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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
D & E COMMUNICATIONS, INC.
(Name of Issuer)
COMMON STOCK, $0.16 PAR VALUE PER SHARE
(Title of Class of Securities)
232860106
(CUSIP Number)
CHARLES J. WEISS
SECRETARY
CITIZENS UTILITIES COMPANY
3 HIGH RIDGE PARK
STAMFORD, CONNECTICUT 06905
(203) 614-4612
(Name, Address and Telephone No. of Person
Authorized to Receive Notices and Communications)
JANUARY 7, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
* The remainder of this cover page shall be filled our for a reporting person's
filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes.)
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Page 2 of 19 Pages
CUSIP No. 232860106
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CITIZENS UTILITIES COMPANY 06-0619596
2. Check the Appropriate Box If A Member Of A Group* (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds*
WC
5. Check Box If Disclosure Of Legal Proceedings
Is Required Pursuant to Items 2(d) or 2(e). [ ]
6. Citizenship Or Place Of Organization
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. Sole Voting Power
1,300,000
8. Shared Voting Power
0
9. Sole Dispositive Power
1,300,000
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned By Each
Reporting Person
1,300,000
12. Check Box If The Aggregate Amount In Row (11)
Excludes Certain Shares* [ ]
13. Percent Of Class Represented By Amount In Row (11)
17.4%
14. Type Of Reporting Person*
CO
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Page 3 of 19 Pages
Item 2. Identity and Background
( a ), ( b ), ( c ) and ( f )
Name of Reporting Person: Citizens Utilities Company
State of Incorporation: Delaware
Principal Business: Citizens Utilities Company, directly or
through its subsidiaries, principally provides
communications, gas, electric and water/waste-
water services to customers in 20 states
throughout the United States.
Address of Principal Business: 3 High Ridge Park, Stamford, CT 06905
Address of Principal Office: 3 High Ridge Park, Stamford, CT 06905
The reporting persons' wholly owned subsidiary Southwestern Investments, Inc. (a
Nevada Corporation ) ( " Southwestern" ) entered into an Agreement with D & E
Communications, Inc. ("D & E" or "Issuer") on November 3, 1997 providing for the
acquisition of up to 1,300,000 to be issued shares of D & E Common Stock
("Common Stock") at a formula derived price per share. The Agreement is filed
as Exhibit A to the Reporting Person's Schedule 13 D.
The Principal business of Southwestern is to hold investments including an
investment in the Issuer. The address and the principal office of Southwestern
is 300 Delaware Ave., Suite 563, Wilmington, DE 19801
The names, business addresses and principal occupations of the executive
officers and directors of the Reporting Person and Southwestern, all of whom are
United States citizens, are set forth in Schedule I hereto and are incorporated
herein by reference.
(d ) - ( e ) During the last five years, neither the Reporting Person,
Southwestern nor, to the best knowledge of the Reporting Person, any of the
executive officers or directors of the Reporting Person or Southwestern have
been convicted in a criminal proceeding ( excluding traffic violations or
similar misdemeanors ) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and amount of funds or other consideration
On January 7, 1998 Southwestern purchased 1,300,000 shares of Common Stock of
Issuer in a private transaction pursuant to an Agreement with D & E dated
November 3, 1997, a copy of which is filed as Exhibit A hereto. Southwestern
used $ 27,015,300 of its working capital to acquire such shares at a price of
$20.781 per share. There has been no prior acquisition of Common Stock of
Issuer by Reporting Person or any of its subsidiaries. To the best knowledge
of Reporting Person, none of the persons listed in Schedule I hereto has
acquired any Common Stock.
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Page 4 of 19 Pages
Item 4. Purpose of Transaction
The transaction is for investment purposes. There are no current plans or
proposals that relate to or will result in any of the events or occurrences set
forth in ( a ) - (j) of this Item 4.
Item 5. Interest in Securities of Issuer
( a) As a result of the purchase made on January 7, 1998 described in item 3
above, the Reporting Person has sole ownership of 1,300,000 shares of Common
Stock of Issuer. The Reporting Person owns 17.4% of all Common Stock presently
reported to be outstanding.
