UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number: 1-7784
CENTURY TELEPHONE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0651161
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Century Park Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(318) 388-9500
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
As of October 31, 1994, there were 53,427,826 shares of
common stock outstanding.
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
TABLE OF CONTENTS
Page No.
Part I. Financial Information:
Consolidated Statements of Income--Three Months and
Nine Months Ended September 30, 1994 and 1993 3
Consolidated Balance Sheets--September 30, 1994 and
December 31, 1993 4
Consolidated Statements of Stockholders' Equity--
Nine Months Ended September 30, 1994 and 1993 5
Consolidated Statements of Cash Flows--
Nine Months Ended September 30, 1994 and 1993 6
Notes to Consolidated Financial Statements 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-20
Part II. Other Information 21
Signature 22
Index to Exhibits 23
2
<PAGE>
PART I. FINANCIAL INFORMATION
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
------------------ ------------------
1994 1993 1994 1993
------- --------- ------- ---------
(expressed in thousands,
except per share amounts)
<S> <C> <C> <C> <C>
REVENUES
Telephone $ 99,487 90,092 286,226 255,918
Mobile Communications 42,028 22,673 109,149 61,010
-------- ------- ------- -------
Total revenues 141,515 112,765 395,375 316,928
-------- ------- ------- -------
OPERATING EXPENSES
Cost of sales and other
operating expenses 70,519 58,985 202,413 167,288
Depreciation and
amortization 25,215 20,303 69,582 56,553
-------- -------- ------- -------
Total operating expenses 95,734 79,288 271,995 223,841
-------- -------- ------- -------
OPERATING INCOME 45,781 33,477 123,380 93,087
-------- -------- ------- -------
OTHER INCOME (EXPENSE)
Interest expense (11,513) (7,807) (30,839) (22,186)
Gain on sale of asset - - - 1,661
Earnings from unconsolidated
cellular partnerships 4,604 2,596 10,579 4,938
Other income and expense 917 1,141 1,046 2,345
-------- -------- ------- -------
Total other income
(expense) (5,992) (4,070) (19,214) (13,242)
-------- -------- ------- -------
INCOME BEFORE INCOME TAXES 39,789 29,407 104,166 79,845
INCOME TAXES 15,176 11,811 38,867 29,992
-------- -------- ------- -------
NET INCOME $ 24,613 17,596 65,299 49,853
======== ======== ======= =======
PRIMARY EARNINGS PER SHARE $ .46 .34 1.22 .98
======== ======== ======= =======
FULLY DILUTED EARNINGS PER
SHARE $ .44 .33 1.18 .96
======== ======== ======= =======
DIVIDENDS PER COMMON SHARE $ .0800 .0775 .2400 .2325
======== ======== ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1994 1993
------ ------------- ------------
(expressed in thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 16,996 9,777
Accounts receivable
Customers, less allowance for doubtful
accounts of $2,757,000 and $1,473,000 40,573 34,438
Other 21,720 21,771
Materials and supplies, at cost 5,619 4,418
Other 1,593 2,068
---------- ----------
86,501 72,472
---------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 923,411 827,776
---------- ----------
INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired 434,571 297,158
Other investments 115,763 98,142
Note receivable 25,000 -
Deferred charges 25,813 23,842
---------- ----------
601,147 419,142
---------- ----------
$1,611,059 1,319,390
========== ==========
LIABILITIES AND EQUITY
----------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 13,289 14,233
Notes payable to banks 46,600 69,200
Accounts payable 50,166 49,506
Accrued expenses and other liabilities
Salaries and benefits 15,738 15,990
Taxes 27,950 9,327
Interest 9,291 6,476
Other 8,792 5,162
Advance billings and customer deposits 11,514 9,312
---------- ----------
183,340 179,206
---------- ----------
LONG-TERM DEBT 637,988 460,933
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES 174,553 165,483
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, authorized
100,000,000 shares, issued and outstanding
53,423,264 and 51,294,705 shares 53,423 51,295
Paid-in capital 315,696 262,294
Retained earnings 261,374 208,945
Employee Stock Ownership Plan commitment (17,590) (9,220)
Preferred stock - non-redeemable 2,275 454
---------- ----------
615,178 513,768
---------- ----------
$1,611,059 1,319,390
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months
ended September 30
--------------------
1994 1993
-------- ---------
(expressed in thousands)
<S> <C> <C>
COMMON STOCK
Balance at beginning of period $ 51,295 48,897
Issuance of common stock for acquisitions 2,000 2,183
Issuance of common stock through dividend
reinvestment, stock purchase and incentive
plans 126 182
Conversion of preferred stock into common
stock 2 -
-------- --------
Balance at end of period 53,423 51,262
-------- --------
PAID-IN CAPITAL
Balance at beginning of period 262,294 191,522
Issuance of common stock for acquisitions 50,311 67,333
Issuance of common stock through dividend
reinvestment, stock purchase and incentive
plans 2,451 2,537
Conversion of preferred stock into common
stock 52 -
Amortization of unearned compensation 588 476
-------- --------
Balance at end of period 315,696 261,868
-------- --------
RETAINED EARNINGS
Balance at beginning of period 208,945 155,676
Net income 65,299 49,853
Cash dividends declared
Common stock-$.2400 and $.2325 per share,
respectively (12,800) (11,730)
Preferred stock (70) (24)
-------- --------
Balance at end of period 261,374 193,775
-------- --------
ESOP COMMITMENT
Balance at beginning of period (9,220) (11,100)
Commitment to ESOP (10,000) -
Reduction of ESOP Commitment 1,630 1,380
-------- --------
Balance at end of period (17,590) (9,720)
-------- --------
PREFERRED STOCK - NON-REDEEMABLE
Balance at beginning of period 454 454
Issuance of preferred stock for acquisition 1,875 -
Conversion of preferred stock into common
stock (54) -
-------- --------
Balance at end of period 2,275 454
-------- --------
TOTAL STOCKHOLDERS' EQUITY $615,178 497,639
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months
ended September 30
-------------------
1994 1993
-------- --------
(expressed in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 65,299 49,853
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 77,134 63,667
Deferred income taxes (5,602) (4,527)
Equity in earnings of unconsolidated
cellular partnerships (11,449) (4,935)
Gain on sale of asset - (1,661)
Changes in current assets and current
liabilities:
Increase in accounts receivable (1,070) (6,067)
Increase (decrease) in accounts payable (4,504) 15,294
Increase in accrued taxes 18,525 13,058
Changes in other current assets and other
current liabilities, net 6,594 (2,694)
Other, net 8,639 6,562
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 153,566 128,550
-------- --------
INVESTING ACTIVITIES
Payments for property, plant and equipment (147,352) (145,535)
Acquisitions, net of cash acquired (54,899) (35,594)
Purchase of life insurance investment (7,664) (7,670)
Note receivable (25,000) -
Other, net 1,882 (70)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (233,033) (188,869)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 209,072 86,402
Payments of long-term debt (90,731) (28,931)
Notes payable, net (22,600) 32,585
Proceeds from issuance of common stock 2,578 2,719
Cash dividends paid (12,870) (11,754)
Other, net 1,237 1,502
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 86,686 82,523
-------- --------
Net increase in cash and cash equivalents 7,219 22,204
Cash and cash equivalents at beginning
of period 9,777 9,771
-------- --------
Cash and cash equivalents at end of period $ 16,996 31,975
======== ========
Supplemental cash flow information:
Income taxes paid $ 26,686 27,373
======== ========
Interest paid $ 28,024 23,620
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
(1) Basis of Financial Reporting
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to rules and regulations of the Securities and
Exchange Commission; however, the Company believes the
disclosures which are made are adequate to make the information
presented not misleading. The financial statements and
footnotes included in this Form 10-Q should be read in
conjunction with the financial statements and notes thereto
included in the Company's annual report on Form 10-K for the
year ended December 31, 1993. Certain 1993 amounts have been
reclassified to be consistent with the 1994 presentation.
The unaudited financial information for the three months
and nine months ended September 30, 1994 and 1993 has not been
audited by independent public accountants; however, in the
opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
results of operations for the three-month and nine-month
periods have been included therein. The results of operations
for the first nine months of the year are not necessarily
indicative of the results of operations which might be expected
for the entire year.
(2) Accounting Pronouncement
In the first quarter of 1994 the Company adopted Statement
of Financial Accounting Standards No. 112 ("SFAS 112"),
"Employers' Accounting for Postemployment Benefits". SFAS 112
requires the adoption of accrual accounting for workers
compensation, disability and other benefits provided after
employment but before retirement by requiring accrual of the
expected cost when it is probable that a benefit obligation has
been incurred and the amount can be reasonably estimated.
Liabilities for postemployment benefits in the consolidated
balance sheet as of December 31, 1993 were not materially
different than those required by SFAS 112; therefore, no
cumulative effect of change in accounting principle was
recorded upon adoption of SFAS 112.
(3) Net Property, Plant and Equipment
Net property, plant and equipment is composed of the
following:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------ -----------
(expressed in thousands)
<S> <C> <C>
Telephone, at original cost $1,057,225 979,449
Accumulated depreciation (299,707) (288,479)
----------- -----------
757,518 690,970
----------- -----------
Mobile Communications, at cost 159,322 113,252
Accumulated depreciation (44,564) (27,736)
----------- -----------
114,758 85,516
----------- -----------
Other, at cost 82,583 77,737
Accumulated depreciation (31,448) (26,447)
----------- -----------
51,135 51,290
----------- -----------
$ 923,411 827,776
=========== ===========
</TABLE>
7
<PAGE>
(4) Long-Term Debt
On May 6, 1994, the Company completed the issuance of
$50,000,000 of 10-year, 7.75% senior notes and $100,000,000 of
30-year, 8.25% senior notes. The proceeds were used to reduce
certain of the Company's short-term bank indebtedness.
Interest payments are due semi-annually in May and November and
principal payments are due in 2004 and 2024 upon maturity of
the 10-year and 30-year notes, respectively. The 30-year notes
are subject to redemption at any time on or after May 1, 2004
at the option of the Company.
Notes payable to banks were classified as long-term debt at
September 30, 1994 to the extent of borrowings available under a
two-year revolving line of credit (convertible to a five-year term
loan) and a three-year revolving credit facility.
(5) Sale of Asset
The Company sold a minority investment in a telephone
company in the first quarter of 1993 which resulted in a pre-
tax gain of $1,661,000 ($1,080,000 after-tax; $.02 per share).
(6) Acquisitions
On April 8, 1993, the Company consummated the acquisition
of San Marcos Telephone Company, Inc. ("SMTC") in a stock and
cash transaction and acquired SM Telecorp, Inc., an affiliate
of SMTC, for cash. Subsequent to the acquisitions, the Company
changed the names of San Marcos Telephone Company, Inc. and the
principal operating subsidiary of SM Telecorp, Inc. to Century
Telephone of San Marcos, Inc. and Century Telecommunications,
Inc., respectively. The total acquisition price for both
companies approximated $100,000,000 (based on Century's stock
price on April 8, 1993). As a result of the acquisitions,
which were accounted for as purchases, the Company acquired
approximately 22,500 telephone access lines in and around San
Marcos, Texas, along with a 35% ownership interest in the
Austin, Texas Metropolitan Statistical Area ("MSA") wireline
cellular market and a 9.6% interest in the Texas Rural Service
Area ("RSA") #16 wireline cellular market, together
representing approximately 309,000 pops (the Company's pro rata
share of population of the licensed areas) at acquisition.
On February 10, 1994, the Company acquired Celutel, Inc.
("Celutel") in a stock and cash transaction. Approximately
$51,400,000 of the purchase price was paid in cash, with the
remainder paid through the issuance of approximately 1,900,000
shares of Century's common stock, the closing price of which
was $26.25 per share on February 10, 1994. In connection with
the acquisition, Century refinanced approximately $41,700,000
of Celutel's debt. The acquisition was accounted for as a
purchase and approximately $140,000,000 of cost in excess of
net assets acquired was recorded as a result of the
acquisition. Celutel currently provides cellular service to
approximately 33,200 customers in five non-wireline provider
systems in MSAs in Mississippi and Texas.
On March 31, 1994, the Company acquired a local exchange
telephone company in Michigan which currently serves
approximately 2,600 access lines and which owns a minority
interest of approximately 11% in a cellular partnership
operated by the Company. The acquisition, which was accounted
for as a purchase, was consummated through the issuance of
approximately 98,000 shares of Century's common stock and
75,000 shares of Century's preferred stock. The closing price
of Century's common stock was $23.125 per share on March 31,
1994.
8
<PAGE>
(7) Expected Acquisition and Dispositions
In June 1994 the Company entered into a definitive
agreement to sell its ownership interest in a cellular RSA in
Minnesota (the "Minnesota RSA") in exchange for $21,500,000
cash. In October 1994 the Company entered into an asset
exchange agreement which supersedes (assuming the asset
exchange is completed) the June definitive agreement. The
asset exchange agreement provides for the Company to exchange
the assets comprising the Minnesota RSA for (i) the assets of
the Pine Bluff, Arkansas MSA cellular system, (ii) $3,500,000
cash and (iii) a secured, guaranteed one-year $7,000,000
promissory note which accrues interest at prime plus 1%. The
asset exchange is subject to, among other things, Federal
Communications Commission ("FCC") approval and other customary
closing conditions. The Company expects to recognize a gain of
approximately $.16 per share upon future consummation of the
transaction.
In October 1994 the Company entered into definitive
agreements under which it will sell its ownership interests in
several cellular RSAs located primarily in western states and
two MSAs in the midwest, which represent an aggregate of
approximately 300,000 pops. Each sale is subject to regulatory
approvals (including FCC approval) and various other closing
conditions. The Company expects to recognize an aggregate gain
of approximately $.05 per share assuming all the transactions
are consummated.
Subject to certain closing conditions, the Company has agreed
to sell its paging operations.
(8) Note Receivable
In May 1994 Century loaned an unaffiliated telephone
holding company $25,000,000. The loan bears interest at prime
plus 1 1/2%; interest is payable quarterly. Quarterly
principal payments are scheduled to begin in August 1995 with
the unpaid balance becoming due in May 1998. The Company
received a security interest in the holding company's capital
stock, a guaranty from such company's principal stockholder and
certain first refusal rights to acquire certain properties
under various specified circumstances.
9
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations ("MD&A") included herein should be
read in conjunction with MD&A and the other information
included in the Company's annual report on Form 10-K for the
year ended December 31, 1993. The results of operations for
the three months and/or nine months ended September 30, 1994
are not necessarily indicative of the results of operations
which might be expected for the entire year.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1994 Compared
to Three Months Ended September 30, 1993
Net income for the third quarter of 1994 was $24,613,000
compared to $17,596,000 during the third quarter of 1993. This
increase was primarily due to a $12,304,000 increase in
operating income and a $2,008,000 increase in earnings from
unconsolidated cellular partnerships. These factors were
partially offset by increases in interest expense and income
tax expense of $3,706,000 and $3,365,000, respectively.
<TABLE>
<CAPTION>
Three months
ended September 30
------------------
1994 1993
------- -------
(expressed in thousands,
except per share amounts)
<S> <C> <C>
Operating income
Telephone $33,740 29,616
Mobile Communications 12,041 3,861
------- -------
45,781 33,477
Interest expense (11,513) (7,807)
Earnings from unconsolidated cellular
partnerships 4,604 2,596
Other income and expense 917 1,141
Income taxes (15,176) (11,811)
------- -------
Net income $24,613 17,596
======= =======
Fully diluted earnings per share $ .44 .33
======= =======
</TABLE>
Fully diluted earnings per share increased to $.44 for the
three months ended September 30, 1994 from $.33 for the three
months ended September 30, 1993, a 33.3% increase. The average
number of fully diluted shares outstanding increased 3.1% as a
result of shares issued for acquisitions and through the Company's
dividend reinvestment, stock purchase and incentive plans.
The mobile communications operating income reflects the
operations of the cellular partnerships in which the Company
has a majority interest. The minority interest partners' share
of the income (or loss) of such partnerships is reflected as an
expense in other income and expense. The Company's share of
income (or loss) from the cellular partnerships in which it has
less than a majority interest is reflected in earnings from
unconsolidated cellular partnerships. The operating income of
the mobile communications segment during the third quarter of
1994 includes the operations of Celutel, Inc. ("Celutel") which
was acquired in February 1994.
10
<PAGE>
Contributions to revenues and operating income by the
Company's telephone operations and mobile communications
operations for the three months ended September 30, 1994 and
1993 were as follows:
<TABLE>
<CAPTION>
Three months
ended September 30
------------------
1994 1993
-------- --------
<S> <C> <C>
Revenues
Telephone operations 70.3% 79.9
Mobile Communications operations 29.7% 20.1
Operating income
Telephone operations 73.7% 88.5
Mobile Communications operations 26.3% 11.5
</TABLE>
Telephone Operations
<TABLE>
<CAPTION>
Three months
ended September 30
------------------
1994 1993
-------- -------
(expressed in thousands)
<S> <C> <C>
Revenues
Local $26,192 22,688
Network access and
long distance 61,614 56,161
Other 11,681 11,243
------- -------
99,487 90,092
------- -------
Operating expenses
Plant operations 22,031 20,691
Customer operations 8,870 8,204
Corporate and other 15,331 14,421
Depreciation and amortization 19,515 17,160
------- -------
65,747 60,476
------- -------
Operating income $33,740 29,616
======= =======
</TABLE>
Telephone operating income increased $4,124,000 (13.9%) due
to an increase in revenues of $9,395,000 (10.4%) which more
than offset an increase in operating expenses of $5,271,000
(8.7%).
The increase in revenues was primarily due to the partial
recovery of increased operating expenses through revenue pools
in which the Company participates with other telephone
companies, increased recovery from the Federal Communications
Commission ("FCC") mandated Universal Service Fund ("USF"), an
increase in local rates of certain of the Company's telephone
subsidiaries, and internal access line growth of 3.9%. During
the third quarter of 1994, revenues from the USF increased
approximately $2,800,000 over such revenues during the third
quarter of 1993. For additional information relating to
telephone revenues, see Nine Months Ended September 30, 1994
Compared to Nine Months Ended September 30, 1993 - Telephone
Operations.
Operating expenses, exclusive of depreciation and
amortization, increased $2,916,000 (6.7%) primarily due to
increases in salaries and wages, employee benefits and other
general operating expenses.
11
<PAGE>
Depreciation and amortization increased $2,355,000 in the
third quarter of 1994 compared to the third quarter of 1993.
The third quarter of 1994 included depreciation recorded in
anticipation of the approval of increases, as of January 1,
1994, in depreciation rates in certain jurisdictions. Higher
levels of plant in service also contributed to the increased
depreciation.
Mobile Communications Operations
<TABLE>
<CAPTION>
Three months
ended September 30
------------------
1994 1993
------- -------
(expressed in thousands)
<S> <C> <C>
Revenues
Cellular service $39,611 20,679
Equipment and paging 2,417 1,994
------- -------
42,028 22,673
------- -------
Operating expenses
Cost of sales and other 8,142 5,142
General, administrative and customer
service 8,678 6,107
Sales and marketing 7,467 4,420
Depreciation and amortization 5,700 3,143
------- -------
29,987 18,812
------- -------
Operating income $12,041 3,861
======= =======
</TABLE>
Mobile communications operating income increased $8,180,000
(211.9%) to $12,041,000 in the third quarter of 1994 from
$3,861,000 in the third quarter of 1993. Mobile communications
revenues increased $19,355,000 (85.4%) which more than offset
an increase in operating expenses of $11,175,000 (59.4%).
The increase in cellular service revenues was substantially
due to (i) a 62.4% increase, exclusive of Celutel, in the
average number of cellular units in service and (ii) service
revenues generated by Celutel which aggregated approximately
$7,800,000 during the third quarter of 1994. The average
number of cellular units in service in majority-owned markets
during the third quarter of 1994 and 1993 was 182,000 and
92,000, respectively. The average monthly cellular service
revenue per subscriber declined to $73 during the third quarter
of 1994 from $75 during the third quarter of 1993,
substantially due to the continued trend that a higher
percentage of recent subscribers tend to be lower-usage
customers. The average monthly service revenue per subscriber
may further decline (i) as market penetration increases and
additional lower-usage customers are activated and (ii) as
competitive pressures intensify. The Company will continue to
focus on customer service and to attempt to stimulate cellular
usage by promoting the availability of certain enhanced
services and by increasing coverage areas through the
construction of additional cell sites.
Cost of sales and other operating expenses increased
$3,000,000 due to expenses incurred in connection with
providing service to a larger number of subscribers, the
continued development of the Company's cellular systems, and
the Celutel acquisition.
The increase of $2,571,000 in general, administrative and
customer service expenses was primarily due to costs incurred
in connection with the Celutel operations and increased costs
associated with serving a larger number of cellular customers.
12
<PAGE>
Sales and marketing expenses increased $3,047,000 due
primarily to an increase in commissions paid to agents for
selling cellular services to new customers and to the Celutel
acquisition.
Depreciation and amortization increased $2,557,000 due to a
higher level of plant in service and to depreciation and
amortization associated with the Celutel acquisition.
Interest Expense
Interest expense increased $3,706,000 (47.5%) during the
third quarter of 1994 compared to the third quarter of 1993 due
to a 33% increase in average debt outstanding (primarily due to
debt issued in connection with the Celutel acquisition) and to
an increase in average interest rates.
Earnings from Unconsolidated Cellular Partnerships
The increase of $2,008,000 in earnings from unconsolidated
cellular partnerships during the third quarter of 1994 compared
to the third quarter of 1993 was due to the improvement in
profitability of cellular partnerships in which the Company
owns less than a majority interest.
Other Income and Expense
Other income and expense decreased $224,000 in the third
quarter of 1994 compared to the third quarter of 1993.
The increased profitability of the Company's majority-owned
and operated cellular partnerships resulted in a corresponding
increase in the expense recorded by the Company to reflect the
minority interest partners' share of the profits. Such
increase in expense was partially offset by interest income
earned on a $25,000,000 note receivable. For additional
information, see Liquidity and Capital Resources and Note 8 of
Notes to Consolidated Financial Statements.
Income Taxes
Income tax expense increased $3,365,000 during the third
quarter of 1994 compared to the third quarter of 1993 primarily
due to an increase in income before taxes.
13
<PAGE>
Nine Months Ended September 30, 1994 Compared
to Nine Months Ended September 30, 1993
Net income for the nine months ended September 30, 1994 was
$65,299,000 compared to $49,853,000 for the nine months ended
September 30, 1993. This increase was primarily due to a
$30,293,000 increase in operating income and a $5,641,000
increase in earnings from unconsolidated cellular partnerships.
These factors were partially offset by increases in interest
expense and income tax expense of $8,653,000 and $8,875,000,
respectively, and by a decrease of $1,299,000 in other income
and expense. The first nine months of 1993 included a
$1,661,000 pre-tax gain on the sale of a minority investment in
a telephone company.
<TABLE>
<CAPTION>
Nine months
ended September 30
------------------
1994 1993
------- -------
(expressed in thousands,
except per share amounts)
<S> <C> <C>
Operating income
Telephone $ 98,526 83,431
Mobile Communications 24,854 9,656
------- -------
123,380 93,087
Interest expense (30,839) (22,186)
Gain on sale of asset - 1,661
Earnings from unconsolidated cellular
partnerships 10,579 4,938
Other income and expense 1,046 2,345
Income taxes (38,867) (29,992)
------- -------
Net income $ 65,299 49,853
======= =======
Fully diluted earnings per share $ 1.18 .96
======= =======
</TABLE>
Fully diluted earnings per share increased to $1.18 for the
nine months ended September 30, 1994 from $.96 for the nine
months ended September 30, 1993, a 22.9% increase. The average
number of fully diluted shares outstanding increased 4.2% as a
result of shares issued for acquisitions and through the
Company's dividend reinvestment, stock purchase and incentive
plans.
The operating income of the telephone segment during the
nine months ended September 30, 1993 includes six months of
operations of Century Telephone of San Marcos, Inc. ("San
Marcos") which was acquired in April 1993.
The mobile communications operating income reflects the
operations of the cellular partnerships in which the Company
has a majority interest. The minority interest partners' share
of the income (or loss) of such partnerships is reflected as an
expense in other income and expense. The Company's share of
income (or loss) from the cellular partnerships in which it has
less than a majority interest is reflected in earnings from
unconsolidated cellular partnerships. The operating income of
the mobile communications segment during the nine months ended
September 30, 1994 includes the operations of Celutel since its
acquisition on February 10, 1994.
14
<PAGE>
Contributions to revenues and operating income by the
Company's telephone operations and mobile communications
operations for the nine months ended September 30, 1994 and
1993 were as follows:
<TABLE>
<CAPTION>
Nine months
ended September 30
------------------
1994 1993
-------- --------
<S> <C> <C>
Revenues
Telephone operations 72.4% 80.7
Mobile Communications operations 27.6% 19.3
Operating income
Telephone operations 79.9% 89.6
Mobile Communications operations 20.1% 10.4
</TABLE>
Telephone Operations
<TABLE>
<CAPTION>
Nine months
ended September 30
------------------
1994 1993
-------- --------
(expressed in thousands)
<S> <C> <C>
Revenues
Local $ 73,664 65,878
Network access and
long distance 179,539 158,848
Other 33,023 31,192
-------- -------
286,226 255,918
-------- -------
Operating expenses
Plant operations 63,621 60,412
Customer operations 25,734 23,130
Corporate and other 44,019 40,700
Depreciation and amortization 54,326 48,245
-------- -------
187,700 172,487
-------- -------
Operating income $ 98,526 83,431
======== =======
</TABLE>
Telephone operating income increased $15,095,000 (18.1%)
due to an increase in revenues of $30,308,000 (11.8%) which
more than offset an increase in operating expenses of
$15,213,000 (8.8%).
The increase in revenues was partially due (approximately
$5,900,000) to San Marcos which contributed nine months of
revenues during the nine-month period ended September 30, 1994
compared to six months of revenues during the comparable period
in 1993. The remaining increase in revenues was primarily due
to the partial recovery of increased operating expenses through
revenue pools in which the Company participates with other
telephone companies, increased recovery from the FCC mandated
USF, an increase in local rates of certain of the Company's
telephone subsidiaries in July 1994, and internal access line
growth of 3.5%. During the first nine months of 1994, revenues
from the USF increased approximately $6,400,000 over such
revenues during the first nine months of 1993.
The Public Service Commission of Wisconsin ("PSCW")
previously ordered the Wisconsin state support fund existing at
July 1, 1993 to be phased-out. Certain of the Company's
subsidiaries affected by the order have received approval from
the PSCW for increased local rates and other compensation which
offset the loss of the amounts that the Company's subsidiaries
had been receiving from the state support fund.
15
<PAGE>
In July 1994 the Wisconsin Telecommunications Act of 1993
was signed into law. The act provides, among other things, for
the PSCW to authorize competitors to provide local exchange
service. During 1994 other states, including some in which the
Company has operations, took legislative and/or regulatory
steps to further introduce competition into the local exchange
carrier business. Local exchange competition is expected to
initially affect large urban areas to a greater extent than
rural, suburban and small urban areas such as those in which
the Company's telephone operations are located.
After initiating an informal earnings review during 1993 of
all independent local exchange carriers in Louisiana, the
Louisiana Public Service Commission ("LPSC") recently docketed
a formal earnings review of such carriers. There is no
assurance that this review will not lead to future revenue
reductions.
Certain long distance carriers have requested the Company
to reduce intrastate access tariffed rates for certain of its
telephone subsidiaries. In March 1994 a major long distance
carrier filed a petition with the LPSC requesting that the
commission investigate and lower the rates for intrastate
access charges charged to long distance carriers by certain
local exchange telephone companies, including the subsidiaries
of the Company which operate in Louisiana. There is no
assurance that this request will not result in reduced
intrastate access revenues.
The $9,132,000 (7.4%) increase in operating expenses,
exclusive of depreciation and amortization, was partially due
(approximately $3,800,000) to San Marcos which contributed nine
months of expenses during the nine-month period ended September
30, 1994 compared to six months of expenses during the
comparable period in 1993. The remainder of the increase in
operating expenses was due to increases in salaries and wages,
employee benefits and other general operating expenses, net of
a reduction of approximately $1,100,000 in postemployment
benefit expense.
During the first nine months of 1994, depreciation and
amortization increased $6,081,000 due partially to $1,400,000
of depreciation and amortization related to the San Marcos
operations. In addition, the nine months ended September 30,
1994 included depreciation recorded in anticipation of the
approval of increases, as of January 1, 1994, in depreciation
rates in certain jurisdictions. Higher levels of plant in
service also contributed to the increased depreciation.
