SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-b(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (')240.14a-11(c) or (')240.14a-12
D&E COMMUNICATIONS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of each class of securities to which
transaction applies:
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(6) Amount Previously Paid:
--------------------------------------------------------
(7) Form, Schedule or Registration Statement No.:
--------------------------------------------------------
(8) Filing Party:
--------------------------------------------------------
(9) Date Filed:
--------------------------------------------------------
Notes:
<PAGE>
D & E COMMUNICATIONS, INC.
Ephrata, Pennsylvania
------------------------
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO PARTICIPANTS OF THE D & E COMMUNICATIONS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
------------------------
The Annual Meeting of the Shareholders of D&E Communications, Inc. ("the
Company") will be held in accordance with the By-Laws of the Company, on
Thursday, April 27, 2000, at 10:30 a.m. local time, at the Brossman Business
Complex, 124 East Main Street, Ephrata, Pennsylvania 17522. The purposes of the
meeting, which are more fully described in the accompanying Proxy Statement,
are:
1. To elect four (4) Class B Directors for a term to expire in the year
2003 (or until their successors are duly elected and qualified);
2. To approve the D&E Communications, Inc. Employee Stock Purchase Plan;
3. To ratify the Board of Directors' selection of PricewaterhouseCoopers
LLP as the Company's independent accountants for 2000; and
4. To act upon such other business as may properly come before the meeting.
Only holders of common stock of record on the books of the Company at the
close of business on February 25, 2000, will be entitled to vote at the Annual
Meeting or any adjournment thereof. The Bank of Lancaster County, the trustee
(the "Trustee") of the D&E Communications, Inc. Employee Stock Ownership Plan
(the "ESOP"), is the record owner of the shares which have been allocated to
your ESOP account. Pursuant to the ESOP, you are entitled to direct the Trustee
on how to vote the shares allocated to your account by returning the enclosed
Participant's Direction Sheet. A copy of the Proxy Statement, the 1999 Annual
Report of the Company, and a Participant's Direction Sheet are being mailed to
you simultaneously prior to the Annual Meeting. The Board of Directors' nominees
for directors are set forth in the accompanying Proxy Statement, as well as
further information on the foregoing matters.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. IT REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
March 23, 2000 By Order of the Board of Directors
W. Garth Sprecher
Secretary
Enclosures
<PAGE>
D & E COMMUNICATIONS, INC.
Ephrata, Pennsylvania
NOTICE OF 2000 ANNUAL MEETING
TO SHAREHOLDERS AND PARTICIPANTS
IN THE DIVIDEND REINVESTMENT PLAN
The Annual Meeting of the Shareholders of D&E Communications, Inc. ("the
Company") will be held in accordance with the By-Laws of the Company on
Thursday, April 27, 2000, at 10:30 am. local time, at the Brossman Business
Complex, 124 East Main Street, Ephrata, Pennsylvania 17522. The purposes of the
meeting, which are more fully described in the accompanying Proxy Statement,
are:
1. To elect four (4) Class B Directors for a term to expire in the year
2003 (or until their successors are duly elected and qualified);
2. To approve the D&E Communications, Inc. Employee Stock Purchase Plan;
3. To ratify the Board of Directors' selection of PricewaterhouseCoopers
LLP as the Company's independent accountants for 2000; and
4. To act upon such other business as may properly come before the meeting.
Only holders of common stock of record on the books of the Company at the
close of business on February 25, 2000, will be entitled to vote at the Annual
Meeting or any adjournment thereof.
For those shareholders who are also participants in the D&E Communications,
Inc. Dividend Reinvestment Plan (the "DRP"), for which the Company serves as
trustee and is the record owner of those shares, you are entitled to direct the
trustee on how to vote the shares allocated to your account by returning the
enclosed Participant's Direction Sheet. A copy of the Proxy Statement, the 1999
Annual Report of the Company, a Proxy Sheet, and a Participant's Direction Sheet
are being mailed to you simultaneously prior to the Annual Meeting. The Board of
Directors' nominees for directors are set forth in the accompanying Proxy
Statement, as well as further information on the foregoing matters.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. IT REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
March 23, 2000
By Order of the Board of Directors
W. Garth Sprecher
Secretary
Enclosures
<PAGE>
PROXY STATEMENT
Proxies in the accompanying form are being solicited by the Board of
Directors (the "Board") of D&E Communications, Inc. (the "Company"), for use at
the Annual Meeting of the Shareholders to be held at 10:30 a.m. on Thursday,
April 27, 2000 at the Brossman Business Complex, 124 East Main Street, Ephrata,
Pennsylvania 17522 (the "Annual Meeting"). This proxy statement and the form of
proxy are being mailed to the Shareholders (as defined below) commencing on or
about March 23, 2000.
Only holders of shares of common stock, par value $0.16 per share, of the
Company ("Common Stock") as shown on the books of the Company at the close of
business on February 25, 2000 (the "Record Date") will be entitled to vote at
the meeting. On the Record Date, there were 7,341,776 shares of Common Stock
outstanding. Holders of record of Common Stock at the close of business on the
Record Date (the "Shareholders"), or their proxies, are entitled to cumulative
voting rights in the election of directors at the Annual Meeting. Under
cumulative voting, a Shareholder, or the Shareholder's proxy, may vote the
number of shares of Common Stock owned by the Shareholder for as many persons as
there are directors to be elected, or may cumulate such votes and give to one,
or distribute among two or more nominees, as many votes as shall equal the
number of directors to be elected multiplied by the number of the Shareholder's
shares of Common Stock. Those persons receiving the highest number of votes are
declared to be elected directors of the Company. For all other purposes, the
Shareholders, or their proxies, are entitled to one vote per each share of
Common Stock at the Annual Meeting.
Judges of election are appointed by the Board to conduct the tabulation of
votes with respect to the election of directors and the other matters to come
before the Annual Meeting and to report the results thereof. The presence in
person or by proxy of the holders of a majority of the shares of Common Stock
outstanding and entitled to vote is required to constitute a quorum for
transaction of business at the Annual Meeting. Except with respect to the
election of directors, the holders of Common Stock have one vote for each share
held by them as of the Record Date.
Under the Company's Articles of Incorporation and By-Laws, and applicable
law, the affirmative vote of shareholders entitled to cast at least a majority
of the votes which all shareholders present at the meeting are entitled to cast
generally is required for shareholder ratification of the selection of
PricewaterhouseCoopers LLP as independent accountants of the Company for the
fiscal year ending December 31, 2000. As such, abstentions generally have the
effect of a negative vote. Any broker non-votes on a particular matter have no
effect since, by definition, they are not entitled to be cast on the matter.
With regard to the election of directors, votes may be cast in favor of a
candidate or may be withheld. As directors are elected by a plurality,
abstentions and broker non-votes have no effect on the election of directors.
PROPOSAL 1: ELECTION OF FOUR (4) DIRECTORS
The Company's Articles of Incorporation provide for a maximum of twelve
(12) directors to be elected to the Company's Board. The Company has determined
that one or more vacancies in the Board may be appropriate and therefor proxies
may not be voted for a greater number of nominees than are named herein.
The Board currently consists of eleven (11) members divided into three (3)
classes which are classified with respect to the year in which their term shall
expire. Each class of directors holds office for a term of three (3) years (or
until their successors are duly elected and qualified), and the three (3)
classes of the Board are staggered. Accordingly, one of the three (3) classes is
elected each year to succeed the directors whose terms are expiring. Currently,
the directors in Class B are serving terms expiring this year. The directors in
Classes C and A are serving terms expiring at the annual meeting of the
shareholders in 2001 and 2002, respectively. The Board has nominated for
re-election to Class B four (4) directors whose terms expire this year; namely
Thomas H. Bamford, Ronald E. Frisbie, Robert M. Lauman and D. Mark Thomas. If
elected, their terms are to expire in the year 2003 (or until their successors
are duly elected and qualified). There are no arrangements or understandings
between any
1
<PAGE>
director or nominee and any other person pursuant to which the director or
nominee was or is to be elected as a director.
The Company has been advised by the persons named in the accompanying proxy
that they intend to vote pursuant to the proxy for the election of Messrs.
Bamford, Frisbie, Lauman and Thomas (who are presently directors of the Company
with regular terms expiring this year) and to exercise cumulative voting, if
necessary, to secure their election. Each individual nominated for election as a
director has agreed to serve if elected. However, the Company is informed that
in the event of the refusal or inability of any of the foregoing nominees for
director to serve, the persons named in the accompanying proxy intend to vote at
the Annual Meeting pursuant to the proxy for the election of such person(s), if
any, as may be nominated by the Board, subject to the right of the persons named
in the proxy to exercise cumulative voting rights as described above.
DIRECTORS
Information follows about each nominee to serve in Class B and the other
directors serving in Classes C and A.
Nominees for Class B Directors For Terms To Expire In 2003
Thomas H. Bamford, age 60, is a principal in The Franklin Consulting Group
(TFCG), a company providing organizational development, strategic planning and
fund raising counsel to colleges, universities and other human services groups.
He was Director of Community Relations at the Lancaster Health Alliance until
1999 when he elected to pursue his work with TFCG on a full time basis. Mr.
Bamford retired as Senior Vice President, Director of Corporate Communications,
and Lancaster Area Executive Officer for CoreStates Bank in 1995 after nearly 27
years of service. He is an accredited member of the Public Relations Society of
America. Currently, Mr. Bamford is a director of the United Way of Lancaster
County, The Lancaster Campaign, the Lancaster Housing Opportunities Partnership,
and the Lancaster YMCA Foundation. He is vice chairman of the Louise von Hess
Foundation for Medical Education, president-elect of the Rotary Club of
Lancaster and a member of the Marketing and Communications Council of the
Lancaster Chamber of Commerce and Industry. He became a Director of the Company
in 1997. Mr. Bamford is a member of the Compensation Committee and Chairman of
the Strategic Planning and Review Committee.