( b )-( e) Not Applicable, except to the best knowledge of the Reporting Person,
none of the persons listed in Schedule I hereto beneficially owns any Common
Stock or has effected any transaction in Common Stock in the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Except for the Agreement attached hereto as Exhibit A, there are no contracts,
arrangements, understandings or relationships with respect to securities of the
Issuer, between Issuer and Reporting Person. To the best knowledge of Reporting
Person, there are no such contracts, arrangements, understandings or
relationships with respect to securities of the Issuer between Issuer or any
other Person and any of the Persons listed on Schedule I hereto.
Item 7. Material to be filed as Exhibits
Exhibit A Stock Acquisition Agreement between D & E Communications and
Southwestern Investments dated November 3, 1997.
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Page 5 of 19 Pages
EXHIBIT A
STOCK ACQUISITION AGREEMENT
This Stock Acquisition Agreement (the "Agreement") is entered
into as of November 3, 1997, by and between D & E Communications, Inc., a
Penn-sylvania corporation (the "Company"), and Southwestern Investments, Inc., a
Nevada corporation and a wholly-owned subsidiary of Citizens Utilities Company
(the "Purchaser").
WHEREAS, the Company desires to sell and the Purchaser desires
to purchase up to 1,300,000 shares of the Company's common stock, par value
$0.16 per share (the "Common Stock"), for the consideration and on the terms set
forth herein;
NOW THEREFORE, in consideration of the representations,
warranties, covenants and conditions set forth in this Agreement, the parties to
this Agreement, intending to be legally bound hereby, mutually covenant and
agree as follows:
1. Transaction.
1.1. Sale and Issuance. At the Closing (as hereafter
defined), the Purchaser shall purchase from the Company and the Company shall
issue and sell to the Purchaser 1,300,000 shares of Common Stock in
consideration of the Purchase Price (as hereafter defined) per share, in cash;
provided, that if the Purchase Price is less than $25.00 per share then the
Company may elect in its discretion to reduce the number of shares of Common
Stock it will sell and the Purchaser will purchase, but to not less than
1,000,000 shares. The "Purchase Price" shall be a per share price equal to the
sum of (i) the average of the closing prices of the Common Stock on the NASDAQ
National Market System on each of the thirty (30) trading days ending on the day
prior to the Closing (the "Average Price") plus (ii) 10% of the Average Price;
provided, that if the Purchase Price as so determined is less than $20.00 per
share then the Purchase Price shall be equal to $20.00 per share and if the
Purchase Price as so determined is greater than $25.00 per share then the
Purchase Price shall be equal to $25.00 per share. The Company and the Purchaser
shall jointly determine and confirm with each other in writing the Purchase
Price after the close of regular hours trading on the NASDAQ National Market on
the day prior to the Closing and the Company shall then advise the Purchaser in
writing of the number of shares of Common Stock that it intends to sell to the
Purchaser at the Closing. The amount equal to the number of shares to be sold by
the Company at the Closing multiplied by the Purchase Price shall be the
"Aggregate Purchase Price."
1.2. Payment and Delivery. The Purchaser shall deliver the
Aggregate Purchase Price to the Company at the Closing by wire transfer of
immediately available funds pursuant to written instructions to be provided by
the Company at least two days prior to the Closing. Upon evidence of receipt of
such funds, the Company shall promptly deliver to the Purchaser a stock
certificate representing the number of shares of Common Stock purchased by
Purchaser.
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Page 6 of 19 Pages
1.3. Closing. The consummation of the transfer and delivery
of the Common Stock to the Purchaser and the receipt of the Aggregate Purchase
Price by the Company will constitute the "Closing." Unless otherwise mutually
agreed to by the parties, the purchase and sale provided for in this Agreement
shall take place at the offices of the Company at 130 East Main Street, Ephrata,
Pennsylvania, at 10:00 a.m. (local time) on the later of (i) December 1, 1997,
or (ii) the date that is two business days following the termination of the
applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act
of 1976. Failure to consummate the purchase and sale provided for in this
Agreement on the date, time and at the place determined pursuant to this Section
1.3 will not result in the termination of this Agreement and will not relieve
any party of any obligation under this Agreement.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
2.1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all requisite corporate power and authority
to own and lease its properties, to carry on its business as presently conducted
and to perform the transaction contemplated hereby.
2.2. Authorization. All corporate action on the part of the
Company and its Board of Directors and shareholders necessary for the
authorization, execution, delivery and performance of the obligations of the
Company under this Agreement, including the authorization, issuance and sale of
the Common Stock to the Purchaser, has been taken. This Agreement constitutes
the valid and legally binding obligation of the Company enforceable against the
Company in accordance with its terms.
