Agreement to exclude ALLTEL and its affiliates from the definition of Acquiring
Person, and to provide that the Aliant Rights shall not become exercisable as a
result of Aliant entering into the merger agreement with ALLTEL and MergerSub
or as a result of the consummation of the merger.
The Aliant Rights Plan is not intended to deter all takeover bids for
Aliant. To the extent an acquirer is discouraged by the Aliant Rights Plan from
acquiring an equity position in Aliant, Aliant shareholders may be deprived
from receiving a premium for their shares. The issuance of additional shares of
the Aliant common stock prior to the Aliant Rights becoming exercisable will
result in an increase in the number of Aliant Rights outstanding.
The foregoing summary descriptions of the Aliant Rights, the Aliant
Rights Agreement and the Aliant Rights Plan do not purport to be complete and
are qualified in their entirety by reference to the Aliant Rights Agreement, a
copy of which is incorporated by reference as an exhibit to the Aliant 1998
Form 10-K. See "WHERE YOU CAN FIND MORE INFORMATION."
For a description of the ALLTEL Rights Agreement, see "DESCRIPTION OF
ALLTEL CAPITAL STOCK -- Rights Agreement."
Business Combination Restrictions
Nebraska Shareholder Protection Act.
Section 21-2451 of the Nebraska Statutes provides that a person who
acquires shares of certain Nebraska publicly traded corporations, including
Aliant, in a "control share acquisition" (as defined below) will have voting
rights as a shareholder on matters (other than the election of directors) only
if a majority of disinterested shareholders vote to approve such voting rights.
"Control share acquisition" is an acquisition of voting stock that would give
the acquiring person power to exercise or direct the exercise (when combined
with all other voting shares owned by such person) of voting power over a new
range of ownership within any of the following parameters: (a) at least 20% but
less than 33 1/3%, (b) at least 33 1/3% but less than 50% or (c) greater than
50%. An acquisition is not a control share acquisition if it is consummated,
among other ways, pursuant to a merger or plan of share exchange effected in
compliance with the statutory merger provisions (including satisfaction of
board and shareholder approval requirements) of Nebraska Law.
Section 21-2452 of the Nebraska Statutes is also applicable to Aliant.
This statute restricts certain business combinations with an interested
shareholder, who is defined to include a person who owns in excess of 10% of
the voting shares of the corporation, with the exception of persons who owned
in excess of 10% of the voting shares prior to April 9, 1988 and who have not
since increased their proportionate voting power (hereafter a "Section 21-2452
Interested Shareholder"). Section 21-2452 prohibits certain "business
combinations" (defined below) between a publicly held Nebraska corporation and
any Section 21-2452 Interested Shareholder for a period of five years after
such shareholder's acquisition, unless the board of directors of the
corporation approves the transaction prior to the date the Section 21-2452
Interested Shareholder first became an interested shareholder. "Business
combination" is 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 or the aggregate market value of the
outstanding stock of the corporation, and certain transactions that would
increase a Section 21-2452 Interested Shareholder's proportionate share
ownership in the corporation.
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The Aliant board has rendered Sections 21-2451 and 21-2452 inapplicable
to the approval, execution and delivery of the merger agreement and the
consummation of the transactions contemplated thereby, including the merger.
Except for these statutory restrictions and the 70% vote requirement set forth
in the Aliant Articles (see "-- Vote on Extraordinary Transactions"), no other
anti-takeover, fair price or control share acquisition statute, regulation,
charter provision or by-law applies to Aliant.
Delaware Anti-Takeover Statute. Like Section 21-2452 of the Nebraska
Statutes described above, Section 203 of Delaware Law restricts business
combinations with certain interested shareholders (defined under the Delaware
statute to include 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 Shareholder"). Section 203,
which applies to ALLTEL, prohibits business combination transactions (defined
substantially the same as Section 21-2452 of the Nebraska Statutes, as
described above) between a publicly held Delaware corporation and any Section
203 Interested Shareholder for a period of three years after the date on which
the Section 203 Interested Shareholder became an interested shareholder, 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 Shareholder becoming an interested shareholder, (b) upon
consummation of the transaction which resulted in the Section 203 Interested
Shareholder becoming an interested shareholder, the Section 203 Interested
Shareholder 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 shareholders, 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 Shareholder.
Unlike Section 21-2451 of the Nebraska Statutes described above, Delaware
Law does not contain any provisions restricting the voting power of acquiring
persons following a "control share acquisition."
Fair Price Provisions. In addition to the provisions of Section 203, the
ALLTEL Certificate contains certain "fair price" provisions which impose
further conditions on the consummation of business combination transactions.
The ALLTEL Certificate requires 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 to approve all Section 203 Business
Combinations involving ALLTEL and a Section 203 Interested Shareholder; unless
(a) after becoming a Section 203 Interested Shareholder, such person 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 Shareholder, (ii) the Section 203 Interested Shareholder shall not
have acquired newly issued securities for ALLTEL (except in certain limited
circumstances) and (iii) the Section 203 Interested Shareholder 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 Shareholder becoming an interested shareholder, and (b)
certain minimum price and other procedural requirements are met in connection
with the proposed transaction with the Section 203 Interested Shareholder. The
term "ALLTEL Continuing Directors" is defined as any person who was a member of
the ALLTEL board and elected by shareholders prior to the time when the Section
203 Interested Shareholder 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 ALLTEL Fair Price Provision or
ALLTEL Certificate, would preclude the holders of a controlling interest from
exercising control over ALLTEL and would not prevent a
59
<PAGE>
hostile acquisition of control of ALLTEL, such provisions may have the effect
of discouraging or making more difficult a hostile acquisition of control.
Rights of Appraisal
Under both Nebraska Law and Delaware Law, shareholders may exercise a
right to dissent from certain corporate action and obtain payment of the fair
value of their shares. This remedy is an exclusive remedy, except where the
corporate action involves fraud or illegality.
Delaware Law provides appraisal rights only in certain mergers or
consolidations and not (unless the certificate of incorporation of a
corporation so provides, which the ALLTEL Certificate does not) for a sale or
transfer of all or substantially all of a corporation's assets or an amendment
to its certificate of incorporation. Moreover, Delaware Law does not provide
appraisal rights in connection with a merger or consolidation (unless the
certificate of incorporation so provides, which the ALLTEL Certificate does
not) to the holders of shares of a constituent corporation listed on 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 shareholders, 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, Delaware Law denies appraisal rights
if the shareholders of the surviving corporation in a merger did not have to
vote to approve the merger.
Under Nebraska Law, the categories of transactions subject to dissenters'
rights are broader than those enumerated in Delaware Law. A shareholder of a
Nebraska corporation may exercise dissenter's rights in connection with an
amendment to the articles of incorporation which materially and adversely
affect the rights or preferences of shares held by the dissenting shareholder,
a sale or exchange of all or substantially all of the corporation's property
not in the usual course of business if the shareholder is entitled to vote on
the sale or exchange, a plan of merger for which shareholder approval is
required, a plan of exchange involving the acquisition of the corporation's
shares if the shareholder is entitled to vote on the plan, and any corporate
action taken pursuant to a shareholder vote to the extent the articles, by-laws
or board resolutions provide for such rights. Aliant common stock shareholders
will have appraisal rights in connection with the merger. See "THE MERGER --
Dissenters' Rights."
Special Redemption Provisions
Under Nebraska Law a corporation may acquire its own shares by purchase
or redemption, subject to the requirement that at the time of the purchase or
redemption, the corporation's total assets shall not be less than the sum of
its total liabilities, plus the amount that would be needed, (assuming the
corporation were to be dissolved at the time of the declaration or payment) to
satisfy the preferential rights of any shareholders that are superior to the
rights of the holders whose shares are being purchased or redeemed.
Under Delaware Law, a corporation may purchase or, if 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.
Preemptive Rights
Unless specifically provided for in a corporation's certificate of
incorporation, neither Nebraska Law nor Delaware Law provide for shareholder
preemptive rights. Neither the Aliant Articles, nor the ALLTEL Certificate,
provides for preemptive rights.
60
<PAGE>
Limitation of Liability
Nebraska Law allows the articles of incorporation to eliminate or limit
the liability of a director to a corporation or its shareholders from monetary
damages for any action taken as a director, except for (a) liability for the
amount of a financial benefit the director received to which the director is
not entitled, (b) an intentional infliction of harm on the corporation or the
shareholder, (c) an intentional authorization of unlawful distributions or (d)
an intentional violation of criminal law. The Aliant Articles do not currently
limit or eliminate directors' liability in any manner.
Section 102(b)(7) of Delaware Law allows a Delaware corporation to limit
or eliminate the personal liability of directors to a corporation and its
shareholders for monetary damages for breach of fiduciary duty as a director,
subject to certain limitations. The ALLTEL Certificate provides 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
Under Nebraska Law, a corporation is required to indemnify a director or
officer of a corporation against expenses actually and reasonably incurred in
connection with the successful defense of certain proceedings, provided that,
such person is wholly successful in such defense. Nebraska Law also permits a
corporation to indemnify its directors and officers for liabilities incurred in
connection with services performed by said director or officer in good faith
and in a manner reasonably believed to be in or not opposed to the best
interest of the corporation. Nebraska Law also permits a corporation to
indemnify its employees and agents. Pursuant to the Aliant By-laws Aliant has
provided for indemnification of officers and directors of Aliant to the fullest
extent provided by Nebraska law. The merger agreement requires ALLTEL to
maintain such indemnification in favor of Aliant's directors and officers
following the effective time of the merger. See "THE MERGER AGREEMENT --
Interests of Certain Persons in the Merger."
Section 145 of Delaware Law 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, 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 ALLTEL Certificate provides for indemnification of officers
and directors to the fullest extent permitted by Section 145 of Delaware Law.
Liquidation Rights
The rights of the holders of Aliant common stock upon the liquidation or
dissolution of Aliant 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."
61
<PAGE>
Amendment to Certificate of Incorporation
Nebraska Law provides that a corporation's articles of incorporation may
be amended by a resolution of the board of directors and the affirmative vote
of at least two-thirds of the shares entitled to vote, unless the articles of
incorporation require a greater vote. Under Nebraska Law, holders of the
outstanding shares of a class are entitled to vote as a separate voting group
if, among other things, the amendment would (a) alter the number of authorized
shares of the class, (b) effect an exchange or reclassification of all or part
of the share into another class or (c) otherwise change the rights, preferences
or limitations of the shares in a class. The Aliant Articles do not alter these
provisions.
Under Delaware Law, 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 Delaware Law, 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 ALLTEL Certificate, the affirmative vote of the holders of a 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
shareholders by a majority of the members of the ALLTEL board and two-thirds of
the ALLTEL Continuing Directors.
Amendment to By-laws
The Aliant By-laws may each be altered, amended or repealed by the
shareholders of Aliant, or by the Aliant board; except that no change in the
time or place for the election of directors shall be made within 60 days prior
to the date on which the next election of directors is to be held, and in the
case of such change, notice thereof must be given to each shareholder at least
20 days prior to such date. New by-laws may also be adopted by the shareholders
of Aliant or the Aliant board. An alteration, amendment or repeal of the Aliant
By-laws or the adoption of new by-laws, can be effected at any annual meeting
of shareholders, any meeting of the Aliant board or at any special meeting of
the shareholders of Aliant.
The ALLTEL By-laws may each be altered, amended or repealed by the
shareholders of ALLTEL, or by the ALLTEL board and new by-laws may also be
adopted by the shareholders of ALLTEL or the ALLTEL board. The alteration,
amendment or repeal of the ALLTEL By-laws or the adoption of new by-laws, can
be effected at any annual meeting of shareholders, any meeting of the ALLTEL
board or at any special meeting of the shareholders of ALLTEL.
62
<PAGE>
ELECTION OF ALIANT DIRECTORS
(Proposal Two)
General
The Aliant by-laws provide for three classes of directors with staggered
terms of office and provide that upon expiration of the term of office for a
class of directors, nominees for that class shall be elected for a term of
three years. At the annual meeting of Aliant, Duane W. Acklie, John Haessler,
William C. Smith and Lyn Wallin Ziegenbein are nominees for re-election as
directors for terms expiring at the earlier of the closing of the merger, the
date of Aliant's 2002 annual meeting of shareholders or such time as their
respective successors are elected and qualified.
Aliant has no reason to believe that any nominee will refuse to act or be
unable to accept election. However, in such event and if any other unforeseen
contingency should arise, it is the intention of the persons named in such
accompanying form of proxy to vote for other nominees selected by the Aliant
board in accordance with their best judgment.
The following table sets forth certain information, as of [February 28,
1999], about each director, including each person's business experience for the
past five years, and presents certain information for all present executive
officers and directors as a group.
The Aliant board unanimously recommends that the shareholders of record
of Aliant common stock vote for all nominees.
Nominees for Term to Expire in 2002
DUANE W. ACKLIE; Director since 1983; Age 67; Lincoln, Nebraska. Mr. Acklie is
Chairman of Crete Carrier Corporation (a motor carrier) of Lincoln, Nebraska,
and has held such position since 1991.
JOHN HAESSLER; Director since 1993; Age 62; Lincoln, Nebraska. Mr. Haessler is
President and Chief Executive Officer of Woodmen Accident and Life Company of
Lincoln, Nebraska, and has held such position since 1986. (See Note 1 below.)
WILLIAM C. SMITH; Director since 1983; Age 65; Lincoln, Nebraska. Mr. Smith
retired in 1989 from the position of Chairman and Chief Executive Officer of
FirsTier Financial, Inc. of Omaha, Nebraska, a position which he had held since
1988. Mr. Smith is currently self-employed in business and financial
consulting.
LYN WALLIN ZIEGENBEIN; Director since 1992; Age 46; Omaha, Nebraska. Mrs.
Ziegenbein is Executive Director of the Peter Kiewit Foundation of Omaha,
Nebraska, and has held such position since 1983.
Present Term Expires in 2000
WILLIAM W. COOK, JR.; Director since 1981; Age 62; Beatrice, Nebraska. Mr. Cook
is Chairman and Chief Executive Officer of Beatrice National Bank & Trust Co.,
of Beatrice, Nebraska, and has held such position since 1993. He was President
and Chief Executive Officer of such Company from 1971 to 1997.
CHARLES N. WHEATLEY; Director since 1993; Age 48; Chicago, Illinois. Mr.
Wheatley is President and Chief Executive Officer of Sahara Enterprises, Inc.
(a diversified holding company) and has held such position since July, 1992.
Mr. Wheatley is also a Director of Sahara Enterprises, Inc.
THOMAS C. WOODS, III; Director since 1979; Age 53; Lincoln, Nebraska. Mr. Woods
is Chairman of the Board of Aliant and its principal subsidiary, Aliant
Communications Co. He has been Aliant's Chairman of the Board since April 1993.
Mr. Woods is also a director of Sahara Enterprises, Inc.
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<PAGE>
Present Term Expires in 2002
CHARLES R. HERMES; Director since 1992; Age 56; Hastings, Nebraska. Mr. Hermes
is President of Dutton-Lainson Company (wholesale electrical and plumbing
supplies, and a manufacturer of hardware and marine specialties) of Hastings,
Nebraska, and has held such position since 1974.
FRANK H. HILSABECK; Director since 1990; Age 54; Lincoln, Nebraska. Mr.
Hilsabeck is President and Chief Executive Officer of Aliant, is President of
its principal subsidiary, Aliant Communications Co., and is Chairman of the
Board of its other subsidiaries, Aliant Cellular Inc., Aliant Systems Inc.,
Aliant Midwest Inc., Aliant Network Services Inc., Aliant Wireless Holdings
Inc., and Prairie Communications, Inc. He has been Aliant's President and Chief
Executive Officer since May 1993.
PAUL C. SCHORR, III; Director since 1973; Age 62; Lincoln, Nebraska. Mr. Schorr
is President and Chief Executive Officer of ComCor Holding Incorporated (an
electrical contractor specializing in construction consulting services) of
Lincoln, Nebraska, and has held such position since 1989. Mr. Schorr is also
Chairman and Chief Executive Officer of Austins Steaks & Saloon, Inc.
JAMES W. STRAND; Director since 1990; Age 52; Lincoln, Nebraska. Mr. Strand is
President-Diversified Operations of Aliant, Executive Vice President-Marketing
and Customer Services of its principal subsidiary, Aliant Communications Co.,
and is President of its subsidiaries, Aliant Cellular Inc., Aliant Midwest
Inc., Aliant Network Services Inc., Aliant Wireless Holdings Inc., and Prairie
Communications, Inc. He has been Aliant's President-Diversified Operations
since May 1990.
- -----------------------
Note 1. Woodmen Accident and Life Company is the insurer from which Aliant and
its principal subsidiary, Aliant Communications Co., purchase key man life
insurance and employee group life insurance. The total net premiums paid for
such insurance coverages in 1998 were $1,579,874.94. Aliant believes that the
rates paid for such insurance are comparable to market rates.
Board of Directors and Committee Meetings
During 1998, eight meetings of the Aliant board were held. All directors
attended at least 75% of the aggregate of the meetings of the Aliant board and
the meetings of all Committees thereof on which they serve. Aliant has no
standing nominating committee, but does have the following three standing
committees:
Executive Committee. The Executive Committee, in accordance with By-Law
17 of Aliant's By- laws, and subject to the limitations of the Nebraska Law,
possesses and may exercise all powers of the Aliant Board. The Executive
Committee met one time during 1998. Executive Committee members during 1998
were: Frank H. Hilsabeck, Chairman; William W. Cook, Jr.; Paul C. Schorr, III;
and William C. Smith.
Audit Committee. The Audit Committee recommends the independent auditors
for Aliant to the full Aliant board, reviews the scope of the audit and
approves the fees for the auditors. In addition, the Audit Committee reviews
the work of Aliant's Internal Audit Section. The Audit Committee met four times
during 1998. Audit Committee members during 1998 were: Charles R. Hermes,
Chairman; Terry L. Fairfield (resigned as director effective December 14,
1998); and John Haessler.
Executive Compensation Committee. The Executive Compensation Committee
reviews and makes recommendations to the full Aliant board for compensation
levels of Aliant's officers and administers the 1989 Stock and Incentive Plan
in which executive officers and other key employees participate. The Executive
Compensation Committee met five times during 1998. The Executive Compensation
Committee members during 1998 were: Duane W. Acklie, Chairman; Paul C. Schorr,
III; Charles N. Wheatley; and Lyn Wallin Ziegenbein.
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<PAGE>
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of March 1, 1999 regarding
the only persons or entities known by Aliant, based on Schedule 13G filings
with the Securities and Exchange Commission, to own more than 5% of Aliant's
common stock. Except as otherwise indicated below, the entity owns such Aliant
common stock directly with sole investment and sole voting power.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
<S> <C> <C>
Sahara Enterprises, Inc.(/1/) 3,176,776 8.9%
Suite 2000
Three First National Plaza
Chicago, IL 60602
</TABLE>
(1) Reference should be made to the table and footnotes thereto under
"Security Ownership of Management" on pages 65 and 66, especially the
information concerning beneficial ownership of shares by Messrs. Woods
and Wheatley.
Information is as of February 28, 1999 (except that the percentage has
been calculated based on the number of shares outstanding as of the
record date of this meeting) and is from the Schedule 13G filed with the
Securities and Exchange Commission on January 31, 1998.
Security Ownership of Management
Set forth below is a tabulation indicating as of February 28, 1999, the
shares of Aliant's common stock beneficially owned by each director and
nominee, each of the named executive officers, and directors and executive
officers of Aliant as a group.
<TABLE>
<CAPTION>
Name of
Beneficial Amount and Nature of Percent
Owner Principal Position Beneficial Ownership of Class
- ---------- ------------------ -------------------- --------
(Note 1)
<S> <C> <C> <C> <C>
Thomas C. Chairman of the Board 42,144 Direct 9.1%
Woods, III and Director 3,248,795 Indirect* Note 3
Frank H. President & Chief Executive 34,298 Direct Note 2
Hilsabeck Officer and Director 545 Indirect
James W. President-Diversified Operations 12,936 Direct Note 2
Strand and Director 6,565 Indirect*
Robert L. Senior Vice President- 15,148 Direct Note 2
Tyler Chief Financial Officer 4,753 Indirect*
Bryan C. Vice President- 11,635 Direct Note 2
Rickertsen Technology 2,048 Indirect*
Michael J. Vice President- 11,942 Direct Note 2
Tavlin Treasurer and Secretary 4,109 Indirect*
Duane W. Director 132,007 Direct Note 2
Acklie 61,950 Indirect*
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent
Beneficial Owner Principal Position Beneficial Ownership of Class
---------------- ------------------ -------------------- --------
(Note 1)
<S> <C> <C> <C>
William W. Cook, Jr. Director 7,233 Direct Note 2
12,002 Indirect*
John Haessler Director 7,000 Direct Note 2
None Indirect
Charles R. Hermes Director 2,000 Direct Note 2
34,692 Indirect*
Paul C. Schorr, III Director 1,961 Direct Note 2
25,778 Indirect*
William C. Smith Director 2,400 Direct Note 2
None Indirect
Charles N. Wheatley Director None Direct 9.1%
3,229,384 Indirect* Note 3
Lyn Wallin Ziegenbein Director 4,000 Direct Note 2
10 Indirect*
All Directors and TOTAL 3,727,759** 10.5%
Executive Officers As a Group
(15 persons)
</TABLE>
*Includes shares held by individual's spouse, held by the individual in
custodianship for minor children, or held by a corporation with which the
individual is affiliated, and to the extent listed as owned by the director or
named executive officer should not be construed as an admission of beneficial
ownership.
**Total shares and percent of class ownership do not reflect the cumulative
effect of beneficial ownership by Messrs. Woods and Wheatley of shares held of
record by Sahara Enterprises, Inc. (See Note 3 below.)
Note 1. Approximate number of shares of common stock owned, directly or
indirectly, as of February 28, 1999. This information has been furnished by
each director or officer. Also includes all short-term incentive awards of
restricted stock of Aliant under the 1989 Stock and Incentive Plan and any
long-term incentive awards of stock options under the Plan which are
exercisable within 60 days of the date hereof.
Note 2. Owns less than one percent of outstanding Aliant common stock.
Note 3. The shares of Aliant common stock shown as indirectly owned by Messrs.
Woods and Wheatley are held as follows: 3,176,776 shares included in each
individual's indirect ownership total were held of record by Sahara
Enterprises, Inc., as of February 28, 1999. Messrs. Woods and Wheatley each
serve as Directors and Mr. Wheatley serves as President and Chief Executive
Officer of Sahara Enterprises, Inc. The balance of Mr. Woods' indirect
ownership is held by his spouse or consists of shares held by him as trustee of
various Woods family trusts. The balance of Mr. Wheatley's indirect ownership
consists of shares held by him as trustee of various Woods family trusts.