Ronald E. Frisbie, age 77, retired from the Company in 1992 where he served
as a Vice President of the Company from 1971 until 1992, and Secretary,
Treasurer and Assistant to the President from 1985 until 1992. He was employed
by the Western Electric Company from 1947 to 1949 and the Commonwealth Telephone
Company from 1949 to 1953 at which time he became employed by the Company as
Wire Chief. Mr. Frisbie has been a Director since 1983. Mr. Frisbie is a member
of the Audit Committee and the Strategic Planning and Review Committee.
Robert M. Lauman, age 74, has been the Executive Vice President and Chief
Operating Officer of the Company since 1990. He joined the Company in 1983 and
was previously employed by Bell of Pennsylvania from 1946 to 1983, at which time
he retired as Vice President -- Engineering. Mr. Lauman is a registered
Professional Engineer, a member of the Pennsylvania Society of Professional
Engineers and a member of the Institute of Electrical and Electronics Engineers,
Inc. He has been a Director of the Company since 1983. Mr. Lauman is a member of
the Executive Committee, the Compensation Committee, and the Strategic Planning
and Review Committee.
D. Mark Thomas, age 52, has been a managing partner in the law firm of
Thomas, Thomas, Armstrong & Niesen, Harrisburg, PA, since the formation of the
firm in 1991, concentrating primarily in public utility and telecommunications
law. Previous thereto, he was a partner in the law firm of Thomas & Thomas from
1977 to 1990. Mr. Thomas became a Director of the Company in 1997. Mr. Thomas is
a member of the Audit Committee.
2
<PAGE>
Class C Directors Whose Terms Expire In 2001
Paul W. Brubaker, age 56, is a Director, Executive Vice President and
Corporate Secretary of the Ephrata National Bank where he has been employed
since 1961. He is a member of the American Institute of Banking and serves as a
director of Pleasant View Retirement Community, Manheim. He serves as Chairman
of the Board for the Atlantic Northeast District, Church of the Brethren. Mr.
Brubaker is a member of the Executive Committee of the Pennsylvania Bankers
Association. He has been a Director of the Company since 1990. Mr. Brubaker is
Chairman of the Audit Committee.
Robert A. Kinsley, age 59, is Chairman and Chief Executive Officer of
Kinsley Construction, a company he founded in York, PA in 1963 that specializes
in heavy, general, and design build construction. Mr. Kinsley is also managing
partner of Kinsley Equities, which is a regional real estate developer of
industrial and commercial properties. He is also a director of Mercantile --
Safe Deposit & Trust Company, Baltimore, Maryland and Ruscilli Construction
Company of Columbus, Ohio. Mr. Kinsley is Chairman of the Board of I. B. Abel,
an electrical construction firm in south central Pennsylvania. He serves
numerous community and professional organizations and is currently President of
South George Street Community Partnership, Chairman of the York County Air
Transpiration Authority, member of the York Foundation Board of Directors and a
Trustee of York College Of Pennsylvania. He has been a Director of the Company
since 1998. Mr. Kinsley is a member of the Compensation Committee and the
Strategic Planning and Review Committee.
Steven B. Silverman, age 67, has been a senior partner in the law firm of
Rothenberg, Silverman and Furman PC, Elkins Park, Pennsylvania since 1995. Prior
to 1995 he was a senior partner in Rothenberg and Silverman. In addition to his
private practice, he serves as an adjunct professor of labor law at Dickinson
School of Law in Carlisle, Pennsylvania. He has been a Director of the Company
since 1991. Mr. Silverman is Chairman of the Compensation Committee.
Anne B. Sweigart, age 85, has held the positions of Chief Executive
Officer, President and Chairman of the Board of the Company since July 1985. She
became a Director in 1952. Mrs. Sweigart served as Executive Vice President from
March 1981 to July 1985. Her employment began in 1936, twenty-five years after
her father founded the Company. From that time until today, she has always been
involved in the management affairs of the Company. She serves on numerous
community Boards and is currently a Trustee of Rider University, a Trustee of
Elizabethtown College, an Honorary Trustee of Lebanon Valley College and a
Trustee of Linden Hall School for Girls. Mrs. Sweigart is also a Director of the
Pennsylvania Telephone Association. Mrs. Sweigart is a member of the Strategic
Planning and Review Committee and serves as Chairman of the Executive Committee.
Class A Directors Whose Terms Expire In 2002
John Amos, age 68, has been in the commercial fruit and produce growing
business for more than 45 years in Grand Traverse County, Michigan serving as
President of Hi-Lo Farms, Inc. since 1979 and as Senior Partner of Amos Farms
since 1980. He became a member of the Board in 1990. Mr. Amos is a member of the
Compensation Committee.
G. William Ruhl, age 60, has been the Senior Vice President of the Company
and Chief Executive Officer of D&E Telephone Company since 1996. From 1991, when
he joined the Company, to 1996 he held the position of Senior Vice President of
D&E Telephone Company. He was previously employed by Bell of Pennsylvania from
1961 to 1991, at which time he retired as Director of Network Architecture and
Deployment Planning. Mr. Ruhl is a registered Professional Engineer and a member
of the Institute of Electrical and Electronics Engineers, Inc. He served as
Chairman of the Board of Directors of Monor Telephone Company from 1994 until
1999 when the company was sold. He serves on the Board of Directors of the
United States Telephone Association (USTA) and was appointed to the President's
National Security Telecommunications Advisory Committee, representing the USTA.
Mr. Ruhl serves on the Board of Directors of the Technology Council of Central
Pennsylvania and serves on the Board of Alliance for Telecommunications Industry
Solutions. He is also President of the Board of Directors of the Central
Pennsylvania Symphony. He became a Director of the Company in 1993. Mr. Ruhl is
a member of the Executive Committee.
3
<PAGE>
W. Garth Sprecher, age 48, is Vice President and Secretary of the Company.
He joined the Company in 1984 as a Communications Consultant for D&E Telephone
and Data Systems, Inc. He was named Commercial Manager of the Company in 1988.
In 1990, he assumed the position of Assistant Secretary and Director of External
Affairs, and in 1996, he assumed his present position. He is a member of the
Board of Directors of the Bank of Lancaster County and serves on both the
Executive and Compensation Committees. He is also immediate past President of
the Board of Directors of the Mid-Atlantic Chapter of the American Society of
Corporate Secretaries. Mr. Sprecher is Vice-Chairman of the Lancaster County
Convention Center Authority and is President-elect of the Pennsylvania Dutch
Council of the Boy Scouts of America. He became a Director of the Company in
1993. Mr. Sprecher is a member of the Executive Committee.
GENERAL INFORMATION REGARDING THE BOARD OF DIRECTORS
Director Attendance at Board Meetings
The Board held a total of ten (10) regularly scheduled meetings during the
year ended December 31, 1999. Each incumbent director attended in excess of 75%
of the aggregate meetings of the Board and the Board's committees on which he or
she served. The Board has the following four (4) standing committees: the Audit
Committee, the Compensation Committee, the Executive Committee and the Strategic
Planning and Review Committee.
Compensation of Directors
The directors were paid a $4,000 retainer plus $800 per meeting which they
attended and $250 per any committee meeting of the Board, not held in
conjunction with a Board meeting. Committee chairs receive an additional annual
compensation of $500.
BOARD COMMITTEES
Audit Committee
The current Audit Committee, consisting of Paul W. Brubaker (Chairman),
Ronald E. Frisbie, and D. Mark Thomas, is responsible for recommending to the
Board the firm of independent public accountants responsible to audit the
Company's financial statements. This Committee also reviews with the independent
public accountants the results of their audit work. The Audit Committee held two
(2) meetings during 1999.
Compensation Committee
The current Compensation Committee, consisting of Steven B. Silverman
(Chairman), John Amos, Thomas H. Bamford, Robert A. Kinsley and Robert M.
Lauman, reviews and makes recommendations to the Board regarding the
compensation practices of the Company. The Compensation Committee held four (4)
meetings during 1999.
Executive Committee
The current Executive Committee, consisting of Anne B. Sweigart (Chairman),
Robert M. Lauman, G. William Ruhl and W. Garth Sprecher, is designed to perform
and uphold the duties and responsibilities of the Board as dictated by the
By-Laws of the Company and within the limitations set by the Board. The
Executive Committee held six (6) meetings during 1999.
Strategic Planning and Review Committee
The current Strategic Planning and Review Committee, consisting of Thomas
H. Bamford (Chairman), Ronald E. Frisbie, Robert A. Kinsley, Robert M. Lauman
and Anne B. Sweigart, considers the long range direction of the Company's goals.