2.3. Validity. The Common Stock, when issued, sold and
delivered in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and nonassessable.
2.4. Capitalization. The authorized capital stock of the
Company consists of 30,000,000 shares of Common Stock, par value of $0.16 per
share, and 20,000,000 shares of Preferred Stock, without par value. As of
October 24, 1997, there were 6,121,956 shares of Common Stock issued and
outstanding. As of the date hereof, other than this Agreement, there are no
options, warrants, calls or other commitments outstanding that obligate the
Company to issue or sell any shares of capital stock, other than pursuant to the
Company's Dividend Reinvestment Plan and Employee Stock Purchase Plan, and
except that the Company is obligated to issue certain warrants to purchase
Common Stock to Boles Knop & Company in consideration of their arranging certain
equity and/or debt financing for the Company.
2.5. No Conflict. The execution, delivery and performance of
this Agreement will not result in a violation of or default under, or result in
the imposition of any lien pursuant to, (i) the Company's Articles of
Incorporation or By-laws as in effect prior to the transaction contemplated
hereby, or (ii) any material mortgage, indenture, agreement, instrument or
contract to which the Company is a party.
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Page 7 of 19 Pages
2.6. Accuracy of Public Information. All documents filed by
the Company with the Securities and Exchange Commission were true and correct in
all material respects as of the date thereof and, as of the date thereof, did
not omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein not misleading.
2.7. No Material Adverse Change. Since December 31, 1996,
there has not been any material adverse change in the business, properties,
financial condition or results of operation of the Company and its consolidated
subsidiaries, taken as a whole.
3. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
3.1. Organization and Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate power and authority to perform the
transaction contemplated hereby. The Purchaser was not organized for the purpose
of purchasing the Common Stock.
3.2. Authorization, Execution and Delivery. All corporate
action on the part of the Purchaser and its Board of Directors and shareholders
necessary for the authorization, execution, delivery and performance of the
obligations of the Purchaser under this Agreement, has been taken. The Agreement
constitutes a valid and legally binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms.
3.3. Enforceability. The execution, delivery and performance
of this Agreement will not result in a violation of or default under, or result
in the imposition of any lien pursuant to (i) the Purchaser's Certificate of
Incorporation or By-laws as in effect immediately prior to the Closing, or (ii)
any material mortgage, indenture, agreement, instrument or contract to which the
Purchaser is a party.
3.4. Securities Matters.
3.4.1. The Purchaser understands that, upon is-
suance, the Common Stock will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), or any applicable state securities laws
in reliance on exemptions from the registration requirements therein, and that
the Company's reliance on such exemptions is predicated on the Purchaser's
representations set forth herein and otherwise in connection with the offer and
sale of the Common Stock.
3.4.2. The Common Stock is being acquired by the
Purchaser for investment for its own account, not as a nominee or agent, and not
with a view to the sale or distribution of all or any part thereof, and the
Purchaser has no present intention of selling, granting participation in or
otherwise distributing the same in violation of applicable securities laws. The
Purchaser represents that it does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to the Common Stock, in violation of
applicable securities laws.
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Page 8 of 19 Pages
3.4.3. The Purchaser (i) has been afforded, prior
to the execution of the Agreement, the opportunity to ask questions of, and to
receive answers from, the Company's executive officers, and to obtain any
additional information, to the extent the Company has such information or could
have acquired it without unreasonable effort or expense, necessary to make an
informed investment decision with respect to the purchase of the Common Stock,
(ii) has not relied upon any representation, warranty or statement, other than
those expressly set forth in this Agreement and the public documents filed by
the company with the Securities and Exchange Commission, (iii) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits, risks and suitability of its investment and can bear the
economic risks of this investment, and (iv) acknowledges and understands that
the Company has relied upon the representations made by the Purchaser in the
Agreement and otherwise in connection with the offer and sale of the Common
Stock, and (v) represents and warrants that Purchaser's representations herein
are true, complete and accurate as of the date of this Agreement.
3.4.4. The Purchaser understands that the Common
Stock may not be sold, transferred or otherwise disposed of without registration
of such Common Stock under the Securities Act and any applicable state
securities laws, or the availability of exemptions from the registration
provisions thereunder, and that in the absence of an effective registration
statement covering the Common Stock or available exemptions from registration,
the Common Stock must be held indefinitely.
