-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vkct+cHoXZ5RV7OcKAUkRaLUyx9WqGQjflNmDOGqajIKe2ikE9PvnzaZlD1glsoh OuWTFF9qtIF67DHdSYSCdw== 0000020520-96-000011.txt : 19960701 0000020520-96-000011.hdr.sgml : 19960701 ACCESSION NUMBER: 0000020520-96-000011 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19960627 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS UTILITIES CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-07047 FILM NUMBER: 96587434 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 STREET 2: P O BOX 3801 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2033298800 MAIL ADDRESS: STREET 1: HIGH RIDGE PARK BLDG NO 3 CITY: STAMFORD STATE: CT ZIP: 06905 S-3 1 File No. 33- As filed with the Securities and Exchange Commission on June 27,1996 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CITIZENS UTILITIES COMPANY (Exact name of registrant as specified in charter) DELAWARE 06-0619596 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification number) High Ridge Park, Bldg. No. 3, Stamford, Connecticut 06905 (203) 329-8800 (Address,including,zip code, and telephone number, including area code, of registrant's principal executive offices) Robert J. DeSantis Vice President and Treasurer Citizens Utilities Company High Ridge Park, Bldg. No. 3 P.O. Box 3801 Stamford, Connecticut 06905 Tel. No. (203) 329-8800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Jonathan H. Churchill, Esq. Vincent Pagano, Esq. Winthrop, Stimson, Putnam & Roberts Simpson Thacher & Bartlett One Battery Park Plaza 425 Lexington Avenue New York, New York 10004-1490 New York, New York 10017-3909 Tel. No. (212) 858-1109 Tel. No. (212) 455-2000 -------------------------------------------- Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. __ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. X If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. __ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. __ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. __ -------------------------------------------- CALCULATION OF REGISTRATION FEE ------------------------------- Title of Securities Debt and Equity* to be Registered - -------------------------- Amount to be $904,125,000 Registered - -------------------------- Proposed Maximum Aggregate Price Per Unit 100%** - -------------------------- Proposed Maximum Aggregate Offering Price $904,125,000** - -------------------------- Amount of Registration Fee $311,767 - -------------------------- * Includes shares of Common Stock Series B issuable upon conversion of Common Stock Series A. ** Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus herein also relates to the remaining $95,875,000 of securities of registrant covered by Registration Statement No. 33-51529. The enclosed Prospectus constitutes Post-effective Amendment No. 1 to said Registration Statement No. 33-51529 to cover up to $95,875,000 of debt and equity securities of registrant, which registrant hereby requests be declared effective at the same time as this registration statement. An indeterminate principal amount of Debt Securities and an indeterminate number of shares of Preferred Stock and Common Stock are being registered. If any Debt Securities are issued at an original issue discount, then the maximum nominal offering price shall be in such greater amount so that the actual aggregate initial offering price of all securities will not exceed $1,000,000,000 (including the securities registered pursuant to the Registration Statement No. 33-51529). - --------------------- The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 27, 1996 PROSPECTUS $1,000,000,000 SECURITIES ----------------------------------- Citizens Utilities Company (the "Company" or "Citizens") may offer, from time to time, debt securities consisting of unsecured debentures, in one or more series (the "Debt Securities"); preferred stock, in one or more series (the "Preferred Stock"); and its Common Stock, Series A and/or Series B (the "Common Stock" and, together with the Debt Securities and Preferred Stock, the "Securities") in amounts, at prices and on terms to be determined at the time of sale. The aggregate initial public offering price of the Securities will not exceed $1,000,000,000. For each offering of Securities for which this Prospectus is being delivered there will be an accompanying Prospectus Supplement (the "Prospectus Supplement") that will set forth: (i) with respect to Debt Securities, the designation, principal amount, interest rate, interest payment dates, maturity (not less than nine months nor more than fifty years), public offering price, any redemption or sinking fund provisions, and any other specific terms; (ii) with respect to Preferred Stock, the specific number of shares, liquidation value, dividend rate (or method of calculation thereof), public offering price, any redemption and sinking fund terms and other specific terms; and (iii) with respect to Common Stock, the specific number of shares, the designation, the public offering price and other specific terms. The outstanding shares of Common Stock are, and the new Common Stock will be, listed on the New York Stock Exchange. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Company may offer the Securities to or through one or more underwriters and/or dealers, directly to one or more institutional or other purchasers, to existing holders of securities, or through agents. See "Plan of Distribution." The Prospectus Supplement will set forth the names of the underwriters, dealers or agents, if any, any applicable commissions or discounts and the gross and net proceeds to the Company from the sale of Securities. The date of this Prospectus is _____________________, 1996 No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this Prospectus or any Prospectus Supplement in connection with an offer made by this Prospectus or any Prospectus Supplement and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or by any other person, underwriter, dealer or agent. Neither the delivery of this Prospectus or any Prospectus Supplement nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the Company since the date hereof or thereof or that the information contained herein is current as of any time subsequent to the date hereof. This Prospectus or any Prospectus Supplement do not constitute an offer or solicitation by anyone in any State in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. TABLE OF CONTENTS AVAILABLE INFORMATION............................. 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 3 CITIZENS UTILITIES COMPANY........................ 3 FINANCIAL INFORMATION............................. 4 APPLICATION OF PROCEEDS........................... 6 CAPITAL REQUIREMENTS AND FINANCING....................................... 6 DESCRIPTION OF THE DEBT SECURITIES...................................... 6 DESCRIPTION OF THE PREFERRED STOCK........................................... 12 DESCRIPTION OF THE COMMON STOCK SERIES A AND SERIES B.......................... 13 DIVIDENDS ON COMMON STOCK SERIES A AND SERIES B.......................... 13 STOCK DIVIDEND SALE PLAN AND CONVERSION OF COMMON STOCK SERIES A INTO SERIES B........................ 14 COMMON STOCK PRICE RANGE........................ 15 COMMON STOCK TRANSFER AGENT...................... 15 PRO FORMA STATEMENTS OF INCOME................... 16 LEGAL OPINIONS................................... 19 EXPERTS.......................................... 19 PLAN OF DISTRIBUTION............................. 19 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 ("1934 Act") and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and Suite 1300, 7 World Trade Center, New York, New York 10048. Copies of such material can also be obtained from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D. C. 20549, at prescribed rates. The SEC also maintains a web site (htp://www.sec.gov) that contains reports, proxy and information statements and other information regarding the Company. Certain securities of the Company are listed on the New York Stock Exchange, 20 Broad Street, New York, New York 10005, and reports, proxy material and other information concerning the Company may be inspected at the office of that Exchange. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCEN OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the SEC pursuant to the 1934 Act are incorporated into this Prospectus by reference: The Company's Annual Report on Form 10-K for the year ended December 31, 1995. The Company=s Quarterly Report on Form 10-Q for the quarter ended March 31, 1996. The Company's Current Reports on Form 8-K filed on March 29, and May 28, 1996. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. The Company hereby undertakes to provide, without charge, to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in this Prospectus, other than exhibits to such documents not specifically incorporated by reference herein. Requests for such copies should be directed to Office of the Secretary, Citizens Utilities Company, High Ridge Park, Bldg. No. 3, Stamford, Connecticut 06905 (telephone 203-329-8800). CITIZENS UTILITIES COMPANY Citizens Utilities Company is a diversified operating company which provides, either directly or through subsidiaries, telecommunications, natural gas transmission and distribution, electric distribution, water or wastewater services to customers in areas of twenty states. Divisions of Citizens provide electric distribution and natural gas transmission and distribution services, purchasing most of the electric power needed and all gas supplies. Telecommunications, water and wastewater services are provided either by divisions of Citizens or by its subsidiaries. Citizens holds a significant investment interest in Centennial Cellular Corp., a cellular telephone company, and owns Electric Lightwave, Inc., an alternative telecommunications service provider operating in five western states. Beginning with 1945, the Company has increased its revenues, net income and earnings per share (as adjusted for subsequent stock dividends and stock splits) every year without interruption. The Company, with administrative offices at High Ridge Park, Bldg. No. 3, Stamford, Connecticut 06905 (telephone 203-329-8800), was incorporated in Delaware in 1935 to acquire the assets and business of a predecessor corporation. Since then, the Company has grown as a result of investment in its own operations and the acquisition of