Exhibit 10.2
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT dated as of May 23, 1995, by and
between Century Telephone Enterprises, Inc., a Louisiana corporation (the
"Company"), and ______________________ ("Officer").
In consideration of the respective covenants and agreements of the
parties contained herein, and intending to be legally bound hereby, the parties
agree as follows:
SECTION 1
DEFINITIONS
As used herein, the following terms shall have the meanings specified.
1.1 The "Act" - the Securities Exchange Act of 1934, as amended.
1.2 "Announcement Date" - the earlier of (i) the day of the public
announcement of a Change in Control (as hereinafter defined) or a proposal
that results in a Change in Control or (ii) the date that the Board enters into
negotiations with any person or entity, which negotiations result in a Change
in Control.
1.3 "Auditors" - the Company's regular independent auditors as of
the Announcement Date.
1.4 "Board" - the Board of Directors of the Company.
1.5 "Cause" - conviction of a felony, habitual intoxication, abuse of
or addiction to a controlled dangerous substance, excessive absenteeism, the
willful and continued failure by Officer to substantially perform his duties
hereunder (other than any such failure resulting from Officer's incapacity due
to physical or mental illness) after demand for substantial performance is
delivered by the Company that specifically identifies the manner in which the
Company believes Officer has not substantially performed his duties, or the
willful engaging by Officer in misconduct which is materially injurious to the
Company, monetarily or otherwise. For purposes of this paragraph, no act or
failure to act on Officer's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Officer shall not be deemed to have been
terminated for Cause without (i) reasonable notice to Officer setting forth the
reasons for the Company's intention to terminate for Cause, (ii) an opportunity
for Officer, together with his counsel, to be heard before the Board, and (iii)
delivery to Officer of notice from the Board finding that, in the good faith
opinion of the Board, Officer has been guilty of conduct set forth above in the
preceding sentence, and specifying the particulars thereof in detail.
1.6 "Change in Control" - (i) the occurrence of an event with
respect to the Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Act; (ii) any "person" (as such term in used in Section 13(d) and 14(d) of
the Act), other than the Company or any "person" who on the date hereof is
a director, officer, an employee benefit plan or related trust or affiliate of
the Company, becoming the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company representing 30%
or more of the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors; (iii) the
Company, its capital stock, or all or substantially all of its assets are
acquired by or combined with (either through a merger, consolidation, reorgan-
ization, share exchange or otherwise) with another entity and less than a
majority of the outstanding voting power of the parent or surviving corporation
are owned, immediately after consummation of such transaction, by Century's
shareholders immediately prior to such time; or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board ceasing for any reason to constitute at least a majority thereof,
unless the election of each director who was not a director at the beginning
of such period shall have been approved in advance by directors representing
at least two-thirds of the directors then in office who were directors at the
beginning of the period.
1.7 "Code" - Internal Revenue Code of 1986, as amended.
1.8 "Company" - Century Telephone Enterprises, Inc. or any
successor thereto.
1.9 "Compensation Amount" - the sum of (i) Officer's annual salary
as of the Announcement Date plus (ii) all cash and stock bonuses (valued on
the date of grant) earned by Officer for the most recent twelve-month period
ending before the effective date of a Change in Control.
1.10 "Effective Termination" - following an Announcement Date, any
action taken by the Company or any controlling entity of the Company in
relation to Officer's salary, duties or position as an officer of the Company,
other than an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company (or any controlling entity of the
Company) within three days after receipt of notice thereof given by Officer,
that, in Officer's reasonable judgment, results in any of the following: (a) a
reduction in Officer's salary as of the Announcement Date or a reduction in
the value of the benefits received by Officer under any pension or welfare
employee benefit plan maintained by the Company as of the Announcement
Date; (b) a diminution in Officer's duties, responsibilities and position in
the management of the Company and its subsidiaries including, without
limitation, (i) the permanent assignment to Officer of duties not consistent
with Officer's position as an officer of the Company, (ii) the demotion of
Officer or (iii) the failure to provide Officer with secretarial assistance
and all support, staff, office, equipment and other facilities necessary to
carry out his functions as an officer of the Company; (c) the relocation of
Officer to an office outside of the city in which he performed his services
for the Company immediately prior to the Announcement Date; or (d) the refusal
to allow Officer to attend to matters or engage in activities not directly
related to the business of the Company which are of the type which he attended
to or engaged in prior to the Announcement Date or was permitted to attend to
or engage in by the Chief Executive Officer or the Board prior to the
Announcement Date.