66
<PAGE>
Executive Compensation
The summary compensation table appearing below shows the compensation for
the past three years for each of Aliant's five most highly compensated
executive officers, including Aliant's chief executive officer.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
-------------------- -----------------------------------
Number of
Restricted Securities All Other
Bonus Stock Underlying Stock Compensation
Name and Principal Position Year Salary($) ($)(1) ($)(2) Options (#)(3) ($)(4)
- --------------------------- ---- ---------- --------- --------------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Frank H. Hilsabeck 1998 355,000 120,032 119,968 22,500 4,800
President & Chief 1997 324,000 84,009 83,991 16,400 4,800
Executive Officer 1996 300,000 45,001 44,999 17,900 4,500
and Director
James W. Strand 1998 236,000 55,806 55,794 13,500 4,800
President-Diversified 1997 216,000 36,013 35,987 8,200 4,800
Operations 1996 200,000 19,812 19,788 8,950 4,500
and Director
Robert L. Tyler 1998 175,000 35,402 35,398 9,000 4,800
Senior Vice President- 1997 162,000 24,030 23,970 5,350 4,800
Chief Financial Officer 1996 150,000 13,208 13,192 5,800 4,500
Bryan C. Rickertsen 1998 159,000 32,427 32,373 6,500 4,770
Vice President- 1997 135,000 19,802 19,798 3,750 4,050
Technology 1996 125,000 10,200 10,200 4,100 3,750
Michael J. Tavlin 1998 119,000 19,817 19,792 4,500 3,570
Vice President-Treasurer 1997 113,000 13,223 13,177 3,150 3,390
and Secretary 1996 113,000 7,036 7,004 3,700 3,390
</TABLE>
(1)Aliant's option and incentive plan is administered by the Executive
Compensation Committee of the Aliant board, and permits the award of short-term
incentives, stock options, stock appreciation rights and restricted stock. The
bonus amounts shown reflect the cash bonus amounts paid pursuant to the short-
term incentive feature of the option and incentive plan attributable to the
fiscal years of Aliant shown. The shareholders of Aliant common stock approved
the option and incentive plan on April 26, 1989.
(2)Pursuant to the terms of the option and incentive plan, a participant may
elect to receive up to forty percent (40%) of the amount of any short-term
incentive award in restricted stock of Aliant. Each of the listed individuals
has elected to receive the maximum amount. The number of such shares awarded
was based upon the closing price of Aliant common stock as of December 31,
1996, and December 31, 1997, and December 31, 1998, respectively. In order to
promote ownership of Aliant common stock, the Executive Compensation Committee
in each year has increased the number of shares awarded by a multiple of 1.5.
The dollar value of the restricted stock awards are attributable to Aliant's
fiscal year as indicated. The number of shares of restricted stock awarded and
values thereof for each named executive officer and the aggregate value as of
December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Number of Restricted Shares
------------------------------------------------------
Aggregate
Name 1996 Award 1997 Award 1998 Award Value
---- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Mr. Hilsabeck 2,647 2,677 2,935 $337,587
Mr. Strand 1,164 1,147 1,365 150,256
Mr. Tyler 776 764 866 98,345
Mr. Rickertsen 600 631 792 82,690
Mr. Tavlin 412 420 484 53,792
Totals 5,599 5,639 6,442 $722,670
</TABLE>
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<PAGE>
The restrictions against sale, transfer, pledge or assignment of the
restricted stock will lapse, and the awards have vested or will vest as
follows: 1996 Awards -- January 29, 1999; and 1997 Awards -- January 30, 2000,
and 1998 Awards -- January 31, 2001. Restrictions will lapse sooner if the
participant dies, becomes disabled, retires or the merger is effected. See "THE
MERGER -- Interests of Certain Persons in the Merger."
Dividends are paid during the period of restriction on the shares of
restricted stock to the executive officer holding such shares and their voting
rights may be exercised by the executive officer.
(3)The options shown for 1996 were awarded on July 1, 1996, the options
awarded for 1997 were awarded on July 1, 1997, and the options awarded for 1998
were awarded on July 1, 1998. The awards were not attributed to any past
performance.
(4)Aliant maintains a 401(k) Savings and Stock Ownership Plan for the benefit
of its employees, including the named executive officers. Pursuant thereto
Aliant (a) has contributed 1.75% of the employee's base salary in the form of
Aliant's common stock for the employee's benefit (to the following maximum base
salary amounts: 1996 -- $150,000.00, 1997 -- $160,000.00, and 1998 --
$160,000.00); and (b) has contributed on a matching basis, at the rate of
0.25% for each 1.00% of the employee's salary contributed to the 401(k)
account, up to a maximum of 1.25% of such salary contribution. Such match is
also made in shares of Aliant common stock.
Option Grants in 1998
The following table represents certain information as to grants of options to
purchase Aliant common stock made to each of the named executive officers
during 1998 pursuant to the 1989 option and incentive plan.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for Option
Individual Grants Grant Term(1)
------------------------ ---------------------------
Number of Percentage of
Securities Total Options At 5% At 10%
Underlying Granted to Exercise of Annual Annual
Options Employees in Base Price Expiration Growth Growth
Name Granted Fiscal Year ($/share) Date Rate Rate
<S> <C> <C> <C> <C> <C> <C>
Frank H. Hilsabeck 22,500 32.1% $27.00 7/1/08 382,050.68 968,197.05
James W. Strand 13,500 19.3% 27.00 7/1/08 229,230.41 580,918.23
Robert L. Tyler 9,000 12.9% 27.00 7/1/08 152,820.27 387,278.82
Bryan C. Rickertsen 6,500 9.3% 27.00 7/1/08 110,370.20 279,701.37
Michael J. Tavlin 4,500 6.4% 27.00 7/1/08 76,410.14 193,639.41
</TABLE>
(1)This presentation is intended to disclose the potential value that would
accrue to the optionee if the option were exercised the day before it would
expire and if the per share value had appreciated at the compounded annual rate
indicated in each column. The assumed rates of appreciation of 5% and 10% are
prescribed by the rules of the Securities and Exchange Commission regarding
disclosure of executive compensation. The assumed annual rates of appreciation
are not intended to forecast possible future appreciation, if any, with respect
to the price of Aliant common stock.
(2)The options to purchase Aliant common stock reflected in the table (which
are nonstatutory stock options for purposes of the Code, as amended), were
granted on July 1, 1998 effective July 1, 2002. The options are subject to
early vesting in the case of the optionee's death, disability or retirement or
a change of control (as defined in the option plan) of Aliant (including the
consummation of the merger).
68
<PAGE>
Option Exercises in Fiscal 1998 and Fiscal 1998 Year-End Option Values
Aliant's option plan which was approved by its shareholders and pursuant
to which options to purchase shares of Aliant common stock have been granted to
officers and other key employees of Aliant and its subsidiaries in the past.
The following table sets forth information concerning the exercise of stock
options by each of the named executive officers during the 1998 fiscal year,
the number of unexercised options existing at the end of the year 1998 each of
the named executive officers and the 1998 year-end value of unexercised
options.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at 12/31/98(#) at 12/31/98($)
------------------------- -------------------------
Shares
Acquired on Value
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank H. Hilsabeck 0 0 0 73,150 0 1,489,006
James W. Strand 0 0 0 39,050 0 781,206
Robert L. Tyler 0 0 0 25,600 0 510,663
Bryan C. Rickertsen 0 0 0 16,250 0 314,631
Michael J. Tavlin 0 0 0 14,900 0 304,776
</TABLE>
Pension Plan Table
The following table illustrates the annual pension plan benefit provided
by Aliant's Plan for Employees' Pensions, as supplemented by the Executive
Benefit Plan for eligible executive employees, upon retirement at age 65,
assuming no optional forms of benefit have been elected. The Plan for
Employees' Pensions is not integrated with social security and is maintained
for all employees.
Estimated Annual Pension at Normal Retirement
Age for Representative Years of Credited Service
<TABLE>
<CAPTION>
Highest 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years 50 Years
Consecutive Service Service Service Service Service Service Service Service
Five-Year (34.875 (52.0 (59.375 (67.00 (74.875 (82.00 (89.125 (96.25
Average Percent Percent Percent Percent Percent Percent Percent Percent
Compensation Factor) Factor) Factor) Factor) Factor) Factor) Factor) Factor)
- ------------ -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 90,000 $ 31,388 $ 46,800 $ 53,438 $ 60,300 $ 67,388 $ 73,800 $ 80,213 $ 86,625
120,000 41,850 62,400 71,250 80,400 89,850 98,400 106,950 115,500
150,000 52,313 78,000 89,063 100,500 112,313 123,000 133,688 144,375
180,000 62,775 93,600 106,875 120,600 134,775 147,600 160,425 173,250
210,000 73,238 109,200 124,688 140,700 157,238 172,200 187,163 202,125
240,000 83,700 124,800 142,500 160,800 179,700 196,800 213,900 231,000
270,000 94,163 140,400 160,313 180,900 202,163 221,400 240,638 259,875
300,000 104,625 156,000 178,125 201,000 224,625 246,000 267,375 288,750
330,000 115,088 171,600 195,938 221,100 247,088 270,600 294,113 317,625
360,000 125,550 187,200 213,750 241,200 269,550 295,200 320,850 346,500
390,000 136,013 202,800 231,563 261,300 292,013 319,800 347,588 375,375
</TABLE>
Compensation covered by the pension plan is a participant's salary, as
shown in the Summary Compensation Table on page 67 (whether or not such
compensation has been deferred at participant's election). Benefits are based
on a participant's average compensation for five consecutive years, or, in the
case of a participant who has been employed for less than five full years, the
period of his employment
69
<PAGE>
covered by the pension plan. Under the pension plan, only salary as shown in
the Summary Compensation Table up to the limits imposed by the Internal Revenue
Code is taken into account. The 1998 compensation limit applicable to the
pension plan is $160,000.00.
Included in the information reflected in the above table are the
supplemental retirement benefits which Aliant provides pursuant to an Executive
Benefit Plan for the benefit of Messrs. Hilsabeck, Strand, Tyler, Rickertsen,
Tavlin, and certain other executive officers. The Executive Benefit Plan also
provides pre-retirement death benefits and long-term disability benefits.
Pension benefits which exceed the limitations imposed by the Internal Revenue
Code are payable under the Executive Benefit Plan. All pension benefits payable
under the Executive Benefit Plan will be paid outside the pension plan as an
operating expense.
The named executive officers have the following years of service with
Aliant and Aliant Communications Co. as of December 31, 1998: Frank H.
Hilsabeck, 31 years; James W. Strand, 25 years; Robert L. Tyler, 39 years;
Bryan C. Rickertsen, 19 years; and Michael J. Tavlin, 12 years.
Compensation of Directors
Full-time officers of Aliant or its subsidiaries do not receive
additional compensation for serving as members of the Aliant board or the
Boards of Directors of its subsidiaries. No additional compensation is paid if
a full-time officer serves on any committee of such Boards of Directors.
Effective April 26, 1995, non-employees serving as members of the Aliant
board are paid:
. an annual retainer of $8,400, paid in monthly installments of
$700;
. an additional fee of $700 for attendance at each meeting of the
Aliant board;
. an additional fee of $1,000 for attendance at any meeting of a
Board Committee by the Committee Chairman;
. an additional fee of $700 for attendance at any meeting of a Board
Committee by other Committee members; and
. reimbursement of expenses incurred in connection with such
meetings.
Total fees paid to Directors in 1998 were $174,700.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Aliant has agreements with Messrs. Hilsabeck, Strand, Tyler, Rickertsen,
and Tavlin which provide that the named executive officer is entitled to
benefits if, after a change in control (as defined), such executive officer's
employment is ended through:
. termination by Aliant other than by reason of death or disability
or for cause (as defined); or
. termination by the executive officer following the first
anniversary of the change in control or due to a breach of the
agreement by Aliant or a significant adverse change in his
responsibilities.
As used in such agreements, (a) "change in control" means (i) if any
person is or becomes a thirty percent (30%) beneficial owner of Aliant or (ii)
a change in a majority of the members of the Aliant board
70
<PAGE>
over a two consecutive year period; and (b) "cause" means termination of an
executive's employment by Aliant after a change in control based upon willful
and intentional conduct causing serious injury to Aliant, conviction for a
felony or willful and unreasonable neglect or refusal to perform the
executive's duties. The benefits provided are: (a) a cash termination payment
of up to three times the sum of executive officer's annual salary and his
highest annual bonus during the three years before the termination and (b)
continuation of equivalent hospital, medical, dental, accident, disability and
life insurance coverage as in effect at the termination. The agreements provide
that if any portion of the benefits under the agreements or under any other
agreement would constitute an "excess parachute payment" for purposes of the
Internal Revenue Code of 1986 (the "Code"), benefits are reduced so that the
executive officer is entitled to receive $1.00 less than the maximum amount
which he can receive without becoming subject to the 20% excise tax imposed by
the Code or which Aliant may pay without loss of deduction under the Code.
In accordance with agreements pursuant to Aliant's Executive Benefit
Plan, in the event of a change in control of Aliant, entitlement to benefits
payable to the named executive officers shall become vested, provided that such
employees shall comply with specified non-competition and confidentiality
requirements of such agreements. The vested amount shall equal 25% of average
final compensation irrespective of the employee's net credited service on the
date of employee's retirement. If after the change of control the employee's
employment is terminated for reasons other than death or retirement, the vested
25% of average final compensation shall be payable on the later of his
attaining age 60 or his date of termination.
Executive Compensation Committee Report on Executive Compensation
The Executive Compensation Committee of the board is responsible for all
aspects of Aliant's compensation package offered to its corporate officers,
including the named executive officers. The following report was approved by
members of the Executive Compensation Committee.
Compensation Policies. Aliant's principal executive compensation
objective is to compensate executive officers in a manner that will attract and
retain the services of an outstanding management team and provide incentives to
motivate superior performance by key employees. In light of that objective, the
Executive Compensation Committee of the Aliant board, which also serves as the
Executive Compensation Committee for Aliant Communications Co. (the principal
subsidiary of Aliant), has approved a compensation program for Aliant's
executive officers consistent with the policies described below.
To attract and retain employees, Aliant's compensation program provides a
base salary and an overall compensation package that are intended to be
competitive and are based upon the following factors. First, the Executive
Compensation Committee reviews the financial performance of Aliant as compared
to the peer group of telecommunications companies (as shown in the Performance
Graph on page 73 which graphically illustrates returns on investment by Aliant
shareholders over a five-year period, including reinvestment of dividends).
Second, the Executive Compensation Committee reviews competitive, legislative,
regulatory and operational issues which Aliant has faced during the past fiscal
year, or will face during the ensuing fiscal year. In its discussions, the
Executive Compensation Committee evaluates the proactive and reactive actions
of the executive officers concerning these first two factors and subjectively
incorporates the evaluation into its compensation decisions. Third, and most
important to the Executive Compensation Committee's considerations, the
Executive Compensation Committee considers surveys of executive compensation
obtained from available sources. Such surveys take into account both the
telecommunications industry and other industries nationwide. The surveys
include mid-sized telecommunications companies in Aliant's peer group, as well
other similarly sized companies in telecommunications or related industries.
The 1997 and 1998 surveys indicated that the compensation of Aliant's chief
executive officer was significantly below the mid-point of the survey results
after giving consideration to the size of Aliant compared to the size of the
companies in the survey. Certain other officers were also below the mid-point
of the survey results. The Committee's actions concerning 1998 salary level
adjustments for these officers included steps to more closely align the salary
of the chief executive officer and other Aliant officers with the mid-point of
the survey results.
71
<PAGE>
To provide incentives to motivate performance, Aliant's executive
compensation program establishes a direct relationship between compensation and
Aliant's performance and encourages executives to acquire an ownership interest
in Aliant. Pursuant to the provisions of the plan, eligible executives, who
have been chosen in advance by the Executive Compensation Committee, receive a
portion of their compensation in the form of incentive awards ("Short-Term
Incentive Awards"). The amounts of such Short-Term Incentive Awards are
established in accordance with goals for growth in earnings before interest,
income taxes, depreciation and amortization ("EBITDA") as pre-determined by the
Executive Compensation Committee. The minimum EBITDA growth required to award
short-term incentive for 1998 was 9.2%. In 1998, Aliant's EBITDA growth yield
yielded an aggregate short-term incentive pool of $620,000 or 34% of composite
salaries for eligible executives. The portion of such incentive pool received
by an executive is based on his or her position of responsibility and
individual performance.
Further, to align the interests of executives with shareholder interests
and to provide a means for the acquisition of an ownership interest in Aliant,
executives are encouraged to elect to receive up to 40% of the cash portion of
the Short-Term Incentive awards in restricted stock of Aliant. If such an
election is made, the Executive Compensation Committee determined 1.5 to be an
appropriate multiple to be applied to the stock portion of the award to
incentive ownership in view of its objective to increase ownership of Aliant's
common stock and the two-year period of transfer restrictions applicable to
restricted stock. Finally, the Executive Compensation Committee may grant stock
options under the Plan to key employees in amounts that are competitive based
upon market considerations, which are exercisable after three years.
Chief Executive Officer Compensation. The compensation for Mr. Frank H.
Hilsabeck, President and Chief Executive Officer, reported for 1998 reflects
the application of the policies described above.
Mr. Hilsabeck also received a Short-Term Incentive Award for 1998. On
February 18, 1998, the Executive Compensation Committee adopted performance
goals for Aliant for 1998 for purposes of Aliant's Short-Term Incentive Awards.
As a result of Aliant's growth in EBITDA and his performance in 1998,
Mr. Hilsabeck received a Short-Term Incentive award of $200,000 or
approximately 32.3% of the aggregate award.
Consistent with Aliant's desire to encourage stock ownership in Aliant,
Mr. Hilsabeck elected to receive restricted stock pursuant to the Plan to the
maximum permitted of 40% of the Short-Term Incentive award. The Executive
Compensation Committee had previously determined to increase the value of the
portion of the award used for the granting of restricted stock by a multiple of
1.5, thereby enabling Mr. Hilsabeck to receive restricted stock with a value of
$119,968, as well as a cash award of $120,032. As of December 31, 1998, Mr.
Hilsabeck held unvested restricted stock with an aggregate value of $337,587,
including the 1998 award.
Mr. Hilsabeck also participated in other employee benefit plans available
to other executive officers during 1998, which the Executive Compensation
Committee believes are competitive, including the Pension Plan, Executive
Benefit Plan, the 401(k) Savings and Stock Ownership Plan and life and health
insurance programs.
Internal Revenue Code Section 162(m). Section 162(m) of the Code
eliminates, subject to certain exceptions, the deductibility of executive
compensation to the extent that any executive's compensation for any year
exceeds $1 million. Exceptions to amounts included in executive compensation
for purposes of Section 162(m) involve various types of performance-based
compensation. As noted above, it is the Executive Compensation Committee's
policy to base a substantial amount of executive compensation on Aliant's
performance. Currently the cash compensation levels for Aliant's executive
officers fall significantly below $1 million. In the event that in the future
the annual remuneration of any executive of Aliant approaches $1 million, the
Executive Compensation Committee will consider the various alternatives
72
<PAGE>
to preserving the deductibility of compensation payments to the extent
reasonably practicable and consistent with its compensation objectives.
Members of the Executive Compensation Committee for 1998 were:
<TABLE>
<S> <C>
Duane W. Acklie,
Chairman Charles N. Wheatley
Paul C. Schorr, III Lyn Wallin Ziegenbein
</TABLE>
Performance Graph
The following graph sets forth a comparison of the cumulative total
shareholder return by quarter, commencing December 31, 1993, and ending
December 31, 1998, on an investment of $100 in
. shares of Aliant common stock;
. shares of Standard & Poor's telephone company composite;
. shares of Standard & Poor's 500 company composite; and
. shares of Aliant's telephone company peer group identified below.
The cumulative total market appreciation includes the cumulative amount
of dividends for the five-year period, assuming dividend reinvestment.
[CUMULATIVE TOTAL RETURN GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------
Aliant Communications Inc. $100 $ 95 $122 $102 $193 $259
- -----------------------------------------------------------------------
S&P 500(R) $100 $101 $139 $171 $229 $294
- -----------------------------------------------------------------------
S&P(R) Telephone Index $100 $ 96 $144 $146 $204 $299
- -----------------------------------------------------------------------
Custom Composite Index $100 $103 $127 $137 $172 $274
(5 Stocks)
</TABLE>
The 5-Stock Custom Composite Index consists of Alltel Corp., Century Telephone
Enterprise, Cincinnati Bell Inc., Frontier Corp. and Southern New England
Telecommunications (through 3Q98)
73
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934,
Aliant's executive officers, directors and holders of more than ten percent of
Aliant's outstanding shares ("Insiders") file reports (on prescribed forms) of
their beneficial ownership of Aliant's stock and furnish copies of such forms
to Aliant. Based solely on a review of the copies of such forms furnished to
Aliant, or written representations that no Form 5 was required to be filed,
Aliant believes that, during its fiscal year commencing January 1, 1998, and
ending December 31, 1998, all Forms 3, 4 and 5 required by Section 16(a) to be
filed by Insiders were filed on a timely basis.
Relationship with Independent Certified Public Accountants
The Aliant board, on the recommendation of the Audit Committee, has
reappointed KPMG Peat Marwick LLP as Aliant's independent certified public
accountants for the calendar year ending December 31, 1999. This accounting
firm has audited the financial statements of Aliant Communications Co.,
formerly known as The Lincoln Telephone and Telegraph Company (LT&T),
continuously since calendar year 1946, and has audited the consolidated
financial statements of Aliant and its other subsidiaries since their
respective dates of incorporation. Representatives of KPMG Peat Marwick LLP
will be present at the Aliant annual meeting, have the opportunity to make any
statements they desire and respond to appropriate questions.
Other Business at the Annual Meeting of Shareholders
Management is not aware of any business which properly may be presented
for action at the meeting other than the matters set forth in the Notice of
Annual Meeting. Should any other matter requiring a vote of the shareholders
properly arise, the enclosed proxy gives discretionary authority to the persons
named in the proxy to vote on such matters in accordance with their best
judgment.
Date of Receipt of Proposals
All shareholder proposals intended for inclusion in Aliant's 2000 proxy
materials and for presentation at Aliant's 2000 annual meeting set in Aliant's
by-laws as the fourth Wednesday in April, or April 26, 2000, must be received
by Aliant (Attn: Corporate Secretary) not later than November 15, 1999. In
addition, Aliant's by-laws establish procedures for shareholder nominations for
election of directors and bringing business before the annual meeting of
Aliant's shareholders. Among other requirements, to bring business before the
2000 annual meeting or to nominate a person for election as a director, a
shareholder must give written notice to the Corporate Secretary of Aliant not
less than 75 days nor more than 100 days prior to April 26, 2000, or in the
event an earlier date is set by the Aliant board within ten days after the
first public disclosure of the earlier date. The notice must contain certain
information concerning the proposed business or the nominee and the shareholder
making the proposal. Any shareholder interested in making a nomination or
proposal should request a copy of the applicable by-law provisions from the
Corporate Secretary of Aliant.
74
<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 Kutak Rock, counsel to ALLTEL. Certain tax matters in connection with
the merger will be passed upon for Aliant by Foley & Lardner, counsel to
Aliant. Certain partners of Kutak Rock beneficially owned as of March 22, 1999
8,750 shares of ALLTEL common stock.
EXPERTS
The consolidated financial statements of ALLTEL incorporated by reference
in this Proxy statement/prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report incorporated by
reference herein. Such financial statements have been incorporated herein by
reference in reliance on the reports of Arthur Andersen (which, as to the
consolidated financial statements of 360 Communications Company ("360") for the
years ended December 31, 1997 and 1996 discussed below, is based in part on the
reports of other auditors) given on the authority of such firm as experts in
accounting and auditing in giving said reports.
The consolidated financial statements of 360 at December 31, 1997 and
1996 and for each of the two years in the period ended December 31, 1997
included in the ALLTEL consolidated financial statements incorporated by
reference in this proxy statement/prospectus have been incorporated herein by
reference in reliance on the report of Ernst & Young, independent accountants
(which, as to certain equity investees of 360, is based in part on the reports
of other independent auditors) given on the authority of said firm as experts
in auditing and accounting.