numerous additional operations. As a result of its diversification, the Company is not dependent upon any single geographic area or any one type of service for its revenues. No single state regulatory body regulates a utility service of the Company accounting for more than 10% of the Company's revenues for the twelve months ended March 31, 1996, pro forma for the acquisitions of the ALLTEL Telecommunications Properties. The Federal Communications Commission will regulate interstate access services of the Company under price cap regulation which allows the Company considerable flexibility in its pricing. The Company is not aware of any other utility company as fully diversified in both geographic areas served and variety of services provided. The Company's operations are conducted principally in small and medium-sized communities. No material part of the Company's business is dependent upon a single customer or a small group of customers. The loss of any single customer or a small group of customers would not have a materially adverse effect upon the Company. The Company's consumer connections have increased from 26,150 in 1945, to 225,389 in 1965, to 610,585 in 1985, and to over 1,600,000 as of March 31, 1996. The Company continually considers and is carrying out expansion through acquisitions and joint ventures in the rapidly evolving telecommunications and cable television industries and in traditional public utility and related businesses. FINANCIAL INFORMATION On November 29, 1994, Citizens and ALLTEL Corporation ("ALLTEL") announced the signing of definitive agreements pursuant to which Citizens agreed to acquire from ALLTEL at a net purchase price of $282 million, approximately 110,000 local telephone access lines and 7,000 cable television subscribers in eight states ("ALLTEL Telecommunications Properties"). In 1995, approximately 93,000 local telephone access lines and approximately 7,000 cable television subscribers were transferred to the Company. On March 31, 1996, the remaining local telephone access lines were transferred to the Company. The following financial information, including pro forma financial information reflecting the acquisitions of the ALLTEL Telecommunications Properties (assuming the acquisitions of such Properties were effective on April 1, 1995), is qualified in its entirety by, and should be read in conjunction with, the information appearing elsewhere herein and the documents and financial statements incorporated by reference herein. Revenues Twelve Months Ended March 31, 1996 ------------------------------------------- (In thousands) Business Sector Pro Forma Actual - ---------------------- ------------ ---------------------------- Telecommunications $724,593 60% $658,051 58% Natural Gas 212,598 18% 212,598 19% Electric 178,581 15% 178,581 16% Water/Wastewater 81,906 7% 81,906 7% ---------- ---- ----------- ------ Total $1,197,678 100% $1,131,136 100% =============== =========== ======= Consolidated Summary Financial Information (In millions, except percentages, ratios and per-share amounts) Twelve Months Ended March 31, 1996 Year Ended December 31, ------------------------ ----------------------- Pro Forma(1) Actual 1995 1994 1993 1992 1991 ------------- ------ ---- ---- ---- ---- ---- INCOME STATEMENT DATA Revenues $1,198 $1,131 $1,069 $906 $613 $577 $545 Net Income $176 $164 $160 $144 $126 $115 $112 Earnings Per Share of Common Stock Series A and Series B(2) $.79 $.74 $.72 $.71 $.63 $.58 $.57 Ratio of Earnings to Fixed Charges(3) 4.0 3.5 3.4 3.7 5.3 4.8 5.3 Ratio of Earnings to Combined Fixed Charges and Dividends on Convertible Preferred Securities(4) 3.7 3.5 3.4 3.7 5.3 4.8 5.3 As at As at December 31, ------------------------------------ March 31, 1996 1995 1994 1993 1992 1991 -------------- ---- ---- ---- ---- ---- CAPITALIZATION DATA - ------------------- Long-Term Debt $1,194 $1,187 $994 $548 $523 $484 Equity(5) $1,785 $1,560 $1,157 $974 $837 $720 Long-Term Debt to Long-Term Debt and Equity 40% 43% 46% 36% 38% 40% Shareholders Equity Per Share of Common Stock Series A and Series B(2) $7.08 $7.01 $5.69 $4.86 $4.20 $3.66 (1) Combined Citizens financial results with the financial results of the ALLTEL Telecommunications Properties assuming the acquisitions and related permanent financings were effective on April 1, 1995. These amounts should be read in conjunction with the Pro Forma Statements of Income beginning on page 16 of this Prospectus. The Pro Forma Income Statement Data is not necessarily indicative of what the actual financial results would have been for the period had the transactions occurred on the date indicated and does not purport to indicate the financial results of future periods. (2) Common Stock Series A and Series B per share amounts have been adjusted retroactively for subsequent stock dividends and stock splits through March 31, 1996. No adjustment has been made for Citizens= 1.6% 1996 second quarter stock dividend, as this adjustment is immaterial. (3) A Earnings@ consist of income before income taxes plus fixed charges.A Fixed Charges@ consist of interest charges and an amount representing the interestfactor included in rentals. (4) On January 22, 1996, a subsidiary of the Company issued $201 million of Company Obligated Mandatorily Redeemable Convertible Preferred Securities (the AConvertible Preferred Securities@) to permanently fund a portion of the purchase price of the ALLTEL Telecommunications Properties. It is intended that the dividends on the Convertible Preferred Securities will be paid in the form of the Company=s Common Stock Series A as opposed to cash. Accordingly, the difference between the Ratio of Earnings to Fixed Charges and the Ratio of Earnings to Combined Fixed Charges and Dividends on Convertible Preferred Securities is attributable to the non-cash dividend. (5) Includes Shareholders= Equity and Convertible Preferred Securities. APPLICATION OF PROCEEDS The proceeds to be received are expected to be used to reimburse the Company's treasury for expenditures for the construction, extension, completion and improvement of utility facilities, to acquire additional public utility and related property and property in the rapidly evolving telecommunications and cable television industries, to improve service, to provide funds for the repayment of outstanding debt on such date or dates as the Company may determine and for other corporate purposes. CAPITAL REQUIREMENTS AND FINANCING The Company carries out a continuous construction program to maintain reliable and safe service and to meet future customer service requirements. The Company estimates that expenditures for construction, extension and improvement of service will require approximately $340 million in 1996. The Company's construction program is under continuous review and may be revised depending on business and economic conditions, regulatory action, governmental mandates, customer demand and other factors. Capital requirements will be financed from internally generated funds, the sale of Securities covered by this Prospectus, other offered securities, the issuance of taxable and tax-exempt long-term debt, short-term borrowings, customer advances, and contributions in aid of construction. The Company maintains $600 million of committed bank lines of credit for general corporate purposes under which there were no amounts outstanding as of June 26, 1996. DESCRIPTION OF THE DEBT SECURITIES General Debt Securities may consist of any one or more of the following types of securities: unsecured debentures, debentures convertible into equity, medium term notes, and other unsecured notes, with a maturity of not less than nine months nor more than fifty years from the date of issuance. For each offering of Debt Securities there will be an accompanying Prospectus Supplement that will set forth the aggregate principal amount or amounts, public offering price or prices, maturity or maturities, rate or rates and times of payment of interest, any sinking fund provisions, any redemption terms and any other special terms of such Debt Securities. If the Debt Securities are to be convertible to shares of equity securities, the accompanying Prospectus Supplement will set forth the terms of conversion. The following statements, which are qualified in their entirety by reference to the Indenture described below, are brief summaries of the provisions of the Indenture. Debentures and other unsecured Debt Securities will be issued under the Company's Indenture dated as of August 15, 1991, as supplemented for the issuances of debentures and as may be further supplemented by one or more supplemental indentures creating the respective series of debentures and other unsecured Debt Securities. Chemical Bank, New York, is the trustee (the "Trustee") under the Indenture. Copies of the Indenture and any supplemental indentures (collectively hereinafter called the "Indenture") are or will be filed as exhibits to the Registration Statement. The Indenture provides generally for the issuance of Debt Securities in series. Securities issued under the Indenture are herein called the "Indenture Securities". Debt Securities will not be secured. Debt Securities will rank equally, unless otherwise specified in the Prospectus Supplements, with any other indebtedness which may be issued under the Indenture and other unsecured obligations of the Company except as noted. As of March 31, 1996, there was outstanding $1,118,704,000 principal amount of unsecured long-term indebtedness of the Company, including obligations under loan agreements relating to industrial development revenue bonds issued on behalf of the Company to finance the construction of specified property, all of which ranks equally in right of payment with the Indenture Securities, except for approximately $1,584,000 principal amount of such unsecured indebtedness which is subordinate to all other unsecured indebtedness. On June 11, 1996, the Company issued $100,000,000 of additional Debt Securities which are outstanding under the Indenture. In the future, the Company may incur additional unsecured indebtedness, including obligations under industrial development revenue bond loan agreements, and secured indebtedness under mortgages or other security arrangements. Assets of subsidiaries of the Company in the states of Arizona and West Virginia are subject to liens of mortgages securing $57,889,000 and $17,075,000, respectively, of principal amount of indebtedness from federal agencies as of March 