SECTION 2
TERM
This Agreement shall terminate on the earlier of (i) May 24, 2000 or
(ii) the date that Officer ceases to be an employee of the Company at any time
prior to an Announcement Date.
SECTION 3
COMPENSATION UPON TERMINATION
3.1 Compensation and Severance Benefits. (a) If, during the period
beginning on the Announcement Date and ending 18 months following the
effective date of a Change in Control, the Company (or any controlling entity
of the Company) shall terminate Officer's employment with the Company,
other than for Cause, or if Officer resigns because an event constituting an
Effective Termination has occurred, Officer shall receive, in addition to all
amounts to which he is entitled pursuant to the Company's termination policies
and plans then in effect, as severance pay, an amount equal to 150% of the
Compensation Amount. Such severance payment shall be made in a lump sum
within five business days of the date that Officer's employment is terminated
or the date that Officer notifies the Company that an event constituting an
Effective Termination has occurred.
(b) Contemporaneously with any payments due under
paragraph (a) and in addition to any other amounts due, the Company shall
pay in cash to Officer an additional amount (the "Gross-up Payment") such
that the sum of all such payments will enable Officer to receive on a net basis,
after deducting any excise tax imposed on Officer by Section 4999 of the Code
in connection with his receipt of all such payments and any federal, state and
local income taxes imposed on Officer in connection with his receipt of all
such payments, the same dollar amount as Officer would receive on a net basis
(after deducting any applicable federal, state and local income taxes) if no
such excise tax were payable under Section 4999 of the Code. In connection with
making the Gross-up Payment, the Company shall cause the Auditors to
furnish written calculations of (a) Officer's "base amount" within the meaning
of Section 280G of the Code and the regulations promulgated thereunder (the
"Base Amount"), (b) the amount of any "parachute payment" deemed to have
been received by Officer with respect to the Change in Control within the
meaning of Section 280G of the Code and the regulations promulgated
thereunder (the "Parachute Payment") and (c) the aggregate marginal income
tax rate applicable to Officer, after taking into account all applicable
federal, state and local income taxes (the "Applicable Rate"). Upon receipt
of these calculations from the Auditors, the parties shall, unless they
mutually agree in writing to the contrary, determine the amount of the
Gross-up Payment in accordance with the following formula:
G = (.2P - .2B) / (.8 - R)
where G is the amount of the Gross-up Payment, P is the amount of the
Parachute Payment, B is the Base Amount and R is the Applicable Rate. If
the Auditors fail to timely complete and deliver the calculations referred to
above, the Company may defer making the Gross-up Payment (but no other
payments contemplated hereunder) until such calculations are received,
provided that no deferral shall be permitted if the Auditor's untimeliness is
caused directly or indirectly by the Company's failure to cooperate in good
faith with the Auditors and further provided that in no event whatsoever shall
this payment be deferred by more than 10 business days.
3.2 Election of Benefits. In lieu of receiving the full amount of
payments provided under Subsection 3.1 hereof, Officer may, by written notice
to the Company, elect to receive, at the Company's expense, for a period of
up to five years following the date that his employment is terminated, medical
or life insurance benefits substantially similar to those benefits provided to
him by the Company on the Announcement Date. The present value of such
benefits shall be determined by the Auditors and deducted from the amounts
to be paid by the Company to Officer pursuant to Subsection 3.1 hereof.