The consolidated financial statements and schedule of Aliant
Communications Inc. as of December 31, 1998 and 1997, and for each of the years
in the three-year period ended December 31, 1998, have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
75
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
ALLTEL has filed with the Commission a Registration Statement under the
Securities Act that registers the issuance and offering to Aliant shareholders
of the shares of ALLTEL common stock to be issued in the merger (the
"Registration Statement"). The Registration Statement, including the attached
exhibits and schedules, contain additional relevant information about ALLTEL
and ALLTEL common stock. The rules and regulations of the Commission allow us
to omit certain information included in the Registration Statement from this
proxy statement/prospectus.
In addition, ALLTEL and Aliant file reports, proxy statements and other
information with the Commission under the Exchange Act. You may read and copy
this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates.
The Commission also maintains an Internet world wide web site that
contains reports, proxy statements and other information about issuers, like
ALLTEL and Aliant, who file electronically with the Commission. The address of
that site is http://www.sec.gov.
You can also inspect reports, proxy statements and other information
about ALLTEL at the offices of the NYSE, 20 Broad Street, New York, New York
10005, and at the offices of the Pacific Exchange, 301 Pine Street, San
Francisco, California 94104. You can inspect copies of such materials relating
to Aliant at the offices of the NASD, 1735 K Street, Washington, D.C. 20006.
The Commission allows ALLTEL and Aliant to "incorporate by reference"
information into this proxy statement/prospectus. This means that the companies
can disclose important information to you by referring you to another document
filed separately with the Commission. The information incorporated by reference
is considered to be a part of this proxy statement/prospectus, except for any
information that is superseded by information that is included directly in this
document.
This proxy statement/prospectus incorporates by reference the documents
listed below that ALLTEL and Aliant have previously filed with the Commission.
They contain important information about our companies and their financial
condition.
76
<PAGE>
<TABLE>
<CAPTION>
ALLTEL SEC Filings Period
------------------ ------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
The description of ALLTEL common stock set forth in
the ALLTEL Registration Statement filed on Form 8-A
(Commission File No. 1-4996)
The description of the Rights Agreement contained
in ALLTEL's Registration Statement on Form 8-A
dated February 3, 1997
<CAPTION>
Aliant SEC Filings Period
------------------ ------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
</TABLE>
ALLTEL and Aliant incorporate by reference additional documents that
either company may file with the Commission between the date of this proxy
statement/prospectus and the date of the Aliant annual meeting. These documents
include periodic reports, such as Annual Reports on Form 10-K, quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
ALLTEL has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to ALLTEL and Aliant has
supplied all such information relating to Aliant.
You can obtain any of the documents incorporated by reference in this
document through ALLTEL or Aliant, as the case may be, or from the Commission
through the Commission's web site at the address described above. Documents
incorporated by reference are available from the companies without charge,
excluding any exhibits to those documents unless the exhibit is specifically
incorporated by reference as an exhibit in this proxy statement/prospectus. You
can obtain documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses:
<TABLE>
<S> <C>
ALLTEL Corporation Aliant Communications Inc.
One Allied Drive 1440 M Street
Little Rock, Arkansas 72202 Lincoln, Nebraska 68508
Attention: Corporate Secretary Attention: Corporate Secretary
Telephone: (501) 905-8000 Telephone: (402) 436-3737
</TABLE>
If you would like to request documents, please do so by April 20, 1999 to
receive them before the Aliant annual meeting. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this proxy statement/prospectus or in any of the
materials that we have incorporated into this document. Therefore, if anyone
does give you information of this sort, you should not rely on it. The
information contained in this document speaks only as of the date of this
document unless the information specifically indicates that another date
applies.
77
<PAGE>
Annex A
AGREEMENT AND PLAN OF MERGER
AMONG
ALLTEL CORPORATION,
PINNACLE MERGER SUB, INC.
AND
ALIANT COMMUNICATIONS INC.
DATED AS OF
DECEMBER 18, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 THE MERGER; CLOSING; EFFECTIVE TIME................................ A-1
1.1 The Merger.......................................................... A-1
1.2 Closing............................................................. A-1
1.3 Effective Time...................................................... A-1
ARTICLE 2 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.................................................................. A-2
2.1 Certificate of Incorporation........................................ A-2
2.2 The By-Laws......................................................... A-2
ARTICLE 3 OFFICERS AND DIRECTORS............................................. A-2
3.1 Directors of Surviving Corporation.................................. A-2
3.2 Officers of Surviving Ccorporation.................................. A-2
3.3 Officers of Parent's Communications Group Market Area............... A-2
ARTICLE 4 EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFI-
CATES....................................................................... A-2
4.1 Effect on Capital Stock............................................. A-2
4.2 Exchange of Certificates for Shares................................. A-3
4.3 Dissenters' Rights.................................................. A-6
4.4 Adjustments to Prevent Dilution..................................... A-6
ARTICLE 5 REPRESENTATIONS AND WARRANTIES..................................... A-6
5.1 Representations and Warranties of the Company, Parent and Merger
Sub...................................................................... A-6
ARTICLE 6 COVENANTS.......................................................... A-17
6.1 Interim Operations.................................................. A-17
6.2 Acquisition Proposals............................................... A-20
6.3 Information Supplied................................................ A-21
6.4 Stockholders Meeting................................................ A-22
6.5 Filings; Other Actions; Notification................................ A-22
6.6 Access; Consultation................................................ A-23
6.7 Affiliates.......................................................... A-23
6.8 Stock Exchange Listing and De-Listing............................... A-24
6.9 Publicity........................................................... A-24
6.10 Benefits............................................................ A-24
6.11 Expenses............................................................ A-25
6.12 Indemnification; Directors' and Officers' Insurance................. A-25
6.13 Takeover Statute.................................................... A-26
6.14 Confidentiality..................................................... A-26
6.15 Charitable Contributions/Community Support.......................... A-26
6.16 Operations and Employment in Lincoln, Nebraska...................... A-27
6.17 Control of the Company's Operations................................. A-27
ARTICLE 7 CONDITIONS......................................................... A-27
7.1 Conditions to Each Party's Obligation to Effect the Merger.......... A-27
7.2 Conditions to Obligations of Parent and Merger Sub.................. A-28
7.3 Conditions to Obligation of the Company............................. A-29
</TABLE>
A-i
<PAGE>
<TABLE>
<S> <C>
ARTICLE 8 TERMINATION........................................................ A-29
8.1 Termination by Mutual Consent........................................ A-29
8.2 Termination by Either Parent or the Company.......................... A-29
8.3 Termination by the Company........................................... A-30
8.4 Termination by Parent................................................ A-30
8.5 Effect of Termination and Abandonment................................ A-31
ARTICLE 9 MISCELLANEOUS AND GENERAL.......................................... A-32
9.1 Survival............................................................. A-32
9.2 Modification or Amendment............................................ A-32
9.3 Waiver of Conditions................................................. A-33
9.4 Counterparts......................................................... A-33
9.5 Governing Law and Venue; Waiver of Jury Trial........................ A-33
9.6 Notices.............................................................. A-34
9.7 Entire Agreement..................................................... A-34
9.8 No Third Party Beneficiaries......................................... A-35
9.9 Obligations of Parent and of the Company............................. A-35
9.10 Severability......................................................... A-35
9.11 Interpretation....................................................... A-35
9.12 Captions............................................................. A-35
9.13 Assignment........................................................... A-35
9.14 Enforcement.......................................................... A-35
</TABLE>
A-ii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
Agreement.................................................................. A-1
Affiliated Group........................................................... A-15
Articles................................................................... A-2
Articles of Merger......................................................... A-1
Audit Date................................................................. A-10
Bankruptcy and Equity Exception............................................ A-9
By-Laws.................................................................... A-2
Certificate................................................................ A-3
Closing.................................................................... A-1
Closing Date............................................................... A-1
Code....................................................................... A-1
Company.................................................................... A-1
Company Acquisition Proposal............................................... A-20
Company Affiliate's Letter................................................. A-24
Company Compensation and Benefit Plans..................................... A-12
Company Disclosure Schedule................................................ A-6
Company Option............................................................. A-24
Company Representatives.................................................... A-20
Company Required Consents.................................................. A-10
Company Requisite Vote..................................................... A-9
Company Rights Agreement................................................... A-2
Company Share.............................................................. A-2
Company Shares............................................................. A-2
Company Stock Plans........................................................ A-7
Company Stockholders Meeting............................................... A-22
Compensation and Benefit Plans............................................. A-12
Confidentiality Agreement.................................................. A-26
Contracts.................................................................. A-10
Costs...................................................................... A-25
Current Group.............................................................. A-15
D&O Insurance.............................................................. A-26
Disclosure Schedule........................................................ A-6
Dissenting Shares.......................................................... A-6
Effective Time............................................................. A-2
Environmental Law.......................................................... A-14
ERISA...................................................................... A-12
ERISA Affiliate............................................................ A-12
ERISA Affiliate Plan....................................................... A-12
Exchange Agent............................................................. A-3
Exchange Ratio............................................................. A-3
Excluded Company Shares.................................................... A-3
FCC........................................................................ A-9
Final Order................................................................ A-27
Final Parent Stock Price................................................... A-3
GAAP....................................................................... A-11
Governmental Entity........................................................ A-10
Hazardous Substance........................................................ A-15
HSR Act.................................................................... A-9
Indemnified Parties........................................................ A-25
Intellectual Property...................................................... A-17
IRS........................................................................ A-12
Laws....................................................................... A-13
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Letter of Transmittal...................................................... A-4
Material Adverse Effect.................................................... A-7
Material Contracts......................................................... A-16
Merger..................................................................... A-1
Merger Consideration....................................................... A-3
Merger Sub................................................................. A-1
NBCA....................................................................... A-1
NBCA Dissenters' Rights Provisions......................................... A-6
NYSE....................................................................... A-3
No Par Preferred Stock..................................................... A-7
Order...................................................................... A-28
Par Preferred Stock........................................................ A-7
Parent..................................................................... A-1
Parent Common Stock........................................................ A-3
Parent Companies........................................................... A-3
Parent Disclosure Schedule................................................. A-6
Parent Preferred Stock..................................................... A-7
Parent Required Consents................................................... A-10
Parent Rights Agreements................................................... A-3
Parent Stock Plans......................................................... A-8
Pension Plan............................................................... A-12
Permits.................................................................... A-14
Person..................................................................... A-4
Prospectus/Proxy Statement................................................. A-21
PUC........................................................................ A-9
Random Trading Days........................................................ A-3
Regulatory Material Adverse Effect......................................... A-23
Reports.................................................................... A-10
Rights..................................................................... A-3
Rights Amendment........................................................... A-16
S-4 Registration Statement................................................. A-21
SEC........................................................................ A-10
Securities Act............................................................. A-9
Software................................................................... A-17
Special FCC Approvals...................................................... A-29
Subsidiary................................................................. A-7
Substitute Option.......................................................... A-24
Substitute Option Price.................................................... A-24
Superior Company Proposal.................................................. A-21
Surviving Corporation...................................................... A-1
Takeover Statute........................................................... A-14
Tax........................................................................ A-15
Tax Return................................................................. A-15
Taxable.................................................................... A-15
Taxes...................................................................... A-15
Termination Date........................................................... A-29
Termination Fee............................................................ A-31
TRA........................................................................ A-12
Utilities Laws............................................................. A-9
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of December 18, 1998, among ALIANT COMMUNICATIONS INC. a Nebraska
corporation (the "Company"), ALLTEL CORPORATION, a Delaware corporation
("Parent"), and PINNACLE MERGER SUB, INC., a Nebraska corporation and a wholly-
owned subsidiary of Parent ("Merger Sub").
RECITALS:
WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub
and the Company have approved this Agreement and the merger of Merger Sub with
and into the Company (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is intended that the
Merger shall be accounted for as a pooling-of-interests; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Nebraska, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger except as set forth in Article 3 hereof. The Merger shall have
the effects specified in the Nebraska Business Corporation Act, as amended (the
"NBCA").
1.2 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Foley & Lardner, Milwaukee, Wisconsin at 9:00 a.m. local
time, on the second business day after the date on which the last to be
fulfilled or waived of the conditions set forth in Article 3 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (ii) at such other place and time and/or
on such other date as the Company and Parent may agree in writing (the "Closing
Date").
1.3 Effective Time. Immediately following the Closing, the Company and
Parent will cause Articles of Merger (the "Articles of Merger") to be executed,
acknowledged and filed with the Secretary of State of Nebraska as provided in
Section 21-20,132 of the NBCA. The Merger shall become effective at the time
when the Articles of Merger have been duly filed with the Secretary of State of
Nebraska or such other
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time as shall be agreed upon by the parties and set forth in the Articles of
Merger in accordance with the NBCA (the "Effective Time").
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Articles of Incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation (the "Articles") until
duly amended as provided therein or by applicable law.
2.2 The By-Laws. The by-laws of the Company in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE 3
OFFICERS AND DIRECTORS
3.1 Directors of Surviving Corporation. The directors of Merger Sub at
the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Articles and the By-Laws.
3.2 Officers of Surviving Corporation. The officers of the Company at the
Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Articles and the By-Laws.
3.3 Officers of Parent's Communications Group Market Area. At the
Effective Time, the following officers of the Company shall be appointed as
officers of the Nebraska-Iowa market area of Parent's Communications Group in
the capacities set forth below, pursuant to the employment agreements attached
hereto as Exhibits A, B, C and D:
<TABLE>
<S> <C>
Frank H. Hilsabeck President and Chief Executive Officer
James W. Strand Vice President and Chief Operating Officer
Michael J. Tavlin Vice President-Finance and Administration
Bryan C. Rickertsen Vice President-Technology
</TABLE>
ARTICLE 4
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
4.1(a) Merger Consideration. Each share of Common Stock, $0.25 par
value per share, of the Company (each a "Company Share" and together the
"Company Shares"), together with the purchase rights attached thereto
pursuant to the Rights Agreement dated as of June 21, 1989, between the
Company and Mellon Securities Trust Company, as Rights Agent (the
"Company
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<PAGE>
Rights Agreement") issued and outstanding immediately prior to the
Effective Time (other than Company Shares that are owned by Parent,
Merger Sub or any other direct or indirect subsidiary of Parent
(collectively, the "Parent Companies")) or Company Shares that are owned
by the Company or any direct or indirect subsidiary of the Company and
in each case not held on behalf of third parties (collectively,
"Excluded Company Shares") shall be converted into and become
exchangeable for the number of shares of Common Stock, par value $1.00
per share, of Parent ("Parent Common Stock") equal to the Exchange
Ratio. The Exchange Ratio is equal to $39.13 divided by the Final Parent
Stock Price (as defined below); provided, however, that (i) in the event
that the Final Parent Stock Price is equal to or less than $52.17, then
the Exchange Ratio shall be equal to 0.75 and (ii) in the event the
Final Parent Stock Price is equal to or more than $58.40, then the
Exchange Ratio shall be equal to 0.67, in all cases subject to
adjustment as provided in Section 4.4 (the "Merger Consideration"). In
the event that the Final Parent Stock Price is equal to or less than
$43, the Company will have the option to terminate this Agreement in
accordance with Section 8.3(c) unless, within 24 hours following the
completion of the second complete trading day immediately prior to the
Closing Date, the Parent, by written notice to the Company, increases
the Exchange Ratio to an amount equal to $32.25 divided by the Final
Parent Stock Price, subject to adjustment as provided in Section 4.4.
For purposes hereof, "Final Parent Stock Price" shall mean an amount
equal to the average of the closing sale price of a share of Parent
Common Stock on the New York Stock Exchange ("NYSE") as reported in The
Wall Street Journal, New York City edition, for the "Random Trading
Days"; for purposes hereof, the "Random Trading Days" shall be the ten
trading days selected by lot out of the 20 consecutive trading days (on
which share of Parent Common Stock are actually traded) ending with the
second complete trading day immediately prior to the Closing Date. The
Company and Parent shall use mutually agreeable procedures to randomly
select the Random Trading Days by lot at 5:00 p.m., New York time, on
the second complete trading day immediately prior to the Closing Date.
All references in this Agreement to Parent Common Stock to be issued
pursuant to the Merger shall be deemed to include the corresponding
rights ("Rights") to purchase Parent Common Stock pursuant to the Rights
Agreement dated as of January 30, 1997, between Parent and First Union
National Bank of North Carolina, as Rights Agent (the "Parent Rights
Agreements"), except where the context otherwise requires. At the
Effective Time, all Company Shares shall no longer be outstanding, shall
be cancelled and retired and shall cease to exist, and each certificate
(a "Certificate") formerly representing any of such Company Shares
(other than Excluded Company Shares), shall thereafter represent only
the right to the Merger Consideration and the right, if any, to receive
pursuant to Section 4.2(d) cash in lieu of fractional shares into which
such Company Shares have been converted pursuant to this Section 4.1(a)
and any distribution or dividend pursuant to Section 4.2(b), in each
case without interest.
4.1(b) Cancellation of Shares. Each Excluded Company Share issued
and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof,
no longer be outstanding, shall be cancelled and retired without payment
of any consideration therefor and shall cease to exist.
4.1(c) Merger Sub. At the Effective Time, each share of Common
Stock, par value $.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one
share of common stock of the Surviving Corporation, and the Surviving
Corporation shall be a wholly-owned subsidiary of Parent.
4.2 Exchange of Certificates for Shares.
4.2(a) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause an exchange agent selected by Parent
with the Company's prior approval, which shall not be unreasonably
withheld (the "Exchange Agent") to mail to each holder of record
A-3
<PAGE>
of a Certificate as of the Effective Time (other than holders of a
Certificate in respect of Excluded Company Shares) (i) a letter of
transmittal specifying that delivery shall be effected, and that risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss in lieu thereof) to the Exchange
Agent (the "Letter of Transmittal") in such form and having such
provisions as Parent and the Company may reasonably agree, and (ii)
instructions for exchanging Certificates for (A) certificates
representing shares of Parent Common Stock and (B) any unpaid dividends
and other distributions and cash in lieu of fractional shares. Subject
to Section 4.2(g), upon surrender of a Certificate for cancellation to
the Exchange Agent together with a Letter of Transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor, (i) a certificate representing that number of whole shares of
Parent Common Stock that such holder is entitled to receive pursuant to
this Article 4, and (ii) a check in the amount (after giving effect to
any required tax withholdings) of (A) any cash in lieu of fractional
shares determined in accordance with Section 4.2(d) hereof plus (B) any
cash dividends and any other dividends or other distributions that such
holder has the right to receive pursuant to the provisions of this
Article 4, and any Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any amount payable
upon due surrender of any Certificate. In the event of a transfer of
ownership of Company Shares that is not registered in the transfer
records of the Company, a certificate representing the proper number of
shares of Parent Common Stock, together with a check for any cash to be
paid upon due surrender of the Certificate and any other dividends or
distributions in respect thereof, may be issued and/or paid to such a
transferee if the Certificate formerly representing such Company Shares
is presented to the Exchange Agent accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable
stock transfer taxes have been paid. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which
the Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Person (as defined below)
requesting such exchange shall pay any transfer or other taxes required
by reason of the issuance of a certificate for shares of Parent Common
Stock in a name other than that of the registered holder of the
Certificate surrendered or shall establish to the satisfaction of Parent
or the Exchange Agent that such tax has been paid or is not applicable.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section
5.1(d)(i)) or other entity of any kind or nature.
4.2(b) Distributions with Respect to Unexchanged Shares; Voting.
(i) Whenever a dividend or other distribution is declared by
Parent in respect of Parent Common Stock, the record date for
which is at or after the Effective Time, that declaration shall
include dividends or other distributions in respect of all shares
of Parent Common Stock issuable pursuant to this Agreement. No
dividends or other distributions in respect of such Parent Common
Stock shall be paid to any holder of any unsurrendered
Certificate, until such Certificate is surrendered for exchange,
in accordance with this Article 4. Subject to the effect of
applicable laws, following surrender of any such Certificate there
shall be issued and/or paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (A) at the time of such
surrender, the dividends or other distributions with a record date
after the Effective Time and a payment date on or prior to the
date of issuance of such whole shares of Parent Common Stock and
not previously paid and (B) at the appropriate payment date, the
dividends or other distributions payable with respect to such
whole shares of Parent Common Stock with a record date after the
Effective Time but with a payment date subsequent to surrender or
delivery. For purposes of dividends or other distributions in
respect of shares of Parent Common Stock, all shares of Parent
Common Stock to be issued pursuant to the Merger shall be deemed
issued and outstanding as of the Effective Time.
A-4
<PAGE>
(ii) Registered holders of unsurrendered Certificates shall
be entitled to vote after the Effective Time at any meeting of
stockholders with a record date at or after the Effective Time the
number of whole shares of Parent Common Stock represented by such
Certificates, regardless of whether such holders have surrendered
their Certificates.
4.2(c) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Company
Shares that were outstanding immediately prior to the Effective Time.
4.2(d) Fractional Shares. Notwithstanding any other provision of
this Agreement, no fractional shares of Parent Common Stock will be
issued and any holder of Company Shares entitled to receive a fractional
share of Parent Common Stock but for this Section 4.2(d) shall be
entitled to receive an amount in cash (without interest) determined by
multiplying such fraction (rounded to the nearest one hundredth of a
share) by the average of the closing price of a share of Parent Common
Stock, as reported in The Wall Street Journal, New York City edition, on
the trading day immediately prior to the Effective Time.
4.2(e) Termination of Exchange Period; Unclaimed Stock. Any shares
of Parent Common Stock and any portion of the cash, dividends or other
distributions with respect to the Parent Common Stock deposited by
Parent with the Exchange Agent (including the proceeds of any
investments thereof) that remain unclaimed by the stockholders of the
Company 180 days after the Effective Time shall be paid to Parent. Any
stockholders of the Company who have not theretofore complied with this
Article 4 shall thereafter look only to Parent for payment of their
shares of Parent Common Stock and any cash, dividends and other
distributions in respect thereof issuable and/or payable pursuant to
Section 4.1, Section 4.2(b) and Section 4.2(d) upon due surrender of
their Certificates (or affidavits of loss in lieu thereof) without any
interest thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation, the Exchange Agent any other Person shall be
liable to any former holder of Company Shares for any amount properly
delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
4.2(f) Lost, Stolen or Destroyed Certificates. In the event 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 the posting by such Person of a bond in
the form customarily required by Parent as indemnity against any claim
that may be made against it with respect to such Certificate, Parent
will issue the shares of Parent Common Stock and the Exchange Agent will
issue any cash, dividends and other distributions in respect thereof
issuable and/or payable in exchange for such lost, stolen or destroyed
Certificate pursuant to Section 4.1, Section 4.2(b) and Section 4.2(d)
upon due surrender of and deliverable in respect of the Company Shares
represented by such Certificate pursuant to this Agreement, in each
case, without interest.
4.2(g) 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 4
(including distributions and dividends paid and any cash paid in lieu of
fractional shares) 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.
4.2(h) No Liability. If any Certificate shall not have been
surrendered prior to one year after the Effective Time, any such Merger
Consideration or cash, dividends or distributions in respect of such
Certificates 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.
A-5
<PAGE>
4.2(i) 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.