31, 1996. Unless otherwise stated in the accompanying Prospectus Supplement, it is intended that Debt Securities will be held by the owners as book-entry securities. See below under "- Book-Entry Debt Securities." Issuance of Additional Debt Securities Additional Debt Securities may be issued under the Indenture. The Indenture does not contain any limitation on the issuance by the Company of other debt securities, either secured or unsecured. Merger, Consolidation, Transfer of Assets In the event of a merger, consolidation or transfer of assets of the Company with or to another corporation or entity, in which the Company is not the surviving corporation, the surviving entity shall assume the obligations of the Company for Indenture Securities under the Indenture by execution of a supplemental indenture, and such merger, consolidation or transfer of assets is conditioned upon the surviving entity having a consolidated net worth immediately subsequent to such event at least equal to that of the Company immediately prior to such event. Modification of Indenture; Defeasance The Indenture provides that, with the consent of the holders of not less than 66 2/3% in principal amount of all series of Indenture Securities affected thereby which are at the time outstanding, the Company and the Trustee may enter into supplemental indentures for the purpose of amending or modifying, in any manner, provisions of the Indenture; provided, however, that no such supplemental indenture, without the consent of the holder of each outstanding Indenture Security affected thereby, shall, among other things, (i) change the maturity of the principal of, or any installment of interest on, any Indenture Security, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or (ii) reduce the amount of the principal of an original issue discount security that would be payable upon acceleration, or (iii) impair the right to institute suit for the enforcement of any such payment on or after the maturity or redemption date, or (iv) reduce the aforesaid percentage of the Indenture Securities, the consent of the holders of which is required for the execution of any such supplemental indenture or the waiver of compliance with certain covenants (Indenture Section 902). The Indenture provides for the defeasance of the Indenture with regard to one or more series of Indenture Securities, or the defeasance of specified covenants of the Indenture applicable to one or more series, upon the deposit in trust of cash or U.S. government securities in an amount sufficient to pay principal, premium, if any, and interest on such series of Indenture Securities and upon satisfaction by the Company of other conditions (Indenture Sections 1302, 1303 and 1304). A condition to defeasance with respect to the entire amount of any series of Indenture Securities is an opinion of counsel to the effect that the holders of such series will not realize income for federal income tax purposes as a result of such defeasance. Events of Default The Indenture defines an Event of Default with respect to any series of Indenture Securities as being: a default for 60 days in the payment of any interest upon any Indenture Security of such series; a default in the payment of any principal of or premium on any Indenture Security of such series when due; a default in the deposit of any sinking fund payment with respect to such series; a default in the performance of any other covenant in the Indenture applicable to such series which goes unremedied for 90 days after notice of default given by the Trustee or the holders of not less than a majority of principal amount of such series; and includes certain events of bankruptcy, insolvency or reorganization. The Company may add, delete or modify any Event of Default or other similar event with respect to one or more series of Indenture Securities at the time of establishing such series (Indenture Section 501). The Company is required to file with the Trustee all reports required by the Trust Indenture Act of 1939, which includes an annual officer's certificate as to compliance with all conditions and covenants under the Indenture (Indenture Sections 704 and 1006). The Indenture provides that, if an Event of Default with respect to a series of Indenture Securities occurs and is continuing, the Trustee or the holders of not less than a majority of principal amount of the outstanding Indenture Securities of such series may declare the principal of the Indenture Securities of such series to be due and payable immediately. The holders of a majority of principal amount of the outstanding Indenture Securities of such series may rescind any such declaration if such Event of Default has been cured or waived and all amounts then due on the Indenture Securities of such series have been paid (Indenture Section 502). The Indenture further provides that, if an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights of the Trustee and the rights of the holders of Indenture Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights (Indenture Section 503). The Indenture provides that the Trustee shall give to the holders of the Indenture Securities of any series notice of any default relating to such series under the Indenture within 90 days of its occurrence, except that in the case of a default by the Company in the performance of any covenant in the Indenture other than those with respect to the payment of principal, premium or interest or deposit of sinking fund payment, no such notice shall be given until at least 30 days after the occurrence thereof, provided that the Trustee may withhold notice to holders of the Indenture Securities of any series of any default (except in payment of the principal of, or premium, if any, or interest on, any Indenture Security or in the making of any sinking fund or similar payment) if it considers it in the interest of the holders of Indenture Securities to do so (Indenture Section 602; and Trust Indenture Act of 1939, Section 315(b)). The Indenture provides that the holders of a majority of principal amount of the outstanding Indenture Securities of a series have the right, subject to certain conditions, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee and the right to waive past defaults, other than defaults in, or relating to, the payment of principal, premium or interest (Indenture Sections 512 and 513). The Trustee will not be required to comply with any request or direction of the holders of Indenture Securities pursuant to the Indenture unless offered indemnity against costs, expenses and liabilities which might be incurred by the Trustee as a result of such compliance (Indenture Section 603(d)). Holders of Indenture Securities of a series have no right to enforce any remedy under the Indenture unless the Trustee has failed to institute proceedings in respect of an Event of Default relating to such series within 90 days after notice thereof and has received a written request by the holders of not less than a majority of principal amount of the outstanding Indenture Securities of such series with an offer of reasonable indemnity against costs, expenses and liabilities that may be incurred in complying with such request (Indenture Section 507). Concerning the Trustee Chemical Bank, the Trustee under the Indenture, has periodically engaged in transactions with, or performed services for, the Company in the ordinary course of business. Chemical Bank is also the trustee under an indenture dated January 15, 1996, as supplemented, pursuant to which $211,756,050 of principal amount of debentures issued to a wholly owned subsidiary of the Company are outstanding. Chemical Bank is also the agent and a participant lender under the Company's committed bank lines of credit arrangements. Book-Entry Debt Securities Unless otherwise stated in the accompanying Prospectus Supplement, it is intended that the Debt Securities will be held by the owners as book-entry securities and will be issued in the form of one or more fully registered global securities. The global securities will be deposited with, or on behalf of, and will be registered in the name of, The Depository Trust Company, New York, New York, (the "Depositary") or its nominee (Indenture Section 311). Except as set forth below, the global securities may be transferred only to a nominee of the Depositary or to a name designated by an authorized representative of the Depositary or its nominee. The Depositary has advised as follows: it is a limited-purpose trust company organized under the banking laws of the State of New York and a "banking organization" within the meaning of that law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the 1934 Act. The Depositary holds securities deposited by its participating organizations ("participants") and facilitates settlement of securities transactions in such securities between participants through electronic book-entry changes in accounts of its participants. Participants include securities brokers and dealers, banks and trust companies, clearing corporations and certain other organizations. Access to the Depositary's system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Persons who are not participants may beneficially own securities held by the Depositary only through participants or indirect participants. The Depositary has advised that pursuant to its procedures: (i) upon issuance of the Indenture Securities by the Company, the Depositary will credit the accounts of participants and indirect participants designated by any underwriters, dealers or agents with the principal amount of the Debt Securities purchased and (ii) ownership of beneficial interests in the global debt securities will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary, the participants and the indirect participants. The laws of some states require that certain persons take physical delivery in definitive form of securities which they own. Consequently, the ability to transfer beneficial interests in the global debentures is limited to such extent. So long as the Depositary or a nominee of the Depositary is the registered owner of the global debt securities, such Depositary or nominee for all purposes will be considered the sole owner or holder of the Debt Securities under the applicable indenture. Except as provided below, owners of beneficial interest in the global debt securities will not be entitled to have Debt Securities registered in their names, will not receive or be entitled