SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A/A
AMENDMENT NO. 1
To Registration Statement on Form 8-A
filed September 19, 1978, relating to
Common Stock, par value $1.00
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CENTURY TELEPHONE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0651161
(State of incorporation) (I.R.S.Employer
or organization) Identification Number)
100 Century Park Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Securities registered hereunder pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
so registered on which each class is registered
Common Stock, New York Stock Exchange
par value $1.00
If this Form relates to the registration of a class of debt
securities and is effective upon filing pursuant to General
Instruction A.(c)(1), please check the following box. [ ]
If this Form relates to the registration of a class of debt
securities and is to become effective simultaneously with the
effectiveness of a concurrent registration statement under the
Securities Act of 1933 pursuant to General Instruction
A.(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the
Act:
None
Century Telephone Enterprises, Inc. (the "Company") hereby
amends its Registration Statement on Form 8-A to (i) amend and
restate Items 1 and 2 thereof to read in their entirety in the
manner set forth immediately below and (ii) delete Items 3 and
4 thereof.
Item 1: Description of Registrant's Securities to be
Registered
The Company's authorized capital stock consists of 175
million shares of common stock, $1.00 par value per share
(the "Common Stock"), of which 59,832,731 shares were
outstanding as of November 30, 1996, and 2 million shares of
preferred stock, $25.00 par value per share (the "Preferred
Stock"), of which 401,629 shares were outstanding as of
November 30, 1996. Each share of Common Stock has attached
to it one Preference Share Purchase Right. The following
description of the Common Stock, the Preferred Stock and the
Preference Share Purchase Rights is qualified in its
entirety by reference to (i) the Company's Articles of
Incorporation (the "Articles") and Bylaws, which are
incorporated herein by reference as exhibits to this
Registration Statement, (ii) the Rights Agreement dated as
of August 27, 1996 (the "Rights Agreement") by and between
the Company and the Rights Agent named therein, which
governs the terms and conditions of the Company's Preference
Share Purchase Rights and which is also incorporated herein
by reference as an exhibit to this Registration Statement,
and (iii) the applicable provisions of the Louisiana
Business Corporation Law.
Preferred Stock
The Board of Directors of the Company is authorized,
without action of its shareholders, to issue Preferred Stock
from time to time and to establish the designations,
preferences and relative, optional or other special rights
and qualifications, limitations and restrictions thereof, as
well as to establish and fix variations in the relative
rights as between holders of any one or more series of such
Preferred Stock. The authority of the Board of Directors
includes, but is not limited to, the determination or fixing
of the following with respect to each series of Preferred
Stock which may be issued: (i) the designation of such
series; (ii) the number of shares initially constituting
such series; (iii) the dividend rate and conditions and the
dividend preferences, if any, in respect of the Common Stock
and among the series of the Preferred Stock; (iv) whether,
and upon what terms, the Preferred Stock shall be
convertible into or exchangeable for any other securities of
the Company; (v) whether, and to what extent, holders of
shares of a series of Preferred Stock will have voting
rights; (vi) the restrictions, if any, upon the issue or
reissue of any additional shares of Preferred Stock; (vii)
whether, and on what terms and conditions, the shares may be
redeemed by the Company (including sinking fund provisions);
and (viii) the liquidation preferences, if any, in respect
of the Common Stock and among the series of the Preferred
Stock.
The Board of Directors has authorized the issuance of,
and there were outstanding as of November 30, 1996,
13,902 shares of Series H Preferred Stock, 68,727 shares of
Series K Preferred Stock and 319,000 shares of Series L
Preferred Stock, all of which vote as a class with the Common
Stock (the "Voting Preferred Stock"). Shares of Series H
Preferred Stock entitle the holder to ten votes per share if
they have been beneficially owned by the same person
continuously since May 30, 1987, as defined below under
"Common Stock - Voting Rights." Otherwise, each share of
Series H Preferred Stock entitles the holder thereof to one
vote per share. All shares of Series K and L Preferred
Stock entitle the holder thereof to one vote per share.
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 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.
Common Stock
The rights of holders of the Common Stock, as described
below, may be subject to the prior rights of holders of any
Preferred Stock that may from time to time be outstanding.
Dividend Rights. Holders of outstanding Common Stock
are entitled to receive such dividends, if any, as may be
declared by the Board of Directors, in its discretion, out
of funds legally available therefor.
Voting Rights. Holders of Common Stock do not have
cumulative voting rights. As a result, the holders of more
than 50% of the Company's voting power may elect all of the
directors if they so desire.
Each share of Common Stock that has been beneficially
owned by the same person continuously since May 30, 1987,
entitles the holder thereof to ten votes on all matters
submitted to a vote of shareholders. Otherwise, each share
entitles the holder thereof to one vote per share.
A person is deemed to be the beneficial owner of a
share of the Company's stock if such person, either alone or
as a member of a group, 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 of such
share. The Company's Articles also provide that each share
of Common Stock acquired upon the conversion of the
outstanding Series H Preferred Stock is deemed to have been
beneficially owned by the holder continuously from the date
on which such holder acquired such preferred stock.
Those holders of Common Stock or Series H Preferred
Stock entitled to cast ten votes per share are sometimes
referred to herein as "Long-Term Shareholders," and the
shares held by such shareholders are sometimes referred to
as "Ten-Vote Shares." The shares of Common Stock or Voting
Preferred Stock that are entitled to only one vote per share
are sometimes referred to as "One-Vote Shares." When used
herein in reference to any particular matter to be voted
upon by the Company's shareholders, "Total Voting Power"
means the total number of votes that holders of the Common
Stock and Voting Preferred Stock are entitled to cast with
respect to such matter.
