Exhibit 10.3
CENTURYTEL, INC.
2002 MANAGEMENT INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the 2002 Management Incentive Compensation
Plan (this "Plan") of CenturyTel, Inc. ("CenturyTel") is to increase shareholder
value and to advance the interests of CenturyTel and its subsidiaries
(collectively, the "Company") by furnishing a variety of equity incentives (the
"Incentives") designed to attract, retain and motivate officers, key employees,
consultants and advisors and to strengthen the mutuality of interests between
such persons and CenturyTel's shareholders. Incentives may consist of options to
purchase shares of CenturyTel's common stock, $1.00 par value per share (the
"Common Stock"), shares of restricted stock or other stock-based awards the
value of which is based upon the value of the Common Stock, all on terms
determined under this Plan. As used in this Plan, the term "subsidiary" means
any corporation, limited liability company or other entity of which CenturyTel
owns (directly or indirectly) within the meaning of Section 425(f) of the
Internal Revenue Code of 1986, as amended (the "Code"), 50% or more of the total
combined voting power of all classes of stock, membership interests or other
equity interests issued thereby.
2. Administration.
2.1 Composition. This Plan shall be administered by the compensation
committee of the Board of Directors of CenturyTel, or by a subcommittee of the
compensation committee. The committee or subcommittee that administers this Plan
shall hereinafter be referred to as the "Committee." The Committee shall consist
of not fewer than two members of the Board of Directors, each of whom shall (a)
qualify as a "non-employee director" under Rule 16b-3 under the Securities
Exchange Act of 1934 (the "1934 Act"), or any successor rule, and (b) qualify as
an "outside director" under Section 162(m) of the Code and the regulations
thereunder (collectively, "Section 162(m)").
2.2 Authority. The Committee shall have authority to award Incentives
under this Plan, to interpret this Plan, to establish any rules or regulations
relating to this Plan that it determines to be appropriate, to enter into
agreements with or provide notices to participants as to the terms of the
Incentives (the "Incentive Agreements") and to make any other determination that
it believes necessary or advisable for the proper administration of this Plan.
Its decisions concerning matters relating to this Plan shall be final,
conclusive and binding on the Company and participants. The Committee may
delegate its authority hereunder to the extent provided in Section 3 hereof. The
Committee shall not have authority to award Incentives under this Plan to
directors in their capacities as such.
3. Eligible Participants. Key employees and officers of the Company
(including officers who also serve as directors of the Company) and consultants
and advisors to the Company shall become eligible to receive Incentives under
this Plan when designated by the Committee. Employees may be designated
individually or by groups or categories, as the Committee deems appropriate.
With respect to participants not subject to Section 16 of the 1934 Act or
Section 162(m), the Committee may delegate to appropriate personnel of the
Company its authority to designate participants, to determine the size, type and
terms of the Incentives to be received by those participants and to determine
any performance objectives for those participants; provided; however that the
exercise price of any stock options granted pursuant to such delegation of
authority shall be, unless otherwise determined by the Committee, equal to the
Fair Market Value of a share of Common Stock on the later of the date of grant
or the date the participant's employment with the Company commences. Any such
delegation by the Committee shall not include the authority to change or modify
in any way the terms of a previously granted Incentive or to take any other
action authorized herein to be taken by the Committee and not specifically
permitted to be delegated in this Section 3.
4. Shares Subject to this Plan. The shares of Common Stock with respect to
which Incentives may be granted under this Plan shall be subject to the
following:
4.1 Type of Common Stock. The shares of Common Stock with respect to
which Incentives may be granted under this Plan may be currently authorized but
unissued shares or shares currently held or subsequently acquired by the Company
as treasury shares, including shares purchased in the open market or in private
transactions.
4.2 Maximum Number of Shares. Subject to the other provisions of this
Section 4, the maximum number of shares of Common Stock that may be delivered to
participants and their beneficiaries under this Plan shall be 4,500,000 shares
of Common Stock.