to receive physical delivery of Debt Securities, and will not be considered the owners or holders thereof under the applicable indenture. Neither the Company nor the Trustee will have any responsibility or obligation for any aspect of the records relating to or payments made on account of beneficial ownership interests in the global debt securities or for maintaining any records relating to such beneficial ownership interests. Principal and interest payments on Debt Securities registered in the name of the Depositary (or its successor or nominee) will be made by the paying agent for the related series under the applicable indenture to the Depositary (or its successor or nominee) as the registered owner of the global debt securities. Under the terms of the Indenture and, unless otherwise stated in the Prospectus Supplement, under the terms of any other applicable indenture the Company and the Trustee will treat the persons in whose names the Debt Securities are registered as the owners of such Debt Securities for the purpose of payment of principal and interest on such Debt Securities, giving any notice permitted or required to be given to holders of Debt Securities, registering the transfer of the global debt securities, and for all other purposes whatsoever. Therefore, neither the Company, the Trustee nor any paying agent has any direct responsibility or liability for the payment of principal or interest on the Debt Securities, or the giving of any such notice, to owners of beneficial interests in the global debt securities, as the case may be, or, in the event of any sinking fund payment or redemption, the selection of the owners of beneficial interests to receive payment. The Depositary has advised that its present practice is, upon receipt of any payment of principal or interest, to credit immediately the accounts of the participants and indirect participants with such payment in amounts proportionate to their respective holdings in principal amount of beneficial interests in the global debt securities as shown on the records of the Depositary. Payments by participants and indirect participants to owners of beneficial interests in the global debt securities will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of the participants or indirect participants. Global debt securities are exchangeable for definitive Debt Securities in registered form only if (i) the Depositary notifies the Company that it will not continue its services as Depositary for the global debt securities, (ii) the Depositary ceases to be clearing agency registered under the 1934 Act, (iii) the Company in its sole discretion determines that all such global debt securities shall be exchangeable for definitive Debt Securities in registered form, or (iv) an Event of Default (as hereinabove described) with respect to the Debt Securities represented by such global debt securities has occurred and is continuing. Any global debt securities that are exchangeable pursuant to the preceding sentence shall be exchangeable for definitive Debt Securities in registered form in denominations of $1,000 and integral multiples thereof. Such definitive Debt Securities shall be registered in the names of the owners of the beneficial interests in such global debt securities as provided by the Depositary's participants (as identified by the Depositary holding such global debt securities). In the event that Debt Securities which are held as book-entry debt securities cease to be book-entry debt securities, such Debt Securities will be delivered as registered debt securities without coupons in denominations of $1,000 or any authorized multiple of $1,000. No service charge will be made for any exchange or registration of transfer of any Debt Securities, except that the Company may require payment sufficient to cover any tax or governmental charge in connection therewith (Indenture Sections 302 and 305). DESCRIPTION OF THE PREFERRED STOCK The Company is authorized to issue up to 50,000,000 shares of Preferred Stock, par value $.01 per share. Under the Company's Restated Certificate of Incorporation, as amended, the Board of Directors is empowered to fix, by resolution, or resolutions, the designations, powers, preferences and relative, participating, optional, conversion and other rights and the qualifications, limitations and restrictions of such Preferred Stock, including dividend rates and payment dates, liquidation preferences, conversion prices, voting rights, redemption and sinking fund terms, and other specific terms. Preferred Stock may be issued in one or more classes and in one or more series. In the event that the Board of Directors shall create a class or series of Preferred Stock, the terms shall be as set forth in the resolution of the Board of Directors creating such stock. None of the Company's authorized Preferred Stock has been issued. The statements with respect to the Company's Preferred Stock contained in this Prospectus and in any Prospectus Supplement, are summaries of the Company's Restated Certificate of Incorporation and the aforesaid resolutions. Such statements are in all respects subject to and qualified in their entirety by reference to the Restated Certificate and the resolutions fixing the terms of the Preferred Stock. Dividend Rights The holders of the Preferred Stock in respect of which an accompanying Prospectus Supplement is being delivered will be entitled to receive dividends when and as declared by the Board of Directors of Citizens, as specified in such accompanying Prospectus Supplement. The date that the initial dividend on such Preferred Stock is expected to be payable will be as set forth in such accompanying Prospectus Supplement. There are no limitations in any existing indentures or any other agreements on the payments of dividends on Preferred Stock. Voting Rights Any rights of the holders of the shares of any series or class of Preferred Stock will be as set forth in an accompanying Prospectus Supplement. Redemption and Liquidation Rights Redemption provisions and liquidation rights and preferences for the Preferred Stock in respect of which an accompanying Prospectus Supplement is being delivered will be set forth in such accompanying Prospectus Supplement. Transfer Agent and Registrar The Transfer Agent and Registrar for the Preferred Stock will be as set forth in an accompanying Prospectus Supplement. DESCRIPTION OF THE COMMON STOCK SERIES A AND SERIES B Citizens' common stock consists of two series: Common Stock Series A and Common Stock Series B. Currently, the Company has authorized 250,000,000 shares of Common Stock Series A and 350,000,000 shares of Common Stock Series B. As of June 26, 1996, the Company had outstanding 152,561,900 shares of Common Stock Series A and 78,388,600 shares of Common Stock Series B. As of June 26, 1996, there were 26,665 record holders of Common Stock Series A and 22,153 record holders of Common Stock Series B. The holders of Common Stock Series A and Common Stock Series B are entitled to one vote for each share on all matters voted on by shareholders. Pursuant to Citizens' Restated Certificate of Incorporation, the holders of Common Stock Series A and the holders of Common Stock Series B vote together as a single class on all matters to be voted on by shareholders, unless otherwise expressly required by applicable law. Common Stock Series A is convertible, on a share-for-share tax-free basis and at no cost to shareholders, into Common Stock Series B at all times. Common Stock Series B is not convertible into Common Stock Series A. The Board of Directors of Citizens may, in its sole discretion and at any time, require all of the holders of Common Stock Series A to exchange all of their shares of Common Stock Series A for shares of Common Stock Series B on a share-for-share basis. The holders of Common Stock Series A and Common Stock Series B participate ratably in liquidation. The holders of Common Stock Series A and Common Stock Series B have no preemptive rights. DIVIDENDS ON COMMON STOCK SERIES A AND SERIES B The holders of Common Stock Series A and Common Stock Series B are entitled to receive dividends when and as declared by the Board of Directors of Citizens out of funds legally available therefor. Dividends have been paid to holders of common stock every year without interruption beginning in 1939 and, although there can be no assurances as to the amount of any future dividends, the Company has increased cash dividends and/or cash value equivalents every year without interruption beginning in 1946. Beginning in 1956, when the two-series common stock capitalization of Citizens was initiated, through 1989, only stock dividends were paid on Common Stock Series A and only cash dividends were paid on Common Stock Series B. Commencing in 1990, Citizens has declared and paid quarterly stock dividends at the same rate on shares of both Common Stock Series A and Common Stock Series B. The stock dividend rate is based on an underlying cash equivalent. The Company expects that under present United States federal tax law, stock dividends on Common Stock Series A and Common Stock Series B, if paid and received pro-rata and otherwise in the same manner as they have been since 1990, will be free of current federal income taxation on receipt. Such stock dividends are generally treated as capital transactions when and if sold. Gain or loss is based on the difference between sales price and adjusted basis per share. To the extent that stock dividends are declared on the Common Stock Series B, the same stock dividend must be declared on the Common Stock Series A. To the extent that cash dividends are paid out of funds that are legally available on the Common Stock Series B, stock dividends with an equivalent fair value must be paid during the same calendar year on the Common Stock Series A, unless cash dividends are declared on the Common Stock Series A at the same time and in an equal amount as on the Common Stock Series B. STOCK DIVIDEND SALE PLAN AND CONVERSION OF COMMON STOCK SERIES A INTO SERIES B COMMON STOCK SERIES A INTO SERIES B The Company has a Stock Dividend Sale Plan (the "Plan") which enables Common Stock Series B shareholders to elect to have their future stock dividends sold and the cash proceeds of the sale (minus a per share commission, currently 2 cents) distributed to them quarterly. If a Common Stock Series B shareholder's account is held by a broker or custodial institution participating in the Plan, the