In the event a person or group of persons who
beneficially owns Ten-Vote Shares transfers such shares so
as to change the beneficial ownership of such shares, the
subsequent holder of such shares will be entitled to one
vote per share (with certain limited exceptions described
below). A change in beneficial ownership occurs whenever
any change occurs in the person or group who has or shares
(i) voting power, (ii) investment power, (iii) the right to
receive sales proceeds, or (iv) the right to receive
dividends or other distributions with respect to such
shares. In the absence of proof to the contrary provided in
accordance with the Company's established written
procedures, a change in beneficial ownership is deemed to
occur whenever a change in the record ownership of shares of
stock occurs. However, the Articles provide that no change
in beneficial ownership will be deemed to have occurred
solely as a result of (i) any event occurring prior to May
30, 1987; (ii) any bona fide gift, bequest, inheritance or
other transfer without valuable consideration; (iii) any
change in the beneficiary of a trust, or any distribution
from a trust, as a result of the birth, death, marriage or
divorce of any person, adoption prior to age 18, the passage
of a period of time or the attainment of a specified age, or
the creation or termination of any guardianship or custodial
arrangement; or (iv) any appointment of a successor trustee,
agent, guardian or custodian with respect to a share of
stock. Additionally, the Articles provide that if a
shareholder who owns Ten-Vote Shares and One-Vote Shares
transfers less than all of the shares held, the shares
transferred will be deemed to consist of One-Vote Shares in
the absence of evidence to the contrary.
The Articles further provide that in the absence of
proof that shares of Common Stock or Series H Preferred
Stock held of record in any name other than that of a
natural person have been beneficially owned continuously
since May 30, 1987 by the person who possess voting power,
investment power, the right to receive sale proceeds and the
right to receive dividends or other distributions with
respect to the shares, such shares will carry with them only
one vote per share, notwithstanding when record ownership of
such shares was acquired. Therefore, shareholders who hold
their shares in "street name" or through any other indirect
method of ownership are required to submit proof of
beneficial ownership to the Company in order to be entitled
to ten votes per share.
Certain additional provisions of the Articles govern
shares of stock held in trust, in any agency or custodial
account, by a guardian, or pursuant to the Uniform Gifts to
Minors Act. Generally, a change in beneficial ownership
will be deemed to have occurred whenever there is a change
in the beneficiary.
The Articles also provide that shares of Common Stock
issued in connection with any stock split or stock dividend
will carry with them the voting rights of the shares in
respect of which they were issued. Shares of Common Stock
that are acquired after May 30, 1987 by shareholders
pursuant to the Company's dividend reinvestment plan or are
acquired by the Company's employee benefit plans will be
One-Vote Shares. Generally, shares of Common Stock held by
the Company'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.
The Company will notify shareholders who are natural
persons, in advance of a shareholders' meeting, of the
Company's determination as to the number of shares for which
they are entitled to ten votes per share under the Articles
and the number of shares for which they are entitled to one
vote. Shareholders who disagree with any such determination
will be provided an opportunity to establish that they are
entitled to additional votes under the Articles. Except
with respect to voting rights, all shares of Common Stock,
whether they are Ten-Vote Shares or One-Vote Shares, are
identical in all respects. Except with respect to voting
rights, all shares within the Series H Preferred Stock,
whether they are Ten-Vote Shares or One-Vote Shares, are
identical in all respects.
The Company's Articles provide that each share of
Common Stock issued by the Company 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 Company's Board, that would be permitted for
the transaction to be accounted for as a pooling of
interests, provided that the Audit Committee of the Board
has made a good faith determination that (i) such
transaction has a bona fide business purpose; (ii) it is in
the best interest of the Company 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 Company. The
foregoing provision of the Company's Articles is not to be
interpreted to require the Company to account for any
business combination transaction in any particular manner.
The Company's benefit plans have historically held, and
are expected to continue to hold for the foreseeable future,
a significant number of Ten-Vote Shares, which has the
effect of conferring upon the trustee thereof the
right to vote a disproportionately large percentage of the
Total Voting Power. As of March 11, 1996, the trustee for
two of the Company's employee benefit plans was the record
holder of 10.6% of the outstanding Common Stock, which
represented approximately 37% of the Total Voting Power. The
trustee votes these shares in accordance with the instructions
of the Company's employees.
Liquidation Rights. Upon the dissolution, liquidation
or winding up of the Company, after payments of debts and
expenses and payment of the liquidation preference plus any
accrued dividends on any outstanding shares of Preferred
Stock, the holders of Common Stock will be entitled to
receive all remaining assets of the Company ratably in
proportion to the number of shares held by them, unless and
to the extent that holders of Preferred Stock are entitled
to participate with the holders of Common Stock in receiving
distributions of such remaining assets.
Preemptive Rights. Except as set forth below under
"Preference Share Purchase Rights," holders of shares of
Common Stock do not have the pre-emptive right to subscribe
to any additional capital stock that may be issued by the
Company.
Preference Share Purchase Rights
On August 27, 1996, the Board of Directors of the
Company declared a dividend of one preference share purchase
right (a "Right") for each outstanding share of Common
Stock. The dividend was paid on November 1, 1996 to
stockholders of record on September 30, 1996 (the "Record
Date"). Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of
Series BB Participating Cumulative Preference Stock, par
value $25 per share (the "Preference Shares"), of the
Company at a price of $110 per one one-hundredth of a
Preference Share (the "Purchase Price"), subject to
adjustment as described below. The description and terms of
the Rights are set forth in the Rights Agreement.