4.3 Share Counting. To the extent any shares of Common Stock covered
by an Incentive are not delivered to a participant or beneficiary because the
Incentive is forfeited or canceled, or the shares of Common Stock are not
delivered because the Incentive is paid or settled in cash or used to satisfy
the applicable tax withholding obligation, such shares shall not be deemed to
have been delivered for purposes of determining the maximum number of shares of
Common Stock available for delivery under this Plan. In the event that shares of
Common Stock are issued as Incentives and thereafter are forfeited or reacquired
by the Company pursuant to rights reserved upon issuance thereof, such forfeited
and reacquired Shares may again be issued under this Plan. If the exercise price
of any stock option granted under this Plan or the applicable withholding taxes
are satisfied by tendering shares of Common Stock to the Company (by either
actual delivery or by attestation), only the number of shares of Common Stock
issued net of the shares of Common Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Common Stock available
for delivery under this Plan.
4.4 Limitations on Number of Shares. Subject to Section 4.5, the
following additional limitations are imposed under this Plan:
(a) The maximum number of shares of Common Stock that may be
issued upon exercise of stock options intended to qualify as incentive stock
options under Section 422 of the Code shall be 4,500,000 shares. Notwithstanding
any other provision herein to the contrary, (i) all shares issuable under
incentive stock options shall be counted against this limit and (ii) shares that
are issued and are later forfeited, cancelled or reacquired by the Company,
shares withheld to satisfy withholding tax obligations and shares delivered in
payment of the Incentive price or applicable withholding taxes shall have no
effect on this limitation.
(b) The maximum number of shares of Common Stock that may be
covered by Incentives granted under this Plan to any one individual during any
one calendar-year period shall be 600,000.
(c) The maximum number of shares of Common Stock that may be
issued as restricted stock or Other Stock-Based Awards (as defined below) shall
be 500,000 shares.
(d) If, after shares have been earned under an Incentive, the
delivery is deferred, any additional shares attributable to dividends paid
during the deferral period shall be disregarded for purposes of the limitations
of this Section 4.
4.5 Adjustment. In the event of any recapitalization, reclassification,
stock dividend, stock split, combination of shares or other change in the Common
Stock, all limitations on numbers of shares of Common Stock provided in this
Section 4 and the number of shares of Common Stock subject to outstanding
Incentives shall be equitably adjusted in proportion to the change in
outstanding shares of Common Stock. In addition, in the event of any such change
in the Common Stock, the Committee shall make any other adjustment that it
determines to be equitable, including without limitation adjustments to the
exercise price of any option and any per share performance objectives of any
Incentive in order to provide participants with the same relative rights before
and after such adjustment.
5. Stock Options. The Committee may grant incentive stock options (as such
term is defined in Section 422 of the Code) or non-qualified stock options. Any
option that is designated as a non-qualified stock option shall not be treated
as an incentive stock option. Each stock option granted by the Committee under
this Plan shall be subject to the following terms and conditions:
5.1 Price. The exercise price per share shall be determined by the
Committee, subject to adjustment under Section 4.5; provided that in no event
shall the exercise price be less than the Fair Market Value (as defined below)
of a share of Common Stock on the date of grant, except in the case of a stock
option granted in assumption of or in substitution for an outstanding award of a
company acquired by the Company or with which the Company combines.
5.2 Number. The number of shares of Common Stock subject to the option
shall be determined by the Committee, subject to the limitations and adjustments
provided in Section 4 hereof.
5.3 Duration and Time for Exercise. Subject to earlier termination as
provided in Section 9.4 and 9.13, the term of each stock option shall be
determined by the Committee, but may not exceed ten years. Each stock option
shall become exercisable at such time or times during its term as shall be
determined by the Committee. The Committee may accelerate the exercisability of
any stock option at any time.
5.4 Repurchase. Upon approval of the Committee, the Company may
repurchase all or a portion of a previously granted stock option from a
participant by mutual agreement before such option has been exercised by payment
to the participant of cash or Common Stock or a combination thereof with a value
equal to the amount per share by which: (a) the Fair Market Value of the Common
Stock subject to the option on the business day immediately preceding the date
of purchase exceeds (b) the exercise price.