cash proceeds are sent to the broker or custodial institution. Generally, for United States federal income tax purposes, the differences between the proceeds from the sale of the stock dividends (the net cash received) and the adjusted basis of the shares sold are treated as a capital transaction. Holders of Common Stock Series A may at any time convert, at no cost, on a share-for-share and tax-free basis their Common Stock Series A shares into Common Stock Series B shares. A Registered Shareholder may give instructions to the Company's Common Stock Transfer Agent and street name holders may give instructions to their brokers to accomplish such conversion from Common Stock Series A into Common Stock Series B, and in conjunction with said conversion, or after such conversion, may enroll in the Plan. Common Stock Series B shareholders may enroll throughout the year in the Plan. After a Common Stock Series B shareholder=s account has been enrolled in the Plan, future stock dividends in that account will be sold quarterly, unless the Company's Common Stock Transfer Agent receives written notification from a Series B shareholder to withdraw that account from the Plan. Shareholders who withdraw an account from the Plan will then receive quarterly stock dividends and are not eligible to re-enroll that account in the Plan for 12 months. COMMON STOCK PRICE RANGE Citizens trades on the New York Stock Exchange under the symbols CZNA and CZNB for Common Stock Series A and Common Stock Series B, respectively. The table below indicates the high and low prices per share for the periods shown. The high and low prices per share from January 3, 1994 through June 26, 1996 were taken from the daily quotations published in The Wall Street Journal during the periods indicated. Prices have been adjusted retroactively for subsequent stock dividends including the stock dividend payable to shareholders of record on June 3, 1996, rounded to the nearest 1/8th. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ----------- ----------- ----------- ----------- High Low High Low High Low High Low ---- --- ---- --- ---- --- ---- --- 1996 Series A $12 1/2 10 1/2 Series B $12 1/2 10 5/8 1995 Series A $13 1/4 11 3/8 12 10 11 1/8 10 1/4 12 7/8 10 1/4 Series B $13 1/4 11 1/4 12 10 11 1/8 10 3/8 13 10 1/4 1994 Series A $15 5/8 12 3/4 14 1/2 12 1/8 13 1/4 12 12 5/8 11 3/8 Series B $15 3/4 12 5/8 14 1/2 12 1/8 13 1/4 12 12 5/8 11 1/2 The reported high and low prices from April 1 through June 26,1996 were $12 1/8 and $10 5/8 per share of Common Stock Series A and $12 1/4 and $10 5/8 per share of Common Stock Series B, respectively. The reported last sale prices on the New York Stock Exchange on June 26, 1996 were $11 5/8 per share of Common Stock Series A and $11 5/8 per share of Common Stock Series B. COMMON STOCK TRANSFER AGENT The transfer agent for the Company's Common Stock Series A and Common Stock Series B is Illinois Stock Transfer Company. PRO FORMA STATEMENTS OF INCOME Citizens Utilities Company and ALLTEL Telecommunications Properties Pro Forma Condensed Combined Statement of Income (In thousands, except for per-share amounts) The following Pro Forma Condensed Combined Statement of Income for the twelve months ended March 31, 1996 combines the historical statements of income of Citizens and the ALLTEL Telecommunications Properties giving effect to the acquisitions as if the acquisitions and the related permanent financings had been effective on April 1, 1995. The Pro Forma Condensed Combined Statement of Income should be read in conjunction with the historical financial statements and related notes thereto of Citizens. The Pro Forma Condensed Combined Statement of Income is not necessarily indicative of what the actual results of operations would have been for the period had the transactions occurred at the date indicated and do not purport to indicate the results of future operations. Twelve Months Ended March 31, 1996 ---------------------------------- Pro Forma --------- Citizens ALLTEL(*)(1) Adjustments Combined -------- ------------ ----------- -------- Revenues $1,131,136 $ 66,542 $1,197,678 Expenses: Operating Expenses 698,302 27,540 725,842 Depreciation and Amortization 166,571 13,836 $ 400(2) 180,807 --------- --------- --------- --------- Total Operating Expenses 864,873 41,376 400 906,649 Income from Operations 266,263 25,166 (400) 291,029 Other Income, net 58,147 925 (3,900)(3) 55,172 Interest Expense 87,081 3,285 (8,400)(4) 81,966 -------- -------- ----------- --------- Income before Income Taxes 237,329 22,806 4,100 264,235 Income Taxes 71,588 8,408 3,200(5) 83,196 -------- -------- ----------- --------- Income before Dividends on Company Obligated Mandatorily Redeemable Convertible Preferred Securities 165,741 14,398 900 181,039 Dividends on Company Obligated Mandatorily Redeemable Convertible Preferred Securities 1,253 - 4,047(6) 5,300 -------- -------- ------------ -------- Net Income $ 164,488 $ 14,398 $ (3,147) $ 175,739 ========= ========= ============= ========= Earnings Per Share of Common Stock Series A and Series B(**) $ .74 $ .79 Weighted Average Common Shares(**) 223,577 223,577 * Represents the financial results from April 1, 1995 to the dates of acquisition for the ALLTEL Telecommunications Properties, net of the financial results for a property transferred to ALLTEL as part of the transactions. Financial results for the ALLTEL Telecommunications Properties from their dates of acquisition through March 31, 1996, are included in Citizens= financial results for the twelve months ended March 31, 1996. ** No adjustment has been made for Citizens= 1.6% 1996 second quarter stock dividend, as this adjustment is immaterial. See Notes to Pro Forma Statements of Income on page 18. PRO FORMA STATEMENTS OF INCOME (continued) Citizens Utilities Company and ALLTEL Telecommunications Properties Pro Forma Condensed Combined Statement of Income (In thousands, except for per-share amounts) The following Pro Forma Condensed Combined Statement of Income for the year ended December 31, 1995 combines the historical statements of income of Citizens and the ALLTEL Telecommunications Properties giving effect to the acquisitions as if the acquisitions and the related permanent financings had been effective on January 1, 1995. The Pro Forma Condensed Combined Statement of Income should be read in conjunction with the historical financial statements and related notes thereto of Citizens. The Pro Forma Condensed Combined Statement of Income is not necessarily indicative of what the actual results of operations would have been for the period had the transactions occurred at the date indicated and do not purport to indicate the results of future operations. Year Ended December 31, 1995 ---------------------------- Pro Forma --------- Citizens ALLTEL(*)(1) Adjustments Combined -------- ------------ ----------- -------- Revenues $1,069,032 $ 90,039 $1,159,071 Expenses: Operating Expenses 655,924 38,654 694,578 Depreciation and Amortization 158,935 18,680 $ 500 (2) 178,115 Total Operating --------- ----------- ------------ ---------- Expenses 814,859 57,334 500 872,693 Income from Operations 254,173 32,705 (500) 286,378 Other Income, net 59,955 1,087 (5,200) (3) 55,842 Interest Expense 87,775 4,467 (12,300) (4) 79,942 --------- ----------- ------------ --------- Income before Income Taxes 226,353 29,325 6,600 262,278 Income Taxes 66,817 10,851 4,600 (5) 82,268 --------- ----------- ----------- --------- Income before Dividends on Company Obligated Mandatorily Redeemable Convertible Preferred Securities 159,536 18,474 2,000 180,010 Dividends on Company Obligated Mandatorily Redeemable Convertible Preferred Securities - - 5,300 (6) 5,300 --------- ----------- ----------- --------- Net Income $159,536 $ 18,474 $(3,300) $174,710 ======== =========== =========== ======== Common Stock Series A and Series B(**) $ .72 $ .78(7) Common Shares(**) 222,373 224,867(7) * Represents the financial results from January 1, 1995 to the dates of acquisition for all the ALLTEL Telecommunications Properties acquired from January 1, 1995 through December 31, 1995 and the financial results for the entire twelve month period for the ALLTEL Telecommunications Property acquired after December 31, 1995, net of the financial results for a property transferred to ALLTEL as part of the transactions. Financial results for the ALLTEL Telecommunications Properties acquired during 1995 are included in Citizens' financial results from their dates of acquisition. ** No adjustment has been made for Citizens' 1.6% 1996 second quarter stock See Notes to Pro Forma Statements of Income on page 18. PRO FORMA STATEMENTS OF INCOME (continued) Citizens Utilities Company and ALLTEL Telecommunications Properties Notes to Pro Forma Condensed Combined Statements of Income (1) On November 29, 1994, Citizens and ALLTEL Corporation ("ALLTEL") announced the signing of definitive agreements pursuant to which Citizens agreed to acquire from ALLTEL at a net purchase price of $282 million, approximately 110,000 local telephone access lines and 7,000 cable television subscribers in eight states ("ALLTEL Telecommunications Properties"). From June 30, 1995 to December 31, 1995, approximately 93,000 local telephone access lines and approximately 7,000 cable television subscribers were transferred to the Company. On March 31, 1996, the remaining local telephone access lines were transferred to the Company. (2) Represents an adjustment to reflect the amortization associated with the $17 million of excess purchase price over net book value of assets acquired or to be acquired. Pursuant to Statement of Financial Accounting Standards No. 71, "Accounting for the Effects of Certain Types of Regulation", the amortization of the remaining $55 million of excess of purchase price over net book value of assets acquired will be deferred. The Company intends to seek from the public utilities commissions maximum recovery of the excess of purchase price over net book value in future rate proceedings. (3) Represents an adjustment to reflect the elimination from Other Income of tax-exempt investment income associated with the cash and investments used to partially fund the acquisitions of the ALLTEL Telecommunications Properties and other properties previously acquired. (4) Represents an adjustment to reflect the inclusion in Interest Expense of the interest expense on debt securities issued or assumed to partially finance the acquisitions of the ALLTEL