Initial Status of the Rights. Until the earlier to
occur of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15%
or more of the outstanding Common Stock or (ii) 10 business
days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person or
group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer that, if
consummated, would result in the beneficial ownership by a
person or group of 15% or more of the outstanding Common
Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by the
Common Stock certificates outstanding as of the Record Date,
together with a copy of a Summary of Rights in the form
mailed to the holders of Common Stock on November 1, 1996.
The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of
the Rights), the Rights will be transferred with and only
with the Common Stock. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common
Stock certificates issued after the Record Date upon any
transfer or new issuance of Common Stock will contain a
notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Stock outstanding as of the Record
Date, even without such notation or a copy of the Summary of
Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate.
Distribution and Term of Rights. As soon as
practicable following the Distribution Date, separate
certificates evidencing the Rights will be mailed to holders
of record of the Common Stock as of the close of business on
the Distribution Date and such separate certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on November 1, 2006 (the
"Final Expiration Date"), unless the Final Expiration Date
is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
Triggering Events. In the event that the Company is
acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an
Acquiring Person, proper provision will be made so that each
holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the
Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the
right to receive upon exercise that number of Common Stock
having a market value at the time of such occurrence of two
times the exercise price of the Right.
Anti-Dilution. The Purchase Price payable, and the
number of Preference Shares or other securities or property
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preference Shares, (ii) upon the
grant to holders of the Preference Shares of certain rights,
options or warrants to subscribe for or purchase Preference
Shares at a price, or securities convertible into Preference
Shares with a conversion price, less than the then-current
market price of the Preference Shares or (iii) upon the
distribution to holders of the Preference Shares of
evidences of indebtedness or assets (excluding regular
quarterly cash dividends or dividends payable in Preference
Shares) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preference Share issuable upon exercise
of each Right are also subject to adjustment in the event of
a stock split of the Common Stock or a stock dividend on the
Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require
an adjustment of at least 1%. No fractional Preference
Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preference
Share, which may, at the election of the Company, be
evidenced by depository receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of
the Preference Shares on the last trading day prior to the
date of exercise.
Exchange and Redemption. At any time after any person
or group becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the
outstanding Common Stock, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by
such person or group which have become void), in whole or in
part, at an exchange ratio of one share of Common Stock, or
one one-hundredth of a Preference Share, per Right (subject
to adjustment).
At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial
ownership of 15% or more of the outstanding Common Stock,
the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), subject to adjustment. The redemption
of the Rights may be made effective at such time, on such
basis and with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
Rights, Preferences and Limitations of Purchase Rights.
Preference Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preference Share will entitle
the holder to receive a preferential quarterly dividend
payment of the greater of $10 or 100 times the aggregate
dividend declared per share of Common Stock. In the event
of liquidation, the holders of the Preference Shares will be
entitled to a minimum preferential liquidation payment of
$100 per share and, under certain circumstances, may be
entitled to receive additional distributions. Each
Preference Share will entitle the holder to 100 votes,
voting together with the Common Stock. Finally, in the
event of any merger, consolidation or other transaction in
which Common Stock is exchanged, each Preference Share will
entitle the holder to receive 100 times the amount received
per share of Common Stock. These rights are protected by
customary anti-dilution provisions. Because of the nature
of the Preference Shares' dividend, liquidation and voting
rights, the value of each one one-hundredth interest in a
Preference Share purchasable upon exercise of each Right
should approximate the value of one share of Common Stock.
Amendments. The terms of the Rights may be amended by
the Board of Directors of the Company without the consent of
the holders of the Rights, including an amendment to lower
the 15% thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage
of the outstanding Common Stock then known to the Company to
be beneficially owned by any person or group of affiliated
or associated persons and (ii) 10%, except that from and
after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person, no such
amendment may adversely affect the interests of the holders
of the Rights.
Miscellaneous. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of
the Company, including, without limitation, the right to
vote or to receive dividends. While the dividend of the
rights will not be taxable to stockholders or to the
Company, stockholders of the Company may, depending upon the
circumstances, recognize taxable income in the event that
the Rights become exercisable as described above.
Laws and Organizational Document Provisions with Possible
Antitakeover Effects
Louisiana law permits corporations to include in their
articles of incorporation any provisions not inconsistent
with law that regulates the internal affairs of the
corporation, including provisions that are intended to
encourage any person desiring to acquire a controlling
interest in the corporation to do so pursuant to a
transaction negotiated with the corporation's board of
directors rather than through a hostile takeover attempt.
These provisions are intended to assure that any acquisition
of control of the corporation will be subject to review by
the board to take into account, among other things, the
interests of all of the corporation's shareholders.
However, some shareholders may find these provisions to be
disadvantageous to the extent that they could limit or
preclude meaningful shareholder participation in certain
transactions such as mergers or tender offers and render
more difficult or discourage certain takeovers in which
shareholders might receive for some or all of their shares a
price that is higher than the prevailing market price at the
time the takeover attempt is commenced. These provisions
might further render more difficult or discourage proxy
contests, the assumption of control by a person of a large
block of the corporation's voting stock or any other attempt
to influence or replace the corporation's incumbent
management.
The Company's Articles contain provisions that are
designed to ensure meaningful participation of the Board of
Directors in connection with proposed takeovers. Moreover,
Louisiana has adopted statutes that regulate takeover
attempts. Set forth below is a discussion of the provisions
of the Louisiana Business Corporation Law and the Company's
Articles and Bylaws that may reasonably be expected to
affect the incidence and outcome of takeover attempts.