4.3 Dissenters' Rights. In accordance with Sections 21-20,137 through 21-
20,150 of the NBCA, dissenters' rights shall be available to holders of Company
Shares in connection with the Merger. Notwithstanding anything to the contrary
herein, any Company Shares held of record by Persons who, prior to the Company
Stockholders Meeting, have objected to the Merger and complied with all
applicable provisions of Sections 21-20,137 through 21-20,150 of the NBCA (the
"NBCA Dissenters' Rights Provisions") necessary to perfect and maintain their
dissenter's rights thereunder (any such Company Shares, "Dissenting Shares")
shall not be converted as of the Effective Time into a right to receive the
Merger Consideration, but instead, shall entitle the holder of such shares to
such rights as may be available under the NBCA Dissenters' Rights Provisions;
provided, however, that if after the Effective Time such holder fails to
perfect or withdraws or otherwise loses his rights under the NBCA Dissenters'
Rights Provisions, the Company Shares owned by such holder immediately prior to
the Effective Time shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration, without
interest. Prior to the Effective Time, the Company shall give Parent prompt
notice of its receipt of each notification from a shareholder stating such
shareholder's intent to demand payment for his or her shares if the Merger is
effectuated, and Parent shall have the right to participate in all negotiations
and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle, any such demands. After the Effective Time,
Parent shall pay, or shall cause the Surviving Corporation to pay, any amounts
that may become payable in respect of Dissenting Shares under the NBCA
Dissenters' Rights Provisions.
4.4 Adjustments to Prevent Dilution. In the event that prior to the
Effective Time there is a change in the number of Company Shares or shares of
Parent Common Stock or securities convertible or exchangeable into or
exercisable for Company Shares or shares of Parent Common Stock issued and
outstanding as a result of a distribution, reclassification, stock split
(including a reverse split), stock dividend or distribution, or other similar
transaction, the Exchange Ratio shall be equitably adjusted to eliminate the
effects of such event.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company, Parent and Merger
Sub. Except as set forth in the corresponding sections or subsections of the
disclosure schedule, dated the date hereof, delivered by the Company to Parent
or by Parent to the Company (each a "Disclosure Schedule," and the "Company
Disclosure Schedule" and the "Parent Disclosure Schedule," respectively), as
the case may be, the Company (except for subparagraphs (b)(ii), (b)(iii),
(c)(ii), (p)(ii) and the second sentence of (q) below and references in
subparagraphs (a) and (e) below to documents made available by Parent to the
Company) hereby represents and warrants to Parent and Merger Sub, and Parent
(except for subparagraphs (b)(i), (c)(i), h(i), (j), (o), (p)(i) and the second
sentence of (q) and (r) below and references in subparagraphs (a), (e) and
(h)(i) below to documents made available by the Company to Parent), on behalf
of itself and Merger Sub, hereby represents and warrants to the Company, that:
5.1(a) Organization, Good Standing and Qualification. Each of it
and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and
authority to own and operate its properties and assets and to carry on
its business as presently conducted and is qualified to do business and
is in good standing as a foreign corporation in each jurisdiction where
the ownership or of its properties or conduct of its business requires
such qualification, except
A-6
<PAGE>
where the failure to be so qualified or in good standing is not, when
taken together with all other such failures, reasonably likely to have a
Material Adverse Effect (as defined below) on it. It has made available
to Parent, in the case of the Company, and to the Company, in the case
of Parent, a complete and correct copy of its certificate or articles of
incorporation, as the case may be, and by-laws, each as amended to date.
Such certificates or articles of incorporation and by-laws as so made
available are in full force and effect.
As used in this Agreement, (i) the term "Subsidiary" means, with respect
to the Company, Parent or Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which (A) at least fifty percent of the
outstanding voting securities or ownership interests is directly or indirectly
owned by such party or by one or more of its respective Subsidiaries or (B)
such party or one or more of its respective Subsidiaries is a general partner
(excluding partnerships in which such party or any Subsidiary of such party
does not have at least fifty percent of the voting interest of such
partnership), (ii) the term "Material Adverse Effect" means, with respect to
either Parent or the Company, as the case may be, a material adverse effect on
the business, results of operations or financial condition of Parent or the
Company, as the case may be, and (iii) reference to "the other party" means,
with respect to the Company, Parent and means, with respect to Parent, the
Company.
5.1(b) Capital Structure.
(i) The authorized capital stock of the Company consists of
120,000,000 Company Shares, of which 35,639,129 Company Shares
were issued and outstanding as of the close of business on
December 16, 1998. All of the outstanding Company Shares have been
duly authorized and are validly issued, fully paid and
nonassessable. As of December 16, 1998, there were not more than
217,550 Company Shares that the Company was obligated to issue
pursuant to the Company Compensation and Benefit Plans (as defined
in Section 5.1(h) and identified in Section 5.1(h) of the Company
Disclosure Schedule as being the only Company Compensation and
Benefit Plans pursuant to which Company Shares may be issued
(collectively the "Company Stock Plans")). Each of the outstanding
shares of capital stock or other securities of each of the
Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and owned by the Company or a direct or
indirect wholly-owned Subsidiary of the Company, free and clear of
any lien, pledge, security interest, claim or other encumbrance.
Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or sell any
shares or capital stock or other securities of the Company or any
of its Subsidiaries or any securities or obligations convertible
or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the Company
or any of its Subsidiaries, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. The
Company does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter.
(ii) The authorized capital stock of Parent consists of
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
September 30, 1998, 274,428,563 shares of Parent Common Stock,
340,792 shares of Par Preferred Stock and 121,563 shares of No Par
Preferred Stock were issued and outstanding. All of the
outstanding shares of Parent Common Stock and Parent Preferred
Stock have been duly
A-7
<PAGE>
authorized and are validly issued, fully paid and nonassessable.
As of the date of this Agreement, 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 the following (collectively, the "Parent Stock
Plans"):
(A) 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;
(B) options and other rights to receive or acquire
shares of Parent Common Stock pursuant to the following plans
of Parent: Amended and Restated 1975 Incentive Stock Option
Plan, 1991 Stock Option Plan, the 1994 Employee Stock Option
Plan, 1994 Non-Employee Directors Stock Option Plan, as
amended, 1998 Equity Incentive Plan, and other employee
incentive or benefit plans, programs and arrangements and non-
employee director plans of parent;
(C) options and other rights to receive or acquire
shares of Parent Common Stock or other stock appreciation
rights pursuant to the following plans of Parent's Subsidiary:
Employee Stock Purchase Plan, Amended and Restated 1996 Equity
Incentive Plan, 1996 Replacement Stock Option Plan, Director
Equity and Deferred Compensation Plan, Retirement Savings
Restoration Plan, Deferred Compensation Plan, and Company
Director Equity and Deferred Compensation Plan.
(iii) Each of the outstanding shares of capital stock of
each of Parent's Significant Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and owned by Parent
or a direct or indirect wholly owned subsidiary of Parent, free
and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or
other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or to sell any
shares of capital stock or other securities of Parent or any of
its Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right
to subscribe for or acquire, any securities of Parent or any of
its Subsidiaries, and no securities or obligation evidencing such
rights are authorized, issued or outstanding. Parent does not have
outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the
stockholders of Parent on any matter.
(iv) The authorized capital stock of Merger Sub consists of
1,000 shares of Common Stock, par value $.01 per share, 100 of
which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective
Time will be, owned by Parent, and there are no (A) other shares
of capital stock or other voting securities of Merger Sub, (B)
securities of Merger Sub convertible into or exchangeable for
shares of capital stock or other voting securities of Merger Sub
or (C) options or other rights to acquire from Merger Sub, or
obligations of Merger Sub to issue, any capital stock, other
voting securities or securities convertible into or exchangeable
for capital stock or other voting securities of Merger Sub. Merger
Sub has not conducted any business prior to the date hereof and
has no, and prior to the Effective Time will have no, assets,
liabilities or obligations of any nature other than those incident
to its formation and pursuant to this Agreement and the Merger and
the other transactions contemplated by this Agreement.
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5.1(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement
and to consummate, subject only to adoption of this Agreement by
the holders of 70% of the outstanding Company Shares (the "Company
Requisite Vote") and the Company Required Consents (as defined in
Section 5.1(d)), the Merger. This Agreement has been duly executed
and delivered by the Company and is a valid and binding agreement
of the Company enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles (the "Bankruptcy and Equity Exception").
The Board of Directors of the Company (A) has unanimously approved
this Agreement and the Merger and the other transactions
contemplated hereby, 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 (B) has
received the opinion of its financial advisors, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, in a customary form and to
the effect that the Merger Consideration to be received by the
holders of the Company Shares in the Merger is fair to such
holders from a financial point of view (and the Company has
delivered a complete and accurate copy of such opinion to Parent).
The Board of Directors of the Company has determined that the
transactions contemplated by this Agreement are in the best
interests of the Company and its stockholders and to recommend to
such stockholders that they approve and adopt this Agreement.
(ii) Parent and Merger Sub each has all requisite corporate
power and authority and each has taken all corporate action
necessary in order to execute, deliver and perform its obligations
under this Agreement and to consummate, subject only to the Parent
Required Consents (as defined in Section 5.1(d)), the Merger. This
Agreement has been duly executed and delivered by Parent and
Merger Sub and is a valid and binding agreement of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the Bankruptcy and Equity
Exception. The shares of Parent Common Stock, when issued pursuant
to this Agreement, will be validly issued, fully paid and
nonassessable, and no stockholder of Parent will have any
preemptive right of subscription or purchase in respect thereof.
5.1(d) Governmental Filings; No Violations.
(i) Other than the necessary filings, notices and/or
approvals (A) pursuant to Section 1.3, (B) under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act") , (C) to comply with state securities or
"blue sky" laws, (D) of the Federal Communications Commission
("FCC") pursuant to the Communications Act of 1934, as amended,
with respect to the transfer of all FCC licenses and
authorizations from the Company to Parent, (E) if any, of the
local, state and foreign public policy commissions or similar
local, state or foreign regulatory bodies (each a "PUC") and the
local, state and foreign Governmental Entities (as defined below)
identified in its respective Disclosure Schedule pursuant to
applicable local, state or foreign laws regulating the telephone,
mobile cellular, paging, cable television or other
telecommunications business ("Utilities Laws") and (F) if any, of
the foreign regulatory bodies identified in its respective
Disclosure Schedule pursuant to applicable foreign laws regulating
actions having the purpose or effect of monopolization or
restraint of trade (such filings, notices
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and/or approvals of Parent being the "Parent Required Consents"
and of the Company being the "Company Required Consents"), no
filings, notices and/or reports are required to be made by it
with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by it from, any
governmental or regulatory authority, court, agency, commission,
body or other governmental entity ("Governmental Entity"), in
connection with the execution and delivery of this Agreement by it
and the consummation by it of the Merger and the other
transactions contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it or
prevent, materially delay or materially impair its ability to
consummate the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this
Agreement by it do not, and the consummation by it of the Merger
and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default
under, its certificate or articles of incorporation, as the case
may be, or by laws or the comparable governing instruments of any
of its Subsidiaries, (B) a breach or violation of, or a default
under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on its assets
or the assets of any of its Subsidiaries pursuant to, or the
trigger of any right of first refusal or other purchase right
pursuant to (with or without notice, lapse of time or both) any
agreement, lease, contract, note, mortgage, indenture, arrangement
or other obligation ("Contracts") binding upon it or any of its
Subsidiaries or to which it or any of its Subsidiaries is subject
or, assuming the filings, notices and/or approvals referred to in
Section 5.1(d)(i) are made or obtained, any Law (as defined in
Section 5.1(i)) or governmental or non-governmental permit or
license to which it or any of its Subsidiaries is subject or (C)
any change in the rights or obligations of any party under any of
its Contracts, except, in the case of clause (B) or (C) above, for
any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely
to have a Material Adverse Effect on it or prevent, materially
delay or materially impair its ability to consummate the
transactions contemplated by this Agreement. The Company
Disclosure Schedule, with respect to the Company, and the Parent
Disclosure Schedule, with respect to Parent, sets forth a correct
and complete list of Contracts of it and its Subsidiaries pursuant
to which consents or waivers are or may be required prior to
consummation of the transactions contemplated by this Agreement
other than those where the failure to obtain such consents or
waivers is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it or prevent or
materially impair its ability to consummate the transactions
contemplated by this Agreement.
5.1(e) Reports; Financial Statements. It has made available to the
other party, each registration statement, report, proxy statement or
information statement prepared by it and any Subsidiary since December
31, 1996 (the "Audit Date"), including its Annual Report on Form 10-K
for the year ended December 31, 1997 in the form (including exhibits,
annexes and any amendments thereto) filed with the Securities and
Exchange Commission (the "SEC") (collectively, including any such
reports filed subsequent to the date hereof, its "Reports"). As of their
respective dates, its Reports (A) complied as to form with the
applicable requirements of the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder, except for such
noncompliance which, individually or in the aggregate, would not have a
Material Adverse Effect, and (B) 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 made therein, in light of
the circumstances on which they were made, not misleading. Except to the
extent that information contained in any of its Reports has been revised
or superseded by a later filed Report, none of its Reports contains any
untrue statement of a material fact or omits to state a material fact
required to
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be stated therein or necessary to make the statements made therein, in
light of the circumstances on which they were made, not misleading. Each
of the consolidated balance sheets included in or incorporated by
reference into its Reports (including the related notes and schedules)
fairly presents the consolidated financial position of it and its
Subsidiaries as of its date and each of the consolidated statements of
income and of cash flows included in or incorporated by reference into
its Reports (including any related notes and schedules) fairly presents
the consolidated results of operations, retained earnings and cash
flows, as the case may be, of it and its Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as may be noted therein. Since the
Audit Date, it has timely filed all Reports required to be filed by it
with the SEC under the rules and regulations of the SEC. Since the Audit
Date, it and each Subsidiary required to make filings under Utilities
Laws has filed with the applicable PUCs or the FCC, as the case may be,
all material forms, statements, reports and documents (including
exhibits, annexes and any amendments thereto) required to be filed by
them, and each such filing complied in all material respects with all
applicable laws, rules and regulations, other than such failures to file
and non-compliance that are, individually or in the aggregate, not
reasonably likely to have a Material Adverse Effect on it or prevent or
materially impair its ability to consummate the transactions
contemplated by this Agreement. To its knowledge, other than disclosed
in its Reports, as of the date hereof, no Person or "group"
"beneficially owns" 5% or more of its outstanding voting securities,
with the terms "beneficially owns" and "group" having the meanings
ascribed to them under Rule 13d-3 and Rule 13d-5 under the Exchange Act.
5.1(f) Absence of Certain Changes. Except as disclosed in its
Reports filed prior to the date hereof or as expressly contemplated or
permitted by this Agreement, since the Audit Date it and its
Subsidiaries have conducted their respective businesses only in, and
have not engaged in any material transaction other than according to,
the ordinary and usual course of such businesses and there has not been
(i) any change in the financial condition, properties, prospects,
business or results of operations of it and its Subsidiaries, except
those changes that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it; (ii) any damage,
destruction or other casualty loss with respect to any asset or property
owned, leased or otherwise used by it or any of its Subsidiaries,
whether or not covered by insurance, which damage, destruction or loss
is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on it; (iii) any declaration, setting aside or
payment of any dividend or other distribution in respect of its capital
stock, except publicly announced regular quarterly cash dividends on its
common stock and, in the case of Parent, any dividends in capital stock
of Parent which are simultaneously taken into account in an adjustment
to the Exchange Ratio pursuant to Section 4.4; or (iv) any change by it
in accounting principles, practices or methods, except as required by
GAAP.
5.1(g) Litigation and Liabilities. Except as disclosed in its
Reports filed prior to the date hereof, there are no (i) civil, criminal
or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the actual knowledge of its executive
officers, threatened in writing against it or any of its Subsidiaries or
Affiliates (as defined in Rule 12b-2 under the Exchange Act), or any of
its properties, before any Government Entity, except for those that are
not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it, or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not
required to be disclosed, including those relating to matters involving
any Environmental Law (as defined in Section 5.1(k)), or any other facts
or circumstances, in either such case, that are reasonably likely to
result in any claims against or obligations or liabilities of it or any
of its Affiliates, except for those that are not, individually or in the
aggregate, reasonably likely to have a
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Material Adverse Effect on it or prevent, materially delay or materially
impair its ability to consummate the transactions contemplated by this
Agreement; provided, however, that for purposes of this subsection (g)
no action, suit, claim, hearing, investigation or proceeding arising
after the date hereof shall be deemed to have any adverse effect if and
to the extent such actions, suits, claims, hearings, investigations or
proceedings are based on this Agreement or the transactions contemplated
hereby.
5.1(h) Employee Benefits.
(i) A copy of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, severance, compensation, medical,
health or other plan, agreement, policy or arrangement that covers
employees, directors, former employees or former directors of the
Company and its Subsidiaries (the "Company Compensation and
Benefit Plans") and any trust agreements or insurance contracts
forming a part of such Company Compensation and Benefit Plans has
been made available by the Company to Parent prior to the date
hereof and each such Company Compensation and Benefit Plan is
listed in Section 5.1(h) of the Company Disclosure Schedule.
(ii) In the case of the Company, each of the Company
Compensation and Benefit Plans or, in the case of Parent, each
bonus, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement,
policy or arrangement that covers employees, directors, former
employees or former directors of Parent and Parent's Subsidiaries
(together with the Company Compensation and Benefit Plans, its
"Compensation and Benefit Plans") is in substantial compliance
with all applicable law, including the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Each
of its Compensation and Benefit Plans that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a
"Pension Plan") and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service (the "IRS") with respect to
"TRA" (as such term is defined in Section 1 of Rev. Proc. 93-39),
and it is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no
pending or, to the actual knowledge of its executive officers,
threatened in writing, material litigation relating to its
Compensation and Benefit Plans. Neither it nor any Subsidiary has
engaged in a transaction with respect to any of its Compensation
and Benefit Plans that, assuming the taxable period of such
transaction expired as of the date hereof, would subject it or any
of its Subsidiaries to a material tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C
or D of Title IV of ERISA (other than the payment of prospective
premium amounts to the Pension Benefit Guaranty Corporation in the
normal course) has been or is expected to be incurred by it or any
Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one
employer with it under Section 4001 of ERISA or Section 414 of the
Code (its "ERISA Affiliate") (each such single-employer plan, its
"ERISA Affiliate Plan"). It and its Subsidiaries and ERISA
Affiliates have not contributed, or been obligated to contribute,
to a multiemployer plan under Subtitle E of Title IV of ERISA at
any time since September 26, 1980. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which
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the 30-day reporting requirement has not been waived, has been
required to be filed for any of its Pension Plans or any of its
ERISA Affiliate Plans within the 12-month period ending on the
date hereof or will be required to be filed in connection with the
transactions contemplated by this Agreement.
(iv) All contributions required to be made under the terms
of any of its Compensation and Benefit Plans as of the date hereof
have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in
its Reports prior to the date hereof. Neither any of its Pension
Plans nor any of its ERISA Affiliate Plans has an "accumulated
funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. Neither it nor
its Subsidiaries has provided, or is required to provide, security
to any of its Pension Plans or to any of its ERISA Affiliate Plans
pursuant to Section 401(a)(29) of the Code.
(v) Under each of its Pension Plans which is a single-
employer plan and each of its ERISA Affiliate Plans, as of the
last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(l6) of ERISA
(as determined on the basis of the actuarial assumptions contained
in such Pension Plan's or ERISA Affiliate Plan's most recent
actuarial valuation), did not exceed the then current value of the
assets of such Pension Plan or ERISA Affiliate Plan, and there has
been no material change in the financial condition of such Pension
Plan or ERISA Affiliate Plan since the last day of the most recent
plan year.
(vi) Neither it nor its Subsidiaries have any obligations
for retiree health and life benefits under any of its Compensation
and Benefit Plans, except as set forth in its Reports filed prior
to the date hereof or as required by applicable law.
(vii) Except as set forth in its Disclosure Schedule, none
of the consummation of the Merger and the other transactions
contemplated by this Agreement, in the case of Parent and the
Company, the adoption of this Agreement by the stockholders of the
Company, in the case of the Company, the approval by the
stockholders of Parent of the issuance of the shares of Parent
Common Stock required to be issued pursuant to Article 4, in the
case of Parent shall (A) entitle any of their respective employees
or directors or any employees of their respective Subsidiaries to
severance pay, directly or indirectly, upon termination of
employment, (B) accelerate the time of funding (whether through a
grantor trust or otherwise), payment or vesting or trigger any
payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any
of their respective Compensation and Benefit Plans or (C) result
in any breach or violation of, or a default under, any of their
respective Compensation and Benefit Plans.
5.1(i) Compliance with Laws. Except as set forth in its Reports
filed prior to the date hereof, the businesses of each of it and its
Subsidiaries have not been, and are not being, conducted in violation of
any law, statute, ordinance, regulation, judgment, order, decree,
injunction, arbitration award, license, authorization, opinion, agency
requirement or permit of any Governmental Entity or common law
(collectively, "Laws"), except for violations or possible violations
that are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on it or prevent, materially delay or
materially impair its ability to consummate the transactions
contemplated by this Agreement. Except as set forth in its Reports filed
prior to the date hereof, no investigation or review by any Governmental
Entity with respect to it or any of its Subsidiaries is pending or, to
the actual knowledge of its executive officers, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, except
for those the outcome of
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which are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on it or prevent, materially delay or
materially impair its ability to consummate the transactions
contemplated by this Agreement. To the knowledge of its executive
officers, no material change is required in its or any of its
Subsidiaries' processes, properties or procedures in connection with any
such Laws, and it has not received any notice or communication of any
material noncompliance with any such Laws that has not been cured as of
the date hereof, except for such changes and noncompliance that are not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on it or prevent, materially delay or materially impair
its ability to consummate the transactions contemplated by this
Agreement. Each of it and its Subsidiaries has all permits, licenses,
franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals (collectively, "Permits"),
necessary to conduct their business as presently conducted, except for
those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it or prevent,
materially delay or materially impair its ability to consummate the
transactions contemplated by this Agreement.
5.1(j) Takeover Statutes. The Board of Directors of the Company
has taken all appropriate and necessary actions such that Parent will
not be prohibited from entering into a "business combination" with the
Company as an "interested stockholder" (in each case as such term is
used in Section 21-2440 of the NBCA) as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby. To the best knowledge of the Company, no other
"fair price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation (each a "Takeover Statute") as in
effect on the date hereof is applicable to the Company, the Company
Shares, the Merger or the other transactions contemplated by this
Agreement. No anti-takeover provision contained in the Company's
articles of incorporation or its by laws is, or at the Effective Time
will be, applicable to the Company, the Company Shares, the Merger or
the other transactions contemplated by this Agreement.