The Company's regulated telephone operations are subject to
the provisions of Statement of Financial Accounting Standards
No. 71 ("SFAS 71"), "Accounting for the Effects of Certain
Types of Regulation." Under SFAS 71 the Company is required to
account for the economic effects of the rate-making process,
including the recognition of depreciation and amortization of
plant and equipment over lives approved by the regulators. The
ongoing applicability of SFAS 71 to the Company's regulated
telephone operations are being monitored due to the changing
regulatory environment and to increasing competition. Should
the regulated operations of the Company no longer qualify for
the application of SFAS 71 at some future date, the required
accounting impact could result in a material, non-cash charge
against earnings.
16
<PAGE>
Mobile Communications Operations
<TABLE>
<CAPTION>
Nine months
ended September 30
------------------
1994 1993
-------- -------
(expressed in thousands)
<S> <C> <C>
Revenues
Cellular service $101,640 54,958
Equipment and paging 7,509 6,052
-------- -------
109,149 61,010
-------- -------
Operating expenses
Cost of sales and other 22,639 14,149
General, administrative and customer
service 24,361 16,901
Sales and marketing 22,039 11,996
Depreciation and amortization 15,256 8,308
-------- -------
84,295 51,354
-------- -------
Operating income $ 24,854 9,656
======== =======
</TABLE>
Mobile communications operating income increased
$15,198,000 (157.4%) to $24,854,000 during the nine months
ended September 30, 1994 from $9,656,000 during the nine months
ended September 30, 1993. Mobile communications revenues
increased $48,139,000 (78.9%) which more than offset an
increase in operating expenses of $32,941,000 (64.1%).
The increase in cellular service revenues was substantially
due to (i) a 61.3% increase, exclusive of Celutel, in the
average number of cellular units in service and (ii) service
revenues generated by Celutel since it was acquired by the
Company on February 10, 1994 which aggregated approximately
$18,600,000 during the nine-month period ended September 30,
1994. The average number of cellular units in service in
majority-owned markets during the nine months ended September
30, 1994 and 1993 was 162,000 and 85,000, respectively. The
average monthly cellular service revenue per subscriber
declined to $70 during the first nine months of 1994 from $72
during the first nine months of 1993, substantially due to the
continued trend that a higher percentage of recent subscribers
tend to be lower-usage customers. The average monthly service
revenue per subscriber may further decline (i) as market
penetration increases and additional lower-usage customers are
activated and (ii) as competitive pressures intensify. The
Company will continue to focus on customer service and to
attempt to stimulate cellular usage by promoting the
availability of certain enhanced services and by increasing
coverage areas through the construction of additional cell
sites.
Cost of sales and other operating expenses increased
$8,490,000 due to expenses incurred in connection with
providing service to a larger number of subscribers, the
continued development of the Company's cellular systems, and
the Celutel acquisition.
The increase of $7,460,000 in general, administrative and
customer service expenses was primarily due to costs incurred
in connection with the Celutel operations and increased costs
associated with serving a larger number of cellular customers.
Sales and marketing expenses increased $10,043,000 due
primarily to an increase in commissions paid to agents for
selling cellular services to new customers and to the Celutel
acquisition.
Depreciation and amortization increased $6,948,000 due to a
higher level of plant in service and to depreciation and
amortization associated with the Celutel acquisition.
17
<PAGE>
Interest Expense
Interest expense increased $8,653,000 (39.0%) during the
nine months ended September 30, 1994 compared to the nine
months ended September 30, 1993 primarily due to a 37% increase
in average debt outstanding (significantly due to debt issued
in connection with the Celutel acquisition).
Gain on Sale of Asset
During the first quarter of 1993, the Company sold its
minority investment in a telephone company which resulted in a
pre-tax gain of $1,661,000 ($1,080,000 after-tax).
Earnings from Unconsolidated Cellular Partnerships
Earnings from unconsolidated cellular partnerships
increased $5,641,000 during the first nine months of 1994
compared to the first nine months of 1993 due to the Company's
share of income from the partnership interests acquired in the
San Marcos acquisition in April 1993 and to the improvement in
profitability of other cellular partnerships in which the
Company owns less than a majority interest.
Other Income and Expense
Other income and expense for the first nine months of 1994
was $1,046,000 compared to $2,345,000 during the first nine
months of 1993.
The increased profitability of the Company's majority-owned
and operated cellular partnerships resulted in a corresponding
increase in the expense recorded by the Company to reflect the
minority interest partners' share of the profits.
Other income and expense also includes the results of
operations of subsidiaries of the Company which are not
included in telephone operations or mobile communications
operations including, but not limited to, the Company's
competitive access subsidiary and the Company's non-regulated
long distance operations. Although not material to
consolidated operations, the combined results of such
subsidiaries were less favorable during the first nine months
of 1994 compared to the first nine months of 1993 primarily due
to losses incurred by recently-formed or recently-acquired
subsidiaries.
Such increases in expenses were partially offset by
interest income earned on a $25,000,000 note receivable. For
additional information, see Liquidity and Capital Resources and
Note 8 of Notes to Consolidated Financial Statements.
Income Taxes
Income tax expense increased $8,875,000 during the nine
months ended September 30, 1994 compared to the nine months
ended September 30, 1993 primarily due to an increase in income
before taxes.
Other
For certain information about a pending acquisition and
pending dispositions, see Note 7 of Notes to Consolidated
Financial Statements.
18
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Excluding cash used for acquisitions, the Company relies on
cash provided by operations to provide a substantial portion of
its cash needs. The Company's telephone operations have
historically provided a stable source of cash flow which has
helped the Company continue its capital improvement program.
Cash provided by mobile communications operations has increased
each year since that segment became cash-flow positive in 1991.
Net cash provided by operating activities was $153,566,000
during the first nine months of 1994 compared to $128,550,000
during the first nine months of 1993. The Company's
accompanying consolidated statements of cash flows identifies
major differences between net income and net cash provided by
operating activities for each of these periods. For additional
information relating to the telephone and mobile communications
operations of the Company, see Results of Operations.
Net cash used in investing activities was $233,033,000 and
$188,869,000 for the nine months ended September 30, 1994 and
1993, respectively. Cash used in connection with the February
1994 acquisition of Celutel (exclusive of the refinancing of
approximately $41,700,000 of Celutel's debt) was $54,899,000.
Cash used in connection with the April 1993 San Marcos
acquisitions was $35,594,000. Payments for property, plant and
equipment were $1,817,000 more in the first nine months of 1994
than in the comparable period during 1993. Capital
expenditures for the nine months ended September 30, 1994 were
$112,066,000 for telephone, $29,191,000 for mobile
communications and $6,095,000 for other operations.
In connection with the corporate restructuring of a local
exchange telephone company that has been viewed from time to
time as an acquisition candidate, Century loaned the telephone
company's newly-formed holding company $25,000,000 in May 1994.
In exchange, the Company received a security interest in the
holding company's capital stock, a guaranty from such company's
principal stockholder and certain first refusal rights to
acquire certain properties under various specified
circumstances. For additional information see Note 8 of Notes
to Consolidated Financial Statements.
Net cash provided by financing activities during the first
nine months of 1994 and 1993 was $86,686,000 and $82,523,000,
respectively. During the first quarter of 1994, the Company
filed a shelf registration statement registering $400,000,000
of senior unsecured debt securities under which the Company
issued $150,000,000 of senior notes on May 6, 1994. See Note 4
of Notes to Consolidated Financial Statements. The proceeds
were used to discharge the Company's indebtedness under a
$90,000,000 bridge loan incurred to fund substantially all of
the Company's cash requirements in connection with the
acquisition of Celutel in February 1994 (including
approximately $41,700,000 of Celutel's debt which was
refinanced), and to reduce the Company's short-term bank
indebtedness under various credit facilities bearing interest
at rates ranging from 4.0% to 4.6%.
Budgeted capital expenditures for 1994 total $142,000,000
for telephone operations and revised budgeted capital
expenditures for mobile communications operations total
approximately $55,000,000 (of which approximately $12,000,000
will be funded by minority interest partners in cellular
partnerships operated by the Company). The Company anticipates
that capital expenditures in its telephone operations will
continue to include the installation of fiber optic cable, the
replacement of mechanical switches with digital switches and
the upgrading of its plant and equipment to provide enhanced
services. Mobile communications capital
19
<PAGE>
expenditures are expected to continue to focus primarily on the
construction of additional cell sites and the upgrading of the
Company's cellular systems to increase capacity and enhance the
Company's ability to provide digital service in the future.
Revised budgeted capital expenditures for other operations
total $7,000,000, which includes capital construction costs
currently planned to be expended by the Company's recently-
formed competitive access subsidiary which in May 1994 obtained
a franchise from Fort Worth, Texas to provide voice, data and
certain video services in the Fort Worth market and
subsequently received approval to extend the Fort Worth system
to Arlington, Texas. The Company will continue to pursue the
acquisition and development of other franchised competitive
access markets.
The Company has decided not to participate in the FCC's
December 1994 auction of 30 Mhz Major Trading Area broadband
licenses to provide Personal Communications Services ("PCS").
If attractive opportunities arise, the Company may participate
in the FCC's auctions of Basic Trading Area PCS licenses to be
held during 1995. Pending these 1995 auctions, the Company
will continue to equip its current cellular networks with
digital enhancements which may, when applied with new
microcellular technologies, permit the Company's cellular
systems to provide services comparable with emerging PCS
technologies.
As of September 30, 1994 the company had $58,600,000 of
undrawn borrowings available under committed bank credit
facilities, along with $25,000,000 available under uncommitted
bank credit facilities. In addition, Century's telephone
subsidiaries had available for use $129,000,000 of commitments
for long-term financing from the Rural Electrification Admini-
stration ("REA"). Applications for additional long-term financing
for the Company's telephone subsidiaries have been filed with
the REA and are in various stages of processing. Federal
budget proposals which could significantly reduce the availability
of new loan commitments to the Company's telephone subsidiaries
under the REA program in future fiscal years were considered in
prior years and are expected to continue to be considered. If
the Company's telephone subsidiaries are unable to borrow
additional funds through the REA program and are forced to
borrow from conventional lenders at market rates, the cost of
new loans might increase.
20
<PAGE>
PART II. OTHER INFORMATION
CENTURY TELEPHONE ENTERPRISES, INC.
Item 6. Exhibits and Reports on Form 8-K
------ --------------------------------
A. Exhibits
--------
3(i) Registrant's Restated Articles of Incorporation,
dated September 30, 1994.
3(ii)Registrant's Bylaws, as amended through August
23, 1994.
4.1 Third Amendment to Revolving Credit Facility
Agreement, dated August 15, 1994 between
Registrant and NationsBank of Texas, N.A.
10.1 Registrant's Amended and Restated Supplemental
Executive Retirement Plan, amended and restated
as of July 1, 1994.
10.2 Registrant's Supplemental Defined Contribution
Plan, effective as of January 1, 1994.
10.3 Registrant's Supplemental Dollars & Sense Plan,
effective as of January 1, 1995.
11 Computations of Earnings Per Share.
27 Financial Data Schedule.
B. Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed during the
quarter ended September 30, 1994.
21
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
CENTURY TELEPHONE ENTERPRISES, INC.
Date: November 14, 1994 /s/ Murray H. Greer
--------------------
Murray H. Greer
Controller
(Principal Accounting Officer)
22
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
INDEX TO EXHIBITS
Exhibit
Number
-------
3(i) Registrant's Restated Articles of Incorporation, dated
September 30, 1994, included herein.
3(ii) Registrant's Bylaws, as amended through August 23, 1994,
included herein.
4.1 Third Amendment to Revolving Credit Facility Agreement,
dated August 15, 1994, included herein.
10.1 Registrant's Amended and Restated Supplemental Executive
Retirement Plan, amended and restated as of July 1, 1994,
included herein.
10.2 Registrant's Supplemental Defined Contribution Plan, effective
as of January 1, 1994, included herein.
10.3 Registrant's Supplemental Dollars & Sense Plan, effective
as of January 1, 1995, included herein.
11 Computations of Earnings Per Share, included herein.
27 Financial Data Schedule, included herein.
23
EXHIBIT 3(i)
RESTATED ARTICLES OF INCORPORATION
of
CENTURY TELEPHONE ENTERPRISES, INC.
Century Telephone Enterprises, Inc., a Louisiana corporation
(the "Corporation"), through its undersigned President and
Secretary and by authority of its Board of Directors, does hereby
certify as of September 30, 1994 that:
FIRST: The Restated Articles of Incorporation of the
Corporation set forth in paragraph Fourth below accurately
reflects the Corporation's articles of incorporation and all
amendments thereto in effect as of the date hereof without any
substantive changes.
SECOND: Each amendment has been effected in conformity with
law.
THIRD: The date of incorporation of the Corporation was
April 30, 1968, and the date of these Restated Articles of
Incorporation is September 30, 1994.
FOURTH: The Restated Articles of Incorporation of the
Corporation are as follows:
ARTICLE I
Name
The name of this Corporation is Century Telephone
Enterprises, Inc.
ARTICLE II
Purpose
The purpose of the Corporation is to engage in any lawful
activity for which corporations may be formed under the Business
Corporation Law of Louisiana.
ARTICLE III
Capital Stock
A. Authorized Shares; Voting Rights. 1. The Corporation
is authorized to issue 100,000,000 shares of Common Stock, par
value $1.00 per share, and 2,000,000 shares of preferred stock,
par value $25.00 per share.
2. Each share of Common Stock and each outstanding
share of the Series A and H Preferred Stock ("Voting Preferred
Stock") which has been beneficially owned continuously by the
same person since May 30, 1987 will entitle such person to ten
votes with respect to such share on each matter properly
submitted to the shareholders of the Corporation for their vote,
consent, waiver, release or other action when the Common Stock
and the Voting Preferred Stock vote together with respect to such
matter.
3. For purposes of this paragraph A, a change in
<PAGE>
beneficial ownership of a share of the Corporation's stock shall
be deemed to have occurred whenever a change occurs in any person
or group of persons who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise
has or shares (i) voting power, which includes the power to vote,
or to direct the voting of such share; (ii) investment power,
which includes the power to direct the sale or other disposition
of such share; (iii) the right to receive or retain the proceeds
of any sale or other disposition of such share; or (iv) the right
to receive distributions, including cash dividends, in respect to
such share.
a. In the absence of proof to the contrary
provided in accordance with the procedures refereed to in
subparagraph (5) of this paragraph A, a change in beneficial
ownership shall be deemed to have occurred whenever a share
of stock is transferred of record into the name of any other
person.
b. In the case of a share of Common Stock or
Voting Preferred Stock held of record in the name of a
corporation, general partnership, limited partnership,
voting trustee, bank, trust company, broker, nominee or
clearing agency, or in any other name except a natural
person, if it has not been established pursuant to the
procedures refereed to in subparagraph (5) that such share
was beneficially owned continuously since May 30, 1987 by
the person who possesses all of the attributes of beneficial
ownership referred to in clauses (i) through (iv) of
subparagraph (3) of this paragraph A with respect to such
share of Common Stock or Voting Preferred Stock, then such
share of Common Stock or Voting Preferred Stock shall carry
with it only one vote regardless of when record ownership of
such share was acquired.
c. In the case of a share of stock held of
record in the name of any person as trustee, agent, guardian
or custodian under the Uniform Gifts to Minors Act as in
effect in any state, a change in beneficial ownership shall
be deemed to have occurred whenever there is a change in the
beneficiary of such trust, the principal of such agent, the
ward of such guardian or the minor for whom such custodian
is acting.
4. Notwithstanding anything in this paragraph A to
the contrary, no change in beneficial ownership shall be deemed
to have occurred solely as a result of:
a. any event that occurred prior to May 30,
1987, including contracts providing for options, rights of
first refusal and similar arrangements, in existence on such
date to which any holder of shares of stock is a party;
b. any transfer of any interest in shares of
stock pursuant to a bequest or inheritance, by operation of
law upon the death of any individual, or by any other
transfer without valuable consideration, including a gift
that is made in good faith and not for the purpose of
circumventing paragraph A;
<PAGE>
c. any change in the beneficiary of any trust,
or any distribution of a share of stock from trust, by
reason of the birth, death, marriage or divorce of any
natural person, the adoption of any natural person prior to
age 18 or the passage of a given period of time or the
attainment by any natural person of a specified age, or the
creation or termination of any guardianship or custodian
arrangement; or
d. any appointment of a successor trustee,
agent, guardian or custodian with respect to a share of
stock.
5. For purposes of this paragraph A, all
determinations concerning changes in beneficial ownership, or the
absence of any such change, shall be made by the Corporation.
Written procedures designed to facilitate such determinations
shall be established by the Corporation and refined from time to
time. Such procedures shall provide, among other things, the
manner of proof of facts that will be accepted and the frequency
with which such proof may be required to be renewed. The
Corporation and any transfer agent shall be entitled to rely on
all information concerning beneficial ownership of a share of
stock coming to their attention from any source and in any manner
reasonably deemed by them to be reliable, but neither the
Corporation nor any transfer agent shall be charged with any
other knowledge concerning the beneficial ownership of a share of
stock.
6. Each share of Common Stock acquired by reason of
any stock split or dividend shall be deemed to have been
beneficially owned by the same person continuously from the same
date as that on which beneficial ownership of the share of Common
Stock, with respect to which such share of Common Stock was
distributed, was acquired.
7. Each share of Common Stock acquired upon
conversion of the outstanding Series A and H Preferred Stock of
the Corporation ("Convertible Stock") shall be deemed to have
been beneficially owned by the same person continuously from the
date on which such person acquired the Convertible Stock
converted into such share of Common Stock.
8. Where a holder beneficially owns shares having ten
votes per share and shares having one vote per share, and
transfers beneficial ownership of less than all of the shares
held, the shares transferred shall be deemed to consist, in the
absence of evidence to the contrary, of the shares having one
vote per share.
9. Shares of Common Stock held by the Corporation's
employee benefit plans will be deemed to be beneficially owned by
such plans regardless of how such shares are allocated to or
voted by participants, until the shares are actually distributed
to participants.
10. Each share of Common Stock, whether at any
particular time the holder thereof is entitled to exercise ten
votes or one, shall be identical to all other shares of Common
Stock in all other respects.
<PAGE>
11. Each share of Voting Preferred Stock, whether at
any particular time the holder thereof is entitled to exercise
ten votes or one, shall be identical in all other respects to all
other shares of Voting Preferred Stock in the same designated
series.
12. Each share of Common Stock issued by he
Corporation in a business combination transaction shall be deemed
to have been beneficially owned by the person who received such
share in the transaction continuously for the shortest period, as
determined in good faith by the Board of Directors, that would be
permitted for the transactions to be accounted for as a pooling
of interests, provided that the Audit Committee of the Board of
Directors has made a good faith determination that (i) such
transaction has a bona fide business purpose, (ii) it is in the
best interests of the Corporation and its shareholders that such
transaction be accounted for as a pooling of interests under
generally accepted accounting principles and (iii) such issuance
of Common Stock does not have the effect of nullifying or
materially restricting or disparately reducing the per share
voting rights of holders of an outstanding class or classes of
voting stock of the Corporation. Notwithstanding the foregoing,
the Corporation shall not issue shares in a business combination
transaction if such issuance would result in a violation of Rule
19c-4 under the Securities Exchange Act of 1934 and nothing
herein shall be interpreted to require the Corporation to account
for any business combination transaction in any particular
manner.
B. Issuance of Preferred Stock. 1. The Preferred Stock
may be issued from time to time in one or more series.
2. In respect to any series of Preferred Stock, the
Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rates, conversion rights, voting
rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation
preferences of any wholly unissued series of Preferred Stock, and
the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease
the number of shares of any series subsequent to the issue of
shares of that series, but not below the number of shares of such
series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares
of such series. In addition thereto the Board of Directors shall
have such other powers with respect to the Preferred Stock and
any series thereof as shall be permitted by applicable law.
3. No full dividend for any quarterly dividend period
may be declared or paid on shares of any series of Preferred
Stock unless the full dividend for that period shall be
concurrently declared or paid on all series of Preferred Stock
outstanding in accordance with the terms of each series. If
there are any accumulated dividends accrued or in arrears on any
share of any series of Preferred Stock those dividends shall be
paid in full before any full dividend shall be paid on any other
series of Preferred Stock. If less than a full dividend is to be
<PAGE>
paid, the amount of the dividend to be distributed shall be
divided among the shares of Preferred Stock for which dividends
are accrued or in arrears in proportion to the aggregate amounts
which would be distributable to those holders of Preferred Stock
if full cumulative dividends had previously been paid thereon in
accordance with the terms of each series.
C. Non-Assessability; Transfers. The stock of this
Corporation shall be fully paid and non-assessable when issued,
shall be represented by certificates, and shall be personal
property. No transfer of the said stock shall be binding upon
this Corporation unless said transfer is made in accordance with
this charter and the by-laws of this Corporation and recorded in
the books thereof.
D. Pre-emptive Rights. No stockholder shall have any pre-
emptive right to subscribe to any or all additions to the stock
of this Corporation.
E. Series A Preferred Stock. Preferred Stock, Series A
("Series A Shares") shall consist of 160,560 shares of Preferred
Stock.
1. Holders of the outstanding Series A Shares shall
be entitled to one vote per share thereof, voting with holders of
shares of Common Stock and with holders of other voting shares of
Preferred Stock as a single class, except as to those matters on
which holders of Preferred Stock or a particular series thereof
are required by applicable law to vote separately; and shall be
entitled to receive, out of any funds legally available therefor,
dividends at the rate of 6-1/8% per annum of the par value
thereof, and no more, payable in cash quarterly on the last day
of March, June, September and December, in each year when and as
declared by the Board of Directors of the Corporation; provided
that, if the Net Earnings per share of Common Stock of this
Corporation reaches $1.50 for the preceding calendar year, the
annual dividend rate shall be 7-1/8% thereafter; and further
provided that, if the Net Earnings per share of Common Stock
reaches $2.00 for the preceding calendar year, the annual
dividend rate shall be 8-1/8% thereafter. For purposes hereof,
"Net Earnings per share of Common Stock" shall be computed on a
fully diluted basis in accordance with Release No. 15, as amended
from time to time by the Accounting Principles Board (or any
successor thereto) of the American Institute of Certified Public
Accountants. Dividends shall accrue on each share of Series A
from the date of its original issuance and shall accrue from day
to day, whether or not earned or declared. Dividends shall be
cumulative so that if dividends in respect of any previous
quarterly dividend period at the prescribed rate per annum shall
not have been paid on or declared and set apart from all Series A
Shares at the time outstanding, the deficiency shall be fully
paid on or declared and set apart for said shares before any
dividend or other distribution shall be paid on or declared or
set apart for shares of Common Stock.
2. In the event of a liquidation, dissolution or
winding up of this Corporation, the holders of Series A Shares
shall be entitled to receive, pro rata with all other holders of
Preferred Stock of whatever series, to the extent available out
of the assets of this Corporation whether such assets are capital
<PAGE>
or surplus of any nature, an amount equal to the par value of
such Preferred Stock, and in addition thereto, a further amount
equal to the dividends unpaid and accumulated thereon, to the
date that payment is made available to the holders of Preferred
Stock, whether earned or declared or not, and no more, before any
payment shall be made or any assets distributed to the holders of
Common Stock.
A consolidation or merger of this Corporation with
or into any other corporation or corporations, or a sale of all
or substantially all of the assets of the Corporation, shall not
be deemed to be a liquidation, dissolution or winding up, within
the meaning of this paragraph.
3. If the average daily market price per share of
this Corporation's Common Stock maintains a level of $17.13 or
higher for a period of at least ninety consecutive days,
thereafter this Corporation, at the option of the Board of
Directors, may at any time or from time to time redeem the whole
or any part of the outstanding Series A Shares by paying in cash
therefor twenty five dollars ($25.00) per share and, in addition
to the aforementioned amount, an amount in cash equal to all
dividends thereon unpaid and accumulated as provided in (1) of
this Paragraph E, whether earned or declared or not, to and
including the date fixed for redemption, such sum being
hereinafter sometimes referred to as the redemption price. In
case of the redemption of a part only of the outstanding Series A
Shares, this Corporation shall designate by lot, in such manner
as the Board of Directors may determine, the shares to be
redeemed, or shall effect such redemption pro rata. Less than
all of the Series A Shares at any time outstanding may not be
redeemed until all dividends accrued and in arrears upon all
Series A Shares outstanding shall have been paid for all past
dividend periods, and until full dividends for the then current
dividend period on all Series A Shares then outstanding, other
than the shares to be redeemed, shall have been paid or declared
and the full amount thereof set apart for payment. At least
thirty (30) days' previous notice by mail, postage prepaid, shall
be given to the holders of record of the Series A Shares to be
redeemed, such notice to be addressed to each shareholder at his
post office address as shown by the records of this Corporation.
On or after the date fixed for redemption and stated in such
notice, each holder of Series A Shares called for redemption
shall surrender his certificate evidencing such shares to this
Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the redemption price.
In case less than all the shares represented by any such
surrendered certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. If such notice of
redemption shall have been duly given, and if on the date fixed
for redemption funds necessary for the redemption shall be
available thereof, then, notwithstanding that the certificates
evidencing any shares so called for redemption shall not have
been surrendered, the dividends with respect to the shares so
called for redemption shall cease to accrue after the date fixed
for redemption and all rights with respect to the shares so
called for redemption shall forthwith after such date cease and
determine, except only the right of the holders to receive the
redemption price without interest upon surrender of their
certificates thereof.
<PAGE>
If, on or prior to any date fixed for redemption
of Series A Shares, this Corporation deposits, with any bank or
trust company, as a trust fund, a sum sufficient to redeem, on
the date fixed for redemption thereof, the shares called for
redemption, with irrevocable instructions and authority to the
bank or trust company to give the notice or redemption thereof if
such notice shall not previously have been given by this
Corporation, or to complete the giving if such notice is
theretofore commenced, and to pay, on and after the date fixed
for redemption or prior thereto, the redemption price of the
shares to their respective holders upon the surrender of their
share certificates, then from and after the date of the deposit
(although prior to the date fixed for redemption), the shares so
called shall cease to accrue after the date fixed for redemption.
The deposit shall be deemed to constitute full payment of the
shares to their holders and from and after the date of the
deposit the shares shall be deemed to be no longer outstanding,
and the holders thereof shall cease to be shareholders with
respect to such shares, and shall have no rights with respect
thereto except the right to receive from the bank or trust
company payment of the redemption price of the shares without
interest, upon the surrender of their certificates therefor, and
the right to convert said shares as provided herein at any time
up to but not after the close of business on the day prior to the
date fixed for redemption of such shares. Any moneys deposited
on account of the redemption price of Series A Shares converted
subsequent to the making of such deposit shall be repaid to the
Corporation forthwith upon the conversion of such Series A
Shares.