The committee addresses technical developments, the changing regulatory
environment and marketing strategy for the Board's consideration. This committee
formed late in 1999 held no meetings during 1999.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
As of March 7, 2000 (the "Most Practicable Date"), there were 7,337,119
shares of the Company's Common Stock outstanding. The table below sets forth the
ownership of the Common Stock held, as of the Most Practicable Date, by each of
(i) the directors, (ii) the executive officers and (iii) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
NATURE AND AMOUNT OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------ ----------------------- --------
<S> <C> <C>
John Amos..................................... 63,150(4,7) *
Thomas H. Bamford............................. 1,500 *
Paul W. Brubaker.............................. 3,375(1,9) *
Ronald E. Frisbie............................. 49,830(1,3,4) *
Donald R. Kaufmann............................ 1,542(1,2,6) *
Robert A. Kinsley............................. 1,040(6) *
Robert M. Lauman.............................. 57,875(1,2,4,5,6) *
Thomas E. Morell.............................. 3,101(2,5) *
G. William Ruhl............................... 6,552(1,2,5,6) *
Steven B. Silverman........................... 1,095(6) *
W. Garth Sprecher............................. 100,493(1,2,4,5,6) 1.37%
Anne B. Sweigart.............................. 392,199(1,2,4,5,6) 5.35%
D. Mark Thomas................................ 3,637(8) *
All Directors and Executive Officers as a
group....................................... 685,389(1,2,3,4,5,6,7,8,9) 9.34%
</TABLE>
- ------------------
* Less than 1 percent.
(1) Includes shares owned in their individual capacities but
held by the D&E Communications, Inc. Voting Trust (the
"Voting Trust") as of the Most Practicable Date as follows:
3,375 for Mr. Brubaker, 49,530 for Mr. Frisbie, 500 for Mr.
Kaufmann, 47,315 for Mr. Lauman, 1,372 for Mr. Ruhl, 98,220
for Mr. Sprecher, 386,519 for Mrs. Sweigart, and 586,831 for
all directors and officers as a group. Mrs. Sweigart and
Messrs. Amos, Frisbie, Lauman and Sprecher are Voting
Trustees of the Voting Trust.
(2) Includes shares held in the Company's Employee Stock
Ownership Plan as of the Most Practicable Date as follows:
928 for Mr. Kaufmann, 1,571 for Mr. Lauman, 1,908 for Mr.
Morell, 2,100 for Mr. Ruhl, 1,674 for Mr. Sprecher, 278 for
Mrs. Sweigart and 8,459 for all directors and officers as a
group. All fractional shares are rounded to the nearest
whole share.
(3) Does not include 920 shares owned by Mr. Frisbie's wife,
with respect to which Mr. Frisbie disclaims beneficial
ownership.
(4) Excludes shares not owned in their individual capacities but
held by the Voting Trust for which Mrs. Sweigart and Messrs.
Amos, Frisbie, Lauman and Sprecher serve as Trustees, and to
which each of the Trustees disclaims beneficial ownership.
(5) Includes shares held in the Company's Employee Stock
Purchase Plan as of the Most Practicable Date as follows:
2,195 for Mr. Lauman, 1,193 for Mr. Morell, 2,660 for Mr.
Ruhl, 577 for Mr. Sprecher, 2,394 for Mrs. Sweigart and
9,019 for all directors and officers as a group.
(6) Includes shares held in the Company's Dividend Reinvestment
Plan as of the Most Practicable Date as follows: 34 for Mr.
Kaufmann, 40 for Mr. Kinsley, 6,494 for Mr. Lauman, 120 for
Mr. Ruhl, 95 for Mr. Silverman, 22 for Mr. Sprecher, 2,708
for Mrs. Sweigart and 9,513 for all directors and officers
as a group.
(7) Includes shares held in the John Amos Living Trust, of which
Mr. Amos is trustee. Does not include 65,709 owned by the
Mary P. Amos Living Trust, of which Mr. Amos' wife is
trustee, and to which Mr. Amos disclaims beneficial
ownership.
(8) Includes 300 shares held as custodian for Emily Thomas and
600 shares held as custodian for David Thomas for which Mr.
Thomas does not disclaim beneficial ownership.
(9) Does not include 625 shares owned by Mr. Brubaker's wife,
with respect to which Mr. Brubaker disclaims beneficial
ownership.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than 10
percent of a registered class of the Company's equity securities, to file
reports of ownership and change in ownership with the Securities and Exchange
Commission and Nasdaq. Directors, executive officers, and other 10 percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
Solely on its review of the copies of such forms or written representations
from certain reporting persons that no Form 5s were required for those persons,
the Company believes that during 1999, all filing requirements under Section
16(a) applicable to its directors and executive officers were met.
IDENTIFICATION OF EXECUTIVE OFFICERS
The following table sets forth the names, ages, and positions of the
executive officers of the Company. All executive officers of the Company serve
for terms of one year and until re-appointed or until a successor is duly
appointed at the annual organizational meeting of directors, which follows the
annual shareholders' meeting. No executive officers have any arrangements or
understandings with any other person pursuant to which such executive officer
was or is to be appointed as an executive officer.
<TABLE>
<CAPTION>
POSITION
NAME AGE POSITION HELD SINCE
- ---- --- -------- ----------
<S> <C> <C> <C>
Anne B. Sweigart.................. 85 Chairman, President, and Chief Executive 1985
Officer
Robert M. Lauman.................. 74 Executive Vice President and Chief 1990
Operating Officer
G. William Ruhl................... 60 Senior Vice President 1991
Thomas E. Morell.................. 39 Vice President, Chief Financial Officer 1995
and Treasurer (1)
W. Garth Sprecher................. 48 Vice President and Secretary (1) 1993
Donald R. Kaufmann................ 57 Vice President of Corporate Development 1996
</TABLE>
- ------------------
(1) Both Messrs. Morell and Sprecher were elected as a Vice President in 1996.
Mrs. Sweigart's and Messrs. Lauman, Ruhl and Sprecher's biographies are set
forth above in the section entitled "Directors".
Thomas E. Morell, age 39, is Vice President, Chief Financial Officer and
Treasurer of the Company. Mr. Morell was Assistant Controller of the Company
from 1984 to 1990, Controller from 1990 to 1995 and Chief Financial Officer and
Treasurer since August 22, 1995. From 1982 to 1984, he was employed by Coopers &
Lybrand LLP as an auditor. Mr. Morell is Managing Director of PenneCom B. V., a
Supervisory Board member of Pilicka Telephone Company and serves as Vice-
Chairman on the Board of Directors of Hands-on-House, Children's Museum of
Lancaster. Mr. Morell is a Certified Public Accountant and is a member of the
Pennsylvania Institute of Certified Public Accountants.
Donald R. Kaufmann, age 57, is Vice President of Corporate Development.
From 1995, when he joined the Company, until 1996, he served as Managing
Director of New Business Ventures and from 1996 to 1999, he served as Chief
Executive Officer of the Company's subsidiary, D&E Telephone and Data Systems,
Inc. Mr. Kaufmann was employed by Bell Atlantic from 1965 to 1995. When Mr.
Kaufmann left Bell Atlantic, he was Director of Network Investment Management.
Mr. Kaufmann is a Chartered Financial Analyst (CFA).
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation received for services to
the Company and its subsidiaries during each of the last three (3) fiscal years
by the Company's CEO and, in addition, the individuals who during 1999 were the
four (4) most highly compensated executive officers of the Company and who
received in excess of $100,000 in salary and bonus.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------------- PERFORMANCE ALL OTHER
OTHER ANNUAL RESTRICTED ANNUAL
SALARY BONUS COMPENSATION SHARE AWARD COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $ ($)(A) ($)(B) ($)(D) ($)(C)
- --------------------------- ---- -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Anne B. Sweigart.......... 1999 $204,384 $91,582 $ -- $80,500 $183,098
Chairman, President & 1998 184,999 64,750 -- -- 185,218
CEO 1997 171,154 76,500 -- -- 180,144
Robert M. Lauman.......... 1999 $173,577 $77,974 $ -- $80,500 $ 59,736
Executive Vice President 1998 156,499 54,775 -- -- 63,887
& Chief Operating Officer 1997 147,270 65,925 -- -- 60,672
G. William Ruhl........... 1999 $119,385 $55,602 $ -- $80,500 $ 19,854
Senior Vice President 1998 100,000 35,000 -- -- 27,250
1997 88,000 39,150 -- -- 26,483
Thomas E. Morell.......... 1999 $111,538 $49,679 $ -- $80,500 $ 6,183
Vice President, Chief 1998 100,000 35,000 -- -- 5,949
Financial Officer and 1997 78,769 34,650 -- -- 9,829
Treasurer
W. Garth Sprecher......... 1999 $ 97,077 $44,817 $ -- $80,500 $ 12,379
Vice President and 1998 80,001 28,000 -- -- 19,900
Secretary 1997 74,001 33,075 -- -- 19,483
</TABLE>
(A) Bonuses are established pursuant to the Company's Officer
Incentive Plan under performance targets for the year
established by the Compensation Committee. Targets for 1999
were set during the first quarter of 1999.
(B) The aggregate amounts of other annual compensation paid to
the named executive officers did not exceed the lesser of
(i) $50,000 or (ii) 10% of the total annual salary and bonus
reported for each individual.