Classified Board of Directors; Removal of Directors;
Vacancies. The Company's Articles provide for the Board of
Directors to be divided into three classes of directors,
with each class to be as nearly equal in number of directors
as possible, serving staggered three-year terms.
Any director of the Company may be removed from office,
but only for cause, by the affirmative vote at a meeting of
shareholders called for such purpose of the holders of a
majority of the Total Voting Power of all shareholders and,
at any time that there is a Related Person (as defined
below), by a majority of the Total Voting Power of all
shareholders other than the Related Person, voting as a
separate group.
Classification of the Board of Directors of the Company
tends to make more difficult the change of a majority of its
composition and to assure the continuity and stability of
the Company's management and policies, since a majority of
the directors at any given time will have served on the
Board for at least one year. Absent a removal of directors,
a minimum of two annual meetings of shareholders would be
necessary to effect a change in the majority control of the
Board.
The classified board provision applies to every
election of directors, regardless of whether the Company is
or has been the subject of an unsolicited takeover attempt.
The shareholders may, therefore, find it more difficult to
change the composition of the Board for any reason,
including performance, and the classified board structure
will thereby tend to perpetuate existing management of the
Company. In addition, because the provision will make it
more difficult to change the control of the Board of
Directors, it may discourage tender offers or other
acquisitions of the Company's stock which shareholders may
believe would be in their best interests.
The provision of the Company's Articles relating to
removal of the Company's directors would also preclude a
third party from gaining control of the Company's Board by
removing incumbent directors without cause and filling the
vacancies created thereby with its own nominees. Without
this provision, under Louisiana law directors could be
removed (with or without cause) by a majority of the Total
Voting Power at any special shareholders' meeting called for
that purpose. Therefore, a party holding or controlling
such requisite vote could circumvent the classified board
structure by calling a special meeting of the shareholders,
removing the incumbent directors and electing its own slate
of directors. The limitations on the Company's ability to
remove its incumbent directors set forth in the Articles
protects the classified board structure against such action.
However, such Article provisions also tend to reduce, and in
some instances eliminate, the power of shareholders, even
those with a majority interest in the Company, to remove
incumbent directors without cause and to fill vacancies on
the Board of Directors.
Under the Louisiana Business Corporation Law, any
vacancy on the board of directors (including those resulting
from an increase in the authorized number of directors) may
be filled by the remaining directors, subject to the right
of the shareholders to fill such vacancy. Under the
Company's Articles, changes in the number of directors may
not be made without, among other things, the affirmative
vote of 80% of the directors. Moreover, vacancies on the
Board may be filled only by the Board of Directors, acting
by vote of both a majority of the directors and a majority
of the Continuing Directors (as defined below), voting as a
separate group. These provisions will likely preclude a
third party from gaining control of the Company's Board by
increasing the number of directors and filling the resulting
vacancies with its own nominees.
Shareholder Action by Unanimous Consent. Under the
Louisiana Business Corporation Law, unless the articles of
incorporation provide otherwise, any vote that could be
taken by shareholders at an annual or special meeting may be
taken instead without a meeting if a consent in writing is
signed by all of the holders of the outstanding voting
stock. The Company's Articles provide that shareholder
action may be taken only at an annual or special meeting of
shareholders, and may not be taken by a written consent of
the shareholders. This Article provision will preclude
consent solicitations by persons desiring to acquire a
controlling interest in the Company.
Restrictions on Taking Shareholder Action. Under the
Louisiana Business Corporation Law, shareholders holding 20%
(or such lesser or greater proportion as fixed in the
articles of incorporation) of the corporation's total voting
power may call a special shareholders meeting. The
Company's Articles provide that holders of a majority of the
Total Voting Power are entitled to call a special meeting of
shareholders. This higher threshold substantially reduces
the ability of shareholders interested in effecting
corporate action from calling a special meeting between
annual meetings.
Fair Price Provisions. The Company's Articles
contain certain provisions designed to provide safeguards
for shareholders when a Related Person attempts to effect a
Business Combination (as defined below) with the Company.
In general, a Business Combination between the Company and a
Related Person must be approved by a majority of the
directors and a majority of the Continuing Directors and by
the affirmative votes of both 80% of the Total Voting Power
of all stockholders and 66-2/3% of the Total Voting Power of
shareholders other than the Related Person present or duly
represented at a meeting, voting as a separate group. These
voting requirements do not apply to any Business Combination
that is approved in advance by a majority of the directors
and a majority of the Continuing Directors, or if certain
minimum price, form of consideration and procedural
requirements are satisfied. If the requisite advance
approval is obtained or the minimum price, form of
consideration and procedural requirements are satisfied,
only the affirmative vote of the holders of 66-2/3% of the
Total Voting Power present or represented at a shareholders'
meeting of the Company is required to approve the Business
Combination.
A "Related Person" is defined as any person (other than
the Company, a subsidiary of the Company or any profit
sharing, employee stock ownership or other employee benefit
plan of the Company or any subsidiary of the Company or any
trust, trustee of or fiduciary with respect to any such plan
acting in such capacity) who (i) is the beneficial owner of
shares of capital stock representing 10% or more of the
outstanding Total Voting Power of the Company entitled to
vote for the election of directors or (ii) is an affiliate
or associate of the Company and at any time within the prior
two years was the beneficial owner of shares of capital
stock representing 10% or more of such voting power. The
term "beneficial owner" includes persons directly or
indirectly owning or having the right to acquire or vote the
stock of the Company.