Telecommunications Properties and other properties previously acquired, net of the elimination of interest expense on borrowings used to temporarily finance the acquisitions and the elimination of interest expense on debt not assumed by the Company. (5) Represents an adjustment to Income Taxes based on Income before Income Taxes using the applicable incremental income tax rate. (6) Represents an adjustment to reflect the annual Dividends on Company Obligated Mandatorily Redeemable Convertible Preferred Securities, net of income taxes, issued in January 1996 to partially finance the acquisitions of the ALLTEL Telecommunications Properties and other properties previously acquired. (7) The Pro Forma Earnings Per Share calculation and Pro Forma Weighted Average Common Shares are based on the weighted average number of common shares outstanding for the period including the number of additional shares issued to partially finance the acquisitions of the ALLTEL Telecommunications Properties and other properties previously acquired, assuming such additional shares were outstanding for the entire twelve month period. Fully diluted earnings per share are not presented because the difference is immaterial. LEGAL OPINIONS The validity of the Securities will be passed upon by Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York, counsel for the Company, and by Simpson Thacher & Bartlett (a partnership which includes professional corporations), 425 Lexington Avenue, New York, New York, counsel for the Underwriters. Legal matters relating to required authorization, if any, of the Securities by the public utilities commissions in the various states will be passed upon by local counsel to the Company in the states of Arizona, Colorado, Hawaii, Louisiana, and Vermont. Winthrop, Stimson, Putnam & Roberts and Simpson Thacher & Bartlett may rely upon such counsel as to certain matters governed by the laws of such states. EXPERTS The consolidated financial statements of the Company as of December 31, 1995, 1994 and 1993, and for each of the years then ended, incorporated by reference in this Prospectus from the Company's Annual Report on Form 10-K, have been so incorporated by reference in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. PLAN OF DISTRIBUTION The Company may sell the Securities (i) to or through one or more underwriters; (ii) to or through dealers; (iii) directly to one or more institutional or other purchasers; (iv) to existing holders of securities; or (v) through agents. Securities may be sold outside the United States. An accompanying Prospectus Supplement will set forth the terms of the offering of Securities, including the name or names of any underwriters, dealers, purchasers or agents, the purchase price of such Securities and the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price, any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which such Securities may be listed. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Only firms named in the Prospectus Supplement are deemed to be underwriters, dealers or agents in connection with the Securities offered thereby. If underwriters are used in the sale, Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Unless otherwise set forth in the Prospectus Supplement, the obligations of the underwriters to purchase the Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all such Securities if any are purchased. Securities may be sold directly by the Company or through any firm designated by the Company from time to time, acting as principal or as agent. The Prospectus Supplement will set forth the name of any dealer or agent involved in the offer or sale of the Securities in respect of which the Prospectus Supplement is delivered and the price payable to the Company by such dealer or any commissions payable by the Company to such agent. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. Underwriters, dealers and agents may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act of 1933, or to contribution with respect to payments for such liabilities which underwriters, dealers or agents may be required to make. Underwriters, dealers and agents may engage in transactions with or perform services for the Company in the ordinary course of business. The anticipated date of delivery of Securities will be as set forth in the Prospectus Supplement relating to such offering. - -------- PART II. INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. Description Amount(1) Securities and Exchange Commission filing fee..................... $311,767 Printing and engraving.......................................... 150,000 Rating Agency Fees.............................................. 180,000 Legal Services................................................. 90,000 Accounting Services............................................ 80,000 Blue Sky Fees................................................... 16,000 New York Stock Exchange listing fee ........................... 84,000 Miscellaneous................................................... 47,000 ---------- Total(1)..................................................... $958,767 ========== (1) All fees are estimated except for the Securities and Exchange Commission filing fee. Item 15. Indemnification of Directors and Officers. Citizens Utilities Company (the "Company"), being incorporated under the Delaware General Corporation Law, is empowered by Section 145 of such law to indemnify officers and directors against certain expenses, liabilities and payments, including liabilities arising under the Securities Act of 1933, (the AAct@), as therein provided. In addition, By-Laws 24 and 24A of the Company and a resolution adopted by the Board of Directors in connection with the issuance of the Securities provide for indemnification of specified persons, including officers and directors of the Company for liabilities, including those arising under said Act, as provided in said By-Laws and resolution. Generally, By-Laws 24 and 24A of the Company provide that, to the fullest extent permitted by applicable law, the Company shall indemnify and hold harmless, among others, any officer or director of the Company or any other entity for which he is acting at the request of the Company, from and against any loss, damage or claim incurred by such person by reason of any act or omission performed or omitted by such person in good faith on behalf of the Company and in a manner such person reasonably believed to be in the best interests of the Company. Such By-Laws, generally speaking, also provides that, to the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a person in defending against any such liability shall, be advanced by the Company subject to specified conditions. The Certificate of Incorporation further provides that no director shall be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, with stated exceptions. The Company also maintains insurance providing coverage for the Company and its subsidiaries against obligations incurred as a result of indemnification of officers and directors. The coverage also insures the officers and directors for a liability against which they may not be indemnified by the Company or its subsidiaries but excludes specified dishonest acts. Item 16. Exhibits. An Exhibit Index, containing a list of all exhibits to this registration statement, commences on page II-7. Item 17. Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that clauses (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those clauses is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stamford and State of Connecticut on the 27th day of June, 1996. CITIZENS UTILITIES COMPANY By /s/Robert J. DeSantis ---------------------- Robert J. DeSantis Vice President and Treasurer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert J. DeSantis, as such person=s true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for such person and in such person=s name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same with all exhibits thereto, and the other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and things requisite and necessary to be done, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof. Signature Title Date /s/Leonard Tow Chairman of the Board, June 27, 1996 - --------------------------- Chief Executive, Officer, (Leonard Tow) Chief Financial Officer and Director /s/Robert J. DeSantis Vice President and Treasurer June 27, 1996 - --------------------------- (Robert J. DeSantis) /s/Norman I. Botwinik Director June 27, 1996 - --------------------------- (Norman I. Botwinik) /s/James C. Goodale Director June 27, 1996 - --------------------------- (James C. Goodale) /s/Aaron I. Fleischman Director June 27, 1996 - --------------------------- (Aaron I. Fleischman) /s/Stanley Harfenist Director June 27, 1996 - --------------------------- (Stanley Harfenist) /s/Andrew N. Heine Director June 27, 1996 - --------------------------- (Andrew N. Heine) /s/Elwood A. Rickless Director June 27, 1996 - --------------------------- (Elwood A. Rickless) Director June 27, 1996 - --------------------------- (John L. Schroeder) /s/Robert D. Siff Director June 27, 1996 - --------------------------- (Robert D. Siff) /s/Robert A. Stanger Director - --------------------------- Robert A. Stanger) June 27, 1996 /s/Charles H. Symington, Jr. Director June 27, 1996 - --------------------------- (Charles H. Symington, Jr.) /s/Edwin Tornberg Director June 27, 1996 - --------------------------- (Edwin Tornberg) /s/Claire Tow Director June 27, 1996 - --------------------------- (Claire Tow) EXHIBIT INDEX Exhibit No. Description 1.1 Form of Underwriting Agreement relating to the Debt Securities. 1.2 Form of Underwriting Agreement relating to the Common Stock. 3.200.1 Restated Certificate of Incorporation of Citizens Utilities Company. 3.200.2 Bylaws, as amended, of Citizens Utilities Company, with all amendments to June 27, 1996. 4.100.1* Indenture dated as of August 15, 1991, between Citizens Utilities Company and Chemical Bank, as trustee. 4.100.10 Form of Supplemental Indenture dated as of ______________, 199_, between Citizens Utilities Company and Chemical Bank, as trustee. 5.1 Opinion of Winthrop, Stimson, Putnam & Roberts. 12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Dividends on Convertible Preferred Securities. 23.1 Consent of KPMG Peat Marwick LLP. 23.2 Consent of Winthrop, Stimson, Putnam & Roberts (to be contained in Exhibit No. 5.1). 24 Powers of Attorney (Included on Page II-5). 