5.1(k) Environmental Matters. Except as disclosed in its Reports
filed prior to the date hereof and except for such matters that, alone
or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on it: (i) each of it and its Subsidiaries has complied
with all applicable Environmental Laws (as defined below), which
compliance includes, but is not limited to, the possession by it and its
Subsidiaries of all material permits and other government authorizations
required under applicable Environmental Law; (ii) the properties
currently owned or operated by it or any of its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) are
not contaminated with any Hazardous Substances (as defined below); (iii)
the properties formerly owned or operated by it or any of its
Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by it or any of its Subsidiaries; (iv)
neither it nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party
property; (v) neither it nor any Subsidiary has been associated with any
release or threat of release of any Hazardous Substance; (vi) neither it
nor any Subsidiary has received any notice, demand, letter, claim or
request for information alleging that it or any of its Subsidiaries may
be in violation of or liable under any Environmental Law (including any
claims relating to electromagnetic fields or microwave transmissions);
(vii) neither it nor any of its Subsidiaries is subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity
or is subject to any indemnity or other agreement with any third party
relating to liability under any Environmental Law or relating to
Hazardous Substances; and (viii) there are no circumstances or
conditions involving it or any of its Subsidiaries that could reasonably
be expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use, or transfer of any of its properties
pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any Law relating to:
(i) the protection, investigation or restoration of the environment, health,
safety, or natural resources, (ii) the handling, use,
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presence, disposal, release or threatened release of any Hazardous Substance or
(iii) noise, odor, wetlands, pollution, contamination or any injury or threat
of injury to persons or property in connection with any Hazardous Substance.
As used herein, the term "Hazardous Substance" means any substance that
is: listed, classified or regulated pursuant to any Environmental Law,
including any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon.
5.1(l) Accounting and Tax Matters. As of the date hereof, neither
it nor any of its affiliates (as determined in accordance with Section
6.7) has taken or agreed to take any action, nor do its executive
officers have any actual knowledge of any fact or circumstance, that, to
their actual knowledge, would prevent Parent from accounting for the
business combination to be effected by the Merger as a "pooling-of-
interests" or prevent the Merger and the other transactions contemplated
by this Agreement from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
5.1(m) Taxes. It and each of its Subsidiaries and each affiliated,
combined, consolidated or unitary group of which it or any of its
Subsidiaries (i) is a member (a "Current Group") or (ii) has been a
member within six years prior 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 (together with Current
Groups, an "Affiliated Group") have prepared in good faith and duly and
timely filed (taking into account any extension of time within which to
file) all material Tax Returns (as defined below) required to be filed
by any of them and all such filed tax returns are complete and accurate
in all material respects. It and each of its Subsidiaries have paid or
adequately reserved for all Taxes (as defined below) due and owing or
that it or any of its Subsidiaries is obligated to withhold from amounts
owing to any employee, creditor or third party, except with respect to
matters contested in good faith or for such amounts that, alone or in
the aggregate, are not reasonably likely to have a Material Adverse
Effect on it. Except as disclosed in the Company Disclosure Schedule, as
of the date hereof, there are not pending or, to the actual knowledge of
its executive officers threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes due and owing
by, or other Tax matters pertaining to, it, its Subsidiaries or any
Affiliated Group. There are not any unresolved questions, claims or
assessments concerning its, any of its Subsidiaries' or any of its
Affiliated Group Tax liability that are reasonably likely to have a
Material Adverse Effect on it. Neither it nor any of its Subsidiaries
has any liability with respect to income, franchise or similar Taxes in
excess of the amounts accrued in respect thereof that are reflected in
the financial statements included in its Reports, except such excess
liabilities as are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes," and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of
any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts and any interest in respect of such
penalties and additions, and (ii) the term "Tax Return" includes all returns
and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.
5.1(n) Labor Matters. Except as set forth in Section 5.1(n) of the
Company Disclosure Schedule, neither it nor any of its Subsidiaries is
the subject of any material proceeding asserting that it or any of its
Subsidiaries has committed an unfair labor practice or is seeking to
compel it to
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bargain with any labor union or labor organization nor is there pending
or, to the actual knowledge of its executive officers, threatened in
writing, nor has there been for the past five years, any labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving it or
any of its Subsidiaries, except in each case as is not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect on
it.
5.1(o) Rights Agreement.
(i) The Company has adopted an amendment to the Company
Rights Agreement (the "Rights Amendment") with the effect that
neither Parent nor Merger Sub shall be deemed to be an Acquiring
Person as such term is defined in the Rights Agreement) and the
Distribution Date (as defined in the Rights Agreement) shall not
be deemed to occur and that the Rights will not separate from the
Company Shares, as a result of entering into this Agreement or
consummating the Merger and/or the other transactions contemplated
hereby.
(ii) The Company has taken all necessary action with respect
to all of the outstanding Rights (as defined in the Rights
Agreement) so that, as of immediately prior to the Effective Time,
as a result of entering into this Agreement or consummating the
Merger and/or the other transactions contemplated by this
Agreement, (A) neither the Company nor Parent will have any
obligations under the Rights or the Rights Agreement and (B) the
holders of the Rights will have no rights under the Rights or the
Rights Agreement.
5.1(p) Brokers and Finders. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in
connection with the Merger or the other transactions contemplated in
this Agreement except that (i) the Company has employed Merrill Lynch,
Pierce, Fenner & Smith Incorporated as its financial advisor, the
arrangements with which have been disclosed to Parent prior to the date
hereof, and (ii) Parent and Merger Sub have employed Stephens Inc. as
their financial advisor, the arrangements with which have been disclosed
to the Company prior to the date hereof.
5.1(q) Lack of Ownership of Parent Common Stock and Company
Shares. 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). Neither the Parent nor any of its Subsidiaries
or affiliates own any Company Shares (exclusive of any shares owned by
the Parent's or its Subsidiaries' or affiliates' employee benefit
plans).
5.1(r) Material Contracts. Except as set forth in its Reports, or
in the Company Disclosure Schedules, neither it 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 5.1(r) being referred to
herein as "Material Contracts"). Each Material Contract is valid and
binding on it and is in full force and effect, and it and each of its
Subsidiaries have in all material respects performed all obligations
required to be performed by them to date under each Material Contract,
except where such noncompliance, individually or in the aggregate, would
not have a Material Adverse Effect on it. Neither it nor any of its
Subsidiaries knows of, or has received notice of, any violation or
default under any Material Contract except for such violations or
defaults as would not in the aggregate have a Material Adverse Effect on
it.
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5.1(s) Intellectual Property.
(i) It and its Subsidiaries own or have a valid license to
use all trademarks, service marks and trade names (including any
registrations or applications for registration of any of the
foregoing) (collectively, "Intellectual Property") necessary to
carry on its business substantially as currently conducted except
for such Intellectual Property that failure of which to own or
validly license individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on it.
(ii) The consummation of the Merger and the other
transactions contemplated by this Agreement will not result in the
loss by it or any of its Subsidiaries of any right to use Software
(as defined below) necessary to carry on its business
substantially as currently conducted and the loss of which would
have a Material Adverse Effect on it. "Software" means all
computer and communications software, including the following: (i)
object or machine-readable code; (ii) source or human-readable
code, including all source files, listings, uncompiled code,
graphics, audio source files, instructions, control logic, flow
charts, internal documentation, designs, drawings, prints,
technical data and such other documentation as is necessary to
recreate, revise, modify or enhance the software or any portion
thereof; (iii) all materials provided in connection with such
software, including all diskettes, tapes and printed,
informational or instructional materials relating to the software.
(iii) The Company's efforts to ensure that the Software and
computer hardware operated by it and its Subsidiaries which is
material to the conduct of its and its Subsidiaries' business is
capable of providing or is being adapted to provide uninterrupted
millenium functionality to record, store, process and present
calendar dates falling on or after January 1, 2000 in
substantially the same manner and with the same functionality as
such software records, stores, processes and presents such
calendar dates falling or before December 31, 1999, except as
would not have a Material Adverse Effect on it, is disclosed in
its Reports, together with the costs of such efforts.
ARTICLE 6
COVENANTS
6.1 Interim Operations.
6.1(a) Operations of Company. The Company covenants and agrees as
to itself and its Subsidiaries that, after the date hereof and prior to
the Effective Time (unless Parent shall otherwise approve in writing,
which approval shall not be unreasonably withheld or delayed, and except
as otherwise expressly contemplated by this Agreement, disclosed in the
Company Disclosure Schedule or required by applicable Law (such party
availing itself of the exception as to applicable Law shall first
consult with the other party)):
(i) the business of it and its Subsidiaries shall be
conducted in the ordinary and usual course and, to the extent
consistent therewith, it and its Subsidiaries shall use all
reasonable efforts to preserve its business organization intact
and maintain its existing relations and goodwill with customers,
suppliers, regulators, distributors, creditors, lessors, employees
and business associates;
(ii) it shall not (A) propose to amend or adopt an amendment
to its articles of incorporation or by-laws or amend, modify or
terminate the Company Rights Agreement;
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provided, however, that nothing in this Agreement shall prevent
the Company from reducing below 10% the beneficial ownership
threshold in the definition of an Acquiring Person (as defined in
the Company Rights Agreement) or extending the Final Expiration
Date of the Company Rights Agreement (as defined therein) or
adopting a new rights agreement having substantially similar terms
as the Company Rights Agreement and not inconsistent with (x) this
provision or (y) Section 5.1(o) (assuming references therein are
to such a new rights agreement) or (z) the transactions
contemplated by this Agreement; (B) split, combine, subdivide or
reclassify its outstanding shares of capital stock; (C) declare,
set aside or pay any dividend or distribution payable in cash,
stock or property in respect of any capital stock, other than
regular quarterly cash dividends in amounts consistent with its
past practice or rights to purchase Company Shares pursuant to any
successor agreement to the Company Rights Agreement, adopted in
accordance with the terms of this Agreement; (D) change accounting
practices (including any material writeoff) in effect at December
31, 1997, except as required by changes in GAAP as concurred in by
the Company's independent auditors; or (E) repurchase, redeem or
otherwise acquire or permit any of its Subsidiaries to purchase or
otherwise acquire any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any
shares of its capital stock, but subject to the Company's
obligations under subparagraph (iii) below;
(iii) notwithstanding anything herein to the contrary
neither it nor any of its Subsidiaries shall take any action that
would reasonably be expected to prevent the Merger from qualifying
for "pooling-of-interests" accounting treatment or as a
"reorganization" within the meaning of Section 368(a) of the Code
or that would cause any of its representations and warranties
herein to become untrue in any material respect;
(iv) neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards of
stock-based compensation or other benefits under, amend or
otherwise modify, any Company Compensation and Benefit Plans or
increase the salary, wage, bonus or other compensation of any
directors, officers or key employees for actions necessary to
satisfy existing contractual obligations under Company
Compensation and Benefit Plans existing as of the date hereof
except (A) for grants or awards to directors, officers and
employees of it or its Subsidiaries under existing Company
Compensation and Benefit Plans in such amounts and on such terms
as are consistent with past practice, or (B) in the normal and
usual course of business (which shall include normal periodic
performance reviews and related Company Compensation and Benefit
Plan increases and the provision of individual Company
Compensation and Benefit Plans consistent with past practice for
promoted or newly hired officers and employees and the adoption of
Company Compensation and Benefit Plans for employees of new
Subsidiaries in amounts and on terms consistent with past
practice); provided, that in no event shall it institute a broad
based change in compensation, unless it shall have used its
reasonable efforts to provide Parent with prior notice of any such
change or, if the Company was unable to provide such prior notice,
the Company shall provide Parent with notice as soon as
practicable following any such change;
(v) neither it nor any of its Subsidiaries shall make any
capital expenditures in any period of 12 consecutive months
following the date hereof in an aggregate amount in excess of 5%
of the aggregate amount reflected in the Company's capital
expenditure budget for such year a copy of which has been provided
to Parent;
(vi) neither it nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, encumber or otherwise
dispose of any of its or its Subsidiaries property or assets
(including capital stock of any of its Subsidiaries) with a fair
market value in
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excess of $1,000,000 individually or $5,000,000 in the aggregate
except for transfers, leases, licenses, sales, mortgages, pledges,
encumbrances, or other dispositions in the ordinary course of
business consistent with past practice;
(vii) neither it nor any of its Subsidiaries shall issue,
deliver, sell, or encumber shares of any class of its common stock
or any securities convertible into, or any rights, warrants or
options to acquire, any such shares except, any such shares issued
pursuant to options and other awards outstanding on the date
hereof under the Company Stock Plans, awards of options and other
awards granted hereafter under the Company Stock Plans in
accordance with this Agreement and shares issuable pursuant to
such awards;
(viii) other than with respect to the purchase of the
Nebraska operations and access lines of General Telephone &
Electronics Corp. on terms reasonably satisfactory to Parent, and
except for the exercise of the Company's option to purchase the
remaining 18.75% of the Omaha Cellular Limited Partnership which
the Company does not currently own, neither of which shall be
limited or otherwise count toward the limitation set forth herein,
neither it nor any of its Subsidiaries shall acquire or agree to
require any business, whether by merger, consolidation, purchase
of property or assets or otherwise (valuing any non-cash
consideration at its fair market value as of the date of the
agreement for such acquisition) for consideration valued in excess
of $5,000,000 in aggregate; provided, that no such acquisition
would prevent, delay or impair its ability to consummate the
transactions contemplated by this Agreement. Notwithstanding the
foregoing, neither it nor any of its Subsidiaries shall acquire
any business the acquisition of which would subject Parent and its
Subsidiaries following the consummation of the Merger to any
Commercial Mobile Radio Service spectrum aggregation limit
restriction pursuant to the provisions of 47 C.F.R. Section 20.6
or place Parent and its Subsidiaries following the consummation of
the Merger in violation of the Cellular Cross Ownership limits
contained in 47 C.F.R. Section 22.942. For purposes of this clause
(viii) consideration paid with respect to any acquisition shall be
deemed to include the aggregate amount of capital expenditures
that the Company is obligated to make at any time or would be
necessary within two years after the date of acquisition;
(ix) neither it nor its Subsidiaries shall enter into any
business other than the telecommunications business and those
businesses traditionally associated with the telecommunications
business; and
(x) neither it nor any of its Subsidiaries shall authorize
or enter into any agreement to do any of the foregoing.
6.1(b) Operations of Parent. Parent covenants and agrees as to
itself and its Subsidiaries that after the date hereof and prior to the
Effective Time (unless the Company shall otherwise approve in writing,
which approval shall not be unreasonably withheld or delayed, and except
as otherwise expressly contemplated by this Agreement, disclosed in the
Parent Disclosure Schedule or required by applicable Law)
(i) the business of it and its Subsidiaries shall be
conducted in the ordinary and usual course and, to the extent
consistent therewith, it and its Subsidiaries shall use all
reasonable best efforts to preserve its business organization
intact and maintain its existing relations and goodwill with
customers, suppliers, regulators, distributors, creditors,
lessors, employees and business associates;
(ii) it shall not (A) amend its certificate of incorporation
or by-laws in any manner that would prohibit or hinder, impede or
delay in any material respect the Merger or the
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consummation of the transactions contemplated hereby, provided
that any amendment to its certificate of incorporation to increase
the authorized number of shares of any class or series of the
capital stock of Parent shall in no way be restricted by the
foregoing; (B) declare, set aside or pay any dividend or other
distribution payable in cash or property (other than Parent Common
Stock or rights to purchase Parent Common Stock pursuant to any
successor agreement to the Parent Rights Agreement) in respect of
any capital stock, other than per share regular quarterly cash
dividends in amounts consistent with its past practice; or (C)
repurchase, redeem or otherwise acquire, or permit any of its
Subsidiaries to purchase or otherwise acquire, except in open
market transactions in connection with the Parent Stock Plans, any
shares of its capital stock or any securities convertible into or
exchangeable for any shares of its capital stock, but subject to
Parent's obligations under subparagraph (iii) below;
(iii) neither it nor any of its Subsidiaries shall take any
action that would reasonably be expected to prevent the Merger
from qualifying for "pooling-of-interests" accounting treatment or
as a tax-free "reorganization" within the meaning of Section
368(a) of the Code or that would cause any of its representations
and warranties herein to become untrue in any material respect;
(iv) neither it nor any of its Subsidiaries shall enter any
business other than the telecommunications or information services
businesses and those businesses traditionally associated with the
telecommunications or information services business; and
(v) neither it nor any of its Subsidiaries shall authorize
or enter into an agreement to do any of the foregoing.
6.1(c) Reliance. Parent and the Company agree that any written
approval obtained under this Section 6.1 may be relied upon by the other
party if signed by the Chief Executive Officer or another executive
officer of the other party.
6.2 Acquisition Proposals.
6.2(a) Company Proposals. The Company agrees that neither it nor
any of its Subsidiaries shall, and that it shall direct and use its best
efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) (the Company, its
Subsidiaries and their officers, directors, employees, agents and
representatives being the "Company Representatives") not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation or similar
transaction involving, or any purchase of, or tender offer for, any of
the assets of it or any of its Subsidiaries or its voting securities if,
as a result of such transaction, (i) the stockholders of the Company
would not hold more than fifty percent of the voting securities of the
surviving corporation or its ultimate parent, (ii) the directors of the
Company would not constitute a majority of the board of directors of the
surviving corporation or its ultimate parent, or (iii) another Person
would acquire more than fifty percent of the assets of the Company and
its Subsidiaries (any such proposal or offer being hereinafter referred
to as a "Company Acquisition Proposal"). The Company further agrees that
neither it nor any of its Subsidiaries shall, and that it shall direct
and use its best efforts to cause the Company Representatives not to,
directly or indirectly, have any discussion with or provide any
confidential information or data to any Person relating to a Company
Acquisition Proposal or engage in any negotiations concerning a Company
Acquisition Proposal, or otherwise facilitate any effort or attempt to
make or implement a Company Acquisition Proposal; provided, however,
that nothing contained in this Agreement shall prevent either the
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Company or the Company Representatives from (i) complying with Rule 14e-
2 promulgated under the Exchange Act with regard to a Company
Acquisition Proposal; (ii) engaging in any discussions or negotiations
with or providing any information to, any Person in response to an
unsolicited bona fide written Company Acquisition Proposal by any such
Person; or (iii) recommending such an unsolicited bona fide written
Company Acquisition Proposal to the stockholders of the Company if in
such case referred to in clause (ii) or (iii), (A) the Board of
Directors of the Company at a meeting determines in good faith (upon the
advice of its financial advisor) that such Company Acquisition Proposal
is reasonably likely to be completed, taking into account all legal,
financial, regulatory and other aspects of the proposal and the Person
making the proposal, and would, if consummated, result in a transaction
more favorable to the Company's stockholders from a financial point of
view than the transaction contemplated by this Agreement (any such more
favorable Company Acquisition Proposal being referred to in this
Agreement as a "Superior Company Proposal"), and (B) the Board of
Directors of the Company at a meeting determines in good faith upon the
advice of outside legal counsel that such action is necessary for the
Board of Directors to comply with its fiduciary duty under applicable
law and (C) prior to providing any information or data to any Person in
connection with a Company Acquisition Proposal by any such Person, the
Board of Directors of the Company shall receive from such Person a
confidentiality agreement in customary form; provided, that such
confidentiality agreement shall not contain terms that prevent the
Company from complying with its obligations under this Section 6.2.
6.2(b) Cessation and Notification. The Company agrees that it will
(i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any Company Acquisition Proposal, (ii) take
the necessary steps to promptly inform the individuals or entities
referred to in the first sentence of Section 6.2(a) of the obligations
undertaken in Section 6.2(a) and (iii) notify Parent immediately if any
such inquiries, proposals or offers are received by, any such
information is requested from, or any such discussions or negotiations
are sought to be initiated or continued with, any of its representatives
indicating, in connection with such notice, the name of such Person and
the terms and conditions of any proposals or offers, and thereafter
shall inform Parent of any material modification of the terms of any
such proposal or offer or the withdrawal thereof. The Company also
agrees that it will promptly request each Person that has heretofore
executed a confidentiality agreement in connection with its
consideration of any Company Acquisition Proposal to return all
confidential information heretofore furnished to such Person by or on
behalf of it or any of its Subsidiaries.
6.3 Information Supplied. The Company and Parent each agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in (a) the Registration Statement on Form S-4 to be filed with the SEC by
Parent in connection with the issuance of shares of Parent Common Stock in the
Merger (including the proxy statement and prospectus (the "Prospectus/Proxy
Statement") constituting a part thereof) (the "S-4 Registration Statement")
will, at the time the S-4 Registration Statement becomes effective under the
Securities Act, and (b) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the time
of the meeting of stockholders of the Company to be held in connection with the
Merger, in any such case, 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. If at any time prior to the Effective Time any
information relating to Parent or the Company, or any of their respective
affiliates, officers or directors, should be discovered by Parent or the
Company which should be set forth in an amendment or supplement to either the
S-4 Registration Statement or the Prospectus/Proxy Statement, so that any of
such documents would not include any misstatement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such
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information shall be promptly filed with the Parent and, to the extent required
by law, disseminated to the stockholders of the Company.
6.4 Stockholders Meeting. The Company will take, in accordance with
applicable law and its articles of incorporation and by-laws, all action
necessary to convene a meeting of holders of Company Shares (the "Company
Stockholders Meeting") as promptly as practicable after the S-4 Registration
Statement is declared effective to consider and vote upon the adoption of this
Agreement. Subject to fiduciary obligations under applicable law and the terms
of this Agreement, the Company's Board of Directors shall recommend that the
stockholders of the Company adopt this Agreement and thereby approve the
transactions contemplated hereby and shall take all lawful action to solicit
such adoption.
6.5 Filings; Other Actions; Notification.
6.5(a) Filings. Parent and the Company shall promptly prepare and
file with the SEC the Prospectus/Proxy Statement, and Parent shall
prepare and file with the SEC the S-4 Registration Statement as promptly
as practicable. Parent and the Company each shall use all reasonable
best efforts to have the S-4 Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing,
and promptly thereafter mail the Prospectus/Proxy Statement to the
stockholders of the Company. Parent shall also use all reasonable best
efforts to obtain prior to the effective date of the S-4 Registration
Statement all necessary state securities law or "blue sky" permits and
approvals required in connection with the Merger and to consummate the
other transactions contemplated by this Agreement and will pay all
expenses incident thereto.
6.5(b) Other Actions. The Company and Parent each shall use all
reasonable best efforts to cause (i) the Merger to qualify for "pooling-
of-interests" accounting treatment and (ii) to be delivered to the other
party and its directors a letter of its independent auditors, dated (A)
the date on which the S-4 Registration Statement shall become effective
and (B) the Closing Date, and addressed to the other party and its
directors, in form and substance customary for "comfort" letters
reasonably satisfactory to the addressee delivered by independent public
accountants in connection with registration statements similar to the S-
4 Registration Statement.
6.5(c) Cooperation. The Company and Parent shall cooperate with
each other and use (and shall cause their respective Subsidiaries to
use) all their respective reasonable best efforts to take or cause to be
taken all actions, and do or cause to be done all things, necessary,
proper or advisable on its part under this Agreement and applicable Laws
to consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including
cooperating with respect to any litigation regarding the transactions
contemplated hereby, preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings and other documents and to obtain as promptly as practicable all
consents, registrations, approvals, permits and authorizations required
to be obtained from any third party and/or any Governmental Entity in
connection with the execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated
hereby; provided, however, that nothing in this Section 6.5 shall
require, or be construed to require, Parent or the Company to agree to,
or comply with, any conditions to the granting of any such consent,
registration, approval, permit or authorization by any Governmental
Entity if compliance with such conditions, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect
on the Surviving Corporation or Parent following the Effective Time;
provided, further, that any divestiture by either Parent or the Company
or any of their respective Subsidiaries reasonably required to cause the
Surviving Corporation to be in compliance with the Commercial Mobile
Radio Service spectrum aggregation limits established by the FCC in 47
C.F.R. Section 20.6 and the Cellular Cross Ownership limits contained in
47 C.F.R. Section 22.942 shall be deemed not to have any adverse effect
on either the Surviving Corporation or Parent following the Effective
Time
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(a "Regulatory Material Adverse Effect"). Subject to applicable laws
relating to the exchange of information, Parent and the Company shall
have the right to review in advance, and to the extent practicable each
will consult the other on, all the information relating to Parent or the
Company, as the case may be, and any of their respective Subsidiaries,
that appear in any filing made with, or written materials submitted to,
any third party and/or any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement. In
exercising the foregoing right, each of the Company and Parent shall act
reasonably and as promptly as practicable.