A "Continuing Director" is defined as any member of the
Board of Directors who is not affiliated with a Related
Person and who was a director of the Company prior to the
time 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 the Continuing
Directors then on the Board.
A "Business Combination" includes the following
transactions: (i) any merger or consolidation of, or an
exchange of securities by the Company or any of its
subsidiaries; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of any assets of the
Company, or any subsidiary of the Company, having an
aggregate book or fair market value of $1,000,000 or more;
(iii) the adoption of a plan or proposal for the liquidation
or dissolution of the Company or any of its subsidiaries;
(iv) the issuance or transfer by the Company or any of its
subsidiaries of securities of the Company or such
subsidiaries having a fair market value of $1,000,000 or
more; (v) any reclassification of securities,
recapitalization, consolidation or any other transaction
which would have the effect, directly or indirectly, of
increasing the voting power or the proportionate share of
the outstanding stock of any class of the Company or any of
its subsidiaries held by a Related Person or any associate
or affiliate thereof; (vi) any loans, advances, guarantees
or other financial assistance or any tax credits provided by
the Company or any of its subsidiaries to a Related Person
or any associate or affiliate thereof, or (vii) any
agreement, contract or other arrangement providing directly
or indirectly for any of the foregoing.
As stated above, there is no supermajority voting
requirement if (i) the Business Combination has been
approved in advance by a majority of the directors and the
Continuing Directors or (ii) if all of the minimum price,
form of consideration and procedural requirements described
below are satisfied.
(i) Minimum Price Requirement. The cash or the fair
market value of the property, securities or other
consideration to be received per share by shareholders of
the Company in connection with the Business Combination must
be no less than the "Highest Purchase Price" (as defined
below).
The "Highest Purchase Price," in the case of
consideration received by holders of Common Stock, must at
least equal the highest of the following: (i) the highest
per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the
Related Person for any shares of Common Stock within the
two-year period immediately prior to the announcement date
of the Business Combination or in the transaction in which
such person became a Related Person; (ii) the market value
per share of Common Stock on the date the Business
Combination is announced or on the date that the Related
Person became a Related Person, whichever is higher; or
(iii) the price per share equal to the market value of the
Common Stock determined pursuant to Subparagraph (ii) above,
multiplied by a fraction the numerator of which is the
highest price per share (including brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by a
Related Person for any shares of Common Stock within a two-
year period immediately prior to the announcement date of
the Business Combination, and the denominator of which is
the market value per share of Common Stock on the first day
in such two-year period on which the Related Person acquired
any shares of Common Stock.
In the case of consideration received by holders of any
series of the Company's Preferred Stock, the Highest
Purchase Price must at least equal the higher of (i) the
Highest Purchase Price determined in the manner set forth
above, except that any calculation based on the per share
purchase price or market value of Common Stock instead is
based on the per share purchase price or market value of
such series of Preferred Stock acquired by the Related
Person, or (ii) the highest preferential amount per share to
which the holders of such series of Preferred Stock would be
entitled to receive upon liquidation of the Company.
(ii) Form of Consideration Requirements. The
consideration paid to the holders of any class or series of
the Company's stock must be in cash or in the same form of
other consideration as previously paid by the Related Person
in acquiring its shares of that class or series of stock.
(iii) Procedural Requirements. The following
procedural requirements must be satisfied at all times after
the Related Person became a Related Person and prior to the
consummation of a Business Combination: (i) there shall
have been no failure to declare and pay at the regular date
therefor any periodic dividends (whether or not cumulative)
on any outstanding Preferred Stock; (ii) there shall have
been (a) no reduction in the annual rate of dividends paid
on the shares of Common Stock (except as necessary to
reflect any stock split or stock dividend with respect to
the Common Stock) and (b) no failure to increase 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 Common Stock; (iii) such Related Person shall
not have become the beneficial owner of any additional
shares of the Company's capital stock 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; and (iv) such Related Person shall not have
received the benefit, 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 the Company or any of its
subsidiaries.
The fair price provisions contained in the Company's
Articles are designed to prevent a purchaser from utilizing
two-tier pricing and similar inequitable tactics in the
event of an attempted takeover of the Company. In the
absence of the Articles' fair price provisions, a purchaser
who acquired control of the Company could be in a position,
by virtue of such control, to compel minority shareholders
to accept a lower price or a less desirable form of
consideration than that given to other shareholders. The
effect of the provisions is to encourage any Related Person
or potential Related Person interested in a Business
Combination to negotiate the terms of such transaction with
the Board of Directors of the Company prior to its
acquisition of a substantial amount of the capital stock of
the Company and in a context that would provide adequate
time and information so that all relevant considerations
would receive the requisite attention and, if necessary,
publicity.
It should be noted, however, that tender offers are
usually made at premium prices above the prevailing market
price of a company's stock. In addition, acquisitions of
stock by persons attempting to acquire control through
market purchases may cause the market price of the stock
temporarily to reach levels which are higher than would
otherwise be the case. Because of the higher percentage
requirements for shareholder approval of any subsequent
Business Combination, and the possibility of having to pay a
higher price to other shareholders in such a Business
Combination, it may become more costly for a purchaser to
acquire control of the Company. Thus, the Company's
Articles may discourage such purchases, particularly those
for less than all of the shares of the Company, and may
therefore deprive holders of Common Stock of an opportunity
to sell their stock at a temporarily higher market price.