(C) The amounts shown in this column are for the following
persons for the following items in the years 1999, 1998, and
1997, respectively:
(i) Anne B. Sweigart: $19,199, $19,297, and $19,470 for Split
Dollar Life Insurance; $3,200, $3,200, and $3,374 for the
401(k) Company Match; $156,249, $150,471, and $144,800 for
Pension Benefits (over age 70 1/2); $4,450, $12,250, and
$12,500 for Director's fees;
(ii) Robert M. Lauman: $15,120, $15,205, and $15,432 for the
Split Dollar Life Insurance; $3,200, $3,200, and $2,938 for
the 401(k) Company Match; $36,716, $33,232, and $29,802 for
Pension Benefits (over age 70 1/2); $4,700, $12,250, and
$12,500 for Director's fees;
(iii) G. William Ruhl: $11,767, $11,767, and $11,773 for the Split
Dollar Life Insurance; $549, $450, and $450 for Term Life
Insurance; $3,088, $2,783, and $1,760 for the 401(k) Company
Match; $4,450, $12,250, and $12,500 for Director's fees;
7
<PAGE>
(iv) Thomas E. Morell: $3,192, $3,190, and $3,188 for the Split
Dollar Life Insurance; $60, $66, and $66 for Term Life
Insurance; $2,931, $2,693, and $1,575 for the 401(k) Company
Match; $0, $0, and $5,000 for Director's meeting attendance
fees;
(v) W. Garth Sprecher: $5,295, $5,310, and $5,329 for the Split
Dollar Life Insurance; $132, $174, and $174 for Term Life
Insurance; $2,502, $2,256, and $1,480 for the 401(k) Company
Match; $4,450, $12,250, and $12,500 for Director's fees.
(D) If they remain Named Officers at December 31, 2001, the
payout value of these awards to Mrs. Sweigart, and Messrs.
Lauman, Ruhl, Morell and Sprecher would be: (a) none, if the
earnings per share target is not met; or (b) the current
market value of 100% of the shares granted, plus an
additional 40% cash award, which is included in the amount
above, and accrued dividends reinvested during the
Performance Period. The total award will be 100% vested upon
completion of the Performance Period.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER
NON-STOCK
NUMBER OF PERFORMANCE PRICE-BASED PLANS
PERFORMANCE PERIOD UNTIL -----------------------------
RESTRICTED MATURATION OR THRESHOLD TARGET MAXIMUM
NAME SHARES PAYOUT ($) ($) ($)
- ---- ----------- ------------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Anne B. Sweigart................... 4,000 1999 - 2001 $ -- $80,500 $80,500
Robert M. Lauman................... 4,000 1999 - 2001 -- 80,500 80,500
G. William Ruhl.................... 4,000 1999 - 2001 -- 80,500 80,500
Thomas E. Morell................... 4,000 1999 - 2001 -- 80,500 80,500
W. Garth Sprecher.................. 4,000 1999 - 2001 -- 80,500 80,500
</TABLE>
- ------------------
After shareholder approval in April 1999, the Performance Restricted Share
Awards listed in the table were made effective January 1, 1999. If they remain
Named Officers at December 31, 2001, the payout value of these awards to Mrs.
Sweigart, and Messrs. Lauman, Ruhl, Morell and Sprecher would be: (a) none, if
the earnings per share target is not met; or (b) the current market value of
100% of the shares granted, plus an additional 40% cash award, which is included
in the amount above, and accrued dividends reinvested during the Performance
Period. The total award will be 100% vested upon completion of the Performance
Period.
Compensation Committee Report On Executive Compensation
The Company's executive compensation program is administered by the
Compensation Committee (the "Committee") comprised of Directors Steven B.
Silverman (Chairman), John Amos, Thomas H. Bamford, Robert A. Kinsley, and
Robert M. Lauman.
In establishing the base salaries of the executive officers of the Company,
including the Chief Executive Officer, Mrs. Sweigart, the Committee considers a
number of factors including (i) salary ranges for comparable positions at other
companies; (ii) the historical financial performance of the Company (including
such indicators as gross revenues, operating income, net income, earnings per
share and earnings before interest, taxes, depreciation and amortization
(EBITDA); (iii) the level of responsibility of the employee; and (iv) the level
of inflation for the period. However, compensation decisions are not based upon
any precise formula and no factor is accorded any greater weight than other
factors. During 1998, a compensation consultant retained by the Committee
developed recommended salary ranges for executive officers of the Company based
on a comparison of salaries paid at comparable companies for positions with
equivalent levels of responsibility. (There is, however, no intentional relation
between the companies used for compensation purposes and the companies in the
NASDAQ Telecommunications Index (Nasdaq Telecom) used in the Stock Performance
Graph below.) Using the consultant's recommendations, and based on the
Committee's
8
<PAGE>
evaluation of the factors listed above, the base salary of the Chief Executive
Officer was increased by 14.6% for 1999 from 1998.
The Company provides an annual incentive opportunity to the Company's
executive officers pursuant to the Company's Officer Incentive Plan, which has
been approved by the Board of Directors. Under the Plan, the Committee
establishes performance targets for EBITDA for the year on a tiered basis
providing for larger percentages of pay as bonus in relation to the level of
meeting or exceeding the target. In 1999, the minimum performance goals
established by the Committee at the beginning of the year were achieved, and
bonuses were paid accordingly.
The Company also provides a long-term incentive opportunity to the
Company's officers and key employees pursuant to the Company's 1999 Long-Term
Incentive Plan, which has been approved by the Board of Directors and
shareholders. Under the Plan, the Committee established performance targets for
earnings per share for the three year period ending December 31, 2001. See the
table on page 8.
Respectfully Submitted,
The Compensation Committee
Steven B. Silverman
John Amos
Thomas H. Bamford
Robert A. Kinsley
Robert M. Lauman
9
<PAGE>
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 1999, Messrs. Silverman (Chairman),
Amos, Bamford, Kinsley and Lauman served on the Compensation Committee of the
Board. Mr. Lauman is an executive officer of the Company.
Pension Plan Table
The Company's pension plan is a noncontributory defined benefit plan
computed on an actuarial basis covering all eligible employees. The plan
provides benefits based on years of service and the employee's compensation as
the average of the highest three consecutive years of the previous ten years
immediately prior to retirement. Accrued benefits are vested after five years of
service. Normal retirement age is 65, but an employee who has attained the age
of 55 and has at least 25 years of service (The Rule of Eighty) may retire
without any actuarial reduction of his benefit. Benefit amounts are not subject
to any deduction for Social Security or other amounts.
The following table illustrates the maximum annual benefit payable upon
retirement pursuant to the Company's pension plan for employees with specified
average final compensation and years of service, assuming normal retirement age
and payment as a single life annuity. The Internal Revenue Service annual plan
compensation limit is $170,000.
AVERAGE YEARS OF SERVICE
FINAL -----------------------------------------------
COMPENSATION 15 20 25 30 35
------------ ------- ------- ------- ------- -------
$100,000 $24,000 $32,000 $40,000 $48,000 $56,000
120,000 28,800 38,400 48,000 57,600 67,200
140,000 33,600 44,800 56,000 67,200 78,400
160,000 38,400 51,200 64,000 76,800 89,600
170,000 40,800 54,400 68,000 81,600 95,200
180,000 40,800 54,400 68,000 81,600 95,200
200,000 40,800 54,400 68,000 81,600 95,200
300,000 40,800 54,400 68,000 81,600 95,200
400,000 40,800 54,400 68,000 81,600 95,200
500,000 40,800 54,400 68,000 81,600 95,200
Compensation included in the pension plan base consists of the base salary and
bonus shown in the Salary and Bonus columns of the Summary Compensation Table.
The years of service for purposes of the pension plan, as of December 31, 1999,
were for Mrs. Sweigart 63 years, Mr. Lauman 16 years, Mr. Ruhl 8 years, Mr.
Morell 15 years and Mr. Sprecher 15 years.
10
<PAGE>
STOCK PERFORMANCE GRAPH
The following is a graphical comparison of five-year cumulative total
return on shares of the Company's Common Shares. The comparison assumes $100
invested in each of the Nasdaq U.S. and Foreign Index (Nasdaq US & Foreign), the
Nasdaq Telecommunications Index (Nasdaq Telecom) and the Company's Common Stock,
on December 31, 1994 and that all dividends were reinvested.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq U.S. &
Foreign.............. $100.00 $140.36 $171.84 $209.85 $290.17 $531.74
Nasdaq Telecom......... $100.00 $130.91 $133.86 $195.75 $322.30 $561.27
D & E.................. $100.00 $111.37 $110.50 $ 85.27 $ 68.09 $ 92.05
</TABLE>
The Common Stock is currently traded on The Nasdaq Stock Market National
Market ("NASDAQ") under the Symbol DECC. Prior to being traded on the NASDAQ,
the Common Stock was traded on the over-the-counter market. For the periods
prior to NASDAQ trading represented on the graph, the comparative prices are an
average of the high and low closing prices of the Common Stock on the last
trading day before the beginning of each fiscal year reported above, as reported
on the interdealer quotation system and summarized in the "Pink Sheets"
published by the National Quotation Bureau. Such quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following Common Stock ownership information is shown as of the Record
Date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------------------ -------------------- --------
<S> <C> <C>
The Voting Trust D & E Communications, Inc............... 2,907,721(1) 39.61%
(the "Voting Trust")
P.O. Box 458
Ephrata, PA 17522
Southwestern Investments, Inc............................ 1,300,000 17.71%
High Ridge Park
Stamford, CT 06905
The Ephrata National Bank, Trustee of the
William and Jemima Brossman Charitable Foundation
(the "Charitable Foundation").......................... 1,040,100(2) 14.17%
P.O. Box 457
Ephrata, PA 17522
Anne B. Sweigart......................................... 392,199(3) 5.34%
P.O. Box 458
Ephrata, PA 17522
</TABLE>
- ------------------
(1) Certain shareholders are parties to the Voting Trust Agreement, dated as of
November 19, 1992, pursuant to which the Voting Trustees named therein have
the right to exercise sole voting power on all matters submitted to the
Company's shareholders for a vote, but not investment power, with respect to
the shares held by such shareholders. By its terms, the Voting Trust expires
November 18, 2002. The Trustees of the Voting Trust are Anne B. Sweigart,
John Amos, Ronald E. Frisbie, Robert M. Lauman and W. Garth Sprecher, each
of whom is a Director of the Company. Each of the Voting Trustees disclaims
beneficial ownership of the shares held by the Voting Trust, except such
shares held by each individual Trustee as a participant in the Voting Trust.