25.1 Form T-1, Statement of Eligibility Under the Trust Indenture Act of 1939, as amended, of Chemical Bank, under the Indenture. ------------------------- * Exhibit No. 4.100.1 is incorporated by reference to such document bearing the same exhibit designation filed with the Company's Quarterly Report on Form 10-Q for the nine months ended September 30, 1991. EX-1 2 CITIZENS UTILITIES COMPANY Debt Securities UNDERWRITING AGREEMENT To Representatives named in New York, New York Schedule I, of the several Underwriters (Date) named in Schedule II hereto Dear Sirs: Citizens Utilities Company, a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule II hereto (the "Underwriters") for whom you are acting as Representatives (the "Representatives") the Company's debt securities of the designation, with the terms and in the aggregate principal amount specified in Schedule I hereto (the "Debt Securities"), to be issued under the Indenture, dated as of August 15, 1991, between the Company and Chemical Bank, as Trustee (the "Trustee"), as supplemented and amended by the First, Second, Third, Fourth, Fifth and Sixth Supplemental Indentures dated as of August 15, 1991, January 15, 1992, April 15, 1994, October 1, 1994, June 15, 1995, and October 15, 1995 respectively, and as to be supplemented and amended by a supplemental indenture relating to the Debt Securities (such Indenture as may be further supplemented and amended being hereinafter referred to as the "Indenture"). I. Representations and Warranties by the Company. The Company represents and warrants to each Underwriter that: (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933 (the "Act") and has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form, including a prospectus, for the registration under the Act of the Debt Securities, which registration statement has become effective. Such registration statement and prospectus may have been amended or supplemented from time to time prior to the date of this Agreement. Any such amendment or supplement was filed with the Commission and any such amendment has become effective. Promptly upon execution of this Agreement, the Company will file with the Commission a prospectus supplement (the "Prospectus Supplement") relating to the Debt Securities pursuant to Rule 424 under the Act. Copies of such registration statement and prospectus, any such amendment or supplement, the Prospectus Supplement and all documents incorporated by reference therein which were filed with the Commission on or prior to the date of this Agreement have been delivered to you. The registration statement and prospectus, as amended or supplemented prior to the date of this Agreement, and as supplemented by the Prospectus Supplement are hereinafter called the "Registration Statement" and the "Prospectus", respectively. Any reference herein to the Registration Statement or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934 (the "Exchange Act") on or before the date of this Agreement, and any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement or the Prospectus shall be deemed to include the filing of any document under the Exchange Act deemed to be incorporated by reference therein after the date of this Agreement. (b) (i) The Registration Statement, at the time it became effective, any post-effective amendment thereto, at the time it became effective, the Prospectus, at the date of this Agreement and at the Closing Date (as hereinafter defined), any amendments thereof and supplements thereto and the Indenture complied or will comply in all material respects with the Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the Exchange Act and the respective rules thereunder and (ii) the Registration Statement did not contain and, as amended by any amendment thereto, will not contain any untrue statement of a material fact or omitted or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and the Prospectus and any amendment thereof or supplement thereto does not contain and will not contain any untrue statement of a material fact or omits or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to (A) that part of the Registration Statement which shall constitute the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of the Trustee or (B) the information contained in or omitted from the Registration Statement or the Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation of the Prospectus. (c) The documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Act or the Exchange Act and the rules and regulations of the Commission thereunder, and any documents so filed and incorporated by reference subsequent to the date of this Agreement will, when they are filed with the Commission, conform in all material respects to the requirements of the Act and the Exchange Act, and the rules and regulations of the Commission thereunder; and none of such documents include or will include any untrue statement of a material fact or omit or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth in the Registration Statement and the Prospectus, there has not been any material adverse change in the business, properties or financial condition of the Company and its subsidiaries, considered as a whole, and there have not been any transactions entered into by the Company or any of its subsidiaries which is material to the Company and its subsidiaries, considered as a whole, other than transactions in the ordinary course of business and transactions contemplated by the Registration Statement or Prospectus. (e) Neither the issuance or sale of the Debt Securities, nor the performance of the terms and provisions thereof and of the Indenture, will conflict with, result in a breach of or constitute a default under the terms of the Certificate of Incorporation or By-Laws of the Company or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it is bound or any order or regulation applicable to the Company of any Court, regulatory body, administrative agency or governmental body having jurisdiction over the Company. (f) The Indenture, except for the supplemental indenture relating to the Debt Securities, has been duly authorized and delivered, and, when the supplemental indenture relating to the Debt Securities has been executed and delivered by the Company and the Trustee, the Indenture, including such supplemental indenture, will have been duly authorized and delivered and will constitute a valid and legally binding instrument enforceable against the Company in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other laws from time to time in effect affecting the enforcement of creditors' rights or of the security provided by the Indenture, or by the application of general principles of equity, and the Indenture has been qualified under the Trust Indenture Act; the Debt Securities have been duly authorized, and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered, will constitute valid and legally binding obligations of the Company entitled to the benefits and security of the Indenture in accordance with their and its terms, subject to the qualification in the preceding clause with respect to the enforceability of the Indenture; and the Debt Securities and the Indenture conform to the descriptions thereof in the Prospectus. 2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to you and each other Underwriter, and you and each other Underwriter agree, severally and not jointly, to purchase from the Company, at the purchase price set forth in Schedule I hereto, the respective principal amounts of the Debt Securities set forth opposite your respective names in Schedule II hereto. 3. Delivery and Payment. Delivery of and payment for the Debt Securities shall be made at the place, date and time specified in Schedule I hereto (or such other place, date and time not later than ten full business days thereafter as the Representatives and the Company shall designate), which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 9 hereof (such date and time being herein called the "Closing" or "Closing Date"). Delivery of the Debt Securities shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company payable by official bank check or checks payable in federal (same day) funds. The Debt Securities shall be in definitive form and shall be registered in such names and in such authorized denominations as the Representatives may request not less than 48 hours in advance of the Closing Date, provided, however, that if the Debt Securities are to be sold in book-entry form, a global Debenture shall be delivered in definitive form registered in the name of Cede & Co. The Company agrees to have the Debt Securities available for inspection, checking and packaging by the Representatives in New York, New York, not later than noon, New York City time, on the last business day prior to the Closing Date. 4. Agreements. The Company agrees with the several Underwriters that: (a) With your consent, the Company will cause the Prospectus Supplement to be filed pursuant to Rule 424 under the Act and will notify the Representatives promptly of such filing. During the period for which a prospectus relating to the Debt Securities is required to be delivered under the Act, the Company will promptly advise the Representatives (i) when any amendment to the Registration Statement shall have become effective, (ii) when any subsequent supplement to the Prospectus has been filed or mailed for filing, (iii) of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceedings for that purpose, and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Debt Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. The Company will not file any amendment of the Registration Statement or supplement to the Prospectus (other than any prospectus supplement relating to the offering of the Debt Securities or a prospectus or prospectus supplement relating to an offering of equity securities registered under the Registration Statement, or of debt securities registered under the Registration Statement and permitted by Section 4(f) hereof, and other than any document required to be filed under the Exchange Act which upon filing is deemed to be incorporated by reference in the Registration Statement or Prospectus) unless the Company has furnished to the Representatives a copy for their review prior to filing and will not file any such proposed amendment or supplement to which they reasonably object. The Company will furnish to the Representatives