The provisions would not necessarily discourage persons who
would be willing to acquire a controlling interest in the
Company and to forego a "second tier" transaction. Although
the supermajority and fair price provisions are designed to
assure fair treatment of all shareholders in the event of a
takeover, the provisions may also adversely affect the
ability of shareholders to benefit from certain transactions
which are opposed by the Company's Board of Directors.
In certain instances, the fair price provisions, while
providing objective pricing criteria, could be arbitrary and
not indicative of market values. In addition, a Related
Person may be unable, as a practical matter, to comply with
all of the procedural requirements of the Company's
Articles. In these circumstances, a potential purchaser
would be forced either to negotiate with the Continuing
Directors and offer terms acceptable to them or to abandon
the proposed Business Combination.
Under the Articles' fair price provisions, in certain
circumstances a Business Combination that might be
attractive to some shareholders might never be proposed to
the shareholders by a Related Person, or, if proposed, might
not be consummated. Due to the supermajority voting
requirements imposed by these provisions, it may be difficult
for a Related Person to secure the necessary shareholder
approvals without the support of management and employee
shareholders. Moreover, since only the Continuing Directors
will have the authority to avoid the requirement of a
supermajority shareholder vote to approve Business
Combinations or the application of the minimum price, form of
consideration and procedural requirements, the provisions
also may tend to insulate management against the possibility
of removal in the event of a takeover bid.
Louisiana has adopted a fair price statute that
provides for protections substantially similar to those
afforded under the Articles' fair price provisions. The
Company has formally claimed the benefits of this statute,
subject to the proviso that the statute will not apply to
any business combination involving a related person that is
an employee benefit plan or related trust of the Company.
Louisiana Control Share Statute. The Louisiana Control
Share Statute adopted in 1987 provides that, subject to
certain exceptions, any shares of certain publicly-traded
Louisiana corporations acquired by a person or group (an
"Acquiror"), other than an employee benefit plan or related
trust of the corporation, in an acquisition that causes such
Acquiror to have the power to vote or direct the voting
shares in the election of directors in excess of 20%, 33-
1/3% or 50% thresholds shall have only such voting power as
shall be accorded by the affirmative vote of, among others,
the holders of a majority of the votes of each voting group
entitled to vote separately on the proposal, excluding all
"interested shares" (as defined below), at a meeting that,
subject to certain exceptions, is required to be called for
that purpose upon the Acquiror's request. "Interested
shares" is defined by the statute to sterilize the vote of
the corporation's management and the Acquiror, and includes
all shares as to which the Acquiror, any officer of the
corporation and any director of the corporation who is also
an employee of the corporation may exercise or direct the
exercise of voting power. If either the Acquiror fails to
comply with certain specified notice requirements or the
shareholders vote against according voting rights to the
shares obtained by the Acquiror, the corporation has the
right to redeem the shares held by the Acquiror for their
fair value.
The Louisiana Control Share Statute establishes a
referendum format by which disinterested shareholders may,
in effect, demonstrate their support or opposition to a
proposed tender offer or share acquisition by their vote as
to whether to accord or deny voting rights to the Acquiror
with respect to shares acquired by him or her. On the one
hand, the possibility that voting rights might be denied
with respect to interested shares may encourage the Acquiror
to negotiate a non-hostile acquisition with the board of
directors. On the other hand, Acquirors that commence a
tender offer at a price in excess of prevailing market
values may be able to readily obtain the shareholder vote
re-enfranchising his or her shares, which in all likelihood
would significantly reduce the pressure on the Acquiror to
negotiate with the board of directors and the willingness of
the board to oppose the transaction.
The statute permits a company to amend its articles of
incorporation or bylaws to exclude from the statute's
application future acquisitions of the Company's stock. In
1995, the Company amended its Bylaws to provide that the
statute does not apply to share acquisitions of the Common
Stock. Subject to any required regulatory approvals, the
Company may at any time opt back into the statute by
rescinding its 1995 bylaw amendment.
Evaluation of Tender Offers. The Company's Articles
expressly require, and the Louisiana Business Corporation
Law expressly permits, the Board of Directors, when
evaluating a Business Combination, tender or exchange offer,
or a proposal by another person to make a tender or exchange
offer, to consider certain enumerated factors in exercising
its judgment in determining what is in the best interests of
the Company and its shareholders. For this purpose, the
Board is to consider, in addition to the adequacy of the
consideration to be paid in any such transaction, (i) the
social and economic effects of the transaction on the
Company and its subsidiaries, and their respective
employees, customers, creditors and other elements of the
communities in which they operate or are located; (ii) the
business and financial condition and the earnings prospects
of the acquiring party, including, but not limited to, debt
service and other existing or likely financial obligations
of the acquiring party, and the possible effect of such
conditions upon the Company and its subsidiaries and other
elements of the communities in which the Company and its
subsidiaries are located; and (iii) the competence,
experience and integrity of the acquiring person and its
management.
One effect of such provision in the Company's Articles
may be to discourage, in advance, an acquisition proposal.
Often, an offeror consults the board of a target corporation
prior to or after commencing a tender or exchange offer in
an attempt to prevent a contest from developing. Such
provision will strengthen the position of the Company's
Board in dealing with any potential offeror which might
attempt to impose a takeover on the Company. Another effect
of such provision may be to dissuade shareholders who might
potentially be displeased with the Board's response to an
acquisition proposal from engaging the Company in costly and
time-consuming litigation.