(2) The Charitable Foundation is a member of the Voting Trust. Therefore, the
number of shares shown above as held by the Charitable Foundation is also
included in the number of shares shown above held by the Voting Trust. The
Ephrata National Bank, as trustee of the Charitable Foundation, exercises
sole investment power, but not the voting power, with respect to the shares
held by the Charitable Foundation.
(3) Mrs. Sweigart is a member of the Voting Trust and has the sole investment
power, but not the voting power, with respect to these shares (except in her
capacity as a Voting Trustee). Therefore, the number of shares shown above
as held by Mrs. Sweigart is also included in the number of shares shown
above as held by the Voting Trust.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Steven B. Silverman, a Director of the Company, is a senior partner in
the law firm of Rothenberg, Silverman and Furman PC which is currently retained
as counsel to the Company.
Mr. D. Mark Thomas, a Director of the Company, is a managing partner in the
law firm of Thomas, Thomas, Armstrong & Niesen, which is currently retained as
counsel to the Company.
Mrs. Anne B. Sweigart, Chairman of the Board, President and Chief Executive
Officer, is the aunt of W. Garth Sprecher, Vice President and Secretary of the
Company.
THE BOARD RECOMMENDS THE ELECTION OF ITS FOUR (4) NOMINEES AS CLASS B
DIRECTORS.
12
<PAGE>
PROPOSAL 2:
PROPOSAL TO APPROVE THE D & E COMMUNICATIONS, INC.
EMPLOYEE STOCK PURCHASE PLAN
On February 24, 2000, the Board of Directors of the Company adopted and
recommended for submission to the shareholders of the Company for their
approval, the D & E Communications, Inc. Employee Stock Purchase Plan (the
"Plan"). The Plan provides employees with the opportunity to participate in the
ownership of the Company through the purchase of the Company's common stock
through payroll deductions. The purpose of the Plan is to facilitate employee
participation in the ownership and economic progress of the Company. The terms
of the Plan were based substantially on the Company's previous employee stock
purchase plan which was adopted in 1994. To facilitate greater participation in
the Plan, as compared to the prior plan, the Company decided to implement a 10%
discount at which employees may purchase the Company's common stock.
The following general description is a summary of the Plan. The complete
text appears as Exhibit A to the Proxy Statement and the following description
is qualified in its entirety by reference to Exhibit A.
Term.
The Plan will become effective on May 1, 2000, subject to approval by the
shareholders of the Company. The Plan will terminate at such time as all of the
shares authorized to be sold pursuant to the Plan are purchased or the Plan will
automatically terminate 10 years from the effective date, unless terminated or
extended by the Board of Directors.
Administration.
The Plan will be administered by a committee appointed by the Board of
Directors. The committee shall be authorized to (i) prescribe, amend and rescind
the rules and regulations relating to the Plan, (ii) interpret the Plan, (iii)
to fix the terms of the offering under the Plan, (iv) restrict participation
under the Plan to comply with then current laws and regulations and (v) suspend
the operation of the Plan. Action by the committee is subject, however, in all
respects, to the express provisions of the Plan and the general control of, and
superseding action by, the Board of Directors. The Company shall bear all
expenses of administering and operating the Plan.
Operation of the Plan.
Each calendar month each eligible employee is given the option to purchase
shares of common stock in the Corporation based on an election made by the
employee to direct a payroll deduction for the purpose of buying the common
stock. The maximum number of shares that any employee may purchase during any
one month is obtained by dividing $2,083.33 by the fair market value of one
share of the Company's common stock. The fair market value of a share of common
stock is calculated by taking the average of the high and low sale prices of the
common stock on the last trading day of the month in which the stock is
purchased. The shares of common stock will be purchased by eligible participants
at 90% of the fair market value of the common stock.
Shares Available under the Plan.
The Company may issue up to 300,000 shares of common stock under the Plan.
The number of shares available may only be increased with the approval of the
shareholders. The employee immediately becomes the owner of those shares
purchased and the shares are not subject to any further vesting, forfeiture or
other ownership restrictions.
13
<PAGE>
Eligible Participants.
Any person who has completed six months of continuous service with the
Company and is on the then-current payroll of employees of the Company or any
subsidiary designated by the Board of Directors as eligible to participate in
the Plan may participate in the Plan, unless such person customarily works less
than 20 hours per week and such person's customary employment with the Company
is not for more than five months in any calendar year. Participation in the Plan
is completely discretionary.
Federal Income Tax Consequences.
The following is a brief description of the Federal income tax consequences
of participating in the Plan, but does not purport to be a full and complete
description. Funds withheld from a participant's pay under the Plan will
constitute salary or wages and are taxable in the year withheld as compensation.
Dividends received on the common stock purchase are taxable in the year
received. If the participant holds the shares acquired under the Plan for at
least two years, the lesser of (i) the amount by which the Fair Market Value of
the shares at the time of acquisition exceeds the amount paid for the shares and
(ii) the amount by which the Fair Market Value of the shares at the time of sale
exceeds the amount paid for the shares, is taxable as ordinary income. The
balance of any gain is taxable as capital gain. If the sales proceeds are less
than the acquisition cost, no ordinary income is recognized and the loss is a
capital loss.
If the participant does not hold the shares acquired under the Plan for at
least two years, ordinary income is recognized to the extent of the difference
between the Fair Market Value of the shares at the time of acquisition and the
amount paid for the shares. Any difference between the amount realized on
disposition of the shares and the Fair Market Value of the shares at the time of
acquisition is taxable as a capital gain or capital loss.
Capital gain or capital loss is "long term" for federal income tax purposes
if the shares have been held by the participant for at least one year and one
day; otherwise, any capital gain or capital loss is "short term" for federal
income tax purposes.
The Corporation may take a business deduction only with respect to the
amounts of ordinary income recognized by Participants who dispose of shares
acquired under the Plan prior to having held such shares for less than two
years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE D&E
COMMUNICATIONS, INC. EMPLOYEE STOCK PURCHASE PLAN.
The affirmative vote of a majority of the shares voting at the meeting is
required for approval of this item.
14
<PAGE>
PROPOSAL 3:
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board, upon recommendation of its Audit Committee, appointed
PricewaterhouseCoopers LLP, as accountants of the Company's Financial Statements
for 2000. The recommendation is being submitted to the Shareholders for
approval, which requires the affirmative vote of a majority of the votes cast by
all shareholders entitled to vote thereon. A representative of
PricewaterhouseCoopers LLP, is expected to be present at the Annual Meeting and
will be available to respond to appropriate questions and have the opportunity
to make a statement if they desire to do so.
THE BOARD RECOMMENDS THE SHAREHOLDERS VOTE IN FAVOR OF RATIFYING
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR 2000.
2000 SHAREHOLDER PROPOSALS
Proposals of shareholders intended for inclusion in the Company's proxy
statement relating to the 2001 Annual Meeting must be received at the Company's
principal executive offices, 124 East Main Street, Ephrata, PA 17522 (please
address to the attention of W. Garth Sprecher, Vice President and Secretary), no
later than Friday, November 24, 2000. Any such proposal must comply with Rule
14a-8 of Regulation 14A of the proxy rules of the Securities and Exchange
Commission. Written notice of shareholder proposals relating to the 2001 Annual
Meeting other than those intended for inclusion in the company's proxy statement
must be received at the Company's principal executive offices no later than
February 14, 2001.
OTHER MATTERS
The Board is not aware that any matter other than those listed in the
Notice of 2000 Annual Meeting of Shareholders is to be presented for action at
the Annual Meeting. If any of the Board's nominees are unable to serve as a
director or if any matter should properly come before the Annual Meeting, it is
intended that votes will be cast pursuant to the proxy in respect thereof in
accordance with the best judgment of the person or persons acting as proxies.
Any Shareholder who executes and returns the proxy may revoke the same at
any time before it is exercised by filing with the Secretary of the Company
written notice of such revocation or a duly executed proxy bearing a later date
or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not in and of itself constitute revocation of a proxy.
The Company will pay the expenses in connection with printing, assembling
and mailing the Notice of 2000 Annual Meeting of Shareholders, this Proxy
Statement and the accompanying form of proxy. In addition to the use of mails,
proxies may be solicited by directors, officers and other employees of the
Company personally or by telephone. The Company may request persons holding
stock in their names or names of nominees to send proxy material to, and obtain
proxies from, their principals, and the Company will reimburse such persons for
their expense in so doing.
Items included in this Proxy Statement are as of December 31, 1999, unless
otherwise stated.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER TO W. GARTH SPRECHER, VICE
PRESIDENT AND SECRETARY, D&E COMMUNICATIONS, INC., 124 EAST MAIN STREET,
EPHRATA, PA 17522, A COPY OF THE COMPANY'S 1999 ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1999 WILL BE PROVIDED WITHOUT CHARGE.
March 23, 2000
15
<PAGE>
EXHIBIT A
D&E COMMUNICATIONS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the Employee Stock Purchase Plan of D & E
Communications, Inc. (the "Company").
SECTION 1. PURPOSE
The D & E Communications, Inc. Employee Stock Purchase Plan (the "Plan") is
intended to facilitate, through accumulated employee payroll deductions, the
participation by eligible employees of the Company and its Designated
Subsidiaries in the ownership and economic progress of the Company by offering
such employees the opportunity to purchase shares of the Company's Common Stock,
par value $.16 per share ("Common Stock"), during defined stock purchase
periods. It is the intention of the Company to have the Plan qualify as an
"employee stock purchase plan" within the meaning of Section 423 of the Internal
Revenue Code of 1986, as amended ("Code") and the provisions of the Plan shall
be construed in a manner consistent therewith.