4. The holders of Series A Shares shall have
conversion rights as follows:
a. The Series A Shares shall be convertible, at
the option of the respective holders thereof, at any time
prior to the day prior to such date, if any, as may have
been fixed for the redemption thereof in any notice of
redemption given as provided in (3) hereof, at the office of
the Corporation or any transfer agent for such shares, into
fully paid and non-assessable shares (calculated to the
nearest whole share, fractions of a share being disregarded)
of Common Stock of the Corporation, at conversion price in
effect at the time of conversion determined as hereinafter
provided, each Series A Share being taken at $25.00 for the
purpose of such conversion. The price at which shares of
Common Stock shall be deliverable upon conversion (herein
called the "conversion price") shall be $11.42 per share
until January 15, 1977, and thereafter the sum of (i) the
average daily closing market price thereof during the
preceding 24 months of any national securities exchange upon
which said Common Stock is listed for trading or, in the
absence of said listing, then as reported by the National
Association of Securities Dealers, Inc., but not more than
$11.42 and not less than $8.12 per share; and (ii) one-half
of the difference between said average market price and
$11.42 per share; provided, however, that any Series A
Shares called for redemption shall be thereafter
convertible, at the option of the holders thereof, at any
time prior to the date fixed for redemption, into shares of
<PAGE>
Common Stock, which shall be valued at $11.42 per share for
said purpose. Such conversion price shall be subject to
adjustment from time to time in certain circumstances, as
hereinafter provided. The Corporation shall make no payment
or adjustment on account of any dividends accrued on the
Series A Shares surrendered for conversion. In case of the
call for redemption of any Series A Shares, the right of
conversion shall terminate as to the shares designated for
redemption, at the close of business on the day preceding
the day fixed for redemption, unless default is made in the
payment of the redemption price.
b. Before any holder of Series A Shares shall be
entitled to convert the same to Common Stock, he shall
surrender the certificates or certificates therefor, duly
endorsed, at the office of the Corporation or of any
transfer agent for the Series A Shares, and shall give
written notice to the Corporation at such office that he
elects to convert the same and shall state in writing
therein the name or names in which he wishes the certificate
or certificates for Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Series A
Shares, or to his nominee or nominees, certificates for the
number of full shares of Common Stock to which he shall be
entitled, as aforesaid. Such conversion shall be deemed to
have been made as of the date of surrender of the Series A
Shares to be converted, and the person or persons entitled
to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or
holders of that Common Stock on said date.
c. In case the Corporation shall at any time
subdivide the outstanding shares of Common Stock, or shall
issue as a dividend on Common Stock such number of shares of
Common Stock as shall equal 10% or more of the number of
shares of Common Stock outstanding immediately prior to the
issuance of such dividend, the conversion price in effect
immediately prior to such subdivision or the issuance of
such dividend shall be proportionately decreased, and in
case the Corporation shall at any time combine the
outstanding shares of Common Stock, the conversion price in
effect immediately prior to such combination shall be
proportionately increased, effective at the close of
business on the date of such subdivision, dividend, or
combination, as the case may be.
d. No fractional shares of Common Stock shall be
issued upon the conversion of Series A Shares. If any
fractional interest in a share of Common Stock would, except
for the provisions of this paragraph d, be deliverable upon
conversion hereunder, the Corporation shall adjust such
fractional interest by rounding off said fractional interest
to the nearest whole number of shares of Common Stock.
e. Whenever the conversion price is adjusted, as
herein provided, the Corporation shall forthwith maintain at
its office and file with the transfer agents for Series A
Shares, if any, a statement signed by the Chairman of the
Board, or the President, or a Vice President of the
<PAGE>
Corporation, and by its Treasurer or an Assistant Treasurer,
showing in detail the facts requiring such adjustment and
the conversion price after such adjustment. Such transfer
agents shall be under no duty or responsibility with respect
to any such statement except to exhibit the same from time
to time to any holder of Series A Shares desiring an
inspection thereof.
f. In case of any capital reorganization or any
reclassification of the capital stock of the Corporation or
in case of the consolidation or merger of the Corporation
with or into another corporation or the conveyance of all or
substantially all of the assets of the Corporation to
another corporation, each Series A Share shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock of the Corporation deliverable upon
conversion of such Series A Share would have been entitled
upon such reorganization, reclassification, consolidation,
merger or conveyance; and, in any such case, appropriate
adjustment (as determined by the Board of Directors) shall
be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of
the holders of the Series A Shares, to the end that the
provisions set forth herein (including provisions with
respect to changes in and other adjustments of the
conversion price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares of stock or
other property thereafter deliverable upon conversion of the
Series A Shares.
g. In case:
(i) the Corporation shall take a record of
the holders of its Common Stock for the purpose of
entitling them to receive a dividend, or any other
distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of
the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase any shares
of stock of any class or to receive any other rights;
or
(iii) of any capital reorganization of the
Corporation, reclassification of the capital stock of
the Corporation (other than a subdivision or
combination of its outstanding shares of Common Stock),
consolidation or merger of the Corporation with or into
another corporation, or conveyance of all of
substantially all of the assets of the Corporation to
another corporation; or
(iv) of the voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation; then, and in any such case, the
Corporation shall cause to be mailed to the holders of
record of the outstanding Series A Shares, at least 10
days prior to the date hereinafter specified, a notice
stating the date on which (x) a record is to be taken
<PAGE>
for the purpose of such dividend, distribution or
rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, dissolution,
liquidation or winding up is to take place and the
date, if any is to be fixed, as of which holders of
Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other
property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
h. The Corporation shall at all times reserve
and keep available, out of its authorized but unissued
Common Stock, solely for the purpose of effecting the
conversion of the Series A Shares, the full number of shares
of Common Stock deliverable upon the conversion of all
Series A Shares from time to time outstanding.
i. The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue
or delivery of shares of Common Stock on conversion of
Series A Shares pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery
of shares of Common Stock in a name other than that in which
the Series A Shares so converted were registered, and no
such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the
amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been
paid.
j. All certificates of the Series A Shares
surrendered for conversion shall be appropriately cancelled
on the books of the Corporation, and the shares so converted
represented by such certificates shall be restored to the
status of authorized but unissued Preferred Stock of the
Corporation without designation as to series.
F. Series H Preferred Stock. Preferred Stock, Series H
("Series H Series") shall consist of 20,000 shares of Preferred
Stock.
1. Holders of the outstanding Series H Shares shall
be entitled to one vote per share thereof, voting with holders of
shares of Common Stock and with holders of other voting shares of
Preferred Stock as a single class, except as to those matters on
which holders of Preferred Stock or a particular series thereof
are required by applicable law to vote separately; and shall be
entitled to receive, out of any funds legally available therefor,
dividends at the rate of 7% per annum of the part value thereof,
and no more, payable in cash quarterly on the last day of March,
June, September, and December in each year, commencing 1975, when
and as declared by the Board of Directors of the Corporation.
Dividends shall accrue on each share of Series H from the date of
its original issuance and shall accrue from day to day, whether
or not earned or declared. Dividends shall be cumulative so that
if dividends in respect of any previously quarterly dividend
period at the prescribed rate per annum shall not have been paid
on or declared and set or apart for all Series H Shares at the
<PAGE>
time outstanding, the deficiency shall be fully paid on or
declared and set apart for said shares before any dividend or
other distribution shall be paid on or declared or set apart for
shares of Common Stock.
2. In the event of a liquidation, dissolution or
winding up of this Corporation, the holders of Series H Shares
shall be entitled to receive, pro rata with all other holders of
Preferred Stock of whatever series, to the extent available out
of the assets of this Corporation, whether such assets are
capital or surplus of any nature, an amount equal to the par
value of such Preferred Stock, and in addition thereto, a further
amount equal to the dividends unpaid and accumulated thereon, to
the date that payment is earned or declared or not, and no more,
before any payment shall be made or any assets distributed to the
holders of Common Stock.
A consolidation or merger of this Corporation with
or into any other corporation or corporations, or a sale of all
or substantially all of the assets of the Corporation, shall not
be deemed to be a liquidation, dissolution or winding up, within
the meaning of this paragraph.
3. The holders of Series H Shares shall have
conversion rights as follows:
a. The Series H Shares shall be convertible, at
the option of the respective holders thereof, at the office
of the Corporation or any transfer agent for such shares,
into fully paid and non-assessable shares (calculated to the
nearest whole share, fractions of a share being disregarded)
of Common Stock of the Corporation, at the conversion rate
of one and twelve thirteenths (1-12/13ths) shares of Common
Stock for each Series H Share converted.
Such conversion rate shall be subject to
adjustment from time to time in certain instances, as
hereinafter provided. The Corporation shall make no payment
or adjustment on account of any dividends accrued on the
Series H Shares surrendered for conversion.
b. Before any holder of Series H Shares shall be
entitled to convert the same in Common Stock, he shall
surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any
transfer agent for the Series H Shares, and shall give
written notice to the Corporation at such office that he
elects to convert the same and shall state in writing
therein the name or names in which he wishes the certificate
or certificates for Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Series H
Shares, or to his nominee or nominees, certificates for the
number of full shares of Common Stock to which he shall be
entitled, as aforesaid. Such conversion shall be deemed to
have been made as of the date of surrender of the Series H
Shares to be converted, and the person or persons entitled
to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or
holders of that Common Stock on said date.
<PAGE>
c. In case the Corporation shall at any time
subdivide the outstanding shares of Common Stock, or shall
issue as a dividend on Common Stock such number of shares of
Common Stock as shall equal 10% or more of the number of
shares of Common Stock outstanding immediately prior to the
issuance of such dividend, the conversion price in effect
immediately prior to such subdivision or the issuance of
such dividend shall be proportionately decreased, and in
case the Corporation shall at any time combine the
outstanding shares of Common Stock, the conversion price in
effect immediately prior to such combination shall be
proportionately increased, effective at the close of
business on the date of such subdivision, dividend or
combination, as the case may be.
d. No fractional shares of Common Stock shall be
issued upon the conversion of Series H Shares. If any
fractional interest in a share of Common Stock would, except
for the provisions of this paragraph d, be deliverable upon
conversion hereunder, the Corporation shall adjust such
fractional interest by rounding off said fractional interest
to the nearest whole number of shares of Common Stock.
e. Whenever the conversion is adjusted, as
herein provided, the Corporation shall forthwith maintain at
its office and file with the transfer agents for Series H
Shares, if any, a statement signed by the Chairman of the
Board, or the President, or a Vice President of the
Corporation, and by its Treasurer or an Assistant Treasurer,
showing in detail the facts requiring such adjustment and
the conversion price after such adjustment. Such transfer
agent shall be under no duty or responsibility with resect
to any such statement except to exhibit the same from time
to time to any holder of Series H Shares desiring an
inspection thereof.
f. In case of any capital reorganization or any
reclassification of the capital stock of the Corporation or
in case of the consolidation or merger of the Corporation
with or into another corporation or the conveyance of all or
substantially all of the assets of the Corporation to
another corporation, each Series H Share shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock of the Corporation deliverable upon
conversion of such Series H Shares would have been entitled
upon such reorganization, reclassification, consolidation,
merger or conveyance; and, in any such case, appropriate
adjustment (as determined by the Board of Directors) shall
be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of
the holders of the Series H Shares, to the end that the
provisions set forth herein (including provisions with
respect to changes in and other adjustments of the
conversion price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares of stock or
other property thereafter deliverable upon the conversion of
the Series H Shares.
<PAGE>
g. In case:
(i) the Corporation shall take a record of
the holders of its Common Stock for the purpose of
entitling them to receive a dividend, or any other
distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of
the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase any shares
of stock of any class or to receive any other rights;
or
(iii) of any capital reorganization of the
Corporation, reclassification of the capital stock of
the Corporation (other than a subdivision or
combination of its outstanding shares of Common Stock),
consolidation or merger of the Corporation with or into
another corporation, or conveyance of all or
substantially all of the assets of the Corporation to
another corporation; or
(iv) of the voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation; then, and in any such case, the
Corporation shall cause to be mailed to the holders of
record of the outstanding Series H Shares, at least 10
days prior to the date hereinafter specified, a notice
stating the date on which (x) a record is to be taken
for the purpose of such dividend, distribution, or
rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, dissolution,
liquidation or winding up is to take place and the
date, if any is to be fixed, as of which holders of
Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other
property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
h. The Corporation shall at all times reserve
and keep available, out of its authorized but unissued
Common Stock, solely for the purpose of effecting the
conversion of the Series H Shares, the full number of shares
of Common Stock deliverable upon the conversion of all
Series H Shares from time to time outstanding.
i. The Corporation shall pay any and all issue
and other taxes that may be payable in respect to any issue
or delivery of shares of Common Stock or conversion of
Series H Shares pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery
of shares of Common Stock in a name other than that in which
the Series H Shares so converted were registered, and no
such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the
amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been
paid.
<PAGE>
j. All certificates of the Series H Shares
surrendered for conversion shall be appropriately cancelled
on the books of the Corporation, and the shares so converted
represented by such certificates shall be restored to the
status of authorized but unissued Preferred Stock of the
Corporation without designation as to series.
G. Series K Preferred Stock. The Corporation's 5%
Cumulative Convertible Series K Preferred Stock ("Series K
Shares") shall consist of 75,000 shares of Preferred Stock having
the preferences, limitations and relative rights set forth below.
1. Holders of the Series K Shares shall be entitled
to cast one vote per share, voting with holders of shares of
Common Stock and with holders of other series of voting preferred
stock as a single class on any matter to come before a meeting of
the shareholders, except with respect to the casting of ballots
on those matters as to which holders of Preferred Stock or a
particular series thereof are required by law to vote separately.
2. The Series K Shares shall, with respect to
dividend rights and rights upon liquidation, dissolution and
winding up, rank prior to the Common Stock and pari passu with
respect to the Series A Shares and Series H Shares. All equity
securities of the Corporation as to which the Series K Shares
rank prior, whether with respect to dividends or upon
liquidation, dissolution or winding-up or otherwise, including
the Common Stock, are collectively referred to herein as the
"Junior Securities"; all equity securities of the Corporation as
to which the Series K Shares rank pari passu, including the
Series A Shares and Series H Shares, are collectively referred to
herein as the "Parity Securities"; and all other equity
securities of the Corporation (other than convertible debt
securities) as to which the Series K Shares ranks junior are
collectively referred to herein as the "Senior Securities." The
preferences, limitations and relative rights of the Series K
Shares shall be subject to the preferences, limitations and
relative rights of any Junior Securities, Parity Securities or
Senior Securities issued after the Series K Shares.
3. The holders of Series K Shares shall have the
following dividend rights:
a. The holders of record of the Series K Shares
shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds of the Corporation
legally available therefor, an annual cash dividend of $1.25
on each Series K Share, payable quarterly on each March 31,
June 30, September 30 and December 31 on which any Series K
Shares shall be outstanding (each a "Dividend Due Date"),
commencing on the last day of the calendar quarter in which
a wholly-owned subsidiary of the Corporation merges with and
into Kingsley Telephone Company. Dividends on each Series K
Share shall accrue and be cumulative from and after the date
of issuance of such Series K Share and dividends payable for
any partial quarterly period shall be calculated on the
basis of a year of 360 days consisting of twelve 30-day
months. Dividends shall be payable to the holders of record
as they appear on the Corporation's stock transfer books at
<PAGE>
the close of business on the record date for such payment,
which the Board of Directors shall fix not more than 60 days
or less than 10 days preceding a Dividend Due Date. Holders
of the Series K Shares shall not be entitled to any
dividends, whether paid in cash, property or stock, in
excess of the cumulative dividends as provided in this
paragraph (a) and shall not be entitled to any interest
thereon.
b. Unless all cumulative dividends accrued on
the Series K Shares have been or contemporaneously are
declared and paid or declared and a sum set apart sufficient
for such payment through the most recent Dividend Payment
Date, then (i) except as provided in the last sentence of
this paragraph, no dividend or other distribution shall be
declared or paid or set apart for payment on any Parity
Securities, (ii) no dividend or other distribution shall be
declared or paid or set aside for payment upon the Junior
Securities (other than a dividend or distribution paid in
shares of, or warrants, rights or options exercisable for or
convertible into, Junior Securities) and (iii) no Junior
Securities shall be redeemed, purchased or otherwise
acquired for any consideration, nor shall any monies be paid
to or made available for a sinking fund for the redemption
of any Junior Securities, except by conversion of Junior
Securities into, or by exchange of Junior Securities for,
other Junior Securities. If accrued dividends are not paid
or set apart with respect to the Series K Shares and all
other Parity Securities in full, all dividends declared with
respect to such securities shall be declared pro rata on a
share-by-share basis among all Series K Shares and Parity
Securities outstanding at the time.
4. The holders of Series K Shares shall have the
following conversion rights:
a. Subject to the rights of the Corporation
specified in paragraph (b) below, each Series K Share shall
be convertible, at any time, at the option of the holder
thereof into that number of fully paid and nonassessable
shares of the Common Stock obtained by dividing $25.00 by
the Conversion Price then in effect under the terms of this
subsection (4). Unless and until changed in accordance with
the terms of this subsection (4), the Conversion Price shall
be $25.33. In order for a holder of the Series K Shares to
effect such conversion, the holder shall deliver to Society
Shareholder Services, Inc., Dallas Texas, or such other
agent as may be designated by the Board of Directors as the
transfer agent for the Series K Shares (the "Transfer
Agent"), the certificates representing such shares in
accordance with paragraph (c) below accompanied by written
notice jointly addressed to the Corporation and the Transfer
Agent that the holder thereof elects to convert such shares
or a specified portion thereof. Each conversion shall be
deemed to have been effected immediately prior to the close
of business on the date on which the certificates
representing the Series K Shares being converted shall have
been delivered to the Transfer Agent in accordance with each
term and condition of paragraph (c) below, accompanied by
the written notice jointly addressed to the Corporation and
<PAGE>
the Transfer Agent of such conversion (the "Optional
Conversion Date"), and the person or persons in whose names
any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the Common
Stock represented thereby at such time. As of the close of
business on the Optional Conversion Date, the Series K
Shares shall be deemed to cease to be outstanding and all
rights of any holder thereof shall be extinguished except
for the rights arising under the Common Stock issued in
exchange therefor and the right to receive accrued and
unpaid dividends on such Series K Shares through the
Optional Conversion Date on the terms specified in paragraph
(d) below.
b. At any time after July 1, 1997, the
Corporation, at its option, shall be entitled to convert, in
whole but not in part, each outstanding Series K Share into
that number of fully paid and nonassessable shares of Common
Stock obtained by dividing $25.00 by the Conversion Price
then in effect. In order to effect such conversion, the
Corporation shall mail notice to each record holder of the
Series K Shares at least 30 but not more than 60 days prior
to the date fixed for such conversion (the "Mandatory
Conversion Date" and together with the Optional Conversion
Date, the "Conversion Date"). Each notice shall specify the
Mandatory Conversion Date and the Conversion Price then in
effect. Any notice mailed in such manner shall be
conclusively deemed to have been duly given regardless of
whether such notice is in fact received. Upon receipt of
such notice, the holder of Series K Shares shall promptly
surrender to the Transfer Agent in accordance with paragraph
(c) below the certificate representing the converted Series
K Shares. In order to facilitate the conversion of the
Series K Shares, the Board of Directors may fix a record
date for the determination of the holders of the Series K
Shares, which shall not be more than 60 days prior to the
Mandatory Conversion Date. As of the close of business on
the Mandatory Conversion Date, the Series K Shares shall be
deemed to cease to be outstanding and all rights of any
holder thereof shall be extinguished except for the rights
arising under the Common Stock issued in exchange therefore
and the right to receive accrued and unpaid dividends on
such Series K Shares through the Mandatory Conversion Date
on the terms specified in paragraph (d) below; provided,
however, that no certificates representing such Common Stock
shall be issued and no dividends or other distributions
shall be payable with respect to such Common Stock, until
the certificates representing the Series K Shares have been
surrendered to the Transfer Agent in accordance with
paragraph (c) below.
c. In connection with surrendering to the
Transfer Agent the certificates representing (or formerly
representing) Series K Shares, the holder shall furnish the
Transfer Agent with transfer instruments satisfactory to the
Corporation and sufficient to transfer the Series K Shares
being converted to the Corporation free of any adverse
interest or claims. As promptly as practicable after the
surrender of the Series K Shares in accordance with this
<PAGE>
paragraph and any other requirement under this subsection
(4), the Corporation, acting directly or through the
Transfer Agent, shall issue and deliver to such holder
certificates for the number of whole shares of Common Stock
issuable upon the conversion of such shares in accordance
with the provisions hereof (along with any interest payment
specified in paragraph (a) or (b) above and cash payment in
lieu of fractional shares specified in paragraph (e) below).
Certificates will be issued for the balance of any remaining
Series K Shares in any case in which fewer than all of the
Series K Shares are converted. Any conversion under
paragraph (a) or (b) shall be effected at the Conversion
Price in effect on the Conversion Date.
d. If the Conversion Date with respect to any
Series K Share occurs after any record date with respect to
the payment of a dividend on the Series K Shares (the
"Dividend Record Date") and on or prior to the Dividend Due
Date, then (i) the dividend due on such Dividend Due Date
shall be payable to the holder of record of such share as of
the Dividend Record Date and (ii) the dividend that accrues
from the close of business on the Dividend Record Date
through the Conversion Date shall be payable to the holder
of record of such share as of the Conversion Date. Except
as provided in this subsection (4), no payment or adjustment
shall be made in connection with any conversion on account
of any dividends accrued on Series K Shares surrendered for
conversion or on account of any dividends on the Common
Stock issued upon conversion.
e. No fractional interest in a share of Common
Stock shall be issued by the Corporation upon the conversion
of any Series K Share. In lieu of any such fractional
interest, the holder that would otherwise be entitled to
such fractional interest shall receive a cash payment
(computed to the nearest cent) equal to such fraction
multiplied by the market value of a share of Common Stock,
which shall be deemed to equal the last reported per share
sale price of Common Stock on the New York Stock Exchange
("NYSE") (or, if the Common Stock is not then traded on the
NYSE, then the last reported per share sale price on such
other national securities exchange on which the Common Stock
is listed or admitted to trading or, if not then listed or
admitted to trading on any national securities exchange,
then the last quoted bid price in the over-the-counter
market as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), or any
similar system of automated dissemination of securities
prices) on the Trading Day (as defined below) immediately
prior to the Conversion Date. As used in this subsection
(4), the term "Trading Day" means (i) if the Common Stock is
listed or admitted for trading on any national securities
exchange, days on which such national securities exchange is
open for business, or (ii) if the Common Stock is not so
listed or admitted for trading but is quoted by NASDAQ or
any similar system of automated dissemination of quotations
of securities prices, days on which trades may be made on
such system.
f. The Conversion Price shall be adjusted from
<PAGE>
time to time as follows:
(i) If the Corporation shall pay or make a
dividend or other distribution on any class of capital
stock of the Company in the form of Common Stock, then
the Conversion Price in effect at the opening of
business on the day following the date fixed for the
determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction the
numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on
the date fixed for such determination and the
denominator of which shall be the aggregate number of
shares of Common Stock that would be outstanding if
such dividend or other distribution were effected as of
such date. For the purposes of this subparagraph (i),
the number of shares of Common Stock at any time
outstanding shall not include shares held in the
treasury of the Corporation.
(ii) If the Corporation shall issue rights,
warrants or other securities convertible into Common
Stock to all holders of its Common Stock entitling them
to subscribe for or purchase shares of Common Stock at
a price per share less than the current market price
per share (determined as provided in subparagraph (vi)
below) of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such
rights, warrants or convertible securities, then the
Conversion Price in effect at the opening of business
on the day following the date fixed for such
determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which
shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed
for such determination plus the number of shares of
Common Stock that the aggregate of the offering price
of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at
such current market price and the denominator of which
shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed
for such determination plus the number of shares of
Common Stock so offered for subscription or purchase.
For the purposes of this subparagraph (ii), the number
of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the
Corporation.
(iii)If the outstanding shares of Common
Stock shall be subdivided into a greater number of
shares of Common Stock, then the Conversion Price in
effect at the opening of business on the day following
the day upon which such subdivision becomes effective
shall be reduced proportionately in the manner provided
in subparagraph (i) above, and, conversely, if the
outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common
Stock, then the Conversion Price in effect at the
<PAGE>
opening of business on the day following the day upon
which such combination becomes effective shall be
proportionately increased.
(iv) If the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness or cash or other
assets (excluding any dividend or distribution referred
to in subparagraph (i) above, any rights, warrants or
convertible securities referred to in subparagraph (ii)
above, and any dividend payable solely in cash from the
earnings of the Corporation), then in each case the
Conversion Price shall be adjusted so that the
Conversion Price shall equal the price determined by
multiplying the Conversion Price in effect immediately
prior to the close of business on the record date for
the determination of holders of Common Stock entitled
to receive such distribution by a fraction the
numerator of which shall be the current market price
per share (determined as provided in subparagraph (vi)
below) of the Common Stock on such record date less the
then fair market value per share (determined solely by
the Board of Directors and described in a statement
filed with the Transfer Agent) of the cash or other
assets or evidences of indebtedness so distributed (and
for which an adjustment to the Conversion Price has not
previously been made pursuant to the terms of this
paragraph (f)) applicable to one share of Common Stock
and the denominator of which shall be such current
market price per share of the Common Stock.
(v) The reclassification of Common Stock
into securities, including securities other than Common
Stock (other than any reclassification upon a
consolidation, merger or statutory share exchange to
which subparagraph (ix) below applies), shall be deemed
to involve (A) a distribution of such securities other
than Common Stock to all holders of Common Stock and
the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of
shareholders entitled to receive such distribution" and
"the date fixed for such determination" within the
meaning of subparagraph (ii) above, and (B) a
subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding
immediately prior to such reclassification into the
number of shares of Common Stock outstanding
immediately thereafter and the effective date of such
reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day
upon which such combination becomes effective," as the
case may be, and "the day upon which such subdivision
or combination becomes effective" within the meaning of
paragraph (iii) above.
(vi) For the purpose of any computation under
subparagraphs (ii) and (iv) above, the current market
price per share of Common Stock on any day shall be
deemed to be the average of the last reported sale
price for the 20 consecutive Trading Days selected by
<PAGE>
the Board of Directors commencing no more than 30
Trading Days before and ending no later than the day
before the day in question on the NYSE (or, if the
Common Stock is not then traded on the NYSE, then the
last reported sale price on such other national
securities exchange on which the Common Stock is listed
or admitted to trading or, if not then listed or
admitted to trading on any national securities
exchange, then the last quoted bid price in the over-
the-counter market as reported by NASDAQ or any similar
system of automated dissemination of securities
prices).
(vii)No adjustment in the Conversion Price
shall be required unless such adjustment would require
an increase or decrease of at least 1% of such price;
provided, however, that any adjustments which by reason
of this subparagraph (vii) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment and provided, further, that any
adjustment shall be made in accordance with the
provisions of this paragraph (f) (other than this
subparagraph (vii)) not later than such time as may be
required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock.
Anything in this subparagraph (vii) to the contrary
notwithstanding, the Corporation shall be entitled to
make such reductions in the Conversion Price, in
addition to those required by this paragraph (f), as it
in its discretion shall determine to be advisable in
order that any stock dividend, subdivision or
combination of shares, distribution of capital stock or
rights or warrants to purchase stock or securities, or
distribution of evidences of indebtedness or assets
(other than cash dividends or distributions paid from
retained earnings) hereafter made by the Corporation to
its shareholders be a tax-free distribution for federal
income tax purposes. All calculations shall be made to
the nearest cent.
(viii)Whenever the Conversion Price is
adjusted as herein provided, the Corporation shall
promptly deliver to the Transfer Agent an officer's
certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of
the facts requiring such adjustment, which certificate
shall constitute conclusive evidence, absent manifest
error, of the correctness of such adjustment. Promptly
after delivery of such certificate, the Corporation
shall prepare and mail a notice to each holder of
Series K Shares at each such holder's last address as
the same appears on the books of the Corporation, which
notice shall set forth the Conversion Price and a brief
statement of the facts requiring the adjustment.
(ix) If the Corporation shall be a party to
any transaction, including, without limitation, a
merger, consolidation or statutory share exchange but
excluding a reincorporation merger and any transaction
as to which subparagraphs (i) through (v) apply, in
<PAGE>
which shares of Common Stock shall be converted into
the right to receive securities, cash or other property
(or any combination thereof) (each of the foregoing
being referred to herein as a "Transaction"), then each
holder of Series K Shares outstanding shall have the
right thereafter to convert such shares only into the
kind and amount of securities, cash and other property
receivable in connection with such Transaction by a
holder of the number of shares of Common Stock into
which such Series K Shares might have been converted
immediately prior to such Transaction, assuming such
holder of Common Stock (A) is not an entity with which
the Corporation consolidated, into which the
Corporation merged, that merged into the Corporation,
that engaged in a share exchange, or to which such sale
or transfer was made, as the case may be (a
"constituent entity"), or an affiliate of a constituent
entity, (B) did not exercise dissenters' rights with
respect to such Transaction and (C) failed to exercise
his rights of election, if any, as to the kind or
amount of securities, cash or other property receivable
in connection with such Transaction (provided that if
the kind or amount of securities, cash and other
property receivable in connection with such Transaction
is not the same for each share of Common Stock held
immediately prior to such Transaction by holders other
than a constituent entity or an affiliate thereof and
in respect of which such rights of election shall not
have been exercised ("non-electing share"), then for
the purpose of this subparagraph (ix) the kind and
amount of securities, cash and other property
receivable in connection with such Transaction by each
non-electing share shall be deemed to be the kind and
amount so receivable per share by all or a plurality of
the non-electing shares). If necessary, appropriate
adjustment shall be made in the application of the
provisions set forth herein with respect to the rights
and interests thereafter of the holders of Series K
Shares so that the provisions set forth herein shall
thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to any shares
of stock or other securities or property thereafter
deliverable on the conversion of the shares. Any such
adjustment shall be evidenced by a certificate of
independent public accountants and a notice of such
adjustment filed and mailed in the manner set forth in
subparagraph (viii) above, and each containing the
information set forth in such subparagraph (viii); and
any adjustment so certified shall for all purposes
hereof conclusively be deemed to be an appropriate
adjustment. The above provisions shall similarly apply
to successive Transactions.