3.4.5. The Purchaser is aware that the Common
Stock to be issued hereunder may not be sold pursuant to Rule 144 promulgated
under the Securities Act unless all the conditions of that Rule are satisfied.
3.5. Conditions. The obligation of each party hereto to
consummate the transactions contemplated hereby shall be subject to the
following conditions: (i) the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have
expired or been terminated, (ii) no action, suit or proceeding relating to the
transaction contemplated hereby shall be pending or threatened, and (iii) the
representations and warranties herein of the other party hereto shall be true
and correct in all material respects as of the Closing Date. (The Company and
the Purchaser agree to cooperate in the preparation of the required
notifications under the HSR Act, to file such notifications as promptly as
reasonably practicable, and to use their reasonable best efforts to obtain
termination of the waiting period under the HSR Act.)
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Page 9 of 19 Pages
3.6. Transfer; Legends. The Common Stock acquired by the
Purchaser pursuant to this Agreement may not be sold, transferred or otherwise
disposed of except pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or pursuant to an
opinion of counsel satisfactory to the Company that such registration is not
required. All certificates evidencing the Common Stock acquired by the Purchaser
pursuant to this Agreement shall bear the following legend:
These securities have not been registered under the Securities
Act of 1933, as amended, or any state securities laws (the
"Acts") and may not be sold, offered for sale, transferred or
otherwise disposed of except pursuant to an effective
registration statement as to the securities under the Acts or
pursuant to an opinion of counsel satisfactory to the Company
that such registration is not required.
4. Confidentiality. All information provided by the Company to the
Purchaser in connection with this Agreement shall be subject to the existing
Confidentiality Agreement between the parties hereto.
5. Standstill Agreement. For a period of one year from the date of this
Agreement, the Purchaser and its representatives shall not, directly or
indirectly, nor shall the Purchaser cause any person or entity controlled by it
to: (i) acquire, agree to acquire or make any offer or proposal to acquire,
directly or indirectly, by purchase, tender or exchange offer or otherwise, any
securities of the Company except by way of stock dividends or other
distributions made on a pro rata basis to all shareholders of the Company; (ii)
solicit proxies or consents or become a "participant" in a "solicitation" (as
such terms are defined in Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of proxies or consents with respect to
securities of the Company with regard to any matter; (iii) seek to advise,
encourage or influence any person with respect to the voting of any securities
of the Company, or induce, attempt to induce or in any manner assist any other
person in initiating any stockholder proposal or a tender or exchange offer for
securities of or any change of control of the Company, or for the purpose of
convening a stockholders' meeting of the Company; (iv) make any public
announcement or make any written or oral proposal or invitation to discuss any
possibility, intention, plan or arrangement, relating to a tender or exchange
offer for securities of the Company or a business combination (or other similar
transaction which would result in a change of control), sale of assets,
liquidation or other extraordinary corporate transaction between the Purchaser
or any of its affiliates and the Company or take any action which might require
the Purchaser to make a public announcement regarding any of the foregoing.
6. Twenty Percent Ownership Limit. For accounting reasons, the
Purchaser currently desires that aggregate number of shares of Common Stock
beneficially owned by it be less than twenty percent (20%) of the aggregate
number of shares of Common Stock outstanding without its consent. If the Company
intends to repurchase shares of Common Stock and as a result of such repurchases
the Purchaser would beneficially own twenty percent (20%) or more of the shares
of Common Stock outstanding after such repurchases, then before effecting such
repurchases the Company shall first offer in writing to purchase shares of
Common Stock from the Purchaser at a price and on such other terms as the
Company intends to repurchase shares of Common Stock from third parties, such
that after all such repurchases from third parties, the aggregate number of
shares of Common Stock beneficially owned by the Purchaser is less than twenty
percent (20%) of the aggregate number of shares of Common Stock outstanding. If
the Purchaser does not accept such offer of the Company to purchase within ten
(10) business days after it is received by the Purchaser, then the Company shall
have the right to effect repurchases from third parties at the price and on such
other terms as were offered to the Purchaser.