5.5 Manner of Exercise. A stock option may be exercised, in whole or in
part, by giving written notice to the Company, specifying the number of shares
of Common Stock to be purchased. The exercise notice shall be accompanied by
tender of the full purchase price for such shares, which may be paid or
satisfied by (a) cash; (b) check; (c) delivery of shares of Common Stock, which
shares shall be valued for this purpose at the Fair Market Value on the business
day immediately preceding the date such option is exercised and, unless
otherwise determined by the Committee, shall have been held by the optionee for
at least six months; (d) delivery of irrevocable written instructions to a
broker approved by the Company (with a copy to the Company) to immediately sell
a portion of the shares issuable under the option and to deliver promptly to the
Company the amount of sale proceeds (or loan proceeds if the broker lends funds
to the participant for delivery to the Company) to pay the exercise price; or
(e) in such other manner as may be authorized from time to time by the
Committee, provided that all such payments shall be made or denominated in
United States dollars. In the case of delivery of an uncertified check, no
shares shall be issued until the check has been paid in full. Prior to the
issuance of shares of Common Stock upon the exercise of a stock option, a
participant shall have no rights as a shareholder.
5.6 Repricing. Except for adjustments pursuant to Section 4.5 or
actions permitted to be taken by the Committee under Section 9.13(c) in the
event of a Change of Control, unless approved by the shareholders of the
Company, (a) the exercise price for any outstanding option granted under this
Plan may not be decreased after the date of grant and (b) an outstanding option
that has been granted under this Plan may not, as of any date that such option
has a per share exercise price that is less than the then current Fair Market
Value of a share of Common Stock, be surrendered to the Company as consideration
for the grant of a new option with a lower exercise price, shares of restricted
stock, an Other Stock-Based Award (as defined in Section 7.1), a cash payment or
Common Stock.
5.7 Incentive Stock Options. Notwithstanding anything in this Plan to
the contrary, the following additional provisions shall apply to the grant of
stock options that are intended to qualify as incentive stock options.
(a) Any incentive stock option authorized under this Plan shall
contain such other provisions as the Committee shall deem advisable, but shall
in all events be consistent with and contain or be deemed to contain all
provisions required in order to qualify the options as incentive stock options;
(b) All incentive stock options must be granted within ten years
from the date on which this Plan was adopted by the Board of Directors;
(c) No incentive stock option shall be granted to any participant
who, at the time such option is granted, would own (within the meaning of
Section 422 of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the employer corporation or of its
parent or subsidiary corporation; and
(d) The aggregate Fair Market Value (determined with respect to
each incentive stock option as of the time such incentive stock option is
granted) of the Common Stock with respect to which incentive stock options are
exercisable for the first time by a participant during any calendar year (under
this Plan or any other plan of the Company) shall not exceed $100,000. To the
extent that such limitation is exceeded, such options shall not be treated, for
federal income tax purposes, as incentive stock options.
5.8 Equity Maintenance. If a participant exercises an option during the
term of his employment with the Company, and pays the exercise price (or any
portion thereof) through the surrender of shares of outstanding Common Stock
owned by the participant, the Committee may, in its discretion, grant to such
participant an additional option to purchase the number of shares of Common
Stock equal to the shares of Common Stock so surrendered by such participant.
Any such additional options granted by the Committee shall be exercisable at the
Fair Market Value of the Common Stock determined as of the business day
immediately preceding the respective dates such additional options may be
granted. The grant of such additional options under this Section 5.8 shall be
made upon such other terms and conditions as the Committee may from time to time
determine.
6. Restricted Stock.
6.1 Grant of Restricted Stock. An award of restricted stock may be
subject to the attainment of specified performance goals or targets,
restrictions on transfer, forfeitability provisions and such other terms and
conditions as the Committee may determine, subject to the provisions of this
Plan. To the extent restricted stock is intended to qualify as performance based
compensation under Section 162(m), it must be granted subject to the attainment
of performance goals as described in Section 8 and meet the additional
requirements by imposed by Section 162(m).