This provision would not make a transaction regarded by
the Company's Board as being in the best interests of the
Company more difficult to accomplish. However, it would
permit the Board to determine that a proposed Business
Combination was not in the best interests of the Company
(and thus to oppose it) on the basis of the various factors
which it is required to consider. In some cases, such
opposition by the Board might have the effect of maintaining
the position of incumbent management.
Unissued Stock. As discussed above under "Preferred
Stock," the Board of Directors of the Company is authorized,
without action of its shareholders, to issue Preferred
Stock. One of the effects of the existence of undesignated
Preferred Stock (and authorized but unissued Common Stock)
may be to enable the Board of Directors to make more
difficult or to discourage an attempt to obtain control of
the Company by means of a merger, tender offer, proxy
contest or otherwise, and thereby to protect the continuity
of the Company's management. If, in the due exercise of its
fiduciary obligations, the Board of Directors were to
determine that a takeover proposal was not in the Company's
best interest, such shares could be issued by the Board of
Directors without shareholder approval in one or more
transactions that might prevent or make more difficult or
costly the completion of the takeover transaction by
diluting the voting or other rights of the proposed acquiror
or insurgent shareholder group, by creating a substantial
voting block in institutional or other hands that might
undertake to support the position of the incumbent Board of
Directors, by effecting an acquisition that might complicate
or preclude the takeover, or otherwise. In this regard, the
Company's Articles grant the Board of Directors broad power
to establish the rights and preferences of the authorized
and unissued Preferred Stock, one or more series of which
could be issued (i) entitling holders to vote separately as
a class on any proposed merger or consolidation; (ii) to
elect directors having terms of office or voting rights
greater than those of other directors; (iii) to convert
Preferred Stock into a greater number of shares of Common
Stock or other securities; (iv) to demand redemption at a
specified price under prescribed circumstances related to a
change of control; or (v) to exercise other rights designed
to impede a takeover. The issuance of shares of Preferred
Stock pursuant to the Board of Directors' authority
described above may adversely affect the rights of the
holders of Common Stock.
Time-Phase Voting. As discussed above, each
outstanding share of Common Stock and Voting Preferred Stock
entitles the holder to one vote unless it has been
beneficially owned by the same person continuously since May
30, 1987, in which case it generally entitles the holder to
ten votes until transfer. The existence of multi-vote stock
may render more difficult a change of control of the Company
or the removal of incumbent management. To the extent that
voting power will be concentrated in the Long-Term
Shareholders, it may be difficult or impossible to
consummate a merger, tender offer or proxy contest opposed
by Long-Term Shareholders, with the result that other
shareholders may be denied the opportunity to sell shares at
a premium or to otherwise realize the benefits of a change
in control. As noted above under "Common Stock - Voting
Rights," the trustee of two of the Company's benefit plans
holds, and is expected to continue to hold for the foreseeable
future, a significant percentage of the Total Voting Power,
which is generally voted by the trustee in accordance with
the instructions of the Company's employees. With respect to
several of the matters discussed herein that may be submitted
to a shareholder vote in connection with a takeover attempt,
the number of votes held by the trustee and voted by the
employees may be sufficient to ensure the defeat of the
matter. Accordingly, a takeover attempt or an effort to
remove incumbent directors or management or any other
corporate action requiring a supermajority vote that is
opposed by the employees of the Company may be less likely to
succeed.
Preference Share Purchase Rights. As discussed above
under the heading " Preference Share Purchase Rights," the
Company has issued Rights entitling the registered holders
to purchase certain securities of the Company. The Rights
will cause substantial dilution to a person or group that
attempts to acquire the Company without conditioning the
offer on the redemption of the Rights. The Rights should
not interfere with any merger or other business combination
approved by the Board of Directors of the Company since the
Board may, at its option, redeem all but not less than all
of the then outstanding Rights in the manner described
above.
Indemnification and Exculpation. Article II, Section
10 of the Bylaws of the Company provides in part that the
Company will indemnify and hold harmless, among others, any
director or officer of the Company or one of its
subsidiaries ("Indemnified Party") against expenses
(including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the
Indemnified Party in connection with any claim, action, suit
or proceeding, whether civil, criminal, administrative or
investigative and whether made judicially or extra-
judicially (a "Claim") involving an Indemnified Party, if
the Indemnified Party is successful in defense of the Claim
or otherwise, or if it is determined by members of the Board
of Directors who are not parties to the Claim or by
independent legal counsel that the Indemnified Party acted
in what he or she reasonably believed to be in the best
interests of the Company, or, in the case of a claim
involving a criminal action, that the Indemnified Party had
no reasonable cause to believe that his or her actions were
unlawful (the "Standard of Conduct"); provided that
generally no person can be indemnified for the results of
such person's willful or intentional misconduct. An officer
of the Company who is not a party to the Claim may authorize
the advancement of expenses to an Indemnified Party upon the
receipt of any undertaking by or on behalf of the
Indemnified Party to repay the amount of such advanced
expenses if it is ultimately determined that he or she is
not entitled to be indemnified by the Company under the
circumstances, or the Company may, in its sole discretion,
assume all responsibility for the defense of the Claim on
behalf of the Indemnified Party if it is determined that the
Indemnified Party met the Standard of Conduct.
The Company's Articles authorize it to enter into
contracts with directors and officers providing for
indemnification to the fullest extent permitted by law. The
Company has entered into indemnification contracts providing
contracting directors or officers the procedural and
substantive rights to indemnification currently set forth in
the Bylaws ("Indemnification Contracts"). The right to
indemnification provided by the Indemnification Contracts
apply to all covered claims, whether such claims arise
before or after the effective date of the contract.