(x) For purposes of this paragraph (f),
"Common Stock" includes any stock of any class of the
Corporation that has no preference in respect of
dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation and that is not subject
to redemption by the Corporation. However, subject to
<PAGE>
the provisions of subparagraph (ix) above, shares
issuable on conversion of Series K Shares shall include
only shares of the class designated as Common Stock of
the Corporation on the date of the initial issuance of
Series K Shares by the Corporation, or shares of any
class or classes resulting from any reclassification
thereof that have no preference in respect of dividends
or amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of
the Corporation and that are not subject to redemption
by the Corporation; provided that if at any time there
shall be more than one such resulting class, the shares
of each such class then so issuable shall be
substantially in the proportion that the total number
of shares of such class resulting from all such
reclassifications bears to the total number of shares
of all such classes resulting from all such
reclassifications.
g. The Corporation shall pay any and all
documentary stamp or similar issue or transfer taxes payable
in respect of the issuance or delivery of shares of Common
Stock in connection with conversions of Series K Shares
pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance or delivery
of shares of Common Stock in a name other than that of the
record holder of the Series K Shares to be converted and no
such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has
been paid.
h. The Corporation covenants that (A) all shares
of Common Stock that may be issued upon conversions of
Series K Shares will upon issuance be duly and validly
issued, fully paid and nonassessable, free of all liens and
charges and not subject to any preemptive rights, and (B) it
will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of
Common stock held in its treasury, or both, for the purpose
of effecting conversions of Series K Shares, the whole
number of shares of Common Stock deliverable upon the
conversion of all outstanding Series K Shares.
5. The holders of Series K Shares shall have the
following liquidation rights and preferences:
a. Upon any voluntary or involuntary
dissolution, liquidation, or winding up of the Corporation
(for the purposes of this subsection (5), a "Liquidation"),
the holder of each Series K Share then outstanding shall be
entitled to be paid out of the assets of the Corporation
available for distribution to its shareholders an amount
equal to $25.00 per share plus all dividends (whether or not
declared or due) accrued and unpaid on such share through
the date fixed for the distribution of assets of the
Corporation to the holders of Series K Shares. With respect
<PAGE>
to the distribution of the Corporation's assets upon a
Liquidation, the Series K Shares shall rank prior to Junior
Securities, pari passu with the Parity Securities and junior
to the Senior Securities.
b. If upon any Liquidation of the Corporation,
the assets available for distribution to the holders of
Series K Shares and any Parity Securities then outstanding
shall be insufficient to pay in full the liquidation
distributions to the holders of the outstanding Series K
Shares and Parity Securities in accordance with the terms of
these Articles of Incorporation, then the holders of such
shares shall share ratably in such distribution of assets.
c. Neither the voluntary sale, conveyance,
lease, pledge, exchange or transfer of all or substantially
all the property or assets of the Corporation, the merger or
consolidation of the Corporation into or with any other
corporation, the merger of any other corporation into the
Corporation, a statutory share exchange with any other
corporation, nor any purchase or redemption of some or all
of the shares of any class or series of stock of the
Corporation, shall be deemed to be a Liquidation of the
Corporation for the purposes of this subsection (5) (unless
in connection therewith the Liquidation of the Corporation
is specifically approved).
d. The holder of any Series K Shares shall not
be entitled to receive any payment owed for such shares
under this subsection (5) until such holder shall cause to
be delivered to the Corporation the certificate or
certificates representing such Series K Shares and transfer
instruments satisfactory to the Corporation and sufficient
to transfer such Series K Shares to the Corporation free of
any adverse interest or claim. No interest shall accrue on
any payment upon Liquidation.
e. After payment of the full amount of the
liquidating distribution to which they are entitled, the
holders of Series K Shares will not be entitled to any
further participation in any distribution of assets by the
Corporation.
6. The Series K Shares is not entitled to any
preemptive or subscription rights in respect of any securities of
the Corporation.
H. Junior Preferred Stock. Series AA Junior Participating
Preferred Stock (the "Junior Preferred Stock") shall consist of
200,000 shares of Preferred Stock, $25 par value.
1. The rights of the holders of Junior Preferred
Stock to dividends and distributions shall be as follows:
a. Subject to the provisions for adjustment
hereinafter set forth, the holders of shares of Junior
Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount
per share (rounded to the nearest cent) equal to 100 times
<PAGE>
the aggregate per share amount of all cash dividends
declared or paid on the Common Stock, and (ii) a preferen-
tial cash dividend ("Preferential Dividends"), if any, on
the 15th day of March, June, September, and December of each
year or, if such 15th day is not a business day, on the bus-
iness day immediately preceding such 15th day (each a
"Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of
a share or fraction of a share of Junior Preferred Stock, in
an amount equal to $21.00 per share of Junior Preferred
Stock less the per share amount of all cash dividends
declared on the Junior Preferred Stock pursuant to clause
(i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issu-
ance of any share or fraction of a share of Junior Preferred
Stock. In the event this Corporation shall, at any time af-
ter the issuance of any share or fraction of a share of
Junior Preferred Stock, make any distribution on the shares
of Common Stock, whether by way of a dividend or a reclassi-
fication of stock, a recapitalization, reorganization or
partial liquidation of the Corporation or otherwise, which
is payable in cash or any debt security, debt instrument,
real or personal property or any other property (other than
cash dividends subject to clause (i) of the immediately
preceding sentence and other than a distribution of shares
of Common Stock or other capital stock of this Corporation
and other than a distribution of rights or warrants to
acquire any such share, including any debt security
convertible into or exchangeable for any such share, at a
price less than the Current Market Price of such share),
then and in each such event this Corporation shall
simultaneously pay on each then outstanding share of Junior
Preferred Stock a distribution, in like kind, of 100 times
(subject to the provisions for adjustment hereinafter set
forth) such distribution paid on a share of Common Stock.
The dividends and distributions on the Junior Preferred
Stock to which holders thereof are entitled pursuant to
clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are
hereinafter referred to as "Participating Dividends," and
the multiple of such cash and non-cash dividends on the
Common Stock applicable to the determination of the
Participating Dividends, which shall be 100 initially but
shall be adjusted from time to time as hereinafter provided,
is hereinafter referred to as the "Dividend Multiple." In
the event this Corporation shall at any time after November
28, 1986 declare or pay any dividend or make any
distribution on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of
Common Stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of
Participating Dividends which holders of shares of Junior
Preferred Stock shall be entitled to receive shall be the
Dividend Multiple applicable immediately prior to such event
multiplied by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number
<PAGE>
of shares of Common Stock that were outstanding immediately
prior to such event.
b. This Corporation shall declare each
Participating Dividend at the same time it declares any cash
or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be
paid. No cash or non-cash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is
required to be paid shall be paid or set aside for payment
on the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock
shall be simultaneously paid, or set aside for payment, on
the Junior Preferred Stock.
c. Preferential Dividends shall begin to accrue
on outstanding shares of Junior Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issuance of any shares of Junior Preferred Stock. Accrued
but unpaid Preferential Dividends shall cumulate but shall
not bear interest. Preferential Dividends paid on the
shares of Junior Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding.
2. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
a. Subject to the provisions for adjustment
hereinafter set forth, each share of Junior Preferred Stock
shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of this Corporation.
The number of votes which a holder of Junior Preferred Stock
is entitled to cast, as the same may be adjusted from time
to time as hereinafter provided, is hereinafter referred to
as the "Vote Multiple." In the event this Corporation shall
at any time after November 28, 1986 declare or pay any
dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of
Common Stock, then in each such case the Vote Multiple
thereafter applicable to the determination of the number of
votes per share to which holders of shares of Junior
Preferred Stock shall be entitled after such event shall be
the Voting Multiple immediately prior to such event
multiplied by a fraction, the numerator of which is the num-
ber of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately
prior to such event.
b. Except as otherwise provided herein or by
law, the holders of shares of Junior Preferred Stock and the
holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of shareholders of
this Corporation.
<PAGE>
c. The holder of a fractional share of Junior
Preferred Stock may vote any such fractional share in
increments of 1/100 of a share on all matters submitted to a
vote of the shareholders of this Corporation such that the
holder of a fractional share of Junior Preferred Stock may
cast one vote for each one hundredth of a share of Junior
Preferred Stock held of record by him.
d. In the event that the Preferential Dividends
accrued on the Junior Preferred Stock for four or more
quarterly dividend periods, whether consecutive or not,
shall not have been declared and paid or set apart for
payment, the holders of record of the Junior Preferred Stock
shall have the right, at the next meeting of shareholders
called for the election of directors, voting as a class to
elect two members to the Board of Directors, which directors
shall be in addition to the number provided for under the
By-laws prior to such event, to serve until the next Annual
Meeting and until their successors are elected and qualified
or their earlier resignation, removal or incapacity or until
such earlier time as all accrued and unpaid Preferential
Dividends upon the outstanding shares of Junior Preferred
Stock shall have been paid (or set aside for payment) in
full. The holders of shares of Junior Preferred Stock shall
continue to have the right to elect directors as provided by
the immediately preceding sentence until all accrued and
unpaid Preferential Dividends upon the outstanding shares of
Junior Preferred Stock shall have been paid (or set aside
for payment) in full. Such directors may be removed and
replaced by such shareholders, and vacancies in such direc-
torships may be filled only by such shareholders (or by the
remaining director elected by such shareholders, if there be
one) in the manner permitted by law; provided, however, that
any such action by shareholders shall be taken at a meeting
of shareholders and shall not be taken by written consent
thereof.
e. Except as otherwise required by law or set
forth herein, holders of Junior Preferred Stock shall have
no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for the
taking of any corporate action.
3. This Corporation shall abide by the following
restrictions:
a. Whenever Preferential Dividends or
Participating Dividends are in arrears or this Corporation
shall be in default in payment thereof, thereafter and until
all accrued and unpaid Preferential Dividends and
Participating Dividends, whether or not declared, on shares
of Junior Preferred Stock outstanding shall have been paid
or set aside for payment in full, and in addition to any and
all other rights which any holder of shares of Junior
Preferred Stock may have in such circumstances, the
Corporation shall not:
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or
<PAGE>
otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to, the Junior
Preferred Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a
parity as to dividends with the Junior Preferred Stock,
unless dividends are paid ratably on the Junior
Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such
shares are then entitled;
(iii)except as permitted by subparagraph (iv)
below, redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation,
dissolution or winding up) with the Junior Preferred
Stock, provided that this Corporation may at any time
redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock
of the Corporation ranking junior (both as to dividends
and upon liquidation, dissolution or winding up) to the
Junior Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Junior Preferred Stock, or
any shares of stock ranking on a parity with the Junior
Preferred Stock (either as to dividends or upon
liquidation, dissolution or winding up), except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the
Board of Directors, after consideration of the
respective annual dividend rates and other relative
rights and preferences of the respective series and
classes, shall determine in good faith will result in
fair and equitable treatment among the respective
series or classes.
b. This Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph
(a) of this Section 3, purchase or otherwise acquire such
shares at such time and in such manner.
c. This Corporation shall not issue any shares
of Junior Preferred Stock except upon exercise of Rights
issued pursuant to that certain Rights Agreement dated as of
November 17, 1986 between the Corporation and the Rights
Agent named therein (the "Rights Agreement"), a copy of
which is on file with the Secretary of the Corporation at
its principal executive office and shall be made available
to shareholders of record without charge upon written
request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in
the provisions hereof shall prohibit or restrict this
Corporation from issuing for any purpose any series of
<PAGE>
preferred stock with rights and privileges similar to,
different from, or greater than, those of the Junior
Preferred Stock.
4. Any shares of Junior Preferred Stock purchased or
otherwise acquired by this Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition
thereof. This Corporation shall cause all such shares upon their
retirement and cancellation to become authorized but unissued
shares of preferred stock, without designation as to series, and
such shares may be reissued as part of a new series of preferred
stock to be created by resolution or resolutions of the Board of
Directors.
5. Upon any voluntary or involuntary liquidation,
dissolution or winding up of this Corporation, no distribution
shall be made (a) to the holders of shares of stock ranking
junior to the Junior Preferred Stock (upon liquidation,
dissolution or winding up) unless the holders of shares of Junior
Preferred Stock shall have received, subject to adjustment as
hereinafter provided, the greater of either (i) $8,500 per share
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of
such payment, or (ii) the amount equal to 100 times the aggregate
amount to be distributed per share to holders of Common Stock, or
(b) to the holders of stock ranking on a parity upon liquidation,
dissolution or winding up with the Junior Preferred Stock, unless
simultaneously therewith distributions are made ratably on the
Junior Preferred Stock and all other shares of such parity stock
in proportion to the total amounts to which the holders of shares
of Junior Preferred Stock are entitled under clause (a)(i) of
this sentence and to which the holders of such parity shares are
entitled, in each case upon such liquidation, dissolution or
winding up. The amount to which holders of Junior Preferred
Stock shall be entitled upon liquidation, dissolution or winding
up of this Corporation pursuant to clause (a)(ii) of the
foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount" and the multiple of the amount
to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of this Corporation
applicable pursuant to said clause to the determination of the
Participating Liquidation Amount, which shall be 100 initially
but shall be adjusted from time to time as hereinafter provided,
is hereinafter referred to as the "Liquidation Multiple." In the
event this Corporation shall at any time after November 28, 1986
declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the Liquidation Multiple therefor
applicable to the determination of the Participating Liquidation
Amount to which holders of Junior Preferred Stock shall be
entitled after such event shall be the Liquidation Multiple
applicable immediately prior to such event multiplied by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
6. The holders of shares of Junior Preferred Stock
<PAGE>
shall have the following rights:
a. In the event that holders of shares of Common
Stock of this Corporation receive after November 28, 1986 in
respect of their shares of Common Stock any share of capital
stock of this Corporation (other than any share of Common
Stock of the Corporation), whether by way of
reclassification, recapitalization, reorganization, dividend
or other distribution or otherwise ("Transaction"), then and
in each such event the dividend rights, voting rights and
rights upon the liquidation, dissolution or winding up of
this Corporation of the shares of Junior Preferred Stock
shall be adjusted so that after such event the holders of
Junior Preferred Stock shall be entitled, in respect of each
share of Junior Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled
immediately prior to such adjustment, to (i) such additional
dividends as equal the Dividend Multiple in effect
immediately prior to such Transaction multiplied by the
additional dividends which the holder of a share of Common
Stock shall be entitled to receive by virtue of the receipt
in the Transaction of such capital stock, (ii) such
additional voting rights as equal the Vote Multiple in
effect immediately prior to such Transaction multiplied by
the additional voting rights which the holder of a share of
Common Stock shall be entitled to receive by virtue of the
receipt in the Transaction of such capital stock and (iii)
such additional distributions upon liquidation, dissolution
or winding up of this Corporation as equal the Liquidation
Multiple in effect immediately prior to such Transaction
multiplied by the additional amount which the holder of a
share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of this Corporation
by virtue of the receipt in the Transaction of such capital
stock, as the case may be, all as provided by the terms of
such capital stock.
b. In the event that holders of shares of Common
Stock of this Corporation receive after November 28, 1986 in
respect of their shares of Common Stock any right or warrant
to purchase Common Stock (including as such a right, for all
purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share
less than the Current Market Price (as hereinafter defined)
of a share of Common Stock on the date of issuance of such
right or warrant, then and in each such event the dividend
rights, voting rights and rights upon the liquidation,
dissolution or winding up of this Corporation of the shares
of Junior Preferred Stock shall each be adjusted so that
after such event the Dividend Multiple, the Vote Multiple
and the Liquidation Multiple shall each be the product of
the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple, as the case may be, in effect immediately prior to
such event multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus
the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or
warrants and the denominator of which shall be the number of
shares of Common Stock outstanding immediately before such
<PAGE>
issuance of rights or warrants plus the number of shares of
Common Stock which could be purchased, at the Current Market
Price of the Common Stock at the time of such issuance, by
the maximum aggregate consideration payable upon exercise in
full of all such rights or warrants.
c. In the event that holders of shares of Common
Stock of this Corporation receive after November 28, 1986 in
respect of their shares of Common Stock any right or warrant
to purchase capital stock of this Corporation (other than
shares of Common Stock), including as such a right, for all
purposes of this paragraph, any security convertible into or
exchangeable for capital stock of this Corporation (other
than Common Stock), at a purchase price per share less than
the Current Market Price of such shares of capital stock on
the date of issuance of such right or warrant, then and in
each such event the dividend rights, voting rights and
rights upon liquidation, dissolution or winding up of this
Corporation of the shares of Junior Preferred Stock shall
each be adjusted so that after such event each holder of a
share of Junior Preferred Stock shall be entitled, in
respect of each share of Junior Preferred Stock held, in
addition to such rights in respect thereof to which such
holder was entitled immediately prior to such event, to
receive (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the
holder of shares of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction (as hereinafter
defined) and (ii) such additional voting rights as equal the
Vote Multiple in effect immediately prior to such event
multiplied, first, by the additional voting rights to which
the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction and (iii) such
additional distributions upon liquidation, dissolution or
winding up of this Corporation as equal the Liquidation
Multiple in effect immediately prior to such event
multiplied, first, by the additional amount which the holder
of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of this Corporation
upon exercise of such right or warrant by virtue of the
capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction,
the numerator of which shall be the difference between the
Current Market Price (as hereinafter defined) of a share of
the capital stock subject to a right or warrant distributed
to the holders of shares of Common Stock of this Corporation
as contemplated by this paragraph immediately after the
distribution thereof and the purchase price per share for
such share of capital stock pursuant to such right or
warrant and the denominator of which shall be the Current
Market Price of a share of such capital stock immediately
after the distribution of such right or warrant.
d. For purposes of this Section (6), the
<PAGE>
"Current Market Price" of a share of capital stock of this
Corporation (including a share of Common Stock) on any date
shall be deemed to be the average of the daily closing
prices per share thereof over the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that, in the event that
such Current Market Price of any such share of capital stock
is determined during a period which includes any date that
is within 30 Trading Days after the ex-dividend date for (i)
a dividend or distribution on stock payable in shares of
such stock or securities convertible into shares of such
stock, or (ii) any subdivision, split, combination,
consolidation, reverse stock split or reclassification of
such stock, then, and in each such case, the Current Market
Price shall be appropriately adjusted by the Board of
Directors of this Corporation to reflect the Current Market
Price of such stock to take into account ex-dividend
trading. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
New York Stock Exchange, or, if the shares are not listed or
admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the shares are listed
or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter
market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or if on any
such date the shares are not quoted by any such organ-
ization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in
the shares selected by the Board of Directors of this
Corporation. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which
the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or
admitted to trading on any national securities exchange, on
which the New York Stock Exchange or such other national
securities exchange as may be selected by the Board of
Directors of this Corporation is open. If the shares are
not publicly held or not so listed or traded on any day
within the period of 30 Trading Days applicable to the
determination of Current Market Price thereof as aforesaid,
"Current Market Price" shall mean the fair market value
thereof per share as determined in good faith by the Board
of Directors of this Corporation. In either case referred
to in the foregoing sentence, the determination of Current
Market Price shall be described in a statement filed with
the Secretary of the Corporation.
7. In case this Corporation shall enter into any
consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into
<PAGE>
other stock or securities, cash and/or any other property, then
in any such case each outstanding share of Junior Preferred Stock
shall at the time be similarly exchanged for or changed into the
aggregate amount of stock, securities, cash and/or other property
(payable in like kind), as the case may be, for which or into
which each share of Common Stock is changed or exchanged multi-
plied by the highest of the Vote Multiple, the Dividend Multiple
or the Liquidation Multiple in effect immediately prior to such
event.
8. Adjustments to the Junior Preferred Stock required
by the provisions hereof shall be effective as of the time at
which the event requiring such adjustments occurs. This
Corporation shall give prompt written notice to each holder of a
share of Junior Preferred Stock of the effect of any adjustment
to the voting rights, dividend rights or rights upon liquidation,
dissolution or winding up of this Corporation of such shares re-
quired by the provisions hereof. Notwithstanding the foregoing
sentence, the failure of this Corporation to give such notice
shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
9. The shares of Junior Preferred Stock shall not be
redeemable at the option of this Corporation or any holder there-
of. Notwithstanding the foregoing sentence of this Section, this
Corporation may acquire shares of Junior Preferred Stock in any
other manner permitted by law, the provisions hereof and the
Articles of Incorporation of the Corporation.
10. Unless otherwise provided in these Articles of
Incorporation, the Junior Preferred Stock shall rank junior to
all other series of the Corporation's preferred stock (as to the
payment of dividends and the distribution of assets on
liquidation, dissolution or winding up) and senior to the Common
Stock.
11. The provisions of this Section of the Articles of
Incorporation shall not be amended in any manner which would
materially affect the rights, privileges or powers of the Junior
Preferred Stock without, in addition to any other vote of
shareholders required by law, the affirmative vote of the holders
of eighty percent or more of the outstanding shares of Junior
Preferred Stock, voting together as a single class.
ARTICLE IV
Exculpation of Directors and Officers
No director or officer of the Corporation shall be liable to
the Corporation or to its shareholders for monetary damages for
breach of his fiduciary duty as a director or officer, provided
that the foregoing provision shall not eliminate or limit the
liability of a director or officer for (a) any breach of his duty
of loyalty to the Corporation or its shareholders; (b) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (c) liability for
unlawful distributions of the Corporation's assets to, or
redemption or repurchase of the Corporation's shares from,
shareholders of the Corporation, under and to the extent provided
in La.R.S. 12:92D; or (d) any transaction from which he derived
an improper personal benefit.
<PAGE>
The Board of Directors may (a) cause the Corporation to
enter into contracts with directors and officers providing for
the limitation of liability set forth in this Article IV and for
indemnification of directors and officers to the fullest extent
permitted by law and (b) adopt by-laws or resolutions providing
for indemnification of directors, officers and other persons to
the fullest extent permitted by law, notwithstanding that some or
all of the members of the Board of Directors acting with respect
to the foregoing may be parties to such contracts or
beneficiaries of such by-laws or resolutions.
Notwithstanding any other provisions of these Articles of
Incorporation, the affirmative vote of at least 80% of the total
voting power shall be required to amend or repeal this Article
IV, and any amendment or repeal of this Article IV shall not
adversely affect any elimination or limitation of liability of a
director or officer of the Corporation under this Article IV with
respect to any action or inaction occurring prior to the time of
such amendment or repeal.
ARTICLE V
Survivability of Indemnification Rights
No amendment or repeal of any by-law or resolution limiting
the right to indemnification provided by such by-law or
resolution shall affect any person's entitlement to
indemnification whose claim thereto results from conduct
occurring prior to the date of such amendment or repeal.
ARTICLE VI
Reversion
Except for cash, shares or other property or rights payable
or issuable to the holders of Preferred Stock, the rights to
which shall be determined under applicable state law, cash,
property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption
price of redeemed shares, which are not claimed by the
shareholder entitled thereto within one year after the dividend
or redemption price became payable or the shares became issuable,
despite reasonable efforts by the Corporation to pay the dividend
or redemption price or deliver the certificates for the shares to
such shareholders within such time, shall, at the expiration of
such time, revert in full ownership to the Corporation, and the
Corporation's obligation to pay such dividend or redemption price
of issue such shares, as the case may be, shall thereupon cease;
provided that the Board of Directors may, at any time, for any
reason satisfactory to it, but need not, authorize (1) payment of
the amount of any cash or property dividend or redemption price
or (2) issuance of any shares, ownership of which has reverted to
the Corporation pursuant to this Article VI, to the person or
entity who or which would be entitled thereto had such reversion
not occurred.
ARTICLE VII
Special Meetings of Shareholders
A majority of the total voting power of the Corporation
shall be required to cause the Secretary of the Corporation to
<PAGE>
call a special meeting of shareholders pursuant to La. R.S.
12:73B. Nothing in this Article VII shall limit the power of the
President of the Corporation or its Board of Directors to call a
special meeting of shareholders.
ARTICLE VIII
Board of Directors; Business Combinations
A. Definitions. The following terms, for all purposes of
these Articles or the By-laws of this Corporation, shall have the
following meaning:
1. An "Affiliate" of, or a person "affiliated with,"
a specified person means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, the person specified.
2. "Associate," when used to indicate a relationship
with any person, means any of the following:
a. Any corporation or organization, other than
this Corporation, of which such person is an officer,
director or partner or is, directly or indirectly, the
beneficial owner of ten percent or more of any class of
equity securities.
b. Any trust or other estate in which such
person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary
capacity.
c. Any relative or spouse of such person, or any
relative of such spouse, who has the same home as such
person.
d. Any investment company registered under the
Investment Company Act of 1940 for which such person serves
as investment advisor.
3. A person shall be deemed to be the "Beneficial
Owner" of any shares of capital stock (regardless whether owned
of record):
a. Which that person or any of its Affiliates or
Associates, directly or indirectly, owns beneficially; or
b. Which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether exercisable
immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote pursuant to
any agreement, arrangement or understanding; or
c. Which are beneficially owned, directly or
indirectly, by any other person with which such person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of voting capital
stock of the Corporation or any of its subsidiaries.
<PAGE>
4. "Business Combination" means any of the following
transactions, when entered into by the Corporation or a
subsidiary of the Corporation with, or upon a proposal by, a
Related Person:
a. The merger or consolidation of, or an
exchange of securities by, the Corporation or any subsidiary
of the Corporation; or
b. The sale, lease, exchange, mortgage, pledge,
transfer or any other disposition (in one or a series of
transactions) of any assets of the Corporation, or of any
subsidiary of the Corporation, having an aggregate book or
fair market value of $1,000,000 or more, measured at the
time the transaction or transactions are approved by the
Board of Directors; or
c. The adoption of a plan or proposal for the
liquidation or dissolution of the Corporation or any
subsidiary of the Corporation; or
d. The issuance or transfer by the Corporation
or any subsidiary of the Corporation (in one or a series of
transactions) of securities of the Corporation, or of any
subsidiary of the Corporation, having a fair market value of
$1,000,000 or more; or
e. The reclassification of securities (including
a reverse stock split), recapitalization, consolidation or
any other transaction (whether or not involving a Related
Person) which has the direct or indirect effect of
increasing the voting power (regardless whether then
exercisable) or the proportionate amount of the outstanding
shares of any class or series of equity securities of this
Corporation or any of its subsidiaries of a Related Person,
or any Associate or Affiliate of a Related Person; or
f. Any agreement, contract or other arrangement
providing directly or indirectly for any of the foregoing.
5. "Common Stock" means any stock other than a class
or series of preferred or preference stock.
6. "Continuing Director" shall mean any member of the
Board of Directors who is not affiliated with a Related Person
and who was a member of the Board of Directors prior to the time
that the Related Person became a Related Person, and any
successor to a Continuing Director who is not affiliated with the
Related Person and is recommended to succeed a Continuing
Director by a majority of Continuing Directors who are then
members of the Board of Directors.
7. "Control," including the terms "controlling,"
"controlled by" and "under common control with," means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract
or otherwise. The beneficial ownership of ten percent or more of
the votes entitled to be cast by a corporation's voting stock
<PAGE>
creates a presumption of control.
8. "This Corporation" and "the Corporation" mean
Century Telephone Enterprises, Inc.
9. "Equity Security" means any of the following:
a. Any stock or similar security, certificate of
interest or participation in any profit sharing agreement,
voting trust certificate or certificate of deposit for an
equity security.
b. Any security convertible, with or without
consideration, into an equity security, or any warrant or
other security carrying any right to subscribe to or
purchase an equity security.
c. Any put, call, straddle or other option or
privilege of buying an equity security from or selling an
equity security to another without being bound to do so.
10. "Extraordinary Event" shall mean, as to any
Business Combination and Related Person, any of the following
events that is not approved by a majority of all Continuing
Directors:
a. Any failure to declare and pay at the regular
date therefor any full quarterly dividend (regardless
whether cumulative) on outstanding Preferred Stock; or
b. Any reduction in the annual rate of dividends
paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock); or
c. Any failure to increase the annual rate of
dividends paid on the Common Stock as necessary to reflect
any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
that has the effect of reducing the number of outstanding
shares of the Common Stock; or
d. The receipt by the Related Person, after such
Related Person has become a Related Person, of a direct or
indirect benefit (except proportionately as a shareholder)
from any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax
advantages provided by the Corporation or any subsidiary of
the Corporation, whether in anticipation of or in connection
with the Business Combination or otherwise.
11. "Independent Shareholder" or "Independent
Stockholder" means a holder of voting stock of this Corporation
who is not a Related Person.
12. "Market Value" means the following:
a. In the case of stock, the highest closing
sale price on the date or during the period in question of a
share of such stock on the principal United States
Securities Exchange registered under the Securities Exchange
<PAGE>
Act of 1934 on which such stock is listed or, if such stock
is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock on the date
or during the period in question on the National Association
of Securities Dealers, Inc., Automated Quotations Systems,
or any alternative system then in use, or, if no such
quotations are available, the fair market value on the date
or during the period in question of a share of such stock as
determined by a majority of the Continuing Directors of this
Corporation in good faith.
b. In the case of property other than cash or
stock, the fair market value of such property on the date or
during the period in question as determined by a majority of
the Continuing Directors of this Corporation in good faith.