6.2 Restricted Period. At the time an award of restricted stock is
made, the Committee shall establish a period of time during which the transfer
of the shares of restricted stock shall be restricted (the "Restricted Period").
Each award of restricted stock may have a different Restricted Period. A
Restricted Period of at least three years is required, except that if vesting of
the shares is subject to the attainment of specified performance goals, the
Restricted Period may be one year or more. Incremental periodic vesting of
portions of the award during the Restricted Period is permitted. Unless
otherwise provided in the Incentive Agreement, the Committee may in its
discretion declare the Restricted Period terminated upon a participant's death,
disability, retirement or other termination by the Company and permit the sale
or transfer of the restricted stock. The expiration of the Restricted Period
shall also occur as provided under Section 9.13 upon a Change of Control of the
Company.
6.3 Escrow. The participant receiving restricted stock shall enter
into an Incentive Agreement with the Company setting forth the conditions of the
grant. Certificates representing shares of restricted stock shall be registered
in the name of the participant and deposited with the Company, together with a
stock power endorsed in blank by the participant. Each such certificate shall
bear a legend in substantially the following form:
The transferability of this certificate and the shares of Common Stock
represented by it is subject to the terms and conditions (including conditions
of forfeiture) contained in the CenturyTel, Inc. 2002 Management Incentive
Compensation Plan (the "Plan") and an agreement entered into between the
registered owner and CenturyTel, Inc. thereunder. Copies of this Plan and the
agreement are on file and available for inspection at the principal office of
the Company.
6.4 Dividends on Restricted Stock. Any and all cash and stock dividends
paid with respect to the shares of restricted stock shall be subject to any
restrictions on transfer, forfeitability provisions or reinvestment requirements
as the Committee may, in its discretion, prescribe in the Incentive Agreement.
6.5 Forfeiture. In the event of the forfeiture of any shares of
restricted stock under the terms provided in the Incentive Agreement (including
any additional shares of restricted stock that may result from the reinvestment
of cash and stock dividends, if so provided in the Incentive Agreement), such
forfeited shares shall be surrendered and the certificates cancelled. The
participants shall have the same rights and privileges, and be subject to the
same forfeiture provisions, with respect to any additional shares received
pursuant to Section 4.5 due to a recapitalization, stock split or other change
in capitalization.
6.6 Expiration of Restricted Period. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee or at such earlier time as provided for in Section 6.2 and in
the Incentive Agreement or an amendment thereto, the restrictions applicable to
the restricted stock shall lapse and a stock certificate for the number of
shares of restricted stock with respect to which the restrictions have lapsed
shall be delivered, free of all such restrictions and legends other than those
required by law, to the participant or the participant's estate, as the case may
be.
6.7 Rights as a Shareholder. Subject to the restrictions imposed under
the terms and conditions of this Plan and subject to any other restrictions that
may be imposed in the Incentive Agreement, each participant receiving restricted
stock shall have all the rights of a shareholder with respect to shares of
Common Stock during any period in which such shares are subject to forfeiture
and restrictions on transfer, including without limitation, the right to vote
such shares.
7. Other Stock-Based Awards.
7.1 Grant of Other Stock-Based Awards. Subject to the limitations
described in Section 7.2 hereof, the Committee may grant to eligible
participants "Other Stock-Based Awards," which shall consist of awards, other
than options or restricted stock provided for in Sections 5 and 6, the value of
which is based in whole or in part on the value of shares of Common Stock. Other
Stock-Based Awards may be awards of shares of Common Stock or may be denominated
or payable in, valued in whole or in part by reference to, or otherwise based on
or related to, shares of, or appreciation in the value of, Common Stock
(including, without limitation, securities convertible or exchangeable into or
exercisable for shares of Common Stock), as deemed by the Committee consistent
with the purposes of this Plan. The Committee shall determine the terms and
conditions of any Other Stock-Based Award (including which rights of a
shareholder, if any, the recipient shall have with respect to Common Stock
associated with any such award) and may provide that such award is payable in
whole or in part in cash. An Other Stock-Based Award may be subject to the
attainment of such specified performance goals or targets as the Committee may
determine, subject to the provisions of this Plan. To the extent that an Other
Stock-Based Award is intended to qualify as "performance-based compensation"
under Section 162(m), it must be granted subject to the attainment of
performance goals as described in Section 8 and meet the additional requirements
imposed by Section 162(m).