6.5(d) Information. The Company and Parent each shall, upon
request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in connection
with the Prospectus/Proxy Statement, the S-4 Registration Statement or
any other statement, filing, notice or application made by or on behalf
of Parent, the Company or any of their respective Subsidiaries to any
third party and/or any Governmental Entity in connection with the Merger
and the transactions contemplated by this Agreement.
6.5(e) Notification. The Company and Parent each shall keep the
other apprised of the status of matters relating or completion of the
transactions contemplated hereby, including promptly furnishing the
other with copies or notices or other communications received by Parent
or the Company, as the case may be, or any of its Subsidiaries, from any
third party and/or any Governmental Entity with respect to the Merger
and the other transactions contemplated by this Agreement. Each of the
Company and Parent shall give prompt notice to the other of any change
that is reasonably likely to result in a Material Adverse Effect on it
or of any failure of any condition to the other party's obligations to
effect the Merger set forth in Article 7.
6.6 Access; Consultation.
6.6(a) Access. Upon reasonable notice, and except as may otherwise
be required by applicable law, the Company and Parent each shall (and
shall cause its Subsidiaries to) afford the Parent Representatives or
the Company Representatives, as the case may be, reasonable access,
during normal business hours throughout the period prior to the earlier
of Effective Time and the Termination Date to its properties, books,
contracts and records and, during such period, each shall (and shall
cause its Subsidiaries to) furnish promptly to the other all information
concerning its business, properties and personnel as may reasonably be
requested, provided that no investigation pursuant to this Section shall
affect or be deemed to modify any representation or warranty made by the
Company or Merger Sub hereunder, and provided, further, that the
foregoing shall not require the Company or Parent to permit any
inspection, or to disclose any information, that in the reasonable
judgment of the Company or Parent, as the case may be, would result in
the disclosure of any trade secrets of third parties or violate any of
its obligations with respect to confidentiality if the Company or
Parent, as the case may be, shall have used all reasonable best efforts
to obtain the consent of such third party to such inspection or
disclosure. All requests for information made pursuant to this Section
shall be directed to an executive officer of the Company or Parent, as
the case may be, or such Person as may be designated by any such
executive officer, as the case may be.
6.6(b) Consultation. From the date hereof to the Effective Time,
Parent and the Company agree to consult with each other on a regular
basis on a schedule to be agreed with regard to their respective
operations.
6.7 Affiliates.
6.7(a) Identification of Affiliates. The Company shall prior to
the Effective Date deliver to the other a letter reasonably satisfactory
to the Parent identifying all Persons whom the Company
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believes to be, at the date of the Company Stockholders Meeting of such
party, "affiliates" of such party for purposes of applicable
interpretations regarding use of the pooling-of-interests accounting
method and for purposes of Rule 145 under the Securities Act. The
Company shall use all reasonable best efforts to cause each Person who
is identified as an "affiliate" of the Company in the letter referred to
above to deliver to Parent on or prior to the date of the Company
Stockholders Meeting a written agreement, in the form attached hereto as
Exhibit E (the "Company Affiliate's Letter"). Prior to the Effective
Time, Company shall use all reasonable best efforts to cause each
additional Person who is identified as an "affiliate" after the date of
the relevant Stockholders Meeting to execute the applicable written
agreement as set forth in this Section 6.7, as soon as practicable after
such Person is identified.
6.7(b) Transfer Restrictions. If the Merger would otherwise
qualify for pooling-of-interests accounting treatment, shares of Parent
Common Stock issued to such affiliates of the Company in exchange for
Company Shares shall not be transferable until such time as financial
results covering at least 30 days of combined operations of Parent and
the Company shall have been published in accordance with SEC Accounting
Series Release 135 and SEC Staff Accounting Bulletins 65 and 26. Any
Company Shares held by any such affiliate shall not be transferable,
regardless of whether such affiliate has provided the applicable written
agreement referred to this Section, if such transfer, either alone or in
the aggregate with other transfers by affiliates, would preclude
Parent's ability to account for the business combination to be effected
by the Merger as a pooling-of-interests. The Company shall not register
the transfer of any Certificate, unless such transfer is made in
compliance with the foregoing.
6.8 Stock Exchange Listing and De-Listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
to be approved for listing on the NYSE, subject to official notice or issuance,
prior to the Closing Date. The Surviving Corporation shall use its best efforts
to cause the Company Shares to be de-listed from the Nasdaq National Stock
Market and de-registered under the Exchange Act as soon as practicable
following the Effective Time.
6.9 Publicity. The initial press release with respect to the Merger shall
be a joint press release and thereafter the Company and Parent shall consult
with each other prior to issuing any press releases or otherwise making public
announcements with respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity (including any national securities
exchange) with respect thereto, except as may be required by law or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange.
6.10 Benefits.
6.10(a) Stock Options.
(i) At the Effective Time, each outstanding option to
purchase Company Shares (a "Company Option") under the Company
Stock Plans, whether vested or unvested, shall be deemed to
constitute an option to acquire, on the same terms and conditions
as were applicable under such Company Option (except to the extent
such terms and conditions are altered in accordance with their
terms as a result of the consummation of the transactions
contemplated by this Agreement), the same number of shares of
Parent Common Stock as the holder of such Company Option would
have been entitled to receive pursuant to the Merger had such
holder exercised such Company Option in full immediately prior to
the Effective Time (rounded up to the nearest whole number) (a
"Substitute Option"), at an exercise price per share (rounded down
to the nearest whole cent) (the "Substitute Option Price") equal
to (A) the aggregate exercise price for the Company Shares
otherwise
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purchasable pursuant to such Company Option divided by (B) the
number of full shares of Parent Common Stock deemed purchasable
pursuant to such Company Option in accordance with the foregoing.
At or prior to the Effective Time, the Company shall make all
necessary arrangements with respect to the Company Stock Plans to
permit the assumption of the unexercised Company Options by Parent
pursuant to this Section and as soon as practicable after the
Effective Time Parent shall use its best efforts to register under
the Securities Act on Form S-8 or other appropriate form (and use
its best efforts to maintain the effectiveness thereof) shares of
Parent Common Stock issuable pursuant to all Substitute Options.
The remaining terms of the Company Options (including, without
limitation, vesting and acceleration terms) and the plans under
which each were issued shall continue to apply.
(ii) Effective at the Effective Time, Parent shall assume
each Company Option in accordance with the terms of the Company
Stock Plan under which it was issued and the stock option
agreement by which it is evidenced. As promptly as practicable
after the Effective Time, the Company shall deliver to the
participants in the Stock Plans appropriate notices setting forth
such participants' rights pursuant to such assumed Company
Options. The Company agrees to use its best efforts to obtain
necessary consents of holders of Company Options to the conversion
described in this Section 6.10(a)(ii).
6.10(b) Employee Benefits. Parent agrees that it shall cause the
Surviving Corporation for at least two years after the Effective Time to
provide or cause to be provided to employees of the Company and its
Subsidiaries compensation and benefit plans that are no less favorable,
in the aggregate, than the Company Compensation and Benefit Plans
disclosed in Section 6.10(b) of the Company Disclosure Schedule;
provided, however, that if during this period Parent implements any
widespread increase or decrease in benefits under compensation and
benefit plans or in the cost thereof to participants under compensation
and benefit plans applicable to employees of Parent and its Subsidiaries
(other than the Surviving Corporation and its Subsidiaries), the
Surviving Corporation shall proportionately adjust the benefits under
the Company's compensation and benefit plans or the cost thereof to
participants, and provided, further with respect to employees who are
subject to collective bargaining, all benefits shall be provided only in
accordance with the applicable collective bargaining agreement. Parent
shall, and shall cause the Surviving Corporation to, honor, pursuant to
their terms, all employee benefit obligations existing at the Closing
Date to current and former employees under the Company Compensation and
Benefit Plans.
6.11 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense, except that expenses incurred in connection with the
filing fee for the S-4 Registration Statement and printing and mailing the
Prospectus/Proxy Statement and the S-4 Registration Statement and the filing
fee under the HSR Act shall be paid by Parent.
6.12 Indemnification; Directors' and Officers' Insurance.
6.12(a) Indemnification of Directors and Officers. From and after
the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, indemnify and hold harmless each present and former
director and officer of the Company (when acting in such capacity)
determined as of the Effective Time (the "Indemnified Parties"), against
any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at or
prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent permitted under Nebraska
law (and the Surviving Corporation
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shall also advance expenses as incurred to the fullest extent permitted
under applicable law, provided the Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification).
6.12(b) Notification of Claim. Any Indemnified Party wishing to
claim indemnification under paragraph (a) of this Section 6.12, upon
learning of any such claim, action, suit, proceeding or investigation,
shall promptly notify the Surviving Corporation thereof, but the failure
to so notify shall not relieve the Surviving Corporation of any
liability it may have to such Indemnified Party if such failure does not
materially prejudice the Surviving Corporation. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before
or after the Effective Time), (i) the Surviving Corporation shall have
the right to assume the defense thereof and the Surviving Corporation
shall not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that
if the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties advises that there are issues which
raise conflicts of interest between the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received.
6.12(c) Maintenance of D&O Insurance. The Surviving Corporation
shall maintain a policy of officers' and directors' liability insurance
for acts and omissions occurring prior to the Effective Time ("D&O
Insurance") with coverage in amount and scope at least as favorable as
the Company's existing directors' and officers' liability insurance
coverage for a period of six years after the Effective Time.
6.12(d) Merger/Sale of Assets. If Parent or any of its successors
or assigns (i) shall consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case,
proper provisions shall be made so that the successors and assigns of
Parent shall assume all of the obligations set forth in this Section.
6.12(e) Intended Benefit. The provisions of this Section are
intended to be for the benefit of, and shall be enforceable by, each of
the Indemnified Parties, their heirs and their representatives.
6.13 Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its Board of Directors shall
grant such approvals and take such actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement or by the Merger and otherwise act to eliminate
or minimize the effects of such statute or regulation on such transactions.
6.14 Confidentiality. The Company and Parent each acknowledges and
confirms that it has entered into a Confidentiality Agreement, dated November
2, 1998 (the "Confidentiality Agreement"), that information provided by each
party hereto to the other party hereto pursuant to this Agreement is subject to
the terms of the Confidentiality Agreement and that the Confidentiality
Agreement shall remain in full force and effect in accordance with its terms,
except that notwithstanding any provision to the contrary contained in the
Confidentiality Agreement, the Confidentiality Agreement shall not terminate
until the earlier to occur of the following: (a) the Effective Time and (b) the
expiration of two years following the date of any termination of this Agreement
pursuant to Article 8.
6.15 Charitable Contributions/Community Support. Parent hereby agrees
that the Company's and its Subsidiaries' provision of charitable contributions
and community support in its and their service
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areas achieves a number of important corporate goals and that after the
Effective Time, subject to the fiduciary obligations of the Surviving
Corporation's Board of Directors, the Surviving Corporation shall, and Parent
shall cause the Surviving Corporation to continue to provide charitable
contributions and community support within the service areas of the Company and
its Subsidiaries at the levels previously disclosed to Parent as set forth in
Schedule 6.15.
6.16 Operations and Employment in Lincoln, Nebraska. Within 60 days from
the date of this Agreement, Parent and Surviving Corporation shall deliver to
the Company a written plan that establishes Lincoln, Nebraska as the designated
headquarters of the Nebraska-Iowa market area of the Communications Group's
consolidated operations of Parent and Surviving Corporation, which plan shall
be implemented on a timely basis following the Effective Time. Pursuant to and
in accordance with such plan, Parent's and Surviving Corporation's consolidated
employment for the two years following the Effective Time shall be no less than
900 at such operations in Lincoln, Nebraska.
6.17 Control of the Company's Operations. Nothing contained in this
Agreement shall give Parent or the Company, directly or indirectly, rights to
control or direct the operations of the other prior to the Effective Time.
Prior to the Effective Time, each of Parent and the Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control
and supervision of its operations.
ARTICLE 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
7.1(a) Stockholder Approval. This Agreement shall have been duly
adopted by holders of Company Shares constituting the Company Requisite
Vote and have been duly adopted by the sole stockholder of Merger Sub.
7.1(b) NYSE Listing. The shares of Parent Common Stock issuable to
the Company stockholders pursuant to this Agreement shall have been
authorized for listing on the NYSE upon official notice of issuance.
7.1(c) Governmental Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and all Company Required Consents (other than those Company
Required Consents relating to agreements subject to rights of first
refusal as set forth in the Company's Disclosure Schedule) and Parent
Required Consents from or with any Governmental Entity shall have been
made or obtained pursuant to a Final Order, free of any conditions
(other than conditions that are not reasonably likely, either
individually or in the aggregate, to have a Regulatory Material Adverse
Effect). For the purposes of this Agreement, "Final Order" means an
action or decision that has been granted as to which (i) no request for
a stay or any similar request is pending, no stay is in effect, the
action or decision has not been vacated, reversed, set aside, annulled
or suspended and any deadline for filing such a request that may be
designated by statute or regulation has passed, (ii) no petition for
rehearing or reconsideration or application for review is pending and
the time for the filing of any such petition or application has passed,
(iii) no Governmental Entity has undertaken to reconsider the action on
its own motion and the time within which it may effect such
reconsideration has passed and (iv) no appeal is pending (including
other administrative or judicial review) or in effect and any deadline
for filing any such appeal that may be specified by statute or rule has
passed, which in any such
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case (i), (ii), (iii) or (iv) is reasonably likely to result in
vacating, reversing, setting aside, annulling, suspending or modifying
such action or decision (in any such case in a manner which would have a
Regulatory Material Adverse Effect following the Effective Time).
7.1(d) Laws and Order. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins or otherwise prohibits consummation of the
Merger or the other transactions contemplated by this Agreement or that
is, individually or in the aggregate with all other such Laws,
reasonably likely to have a Material Adverse Effect on Parent or the
Company (collectively, an "Order"), and no Governmental Entity shall
have instituted any proceeding, or, in the case of a federal
Governmental Entity, threatened in writing to institute any proceeding,
seeking any such Order.
7.1(e) S-4. The S-4 Registration Statement shall have become
effective under the Securities Act. No stop order suspending the
effectiveness of the S-4 Registration Statement shall have been issued,
and no proceedings for that purpose shall have been initiated or be
threatened by the Parent.
7.1(f) Accountants' Letters. Parent and the Company shall have
received the "comfort" letters described in Section 6.5(b). Parent and
the Company shall receive a letter dated as of the Effective Time from
Parent's independent public accounting firm to the effect that the
Merger will qualify for "pooling-of-interests" accounting treatment.
7.1(g) Dissenters' Rights Limit. The holders of not more than 9%
of the outstanding Company Shares shall have exercised their dissenters'
rights under the NBCA Dissenters' Rights Provisions.
7.2 Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
7.2(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects as of the Closing Date as though made
on and as of the Closing Date (except to the extent such representations
and warranties speak as of an earlier date), and Parent shall have
received a certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
7.2(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received a certificate signed on behalf of
the Company by an executive officer of the Company to such effect.
7.2(c) Consents Under Agreements. The Company shall have obtained
the consent or approval of each Person whose consent or approval shall
be required in order to consummate the transactions contemplated by this
Agreement under any Contract to which the Company or any of its
Subsidiaries is a party, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not
reasonably likely to have, a Material Adverse Effect on the Company.
7.2(d) Tax Opinion. Parent shall have received the opinion of
Kutak Rock, counsel to Parent, dated the Closing Date, to the effect
that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and
that each of
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Parent, Merger Sub and the Company will be a party to that
reorganization within one meaning of Section 368(b) of the Code; it
being understood that in rendering such opinion, such counsel shall be
entitled to rely on certain customary representations and assumptions.
7.2(e) Special FCC Approvals. The FCC shall have issued any
required waivers under Section 61.41 of the FCC's Rules so that: (i)
Parent's existing local exchange properties will not become subject to
the FCC's "price cap" regulations; (ii) Parent will be entitled to
continue to operate the Company's local exchange properties under the
FCC's "price cap" regulations, or, in Parent's discretion, to operate
the Company's local exchange properties under "rate-of-return"
regulation; and (iii) no other Parent local exchange properties
participating in the National Exchange Carrier Association pools will be
required to leave the pools as a result of the transaction contemplated
by the Agreement (such waivers set forth in (i), (ii) or (iii) hereof
shall be referred to as the "Special FCC Approvals").
7.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or Prior to the Effective Time of the following conditions:
7.3(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be
true and correct in all material respects as of the Closing Date as
though made on and as of the Closing Date (except to the extent such
representations and warranties speak as of an earlier date), and the
Company shall have received a certificate signed on behalf of Parent by
an executive officer of Parent to such effect.
7.3(b) Performance of Obligations of Parent and Merger Sub. Each
of Parent and Merger Sub shall have performed in all material respects
all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Parent and Merger Sub by an executive
officer of Parent to such effect.
7.3(c) Tax Opinion. The Company shall have received the opinion of
Foley & Lardner, counsel to the Company, dated the Closing Date, to the
effect that the Merger will be treated for Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code,
and that each of Parent, Merger Sub and the Company will be a party to
that reorganization within the meaning of Section 368(b) of the Code; it
being understood that in rendering such opinion, such counsel shall be
entitled to rely on certain customary representations and assumptions.
ARTICLE 8
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent, by action
of their respective Boards of Directors.
8.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or the Company if (a)
the Merger shall not have been consummated by May 31, 1999 (the "Termination
Date"), whether such date is before or after the date of approval by the
stockholders of the Company; provided, however, that if Parent or the Company
reasonably determines that additional time is necessary in connection with
obtaining a Parent Required Consent or a Company Required Consent from or
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with any Governmental Entity, the Termination Date may be extended for up to 60
calendar days at any one time by Parent or the Company from time to time by
written notice to the other party up to a date not beyond July 30, 1999, which
date shall be deemed to be the Termination Date, (b) the adoption of this
Agreement by the Company's stockholders required by Section 7.l(a) shall not
have occurred at a meeting duly convened therefor or at any adjournment or
postponement thereof, or (c) any Order permanently restraining, enjoining or
otherwise prohibiting consummation of the Merger shall become final and non-
appealable (whether before or after the adoption or approval by the
stockholders of the Company); provided, that the right to terminate this
Agreement pursuant to clause (a) above shall not be available to any party that
has breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure of the Merger
to be consummated.
8.3 Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the adoption of this Agreement by the stockholders of the Company
referred to in Section 7.l(a), by action of the Board of Directors of the
Company:
8.3(a) Superior Company Proposal. If (i) the Board of Directors of
the Company determines that a transaction constitutes a Superior Company
Proposal and the Company desires to enter into an agreement, with
respect thereto and (ii) Parent does not make, within three business
days after receipt of the Company's written notification of its desire
to enter into a binding agreement for a Superior Company Proposal, the
terms of which are specified in such notice, an offer that the Board of
Directors of the Company believes, in good faith after consultation with
its financial advisors, is at least as favorable, from a financial point
of view, to the stockholders of the Company as the Superior Company
Proposal, and (iii) upon such date of termination the Company enters
into a definitive agreement with respect to such Superior Company
Proposal, and (iv) the Company pays to Parent the Termination Fee set
forth in 8.5(b). The Company agrees to notify Parent promptly if its
desire to enter into a written agreement referred to in its notification
shall change at any time after giving such notification; or
8.3(b) Modification of Board Recommendation; Material Breach;
Material Adverse Effect. If (i) there has been a material breach by
Parent or Merger Sub of any representation, warranty, covenant or
agreement contained in this Agreement which (A) would result in a
failure of a condition set forth in Section 7.3(a) or 7.3(b) and (B)
cannot be or is not cured prior to the Termination Date, or (ii) there
has been a change, event, development or combination of developments
that has occurred after the date hereof with respect to Parent which,
individually or in the aggregate, has had or could have a Material
Adverse Effect.
8.3(c) Failure to Adjust Exchange Ratio. If the Final Parent Stock
Price is equal to or less than $43, and the Parent does not increase the
Exchange Ratio as provided in Section 4.1.
8.4 Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of
the Board of Directors of Parent if (a) the Board of Directors of the Company
shall have withdrawn or adversely modified its approval or recommendation to
the Company's stockholders of this Agreement, or failed to reconfirm such
recommendation within 5 business days after a written request by Parent to do
so; provided that such a request is made after the Board of Directors of the
Company or any Company Representative shall have taken any of the actions that
would be proscribed by Section 6.2(a) but for the exception therein allowing
certain actions to be taken pursuant to clause (B) or (C) of the provision
thereof with respect to any bona fide written Company Acquisition Proposal that
has not been withdrawn or rejected by the Board of Directors of the Company,
(b) there has been a material breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement which (i) would
result in a failure of a condition set forth in Section 7.2(a), 7.2(b) or
7.2(c) and (ii) cannot be or is not cured prior to the
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Termination Date, (c) if the Company or any Company Representative shall
violate Section 6.2(b) or shall take any of the actions that would be
proscribed by Section 6.2(a) but for the exception therein allowing certain
actions to be taken pursuant to clause (B) or (C) of the provision thereof
(other than any such actions taken pursuant to such clause (B) with respect to
any bona fide written Company Acquisition Proposal received after the date
hereof that was not solicited by the Company after the date hereof); (d) 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 Effective Date and the
Board of Directors of the Company fails to recommend against acceptance of such
tender offer or exchange offer by Company's stockholders or (e) there has been
a change, event, development or combination of developments that has occurred
after the date hereof with respect to the Company which, individually or in the
aggregate, could have a Material Adverse Effect.
8.5 Effect of Termination and Abandonment.
8.5(a) Void. In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 8, this Agreement
(other than as set forth in Section 9.1) shall become void and of no
effect with no liability on the part of any party hereto (or of any of
its directors, officers, employees, agents, legal or financial advisors
or other representatives); provided, however, no such termination shall
relieve any party hereto from any liability for damages resulting from
any willful and intentional breach of this Agreement (to the extent any
such damages exceed any Termination Fee that may have been paid pursuant
to Section 8.5(b) or 8.5(c)) or from any obligation to pay, if
applicable, the Termination Fee pursuant to Section 8.5(b) or 8.5(c).