13. A "Person" shall mean any individual, firm,
corporation or other entity, or a group of persons acting or
agreeing to act together in the manner set forth in Rule 13d-5
under the Securities Exchange Act of 1934, as in effect on
January 1, 1984.
14. "Related Person" means any person (other than the
Corporation, a subsidiary of the Corporation or any profit
sharing, employee stock ownership or other employee benefit plan
of the Corporation or any subsidiary of the Corporation or any
trust, trustee of or fiduciary with respect to any such plan
acting in such capacity) that is the direct or indirect
Beneficial Owner of shares of capital stock representing more
than ten percent of the outstanding voting power of the
Corporation entitled to vote for the election of directors, and
any Affiliate or Associate of any such person. For the purpose
of determining whether a person is the Beneficial Owner of a
percentage, specified in this Article VIII, of the outstanding
voting power of the Corporation, the number of shares of voting
stock deemed to be outstanding shall include shares deemed owned
by that person through application of Subsection A.3. of this
Article VIII but shall not include any other shares which may be
issuable to any other person.
15. "Subsidiary" means any corporation of which voting
stock having a majority of the votes entitled to be cast is
owned, directly or indirectly, by this Corporation.
16. "Voting Stock" means shares of capital stock of a
corporation entitled to vote generally in the election of
directors.
17. "Whole Board of Directors" means the authorized
number of directors fixed by Paragraph B.1. of this Article VIII
or determined from time to time by the Board of Directors
pursuant thereto.
B. Board of Directors. 1. The business and affairs of
this Corporation shall be managed by or under the direction of
the Board of Directors. The number of directors of this
Corporation (exclusive of directors to be elected by the holders
of any one or more series of the Preferred Stock voting
separately as a class or classes) that shall constitute the Whole
Board of Directors shall be 14, unless otherwise determined from
<PAGE>
time to time by resolution adopted by the affirmative votes of
both of the following:
a. Eighty percent of the directors then in
office; and
b. A majority of the Continuing Directors,
voting as a separate group.
2. The Board of Directors shall be divided into three
classes, designated Classes I, II and III, as nearly equal in
number as the then total number of directors constituting the
Whole Board of Directors permits. The members of Class III shall
next be elected at the annual meeting of stockholders in 1985;
and members of Classes I and II shall next be elected at the
annual meeting of stockholders to be held in 1986 and 1987,
respectively. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from any
increase in the number of directors, may be filled only by the
Board of Directors, acting by vote of both (a) a majority of the
directors then in office, although less than a quorum, and (b) a
majority of the Continuing Directors; and any directors so chosen
shall hold office until the next election of the class for which
such directors shall have been chosen and until their successors
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
Notwithstanding the foregoing, and except as otherwise required
by law, whenever the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a
class, to elect one or more directors of this Corporation, the
terms of the directors or directors elected by such holders shall
expire at the next succeeding annual meeting of the stockholders
and vacancies created with respect to any directorship of the
directors so elected may be filled in the manner specified by
such Preferred Stock. Subject to the foregoing, at each annual
meeting of stockholders the successors to be the class of
directors whose term shall then expire shall be elected to hold
office for a term expiring at the third succeeding annual meeting
and until their successors shall be elected and qualified.
3. Notwithstanding any other provisions of these
Articles or the Bylaws of this Corporation (and notwithstanding
the fact that some lesser percentage may be specified or
permitted by law) any director or the entire Board of Directors
of this Corporation may be removed at any time, but only for
cause and only by the affirmative votes, at a meeting of the
holders of voting stock of the Corporation called for that
purpose, of at least both of the following:
a. A majority of the votes entitled to be cast
by holders of outstanding shares of voting stock of this
Corporation; and
b. A majority of the votes entitled to be cast
by the Independent Stockholders, voting as a separate voting
group.
The foregoing notwithstanding, and except as otherwise
required by law, whenever the holders of any one or more series
of Preferred Stock shall have the right, voting separately as a
<PAGE>
class, to elect one or more directors of this Corporation, the
provisions of this Paragraph B.3. shall not apply with respect to
the director or directors elected by such holders of Preferred
Stock.
C. Vote Required in Business Combinations. No Business
Combination may be effected unless all of the following
conditions have been fulfilled:
1. In addition to any vote otherwise required by law
or these Articles, the proposal to effect a Business Combination
shall have been approved by (a) a majority of the directors then
in office and (b) a majority of the Continuing Directors; and by
the affirmative votes of both of the following:
a. Eighty percent of the votes entitled to be
cast by holders of outstanding shares of voting stock of
this Corporation, voting as a separate voting group; and
b. Two-thirds of the votes entitled to be
cast by the Independent Stockholders present or duly
represented at a meeting, voting as a separate voting group.
2. A proxy or information statement describing the
proposed Business Combination and complying with the requirements
of the Securities Exchange Act of 1934, as amended (the "Act"),
and the rules and regulations thereunder (or any subsequent
provisions replacing the Act, rules or regulations as a whole or
in part) is mailed to all stockholders of the Corporation at
least 30 days prior to the consummation of such Business
Combination (regardless of whether such proxy or information
statement is required pursuant to the Act or subsequent
provisions).
D. Nonapplicability of Voting Requirements. 1. For the
purposes of Subparagraph 2 of this Paragraph D, the following
terms shall have the meanings ascribed to them:
a. "Announcement date" means the first general
public announcement of the proposal or intention to make a
proposal of the Business Combination or its first
communication generally to shareholders of this Corporation,
whichever is earlier.
b. "Determination date" means the date on which
a Related Person first became a Related Person.
c. "Valuation date" means the following:
(i) For a Business Combination voted upon by
shareholders, the latter of the date prior to the date
of the shareholders' vote and the day twenty days prior
to the consummation of the Business Combination.
(ii) For a Business Combination not voted
upon by the shareholders, the date of the consummation
of the Business Combination.
2. The vote required by Paragraph C of this Article
VIII does not apply to a Business Combination, if each of the
<PAGE>
following conditions is met:
a. The aggregate amount of the cash and the
market value on the valuation date of consideration other
than cash to be received per share by all holders of common
stock in such Business Combination is at least equal to the
highest of the following:
(i) the highest per share price, including
any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by or on behalf of the
Related Person for any shares of common stock of the
same class or series acquired by it:
(a) Within the two-year period
immediately prior to the announcement date of the
proposal of the Business Combination; and
(b) In the transaction in which it
became a Related Person, whichever is higher.
(ii) The market value per share of common
stock of the same class or series on the announcement
date or on the determination date, whichever is higher;
(iii)The price per share equal to the market
value per share of common stock of the same class or
series determined pursuant to Subparagraph D.2(a)(ii)
of this Article VIII, multiplied by the fraction of:
(a) The highest per share price,
including any brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by or for
the Related Person for any shares of common stock
of the same class or series acquired by it within
the two-year period immediately prior to the
announcement date, over
(b) The market value per share of
common stock of the same class or series on the
first day in such two-year period on which the
Related Person acquired any shares of common
stock.
b. The aggregate amount of the cash and the
market value as of the valuation date of consideration other
than cash to be received per share by holders of shares of
any class or series of outstanding stock other than common
stock is at least equal to the highest of the following,
whether or not the Related Person has previously acquired
any shares of a particular class or series of stock:
(i) The highest per share price, including
any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by or for the Related
Person for any shares of such class of stock acquired
by it:
(a) Within the two-year period
immediately prior to the announcement date of the
<PAGE>
proposal of the Business Combination; or
(b) In the transaction in which it
became a Related Person, whichever is higher; or
(ii) The highest preferential amount per
share to which the holders of shares of such class of
stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of
this Corporation; or
(iii)The market value per share of such class
of stock on the announcement date or on the
determination date, whichever is higher; or
(iv) The price per share equal to the market
value per share of such class of stock determined
pursuant to Subparagraph D.2(b)(iii) multiplied by the
fraction of:
(a) The highest per share price,
including any brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by or for
the Related Person for any shares of any class of
voting stock acquired by it within the two-year
period immediately prior to the announcement date,
over
(b) The market value per share of the
same class of voting stock on the first day in
such two-year period on which the Related Person
acquired any shares of the same class of voting
stock.
c. The consideration to be received by holders
of any class or series of outstanding stock is to be in cash
or in the same form as the Related Person has previously
paid for shares of the same class or series of stock. If
the Related Person has paid for shares of any class of stock
with varying forms of consideration, the form of
consideration for such class of stock shall be either cash
or the form used to acquire the largest number of shares of
such class or series of stock previously acquired by it.
d. (i) After the Related Person has become a
Related Person and prior to the consummation of such
Business Combination:
(a) There shall have been no failure to
declare and pay at the regular date therefor any
full periodic dividends, cumulative or not, on any
outstanding preferred stock of this Corporation;
(b) There shall have been:
i) No reduction in the annual
rate of dividends paid on any class or series
of stock of this Corporation that is not
preferred stock except as necessary to
reflect any subdivision of the stock; and
<PAGE>
ii) An increase in such annual
rate of dividends as necessary to reflect any
reclassification, including any reverse stock
split, recapitalization, reorganization, or
any similar transaction which has the effect
of reducing the number of outstanding shares
of the stock; and
(c) The Related Person did not become
the Beneficial Owner of any additional shares of
stock of this Corporation except as part of the
transaction which resulted in such Related Person
becoming a Related Person or by virtue of
proportionate stock splits or stock dividends.
(ii) The provisions of (a) and (b) of
Subparagraph D.2(d)(i) shall not apply if no Related
Person or an Affiliate or Associate of the Related
Person voted as a director of this Corporation in a
manner inconsistent with (a) and (b) of Subparagraph
D.2(d)(i) and the Related Person, within ten days after
any act or failure to act inconsistent with such Sub-
subparagraphs, notifies the Board of Directors of this
Corporation in writing that the Related Person
disapproves thereof and requests in good faith that the
Board of Directors rectify such act or failure to act.
e. After the Related Person has become a Related
Person, the Related Person may not have received the
benefit, directly or indirectly, except proportionately as a
shareholder, of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by this Corporation or any of its
subsidiaries, whether in anticipation of or in connection
with such Business Combination or otherwise.
3. The vote required by Subparagraph C.1 of this
Article VIII shall not apply to a proposed Business Combination,
if, prior to the time the Related Person involved in the proposed
transaction shall have become a Related Person, the proposed
Business Combination is approved by the affirmative votes of both
of the following:
a. A majority of the directors then in office;
and
b. A majority of the Continuing Directors, as a
separate group.
E. Alternative Shareholder Vote for Business Combinations.
In the event the conditions set forth in Subparagraph D.2 have
been met or the approvals described in Subparagraph D.3 have been
voted, the affirmative vote required of shareholders in order to
approve the proposed Business Combination shall be 66-2/3% of the
voting power present or duly represented at the meeting called
for the purpose.
ARTICLE IX
Written Consents of Shareholders
<PAGE>
Any action required or permitted to be taken at any annual
or special meeting of stockholders may be taken only upon the
vote of the stockholders, present in person or represented by
duly authorized proxy, at an annual or special meeting duly
noticed and called, as provided in the Bylaws of the Corporation;
and may not be taken by a written consent of the stockholders
pursuant to the Business Corporation Law of the State of
Louisiana.
ARTICLE X
Evaluation of Certain Transactions
In connection with the exercise of its judgment in
determining what is in the best interest of the Corporation and
its stockholders when evaluating a Business Combination or a
tender or exchange offer or a proposal by another Person or
Persons to make a tender or exchange offer, the Board of
Directors of the Corporation shall consider, in addition to the
adequacy of the amount to be paid in connection with any such
transaction, all of the following factors and any other factors
which it deems relevant: (i) the social and economic effects of
the transaction on the Corporation and its subsidiaries,
employees, customers, creditors and other elements of the
communities in which the Corporation and its subsidiaries operate
or are located; (ii) the business and financial condition and
earnings prospects of the acquiring Person or Persons, including,
but not limited to, debt service and other existing or likely
financial obligations of the acquiring Person or Persons, and the
possible effect of such conditions upon the Corporation and its
Subsidiaries and the other elements of the communities in which
the Corporation and its subsidiaries operate or are located; and
(iii) the competence, experience and integrity of the acquiring
Person or Persons and its or their management.
ARTICLE XI
Amendments and Other Matters
A. Charter Amendments. Articles VIII, IX, X and XI of
these Articles of Incorporation shall not be amended in any way
(whether by modification or repeal of an existing Article or
Articles or by addition of a new Article or Articles) except upon
resolutions adopted by the affirmative votes equivalent to those
required by Subparagraph C.1 (a) and (b) of Article VIII;
provided, however, that, if such resolutions shall first be
adopted by both of the following:
1. A majority of the directors then in office; and
2. A majority of the Continuing Directors, voting as
a separate group,
then such resolutions shall be deemed adopted by the shareholders
upon the affirmative vote of a majority of the votes entitled to
be cast by holders of outstanding shares of voting stock of this
Corporation, voting as a single group.
B. Bylaw Amendments. Bylaws of this Corporation may be
altered, amended, or repealed or new Bylaws may be adopted:
<PAGE>
1. By the stockholders, but only upon the affirmative
votes equivalent to those required by Subparagraph C.1(a) and (b)
of Article VIII; or
2. By the Board of Directors, but only upon the
affirmative votes equivalent to those required by Subparagraph
D.3(a) and (b) of Article VIII.
C. Benefit of Statute. This Corporation claims and shall
have the benefit of provisions of R.S. 12:133 except that the
provisions of R.S. 12:133 shall not apply to any business
combination involving an interested shareholder that is an
employee benefit plan or related trust of this Corporation.
CENTURY TELEPHONE ENTERPRISES, INC.
By: /s/ Glen F. Post, III
----------------------
Glen F. Post, III
President
By: /s/ Harvey P. Perry
----------------------
Harvey P. Perry
Secretary
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF OUACHITA
BEFORE ME, the undersigned authority, personally came and
appeared Glen F. Post, III and Harvey P. Perry, to me known to be
the President and Secretary, respectively, of Century Telephone
Enterprises, Inc. and the persons who executed the foregoing
instrument in such capacities, and who, being duly sworn,
acknowledged in my presence and in the presence of the
undersigned witnesses that they were authorized to and did
execute the foregoing instrument in such capacities for such
corporation, as its and their free act and deed.
IN WITNESS WHEREOF, the appearers, witnesses and I have
hereunto fixed our signatures on this 30th day of September,
1994.
WITNESSES:
/s/ Joy B. Eppinette /s/ Glen F. Post, III
--------------------- -----------------------
Glen F. Post, III
/s/ Kay Buchart /s/ Harvey P. Perry
--------------------- -----------------------
Harvey P. Perry
/s/ Kathy Tettleton
_______________________
NOTARY PUBLIC
EXHIBIT 3 (ii)
BYLAWS
(Amended entirely March 19, 1987)
(Article I, Section 1 Amended August 24, 1987)
(Article II, Section 9 Amended entirely February 22, 1988)
(Article II, Section 2, A., Amended May 16, 1988)
(Article I, Section 1 Amended June 24, 1988)
(Article IV Amended in its entirety November 22, 1988)
(Article 1, Section 1 Amended February 21, 1989)
(Article I, Section 1, A., B., and C., Amended April 25, 1989)
(Article I, Sec. 1, new "K", redesignation of "L" through "Q", July 10, 1989)
(Article I, Section 1, "Q" - Amended August 22, 1989)
(Article 1, Section 1 (B)(C) - Amended July 17, 1990)
(Article III, Section 1, Subsection "F" - Amended February 25, 1992)
(Article I, Section 2, and adding new Section 1A. to Article II - May 14, 1993)
(Article I, Section 1, Subsection "K" - May 6, 1993)
(Article I, Section 1, Amended in its entirety May 25, 1993)
(Article I, Section 1(C) and Article III, Section 1(B) - February 22, 1994)
(Article III, Section 1(B) Amended in its entirety - August 23, 1994)
ARTICLE I
OFFICERS
Section l. Required and Permitted Officers.
The officers of Century Telephone Enterprises, Inc., shall
be a Chairman of the Board; a Chief Executive Officer; a
President; a Secretary; and a Treasurer. The Board may elect
such other officers as the Board may determine. An officer need
not be a Director and any two or more of the offices may be held
by one person; provided, that a person holding more than one
office may not sign in more than one capacity any certificate or
any instrument required to be signed by two officers. The
required and permitted officers and duties thereof are as
follows:
A. Chairman of the Board (Chairman). The Chairman shall
preside at all meetings of the stockholders and Directors, see
that all orders, policies and resolutions of the Board are
carried out and perform such other duties as may be prescribed by
the Board of Directors or the Bylaws.
B. Vice Chairman. The Board may from time to time elect
one or more Vice Chairmen. The Vice Chairman shall serve in the
absence or inability of the Chairman to serve. In the event of
the death, resignation or permanent inability of the Chairman to
serve, the Vice Chairman shall automatically succeed to the
office of Chairman until such time as the Board of Directors
convenes at a properly called meeting to elect a new Chairman.
In the event that there is more than one Vice Chairman, then the
one who has served in that capacity for the longest period of
time shall serve in the absence of the Chairman or assume the
office of Chairman as the case may be.
C. Chief Executive Officer (CEO). The CEO shall, subject
<PAGE>
to the powers of the Chairman, have general and active management
of the business of the Corporation. He may sign, execute and
deliver in the name of the corporation powers of attorney,
contracts, bonds and other obligations and shall perform such
other duties as may be prescribed from time to time by the Board
of Directors and the Bylaws. The CEO shall manage the day-to-day
affairs of the Corporation and direct the activities of the
President - Telephone Group, President - Telecommunications
Services, the General Counsel and the Chief Financial Officer.
Without limiting the generality of the foregoing, the CEO shall,
unless otherwise directed by the Board, establish the annual
salaries of each non-executive officer of the Corporation and
each officer of the Corporation's subsidiaries.
D. President. The President may sign, execute and
deliver in the name of the Corporation powers of attorney,
contracts, bonds, and other obligations and shall perform such
other duties as may be prescribed from time to time by the Board
of Directors, the Chairman, the CEO, and the Bylaws.
E. Executive Vice President(s). The Executive Vice
President(s) shall assist the CEO in discharging the duties of
that office in any manner requested and perform any other duties
as may be prescribed by the CEO, the Board of Directors and/or
the Bylaws.
F. Chief Financial Officer. The Chief Financial Officer
shall be the principal financial officer of the Corporation. He
shall manage the financial affairs of the Corporation and direct
the activities of the Treasurer, Controller and other officers
responsible for functional areas within the Finance Group. He
may sign, execute and deliver in the name of the Corporation
powers of attorney, contracts, bonds, and other obligations and
shall perform such other duties as may be prescribed from time to
time by the Board of Directors or by the Bylaws. He shall be
responsible for all internal and external financial reporting.
G. Treasurer. As directed by the Chief Financial Officer,
the Treasurer shall have general custody of all the funds and
securities of the Corporation. He may sign, with the CEO,
President, Chief Financial Officer or such other person or
persons as may be designated for the purpose by the Board of
Directors, all bills of exchange or promissory notes of the
Corporation. He shall perform such other duties as may be
prescribed from time to time by the Chief Financial Officer or by
the Bylaws.
H. Controller. As directed by the Chief Financial
Officer, he shall be responsible for the development and
maintenance of the accounting systems used by the Corporation and
its subsidiaries. The Controller shall be authorized to
implement policies and procedures to ensure that the Corporation
and its subsidiaries maintain internal accounting control systems
designed to provide reasonable assurance that the accounting
records accurately reflect business transactions and that such
transactions are in accordance with managements' authorization.
Additionally, as directed by the Chief Financial Officer, the
Controller shall be responsible for internal and external
financial reporting for the Corporation and its subsidiaries.
<PAGE>
I. Assistant Treasurer. The Assistant Treasurer shall
have such powers and perform such duties as may be assigned by
the Treasurer. In the absence or disability of the Treasurer,
the Assistant Treasurer shall perform the duties and exercise the
powers of the Treasurer.
J. Secretary. The Secretary shall keep the minutes of all
meetings of the stockholders, the Board of Directors and all
committees. He shall cause notice to be given of meetings of
stockholders, of the Board of Directors and of any committee
appointed by the Board. He shall have custody of the corporate
seal and general charge of the records, documents and papers of
the Corporation not pertaining to the duties vested in other
officers, which shall at all reasonable times be open to the
examination of any Director. He may sign or execute contracts
with any other officer thereunto authorized in the name of the
Corporation and affix the seal of Corporation thereto. He shall
perform such other duties as may be prescribed from time to time
by the Board of Directors or by the Bylaws.
K. Assistant Secretary. The Assistant Secretary shall
have powers and perform such duties as may be assigned by the
Secretary. In the absence or disability of the Secretary, the
Assistant Secretary shall perform the duties and exercise the
power of the Secretary.
L. President - Telecommunications Services. The President
- Telecommunications Services shall serve as President of all
Cellular and Paging subsidiaries and such other subsidiaries of
the Company as he is from time to time elected President by the
Board of Directors thereof. Subject to any limitation in these
or the subsidiary Bylaws, he shall be responsible for all
operations, marketing, construction, preparation of budgets and
business plans, and the profitability of all of the operations of
the company under his supervision.
M. President - Telephone Group. The President -
Telephone Group shall serve as President of all operating
telephone subsidiaries and subsidiaries operating in conjunction
therewith. Subject to any limitations in these or the
subsidiary Bylaws, he shall be responsible for all operations,
marketing, construction, preparation of budgets and business
plans, and the profitability of all of the operations of the
company under his supervision.
N. General Counsel. The General Counsel shall be directly
responsible for advising the Board of Directors, the Company, and
all its officers and employees in all matters affecting the legal
affairs of the Company. He shall determine the need for and if
necessary, select outside counsel to represent the Company and
approve all fees in connection with their representation. He
shall also have such other powers, duties and authority as may be
prescribed to him from time to time by the CEO, Board of
Directors, or the Bylaws.
O. Senior Vice President(s). The Senior Vice President(s)
shall perform such duties as may be prescribed from time to time
by the Board of Directors, the CEO, or the Bylaws.
P. Vice President(s). The Vice President(s) shall have
<PAGE>
such powers and perform such duties as may be assigned to them by
the Board of Directors, the CEO, the President, or the Executive
Vice President or Senior Vice President to whom they report. A
Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
Q. Assistant Vice President(s). The Assistant Vice
President(s) shall have such powers and perform such duties as
may be assigned to them by the Board of Directors, the CEO, the
President or the office to whom they report. An Assistant Vice
President may sign and execute contracts and other obligations
pertaining to the regular course of his duties.
R. Executive Officer Group. The Executive Officer Group
shall be the Chairman of the Board, the Chief Executive Officer,
the Chief Financial Officer, the President - Telecommunications
Services, the President Telephone Group, and the General Counsel.
Section 2. Election and Removal of Officers
The officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of
the shareholders and, at any time, the Board may remove any
officer (with or without cause, and regardless of any contractual
obligation to such officer) and fill a vacancy in any office; but
any election to, removal from or appointment to fill a vacancy in
any office, and the determination of the terms of employment,
shall require the affirmative votes of: (a) a majority of the
Directors then in office; and (b) a majority of the Continuing
Directors (as defined in the Articles of Incorporation), voting
as a separate group.
In addition, the Chief Executive Officer is empowered in his
sole discretion to remove or suspend any officer or other
employee of the Corporation who (1) fails to respond
satisfactorily to the Corporation respecting any inquiry by the
Corporation for information to enable it to make any
certification required by the Federal Communications Commission
under the Anti-Drug Abuse Act of 1988, (2) is arrested or
convicted of any offense concerning the distribution or
possession of, or trafficking in, drugs or other controlled
substances, or (3) the Chief Executive Officer believes to have
been engaged in actions that could lead to such an arrest or
conviction.
ARTICLE II
BOARD OF DIRECTORS
Section l. Powers
In addition to the powers and authorities by these Bylaws
expressly conferred upon it, the Board of Directors may exercise
all such powers of the Corporation and do all such lawful acts
and things as are not by statute or by the Articles of
Incorporation or by these Bylaws required to be exercised or done
by the stockholders.
A. No person shall be eligible for nomination, election
or service as a director of the Corporation who shall
<PAGE>
(i) in the opinion of the Board of Directors fail to
respond satisfactorily to the Corporation respecting any inquiry
of the Corporation for information to enable the Corporation to
make any certification required by the Federal Communication's
Commission under the Anti-Drug Abuse Act of 1988 or to determine
the eligibility of such persons under this section;
(ii) have been arrested or convicted of any offense
concerning the distribution or possession of, or trafficking in,
drugs or other controlled substances, provided that in the case
of an arrest the Board of Directors may in its discretion
determine that notwithstanding such arrest such persons shall
remain eligible under this Section; or
(iii) have engaged in actions that could lead to
such an arrest or conviction and that the Board of Directors
determines would make it unwise for such person to serve as a
director of the Corporation.
B. Any person serving as a director of the Corporation
shall automatically cease to be a director on such date as he
ceases to have the qualifications set forth in Paragraph A of
this Section, and his position shall be considered vacant within
the meaning of Article VIII, Section B, Paragraph 2 of the
Articles of Incorporation of the Corporation.
Section 2. Organization and Regular Meetings.
A. The Board of Directors shall hold an annual
organization meeting, without notice, immediately following the
adjournment of the annual meeting of the shareholders and shall
hold a regular meeting on the first Tuesday after the twentieth
in the months of February, May, August and November of each year.
B. The Secretary shall give not less than ten days'
written notice to each Director of all regular meetings, which
notice shall state the time and place of the meeting.
C. Any Director may waive notice of a meeting by written
waiver executed either before or after the meeting.
Section 3. Special Meetings.
A. Special meetings of the Board of Directors may be
called by the Chairman of the Board or, if he is absent or unable
or unwilling to act, by the President. Upon the written request
of any two Directors delivered to the Chairman of the Board, the
President or the Secretary of the Corporation, a Special Meeting
shall be called.
B. Written notice of the time and place of special
meetings shall be delivered personally to the Directors or sent
to each Director by letter or by telegram, charges prepaid,
addressed to him at his address shown on such records or if not
readily ascertainable, at the place in which the meetings of the
Directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail at
least seventy-two hours or delivered to an overnight mail
<PAGE>
delivery service or to the telegraph company in the place in
which the principal office of the corporation is located at least
forty-eight hours prior to the time of the holding of the
meeting. In case such notice is personally delivered as
above provided, it shall be so delivered at least twenty-four
hours prior to the time of the holding of the meeting. The
foregoing notwithstanding, if the Chairman or the President shall
determine, in his sole discretion, that the subject of the
special meeting is urgent and must be considered by the Board
without delay, notice may be given by personal delivery or by
telephone not less than twelve hours prior to the time set for
the meeting, provided a confirming telegram or overnight letter
is sent to the Director contemporaneously. Such mailing,
telegraphing, telephoning or personal delivery as above provided
shall be due, legal and personal notice to such Director.
Section 4. Quorum.
A majority of the authorized number of Directors as fixed by
or pursuant to the Articles of Incorporation shall be necessary
to constitute a quorum for the transaction of business and the
action of a majority (or of a required super-majority as to those
matters specified in the Articles of Incorporation or these
Bylaws or by applicable law) of the Directors present at any
meeting at which there is a quorum, when duly assembled, is valid
as a corporate act; provided that a minority of the Directors, in
the absence of a quorum, may adjourn from time to time, but may
not transact any business.
Section 5. Notice of Adjournment.
Notice of the time and place of holding an adjourned meeting
need not be given to absent Directors, if the time and place be
fixed at the meeting adjourned.
Section 6. Consent of Board Obviating Necessity of Meeting.
Anything to the contrary contained in these Bylaws
notwithstanding, any action required or permitted to be taken by
the Board of Directors may be taken without a meeting, if all
members of the Board of Directors shall individually or
collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the
proceedings of the Board. Such action by written consent shall
have the same force and effect as a unanimous vote of such
Directors at a meeting.
Section 7. Voting.
At all meetings of the Board, each Director present shall
have one vote. At all meetings of the Board, all questions,
the manner of deciding which is not otherwise specifically
regulated by law, the Certificate of Incorporation or these
Bylaws, shall be determined by a majority of the Directors
present at the meeting; provided, however, that any shares of
other corporations owned by the Corporation shall be voted only
pursuant to resolutions duly adopted upon the affirmative votes
of (a) eighty percent of the Directors then in office and (b) a
majority of the Continuing Directors (as defined in the Articles
of Incorporation), voting as a separate group.
<PAGE>
Section 8. Use of Communications Equipment.