SECTION 2. ADMINISTRATION
a. Committee. The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of the Company. The Committee
shall be constituted so that at all relevant times it meets the then-applicable
requirements of Rule 16b-3 (or its successor) promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). Subject to the direction of the
Board of Directors and the express provisions of the Plan, the Committee shall
be authorized: to prescribe, amend and rescind rules and regulations relating to
the Plan and the Committee's administration thereof; to interpret the Plan; to
fix the terms of the offering under the Plan; to restrict participation in the
Plan consistent with any requirement of law or regulation; to suspend the
operation of the Plan; and to make all other determinations necessary to the
administration of the Plan, including the appointment of individuals to
facilitate the day-to-day operation thereof. The Committee's determinations as
to the interpretation and operation of the Plan shall be final and conclusive.
b. Secretary. The Secretary of the Company (the "Secretary"), or such
other person as the Committee may designate, shall, under the direction of the
Committee, maintain records, send detailed statements of account to Participants
and perform such other duties relating to the Plan as the Committee may specify
from time to time. The Secretary will hold for safekeeping the shares purchased
under the Plan in accounts for the Participants ("Plan Accounts") until
termination of participation in the Plan or until a written request is received
for withdrawal of all or part of a Participant's shares. Shares acquired under
the Plan and held by the Secretary may be registered in the name of a nominee as
agent for Participants in the Plan.
SECTION 3. SHARES SUBJECT TO THE PLAN
Shares of Common Stock to be acquired by Participants under the Plan shall
be acquired from the Company and may be either original issue or treasury
shares. Subject to adjustment under Section 21, not more than 300,000 shares of
Common Stock may be acquired by Participants under the Plan.
SECTION 4. ELIGIBILITY
"Eligible Employee" shall mean each person who, on any day during an
Enrollment Period (as defined in Section 9) is an Employee (as defined in
Section 5) of the Company or a Designated Subsidiary, and has completed at least
six of months Continuous Service.
As a condition to being or remaining an Eligible Employee, the Committee
may also require that the legal guardian of a Participant who is not, for any
reason, competent to enter into a contract, affirm the Participant's actions
with respect to the Plan. The Committee may develop rules and make
determinations as to the effect of temporary or longer-term interruptions in
services and in active employment on an Employee's eligibility for purposes of
the Plan.
A-1
<PAGE>
SECTION 5. CERTAIN DEFINITIONS
The following definitions shall apply for purposes of the Plan:
"Designated Subsidiary" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
"Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly, shares in number exceeding 50% of the total combined
voting power of all classes of the voting capital stock thereof, whether or not
such corporation now exists or is hereafter organized or acquired by the
Company.
"Employee" shall mean each person, including an officer, on the
then-current payroll of employees of the Company or a Designated Subsidiary,
excluding (1) a person whose customary employment is less than 20 hours per week
and (2) a person whose customary employment is not for more than five months in
any calendar year.
"Continuous Service" shall mean the period of time that an Employee has
been continually on the payroll of employees of the Company and/or one or more
of the Designated Subsidiaries.
SECTION 6. PURCHASE PRICE
The purchase price per share of the shares of Common Stock sold to Eligible
Employees under this Plan ("Purchase Price") for any Stock Purchase Period (as
defined below) shall be 90% of the Fair Market Value (as defined below) of a
share of Common Stock on the last business day of such Stock Purchase Period.
SECTION 7. GRANT OF OPTION TO PURCHASE SHARES
Each Eligible Employee shall be granted an option effective on the last day
of each Stock Purchase Period to purchase a number of full shares of Common
Stock (subject to adjustment as provided in Section 21 below). The maximum
number of shares an Eligible Employee shall be eligible to purchase for any
Stock Purchase Period is $2,083.33 divided by 100% of the Fair Market Value of a
share of Common Stock on the last day of the Stock Purchase Period.
Anything herein to the contrary notwithstanding, if, as of the last day of
a Purchase Period, any Eligible Employee entitled to purchase shares hereunder
would be deemed for the purposes of Section 423(b)(3) of the Code to own stock
(including any number of shares which such person would be entitled to purchase
hereunder) possessing 5% or more of the total combined voting power or value of
all classes of stock of the Company, the maximum number of shares which such
person shall be entitled to purchase pursuant to the Plan shall be reduced to
that number which when added to the number of shares of stock of the Company
which such person is so deemed to own (excluding any number of shares which such
person would be entitled to purchase hereunder), is one less than such 5%.
SECTION 8. STOCK PURCHASE PERIODS
The opportunity to purchase such shares of Common Stock under the Plan
shall be offered during continuous periods of one calendar month each in
duration ("Stock Purchase Period"). Any such option granted with respect to a
Stock Purchase Period which is not exercised in such Stock Purchase Period may
not thereafter be exercised. From time to time, the Committee, in its sole
discretion, may limit the aggregate number of shares of Common Stock to be
available, or may limit the maximum number of shares which may be purchased by
each Participant, during any Stock Purchase Period. If the Plan becomes
oversubscribed for any Stock Purchase Period, the Committee may adopt rules for
prorating the available Common Stock among Participants and refunding excess
amounts held in the Participant's Stock Purchase Accounts established by Section
9 of the Plan.
SECTION 9. ENROLLMENT AND PAYROLL DEDUCTIONS
a. An Eligible Employee may enroll as a Participant in the Plan no later
than the fifteenth (15th) business day of the month preceding the month in which
payroll deductions under the Plan commence ("Enrollment Period") or during any
such other Enrollment Period as may be established by the
A-2
<PAGE>
Committee. Enrollment in the Plan shall be made by completing and filing the
prescribed payroll deduction authorization form provided by the Company and
filing such form with the Company.
b. A participant may elect payroll deductions of any whole percentage from
one percent (1%) through ten percent (10%) of the Participant's compensation
("Current Compensation"). Compensation means the total earnings payable to a
Participant by the Company or a Designated Subsidiary, determined prior to any
pre-tax contributions made by a Participant to either a qualified cash or
deferred arrangement (Code Section 401(k) plan) or cafeteria plan (Code Section
125 plan) maintained by the Company or a Designated Subsidiary, but shall not
include reimbursements for expenses, nor shall it include any payments on
account of disability, layoff or workers' compensation, payments made in lieu of
vacation time, cost of living, flat rate allowances, bonuses, incentive pay,
severance pay, automobile allowances, or payments under any retirement plan
sponsored by the Company. Such elected percentage may be increased or decreased
under the Plan by the Participant's filing of a new authorization form with the
Company's payroll office during a subsequent Enrollment Period, but the
Participant shall not be entitled to suspend payroll deductions except by
withdrawing from the Plan pursuant to Section 16.
c. The Company or the Designated Subsidiary will maintain a bookkeeping
account in U.S. dollars to reflect each Participant's payroll deductions
hereunder ("Stock Purchase Account"). The funds recorded in the Stock Purchase
Accounts will be included in general corporate funds, and no interest will be
paid by the Company or a Designated Subsidiary on such funds. A Participant may
not pay into a Stock Purchase Account other than by payroll deduction.
SECTION 10. FAIR MARKET VALUE
In any determination of fair market value under the Plan ("Fair Market
Value"), the Fair Market Value of one share of Common Stock shall mean the
average of the high and low sales prices of the Common Stock on the day in
question as reported on the National Association of Securities Dealers, Inc.,
Automated Quotation System or, if no trades are reported for such day, on the
last trading day; provided, however, that, in any case, if the Committee
determines for any reason that the Fair Market Value as so determined does not
accurately reflect the fair market value of the Common Stock, then the Committee
may, in its sole and absolute discretion, establish the Fair Market Value of the
Common Stock for purposes of the Plan, which Fair Market Value shall be
conclusive and binding for all purposes hereunder. For purposes of purchasing
Common Stock for the Participants' Plan Accounts, the Fair Market Value shall be
calculated on the last business day of each Stock Purchase Period. For purposes
of determining the value of fractional shares upon withdrawal or Plan
termination, the Fair Market Value shall be determined as soon as practicable
after withdrawal or Plan termination. For purposes of dividend reinvestment
under the Plan (see Section 19), the Fair Market Value shall be determined on
such basis as the Committee shall deem appropriate.
No shares shall be sold by the Company to Participants in the Plan at less
than the par value of such shares.
SECTION 11. PURCHASES OF COMMON STOCK
As soon as practicable after the last business day of each Stock Purchase
Period, the Company shall transfer to the Secretary shares of Common Stock equal
to the combined balance of all Participants' Stock Purchase Accounts on the last
day of the Stock Purchase Period divided by the Purchase Price; provided,
however, that the shares so transferred may be less than the combined balance of
all Participants' Stock Purchase Accounts on the last day of the Stock Purchase
Period divided by the Purchase Price in the event of an oversubscription during
any Stock Purchase Period as provided in Section 3 and provided, further, that
no such transfer shall be made by the Company in the event the Plan is
terminated as provided in Section 23. The Secretary shall allocate the Common
Stock among the Participants' Plan Accounts established pursuant to Section 2 in
proportion to the funds in their respective Stock Purchase Accounts. Anything
herein to the contrary notwithstanding, no Eligible Employee may, in any
calendar year, purchase a number of shares of Common Stock under this Plan
which, together with all other shares of stock of the Company and its
Subsidiaries which he may be entitled to purchase in such year under all other
employee stock purchase plans of the Company and its
A-3
<PAGE>
subsidiaries which meet the requirements of Section 423(b) of the Code, have an
aggregate Fair Market Value (measured as of the last day of each applicable
Stock Purchase Period) in excess of $25,000. The limitation described in the
preceding sentence shall be applied in a manner consistent with Section
423(b)(8) of the Code.