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Page 10 of 19 Pages
7. Right of First Refusal. If the Purchaser proposes to sell, transfer
or otherwise convey (a "transfer") all or part of the Common Stock held by it,
the Purchaser shall notify the Company in writing of its intention, including
the number of shares to be sold, the identity of the proposed purchaser, the
proposed purchase price and the other terms of the sale. The Company shall
thereupon have the right to purchase all or part of the shares proposed in the
notice to be sold at the price and on the same terms as set forth in said
notice. If the Company decides to exercise its right of first refusal, it shall
deliver a written notice to such effect to the Purchaser within ten (10)
business days after receiving notice from the Purchaser. The Company shall
consummate such purchase not later than thirty (30) days after giving its notice
to the Purchaser. If the Company declines to exercise its right to purchase the
shares of Common Stock proposed to be sold by the Purchaser, the Purchaser may,
for a period of ninety (90) days, transfer such shares to the person, at the
price and on the other terms set forth in its notice to the Company; provided,
however, that it shall be a condition of the Purchaser's right to transfer such
shares (other than a transfer in a registered public offering in which the
transferee acquires beneficial ownership of less than 200,000 shares) that the
purchaser thereof agree to be bound by Sections 5 and 7 of this Agreement. All
certificates evidencing the Common Stock acquired by the Purchaser pursuant to
this Agreement shall bear the following legend:
The sale, transfer or other disposition of the shares of Common Stock
represented by this certificate is subject to the terms and conditions
of a Stock Acquisition Agreement dated as of October __, 1997, by and
between ___________ and __________, a copy of which is on file at the
Company's registered office.
8. Registration Rights. The parties agree that they shall be bound by
the registration rights provision attached hereto as Exhibit A.
9. No Pre-Closing Acquisitions. The Company covenants and agrees that
from the date of this Agreement through the Closing, it shall not purchase nor
shall it permit any of its subsidiaries or employee benefit plans to purchase
any shares of Common Stock, except that the Company's Dividend Reinvestment Plan
and Employee Stock Purchase Plan may continue to purchase newly issued shares
directly from the Company but not in the open market.
10. Termination. If the Closing has not occurred by March 31, 1997,
this Agreement shall terminate and be of no further force or effect, and neither
party shall have any liability to the other except for any damages suffered by a
party as a result of a breach of this Agreement by the other party.
11. Miscellaneous.
11.1. Governing Law. The Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania without regard to
any jurisdiction's conflicts of laws provisions.
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Page 11 of 19 Pages
11.2. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein. The terms of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties except to the extent assignability is limited herein.
11.3. Assignability. Neither party shall assign, or otherwise
transfer any interest in this Agreement to any other person or entity without
the prior written consent of the other party.
11.4. No Third-Party Beneficiaries. Nothing in the Agreement
shall be construed to give any person other than the parties hereto any legal or
equitable right, remedy or claim under this Agreement. The Agreement shall be
for the sole and exclusive benefit of the parties hereto.
11.5. Counterparts; Facsimile. This Agreement may be executed
in counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement. Delivery of executed
signature pages by facsimile transmission will constitute effective and binding
execution and delivery.
11.6. Titles and Subtitles. The titles and subtitles used in
the Agreement are used for convenience only and are not to be considered in
construing or interpreting the Agreement.
11.7. No Presumption. There will be no presumption against
any party on the ground that such party was responsible for preparing this
Agreement or any part of it.
11.8. Publicity. Except as otherwise required by law, neither
the Company nor the Purchaser shall issue a press release or make any other
public announcement regarding the transactions contemplated by this Agreement
without the consent of the other, which consent shall not be unreasonably
withheld.
12. Notices. Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given upon (i)
personal delivery, (ii) facsimile transmission, with confirmed receipt, or (iii)
delivery by overnight courier, charges prepaid at the following addresses:
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Page 12 of 19 Pages
If to the Company at:
D & E Communications, Inc.
130 East Main Street
Ephrata, PA 17522
Attention: Chief Executive Officer
Telephone: (717) 738-8430
Telecopy: (717) 733-7461
If to the Purchaser:
Southwestern Investments, Inc.
Administration Offices
High Ridge Park
Stamford, CT 06905
Attention: Chief Executive Officer
Telephone: (203) 614-4612
Telecopy: (203) 614-4651
IN WITNESS WHEREOF, the parties have executed the
Agreement as of November 3, 1997.
D & E COMMUNICATIONS, INC.
By:/s/ G. William Ruhl
Title: Senior Vice President
SOUTHWESTERN INVESTMENTS, INC.