Meetings of the Board of Directors may be held by means of
telephone conference calls or similar communications equipment
provided that all persons participating in the meeting can hear
and communicate with each other.
Section 9. Indemnification
9.1 Definitions. As used in this Section:
(a) The term "Expenses" shall mean any expenses or
costs (including, without limitation, attorney's fees, judgments,
punitive or exemplary damages, fines and amounts paid in
settlement). If any of the foregoing amounts paid on behalf of
Indemnitee are not deductible by Indemnitee for federal or state
income tax purposes, the Company will reimburse Indemnitee for
tax liability with respect thereto by paying to Indemnitee an
amount which, after taking into account taxes on such amount,
equals Indemnitee's incremental tax liability.
(b) The term "Claim" shall mean any threatened,
pending or completed claim, action, suit, or proceeding, whether
civil, criminal, administrative or investigative and whether made
judicially or extra-judicially, or any separate issue or matter
therein, as the context requires.
(c) The term "Determining Body" shall mean (i) those
members of the Board of Directors who are not named as parties to
the Claim for which indemnification is being sought ("Impartial
Directors"), if there are at least three Impartial Directors, or
(ii) a committee of at least three directors appointed by the
Board of Directors (regardless whether the members of the Board
of Directors voting on such appointment are Impartial Directors)
and composed of Impartial Directors or (iii) if there are fewer
than three Impartial Directors or if the Board of Directors or a
committee appointed thereby so directs (regardless whether the
members thereof are Impartial Directors), independent legal
counsel, which may be the regular outside counsel of the
Corporation.
(d) The term "Indemnitee" shall mean each director and
officer and each former director and officer of the Corporation.
9.2 Indemnity.
(a) To the extent any Expenses incurred by Indemnitee
are in excess of the amounts reimbursed or indemnified pursuant
to policies of liability insurance maintained by the Corporation,
the Corporation shall indemnify and hold harmless Indemnitee
against any such Expenses actually and reasonably incurred
in connection with any Claim against Indemnitee (whether as a
subject of or party to, or a proposed or threatened subject of or
party to, the Claim) or in which Indemnitee is involved solely as
a witness or person required to give evidence, by reason of his
position.
(i) as a director or officer of the Corporation
<PAGE>
(ii) as a director or officer of any subsidiary of
the Corporation or as a fiduciary with respect to any employee
benefit plan of the Corporation or
(iii) as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other for profit or not for profit entity or enterprise, if
such position is or was held at the request of the Corporation,
whether relating to service in such position before or after the
effective date of this Section 9, if (i) the Indemnitee is
successful in his defense of the Claim on the merits or otherwise
or (ii) the Indemnitee has been found by the Determining Body
(acting in good faith) to have met the Standard of Conduct;
provided that (a) the amount of Expenses for which the
Corporation shall indemnify Indemnitee may be reduced by the
Determining Body to such amount as it deems proper if it
determines in good faith that the Claim involved the receipt of a
personal benefit by Indemnitee and (b) no indemnification shall
be made in respect of any Claim as to which Indemnitee shall have
been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for willful or
intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper benefit, unless, and
only to the extent that, a court shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses as the court
shall deem proper; and provided further that, if the Claim
involves Indemnitee by reason of his position with an entity or
enterprise described in clause (ii) or (iii) of this Section
3.2(a) and if Indemnitee may be entitled to indemnification with
respect to such Claim from such entity or enterprise, Indemnitee
shall be entitled to indemnification hereunder only (x) if
he as applied to such entity or enterprise for
indemnification with respect to the Claim and (y) to the extent
that indemnification to which he would be entitled hereunder but
for this proviso exceeds the indemnification paid by such other
entity or enterprise.
(b) For purposes of this Section, the Standard of
Conduct is met when conduct by an Indemnitee with respect to
which a Claim is asserted was conduct that he reasonably believed
to be in, or not opposed to, the best interest of the
Corporation, and, in the case of a Claim which is a criminal
action or proceeding, conduct that the Indemnitee had no
reasonable cause to believe was unlawful. The termination of any
Claim by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself,
create a presumption that Indemnitee did not meet the Standard of
Conduct.
(c) Promptly upon becoming aware of the existence of
any Claim, Indemnitee shall notify the Chief Executive Officer of
the existence of the Claim, who shall promptly advise the members
of the Board of Directors thereof and that establishing the
Determining Body will be a matter presented at the next regularly
scheduled meeting of the Board of Directors. After the
Determining Body has been established the Chief Executive Officer
shall inform Indemnitee thereof and Indemnitee shall immediately
notify the Determining Body of all facts relevant to the Claim
<PAGE>
known to such Indemnitee. Within 60 days of the receipt of such
notice and information, together with such additional information
as the Determining Body may request of Indemnitee, the
Determining Body shall report to Indemnitee of its determination
whether Indemnitee has met the Standard of Conduct. The
Determining Body may extend the period of time for
determining whether the Standard of Conduct has been met, but in
no event shall such period of time be extended beyond an
additional sixty days.
(d) If, after determining that the Standard of Conduct
has been met, the Determining Body obtains facts of which it was
not aware at the time it made such determination, the Determining
Body on its own motion, after notifying the Indemnitee and
providing him an opportunity to be
heard, may, on the basis of such facts, revoke such
determination, provided that, in the absence of actual fraud by
Indemnitee, no such revocation may be made later than thirty days
after final disposition of the Claim.
(e) Indemnitee shall promptly inform the Determining
Body upon his becoming aware of any relevant facts not
theretofore provided by him to the Determining Body, unless the
Determining Body has obtained such facts by other means.
(f) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment
of the Determining Body, met the Standard of Conduct, the
Corporation may, in its sole discretion, assume all
responsibility for the defense of the Claim, and, in any event,
the Corporation and Indemnitee each shall keep the other informed
as to the progress of the defense of the Claim, including prompt
disclosure of any proposals for settlement; provided that if the
Corporation is a party to the Claim and Indemnitee reasonably
determines that there is a conflict between the positions of the
Corporation and Indemnitee with respect to the Claim, then
Indemnitee shall be entitled to conduct his defense with counsel
of his choice; and provided further that Indemnitee shall in any
event be entitled at his expense to employ counsel chosen by him
to participate in the defense of the Claim; and
(ii) the Corporation shall fairly consider any
proposals by Indemnitee for settlement of the Claim. If the
Corporation proposes a settlement of the Claim and such
settlement is acceptable to the person asserting the Claim or the
Corporation believes a settlement proposed by the person
asserting the Claim should be accepted, it shall inform
Indemnitee of the terms of such proposed settlement and shall fix
a reasonable date by which Indemnitee shall respond. If
Indemnitee agrees to such terms, he shall execute such documents
as shall be necessary to make final the settlement. If
Indemnitee does not agree with such terms, Indemnitee may proceed
with the defense of the Claim in any manner he chooses, provided
that if Indemnitee is not successful on the merits or otherwise,
the Corporation's obligation to indemnify such Indemnitee as to
any Expenses incurred by following his disagreement shall be
limited to the lesser of (A) the total Expenses incurred by
Indemnitee following his decision not to agree to such proposed
<PAGE>
settlement or (B) the amount that the Corporation would have paid
pursuant to the terms of the proposed settlement. If, however,
the proposed settlement would impose upon Indemnitee any
requirement to act or refrain from acting that would materially
interfere with the conduct of Indemnitee's affairs, Indemnitee
shall be permitted to refuse such settlement and proceed with the
defense of the Claim, if he so desires, at the Corporation's
expense in accordance with the terms and conditions of this
Agreement without regard to the limitations imposed by the
immediately preceding sentence. In any event, the Corporation
shall not be obligated to indemnify Indemnitee for an amount paid
in settlement that the Corporation has not approved.
(g) In the case of a Claim involving a proposed,
threatened or pending criminal proceeding, Indemnitee shall be
entitled to conduct the defense of the Claim and to make all
decisions with respect thereto, with counsel of his choice;
provided that the Corporation shall not be obligated to indemnify
Indemnitee for an amount paid in settlement that the Corporation
has not approved.
(h) After notification to the Corporation of the
existence of a Claim, Indemnitee may from time to time request of
the Chief Executive Officer or, if the Chief Executive Officer
is a party to the Claim as to which indemnification is being
sought, any officer who is not a party to the Claim and who
is designated by the Chief Executive Officer (the
"Disbursing Officer"), which designation shall be made promptly
after receipt of the initial request, that the Corporation
advance to Indemnitee the Expenses (other than fines, penalties,
judgments or amounts paid in settlement) that he incurs in
pursuing a defense of the Claim prior to the time that the
Determining Body determines whether the Standard of Conduct has
been met. The Disbursing Officer shall pay to Indemnitee the
amount requested (regardless of Indemnitee's apparent ability
to repay the funds) upon receipt of an undertaking by
or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Corporation under the circumstances, provided
that if the Disbursing Officer does not believe such amount to be
reasonable, he shall advance the amount deemed by him to be
reasonable and Indemnitee may apply directly to the Determining
Body for the remainder of the amount requested.
(i) After a determination that the Standard of Conduct
has been met, for so long as and to the extent that the
Corporation is required to indemnify Indemnitee under this
Agreement, the provisions of Paragraph (h) shall continue to
apply with respect to Expenses incurred after such time except
that (i) no undertaking shall be required of Indemnitee and (ii)
the Disbursing Officer shall pay to Indemnitee the amount of any
fines, penalties or judgments against him which have become final
for which the Corporation is obligated to indemnify him or any
amount of indemnification ordered to be paid to him by a court.
(j) Any determination by the Corporation with respect
to settlement of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep
confidential to the extent permitted by law and their fiduciary
<PAGE>
obligations all facts and determinations provided pursuant to or
arising out of the operation of this Agreement and the
Corporation and Indemnitee shall instruct its or his agents and
employees to do likewise.
9.3 Enforcement.
(a) The rights provided by this Section shall be
enforceable by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his
rights under this Section, Indemnitee shall be entitled to
recover from the Corporation, and shall be indemnified by the
Corporation against, any and all Expenses actually and reasonably
incurred by him in connection with such proceeding, but only if
he prevails therein. If it shall be determined that Indemnitee
is entitled to receive part but not all of the relief sought,
then Indemnitee shall be entitled to be reimbursed for all
Expenses incurred by him in connection with such proceeding if
the indemnification amount to which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the
Expenses sought incurred by Indemnitee in connection with such
judicial adjudication shall be appropriately prorated.
(c) In any judicial proceeding described in this
subsection, the Corporation shall bear the burden of proving that
Indemnitee is not entitled to Expenses sought with respect to any
Claim.
9.4 Saving Clause.
If any provision of this Section is determined by a court
having jurisdiction over the matter to require the Corporation to
do or refrain from doing any act that is in violation of
applicable law, the court shall be empowered to modify or reform
such provision so that, as modified or reformed, such provision
provides the maximum indemnification permitted by law and such
provision, as so modified or reformed, and the balance of this
Section, shall be applied in accordance with their terms.
Without limiting the generality of the foregoing, if any portion
of this Section shall be invalidated on any ground, the
Corporation shall nevertheless indemnify and Indemnitee to the
full extent permitted by any applicable portion of this Section
that shall not have been invalidated and to the full extent
permitted by law with respect to that portion that has been
invalidated.
9.5 Non-Exclusivity.
(a) The indemnification and payment of Expenses
provided by or granted pursuant to this Section shall not be
deemed exclusive of any other rights to which Indemnitee is or
may become entitled under any statute, article of incorporation,
by-law, authorization of shareholders or directors, agreement or
otherwise.
(b) It is the intent of the Corporation by this
Section to indemnify and hold harmless Indemnitee to the fullest
extent permitted by law, so that if applicable law would permit
the Corporation to provide broader indemnification rights than
<PAGE>
are currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable
law notwithstanding that the other terms of this Section would
provide for lesser indemnification.
9.6 Successors and Assigns. This Section shall be binding
upon the Corporation, its successors and assigns, and shall inure
to the benefit of Indemnitee's heirs, personal representatives,
and assigns and to the benefit of the Corporation, its successors
and assigns.
9.7 Indemnification of Other Persons. The Corporation may
indemnify any person not a director or officer of the Corporation
to the extent authorized by the Board of Directors or a committee
of the Board expressly authorized by the Board of Directors.
ARTICLE III
COMMITTEES
Section 1. Standing Committees:
The Board of Directors shall have six standing committees,
the names, functions and powers of each of which shall be as
follows:
A. The Executive Committee shall consist of not less than
three Directors, one of whom shall be the CEO, who shall also
serve as chairman of the Executive Committee. To the full extent
permitted by law and the Articles of Incorporation, the Executive
Committee shall have and may exercise all of the powers of the
Board in the management of the business and affairs of the
Corporation when the Board is not in session.
B. The Compensation Committee shall consist of two or
more Directors (the exact number of which shall be set from time
to time by the Board), each of whom shall (i) be a "disinterested
person" as defined in Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) not serve, and shall
not have served in the past, as an officer or employee of the
Corporation or any of its subsidiaries. The Compensation
Committee is empowered to:
1. after receiving and considering the recommendations of the
chief executive officer, determine from time to time the salary of
the Corporation's executive officers (as defined in Article I(1)(R)
of these Bylaws) and the fees of the Corporation's directors;
2. administer each of the Corporation's incentive compensation
plans and stock-based plans (including its 1983 Restricted Stock
Plan, Key Employee Incentive Compensation Plan, 1988 Incentive
Compensation Program, 1990 Incentive Compensation Program and any
successor plans), and exercise all powers provided for in such plans;
3. approve any (i) proposed plan or arrangement offering or
providing any benefits to one or more of the Corporation's executive
officers or directors (other than any plan or arrangement offering
benefits that do not discriminate in scope, terms or operation in
favor of executive officers or directors and that are generally available
to all salaried employees) and (ii) proposed amendment or change
<PAGE>
to any such plan or arrangement;
4. approve any (i) proposed employment contract between the Corporation
and an executive officer or proposed executive officer thereof and (ii)
proposed extension or material amendment thereto;
5. issue executive compensation reports to the Corporation's share-
holders in the manner required under the rules and regulations of the
U.S. Securities and Exchange Commission;
6. retain independent consultants and legal advisors who will report
directly to the Compensation Committee and be paid with funds of the
Corporation; and
7. if requested by the Board, (i) review, determine or approve the
compensation of any non-executive officer of the Corporation or any
officer of the Corporation's subsidiaries, (ii) review, determine or
approve any proposed amendments, contributions or changes to any
ofthe Corporation's employee benefit plans, welfare plans, insurance
or other benefit arrangements that are not directly administered or
monitored by the Compensation Committee pursuant to the powers granted
in paragraphs 2 and 3 above, and (iii) perform such other services as
may be delegated to it by the Board.
No action of the type described in paragraphs 1 - 6 shall be
valid unless it has been approved by the Compensation Committee.
All actions of the Compensation Committee shall be subject to
ratification by the full Board of Directors unless the
Compensation Committee reasonably determines that submitting a
matter to the full Board of Directors for ratification would be
prohibited by, or contrary to the intents and purposes of, any
laws, rules, or regulations that require or contemplate that such
matter be authorized by independent directors.
C. The Nominating Committee shall consist of two or more
Directors and shall perform the following functions:
1. To consider and recommend to the Board nominees for election
by shareholders or for appointment by the remaining Directors to
fill vacancies on the Board;
2. To review and consider the performance of and to recommend
the appointment or reappointment of officers of the Corporation.
D. The Audit Committee shall consist of two or more
Directors, none of whom shall otherwise be employed by the
Corporation, and shall have the following responsibilities:
1. To recommend to the Board the engagement or discharge of the
Company's independent auditor of its financial statements;
2. To direct and supervise all investigations into matters relating
to or rising from the performance and results of each independent audit;
3. To review with the Company's independent auditor the plan and
results of each independent audit engagement;
4. To review the scope, adequacy and results of the Company's internal
auditing procedures;
<PAGE>
5. To review and to approve or disapprove each service to be performed
for the Company by the independent auditor before such service is
performed; except that the Committee is authorized to permit the
President or the Chief Financial Officer to engage the independent
auditor or perform any category of service specified by the Committee
under circumstances deemed appropriate by the Audit Committee;
6. To review the degree of independence of the independent auditor;
7. To consider the range of audit and non- audit fees;
8. To review the adequacy of the Company's system of internal accounting
controls.
E. The Insurance Evaluation Committee shall consist of two
or more Directors, and shall have the following responsibilities:
1. To review periodically the Company's insurance programs and to
advise and recommend any action deemed appropriate with respect thereto;
and
2. To review periodically the Company's insurance needs and to advise
and recommend any action deemed appropriate with respect thereto.
F. The Shareholder Relations Committee shall consist of three or
more non officer directors and shall have the authority of the Board of
Directors with respect to investigating, inquiring into and considering
issues related to certain shareholders' interest and rights and
considering and acting upon shareholder matters as assigned, from time
to time, by the Chairman of the Board.
Section 2. Appointment and Removal of Committee Members.
Directors shall be appointed to or removed from a
committee only upon the affirmative votes of:
1. A majority of the Directors then in office; and
2. A majority of the Continuing Directors (as defined in the
Articles of Incorporation), voting as a separate group.
Section 3. Procedures for Committees.
Each committee shall keep written minutes of its meetings.
All action taken by a committee shall be reported to the Board of
Directors at its next meeting, whether regular or special.
Failure to keep written minutes or to make such a report shall
not affect the validity of action taken by a committee. Each
committee shall adopt such regulations (not inconsistent with the
Articles of Incorporation, these bylaws or any regulations
specified for such committee by the Board of Directors) as it
shall deem necessary for the proper conduct of its functions and
the performance of its responsibilities.
Section 4. Quorum Meetings.
A majority of the members of any committee shall constitute
a quorum and action by a majority (or by any super majority
required by law, the Articles of Incorporation, these Bylaws or
any applicable resolution adopted by the Board of Directors) of a
<PAGE>
quorum at any meeting of a committee shall be deemed action by
the committee. The committee may also take action without
meeting, if all members thereof consent in writing thereto.
Meetings of a committee may be held by telephone conference calls
or other communications equipment provided each person
participating may hear and be heard by all other meeting par-
ticipants.
Section 5. Authority of Chairman to Appoint Committees.
Whenever the Board of Directors is not in session, the
Chairman may create such committees as he deems necessary or
useful and may appoint Directors as members thereof. Any such
action by the Chairman, and any action taken by such a committee
shall be subject to ratification or disapproval by the Board at
its next meeting.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section l. Place of Meetings.
Unless otherwise required by law or these By-laws, all
meetings of the shareholders shall be held at the principal
office of the Corporation or at such other place, within or
without the State of Louisiana, as may be designated by the Board
of Directors.
Section 2. Annual Meeting; Notice Thereof.
An annual meeting of the shareholders shall be held on the
date and at the time specified by the Board of Directors in each
year. Notice of the annual meeting must state the purpose
thereof and the business to be conducted thereat shall be limited
to such purpose or purposes.
Section 3. Election of Directors.
The Board of Directors shall be divided into three classes
as nearly equal in number as may be possible. Any increase or
decrease in the number of directors shall be apportioned by the
Board of Directors so that all classes of directors shall be as
nearly equal in number as can be. At each annual meeting of
shareholders, directors shall be elected to succeed those
directors whose terms then expire. Such newly elected directors
shall serve until the third succeeding annual meeting of
shareholders after their election and until their successors are
elected and qualified. A director elected to fill a vacancy
shall hold office for a term expiring at the annual meeting at which
the term of the class to which he shall have been elected expires.
No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
Section 4. Special Meeting.
Special meetings of the shareholders, for any purpose or
purposes, may be called by the Chairman of the Board, the
President or Board of Directors. At any time, upon the written
request of any shareholder or group of shareholders holding in
<PAGE>
the aggregate at least eighty percent (80%) of the Total Voting
Power, as defined in Article IV, Section 8 of these By-laws, the
Secretary shall call a special meeting of shareholders to be held
at the registered office of the Corporation at such time as the
Secretary may fix, not less than fifteen nor more than sixty days
after the receipt of said request, and if the Secretary shall
neglect or refuse to fix such time or to give notice of the
meeting, the shareholder or shareholders making the request may
do so. Such requests must state the specific purpose or purposes
of the proposed special meeting, and the business to be conducted
thereat shall be limited to such purpose or purposes.
Section 5. Notice of Meetings.
Except as otherwise provided by law, the authorized person
or persons calling a shareholders' meeting shall cause written
notice of the time, place and purpose of the meeting to be given
to all shareholders entitled to vote at such meeting, at least
ten days and not more than sixty days prior to the day fixed for
the meeting.
Section 6. List of Shareholders.
At every meeting of shareholders, a list of shareholders
entitled to vote, arranged alphabetically and certified by the
Secretary or by the agent of the Corporation having charge of
transfers of shares, showing the number and class of shares held
by each shareholder on the record date for the meeting, shall be
produced on the request of any shareholder.
Section 7. Quorum.
At all meetings of shareholders, the holders of a majority
of the Total Voting Power, as defined in Article IV, Section 8 of
these By-laws, shall constitute a quorum, except that at any
meeting the notice of which sets forth any matter that, by law or
the Articles of Incorporation of the Corporation, must be
approved by the affirmative vote of a specified percentage in
excess of a majority of the Total Voting Power of the
Corporation, the holders of that specified percentage shall
constitute a quorum.
Section 8. Voting.
When a quorum is present at any meeting, the vote of the
holders of a majority of the Voting Power, as defined in Article
IV, Section 8 of these By-laws, present in person or represented
by proxy shall decide any question brought before such
meeting, unless the question is one uponwhich, by express
provision of law or the Articles of Incorporation of the
Corporation, a different vote is required, in which case such
express provision shall govern and control the decision of such
question. Directors shall be elected by plurality vote. As used
in these By-laws, the term "Voting Power" shall mean the right
vested by law or by these By-laws or the Corporation's Articles
of Incorporation in the shareholders or in one or more classes
of shareholders, and the right conferred by the
Corporation pursuant to La. R.S.12:75H upon the holders of any
bonds, debentures or other obligations issued by the Corporation,
to vote in the determination of a particular question or matter.
<PAGE>
As used in these By-laws, the term "Total Voting Power" shall
mean the total number of votes that shareholders and holders of
any bonds, debentures or other obligations granted voting rights
by the Corporation are entitled to cast in the determination of a
particular question or matter.
Section 9. Proxies.
At any meeting of the shareholders, every shareholder having
the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such
shareholder and bearing a date not more than eleven months prior
to the meeting, unless the instrument provides for a longer
period, but in no case will an outstanding proxy be valid for
longer than three years from the date of its execution and in no
case may a proxy be voted at a meeting called pursuant to La.
R.S. 12:138 unless it is executed and dated by the shareholder
within 30 days of the date of such meeting. The person appointed
as proxy need not be a shareholder of the Corporation.
Section 10. Voting Power Present or Represented.
For purposes of determining the amount of Voting Power
present or represented at any annual or special meeting os
shareholders with respect to voting on a particular proposal,
shares as to which the proxy holders have been instructed to
abstain from voting on the proposal, and shares as to which the
proxy holders have been precluded from voting thereon (whether by
law, regulations of the Securities and Exchange Commission, rules
or by-laws of any self-regulatory organization or otherwise) will
not be treated as present.
Section 11. Adjournments.
Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a
new record date is fixed for other adjourned meeting, but any
meeting at which directors are to be elected shall be adjourned
only from day to day until such directors shall have been
elected.
Section 12. Withdrawal.
If a quorum is present or represented at a duly organized
meeting, such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum as fixed in Article IV,
Section 7 of these By-laws, or the refusal of any shareholders
present to vote.
Section 13. Lack of Quorum.
If a meeting cannot be organized because a quorum has not
attended, those present may adjourn the meeting to such time and
place as they may determine, subject, however, to the provisions
of Article IV, Section 10 hereof. In the case of any meeting
called for the election of directors, those who attend the second
of such adjourned meetings, although less that a quorum as fixed
in Article IV, Section 7 hereof, shall nevertheless constitute a
quorum for the purpose of electing directors.
<PAGE>
Section 14. Presiding Officer.
The Chairman of the Board, or in his absence, the President,
shall preside at all shareholders' meetings.
ARTICLE V
CERTIFICATES OF STOCK
The certificates of stock of the Corporation shall be
numbered and shall be entered into the books of the Corporation
as they are issued.
They shall exhibit the holder's name and number of shares
and shall be signed by the President or Vice-President and the
Secretary-Treasurer.
ARTICLE VI
REGISTERED STOCKHOLDERS
The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the
part of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by the laws of
Louisiana.
ARTICLE VII
LOSS OF CERTIFICATE
Any person claiming a certificate of stock to be lost or
destroyed, shall make an affidavit or affirmation of that fact,
and the Board of Directors may, in its discretion require the
owner of the lost of destroyed certificate or his legal
representative, to give the Corporation a bond, in such sum as
the Board of Directors of the Corporation may require to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss of any such
certificate; a new certificate of the same tenor and for the same
number of shares as the one alleged to be lost or destroyed, may
be issued without requiring any bond when, in the judgment of the
directors, it is proper to do so.
ARTICLE VIII
CHECKS
All checks, drafts and notes of the Corporation shall be
signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time
designate.
ARTICLE IX
DIVIDENDS
<PAGE>
Dividends upon the capital stock of the Corporation, subject
to the provisions of the articles of incorporation if any, may be
declared by the Board of Directors at any regular or special
meetings, pursuant to law.
ARTICLE X
AMENDMENTS
These Bylaws may only be altered, amended or repealed as
follows;
A. By the stockholders, but only upon the affirmative votes
equivalent to those required by Subparagraph C.1(a) and (b) of
Article VIII of the Articles of Incorporation; or
B. By the Board of Directors, but only upon the affirmative
votes equivalent to those required by Subparagraph D.3(a) and
(9b) of Article VIII of the Articles of Incorporation.
EXHIBIT 4.1
THIRD AMENDMENT TO COMPETITIVE ADVANCE
--------------------------------------
AND REVOLVING CREDIT FACILITY AGREEMENT
---------------------------------------
THIS AMENDMENT is entered into as of August 15, 1994, among
CENTURY TELEPHONE ENTERPRISES, INC., a Louisiana corporation (the
"Borrower"), the banks listed on the signature page of the
amendment (the "Banks"), and NATIONSBANK OF TEXAS, N.A., a
national banking association, as agent for the Banks (in such
capacity, the "Agent") and as auction administration agent (in
such capacity, the "Auction Administration Agent").
The Borrower, the Banks, the Agent, and the Auction
Administration Agent entered into the Competitive Advance and
Revolving Credit Facility Agreement (as renewed, extended,
amended, and supplemented, the "Credit Agreement") dated as of
February 7, 1992, as amended, providing for the Banks to extend
credit to the Borrower on a revolving credit basis, not to exceed
an aggregate principal amount of $55,000,000. The Borrower, the
Banks, the Agent, and the Auction Administration Agent have
agreed, upon the following terms and conditions, to amend the
Credit Agreement to provide for an extension of the Termination
Date to January 2, 1998, and to make other changes to the Credit
Agreement. Accordingly, in consideration of the mutual
agreements below, the Borrower and the Banks, the Agent, and the
Auction Administration Agent agree as follows:
1. Certain Definitions. Unless otherwise stated,
terms defined in the Credit Agreement have the same meanings when
used in this amendment, and all references to "Sections,"
"Schedules," and "Exhibits" are to sections, schedules, and
exhibits of or to the Credit Agreement.
2. Amendments. The Credit Agreement is amended as
follows:
(a) The definition of "Funded Debt" is amended in
its entirety to read as follows:
"Funded Debt" shall mean and include, as of any
date as of which the amount thereof is to be determined, (i) all
funded indebtedness of the Companies, (ii) all funded
indebtedness of any Subsidiary (other than funded indebtedness of
such Subsidiary owing to the Borrower or another Subsidiary), and
(iii) all indebtedness for borrowed money, but not
(iv) indebtedness secured by or borrowed against the cash
surrender value of life insurance policies up to the amount of
such cash surrender value.
(b) The definition of "Termination Date" is
amended in its entirety to read as follows:
"Termination Date" means, at any time, January 2,
1998, or the earlier date of termination in whole of the Total
Commitment pursuant to Section 2.6.
(c) The following definition of "Guaranty" is
<PAGE>
hereby added to the Credit Agreement, to read as follows:
"Guaranty" means by any particular Person, all
obligations of such Person guaranteeing or in effect guaranteeing
any Debt, dividend or other obligation of any other Person (the
"primary obligor") in any manner whether directly or indirectly,
including, without limitation of the generality of the foregoing,
obligations incurred through an agreement, contingent or
otherwise, by such particular Person (i) to purchase such Debt or
obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Debt or obligation or (y) to maintain working
capital or equity capital or otherwise to advance or make
available funds for the purchase or payment of such Debt or
obligation, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of the primary obligor to make payment
of the Debt or obligation or (iv) otherwise to assure the owner
of the Debt or obligation of the primary obligor against loss in
respect thereof.