8.5(b) Company Termination Fee. In the event that (i) a bona fide
Company Acquisition Proposal shall have been made to the Company and
made known to stockholders generally or have been made directly to
stockholders generally or any Person shall have publicly announced an
intention (whether or not conditional) to make a bona fide Company
Acquisition Proposal and such Company Acquisition Proposal or announced
intention shall not have been withdrawn prior to the Company's
Stockholders Meeting and thereafter this Agreement is terminated by
either Parent or the Company pursuant to Section 8.2(b) or 8.4(b)
(solely with respect to a willful and intentional breach) and within
twelve (12) months after such termination the Company shall have entered
into an agreement to consummate a transaction that would constitute a
Company Acquisition Proposal if it were the subject of a proposal, or
(ii) this Agreement is terminated (A) by the Company pursuant to Section
8.3(a) or (B) by Parent pursuant to Section 8.4(a), (b) (solely with
respect to a willful and intentional breach) (c) or (d), then the
Company shall promptly, but in no event later than (i) two days after
the date of termination pursuant to Section 8.4(a), (b) (solely with
respect to a willful and intentional breach) or (c), (d) or on the
Closing Date of any Company Acquisition Proposal described in clause (i)
to this Section 8.5(b), pay Parent a fee equal to two percent (2%) of
the aggregate market value of the Company Shares as determined by
multiplying the closing price of the Company's Shares on Nasdaq National
Market on the Termination Date times the total outstanding Shares of
Company Common Stock on such date (the "Termination Fee"), which amount
shall be exclusive of any expenses to be paid pursuant to Section 6.11,
payable by wire transfer of same day funds. The Company acknowledges
that the agreements contained in this Section 8.5(b) are an integral
part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent and Merger Sub would not enter into
this Agreement; accordingly, if the Company fails to pay promptly the
amount due pursuant to this Section 8.5(b), and, in order to obtain such
payment, Parent or Merger Sub commences a suit which results in a
judgment against the Company for the fee set forth in this paragraph
(b), the Company shall pay to Parent or Merger Sub its costs and
expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at the prime rate of
Citibank N.A. in effect on the date such payment was required to be
made.
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8.5(c) Parent Termination Fee. In the event that this Agreement is
terminated by the Company pursuant to Section 8.3(b)(i) (solely with
respect to a willful and intentional breach), then
Parent shall promptly but in no event later than two days after the date
of such termination, pay the Company a fee equal to the Termination Fee,
which amount shall be exlusive of any expenses to be paid pursuant to
Section 6.11, payable by wire transfer of same day funds. In the event
that (A) within 10 business days after written request after April 30,
1999, by the Company to Parent, Company does not receive a letter from
Parent's independent public accounting firm to the effect that such
accountants concur with Parent's conclusion that the Merger will qualify
for "pooling-of-interests" accounting treatment as required in Section
7.1(f) or (B) if the Agreement is terminated because of Parent's failure
to receive any of the Special FCC Approvals referred to in Section
7.2(e), then Parent shall, within two days after failure to deliver to
the Company the letter from Parent's independent public accountants to
the effect that such accountants concur with Parent's conclusion that
the Merger will qualify for "pooling-of-interests" accounting treatment
as required by Section 7.1(f) or within two days after this Agreement is
terminated as a result of Parent's failure to obtain any of the Special
FCC Approvals referred to in Section 7.2(e), pay the Company a fee equal
to $12 million, which amount shall be exclusive of any expenses to be
paid pursuant to Section 6.11, payable by wire transfer of same day
funds; provided, however, that the fee payable by Parent in connection
with clause (A) above shall not be payable if (x) Parent, at the time
such payment would otherwise be required, has a right to terminate this
Agreement pursuant to Section 8.2 or 8.3 hereof (other than a right to
terminate for failure of the condition specified in the second sentence
of Section 7.1(f)), or (y) the principal reason for failure to obtain an
accountant's letter specified in clause (A) is either a circumstance,
event or condition related to the Company (other than arising out of the
transactions contemplated by this Agreement or any of the exhibits (as
distinguished from any Schedules) hereto) or a change in applicable
accounting rules (as specified by the Financial Accounting Standards
Board or the Securities Exchange Commission). Any such payment by Parent
shall be the sole remedy of the Company in connection with the events
described in clauses (A) and (B) above. Parent acknowledges that the
agreements contained in this Section 8.5(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, the Company would not enter into this Agreement;
accordingly, if Parent fails to pay promptly the amount due pursuant to
this Section 8.5(c), and, in order to obtain such payment, the Company
commences a suit which results in a judgment against Parent for the fee
set forth in this Section 8.5(c), Parent shall pay to the Company its
costs and expenses (including attorneys' fees) in connection with such
suit, together with interest on the amount of the fee at the prime rate
of Citibank N.A. in effect on the date such payment was required to be
made.
ARTICLE 9
MISCELLANEOUS AND GENERAL
9.1 Survival. This Article 9 and the agreements of the Company, Parent
and Merger Sub contained in Sections 6.10 (Benefits); 6.11 (Expenses); 6.12
(Indemnification; Directors' and Officers' Insurance); 6.15 (Charitable
Contributions/Continuing Support); and 6.16 (Operations and Employment in
Lincoln, Nebraska) shall survive the consummation of the Merger. This Article 9
(other than Section 9.2 (Modification or Amendment), Section 9.3 (Waiver of
Conditions) and Section 9.13 (Assignment)) and the agreements of the Company,
Parent and Merger Sub contained in Section 6.11 (Expenses), Section 6.14
(Confidentiality) and Section 8.5 (Effect of Termination and Abandonment) shall
survive the termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
9.2 Modification or Amendment. Subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
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<PAGE>
9.3 Waiver of Conditions.
9.3(a) In Writing. Any provision of this Agreement may be waived
prior to the Effective Time if, and only if, such waiver is in writing
and signed by the party against whom the waiver is to be effective.
9.3(b) Failure or Delay. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege. Except as otherwise herein provided, the
rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
9.4 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5 Governing Law and Venue; Waiver of Jury Trial.
9.5(a) Governing Law. This Agreement shall be deemed to be made in
and in all respects shall be interpreted, construed and governed by and
in accordance with the law of the State of Delaware without regard to
the conflict of law principles thereof. The parties hereby irrevocably
submit to the jurisdiction of the Federal courts of the United States of
America and the state courts located in the State of Delaware solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in
respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for
the interpretation or enforcement hereof or of any such document, that
it is not subject thereto or that such action, suit or proceeding may
not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties
hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Federal or state
court. The parties hereby consent to and grant any such court
jurisdiction over the Person of such parties and over the subject matter
of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in
Section 9.6 or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
9.5(b) Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
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<PAGE>
9.6 Notices. Notices, requests, instructions or other documents to be
given under this Agreement shall be in writing and shall be deemed given, (i)
when sent if sent by facsimile, provided that the fax is promptly confirmed by
telephone confirmation thereof, (ii) when delivered, if delivered personally to
the intended recipient, and (iii) one business day later, if sent by overnight
delivery via a national courier service, and in each case, addressed to a party
at the following address for such party:
if to Parent or Merger Sub:
One Allied Drive
Little Rock, AR 72202
Attn: Chief Executive Officer
Fax: 501-905-0962
(with a copy to:
One Allied Drive
Little Rock, AR 72202
Attn: Chief Legal Officer
Fax: 501-905-0962)
if to the Company:
1440 M Street
Lincoln, Nebraska 68501-1309
Attn: Frank H. Hilsabeck
Fax: 402-475-9195
(with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Benjamin F. Garmer III
Fax: (414) 297-4900
and a copy to:
Woods & Aitken
206 South 13th Street
Lincoln, Nebraska 68508
Attn: Paul M. Schudel
Fax: (402) 474-5777
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7 Entire Agreement. This Agreement (including any exhibits hereto), the
Confidentiality Agreement, the Company Disclosure Schedule and the Parent
Disclosure Schedule constitute the entire agreement, and supersede all other
prior agreements, understandings, representations and warranties both written
and oral, among the parties, with respect to the subject matter hereof. EACH
PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND MERGER SUB NOR THE COMPANY
MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY
OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE
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<PAGE>
DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY
DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
9.8 No Third Party Beneficiaries. Except as provided in Section 6.12
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.9 Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11 Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
9.12 Captions. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
9.13 Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that Parent may designate prior to the
Effective Time, by written notice to the Company, another wholly-owned direct
or indirect Subsidiary to be a party to the Merger in lieu of Merger Sub, in
which event all references herein to Merger Sub shall be deemed references to
such other Subsidiary (except with respect to representations and warranties
made herein with respect to Merger Sub as of the date hereof) and all
representations and warranties made herein with respect to Merger Sub as of the
date hereof shall also be made with respect to such other subsidiary as of the
date of such designation. Any assignment in contravention of the preceding
sentence shall be null and void.
9.14 Enforcement. 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.
A-35
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
ALIANT COMMUNICATIONS INC.
By: /s/ Frank H. Hilsabeck
----------------------------------
Frank H. Hilsabeck
President and Chief Executive
ALLTEL CORPORATION
By: /s/ Scott Ford
----------------------------------
Name: Scott Ford
--------------------------------
Title: President
-------------------------------
MERGER SUB
By: /s/ Scott Ford
----------------------------------
Name: Scott Ford
--------------------------------
Title: President
-------------------------------
A-36
<PAGE>
ANNEX B
[MERRILL LYNCH LETTERHEAD APPEARS HERE]
December 18, 1998
Board of Directors
Aliant Communications, Inc.
1440 M Street
P.O. Box 81309
Lincoln, NE 68501-1309
Members of the Board of Directors:
Aliant Communications, Inc. ("Aliant"), ALLTEL Corporation ("ALLTEL"),
and a newly formed, wholly owned subsidiary of ALLTEL ("Acquisition Sub"),
propose to enter into an Agreement and Plan of Merger (the "Agreement")
pursuant to which Acquisition Sub will be merged with and into Aliant (the
"Merger") and each outstanding share of the common stock, par value $0.25 per
share, of Aliant (the "Aliant Shares"), will be converted into the right to
receive the number of shares (the "Exchange Ratio") of the common stock, par
value $1.00 per share, of ALLTEL (the "ALLTEL Shares") equal of $39.13, subject
to adjustment as provided in the Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair
from a financial point of view to the holders of Aliant Shares.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to Aliant 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 Aliant 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 Aliant and ALLTEL;
(3) Conducted discussions with members of senior management and
representatives of Aliant 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 Aliant
Shares and 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 Aliant and ALLTEL and
compared them with those of certain publicly traded companies that
we deemed to be relevant;
<PAGE>
[MERRILL LYNCH LOGO APPEARS HERE]
(6) Compared the proposed financial terms of the Merger with the
financial terms of certain other transactions that we deemed to be
relevant;
(7) Participated in certain discussions and negotiations among
representatives of Aliant and ALLTEL and their respective
financial and legal advisors;
(8) Reviewed the potential pro forma impact of the Merger;
(9) Reviewed a draft dated December 17, 1998 of the Agreement, and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment if 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 Aliant or ALLTEL. In addition, we have not assumed any
obligation to conduct, nor have we conducted, any physical inspection of the
properties or facilities of Aliant or ALLTEL. With respect to the financial
forecast information and the Expected Synergies furnished to or discussed with
us by Aliant or ALLTEL, we have assumed that they have been reasonably prepared
and reflect the best currently available estimates and judgments of the
respective managements or Aliant or ALLTEL as to the expected future financial
performance of Aliant 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.
We have also assumed that the final form of the Agreement will be substantially
similar to the last draft reviewed by us.
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.
In connection with the preparation of this opinion, we have not been
authorized by Aliant of the Board of Directors to solicit, nor have we
solicited, third-party indications of interest, other than with respect to
ALLTEL and one additional third party, for the acquisition of all of any part
of Aliant.
We are acting as financial advisor to Aliant in connection with the
Merger and will receive a fee from Aliant for our services, a significant
portion of which is contingent upon the consummation of the Merger. In
addition, Aliant 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 Aliant and ALLTEL and may continue to do so and have
received, and may receive, compensation for the rendering of such services. In
addition, in the ordinary course of our business, we may actively trade Aliant
Shares, as well as 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.
B-2
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[MERRILL LYNCH LOGO APPEARS HERE]
This opinion is for the use and benefit of the Board of Directors of
Aliant in its evaluation of the Merger and may not be used for any other
purpose. Our opinion does not address the merits of the underlying decision by
Aliant to engage in the Merger and does not constitute a recommendation to any
shareholder as to how such shareholder should vote on the proposed Merger.
We are not expressing any opinion herein as to the prices at which 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 the holders of Aliant Shares.
Very truly yours,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
B-3
<PAGE>
Annex C
Sections 21-20,137 to 21-20,150 of the Nebraska Business Corporation Act
(S) 21-20,137. Dissenters' rights; terms, defined.
For purposes of sections 21-20,137 to 21-20,150:
(1) Beneficial shareholder shall mean the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder;
(2) Corporation shall mean the issuer of the shares held by a dissenter
before the corporate action or the surviving or acquiring corporation by
merger or share exchange of that issuer;
(3) Dissenter shall mean a shareholder who is entitled to dissent from
corporate action under section 21-20,138 and who exercises that right when and
in the manner required by sections 21-20,140 to 21-20,148;
(4) Fair value, with respect to a dissenter's shares, shall mean the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would be
inequitable;
(5) Interest shall mean interest from the effective date of the
corporate action until the date of payment at the rate specified in section
45-104, as such rate may from time to time be adjusted by the Legislature;
(6) Record shareholder shall mean the person in whose name shares are
registered in the records of a corporation or the beneficial shareholder to
the extent of the rights granted by a nominee certificate on file with a
corporation; and
(7) Shareholder shall mean the record shareholder or the beneficial
shareholder.
(S) 21-20,138. Right to dissent.
(1) A shareholder shall be entitled to dissent from, and obtain payment
of the fair value of his or her shares in the event of, any of the following
corporate actions;
(a) Consummation of a plan of merger to which the corporation is a
party;
(i) If shareholder approval is required for the merger by
section 21-20,130 or the articles of incorporation and the
shareholder is entitled to vote on the merger; or
(ii) If the corporation is a subsidiary that is merged with
its parent under section 21-20,131;
(b) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired,
if the shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation other than in the usual and
regular course of business if the shareholder is entitled to vote on the
sale or exchange, including a sale in dissolution, but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by
which all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date of sale;
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(d) An amendment of the articles of incorporation that materially
and adversely affects rights in respect of a dissenter's shares because
it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for
the redemption or repurchase of the shares;
(iii) Alters or abolishes a preemptive right of the holder
of the shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on
any matter, or to cumulate votes, other than a limitation by
dilution through issuance of shares or other securities with
similar voting rights; or
(v) Reduces the number of shares owned by the shareholder to
a fraction of a share if the fractional share so created is to be
acquired for cash under section 21-2038; or
(e) Any corporate action taken pursuant to a shareholder vote to
the extent the articles of incorporation, the bylaws, or a resolution of
the board of directors provides that voting or nonvoting shareholders
are entitled to dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for his or her
shares under sections 21-20,137 to 21-20,150 may not challenge the corporate
action creating his or entitlement unless the action is unlawful or fraudulent
with respect to the shareholder or the corporation.
(3) The right to dissent and obtain payment under sections 21-20,137 to
21-20,150 shall not apply to the shareholders of a bank, trust company, stock-
owned savings and loan association, industrial loan and investment company, or
the holding company of any such bank, trust company, stock-owned savings and
loan association, or industrial loan and investment company.
(S) 21-20,139. Dissent by nominees and beneficial owners.
(1) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his or her name only if he or she dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
he or she asserts dissenters' rights. The rights of a partial dissenter under
this subsection shall be determined as if the shares as to which he or she
dissents and his or her other shares were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his or her behalf only if:
(a) He or she submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(b) He or she does so with respect to all shares of which he or
she is the beneficial shareholder or over which he or she has power to
direct the vote.
(S) 21-20,140. Notice of dissenters' rights.
(1) If proposed corporate action creating dissenters' rights under
section 21-20,138 is submitted to a vote at a shareholders' meeting, the
meeting notice shall state that shareholders are or may be entitled to assert
dissenters' rights under sections 21-20,137 to 21-20,150 and be accompanied by
a copy of such sections.
C-2
<PAGE>
(2) If corporate action creating dissenters' rights under section 21-
20,138 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send those shareholders the dissenters' notice described
in section 21-20,142.
(S) 21-20,141. Dissenters' rights; notice of intent to demand payment.
(1) If proposed corporate action creating dissenters' rights under
section 21-20,138 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights (a) shall deliver to the
corporation before the vote is taken written notice of his or her intent to
demand payment for his or her shares if the proposed action is effectuated and
(b) shall not vote his or her shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection
(1) of this section shall not be entitled to payment for his or her shares
under sections 21-20,137 to 21-20,150.
(S) 21-20,142. Dissenters' notice.
(1) If proposed corporate action creating dissenters' rights under
section 21-20,138 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied
the requirements of section 21-20,141.
(2) The dissenters' notice shall be sent no later than ten days after
the corporate action was taken and shall:
(a) State where the payment demand shall be sent and where and
when certificates for certificated shares shall be deposited;
(b) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is
received;
(c) Supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the terms of
the proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he or she acquired beneficial
ownership of the shares before that date;
(d) Set a date by which the corporation shall receive the payment
demand which date may not be fewer than thirty nor more than sixty days
after the date the notice required by subsection (1) of this section is
delivered; and
(e) Be accompanied by a copy of sections 21-20,137 to 21-20,150.
(S) 21-20,143. Dissenters' rights; duty to demand payment.
(1) A shareholder who was sent a dissenters' notice described in section
21-20,142 shall demand payment, certify whether he or she acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to subdivision (2)(c) of section 21-20,142, and
deposit his or her certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits his or her shares
under subsection (1) of this section shall retain all other rights of a
shareholder until such rights are canceled or modified by the taking of the
proposed corporate action.
C-3
<PAGE>
(3) A shareholder who does not demand payment or does not deposit his or
her share certificates where required, each by the date set in the dissenters'
notice, shall not be entitled to payment for his or her shares under sections
21-20,137 to 21-20,150.
(S) 21-20,144. Dissenters' rights; share restrictions.
(1) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions are released under section 21-
20,146.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares shall retain all other rights of a shareholder until
such rights are canceled or modified by the taking of the proposed corporate
action.
(S) 21-20,145. Dissenters' rights; payment.
(1) Except as provided in section 21-20,147, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with section 21-20,143 the
amount the corporation estimates to be the fair value of his or her shares,
plus accrued interest.
(2) The payment shall be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial
statement, if any;
(b) A statement of the corporation's estimate of the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenters' right to demand payment under
section 21-20,148; and
(e) A copy of section 21-20,137 to 21-20,150.
(S) 21-20,146. Dissenters' rights; failure to take action.
(1) If the corporation does not take the proposed action within sixty
days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(2) If, after returning deposited certificates and releasing transfer
restriction, the corporation takes the proposed action, it shall send a new
dissenter's notice under section 21-20,142 and repeat the payment demand
procedure.
(S) 21-20,147. Dissenters' rights; after acquired shares.
(1) A corporation may elect to withhold payment required by section 21-
20,145 from a dissenter unless he or she was the beneficial shareholder before
the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporation action.
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(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his or her demand. The corporation shall send with its offer a statement of
its estimate of the fair value of the shares, an explanation of how the
interest was calculated, and a statement of the dissenter's right to demand
payment under section 21-20,148.
(S) 21-20,148. Dissenters' rights; procedure if shareholder dissatisfied with
payment or offer.
(1) A dissenter may notify the corporation in writing of his or her
own estimate of the fair value of his or her shares and amount of interest
due, and demand payment of his or her estimate, less any payment under section
21-20,145, or reject the corporation's offer under section 21-20,147 and
demand payment of the fair value of his or her shares and interest due if:
(a) The dissenter believes that the amount paid under section
21-20,145 or offered under section 21-20,147 is less than the fair value
of his or her shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under section 21-
20,145 within sixty days after the date set for demanding payment; or
(c) The corporation, having failed to take the proposed action,
does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within sixty days after
the date set for demanding payment.
(2) A dissenter waives his or her right to demand payment under this
section unless he or she notifies the corporation of his or her demand in
writing under subsection (1) of this section within thirty days after the
corporation made or offered payment for his or her shares.
(S) 21-20,149. Dissenters' rights; court action.
(1) If a demand for payment under section 21-20,148 remains unsettled,
the corporation shall commence a proceeding within sixty days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the
proceeding within the sixty-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the district
court of the county where a corporation's principal office, or, if none in
this state, its registered office, is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the district court of the county in this state where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unsettled, parties to the
proceeding as in an action against their shares and all parties shall be
served with a copy of the petition. Nonresidents may be served by registered
or certified mail or by publication as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section shall be plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. Appraisers shall have the
powers described in the order appointing them or in any amendment to such
order. The dissenters shall be entitled to the same discovery rights as
parties in other civil proceedings.
C-5
<PAGE>
(5) Each dissenter made a party to the proceeding shall be entitled to
judgment (a) for the amount, if any, by which the court finds the fair value
of his or her shares, plus interest, exceeds the amount paid by the
corporation or (b) for the fair value, plus accrued interest, of his or her
after-acquired shares for which the corporation elected to withhold payment
under section 21-20,147.
(S) 21-20,150. Dissenters' rights; court costs and attorney's fees.
(1) The court in an appraisal proceeding commenced under section 21-
20,149 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court
shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under section 21-
20,148.
(2) The court may also assess the attorney's fees and expenses and the
fees and expenses of experts for the respective parties in amounts the court
finds equitable:
(a) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not substantially
comply with the requirements of sections 21-20, 140 to 21-20,148; or
(b) Against either the corporation or a dissenter, in favor of
any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by sections 21-20,137 to 21-
20,150.
(3) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated and that
the fees for those services should not be assessed against the corporation,
the court may award to counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
C-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Article VII of ALLTEL's Amended and Restated Certificate of
Incorporation (the "Certificate") provides for the indemnification of
directors, officers, agents and employees for expenses incurred by them and
judgments rendered against them in actions, suits or proceedings in relation
to certain matters brought against them as such directors, officers, agents
and employees, respectively. The Certificate provides for indemnification to
the fullest extent permitted by the Delaware General Corporation Law. Any
expansion of the protection afforded directors, officers, employees or agents
by the Delaware General Corporation Law is automatically extended to ALLTEL's
directors, officers, employees or agents, as the case may be. The Certificate
also permits ALLTEL to advance expenses incurred by a director or officer in a
legal proceeding prior to final disposition of the proceeding.
In addition to indemnity provisions contained in the Certificate, ALLTEL
has entered into indemnity agreements with its directors and officers. Under
these indemnity agreements, ALLTEL will indemnify its directors and officers
to the fullest extent permitted or authorized by the Delaware General
Corporation Law, as it may from time to time be amended, or by any other
statutory provisions authorizing or permitting such indemnification. Under the
terms of certain insurance policies maintained by ALLTEL, directors and
officers of ALLTEL are insured against certain liabilities, including
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). ALLTEL will indemnify such officers and directors under the
indemnity agreements from all losses arising out of claims made against them
except those based upon illegal personal profit, recovery of short-swing
profits or dishonesty; provided, however, that ALLTEL's obligations will be
satisfied to the extent of any reimbursement under such insurance.
The Delaware General Corporation Law permits a Delaware corporation to
indemnify directors, officers, employees and agents under some circumstances
and mandates indemnification under certain limited circumstances. The Delaware
General Corporation Law permits a corporation to indemnify an officer,
director, employee or agent for expenses actually and reasonably incurred, as
well as fines, judgments and amounts paid in settlement in the context of
actions other than derivative actions, if such person acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. Indemnification against expenses incurred by a
director, officer, employee or agent in connection with the defense of a
proceeding against such person for actions in such capacity is mandatory to
the extent that such person has been successful on the merits. If a director,
officer, employee or agent is determined to be liable to the corporation,
indemnification for expenses is not allowable, subject to limited exceptions
where a court deems the award of expenses appropriate. The Delaware General
Corporation Law grants express power to a Delaware corporation to purchase
liability insurance for its directors, officers, employees and agents,
regardless of whether any such person is otherwise eligible for
indemnification by the corporation. Advancement of expenses is permitted, but
a person receiving such advances must repay those expenses if it is ultimately
determined that he is not entitled to indemnification.