7.2 Limitations. Other Stock-Based Awards granted under this Section 7
shall be subject to a vesting period of at least three years, except that if
vesting of the award is subject to the attainment of specified performance
goals, a minimum vesting period of one year is allowed. Incremental periodic
vesting of portions of the award over the required vesting period is permitted.
Notwithstanding the minimum vesting periods described in this Section 7.2, the
Committee may make special grants of Other Stock-Based Awards with respect to an
aggregate of no more than 225,000 shares of Common Stock, as adjusted under
Section 4.5, which special awards shall not be subject to any minimum vesting
requirements.
8. Section 162(m) Awards. To the extent that shares of restricted stock or
Other Stock-Based Awards granted under the Plan are intended to qualify as
"performance-based compensation" under Section 162(m), the vesting, grant or
payment of such awards shall be conditioned on the achievement of one or more
performance goals and must satisfy the other requirements of Section 162(m). The
performance goals pursuant to which such awards shall vest, be granted or be
paid out shall be any or a combination of the following performance measures
applied to the Company, a subsidiary or a division: earnings per share, return
on assets, an economic value added measure, stockholder return, earnings, return
on equity, return on investment, cash provided by operating activities, increase
in cash flow, increase in revenues or operating revenues, or customer growth.
The performance goals may be subject to such adjustments as are specified in
advance by the Committee. For any performance period, the performance objectives
may be measured on an absolute basis or relative to a group of peer companies
selected by the Committee, relative to internal goals or relative to levels
attained in prior years.
9. General.
9.1 Duration. Subject to Section 9.10, this Plan shall remain in effect
until all Incentives granted under this Plan have either been satisfied by the
issuance of shares of Common Stock or the payment of cash or been terminated
under the terms of this Plan or the applicable Incentive Agreement and all
restrictions imposed on shares of Common Stock in connection with their issuance
under this Plan have lapsed.
9.2 Transferability of Incentives. No Incentive granted hereunder
may be transferred, pledged, assigned or otherwise encumbered by the holder
thereof except:
(a) by will;
(b) by the laws of descent and distribution;
(c) pursuant to a domestic relations order, as defined in
the Code; or
(d) in the case of stock options only, if permitted by the
Committee and so provided in the Incentive Agreement or an amendment thereto,
(i) to Immediate Family Members (as defined below), (ii) to a partnership in
which the participant and/or Immediate Family Members, or entities in which the
participant and/or Immediate Family Members are the sole owners, members or
beneficiaries, as appropriate, are the sole partners, (iii) to a limited
liability company in which the participant and/or Immediate Family Members, or
entities in which the participant and/or Immediate Family Members are the sole
owners, members or beneficiaries, as appropriate, are the sole members, or (iv)
to a trust for the sole benefit of the participant and/or Immediate Family
Members. "Immediate Family Members" means the spouse and natural or adopted
children or grandchildren of the participant and their respective spouses. To
the extent that an incentive stock option is permitted to be transferred during
the lifetime of the participant, it shall be treated thereafter as a
non-qualified stock option.
Any attempted assignment, transfer, pledge, hypothecation or other disposition
of an Incentive, or levy of attachment or similar process upon the Incentive not
specifically permitted herein, shall be null and void and without effect.
9.3 Dividend Equivalents. In the sole and complete discretion of the
Committee, an Incentive may provide the holder thereof with dividends or
dividend equivalents, payable in cash, shares, other securities or other
property on a current or deferred basis.
9.4 Effect of Termination of Employment or Death. In the event that a
participant ceases to be an employee of the Company for any reason, including
death, disability, early retirement or normal retirement, any Incentives may be
exercised, shall vest or shall expire at such times as may be determined by the
Committee and set forth in the Incentive Agreement.