(d) Section 5.3(c) of the Credit Agreement is
amended in its entirety to read as follows:
5.3 Items to be Furnished. The Borrower shall
cause the following to be furnished to the Agent:
(c) Promptly after preparation (and no later than
the later of 15 days (a) after such filing is due or (b) after
timely filing, if filed with the Securities and Exchange
Commission), true copies of all regular and periodic reports,
statements, documents, plans, and other written communications
furnished by or on behalf of any Company to stockholders or to
the Securities and Exchange Commission. However, only
registration statements covering more than 2 percent of the
Borrower's outstanding shares of common stock shall be required
to be furnished unless specifically requested by the Agent.
<PAGE>
(e) Section 5.13 of the Credit Agreement is
amended in its entirety to read as follows:
5.13 Loans, Advances, Guaranties, and Investments.
Except as permitted by Section 5.12, no Company will make any
loan, advance, extension of credit, or capital contribution to,
make any investment in, or purchase or commit to purchase any
stock or other securities or evidences of Debt of, or interests
in, any other Person, other than (a) expense accounts for and
other advances to directors, officers, and employees of such
Company in the ordinary course of business not to exceed
$1,000,000 in the aggregate outstanding at any time;
(b) investments in (or secured by) obligations of the United
States of America and agencies thereof and obligations guaranteed
by the United States of America maturing within one year from the
date of acquisition; (c) certificates of deposit issued by any of
the Banks; (d) certificates of deposit which are fully insured by
the Federal Deposit Insurance Corporation or are issued by
commercial banks organized under the Laws of the United States of
America or any state thereof and having combined capital,
surplus, and undivided profits of not less than $100,000,000 (as
shown on such Person's most recently published statement of
<PAGE>
condition), and, unless Borrower has a written commitment to
borrow funds from such commercial bank, which certificates of
deposit have one of the two highest ratings from Moody's
Investors Service, Inc., or Standard & Poors Corporation;
(e) commercial paper rated A-1 by Moody's Investors Service,
Inc., or P-1 by Standard & Poors Corporation; (f) investments
having one of the two highest ratings from Moody's Investors
Service, Inc., or Standard & Poors Corporation; (g) extensions of
credit in connection with trade receivables and overpayments of
trade payables, in each case resulting from transactions in the
ordinary course of business; (h) loans from any Company to any
other Company, investments by any Company in any other Company,
and Guaranties by any Company of the Debt of any other Company;
(i) investments in the cash surrender value of life insurance
policies issued by Persons with a financial rating from A. M.
Best Company (as reported in Best's Insurance Reports) of at
least "A+"; provided, however, that if such Person's financial
rating is downgraded to less than "A+", then within 90 days
following such downgrading, either (i) such cash value life
insurance policies will be transferred to another insurance
company with a financial rating of at least "A+", (ii) such cash
value insurance policies will be collapsed and the cash value
thereof will be collected by the investing Company, or (iii) such
investment will become an investment subject to the limitations
of subparagraph (m) of this Section 5.13; (j) investments in the
capital stock or securities of or loans to or Guaranties of the
Debt of any Person engaged in business comparable to the general
business of any Company (x) in which a Company possesses (or will
possess, after such investment) an equity ownership interest in
such Person or (y) secured by the borrower's interest in such
business; (k) in the ordinary course of business, investments in
the capital stock of the Rural Telephone Bank, National Bank for
Cooperatives, or the National Rural Utilities Cooperative Finance
Corporation, or any other lender from whom the investing Company
is intending to borrow money which requires such Company to make
an equity investment in such lender in order to so borrow;
(l) Guaranties of the Debt of the Borrower's Employee Stock
Ownership Plan; and (m) other loans, advances, Guaranties, and
investments which never exceed in the aggregate at any time 25%
of Adjusted Consolidated Net Worth (valued on the basis of
original cost, plus subsequent cash and stock additions, less any
write-down in value).
(f) Section 5.23 of the Credit Agreement is
amended in its entirety to read as follows:
5.23 Ratio of Funded Debt to Net Worth. As
calculated at the end of each fiscal quarter of the Borrower, the
Borrower shall not permit (a) Funded Debt of the Companies to
exceed 185% of Consolidated Net Worth or (b) Funded Debt of the
Companies other than the Borrower to exceed 150% of Consolidated
Net Worth (excluding Borrower's portion thereof). For purposes
of this Section 5.23 Funded Debt shall include any Company's
Guaranty of Funded Debt of any Person other than another Company
or the Borrower's Employee Stock Ownership Plan.
(g) Section 6.6 of the Credit Agreement is
amended in its entirety to read as follows:
6.6 Default Under Other Agreements. A default
<PAGE>
exists under any Material Agreement to which any Company is a
party, the effect of which is to cause, or which permits the
holder thereof (or a trustee or representative of such holder) to
cause, unpaid consideration of at least 1% of Consolidated Net
Worth (individually or in the aggregate) to become due prior to
the stated maturity or prior to the regularly scheduled dates of
payment.
3. Additional Event of Default. No later than 30
days after the date of this amendment, the Borrower shall deliver
to the Agent a certificate from the president, secretary, chief
financial officer, or treasurer of the Borrower certifying as to
resolutions duly adopted by its directors approving and
authorizing this amendment and the execution of the Loan Papers,
or ratifying the actions of the officers of the Borrower
contemplated in this amendment, to which shall be attached a copy
of such resolutions. The failure or refusal of the Borrower to
deliver such certificate to the Agent on or before such date
shall be an Event of Default.
4. Representations. The Borrower represents and
warrants to the Banks, the Agent, and the Auction Administration
Agent that (a) all representations and warranties stated in
Section 3 of the Credit Agreement are true and correct in all
material respects the same as if restated verbatim in this
amendment as of the date of this amendment, except to the extent
that (i) the representations and warranties speak to a specific
date or (ii) the facts on which such representations and
warranties are based have been changed by transactions
contemplated or permitted by the Credit Agreement, and (b) as of
the date of this amendment, no Material Adverse Effect, Default,
or Event of Default has occurred and is continuing.
5. References. All references in the Loan Papers to
the "Credit Agreement" shall refer to the Credit Agreement as
amended by this amendment, and, because this amendment is a "Loan
Paper" referred to in the Credit Agreement, the provisions
relating to Loan Papers set forth in the Credit Agreement are
incorporated in this amendment by reference, the same as if set
forth in this amendment verbatim.
6. Scope of Amendment. Except as specifically
amended and modified in this amendment, (a) the Credit Agreement
is unchanged and continues in full force and effect, and (b) the
Borrower hereby confirms and ratifies the existence of and each
and every term, condition, and covenant contained in the Credit
Agreement, to the same extent and as though the same were set out
in full in this amendment.
7. Counterparts. This amendment has been executed in
a number of identical counterparts, each of which shall be deemed
an original. In making proof of this instrument, it shall not be
necessary for any party to account for all counterparts, and it
shall be sufficient for any party to produce but one such
counterpart.
8. Parties Bound. This amendment shall be binding
upon and shall inure to the benefit of the Borrower, each Bank,
the Agent, and Administrative Agent, and their respective
successors and assigns subject to Section 9.20 of the Credit
<PAGE>
Agreement.
9. ENTIRETY. THIS AMENDMENT AND THE LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first stated above.
CENTURY TELEPHONE ENTERPRISES, INC.,
as the Borrower
By /s/ R. Stewart Ewing, Jr.
-------------------------
Name: R. Stewart Ewing, Jr.
Title: Senior Vice President and
Chief Financial Officer
NATIONSBANK OF TEXAS, N.A., as the Agent,
the Auction Administration Agent,
and a Bank
By /s/ W. Hutchinson McClendon, IV
-------------------------------
Name: W. Hutchinson McClendon, IV
Title: Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION (formerly Texas Commerce
Bank, National Association), as a Bank
By /s/ Robert C. Stack
-------------------
Name: Robert C. Stack
Title: Executive Vice President
THE BANK OF NOVA SCOTIA, as a Bank
By /s/ F. C. H. Ashby
------------------
Name: F. C. H. Ashby
Title: Senior Manager Loan Operations
EXHIBIT 10.1
CENTURY TELEPHONE ENTERPRISES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1994 AMENDMENT AND RESTATEMENT
I. Purpose of the Plan
This Supplemental Executive Retirement Plan (the "Plan") is
intended to provide Century Telephone Enterprises, Inc. (the
"Company") and its subsidiaries a method for attracting and
retaining key employees; to provide a method for recognizing the
contributions of such personnel; and to promote executive and
managerial flexibility, thereby advancing the interests of the
Company and its stockholders. In addition, the Plan is intended
to provide a more adequate level of retirement benefits in
combination with the Company's general retirement program.
II. Definitions
As used in this Plan, the following terms shall have the
meanings indicated, unless the context otherwise specifies or
requires:
2.01 "ACCRUED BENEFIT", as of a given date, shall mean an
amount equal to the basic monthly benefit to which a Participant
is entitled on his Normal Retirement Date in accordance with
Section 5.01 using his Average Monthly Compensation, Estimated
Primary Insurance Amount and Credited Service determined as of
such given date, in lieu of the corresponding amounts determined
as of his Normal Retirement Date.
2.02 "ACTUARIAL EQUIVALENT" shall mean the amount of
pension of a different type or payable at a different age that
has the same value as computed by the Actuary on the basis of
interest and mortality tables. Mortality will be based on the
UP84 Mortality Table. The interest rate will be equal to the
Pension Benefit Guaranty Corporation's published interest rate
for immediate annuities on the date of pension commencement.
2.03 "AVERAGE MONTHLY COMPENSATION" shall mean the average
of the 36 consecutive months' Compensation of a Participant which
produce the highest average out of the last 120 months of
employment. No compensation will be considered during a period
of Leave of Absence for purposes of determining Average Monthly
Compensation.
2.04 "BOARD OF DIRECTORS" shall mean not less than a quorum
of the whole Board of Directors of Century Telephone Enterprises,
Inc.
2.05 "COMMITTEE" shall mean three or more members of the
Board of Directors as described in Section 14.01 of the Plan, or
the Board if no Committee has been appointed.
2.06 "COMPANY" shall mean Century Telephone Enterprises,
Inc., any Subsidiary thereof, and any affiliate listed on
<PAGE>
Appendix A attached hereto.
2.07 "COMPENSATION" shall mean the sum of a Participant's
Salary, determined under Section 2.18 and Incentive Compensation,
determined under Section 2.13, for a particular month.
2.08 "CREDITED SERVICE" shall mean employment for which a
Participant is entitled to receive service credit for accrual of
benefit and for eligibility for benefits under the Plan in
accordance with the provisions of Section 4.01.
2.09 "DISABILITY" shall mean a condition which makes a
Participant unable to perform each of the material duties of his
regular occupation where he is likely to remain thus
incapacitated continuously and permanently.
2.10 "EFFECTIVE DATE" of this Amendment and Restatement
shall mean July 1, 1994. Specifically, the amendment to the
definition of Compensation hereunder shall only apply to
Compensation paid on or after July 1, 1994, and the survivor
annuity provided under Article IX hereof shall only apply to
Participants whose date of death is on or after July 1, 1994. In
addition, the benefits provided hereunder for Jim D. Reppond
shall be computed without regard to the amendment to the
definition of Compensation and the provision of the survivor
annuity referenced in the preceding sentence.
2.11 "EMPLOYER" shall mean Century Telephone Enterprises,
Inc., any Subsidiary thereof, and any affiliate listed on
Appendix A attached hereto.
2.12 "ESTIMATED PRIMARY INSURANCE AMOUNT" shall mean the
monthly primary insurance amount calculated to be available at
age 65 based on the Social Security law in effect on the
Participant's Normal Retirement Date or earlier date of
termination. The primary insurance amount of a Participant who
terminates prior to Normal Retirement Date shall be based on the
assumption that the Participant earns no compensation between his
termination date and his Normal Retirement Date.
2.13 "INCENTIVE COMPENSATION" shall mean the monthly
equivalent of the amount awarded to a Participant under the
Company's Key Employee Incentive Compensation Program or other
incentive compensation arrangement maintained by the Company,
including the amount of any stock award in its cash equivalent at
the time of conversion of the award from cash to stock. A
Participant's Incentive Compensation shall be determined on a
monthly basis by dividing the amount of the Incentive
Compensation award by the number of months to which the award
relates. Each award of Incentive Compensation shall, for
purposes of this Plan, be allocated to the month or months to
which the award relates, i.e., that period of time during which
the award was earned.
2.14 "LEAVE OF ABSENCE" shall mean any extraordinary
absence authorized by the Employer under the Employer's standard
personnel practices.
2.15 "NORMAL RETIREMENT DATE" shall mean the first day of
the month coincident with or next following a Participant's 65th
<PAGE>
birthday.
2.16 "PARTICIPANT" shall mean any officer of the Employer
who is granted participation in the Plan in accordance with the
provisions of Article III.
2.17 "PLAN" shall mean the Century Telephone Enterprises,
Inc. Supplemental Executive Retirement Plan, as amended and
restated herein.
2.18 "SALARY" shall mean the monthly equivalent of a
Participant's annual rate of pay as of the date of determination
of benefits hereunder, exclusive, however, of bonus payments,
overtime payments, commissions, imputed income on life insurance,
vehicle allowances, relocation expenses, severance payments, and
any other extra compensation.
2.19 "SUBSIDIARY" shall mean any corporation in which the
Company owns, directly or indirectly through subsidiaries, at
least fifty percent (50%) of the combined voting power of all
classes of stock.
III. Participation
3.01 Any officer who is either one of the key employees of
the Company in a position to contribute materially to the
continued growth and future financial success of the Company, or
one who has made a significant contribution to the Company's
operations, thereby meriting special recognition, shall be
eligible to participate provided the following requirements are
met:
a. The officer is employed on a full-time basis by
Century Telephone Enterprises, Inc., any
Subsidiary thereof, or any affiliate listed on
Appendix A;
b. The officer is compensated for full-time
employment by a regular salary;
c. The coverage of the officer is duly approved by
the Board of Directors of Century Telephone
Enterprises, Inc.
It is intended that participation in this Plan shall be extended
only to those officers who are members of a select group of
management and highly compensated employees, as determined by the
Committee.
3.02 Any officer who is currently a Participant in the Plan
shall continue to be a Participant in the Plan as amended and
restated. Any other officer who meets the requirements defined
in Section 3.01 shall be a Participant in the Plan on the January
1 following the attainment of officer status.
3.03 Any officer who met the requirements defined in
Section 3.01, who was age 60 as of November 21, 1983, and who was
employed by the Company on January 1, 1990, will receive benefits
equal to the greater of:
<PAGE>
a. the benefit determined under this Plan, or
b. a monthly benefit equal to sixty-five percent
(65%) of Average Monthly Compensation offset by
retirement income payable to the individual
executive from:
1. Social Security (Primary Insurance Amount
only) determined as of date of retirement
under the Social Security Act.
2. The Company's Stock Bonus Plan and PAYSOP (in
which case the Stock Bonus Plan and PAYSOP
accumulation at date of determination will be
converted to a monthly annuity on a straight
life basis based upon actuarial assumptions
with respect to mortality and investment
return). The mortality assumptions will be
based upon the 1971 Group Annuity Mortality
Table. The investment return assumption will
reflect current market conditions as measured
by the 52-week Treasury bill rate as
determined monthly.
3. Benefits payable from any qualified or
nonqualified plan attributable to prior
employment for those officers who are hired
on or after attainment of age 55 (in which
case the benefit(s) will be expressed in
terms of a monthly annuity on a straight life
basis payable at date of retirement).
IV. Credited Service
4.01 A Participant will receive credit for each year of
employment, calculated in completed years and months regardless
of the number of hours worked. Credited service will include all
years of service prior to becoming an officer of the Company,
years of service following Normal Retirement Date, and years of
service with any Subsidiary or any affiliate listed on Appendix A
attached hereto. In addition, periods of Leave of Absence and
periods during which severance pay is provided shall count as
periods of service. A fraction of a year of Credited Service
will be given for completed months during the year of
termination.
4.02 At the discretion of the Board of Directors, service
with a predecessor employer may be credited for purposes of this
Plan. If such service is credited to a Participant, the benefit
payable under this Plan shall be reduced by any benefit payable
from the prior employer. The Board of Directors shall make a
determination whether service with a predecessor employer will be
credited to a Participant prior to the Participant's commencement
of participation in this Plan, and such determination, once made,
shall be irrevocable. If no determination is made by the Board
of Directors prior to a Participant's commencement of
participation in this Plan, service with a predecessor employer
by such Participant shall not be credited for purposes of this
Plan.
<PAGE>
V. Normal Retirement
5.01 Except as provided in Section 3.03, the monthly
retirement benefit payable to a Participant on his Normal
Retirement Date shall be equal to (a) less (b), where:
(a) is 1 1/2% of Average Monthly Compensation multiplied
by Credited Service, not greater than 30 years.
(b) is 3 1/3% of Estimated Primary Insurance Amount,
multiplied by Credited Service, not greater than
30 years.
5.02 The normal form of payment of a Participant's normal
retirement benefit shall be an annuity payable for the life of
the Participant.
VI. Late Retirement
6.01 If a Participant remains employed beyond his Normal
Retirement Date, his late retirement date will be the first day
of the month coincident with or next following his actual date of
retirement.
6.02 A Participant's late retirement benefit will be
calculated in accordance with Section 5.01, based on his Average
Monthly Compensation and Credited Service as of his late
retirement date. His Primary Insurance Amount will be computed
as of his Normal Retirement Date.
VII. Early Retirement
7.01 A Participant who has attained age 55, and who has
completed 15 or more years of service, is eligible for early
retirement. An eligible Participant's early retirement date is
the first day of the month coincident with or next following the
date he terminates employment.
7.02 A Participant's early retirement benefit is 100% of
his Accrued Benefit computed as of his early retirement date,
payable at his Normal Retirement Date.
7.03 A Participant may elect to receive his early
retirement benefit prior to Normal Retirement Date, in which
event the benefit payable will be reduced according to the
following schedule:
<TABLE>
<CAPTION>
Age at Commencement Percentage of Accrued Benefit
<C> <C>
55 50 %
56 53 1/3 %
57 56 2/3 %
58 60 %
59 63 1/3 %
60 66 2/3 %
61 73 1/3 %
62 80 %
63 86 2/3 %
64 93 1/3 %
65 100 %
</TABLE>
<PAGE>
7.04 The Board of Directors, at its sole discretion, may
grant to a Participant 100% of his Accrued Benefit, payable at
his early retirement date without such benefit being subject to
the reductions set forth in Section 7.03, provided the
Participant has met the requirements of Section 7.01.
VIII.Disability
8.01 A Participant who becomes disabled, as defined in
Section 2.09, prior to retirement or termination of service will
be entitled to a disability benefit computed in accordance with
Section 8.02.
8.02 A Participant's disability benefit will be calculated
in accordance with Section 5.01 based on (1) his Average Monthly
Compensation projected to Normal Retirement Date assuming his
Compensation as of the date of his disability remains constant,
(2) his projected service to Normal Retirement Date and (3) his
Estimated Primary Insurance Amount based on the Social Security
law in effect on the date of his disability.
8.03 A Participant's disability benefit will commence at
his Normal Retirement Date, and the normal form of benefit
payment will be an annuity payable for the life of the
Participant.
IX. Death Benefit
9.01 Upon the death of a Participant who is actively
employed or on Leave of Absence at the time of his death or who
has retired or become disabled prior to the commencement of
benefit payments hereunder, a Participant's beneficiary (as
determined under Section 9.02) will be entitled to receive a
death benefit determined in accordance with Section 9.03.
9.02 The beneficiary of a Participant who is married on the
date of his death shall be his spouse. The beneficiary of an
unmarried Participant shall be his living children as of his date
of death.
9.03 The monthly death benefit payable to the beneficiary
of a Participant shall be equal to (a) less (b), where:
(a) is 36% of Average Monthly Compensation projected
to his Normal Retirement Date assuming his
Compensation as of his date of death remains
constant until his Normal Retirement Date.
(b) is 80% of Estimated Primary Insurance Amount.
9.04 The death benefit shall be paid to the surviving
spouse, if any, of the Participant for his or her life. If the
Participant is unmarried at the date of death, or if the
surviving spouse dies subsequent to the Participant's death, the
death benefit shall be paid to the Participant's surviving child
or children (or legal representative of any minor child) in equal
shares. The death benefit payable to a child shall terminate
upon the later of the child's attainment of age 19 or age 23, if
a full-time student at an accredited educational institution, and
<PAGE>
such share shall thereafter revert to and be payable equally to
the remaining surviving children of the Participant until the
interest of each such surviving child has terminated.
9.05 If a Participant has no surviving spouse or children
at the date of his or her death, no death benefit shall be paid
under this Plan.
X. Termination of Service
10.01 If a Participant terminates service prior to death,
disability or retirement, his Accrued Benefit determined under
Section 2.01 shall be vested in accordance with the following
schedule:
Years of Service Vested %
less than 5 0%
5 or more 100%
10.02 A Participant's vested Accrued Benefit is payable at
his Normal Retirement Date. A Participant may elect to have his
benefit commence prior to age 65 but after age 55 if he meets the
service requirements for early retirement pursuant to Section
7.01. If the benefit commences before age 65, the amount of
monthly benefit will be reduced according to the schedule set
forth in Section 7.03.
XI. Form of Benefit Payment
11.01 The normal form of benefit payment is a monthly
lifetime annuity, payable in accordance with the Company's
standard payroll practices.
11.02 A Participant may, prior to commencement of
participation in the Plan, elect an optional form of payment
which is the Actuarial Equivalent of a Participant's basic
monthly pension, as follows:
Option 1: A reduced monthly pension payable for the
lifetime of the Participant with a minimum of sixty (60)
monthly payments guaranteed.
Option 2: A reduced monthly pension payable for the
lifetime of the Participant with a minimum of one hundred
twenty (120) monthly payments guaranteed.
Option 3: A reduced monthly pension payable for the
lifetime of the Participant with a minimum of one hundred
eighty (180) monthly payments guaranteed.
Option 4: A reduced monthly pension, payable to the
Participant for the life of the Participant, with monthly
payments of one-half (1/2) the reduced amount that was payable
monthly to the Participant payable after the Participant's
death for the life of the Participant's spouse.
Option 5: A reduced monthly pension payable to the
Participant for the life of the Participant, with reduced
monthly payments of two thirds ( 2/3 ) of the reduced amount
<PAGE>
that was payable monthly to the Participant payable after
the Participant's death for the life of the Participant's
spouse.
Option 6: A reduced monthly pension payable to the
Participant for the life of the Participant, with reduced
monthly payments of three fourths ( 3/4 ) of the reduced
amount that was payable monthly to the Participant payable
after the Participant's death for the life of the
Participant's spouse.
Option 7: A reduced monthly pension payable to the
Participant for the life of the Participant, with the same
monthly pension payable after the Participant's death for
the life of the Participant's spouse.
11.03 If a Participant does not elect an optional form of
benefit payment under Section 11.02 prior to the commencement of
participation in the Plan, such Participant's benefits shall be
paid in the normal form provided in Section 11.01.
XII. Reemployment of Participants
12.01 If a Participant retires or otherwise terminates
employment with the Employer and such Participant is reemployed
by the Employer, his entitlement to any benefits will be
determined on the basis of the provisions of the Plan in effect
on his subsequent termination date. The benefit will be based on
the Average Monthly Compensation, Estimated Primary Insurance
Amount and Credited Service as of the date of subsequent
termination, taking into account all Credited Service prior to
the Participant's reemployment date. For purposes of calculating
Average Monthly Compensation, the average of the 36 consecutive
months' Compensation which produce the highest average out of the
last 120 months of employment will be considered, without regard
to the break in service.
12.02 If a Participant is reemployed after benefit
commencement, the payment of any benefit to such Participant
under the Plan on account of his retirement or severance shall be
suspended by reason of such reemployment. The amount of his
benefit at his subsequent termination will be calculated in
accordance with Section 12.01 but reduced by the actuarial
equivalent of any benefit payments received prior to subsequent
termination.
12.03 The form of monthly benefit payment upon subsequent
termination shall be the form of payment that was in effect prior
to reemployment. If the Participant was married at the time of
benefit commencement, and if the Participant's spouse dies prior
to subsequent commencement of benefit payments, such form of
payment shall remain applicable (as though he were married to his
deceased spouse) with no further payments upon his death.
XIII.Additional Restrictions on Benefit Payments
13.01 In no event will there be a duplication of benefits
payable under the Plan because of employment by more than one
participating Employer.
<PAGE>
13.02 Notwithstanding anything to the contrary in the Plan,
payments shall cease and any benefits under this Plan not yet
paid will be forfeited in the event the Participant engages in
gross misconduct, competitive employment or other activities
detrimental to the welfare of the Company, as determined by the
Board of Directors.
XIV. Administration and Interpretation
14.01 The Plan shall be administered by the Board of
Directors through a Committee which shall consist of three or
more members of the Board of Directors of the Company. No
individual who is or has ever been a member of the Committee
shall be eligible to be designated as a participant or receive
payments under this Plan. The Committee shall have full power
and authority to interpret and administer the Plan and, subject
to the provisions herein set forth, to prescribe, amend and
rescind rules and regulations and make all other determinations
necessary or desirable for the administration of the Plan. The
Board may from time to time appoint additional members of the
Committee or remove members and appoint new members in
substitution for those previously appointed and to fill vacancies
however caused.
14.02 The decision of the Committee relating to any
question concerning or involving the interpretation or
administration of the Plan shall be final and conclusive, and
nothing in the Plan shall be deemed to give any employee any
right to participate in the Plan, except to such extent, if any,
as the Committee may have determined or approved pursuant to the
provisions of the Plan.
XV. Nature of the Plan
Benefits under the Plan shall generally be payable by the
Company from its own funds, and such benefits shall not (i)
impose any obligation upon the trust(s) of the other employee
benefit programs of the Company; (ii) be paid from such trust(s);
nor (iii) have any effect whatsoever upon the amount or payment
of benefits under the other employee benefit programs of the
Company. Participants have only an unsecured right to receive
benefits under the Plan from the Company as general creditors of
the Company. The Company may deposit amounts in the Century
Telephone Enterprises, Inc. Supplemental Executive Retirement
Trust (the "Trust") established by the Company for the purpose of
funding the Company's obligations under the Plan. Participants
and their beneficiaries, however, have no secured interest or
special claim to the assets of the Trust, and the assets of the
Trust shall be subject to the payment of claims of general
creditors of the Company upon the insolvency or bankruptcy of the
Company, as provided in the Trust.
XVI. Employment Relationship
An employee shall be considered to be in the employment of
the Company and its subsidiaries as long as he remains an
employee of either the Company, any Subsidiary of the Company, or
any corporation to which substantially all of the assets and
business of the Company are transferred. Nothing in the adoption
of this Plan nor the designation of any Participant shall confer
<PAGE>
on any employee the right to continued employment by the Company
or a Subsidiary of the Company, or affect in any way the right of
the Company or such Subsidiary to terminate his employment at any
time. Any question as to whether and when there has been a
termination of an employee's employment, and the cause, notice or
other circumstances of such termination, shall be determined by
the Board, and its determination shall be final.
XVII.Amendment and Termination of Plan
The Board of Directors of the Company in its sole discretion
may terminate the Plan at any time, and shall have the right to
alter or amend the Plan or any part thereof from time to time,
except that the Board of Directors shall not terminate the Plan
or make any alteration or amendment thereto which would impair
any rights or benefits of a Participant previously accrued.
XVIII. Binding Effect
This Plan shall be binding on the Company, each Subsidiary,
and any affiliate listed on Exhibit A, the successors and assigns
thereof, and any entity to which substantially all of the assets
or business of the Company, a Subsidiary, or a participating
affiliate are transferred.
XIX. Reimbursement to Participants
The Company shall reimburse any Participant, or beneficiary
thereof, for all expenses, including attorney's fees, actually
and reasonably incurred by the Participant or beneficiary in any
proceeding to enforce any of their rights under this Plan.
XX. Construction
The masculine gender, where appearing in the Plan, shall be
deemed to include the feminine gender, and the singular may
indicate the plural, unless the context clearly indicates the
contrary. The words "hereof", "herein", "hereunder" and other
similar compounds of the word "here" shall, unless otherwise
specifically stated, mean and refer to the entire Plan, not to
any particular provision or Section. Article and Section
headings are included for convenience of reference and are not
intended to add to, or subtract from, the terms of the Plan.