II-1
<PAGE>
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Number Exhibit
- ------ -------
<S> <C>
2.1 Agreement and Plan of Merger dated as of December 18, 1998 among ALLTEL Corporation,
Pinnacle Merger Sub, Inc. and Aliant Communications, Inc. (attached as Annex A to the Proxy
Statement/Prospectus contained in this Registration Statement).
4.1 Rights Agreement dated January 30, 1997 between ALLTEL Corporation and First Union National
Bank, as Rights Agent (incorporated by reference to ALLTEL Registration Statement on
Form 8-A dated October 16, 1997).
5 Opinion of Kutak Rock as to the legality of the shares being registered.
8.1 Opinion of Kutak Rock as to certain federal income tax consequences of the Merger.
8.2 Opinion of Foley & Lardner as to certain federal income tax consequences of the Merger.
23.1 Consent of Kutak Rock (included in the opinion in Exhibit 5).
23.2 Consent of Kutak Rock (included in the opinion filed as Exhibit 8.1).
23.3 Consent of Foley & Lardner (included in the opinion filed as Exhibit 8.2).
23.4 Consent of Arthur Andersen LLP.
23.5 Consent of Ernst & Young LLP.
23.6 Consent of Arthur Andersen LLP.
23.7 Consent of Arthur Andersen LLP.
23.8 Consent of PricewaterhouseCoopers.
23.9 Consent of PricewaterhouseCoopers.
23.10 Consent of KPMG LLP
24 Powers of Attorney
99.1 Form of Proxy Card for the Stockholders of Aliant.
99.2 Consent of Merrill Lynch Pierce, Fenner & Smith Incorporated
</TABLE>
- --------
(b)Financial Statement Schedules
None.
Item 22. Undertakings
ALLTEL hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement; and
II-2
<PAGE>
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering;
(4) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;
(5) that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other Items of the applicable form;
(6) that every prospectus: (i) that is filed pursuant to
paragraph (5) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act is used in connection with
an offering of securities subject to Rule 415, will be filed as a part
of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof;
(7) to respond to requests for information that is incorporated
by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13
of this Form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request; and
(8) to supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
ALLTEL pursuant to the foregoing provisions, or otherwise, ALLTEL has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by ALLTEL of expenses
incurred or paid by a director, officer, or controlling person of ALLTEL in
the successful defense of any
II-3
<PAGE>
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, ALLTEL
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Little Rock, State of
Arkansas, on the 24 day of March, 1999.
ALLTEL Corporation
/s/ Joe T. Ford
By: _________________________________
Chairman and Chief Executive
Officer
Title: ______________________________
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*Joe T. Ford Chairman, Chief Executive March 24, 1999
______________________________________ Officer and Director
(Joe T. Ford)
*Dennis E. Foster Vice Chairman and Director March 24, 1999
______________________________________
(Dennis E. Foster)
*Scott T. Ford President, Chief Operating March 24, 1999
______________________________________ Officer and Director
(Scott T. Ford)
*Dennis J. Ferra Senior Vice President and March 24, 1999
______________________________________ Chief Administrative
(Dennis J. Ferra) Officer (Principal
Financial Officer)
*Jeffrey R. Gardner Senior Vice President- March 24, 1999
______________________________________ Finance and Treasurer
(Jeffrey R. Gardner) (Principal Accounting
Officer)
*John R. Belk Director March 24, 1999
______________________________________
(John R. Belk)
*Lawrence L. Gellerstedt III Director March 24, 1999
______________________________________
(Lawrence L. Gellerstedt III)
*Charles H. Goodman Director March 24, 1999
______________________________________
(Charles H. Goodman)
*Michael L. Hooker Director March 24, 1999
______________________________________
(Michael L. Hooker)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*W. W. Johnson Director March 24, 1999
______________________________________
(W. W. Johnson)
*Emon A. Mahony, Jr. Director March 24, 1999
______________________________________
(Emon A. Mahony, Jr.)
*John P. McConnell Director March 24, 1999
______________________________________
(John P. McConnell)
*Josie C. Natori Director March 24, 1999
______________________________________
(Josie C. Natori)
*Frank E. Reed Director March 24, 1999
______________________________________
(Frank E. Reed)
*Ronald Townsend Director March 24, 1999
______________________________________
(Ronald Townsend)
*William H. Zimmer Director March 24, 1999
______________________________________
(William H. Zimmer)
/s/ Francis X. Frantz March 24, 1999
*By: _________________________________
(Francis X. Frantz,
Attorney-in-Fact)
</TABLE>
II-6
<PAGE>
EXHIBIT 5
March 24, 1999
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202
Re: REGISTRATION ON FORM S-4 OF SHARES OF COMMON STOCK, PAR
VALUE $1.00 PER SHARE, OF ALLTEL CORPORATION
Ladies and Gentlemen:
We are acting as counsel to ALLTEL Corporation, a Delaware corporation (the
"Company"), in connection with the issuance of shares (the "Shares") of common
stock, par value $1.00 per share, of the Company pursuant to the transactions
contemplated by the Agreement and Plan of Merger (the "Merger Agreement"), dated
as of December 18, 1998, among the Company, Pinnacle Merger Sub, Inc., a
Nebraska corporation and wholly-owned subsidiary of the Company ("Merger Sub"),
and Aliant Communications, Inc., a Nebraska corporation ("Aliant").
We have examined such documents, records, and matters of law as we have
deemed necessary for purposes of this opinion. Based on such examination and on
the assumptions set forth below, we are of the opinion that the Shares to be
offered and sold, when issued and delivered in accordance with the terms and
provisions of the Merger Agreement against receipt of the consideration provided
for therein, will be validly issued, fully paid, and nonassessable.
In rendering this opinion, we have (i) assumed and have not independently
verified (a) the due authorization, execution and delivery of the Merger
Agreement, (b) that all signatures on all certificates and other documents
examined by us are genuine, and that, where any such signature purports to have
been made in a corporate, governmental or other capacity, the person who affixed
such signature to such certificate or other document had authority to do so, and
(c) the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as copies, and
(ii) as to certain factual matters, relied upon certificates of public officials
and of the Company and its officers and have not independently checked or
verified the accuracy of the factual statements contained therein. In addition,
our examination of matters of law has been limited to the General Corporation
Law of the State of Delaware and the federal laws of the United States of
America, in each case as in effect on the date hereof.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us in the Proxy
Statement/Prospectus constituting a part of the Registration Statement under the
caption "Legal Matters."
Very truly yours,
/s/ KUTAK ROCK
<PAGE>
Exhibit 8.1
[Kutak Rock]
March 24, 1999
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202
Ladies and Gentlemen:
We have acted as counsel to ALLTEL Corporation("ALLTEL"), a Delaware
corporation, in connection with (i) the Merger, as defined and described in the
Agreement and Plan of Merger, dated as of December 18, 1998 (the "Merger
Agreement"), among ALLTEL, Pinnacle Merger Sub, Inc., a Nebraska corporation and
newly-formed, wholly-owned subsidiary of ALLTEL, and Aliant Communications,
Inc., a Nebraska corporation ("Aliant"), and (ii) the preparation and filing of
the Registration Statement with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), on March 24, 1999 (the "Registration Statement"), which includes the
Proxy Statement/Prospectus of Aliant(the "Proxy Statement/Prospectus"). Unless
otherwise indicated, each capitalized term used herein has the meaning ascribed
to it in the Merger Agreement.
In connection with this opinion, we have examined the Merger Agreement, the
Proxy Statement/Prospectus and such other documents and corporate records as we
have deemed necessary or appropriate in order to enable us to render the opinion
below. For purposes of this opinion, we have assumed (i) the validity and
accuracy of the documents and corporate records that we have examined and the
facts and representations
<PAGE>
ALLTEL Corporation
March 24, 1999
Page 2
concerning the Merger that have come to our attention during our engagement and
(ii) that the Merger will be consummated in the manner described in the Merger
Agreement and the Proxy Statement/Prospectus.
Subject to the assumptions set forth above and the assumptions and
qualifications set forth in the discussion in the Proxy Statement/Prospectus
under the heading "Certain United States Federal Income Tax Consequences of the
Merger" (the "Discussion"), and assuming that the factual representations
referenced in the Discussion and to be received by us are true and complete as
of the Effective Time, we are of the opinion that the Merger will constitute a
reorganization as described in Section 368(a) of the Internal Revenue Code of
1986, as amended, and that the Discussion sets forth the material United States
federal income tax consequences of the Merger to holders of Aliant common stock
who exchange such stock for ALLTEL common stock pursuant to the Merger. We
express no opinion as to whether the Discussion addresses all of the United
States federal income tax consequences of the Merger. In addition, we express no
opinion as to the United States federal, state, local, foreign or other tax
consequences, other than as set forth in the Discussion. Further, there can be
no assurances that the opinion expressed herein will be accepted by the Internal
Revenue Service (the "IRS") or, if challenged, by a court. This opinion is
delivered in accordance with the requirements of Item 601(b)(8) of Regulation S-
K under the Securities Act.
In rendering our opinion, we have considered the applicable provisions of
the Code, Treasury Department regulations promulgated thereunder, pertinent
judicial authorities, interpretive rulings of the IRS and such other authorities
as we have considered relevant. It should be noted that statutes, regulations,
judicial decisions and administrative interpretations are subject to change at
any time (possibly with retroactive effect). A change in the authorities or the
accuracy or completeness of any of the information, documents, corporate
records, covenants, statements, representations or assumptions on which our
opinion is based could af-
<PAGE>
ALLTEL Corporation
March 24, 1999
Page 3
fect our conclusions. This opinion is expressed as of the date hereof, and we
are under no obligation to supplement or revise our opinion to reflect any
changes (including changes that have retroactive effect) (i) in applicable law
or (ii) in any information, document, corporate record, covenant, statement,
representation or assumption stated herein which becomes untrue or incorrect.
This letter is furnished to you solely for use in connection with the
Merger, as described in the Merger Agreement and the Proxy Statement/Prospectus,
and is not to be used, circulated, quoted, or otherwise referred to for any
other purpose without our express written permission. In accordance with the
requirements of Item 601(b)(23) of Regulation S-K under the Securities Act, we
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm name under the headings "SUMMARY --
The Merger -- Certain United States Federal Income Tax Consequences of the
Merger," "THE MERGER -- Certain United States Federal Income Tax Consequences of
the Merger," "OTHER TERMS OF THE MERGER AGREEMENT -- Conditions to Consummation
of the Merger" and "LEGAL MATTERS" in the Proxy Statement/Prospectus. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
Kutak Rock
<PAGE>
Exhibit 8.2
<TABLE>
<CAPTION>
<S> <C> <C>
CHICAGO FIRSTAR CENTER SACRAMENTO
DENVER 777 EAST WISCONSIN AVENUE SAN DIEGO
JACKSONVILLE MILWAUKEE, WISCONSIN 53202-5367 SAN FRANCISCO
LOS ANGELES TELEPHONE (414) 271-2400 TALLAHASSEE
MADISON FACSIMILE (414) 297-4900 TAMPA
MILWAUKEE WASHINGTON, D.C.
ORLANDO WEST PALM BEACH
WRITER'S DIRECT LINE
(414) 297-5729
EMAIL ADDRESS CLIENT/MATTER NUMBER
[email protected] 016495/0101
</TABLE>
March 24, 1999
Aliant Communications Inc.
1440 M Street
Lincoln, NE 68501
Ladies and Gentlemen:
We have acted as counsel to Aliant Corporation ("Aliant"), a Nebraska
corporation, in connection with (i) the Merger, as defined and described in the
Agreement and Plan of Merger, dated as of December 18, 1998 (the "Merger
Agreement"), among ALLTEL Corporation ("ALLTEL"), a Delaware Corporation,
Pinnacle Merger Sub, Inc., a Nebraska corporation and newly-formed, wholly-owned
subsidiary of ALLTEL, and Aliant, and (ii) the preparation and filing of the
Registration Statement with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), on March 24, 1999 (the "Registration Statement"), which includes the
Proxy Statement/Prospectus of Aliant (the "Proxy Statement/Prospectus"). Unless
otherwise indicated, each capitalized term used herein has the meaning ascribed
to it in the Merger Agreement.
In connection with this opinion, we have examined the Merger
Agreement, the Proxy Statement/Prospectus and such other documents and corporate
records as we have deemed necessary or appropriate in order to enable us to
render the opinion below. For purposes of this opinion, we have assumed (i) the
validity and accuracy of the documents and corporate records that we have
examined and the facts and representations concerning the Merger that have come
to our attention during our engagement and (ii) that the Merger will be
consummated in the manner described in the Merger Agreement and the Proxy
Statement/Prospectus.
Subject to the assumptions set forth above and the assumptions and
qualifications set forth in the discussion in the Proxy Statement/Prospectus
under the heading "Certain United States Federal Income Tax Consequences of the
Merger" (the "Discussion"), and assuming that the factual representations
referenced in the Discussion and to be received by us are true and complete as
of the Effective Time, we are of the opinion that the Merger will constitute a
reorganization as described in Section 368(a) of the Internal Revenue Code of
1986, as amended, and that the Discussion sets forth the material United States
federal income tax consequences of the Merger to holders of Aliant common stock
who exchange such stock for ALLTEL common
<PAGE>
Aliant Communications Inc.
March 24, 1999
Page 2
stock pursuant to the Merger. We express no opinion as to whether the Discussion
addresses all of the United States federal income tax consequences of the
Merger. In addition, we express no opinion as to the United States federal,
state, local, foreign or other tax consequences, other than as set forth in the
Discussion. Further, there can be no assurances that the opinion expressed
herein will be accepted by the Internal Revenue Service (the "IRS") or, if
challenged, by a court. This opinion is delivered in accordance with the
requirements of Item 601(b)(8) of Regulation S-K under the Securities Act.
In rendering our opinion, we have considered the applicable provisions
of the Code, Treasury Department regulations promulgated thereunder, pertinent
judicial authorities, interpretive rulings of the IRS and such other authorities
as we have considered relevant. It should be noted that statutes, regulations,
judicial decisions and administrative interpretations are subject to change at
any time (possibly with retroactive effect). A change in the authorities or the
accuracy or completeness of any of the information, documents, corporate
records, covenants, statements, representations or assumptions on which our
opinion is based could affect our conclusions. This opinion is expressed as of
the date hereof, and we are under no obligation to supplement or revise our
opinion to reflect any changes (including changes that have retroactive effect)
(i) in applicable law or (ii) in any information, document, corporate record,
covenant, statement, representation or assumption stated herein which becomes
untrue or incorrect.
This letter is furnished to you solely for use in connection with the
Merger, as described in the Merger Agreement and the Proxy Statement/Prospectus,
and is not to be used, circulated, quoted, or otherwise referred to for any
other purpose without our express written permission. In accordance with the
requirements of Item 601(b)(23) of Regulation S-K under the Securities Act, we
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm name under the headings "SUMMARY --
The Merger -- Certain United States Federal Income Tax Consequences of the
Merger," "THE MERGER -- Certain United States Federal Income Tax Consequences of
the Merger," "OTHER TERMS OF THE MERGER AGREEMENT -- Conditions to Consummation
of the Merger" and "LEGAL MATTERS" in the Proxy Statement/Prospectus. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
FOLEY & LARDNER
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January 28,
1999, included in ALLTEL Corporation's Form 10-K for the year ended December 31,
1998 and to all references to our Firm included in this registration statement.
Arthur Andersen LLP
Little Rock, Arkansas,
March 24, 1999.
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related prospectus of ALLTEL Corporation,
and to the incorporation by reference of our report dated March 6, 1998 with
respect to the consolidated financial statements and schedule of 360
Communications Company included in ALLTEL Corporation's Annual Report on Form
10-K for the year ended December 31, 1998.
Ernst & Young LLP
Chicago, Illinois
March 24, 1999
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated February 13,
1998, with respect to GTE Mobilnet of South Texas Limited Partnership, included
in ALLTEL Corporation's Form 10-K for the year ended December 31, 1998 and to
all references to our firm included in this registration statement. Such GTE
Mobilnet of South Texas Limited Partnership financial statements are not
included separately in ALLTEL Corporation's Form 10-K.
Arthur Andersen LLP
Atlanta, Georgia
March 24, 1999
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference into this registration statement (Form S-4) of our report dated
January 16, 1998, with respect to the Chicago SMSA Limited Partnership included
in ALLTEL Corporation's Form 10-K for the year ended December 31, 1998 and to
all references to our firm included in this registration statement. Such Chicago
SMSA Limited Partnership financial statements are not included separately in
ALLTEL Corporation's Form 10-K.
Arthur Andersen LLP
Chicago, Illinois
March 24, 1999
<PAGE>
EXHIBIT 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into the registration
statement of ALLTEL Corporation on Form S-4 of our report dated February 13,
1998 on our audits of the financial statements of the New York SMSA Limited
Partnership as of and for the year ended December 31, 1997 and 1996 which report
is included in the 360 Communications Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
PricewaterhouseCoopers LLP
New York, New York
March 24, 1999
<PAGE>
EXHIBIT 23.9
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement (Form S-4) of
our report dated March 6, 1998 on our audit of the financial statements and
financial statement schedules of the Orlando SMSA Limited Partnership. We also
consent to the references to our firm under the caption "Experts."
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 24, 1999
<PAGE>
EXHIBIT 23.10
Accountants' Consent
The Board of Directors
Aliant Communications Inc.:
We consent to the use of our reports incorporated herein by reference and to the
reference of our Firm under the heading "Experts" in the proxy statement
contained in the registration statement filed on Form S-4 by ALLTEL Corporation.
KPMG Peat Marwick LLP
Lincoln, Nebraska
March 24, 1999
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, a director or officer, or
both, of ALLTEL Corporation ("ALLTEL"), acting pursuant to authorization of the
Board of Directors of the Corporation, hereby appoints Joe T. Ford, Scott T.
Ford, Francis X. Frantz, Dennis J. Ferra, and Jeffery H. Gardner, or any of
them, attorneys-in-fact and agents for me and in my name and on my behalf,
individually and as a director or officer, or both, of ALLTEL, to sign a
Registration Statement on Form S-4 containing a proxy statement/prospectus,
together with all necessary exhibits, and any amendments (including post
effective amendments) and supplements thereto, to be filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), with respect to the issuance and sale of shares of common stock, $1.00
par value, of ALLTEL to be issued or delivered in accordance with the Agreement
and Plan of Merger, dated as of December 18, 1998, among ALLTEL, a newly-formed
subsidiary of ALLTEL, and Aliant Communications Inc., and generally to do and
perform all things necessary to be done in connection with the foregoing as
fully in all respects as I could do personally.
IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of March,
1999.
Signed: /s/ JOE T. FORD
----------------------------------------
Name: Joe T. Ford
Signed: /s/ DENNIS E. FOSTER
----------------------------------------
Name: Dennis E. Foster
Signed: /s/ SCOTT T. FORD
----------------------------------------
Name: Scott T. Ford
Signed: /s/ DENNIS J. FERRA
----------------------------------------
Name: Dennis J. Ferra
Signed: /s/ JEFFERY R. GARDNER
----------------------------------------
Name: Jeffery R. Gardner
Signed: /s/ JOHN R. BELK
----------------------------------------
Name: John R. Belk
Signed: /s/ LAWRENCE L. GELLERSTEDT III
----------------------------------------
Name: Lawrence L. Gellerstedt III
Signed: /s/ CHARLES H. GOODMAN
----------------------------------------
Name: Charles H. Goodman
Signed: /s/ MICHAEL L. HOOKER
----------------------------------------
Name: Michael L. Hooker
<PAGE>
Signed: /s/ W. W. JOHNSON
----------------------------------------
Name: W. W. Johnson
Signed: /s/ EMON A. MAHONY, JR.
----------------------------------------
Name: Emon A. Mahony, Jr.
Signed: /s/ JOHN P. MCCONNELL
----------------------------------------
Name: John P. McConnell
Signed: /s/ JOSIE C. NATORI
----------------------------------------
Name: Josie C. Natori
Signed: /s/ FRANK E. REED
----------------------------------------
Name: Frank E. Reed
Signed: /s/ RONALD TOWNSEND
----------------------------------------
Name: Ronald Townsend
Signed: /s/ WILLIAM H. ZIMMER
----------------------------------------
Name: William H. Zimmer
<PAGE>
EXHIBIT 99.1
[LOGO OF ALIANT COMMUNICATIONS APPEARS HERE]
Proxy
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Thomas C. Woods III and Frank H. Hilsabeck
proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of stock of Aliant Communications Inc. standing
in the name of the undersigned with all powers which the undersigned would
possess if present at the Annual Meeting of Shareholders of the Company to be
held April 27, 1999 or any adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
[Fold and Detach Here]
<PAGE>
Please mark
vote as
indicated in [X]
this example
Item 1. Merger with Alltel
- --------------------------------------------------------------------------------
To approve the Agreement and Plan of Merger, dated as of
December 18, 1998, by and among Aliant Communications, Inc., FOR AGAINST ABSTAIN
ALLTEL Corporation and a wholly-owned subsidiary of ALLTEL, [ ] [ ] [ ]
the terms and conditions of which are described in the
accompanying proxy statement/prospectus.
Item 2. Election of Directors
- --------------------------------------------------------------------------------
Nominees: Duane W. Acklle, [ ] For all nominees
John Haessler, listed to the left
William C. Smith and (except as marked
Lyn Wallin Ziegenbein. to the contrary)
Instruction: To withhold authority to
vote for any individual [ ] WITHHOLD AUTHORITY
nominee, write that individual's to vote for all
name in the space below. nominees
- -------------------------------------------------
Item 3.
- --------------------------------------------------------------------------------
In their discretion, the Proxies are authorized to vote on such other business
as may properly come before the meeting or any adjournment thereof.
- --------------------------------------------------------------------------------
____
|
|
Signature Signature Date
----------------------- ------------------------- ------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- -------------------------------------------------------------------------------
[FOLD AND DETACH HERE]
[LOGO OF Aliant Communications Appears Here]
Annual Meeting of Shareholders
Tuesday, April 27, 1999
10:30 a.m.
The Cornhusker Hotel
333 So. 13th St.
Lincoln, Nebraska
Agenda:
Merger with ALLTEL
Election of Directors
Report on the progress of the corporation
Discussion on matters of current interest
<PAGE>
Exhibit 99.2
[LETTERHEAD OF MERRILL LYNCH]
Board of Directors
Aliant Communications Inc.
1440 M Street
Lincoln, Nebraska 68508
We hereby consent to the inclusion of our opinion letter dated December
18, 1998 to the Board of Directors of Aliant Communications Inc. ("Aliant") as
Annex B to the Proxy Statement/Prospectus relating to the proposed merger of
Aliant and ALLTEL Corporation and to the references thereto in such Proxy
Statement/Prospectus under the captions "SUMMARY -- Opinion of Aliant's
Financial Advisor," "THE MERGER -- Background of the Merger," "--Aliant's
Reasons for the Merger; Recommendation of the Aliant Board" and "-- Opinion of
Financial Advisor to Aliant." In giving this consent, we do not admit that we
come within the category of persons whose consent is required under, and we do
not admit that we are "experts" for purposes of the Securities Act of 1933 and
the rules and regulations promulgated thereunder.
/s/ MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
New York, New York
March 24, 1999