9.5 Additional Condition. Anything in this Plan to the contrary
notwithstanding: (a) the Company may, if it shall determine it necessary or
desirable for any reason, at the time of award of any Incentive or the issuance
of any shares of Common Stock pursuant to any Incentive, require the recipient
of the Incentive, as a condition to the receipt thereof or to the receipt of
shares of Common Stock issued pursuant thereto, to deliver to the Company a
written representation of present intention to acquire the Incentive or the
shares of Common Stock issued pursuant thereto for his own account for
investment and not for distribution; and (b) if at any time the Company further
determines, in its sole discretion, that the listing, registration or
qualification (or any updating of any such document) of any Incentive or the
shares of Common Stock issuable pursuant thereto is necessary on any securities
exchange or under any federal or state securities or blue sky law, or that the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with the award of any Incentive,
the issuance of shares of Common Stock pursuant thereto, or the removal of any
restrictions imposed on such shares, such Incentive shall not be awarded or such
shares of Common Stock shall not be issued or such restrictions shall not be
removed, as the case may be, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
9.6 Incentive Agreements. An Incentive under this Plan shall be subject to
such terms and conditions, not inconsistent with this Plan, as the Committee
may, in its sole discretion, prescribe and set forth in the Incentive Agreement.
Such terms and conditions may provide for the forfeiture of an Incentive or the
gain associated with an Incentive under certain circumstances to be set forth in
the Incentive Agreement, including if the participant competes with the Company
or engages in other activities that are harmful to the Company. All terms and
conditions of any Incentive shall be reflected in such form of Incentive
Agreement as is determined by the Committee. A copy of such document shall be
provided to the participant, and the Committee may, but need not, require that
the participant duly execute and deliver to the Company a copy of such document
as a condition precedent to the effectiveness of the grant of the Incentive.
Such document is referred to in this Plan as an "Incentive Agreement" regardless
of whether a participant's signature is required.
9.7 Withholding.
(a) The Company shall have the right to withhold from any payments
or stock issuances under this Plan, or to collect as a condition of payment, any
taxes required by law to be withheld.
(b) Any participant may, but is not required to, satisfy his or her
withholding tax obligation in whole or in part by electing (the "Election") to
deliver currently owned shares of Common Stock or to have the Company withhold
from the shares the participant otherwise would receive shares of Common Stock
having a value equal to the minimum amount required to be withheld. The value of
the shares to be delivered or withheld shall be based on the Fair Market Value
of the Common Stock on the date that the amount of tax to be withheld shall be
determined (the "Tax Date"). Each Election must be made prior to the Tax Date.
The Committee may disapprove of any Election, may suspend or terminate the right
to make Elections, or may provide with respect to any Incentive that the right
to make Elections shall not apply to such Incentive.
9.8 No Continued Employment. No participant under this Plan shall have
any right, because of his or her participation, to continue in the employ of the
Company for any period of time or to any right to continue his or her present or
any other rate of compensation.
9.9 Deferral Permitted. Payment of cash or distribution of any shares
of Common Stock to which a participant is entitled under any Incentive shall be
made as provided in the Incentive Agreement. Payment may be deferred at the
option of the participant if provided in the Incentive Agreement.
9.10 Amendment or Discontinuance of this Plan. The Board may amend or
discontinue this Plan at any time; provided, however, that no such amendment
may:
(a) without the approval of the shareholders, (i) increase,
subject to adjustments permitted herein, the maximum number of shares of Common
Stock that may be issued through this Plan, (ii) materially increase the
benefits accruing to participants under this Plan, (iii) materially expand the
classes of persons eligible to participate in this Plan, or (iv) amend Section
5.6 to permit repricing of options, or
(b) materially impair, without the consent of the recipient, an
Incentive previously granted, except that the Company retains all rights under
Section 9.13 hereof.