The Company maintains an insurance policy covering the
liability of its directors and officers for actions taken in
their official capacity. The Indemnification Contracts
provide that, to the extent insurance is reasonably
available, the Company will maintain comparable insurance
coverage for each contracting party as long as he or she
serves as an officer or director and thereafter for so long
as he or she is subject to possible personal liability for
actions taken in such capacities. The Indemnification
Contracts also provide that if the Company does not maintain
comparable insurance, it will hold harmless and indemnify a
contracting party to the full extent of the coverage that
would otherwise have been provided for his or her benefit.
The Company's Articles include a provision that
eliminates the personal liability of a director or officer
to the Company and its shareholders for monetary damages
resulting from breaches of the duty of care to the full
extent permitted by Louisiana law and further provides that
any amendment or repeal of this provision will not affect
the elimination of liability accorded to any director or
officer for acts or omissions occurring prior to such
amendment or repeal.
Amendment of the Articles and Bylaws. Various
provisions in the Company's Articles, including the
classified board provisions, fair price provisions and those
provisions limiting the ability of shareholders to act by
written consent, may not be amended except upon the
affirmative vote of both 80% of the Total Voting Power of
all shareholders and 66-2/3% of the Total Voting Power of
the shareholders other than a Related Person present or
represented at a shareholders' meeting, voting as a separate
group; provided that the affirmative vote of the holders of
only a majority of the Total Voting Power is required if the
amendments were first adopted by both a majority of the
directors and a majority of the Continuing Directors, voting
as a separate group.
The Company's Articles provide that the Bylaws may be
adopted, amended or repealed and new Bylaws may be adopted
by a majority of the Board of Directors and a majority of
the Continuing Directors, voting as a separate group, or by
the affirmative vote of the holders of at least 80% of the
Total Voting Power of all shareholders, and 66-2/3% of the
Total Voting Power of the shareholders other than the
Related Person present or duly represented at the
shareholders' meeting, voting as a separate group.
The multiple votes required to amend the Company's
Articles or Bylaws may have the effect of discouraging a
potential purchaser of the Company's capital stock from
undertaking market purchases, initiating a tender offer or
entering into a proxy contest where the ability to make
fundamental changes through article or bylaw amendments is
an important element of the strategy of such party.
Advance Notification of Nominations and Other Matters.
The Company's Bylaws require shareholders of record who wish
to nominate directors or submit proposals for consideration
at shareholders' meetings to provide timely advance written
notice to the Company. Subject to certain exceptions, to be
timely the notice must be received by the Company not less
than 70 days nor more than 210 days prior to the anniversary
date of the previous year's annual meeting.
The notice to the Company must contain certain
information, including the name, age and address of the
shareholder proposing such action and any persons acting in
concert with such shareholder and a representation by such
shareholder that such shareholder is a holder of record of
the Company's capital stock and intends to appear at the
meeting in person to make the nomination or propose the
specified matter. In the case of nominations for directors,
the notice must also include (i) the name, age, address and
principal occupation of each nominee, (ii) a description of
all arrangements between the nominating shareholder and each
nominee, (iii) other information required to be included in
a proxy statement pursuant to the proxy rules of the
Securities and Exchange Commission, and (iv) the consent of
each nominee to serve as director of the Company if elected
and an affidavit that such nominee meets all applicable
qualifications to serve as a director. In the case of other
proposed business, the shareholder's notice must set forth a
description of the business, the reasons for conducting such
business at the meeting and any material interest of the
shareholder therein. The chairman of the shareholders'
meeting will have the power to disregard any nomination or
other matter that fails to comply with these procedures.
With respect to proposals by shareholders to propose
matters other than the nomination of directors, the Bylaws
permit the Company to disregard proposals that (i) are
substantially duplicative of a prior-received proposal to be
voted upon at the upcoming meeting, (ii) deal with
substantially the same subject matter as a prior proposal
that was voted upon within the preceding five years and
which failed to receive affirmative votes in excess of
certain specified levels, or (iii) in the judgment of the
Board of Directors are not proper subjects for action by
shareholders under Louisiana law.
Restrictions on director nominations make it easier for
incumbent directors to obtain advance notice of nominations
and render more difficult the assumption of control of the
Company by a purchaser of a significant block of the
Company's stock through the removal of incumbent directors.
Such restrictions eliminate the possibility of unexpected
nominations for directors from the floor of meetings and
limit the ability of shareholders to cause sudden changes in
the membership of the Board of Directors. Similarly, the
restrictions on shareholder proposals make it easier for the
Company to control the topics brought before a shareholders
meeting and may make it more difficult for shareholders to
influence corporate actions and policy.
Item 2: Exhibits
3.1 Amended and Restated Articles of Incorporation of
the Company (incorporated by reference to Exhibit
3(i) to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996).
3.2 Bylaws of the Company as amended through November
21, 1996 (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-4,
Registration No. 333-17015, filed on November 27, 1996).
4.1 Rights Agreement dated August 27, 1996 by and
between the Company and Society National Bank, as
Rights Agent (incorporated by reference to Exhibit 1
of the Company's Current Report on Form 8-K filed
August 30, 1996).
* * * * *
Signature
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly
caused this amendment to its registration statement to be
signed on its behalf by the undersigned, thereto duly
authorized.
CENTURY TELEPHONE ENTERPRISES, INC.
By: /s/ Harvey P. Perry
Harvey P. Perry
Senior Vice President,
General Counsel and
Secretary
Dated: December 2, 1996