By: /s/ Robert J. DeSantis
Title: Vice President, Treasurer and
Chief Financial Officer
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Page 13 of 19 Pages
EXHIBIT A
Registration Rights
1. In connection with your (for purposes of this Exhibit A, the terms
"you" and "your" shall refer to the Purchaser) purchase from D & E
Communications, Inc. ("D & E") of up to 1,300,000 shares of the Common Stock of
D & E (the "Registrable Securities"), D & E covenants and agrees to prepare and
file with the Securities and Exchange Commission (the "Securities Commission") a
registration statement covering all or such number of shares of the Registrable
Securities which you may designate, at a time within the consecutive ten-year
period commencing with the date hereof (the "Term") which, subject to the other
provisions hereof, is mutually agreeable to both of us, but in no event earlier
than 20 days or later than 60 days from the date of receipt by D & E of a
written demand from you requesting that a registration statement with respect to
all or a portion of the Registrable Securities (the "Offered Securities") be
filed with the Securities Commission under the Securities Act of 1933, as
amended (the "Securities Act"). D & E shall use its best efforts to cause such
registration statement to become effective to permit the sale of the Offered
Securities. You understand and agree that the Offered Securities may only be
registered at such time as you are prepared to sell such shares and that any
sale of the Offered Securities may only be effected through underwriters of
recognized standing.
2. D & E shall furnish you such numbers of copies of a printed
prospectus, including a preliminary prospectus and any amendments or supplements
thereto, in conformity with the requirements of the Securities Act, and such
other documents as you may reasonably request in order to facilitate the sale of
the Offered Securities. D & E shall also register or qualify the Offered
Securities covered by such registration statement under such securities or blue
sky laws of such jurisdictions as you shall reasonably request. D & E shall keep
effective and maintain any such registration statement until you have sold or
disposed of all of the Offered Securities, but in no event for a period beyond
six months from the effective date of such registration statement, and from time
to time during such six-month period D & E shall amend or supplement the
prospectus used in connection therewith to the extent necessary in order to
comply with Securities Act, it being understood that on notice to you, D & E
shall have the right to suspend the sale of any offered Securities, with the
further understanding that in the event D & E so suspends such sale during said
six-month period, the period of such suspension shall be added onto the said
six-month period at the end thereof.
3. D & E may include other shares of D & E's Common Stock or other of D
& E's securities in such registration statement filed pursuant to the
aforementioned demand. D & E shall be required to file only three registration
statements relating to the Registrable Securities.
4. Nothing herein shall restrict D & E's ability to file any
registration statement or prospectus or prospectus supplement in respect of the
offering and sale of other shares of D & E's Common Stock or other of D & E's
other securities at any time or from time to time or to otherwise offer or sell
any other shares of D & E's Common Stock or other of D & E's other securities.
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Page 14 of 19 Pages
5. Notwithstanding the foregoing, D & E shall have no obligation to
prepare and file such registration statement covering any of the Offered
Securities, if (a) at the time of the receipt of the demand, a registration
statement covering any of D & E's securities is (i) is expected to be filed by D
& E within 60 days, (ii) is then in effect or (iii) became effective within the
six-month period immediately preceding such demand, or it is prohibited from so
doing pursuant to agreements with underwriters, or (b) promptly after receipt of
such demand, D & E furnishes to you (i) an opinion of its counsel to the effect
that such registration would require the disclosure of an event or information
which the Company does not then desire to disclose, and (ii) a certificate
signed by the President of the Company stating that in the reasonable, good
faith judgment of the Board of Directors disclosure of such event or information
would have a material adverse effect on the Company (the Company will advise you
of the nature of such event or information upon receipt of a signed
confidentiality agreement reasonably satisfactory to the Company); provided,
that in such event, D & E's obligation to prepare and file a registration
statement shall be deferred for not more than three (3) months.