9.11 Definition of Fair Market Value. Whenever the "Fair Market Value"
of Common Stock or some other specified security must be determined for purposes
of this Plan, it shall be determined as follows: (i) if the Common Stock or
other security is listed on an established stock exchange or any automated
quotation system that provides sale quotations, the closing sale price for a
share thereof on such exchange or quotation system on the applicable date and if
shares are not traded on such day, on the next preceding trading date, (ii) if
the Common Stock or other security is not listed on any exchange or quotation
system, but bid and asked prices are quoted and published, the mean between the
quoted bid and asked prices on the applicable date and if bid and asked prices
are not available on such day, on the next preceding day on which such prices
were available; and (iii) if the Common Stock or other security is not regularly
quoted, the fair market value of a share thereof on the applicable date as
established by the Committee in good faith.
9.12 Loans. In order to assist a participant in acquiring shares of
Common Stock pursuant to an Incentive granted under this Plan, the Committee may
authorize, at either the time of the grant of the Incentive, at the time of the
acquisition of Common Stock pursuant to the Incentive, or at the time of the
lapse of restrictions on shares of restricted stock granted under this Plan, the
extension of a loan to the participant by the Company. The terms of any loans,
including the interest rate, collateral and terms of repayment, will be subject
to the discretion of the Committee. The maximum credit available hereunder shall
be equal to the aggregate purchase price of the shares of Common Stock to be
acquired pursuant to the Incentive plus the maximum tax liability that may be
incurred in connection with the Incentive.
9.13 Change of Control
(a) A Change of Control shall mean:
(i) the acquisition by any person of beneficial ownership
of 30% or more of the outstanding shares of the Common Stock or 30% or more of
the combined voting power of CenturyTel's then outstanding securities entitled
to vote generally in the election of directors; provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change of Control:
(A) any acquisition (other than a Business
ch constitutes a Change of Control under
Section 9.13(a)(iii) hereof) of Common Stock directly from the Company,
(B) any acquisition of Common Stock by the Company,
(C) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or
(D) any acquisition of Common Stock by any
corporation pursuant to a Business Combination that does not constitute a Change
of Control under Section 9.13(a)(iii) hereof; or
(ii) individuals who, as of January 1, 2002, constituted
the Board of Directors of CenturyTel (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to such date whose
election, or nomination for election by CenturyTel's shareholders, was approved
by a vote of at least two-thirds of the directors then comprising the Incumbent
Board shall be considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Incumbent Board; or
(iii) consummation of a reorganization, share exchange,
merger or consolidation (including any such transaction involving any direct or
indirect subsidiary of CenturyTel) or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Combination");
provided, however, that in no such case shall any such transaction constitute a
Change of Control if immediately following such Business Combination:
(A) the individuals and entities who were the
beneficial owners of CenturyTel's outstanding Common Stock and CenturyTel's
voting securities entitled to vote generally in the election of directors
immediately prior to such Business Combination have direct or indirect
beneficial ownership, respectively, of more than 50% of the then outstanding
shares of common stock, and more than 50% of the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors of the surviving or successor corporation, or, if applicable, the
ultimate parent company thereof (the "Post-Transaction Corporation"), and
(B) except to the extent that such ownership
existed prior to the Business Combination, no person (excluding the
Post-Transaction Corporation and any employee benefit plan or related trust of
either CenturyTel, the Post-Transaction Corporation or any subsidiary of either
corporation) beneficially owns, directly or indirectly, 20% or more of the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or 20% or more of the combined voting power of the then
outstanding voting securities of such corporation, and
(C) at least a majority of the members of the
board of directors of the Post-Transaction Corporation were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board of Directors, providing for such Business Combination; or
(iv) approval by the shareholders of CenturyTel of a
complete liquidation or dissolution of CenturyTel.
For purposes of this Section 9.13, the term "person" shall mean a natural
person or entity, and shall also mean the group or syndicate created when two or
more persons act as a syndicate or other group (including, without limitation, a
partnership or limited partnership) for the purpose of acquiring, holding, or
disposing of a security, except that "person" shall not include an underwriter
temporarily holding a security pursuant to an offering of the security.