3.3 Additional Obligations of the Company. Nothing herein shall
relieve the Company of its obligations to Officer under any qualified or non-
qualified retirement plan, deferred compensation plan, incentive compensation
plan, stock purchase plan, stock option plan, stock ownership plan, bonus plan,
supplemental plan, insurance program or plan, or any other compensation,
benefit or welfare plan or arrangement, or any agreement entered into
thereunder.
SECTION 4
SUCCESSORS; ASSIGNMENT
4.1 Successors to Officer. This Agreement and all rights of Officer
hereunder shall inure to the benefit of and be enforceable by the Officer's
personal or legal representative, executors, administrators, successors, heirs,
distributes, devises and legatees. If Officer should die while any amounts
would still be payable to him hereunder, had he continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Officer's devise, legatee, or other designee or,
if there be no such designee, to Officer's estate.
4.2 Successors to Company. This Agreement and all obligations of
the Company hereunder shall be binding on the Company and on any
successor to the Company. The Company hereby agrees that it will not enter
into any agreement to consolidate, amalgamate or merge with another entity
or to convey all or substantially all of its assets to another entity unless
such agreement provides for the rights set forth in this Agreement.
4.3 Assignment by Officer. Neither this agreement nor any of its
benefits may be assigned by Officer.
SECTION 5
MISCELLANEOUS
5.1 Notice. Any notice provided for in this Agreement shall be
actual notice and shall be deemed to have been duly given when actually
received by Officer.
5.2 Waiver. The failure by any party to enforce any of its rights
hereunder shall not be deemed to be a waiver of such rights, unless such
waiver is an express written waiver. Waiver of any one breach shall not be
deemed to be a waiver of any other breach of the same or any other provision
hereof.
5.3 Whole Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the
subject matter hereof, and there are no agreements or understandings among
the parties other than those set forth herein or provided hereby.
5.4 Choice of Law. The validity of this Agreement, the
construction of its terms and the determination of the rights and duties of the
parties hereto shall be governed by and construed in accordance with the laws
of the State of Louisiana applicable to contracts made and to be performed
wholly within such state.
5.5 Amendment. The parties may amend this Agreement by an
instrument in writing signed by both parties.
5.6 Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
5.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
5.8 Expenses. The Company shall reimburse Officer all expenses,
including attorneys' fees, actually and reasonably incurred by Officer in any
proceeding to enforce any of his rights under this Agreement.
5.9 Confidentiality. Upon receipt of the payments or benefits
contemplated by Section 3 hereof, Officer agrees to refrain for a period of 18
months from divulging any non-public, confidential or proprietary information
concerning the Company or its subsidiaries to any person or entity other than
the Company, its subsidiaries or their respective officers, directors or
advisors, provided that this obligation shall lapse prior to the end of such
18-month period with respect to any information that (i) is or becomes generally
available to the public other than as a result of a breach of this Section,
(ii) is or becomes available to Officer on a non-confidential basis from a
source other than the Company or its representatives, provided that such
source is not known by Officer to have violated any confidentiality agreement
with the Company in connection with such disclosure, or (iii) is acquired or
developed independently by Officer without violating this Section.
5.10 Demand for Benefits. Unless otherwise provided herein, the
payment or payments due hereunder shall be paid to Officer without the need
for demand, and to a beneficiary upon the receipt of the beneficiary's address
and Social Security number. Nevertheless, Officer or a person claiming to be
a beneficiary who claims entitlement to a benefit can file a claim for benefits
hereunder with the Company. Unless otherwise provided herein, the Company
shall accept or reject the claim within five business days of its receipt. If
the claim is denied, the Company shall give the reason for denial in a written
notice that refers to the provision of this Agreement that forms the basis of
the denial. If any additional information or material is necessary to perfect
the claim, the Company will identify these items in writing and explain why such
additional information is necessary.
IN WITNESS WHEREOF, the parties have executed this
instrument as of the date and year first above written.
CENTURY TELEPHONE ENTERPRISES, INC.
By: ______________________________
Glen F. Post, III
Vice Chairman, President and
Chief Executive Officer
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OFFICER