6. Additionally, if D & E at any time during the Term proposes to
register any of its securities under the Securities Act for sale to the general
public, on any form upon which the Offered Securities may be registered, D & E
will at each such time during the Term give prompt notice to you of its
intention. Upon your written request given within 30 days after D & E has given
such notice, D & E will cause each of the Offered Securities which you have
requested be registered under the Securities Act, to be included in such
registration statement, all to the extent requisite to permit the sale by you of
the Offered Securities so to be registered. If the securities to be so
registered for sale by D & E are to be distributed by or through a firm of
underwriters of recognized standing, then the Offered Securities to be
registered shall be included in such underwriting on the same terms as other
securities of the same class which are included in such underwriting, provided
that if, in the written opinion of the managing underwriter or underwriters, the
total amount of such securities to be so registered, when added to such Offered
Securities, will exceed the maximum amount of D & E's securities which can be
marketed without otherwise materially and adversely affecting the entire
offering, then D & E shall exclude from such underwriting (a) first, all
securities, other than the Offered Securities, being sold for the account of
other than D & E, (b) next, the number of Offered Securities, as is necessary in
the opinion of the managing underwriter to reduce the size of the offering, and
(c) last, the number of securities for the account of D & E which in the opinion
of the managing underwriter can or should be excluded.
<PAGE>
Page 15 of 19 Pages
7. You agree that you are acquiring the Common Stock shares for
investment only and without any intention on your part to sell or otherwise
distribute any of such shares, that no transfer of said shares will be made
without registration under the Securities Act or an opinion of Counsel for you
that such transfer is pursuant to an exemption under the Securities Act and that
the certificates representing said shares shall be endorsed with the following
legend:
These securities have not been registered under the Securities
Act of 1933, as amended, or any state securities laws (the
"Acts") and may not be sold, offered for sale, transferred or
otherwise disposed of except pursuant to an effective
registration statement as to the securities under the Acts or
pursuant to an opinion of counsel satisfactory to the Company
that such registration is not required.
8. The costs and expenses of the registration and qualification of
Offered Securities under the Securities Act and state securities acts and of all
other actions which D & E is required to take or effect pursuant to paragraph 1
of the Agreement, shall be paid by you (including, without limitation, all
registration and filing fees, printing expenses, auditing costs and expenses,
and the reasonable fees and disbursements of counsel for D & E and your
counsel). With respect to such of the Registrable Securities which you desire to
have registered pursuant to paragraph 6 of this Agreement, such fees, expenses
and disbursements (other than your share of registration and filing fees and
underwriters commissions based on the number of shares requested by you, and
disbursements of your counsel and any extraordinary expenses, such as but not
limited to, expense of securing approval of regulatory authorities, all of which
shall be paid by you in full) shall be paid by D & E.
9. You shall have the right to assign and transfer the registration
rights set forth in paragraphs 1 and 6 hereof to one person (the "Assignee"),
but only in connection with a single sale of all of the Registrable Securities
(or such of such shares that you have not heretofore sold pursuant to
registrations under said paragraphs) to a purchaser or purchasers who
represent(s) to D & E that the purchaser or purchasers (is)(are) acquiring the
shares for investment only and not with a view to the sale or other distribution
thereof and an acknowledgment and agreement that (i) any sale or transfer of the
acquired shares may only be effected pursuant to a registration under the Act or
with an opinion of D & E's counsel that such transfer is being made pursuant to
an exemption under the Act, (ii) that any sale or other transfer may only be
made through underwriters of recognized standing, (iii) that the legend
referenced in paragraph 7 shall remain on the certificates for the shares
transferred by you to such person and (iv) that all of the restrictions and
limitations set forth in paragraphs 1 through 8 of this agreement shall apply
with full force and effect and be binding on the Assignee.
<PAGE>
Page 16 of 19 Pages
SCHEDULE I
The names, addresses and principal occupations of each of the executive
officers and directors of Citizens Utilities Company and Southwestern
Investments, Inc. are listed below.
CITIZENS UTILITIES COMPANY
NAME AND ADDRESSES PRINCIPAL OCCUPATION
Directors
Norman I. Botwinik
Building #14
60 Connolly Parkway (Retired)
Hamden, CT 06514
Aaron I. Fleischman Senior Partners
FLEISCHMAN AND WALSH, LLP FLEISCHMAN AND WALSH, LLP
1400 Sixteenth Street, NW
Washington, DC 20036
Stanley Harfenist President and
ADESSO, INC. Chief Executive Officer
5110 West Goldleaf Circle ADESSO, INC.
Suite 90
Los Angeles, CA 90056
Andrew N. Heine Attorney, Andrew N. Heine, P.C.
GORDON ALTMAN BUTWOSKY WEITZEN
SHALOV & WEIN
114 West 47th Street, 21st Fl.
New York, NY 10036-1510
John L. Schroeder Director, Dean Witter Funds,
North Gate, 3A - Alger Court
Bronxville, NY 10708
Robert D. Siff Consultant
3 Fogg Street
Concord, NH 03301
Edwin Tornberg President,
EDWIN TORNBERG & CO., INC. Edwin Tornberg & Co., Inc.