(b) Upon a Change of Control of the type described in clause
(a)(i) or (a)(ii) of this Section 9.13 or upon the approval by the Board of
Directors of CenturyTel of any Change of Control of the type described in clause
(a)(iii) or (a)(iv) of this Section 9.13, all outstanding Incentives granted
pursuant to this Plan shall automatically become fully vested and exercisable,
all restrictions or limitations on any Incentives shall automatically lapse and,
unless otherwise provided in the applicable Incentive Agreement, all performance
criteria and other conditions relating to the payment of Incentives shall be
deemed to be achieved or waived by CenturyTel without the necessity of action by
any person.
(c) No later than 30 days after a Change of Control of the type
described in subsections (a)(i) or (a)(ii) of this Section 9.13 and no later
than 30 days after the approval by the Board of a Change of Control of the type
described in subsections (a)(iii) or (a)(iv) of this Section 9.13, the
Committee, acting in its sole discretion without the consent or approval of any
participant (and notwithstanding any removal or attempted removal of some or all
of the members thereof as directors or Committee members), may act to effect one
or more of the alternatives listed below, which may vary among individual
participants and which may vary among Incentives held by any individual
participant:
(i) require that all outstanding options or Other
Stock-Based Awards be exercised on or before a specified date (before or after
such Change of Control) fixed by the Committee, after which specified date all
unexercised options and Other Stock-Based Awards and all rights of participants
thereunder shall terminate,
(ii) make such equitable adjustments to Incentives then
outstanding as the Committee deems appropriate to reflect such Change of Control
(provided, however, that the Committee may determine in its sole discretion that
no adjustment is necessary),
(iii) provide for mandatory conversion or exchange of some
or all of the outstanding options or Other Stock-Based Awards held by some or
all participants as of a date, before or after such Change of Control, specified
by the Committee, in which event such options and Other Stock-Based Awards shall
be deemed automatically cancelled and the Company shall pay, or cause to be
paid, to each such participant an amount of cash per share equal to the excess,
if any, of the Change of Control Value of the shares subject to such option or
Other Stock-Based Award, as defined and calculated below, over the per share
exercise price of such options or the per share exercise or base price of such
Other Stock-Based Awards or, in lieu of such cash payment, the issuance of
Common Stock or securities of an acquiring entity having a Fair Market Value
equal to such excess, or
(iv) provide that thereafter, upon any exercise of an
option or Other Stock-Based Award that entitles the holder to receive Common
Stock, the holder shall be entitled to purchase or receive under such option or
Other Stock-Based Award, in lieu of the number of shares of Common Stock then
covered by such option or Other Stock-Based Award, the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the holder would have been entitled pursuant to the terms of the
agreement providing for the reorganization, share exchange, merger,
consolidation or asset sale, if, immediately prior to such Change of Control,
the holder had been the record owner of the number of shares of Common Stock
then covered by such option or Other Stock-Based Award.
(d) For the purposes of conversions or exchanges under paragraph
(iii) of Section 9.13(c), the "Change of Control Value" shall equal the amount
determined by whichever of the following items is applicable:
(i) the per share price to be paid to holders of Common
Stock in any such merger, consolidation or other reorganization,
(ii) the price per share offered to holders of Common Stock
in any tender offer or exchange offer whereby a Change of Control takes place,
or
(iii) in all other events, the fair market value of a share
of Common Stock, as determined by the Committee as of the date determined by the
Committee to be the date of conversion or exchange.
(e) In the event that the consideration offered to shareholders
of CenturyTel in any transaction described in this Section 9.13 consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered that is other than cash.
* * * * * * * * * *
IN WITNESS WHEREOF, the undersigned Secretary of CenturyTel, Inc.
hereby certifies that the foregoing CenturyTel 2002 Management Incentive
Compensation Plan was (i) recommended to the Board of Directors of CenturyTel,
Inc. (the "Board") by its Compensation Committee at a meeting of the
Compensation Committee duly held on February 25, 2002, (ii) approved by the
Board at a meeting duly held on February 26, 2002, and (iii) approved by the
affirmative vote of the holders of a majority of the voting power present at the
2002 Annual Meeting of Shareholders of the Company held on May 9, 2002.
Dated May 9, 2002 /s/ Harvey P. Perry
--------------------------
Harvey P. Perry
Secretary