SECTION 12. FRACTIONAL SHARES
Unless otherwise determined by the Committee, fractional shares of Common
Stock, computed to four decimal places, shall be allocated under the Plan and
credited to the Plan Account of each Participant; however, no certificates will
be issued for fractional share interests credited to a Participant under the
Plan. In the event the Committee determines that fractional shares shall not be
so allocated and credited, it shall establish rules dealing with any amount in a
Participant's Stock Purchase Account or the amount of any dividend to be
reinvested under the Plan's dividend reinvestment program that is insufficient
to purchase a whole share of Common Stock under the Plan.
SECTION 13. REPORTS TO PARTICIPANTS
As soon as practicable after March, June, September and December of each
year, a quarterly statement of account will be sent to each Participant. The
statement is a Participant's continuing record of the cost of purchases and
should be retained for income tax purposes. In addition, each Participant will
be sent copies of other communications sent to holders of the Company's Common
Stock, including the Company's Annual Report, the Notice of Annual Meeting and
Proxy Statement, and any Internal Revenue Service information for reporting
dividend income.
SECTION 14. CERTIFICATES FOR SHARES
a. No certificate will be issued to a Participant for shares credited to
his or her account until withdrawal of the Participant from the Plan or unless
he or she so requests the Secretary in writing. The number of shares credited to
a Participant's Plan Account will be shown on the Participant's quarterly
statement of account.
b. At any time, a Participant may withdraw shares from his or her Plan
Account by requesting in writing that the Secretary send him or her a
certificate for all or part of the whole shares credited to his or her Plan
Account (see the final paragraph of this Section 14 if shares are to be issued
in other than the Participant's name). This request should be mailed to the D &
E Communications, Inc. Employee Stock Purchase Plan, Brossman Business Complex,
124 East Main Street, Ephrata, PA 17522-0458, Attention: W. Garth Sprecher. If,
however, a request for withdrawal is received on or after the record date for a
dividend, any cash dividend paid on that dividend payment date with respect to
such shares will still be reinvested for the Participant and credited to his or
her Plan Account. Any remaining whole shares and fractions of a share will
continue to be credited to the Participant's Plan Account.
c. Certificates will only be issued for whole shares. Certificates for
fractional share interests will not be issued to Participants under any
circumstances.
d. Plan Accounts are maintained in the name of the Participant only and
certificates for whole shares, when issued, will be registered in the name of
the Participant only. Should a Participant want these shares re-registered in
any name other than his or her own name, he or she must make a separate request
for such re-registration indicating such name in his or her request. In the
event of such re-registration, a Participant would be responsible for any
possible transfer taxes and for compliance with any applicable transfer
requirements.
SECTION 15. VOTING SHARES HELD BY THE PLAN
a. Both whole and fractional shares (unless the Committee determines not
to allocate fractional shares pursuant to Section 12 hereof) credited to a
Participant's Plan Account will be voted at shareholders' meetings, with
fractional shares having proportionate voting rights, as the Participant directs
in the manner hereinafter provided.
b. A proxy card, together with the Company's proxy statement, will be sent
to each Participant in connection with any annual or special meeting of
shareholders, as in the case of other shareholders
A-4
<PAGE>
who are not Participants. This proxy will apply only to all shares credited to
the Participant's Plan Account. A separate proxy card and proxy statement will
be sent with respect to any shares registered in the Participant's own name.
c. As in the case of non-Participant shareholders, if no instructions are
indicated on a properly signed and returned proxy card, all of the Participant's
shares -- those registered in his or her name, if any, or those credited to such
Participant's Plan Account, whichever is applicable -- will be voted in
accordance with the proxy card. If the proxy card is not returned or is returned
unsigned, the Participant's shares may be voted only if the Participant or a
duly appointed representative votes in person at the meeting and, as to the
shares credited to the Participant's Plan Account, obtains a proxy from the
shareholder of record of the credited shares, specifically the Secretary or its
nominee.
SECTION 16. WITHDRAWAL AND TERMINATION OF EMPLOYMENT
a. A Participant may withdraw from the Plan at any time by giving notice
to the Company in accordance with rules established by the Committee. This
notice shall be effective in suspending payroll deductions under the Plan as
soon as practicable after receipt by the Company. However, the balance in the
Participant's Stock Purchase Account existing at the time notice becomes
effective in suspending payroll deductions will be utilized for acquisition of
Common Stock pursuant to the Plan. Termination of employment, including death,
of a Participant or failure of a Participant to continue to be an Eligible
Employee shall result in automatic withdrawal from the Plan in accordance with
rules established by the Committee.
b. Upon withdrawal from the Plan, a certificate shall be issued to the
participant as soon as practicable for the number of whole shares in the
Participant's Plan Account and a check equal to the Fair Market Value of any
fractional shares shall be issued to the Participant.
SECTION 17. PLAN EXPENSES AND RESPONSIBILITIES
a. The Company shall bear all expenses of administering and operating the
Plan. Such administration and operation by the Company with respect to shares
purchased under the Plan shall cease when a certificate for such shares is
issued (or cash paid for fractional shares in the event of withdrawal or Plan
termination) to the Participant.
b. Neither the Company, the Committee nor the Secretary will be liable
under the Plan for any act done in good faith or for any good-faith omission to
act, including without limitation any claim of liability arising out of failure
to terminate a Participant's Plan Account upon such Participant's death or with
respect to the prices at which shares are purchased for the Participant's Plan
Account, the times when such purchases are made, or with respect to any
fluctuation in market value of the Common Stock.
c. The Participant should recognize that the Company cannot assure the
Participant of a gain or protect him or her against a loss on the shares
purchased under the Plan.
d. The Company reserves the right to interpret and regulate the Plan as it
deems necessary or desirable in connection with the Plan's operation.
SECTION 18. RIGHTS NON-TRANSFERABLE
Neither the Participant's right to purchase Common Stock under the Plan nor
the funds accumulated in the Participant's Stock Purchase Account may be sold,
transferred, pledged, assigned or otherwise disposed of by the Participant, and
such right is exercisable only by the Participant or by his or her guardian or
legal representative.
SECTION 19. DIVIDEND REINVESTMENT PROGRAM
All Common Stock held by the Secretary in a Participant's Plan Account will
automatically participate in the Plan's dividend reinvestment program, whereby
any dividends paid with respect to the Common Stock in a Participant's Plan
Account will be reinvested in additional shares of Common Stock. Such shares
will be purchased from the Company at their Fair Market Value and transferred by
the Secretary to the Participant's Plan Account. The number of shares purchased
will depend on the
A-5
<PAGE>
amount of the dividends on the shares in the Participant's Plan Account and the
Fair Market Value per share. A Participant's Plan Account will be credited with
that number of shares, including fractions, if any, as set forth in Section 12
of the Plan, equal to the amount of dividends to be invested divided by the
applicable purchase price per share. If a Participant is subject to backup
withholding under the then applicable Federal income tax laws, the amount of
dividends to be reinvested will be reduced by the amount required to be withheld
by the Company. Participants' Plan Accounts will be credited with dividends with
respect to fractions as well as whole shares.
SECTION 20. RIGHTS OFFERINGS, STOCK DIVIDENDS AND STOCK SPLITS
a. If a Participant is entitled to participate in a rights offering by the
Company, entitlement will be based on his or her total holdings, including
shares credited to the Participant pursuant to the Plan. Rights certificates
will, however, be issued for the number of whole shares only.
b. Any dividend payable in stock or split shares distributed by the
Company on shares held in a Participant's Plan Account will be added to and
become part of such Plan Account. The portion of such dividend distributed on
shares registered in the Participant's own name, if any, will be mailed directly
to the Participant in the same manner as to shareholders who are not
Participants.
SECTION 21. ADJUSTMENTS IN NUMBER OF SHARES
a. In the event that a dividend shall be declared upon the Common Stock
payable in shares of said stock, the number of shares of Common Stock available
for issuance pursuant to the Plan shall be adjusted by adding thereto the number
of shares which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the shareholders entitled to
receive such stock dividend.
b. In the event that the outstanding shares of Common Stock shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, merger
or consolidation, then there shall be substituted for the shares available for
issuance pursuant to the Plan, the number and kind of shares of stock or other
securities which would have been substituted therefor if such shares had been
outstanding on the date fixed for determining the shareholders entitled to
receive such changed or substituted stock or other securities.
c. In the event there shall be any change, other than specified in this
Section 21, in the number or kind of outstanding shares of Common Stock of the
Company or of any stock or other securities into which such Common Stock shall
be changed or for which it shall have been exchanged, then if the Board of
Directors shall determine, in its discretion, that such change equitably
requires an adjustment in the number or kind of shares which are available for
issuance pursuant to the Plan, such adjustment shall be made by the Board of
Directors and shall be effective and binding for all purposes of the Plan.
d. No adjustment or substitution provided for in this Section 21 shall
require the Company to issue or to sell a fractional share under the Plan, and
the total adjustment or substitution may be limited accordingly.
SECTION 22. GOVERNMENT REGULATION
Notwithstanding any provision of the Plan, the Company's sale and delivery
of Common Stock under the Plan is at all time subject to obtaining any and all
approvals of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Common Stock.