8917 Cherbourg Drive
Potomac, MD 20854
Claire Tow Senior Vice President
CENTURY COMMUNICATIONS CORP. Century Communications Corp.
50 Locust Avenue
New Canaan, CT 06840
Leonard Tow Chairman of the Board, Chief
CITIZENS UTILITIES COMPANY Executive Officer and
3 High Ridge Park Chief Financial Officer
Stamford, CT 06905 CITIZENS UTILITIES COMPANY
<PAGE>
Page 17 of 19 Pages
NAME AND ADDRESSES PRINCIPAL OCCUPATION
Executive Officers
Leonard Tow Chairman of the Board and
CITIZENS UTILITIES COMPANY Chief Executive Officer
3 High Ridge Park
Stamford, CT 06905
Daryl A. Ferguson President and Chief Operating
CITIZENS UTILITIES COMPANY Officer
3 High Ridge Park
Stamford, CT 06905
Robert J. DeSantis Vice President, Treasurer and
CITIZENS UTILITIES COMPANY Chief Financial Officer
3 High Ridge Park
Stamford, CT 06905
J. Michael Love Vice President, Public Services
CITIZENS UTILITIES COMPANY
3 High Ridge Park
Stamford, CT 06905
Livingston E. Ross Vice President and Controller
CITIZENS UTILITIES COMPANY
3 High Ridge Park
Stamford, CT 06905
O. Lee Jobe Vice President, Communications
CITIZENS UTILITIES COMPANY
3 High Ridge Park
Stamford, CT 06905
David B. Sharkey President and Chief Operating
ELECTRIC LIGHTWAVE , INC. Officer of ELECTRIC LIGHTWAVE,
8100 NE Parkway Drive, Suite 150 INC.
Vancouver, WA 98662-6461 (principal subsidiary of
Citizens Utilities Company)
L. Russell Mitten Vice President and General
CITIZENS UTILITIES COMPANY Counsel of CITIZENS UTILITIES
3 High Ridge Park COMPANY
Stamford, CT 06905
Donald P. Weinstein Vice President, Corporate
CITIZENS UTILITIES COMPANY Planning
3 High Ridge Park CITIZENS UTILITIES COMPANY
Stamford, CT 06905
<PAGE>
Page 18 of 19 Pages
SOUTHWESTERN INVESTMENTS, INC.
NAME AND ADDRESSES PRINCIPAL OCCUPATION
Directors
Robert J. DeSantis Vice President, Treasurer and
CITIZENS UTILITIES COMPANY Chief Financial Officer
3 High Ridge Park
Stamford, CT 06905
Daryl A. Ferguson President and Chief Operating
CITIZENS UTILITIES COMPANY Officer
3 High Ridge Park
Stamford, CT 06905
Peter C. Fulweiler Vice President
PNC BANK OF DELAWARE PNC Bank of Delaware
222 Delaware Avenue
Wilmington, DE 19899
Leonard Tow Chairman of the Board and Chief
CITIZENS UTILITIES COMPANY Executive Officer
3 High Ridge Park
Stamford, CT 06905
Executive Officers
Daryl A. Ferguson President and Chief Operating
CITIZENS UTILITIES COMPANY Officer
3 High Ridge Park
Stamford, CT 06905
Robert J. DeSantis Vice President, Treasurer and
CITIZENS UTILITIES COMPANY Chief Financial Officer
3 High Ridge Park
Stamford, CT 06905
Edward O. Kipperman Vice President, Tax
CITIZENS UTILITIES COMPANY
3 High Ridge Park
Stamford, CT 06905
L. Russell Mitten Vice President and General
CITIZENS UTILITIES COMPANY Counsel
3 High Ridge Park
Stamford, CT 06905
Livingston E. Ross Vice President and Controller
CITIZENS UTILITIES COMPANY
3 High Ridge Park
Stamford, CT 06905
<PAGE>
Page 19 of 19 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I cer-
tify that the information set forth in this statement is true, complete and
correct.
CITIZENS UTILITIES COMPANY
Dated: January 12, 1998 By: /s/ Charles J. Weiss
-----------------------
Charles J. Weiss
Secretary