IN WITNESS WHEREOF, Century Telephone Enterprises, Inc. has
executed this Plan in its corporate name and its corporate seal
to be hereunto affixed this 11th day of November, 1994.
ATTEST: CENTURY TELEPHONE ENTERPRISES, INC.
/s/ Sandra Post
-----------------------
By: /s/ R. Stewart Ewing, Jr.
---------------------------
R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
EXHIBIT 10.2
CENTURY TELEPHONE ENTERPRISES, INC.
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
I. Purpose of the Plan
This Supplemental Defined Contribution Plan (the "Plan") is
intended to provide Century Telephone Enterprises, Inc. (the
"Company") and its subsidiaries a method for attracting and
retaining key employees; to provide a method for recognizing the
contributions of such personnel; and to promote executive and
managerial flexibility, thereby advancing the interests of the
Company and its stockholders. In addition, the Plan is intended
to provide a more adequate level of retirement benefits in
combination with the Company's general retirement program.
II. Definitions
As used in this Plan, the following terms shall have the
meanings indicated, unless the context otherwise specifies or
requires:
2.01 "ACCOUNT" shall mean the account established under
this Plan in accordance with Section 4.01.
2.02 "ACCOUNT BALANCE", as of a given date, shall mean the
fair market value of a Participant's Account, as determined by
the Committee.
2.03 "BOARD OF DIRECTORS" shall mean not less than a quorum
of the whole Board of Directors of Century Telephone Enterprises,
Inc.
2.04 "COMMITTEE" shall mean three or more members of the
Board of Directors as described in Section 11.01 of the Plan, or
the Board if no Committee has been appointed.
2.05 "COMMON STOCK" shall mean the common stock, $1.00 par
value per share, of the Company.
2.06 "COMPANY" shall mean Century Telephone Enterprises,
Inc., any Subsidiary thereof, and any affiliate listed on
Appendix A attached hereto.
2.07 "COMPENSATION" shall mean a sum of Participant's
Salary, determined under Section 2.18 and Incentive Compensation,
determined under Section 2.10, for a particular year. The
determination of a Participant's Compensation for purposes of
this Plan shall be made by the Committee, in its sole discretion.
2.08 "DISABILITY" shall mean a condition which makes a
Participant unable to perform each of the material duties of his
regular occupation where he is likely to remain thus
incapacitated continuously and permanently.
2.09 "EFFECTIVE DATE" of this Plan shall mean January 1,
1994.
2.10"EMPLOYER" shall mean Century Telephone Enterprises,
<PAGE>
Inc., any Subsidiary thereof, and any affiliate listed on
Appendix A attached hereto.
2.11 "INCENTIVE COMPENSATION" shall mean the amount awarded
to a Participant under the Company's Key Employee Incentive
Compensation Program or other executive incentive compensation
arrangement maintained by the Company, including the amount of
any stock award in its cash equivalent at the time of conversion
of the award from cash to stock. A Participant's Incentive
Compensation shall be determined on an annual basis and shall,
for purposes of this Plan, be allocated to the year or years to
which the award relates, i.e., the period of time during which
the award was earned.
2.12 "LEAVE OF ABSENCE" shall mean any extraordinary
absence authorized by the Employer under the Employer's standard
personnel practices.
2.13 "NORMAL RETIREMENT AGE" shall mean age sixty-five (65).
2.14 "NORMAL RETIREMENT DATE" shall mean the first day of
the month coincident with or next following a Participant's
sixty-fifth (65th) birthday. Normal Retirement Age shall mean
age sixty-five (65).
2.15 "PARTICIPANT" shall mean any officer of the Employer
who is granted participation in the Plan in accordance with the
provisions of Article III.
2.16 "PHANTOM STOCK UNIT" shall mean a unit, the value of
which is equal to the value of a share of Common Stock, but does
not represent actual shares of Common Stock.
2.17 "PLAN" shall mean the Century Telephone Enterprises,
Inc. Supplemental Defined Contribution Plan, as amended and
restated herein.
2.18 "PLAN CONTRIBUTIONS" shall mean the total dollar
amount of contributions made, directly or indirectly, on behalf
of a Participant under the Company's Stock Bonus Plan, PAYSOP and
Trust and the Company's Employee Stock Ownership Plan and Trust.
2.19 "PLAN CONTRIBUTION PERCENTAGE" shall mean the estimated
total of the percentage of compensation of employees of the
Company contributed by the Company to its Stock Bonus Plan,
PAYSOP and Trust and its Employee Stock Ownership Plan and Trust,
as determined by dividing Plan Contributions for a particular
year by estimated compensation taken into account under such
plans for the year. The Committee, in its sole discretion, shall
determine the Plan Contribution Percentage for each year, and
such determination shall be binding and conclusive.
2.20 "SALARY" shall mean a Participant's annual rate of pay
as of the date of determination of benefits hereunder, exclusive,
however, of bonus payments, overtime payments, commissions,
imputed income on life insurance, vehicle allowances, relocation
expenses, severance payments, and any other extra compensation.
2.21 "SUBSIDIARY" shall mean any corporation in which the
Company owns, directly or indirectly through subsidiaries, at
<PAGE>
least fifty percent (50%) of the combined voting power of all
classes of stock.
III. Participation
3.01 Any officer who is either one of the key employees of
the Company in a position to contribute materially to the
continued growth and future financial success of the Company, or
one who has made a significant contribution to the Company's
operations, thereby meriting special recognition, shall be
eligible to participate provided the following requirements are
met:
a. The officer is employed on a full-time basis by
Century Telephone Enterprises, Inc., any
Subsidiary thereof or any affiliate listed on
Appendix A;
b. The officer is compensated for full-time
employment by a regular salary;
c. The coverage of the officer is duly approved by
the Board of Directors of Century Telephone
Enterprises, Inc.
It is intended that participation in this Plan shall be extended
only to those officers who are members of a select group of
management and highly compensated employees, as determined by the
Committee.
IV. Accounts and Investments
4.01 An Account shall be established on behalf of each
Participant who receives an allocation of Phantom Stock Units
pursuant to Article V hereof. Each Participant's Account shall
be credited with such allocation, and shall be debited with any
expenses properly chargeable thereto. Any cash dividends paid on
the Common Stock will be deemed to be paid on the Phantom Stock
Units and will be deemed to be invested in additional Phantom
Stock Units.
4.02 Each Participant shall be furnished with a statement of
his Account, in such form as the Committee shall determine,
within a reasonable period of time after the end of each year.
V. Allocations to Accounts
5.01 For each calendar year in which this Plan is in
effect, each Participant's Account shall be credited with that
number of Phantom Stock Units equal in value to that number of
shares of Common Stock that could be purchased with an amount
determined according to the following formula:
(a) Compensation,
times
(b) Plan Contribution Percentage,
less
(c) Plan Contributions.
For purposes of this Section 5.01 the Common Stock shall be
<PAGE>
valued at the closing price of the Common Stock on the New York
Stock Exchange on the trading day immediately preceding the date
specified in Section 5.02.
5.02 The amount determined under Section 5.01 shall be
credited to a Participant's account as of the later of the date
on which the credit to the Participant's Account for the year
under Section 5.01 is determined, or the date on which an amount
representing such credit is contributed under the Plan, and shall
be considered a part of the Participant's Account Balance as of
such date.
VI. Vesting of Account
6.01 A Participant's Account shall be fully vested upon:
(a) attainment of age 55.
(b) death.
(c) disability as defined in Section 2.07.
6.02 If a Participant terminates service for reasons other
than as listed in Section 6.01(a), (b), or (c), his Account
Balance shall be vested in accordance with the following
schedule:
Years of Service Vested %
less than 5 0%
5 or more 100%
VII. Years of Service
7.01 A Participant will receive credit for a year of
service for each calendar year in which he completes at least one
thousand (1000) hours of service. Years of service will include
all years of service prior to becoming an officer of the Company,
years of service following Normal Retirement Date, and years of
service with any Subsidiary or any affiliate listed on Appendix A
attached hereto. In addition, periods of Leave of Absence and
periods during which severance pay is provided shall be counted
for determining years of service.
VIII.Time of Payment and Beneficiaries
8.01 Except as provided in Section 8.02, a Participant's
vested Account Balance is payable upon termination of employment.
8.02 Payment of the Account Balance of a deceased
Participant shall commence within ninety (90) days of his death,
and shall be made to his beneficiary designated on a form
provided for such purpose by the Plan Administrator. If the
Participant fails to designate a beneficiary, his Account Balance
shall be payable to his surviving spouse or, if none, to his
surviving child or children (or legal representative of any minor
child or child who has been declared incompetent or incapable of
handling his affairs) in equal shares. The Account Balance of a
Participant who dies leaving no spouse or children shall be paid
to his estate.
IX. Form of Benefit Payment
<PAGE>
9.01 The normal form of payment of a Participant's Account
Balance is a lump sum cash payment.
9.02 A Participant may, prior to termination of employment,
elect to receive payment of his Account Balance in monthly,
quarterly, or annual cash installments of approximately equal
amounts, over a period not to exceed ten (10) years.
X. Additional Restrictions on Benefit Payments
10.01 In no event will there be a duplication of benefits
payable under the Plan because of employment by more than one
participating Employer.
XI. Administration and Interpretation
11.01 The Plan shall be administered by the Board of
Directors through a Committee which shall consist of three or
more members of the Board of Directors of the Company. No
individual who is or has ever been a member of the Committee
shall be eligible to be designated as a participant or receive
payments under this Plan. The Committee shall have full power
and authority to interpret and administer the Plan and, subject
to the provisions herein set forth, to prescribe, amend and
rescind rules and regulations and make all other determinations
necessary or desirable for the administration of the Plan. The
Board may from time to time appoint additional members of the
Committee or remove members and appoint new members in
substitution for those previously appointed and to fill vacancies
however caused.
11.02 The decision of the Committee relating to any
question concerning or involving the interpretation or
administration of the Plan shall be final and conclusive, and
nothing in the Plan shall be deemed to give any employee any
right to participate in the Plan, except to such extent, if any,
as the Committee may have determined or approved pursuant to the
provisions of the Plan.
XII. Nature of the Plan
12.01 Benefits under the Plan shall generally be payable by
the Company from its own funds, and such benefits shall not (i)
impose any obligation upon the trust(s) of the other employee
benefit programs of the Company; (ii) be paid from such trust(s);
nor (iii) have any effect whatsoever upon the amount or payment
of benefits under the other employee benefit programs of the
Company. Participants have only an unsecured right to receive
benefits under the Plan from the Company as general creditors of
the Company. The Company may deposit amounts in a trust
established by the Company for the purpose of funding the
Company's obligations under the Plan. Participants and their
beneficiaries, however, have no secured interest or special claim
to the assets of such trust, and the assets of the trust shall be
subject to the payment of claims of general creditors of the
Company upon the insolvency or bankruptcy of the Company, as
provided in the trust.
XIII.Employment Relationship
<PAGE>
13.01 An employee shall be considered to be in the
employment of the Company and its subsidiaries as long as he
remains an employee of either the Company, any Subsidiary of the
Company, or any corporation to which substantially all of the
assets and business of the Company are transferred. Nothing in
the adoption of this Plan nor the designation of any Participant
shall confer on any employee the right to continued employment by
the Company or a Subsidiary of the Company, or affect in any way
the right of the Company or such Subsidiary to terminate his
employment at any time. Any question as to whether and when
there has been a termination of an employee's employment, and the
cause, notice or other circumstances of such termination, shall
be determined by the Board, and its determination shall be final.
XIV. Amendment and Termination of Plan
14.01 The Board of Directors of the Company in its sole
discretion may terminate the Plan at any time and shall have the
right to alter or amend the Plan or any part thereof from time to
time, except that the Board of Directors shall not terminate the
Plan or make any alteration or amendment thereto which would
impair any rights or benefits of a Participant previously
accrued.
XV. Binding Effect
15.01 This Plan shall be binding on the Company, each
Subsidiary and any affiliate listed on Exhibit A, the successors
and assigns thereof, and any entity to which substantially all of
the assets or business of the Company, a Subsidiary, or a
participating affiliate are transferred.
XVI. Reimbursement of Participants
16.01 The Company shall reimburse any Participant, or
beneficiary thereof, for all expenses, including attorney's fees,
actually and reasonably incurred by the Participant or
beneficiary in any proceeding to enforce any of their rights
under this Plan.
XVII.Construction
17.01 The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, and the singular
may indicate the plural, unless the context clearly indicates the
contrary. The words "hereof", "herein", "hereunder" and other
similar compounds of the word "here" shall, unless otherwise
specifically stated, mean and refer to the entire Plan, not to
any particular provision or Section. Article and Section
headings are included for convenience of reference and are not
intended to add to, or subtract from, the terms of the Plan.
IN WITNESS WHEREOF, Century Telephone Enterprises, Inc. has
executed this Plan in its corporate name and its corporate seal
to be hereunto affixed this 11th day of November, 1994.
ATTEST: CENTURY TELEPHONE ENTERPRISES, INC.
/s/ Sandra Post
-----------------------
<PAGE>
By: /s/ R. Stewart Ewing, Jr.
------------------------------
R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
EXHIBIT 10.3
CENTURY TELEPHONE ENTERPRISES, INC.
SUPPLEMENTAL DOLLARS & SENSE PLAN
I. Purpose of the Plan
This Supplemental Dollars & Sense Plan (the "Plan") is
established by Century Telephone Enterprises, Inc. and its
subsidiaries and designated affiliates (collectively referred to
as the "Company") to provide to certain select management
employees the opportunity to defer a portion of their
compensation in excess of the deferrals permissible under the
terms of the Century Telephone Enterprises, Inc. Dollars & Sense
Plan and Trust (the "Dollars & Sense Plan") maintained by the
Company and to allow the Company to make matching contributions
based on such deferrals in excess of those permissible under such
plan. This Plan is not intended to constitute a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and is designed to be exempt from the
participation, vesting, funding and fiduciary responsibility
rules of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
II. Definitions
As used in this Plan, the following terms shall have the
meanings indicated, unless the context otherwise specifies or
requires:
2.01 "ACCOUNT" shall mean the account established under
this Plan in accordance with Section 4.01.
2.02 "ACCOUNT BALANCE", as of a given date, shall mean the
fair market value of a Participant's Account, as determined by
the Committee.
2.03 "BENEFICIARY" shall mean the person or persons
designated by the Participant, or pursuant to a qualified
domestic relations order, to receive benefits after the death of
the Participant.
2.04 "BOARD OF DIRECTORS" shall mean not less than a quorum
of the whole Board of Directors of Century Telephone Enterprises,
Inc.
2.05 "COMMITTEE" shall mean three or more members of the
Board of Directors as described in Section 11.01 of the Plan, or
the Board if no Committee has been appointed.
2.06 "COMMON STOCK" shall mean the common stock, $1.00 par
value per share, of the Company.
2.07 "DISABILITY" shall mean a condition which makes a
Participant unable to perform each of the material duties of his
regular occupation where he is likely to remain thus
incapacitated continuously and permanently.
2.08 "EFFECTIVE DATE" of this Plan shall mean the first day
of the first payroll period commencing after January 1, 1995.
<PAGE>
2.09 "EMPLOYER" shall mean Century Telephone Enterprises,
Inc., any Subsidiary thereof, and any affiliate listed on
Appendix A attached hereto and made a part hereof.
2.10 "EXCESS SALARY" shall mean the amount of a
Participant's compensation upon which the Participant can no
longer make deferral contributions under the Dollars & Sense Plan
due to the application of either Code Section 401(a)(17) or
402(g).
2.11 "INCENTIVE COMPENSATION" shall mean the amount awarded
to a Participant under the Company's Key Employee Incentive
Compensation Program or other executive incentive compensation
arrangement maintained by the Company, including the amount of
any stock award in its cash equivalent at the time of conversion
of the award from cash to stock. A Participant's Incentive
Compensation shall be determined on an annual basis and shall,
for purposes of this Plan, be allocated to the year in which the
award is paid to the Participant.
2.12 "LEAVE OF ABSENCE" shall mean any extraordinary
absence authorized by the Employer under the Employer's standard
personnel practices.
2.13 "NORMAL RETIREMENT AGE" shall mean age sixty-five (65).
2.14 "NORMAL RETIREMENT DATE" shall mean the first day of
the month coincident with or next following a Participant's
sixty-fifth (65th) birthday.
2.15 "PHANTOM STOCK UNIT" shall mean a unit, the value of
which is equal to the value of a share of Common Stock, but does
not represent actual shares of Common Stock.
2.16 "PARTICIPANT" shall mean any officer of Century
Telephone Enterprises, Inc., any Subsidiary thereof, and any
affiliate listed on Appendix A, who is granted participation in
the Plan in accordance with the provisions of Article III.
2.17 "PLAN" shall mean the Century Telephone Enterprises,
Inc. Supplemental Dollars & Sense Plan, as amended and restated
herein.
2.18 "PLAN YEAR" shall mean the calendar year.
2.19 "SUBSIDIARY" shall mean any corporation in which the
Company owns, directly or indirectly through subsidiaries, at
least fifty percent (50%) of the combined voting power of all
classes of stock.
III. Participation
3.01 Any officer who is either one of the key employees of
the Company in a position to contribute materially to the
continued growth and future financial success of the Company, or
one who has made a significant contribution to the Company's
operations, thereby meriting special recognition, shall be
eligible to participate provided the following requirements are
met:
<PAGE>
a. The officer is employed on a full-time basis by
Century Telephone Enterprises, Inc., any
Subsidiary thereof, or any affiliate listed on
Appendix A;
b. The officer is compensated for full-time
employment by a regular salary;
c. The coverage of the officer is duly approved by
the Board of Directors of Century Telephone
Enterprises, Inc.
It is intended that participation in this Plan shall be extended
only to those officers who are members of a select group of
management and highly compensated employees, as determined by the
Committee.
IV. Accounts and Investments
4.01 An Account shall be established on behalf of each
Participant who receives an allocation pursuant to Article VI
hereof. Each Participant's Account shall be credited with such
allocation, and earnings and gains on his Account Balance, and
shall be debited with distributions, losses, and any expenses
properly chargeable thereto.
4.02 Each Participant shall have the same rights with
respect to investment of amounts in his Account hereunder as are
available from time to time under the Dollars & Sense Plan, as to
permissible investment funds, except as provided below, and
election rights. Investment in the Century Stock Fund will not
be available under the Plan but investments in Phantom Stock
Units will be permitted. Any cash dividend paid on the Common
Stock will be deemed to be paid on the Phantom Stock Units and
will be deemed to be invested in additional Phantom Stock Units.
4.03 The Accounts of Participants in the Plan shall be
revalued as of the last day of each calendar quarter, and each
Participant shall be furnished with a statement of his Account,
in such form as the Committee shall determine, within a
reasonable period of time after the end of each quarter.
V. Participant Salary Deferrals
5.01 Each Participant shall make separate written
elections, prior to the first day of each Plan Year (or, as to
Participants who first become Participants as of a day other than
January 1, prior to such date) to defer a portion of his (i)
Excess Salary and/or (ii) Incentive Compensation. The amount of
allowable deferral pursuant to each of the Participant's
elections shall be a whole percentage, not to exceed ten percent
(10%). An election to defer Excess Salary shall provide for a
deferral to be made from each paycheck. An election to defer
Incentive Compensation shall provide for a deferral based on the
total Incentive Compensation award, including stock, as
determined under Section 2.10, with the amount of such deferral
to be made from the bonus check representing the cash portion of
such award.
5.02 Any agreement made under the terms of Section 5.01
<PAGE>
shall be irrevocable until the succeeding January 1, except that
a salary deferral election under the terms of this Plan may be
changed, amended or suspended at the same time and in the same
manner as elections under the Company's Dollars & Sense Plan.
5.03 If a Participant does not make new elections for a
succeeding Plan Year under Section 5.01, his elections in effect
for the current Plan Year shall be deemed to continue in force
and effect as if made for such succeeding Plan Year.
VI. Allocations to Participant's Accounts
6.01 The Employer shall allocate to each Participant's
Account the amount of Excess Salary and/or Incentive Compensation
deferred by such Participant pursuant to an election made under
Section 5.01. The allocation hereunder shall be made as of the
date of the paycheck or bonus check to which the deferral by the
Participant relates.
6.02 The Employer shall allocate a matching contribution to
each Participant's Account under this Plan each Plan Year equal
to the total matching percentage (including matching and
supplemental matching contributions) for the year provided by the
Dollars & Sense Plan multiplied by the Participant's deferrals
under this Plan not in excess of six percent (6%) of the
Participant's Excess Salary and/or Incentive Compensation,
applied to each separately.
VII. Vesting of Account
7.01 A Participant's Account Balance shall be fully vested
at all times.
VIII.Time of Payment and Beneficiaries
8.01 Except as provided in Section 8.02 and 8.03, a
Participant's Account Balance is payable upon termination of
employment.
8.02 Upon the election of a Participant, prior to
termination of employment, payment of his Account Balance shall
commence at a specified date after the date of his termination of
employment.
8.03 Payment of the Account Balance of a deceased
Participant shall commence within ninety (90) days of his death,
and shall be made to his beneficiary designated on a form
provided for such purpose by the Plan Administrator. If the
Participant fails to designate a beneficiary, his Account Balance
shall be payable to his surviving spouse or, if none, to his
surviving child or children (or legal representative of any minor
child or child who has been declared incompetent or incapable of
handling his affairs) in equal shares. The Account Balance of a
Participant who dies leaving no spouse or children shall be paid
to his estate.
IX. Form of Benefit Payment
9.01 The normal form of payment of a Participant's Account
Balance is a lump sum.
<PAGE>
9.02 A Participant may, prior to termination of employment,
elect to receive payment of his Account Balance in monthly,
quarterly, or annual installments of approximately equal amounts,
over a period not to exceed ten (10) years.
X. Additional Restrictions on Benefit Payments
10.01 In no event will there be a duplication of benefits
payable under the Plan because of employment by more than one
participating Employer.
XI. Administration and Interpretation
11.01 The Plan shall be administered by the Board of
Directors through a Committee which shall consist of three or
more members of the Board of Directors of the Company. No
individual who is or has ever been a member of the Committee
shall be eligible to be designated as a participant or receive
payments under this Plan. The Committee shall have full power
and authority to interpret and administer the Plan and, subject
to the provisions herein set forth, to prescribe, amend and
rescind rules and regulations and make all other determinations
necessary or desirable for the administration of the Plan. The
Board may from time to time appoint additional members of the
Committee or remove members and appoint new members in
substitution for those previously appointed and to fill vacancies
however caused.
11.02 The decision of the Committee relating to any
question concerning or involving the interpretation or
administration of the Plan shall be final and conclusive, and
nothing in the Plan shall be deemed to give any employee any
right to participate in the Plan, except to such extent, if any,
as the Committee may have determined or approved pursuant to the
provisions of the Plan.
XII. Nature of the Plan
12.01 Benefits under the Plan shall generally be payable by
the Company from its own funds, and such benefits shall not (i)
impose any obligation upon the trust(s) of the other employee
benefit programs of the Company; (ii) be paid from such trust(s);
nor (iii) have any effect whatsoever upon the amount or payment
of benefits under the other employee benefit programs of the
Company. Participants have only an unsecured right to receive
benefits under the Plan from the Company as general creditors of
the Company. The Company may deposit amounts in a trust
established by the Company for the purpose of funding the
Company's obligations under the Plan. Participants and their
beneficiaries, however, have no secured interest or special claim
to the assets of such trust, and the assets of the trust shall be
subject to the payment of claims of general creditors of the
Company upon the insolvency or bankruptcy of the Company, as
provided in the trust.
XIII.Employment Relationship
13.01 An employee shall be considered to be in the
employment of the Company and its subsidiaries as long as he
<PAGE>
remains an employee of either the Company, any Subsidiary of the
Company, or any corporation to which substantially all of the
assets and business of the Company are transferred. Nothing in
the adoption of this Plan nor the designation of any Participant
shall confer on any employee the right to continued employment by
the Company or a Subsidiary of the Company, or affect in any way
the right of the Company or such Subsidiary to terminate his
employment at any time. Any question as to whether and when
there has been a termination of an employee's employment, and the
cause, notice or other circumstances of such termination, shall
be determined by the Board, and its determination shall be final.
XIV. Amendment and Termination of Plan
14.01 The Board of Directors of the Company in its sole
discretion may terminate the Plan at any time and shall have the
right to alter or amend the Plan or any part thereof from time to
time, except that the Board of Directors shall not terminate the
Plan or make any alteration or amendment thereto which would
impair the rights of a Participant previously accrued.
XV. Binding Effect
15.01 This Plan shall be binding on the Company, each
Subsidiary and any affiliate listed on Exhibit A, the successors
and assigns thereof, and any entity to which substantially all of
the assets or business of the Company, a Subsidiary, or a
participating affiliate are transferred.
XVI. Reimbursement of Participants
16.01 The Company shall reimburse any Participant, or
beneficiary thereof, for all expenses, including attorney's fees,
actually and reasonably incurred by the Participant or
beneficiary in any proceeding to enforce any of their rights
under this Plan.
XVII. Construction
17.01 The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, and the singular
may indicate the plural, unless the context clearly indicates the
contrary. The words "hereof", "herein", "hereunder" and other
similar compounds of the word "here" shall, unless otherwise
specifically stated, mean and refer to the entire Plan, not to
any particular provision or Section. Article and Section
headings are included for convenience of reference and are not
intended to add to, or subtract from, the terms of the Plan.
IN WITNESS WHEREOF, Century Telephone Enterprises, Inc. has
executed this Plan in its corporate name and its corporate seal
to be hereunto affixed this 11th day of November, 1994.
ATTEST:
/s/ Sandra Post CENTURY TELEPHONE ENTERPRISES, INC.
----------------------
By: /s/ R. Stewart Ewing, Jr.
----------------------------
R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
EXHIBIT 11
CENTURY TELEPHONE ENTERPRISES, INC.
COMPUTATIONS OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
(expressed in thousands,
except per share amounts)
<S> <C> <C> <C> <C>
Net income $24,613 17,596 65,299 49,853
Preferred stock dividend requirements (30) (6) (73) (18)
------- ------ ------ ------
Net income applicable to common stock 24,583 17,590 65,226 49,835
Dividends applicable to Series H and
Series K 30 6 73 18
Interest on 6% convertible debentures
and amortization of deferred debt
costs incurred in connection with
the issuance of the debentures,
net of taxes 1,157 1,145 3,449 3,437
------- ------ ------ ------
Net income as adjusted for purposes
of computing fully diluted earnings
per share $25,770 18,741 68,748 53,290
======= ====== ====== ======
Weighted average number of shares:
Outstanding during period 53,399 51,219 53,016 50,317
Common stock equivalent shares 601 725 551 686
Employee Stock Ownership Plan
shares not committed to be
released (417) - (268) -
------- ------ ------ ------
Total number of shares for computing
primary earnings per share 53,583 51,944 53,299 51,003
Incremental common shares attributable
to additional dilutive effect of
convertible securities 4,749 4,642 4,717 4,700
------- ------ ------ ------
Total number of shares as adjusted
for purposes of computing fully
diluted earnings per share 58,332 56,586 58,016 55,703
======= ====== ====== ======
Earnings per average common share $ .46 .34 1.23 .99
======= ====== ====== ======
Primary earnings per share $ .46 .34 1.22 .98
======= ====== ====== ======
Fully diluted earnings per share $ .44 .33 1.18 .96
======= ====== ====== ======
</TABLE>
24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDIT-
ED CONSOLIDATED BALANCE SHEET OF CENTURY TELEPHONE ENTERPRISES, INC. & SUBSID-
IARIES AS OF SEPTEMBER 30, 1994 & THE RELATED UNAUDITED CONSOLIDATED STATEMENTS
OF INCOME, STOCKHOLDERS' EQUITY & CASH FLOWS FOR THE NINE-MONTH PERIOD THEN
ENDED & IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 16,996
<SECURITIES> 0
<RECEIVABLES> 43,330
<ALLOWANCES> 2,757
<INVENTORY> 5,619
<CURRENT-ASSETS> 86,501
<PP&E> 1,299,130
<DEPRECIATION> 375,719
<TOTAL-ASSETS> 1,611,059
<CURRENT-LIABILITIES> 183,340
<BONDS> 637,988
<COMMON> 53,423
0
2,275
<OTHER-SE> 559,480
<TOTAL-LIABILITY-AND-EQUITY> 1,611,059
<SALES> 0
<TOTAL-REVENUES> 395,375
<CGS> 0
<TOTAL-COSTS> 271,995
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,839
<INCOME-PRETAX> 104,166
<INCOME-TAX> 38,867
<INCOME-CONTINUING> 65,299
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,299
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.18
</TABLE>