SECTION 23. EFFECTIVE DATE AND AMENDMENT OR TERMINATION OF PLAN
a. The Plan shall become effective on May 1, 2000 (the "Effective Date"),
subject to approval by the shareholders of the Company prior to May 1, 2001. If
the Plan is not so approved, the Plan shall not become effective. The Plan shall
automatically terminate ten years from the Effective Date, unless otherwise
terminated or extended by the Board of Directors; provided, however, that unless
otherwise provided by the Committee, payroll deductions shall not be made with
respect to compensation for work completed less than one month prior to such
automatic termination date. Unless shareholder
A-6
<PAGE>
approval would be required to meet the applicable requirements of Rule 16b-3,
the Board of Directors may by resolution alter, amend, suspend, extend or
terminate the Plan at any time.
b. The Board of Directors shall have complete power and authority to
terminate or amend the Plan; provided, however, that the Board of Directors
shall not, without the approval of the stockholders of the Company (i) increase
the maximum number of shares which may be acquired under the Plan (except
pursuant to Section 21); (ii) amend the requirements as to the class of
Employees eligible to purchase stock under the Plan. No termination,
modification, or amendment of the Plan may, without the consent of an Eligible
Employee then having an option under the Plan to purchase Common Stock,
adversely affect the rights of such Eligible Employee under such option.
c. Upon termination of the Plan, any funds in each Participant's Stock
Purchase Account shall be refunded to the Participant within 30 days of such
termination, a certificate for the whole number of shares in each Participant's
Plan Account shall be issued to the Participant and a check equal to the fair
market value (determined as provided in Section 10) of any fractional shares
shall be issued to the Participant. However, in the event the Company or its
successor terminates the Plan for the purpose of establishing another employee
stock purchase plan, a Participant in the Plan will be enrolled automatically in
such other plan and shares credited to his or her Plan Accounts will be credited
automatically under such other plan, unless proper notice is received to the
contrary.
SECTION 24. NO EMPLOYMENT RIGHTS
The Plan does not, directly or indirectly, create any right for the benefit
of any Employee or class of Employees to purchase any shares under the Plan, or
create in any Employee or class of Employees any right with respect to
continuation of employment by the Company or any subsidiary, and it shall not be
deemed to interfere in any way with the right of the Company or Subsidiary, as
applicable, to terminate, or otherwise modify, an Employee's employment at any
time.
SECTION 25. EFFECT OF PLAN
The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of, all successors of each Eligible Employee
participating in the Plan, including, without limitation, such Eligible
Employee's estate and the executors, administrators or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Eligible Employee.
SECTION 26. GOVERNING LAW
The law of the Commonwealth of Pennsylvania will govern all matters relating to
this Plan except to the extent it is superseded by the laws of the United
States.
A-7
<PAGE>
PROXY
D & E Communications, Inc.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Anne B. Sweigart, Robert M. Lauman and W. Garth Sprecher, or any one or
more of them with power of substitution in each, are here-by
authorized to represent the undersigned at the 2000 Annual Meeting
of Shareholders of D & E Communications, Inc. to be held at the
Brossman Business Complex, 124 East Main Street, Ephrata,
Pennsylvania, on April 27, 2000 at 10:30 a.m., and at any
adjournment thereof, and thereat to vote the same number of shares
as the undersigned would be entitled to vote if then personally
present.
(IMPORTANT TO BE SIGNED AND DATED BELOW)
1. ELECTION OF FOUR (4) DIRECTORS
NOMINEES: For the Class B Directors Whose Terms Expire in 2003: Thomas H.
Bamford, Ronald E. Frisbie, Robert M. Lauman and D. Mark Thomas
|_| FOR all nominees listed (except as marked to the contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name on the line below.)
------------------------------------------------
2. APPROVAL OF THE D&E COMMUNICATIONS, INC. EMPLOYEE STOCK PURCHASE PLAN
|_| For |_| Against |_| Abstain
3. RATIFICATION OF INDEPENDENT ACCOUNTANTS
|_| For |_| Against |_| Abstain
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE LISTED NOMINEES IN THE ELECTION OF THE
FOUR (4) DIRECTORS, FOR APPROVAL OF THE D&E COMMUNICATIONS, INC.
EMPLOYEE STOCK PURCHASE PLAN AND FOR THE RATIFICATION OF INDEPENDENT
ACCOUNTANTS, AND IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF. IF NECESSARY, CUMULATIVE VOTING RIGHTS WILL BE
EXERCISED TO SECURE THE ELECTION OF AS MANY AS POSSIBLE OF THE BOARD
OF DIRECTORS' NOMINEES.
DATE: , 2000
------------------------------------------------
------------------------------------------------
Shareholder(s) sign above exactly as name is printed on label.
If signing as representative, so indicate.
For joint accounts, all owners should sign.
<PAGE>
PARTICIPANT'S DIRECTION
Employee Stock Ownership Plan
To: The Bank of Lancaster County, as Trustee of
the Employee Stock Ownership Plan
Pursuant to your notice accompanied by the proxy material in connection with
the 2000 Annual Meeting of Shareholders of D & E Communications,
Inc. to be held on April 27, 2000, at 10:30 a.m., I direct you to
execute a proxy in the form solicited by the Board of Directors of
D & E Communications, Inc. with respect to all shares of Common
Stock, par value $0.16, to which I have the right to give voting
directions under the Denver and Ephrata Telephone and Telegraph
Company Employee Stock Ownership Plan as follows:
(IMPORTANT TO BE SIGNED AND DATED BELOW)
1. ELECTION OF FOUR (4) DIRECTORS
NOMINEES: For the Class B Directors Whose Terms Expire in 2003:
Thomas H. Bamford, Ronald E. Frisbie, Robert M. Lauman
and D. Mark Thomas
|_| FOR all nominees listed (except as marked to the contrary below)
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write the nominee's name on the line below.)
-------------------------------------------
2. APPROVAL OF THE D&E COMMUNICATIONS, INC. EMPLOYEE STOCK PURCHASE PLAN
|_| For |_| Against |_| Abstain
3. RATIFICATION OF INDEPENDENT ACCOUNTANTS
|_| For |_| Against |_| Abstain
THIS PARTICIPANT'S DIRECTION, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT. IF NO
DIRECTION IS MADE, THIS PARTICIPANT'S DIRECTION WILL BE VOTED FOR
THE LISTED NOMINEES IN THE ELECTION OF THE FOUR (4) DIRECTORS, FOR
APPROVAL OF THE D&E COMMUNICATIONS, INC. EMPLOYEE STOCK PURCHASE
PLAN AND FOR THE RATIFICATION OF INDEPENDENT ACCOUNTANTS, AND IN ITS
DISCRETION, THE TRUSTEE IS AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
POSTPONEMENT OR ADJOURNMENT THEREOF. IF NECESSARY, CUMULATIVE VOTING
RIGHTS WILL BE EXERCISED TO SECURE THE ELECTION OF AS MANY AS
POSSIBLE OF THE BOARD OF DIRECTORS' NOMINEES.
DATE: , 2000
--------------------------------------------
--------------------------------------------
Participant(s) sign above exactly as name
is printed on label.
<PAGE>
PARTICIPANT'S DIRECTION
D & E Communications, Inc.
Dividend Reinvestment Plan
To: D & E Communications, Inc., as Trustee of the D & E Communications, Inc.
Dividend Reinvestment Plan
Pursuant to your notice accompanied by the proxy material in connection with
the 2000 Annual Meeting of Shareholders of D & E Communications,
Inc. to be held on April 27, 2000, at 10:30 a.m., I direct you to
execute a proxy in the form solicited by the Board of Directors of D
& E Communications, Inc. with respect to all shares of Common Stock,
par value $0.16, to which I have the right to give voting directions
under the D & E Communications, Inc. Dividend Reinvestment Plan as
follows:
(IMPORTANT TO BE SIGNED AND DATED BELOW)
1. ELECTION OF FOUR (4) DIRECTORS
NOMINEES: For the Class B Directors Whose Terms Expire in 2003:
Thomas H. Bamford, Ronald E. Frisbie, Robert M. Lauman
and D. Mark Thomas
|_| FOR all nominees listed (except as marked to the contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name on the line below.)
-------------------------------------------
2. APPROVAL OF THE D&E COMMUNICATIONS, INC. EMPLOYEE STOCK PURCHASE PLAN
|_| For |_| Against |_| Abstain
3. RATIFICATION OF INDEPENDENT ACCOUNTANTS
|_| For |_| Against |_| Abstain
THIS PARTICIPANT'S DIRECTION, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT. IF NO
DIRECTION IS MADE, THIS PARTICIPANT'S DIRECTION WILL BE VOTED FOR
THE LISTED NOMINEES IN THE ELECTION OF THE FOUR (4) DIRECTORS, FOR
APPROVAL OF THE D&E COMMUNICATIONS, INC. EMPLOYEE STOCK PURCHASE
PLAN AND FOR THE RATIFICATION OF INDEPENDENT ACCOUNTANTS, AND IN ITS
DISCRETION, THE TRUSTEE IS AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
POSTPONEMENT OR ADJOURNMENT THEREOF. IF NECESSARY, CUMULATIVE VOTING
RIGHTS WILL BE EXERCISED TO SECURE THE ELECTION OF AS MANY AS
POSSIBLE OF THE BOARD OF DIRECTORS' NOMINEES.
DATE: , 2000
-------------------------------------------
-------------------------------------------
Participant(s) sign above exactly as
name is printed on label.