prior to the filing thereof a copy of any such prospectus supplement and any document which upon filing is deemed to be incorporated by reference in the Registration Statement or Prospectus. (b) If, at any time when a prospectus relating to the Debt Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary at any time to amend or supplement the Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will prepare and file with the Commission, subject to paragraph (a) of this Section 4, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance. (c) The Company will furnish to each of the Representatives a signed copy of the Registration Statement as originally filed and of each amendment thereto, including statement on Form T-1 of the Trustee and all powers of attorney, consents and exhibits filed therewith (other than exhibits incorporated by reference), and will deliver to the Representatives conformed copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act, all amendments of and supplements to such documents, in each case as soon as available and in such quantities as the Representatives may reasonably request. (d) The Company will furnish such information, execute such instruments and take such action as may be required to qualify the Debt Securities for sale under the laws of those states specified in a writing heretofore delivered by you and countersigned by the Company and such other jurisdictions as the Representatives may designate in which there is a change of law or regulation after the date hereof affecting the status of the Debt Securities as exempt Debt Securities under such laws and will maintain such qualifications in effect so long as required for the distribution of the Debt Securities; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general or unlimited service of process in any jurisdiction where it is not now so subject. (e) So long as the Debt Securities are outstanding, the Company will furnish (or cause to be furnished) to each of the Representatives, upon request, copies of (i) all reports to stockholders of the Company and (ii) all reports and financial statements filed with the Commission. (f) During the period beginning from the date of this Agreement and continuing to and including the earlier of (i) the termination of trading restrictions on the Debt Securities, as notified to the Company by the Representatives, or (ii) the tenth day after the Closing Date for the Debt Securities, the Company will not offer, sell, or otherwise dispose of any debentures or similar debt securities of the Company (except debt securities which are subordinated to the Debt Securities, bank debt, commercial paper or under prior contractual commitments which have been disclosed to you), without the prior written consent of the Representatives, which consent shall not be unreasonably withheld. (g) The Company will make generally available to its security holders and to the Representatives, as soon as practicable, but not later than sixteen months after the "effective date" of the Registration Statement (as such term is defined in Rule 158(c) under the Act), a consolidated earning statement (which need not be audited) of the Company, covering a period of twelve-months beginning after such effective date which will satisfy the provisions of Section 11(a) of the Act. 5. Expenses. The Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Debt Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement and the Prospectus and amendments and supplements thereto and the furnishing of copies thereof and of any preliminary Prospectus to the Underwriters and dealers; (ii) the cost of printing this Agreement, the Supplemental Indenture under which the Debt Securities are issued and the Blue Sky Survey; (iii) all expenses including fees and disbursements of counsel (up to a maximum of $_________) in connection with the qualification of the Debt Securities under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and the preparation of a Blue Sky Survey; (iv) any fees charged by the rating services for rating the Debt Securities; (v) the cost of preparing the Debt Securities; (vi) the fees and expenses of the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Debt Securities; and (vii) all other costs and expenses incident to the performance of the Company's obligations hereunder which are not otherwise specifically provided for in this Section 5. Except as provided in Section 5 and Section 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Debt Securities by them, and any advertising expenses connected with any offers they may make. The Company shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits. 6. Conditions to the Obligations of the Under-writers. The obligations of the Underwriters to purchase the Debt Securities shall be subject to the accuracy in all material respects of the representations and warranties on the part of the Company contained herein (except insofar as such representations and warranties have already been qualified as to materiality therein) as of the date hereof and the Closing Date, to the accuracy of the statements of Company officers made in any certificates given pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; (b) There shall be in full force and effect, on the date of this Agreement and on the Closing Date, an order or orders, if necessary, of the Federal Energy Regulatory Commission ("FERC") authorizing the issue and sale of the Debt Securities on the terms set forth or contemplated in this Agreement, and no additional order of FERC shall be necessary for such issuance and sale; (c) At the Closing Date, the Company shall have received all authorizations from any state regulatory commission (other than pursuant to any state "Blue Sky" laws) necessary for the issuance and sale of the Debt Securities and related transactions on the terms set forth or contemplated in this Agreement and containing no provision unacceptable to the Representatives, which such authorizations shall be in full force and effect and no order or additional order of any such Commission shall be necessary for such issuance and sale which has not been obtained; (d) At the Closing Date, the Representatives shall have been furnished with the following opinions, addressed to the Underwriters (with conformed copies thereof for each of the other Underwriters), in form and substance satisfactory to the Representatives, dated the Closing Date or a date not more than three days prior thereto: (i) Opinion of Boulanger, Hicks & Churchill, P.C., New York, New York, counsel to the Company; (ii) Opinions of Brown & Bain, P.A., Phoenix, Arizona; LeBoeuf, Lamb, Greene & MacRae, Denver, Colorado; Cades Schutte Fleming & Wright, Honolulu, Hawaii; Marshall Ordemann, counsel to the Louisiana Gas Division of the Company, Harvey, Louisiana; Stokes & Bartholomew, Nashville, Tennessee; Miller, Eggleston and Rosenberg, Ltd., Burlington, Vermont; and Jackson & Kelly, Charleston, West Virginia (or other local counsel to the Company), counsel to the Company; and (iii) Opinion of Simpson Thacher & Bartlett, New York, New York, counsel to the Underwriters; (e) At the Closing Date, the Representatives shall have been furnished a letter dated the Closing Date, in form and substance satisfactory to the Representatives, from KPMG Peat Marwick, the Company's independent public accountants, containing statements and information heretofore agreed upon with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus; (f) At the Closing Date, the Representatives shall have received a certificate, dated the Closing Date, signed by an officer of the Company, to the effect that, (A) since the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been any material adverse change in the business, properties or financial condition of the Company and its subsidiaries, considered as a whole; provided that a downgrading of the rating of the Company's publicly-held securities by itself shall not be deemed to be a "material adverse change", and (B) since such dates, there has not been any transaction entered into by the Company or any of its subsidiaries other than transactions referred to in, or contemplated by, the Registration Statement and Prospectus and transactions which are not material to the Company and its subsidiaries considered as a whole; (g) At the Closing Date, the Representatives shall have received a certificate, dated the Closing Date signed by an officer of the Company, to the effect that, since the respective dates as of which information is given in the Registration Statement and Prospectus, neither the Company nor any of its subsidiaries shall have sustained a loss by fire, flood, accident or other calamity which is substantial with respect to the property of the Company and its subsidiaries, considered as a whole. At the Closing the Representatives shall have been furnished with certificates satisfactory to the Representatives as to the accuracy of its representations and warranties herein at and as of the Closing and as to the performance by the Company of all of its obligations hereunder to be performed at or prior to the Closing, and the Company also shall have furnished to you a certificate satisfactory to you as to the matters set forth in subsections (a) and (b) of this Section 6. If any of the conditions specified in this Section 6 shall not have been fulfilled when and as required by this Agreement, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Company in writing, or by telephone or telegraph confirmed in writing. 7. Conditions of Company's Obligations. The obligations of the Company to sell and deliver the Debt Securities are subject to the following conditions: (a) Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) The conditions referred to in subsections (b) and (c) of Section 6 shall have been met and no order or authorization referred to therein shall contain any provision unacceptable to the Company. If any of the conditions specified in this Section 7 shall not have been fulfilled, this Agreement and all obligations of the Company hereunder may be canceled on or at any time prior to the Closing Date by the Company. Notice of such cancellation shall be given to the Representatives in writing or by telephone or telegraph confirmed in writing. 8. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person who controls any Underwriter within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Debt Securities as originally filed or in any amendment thereof or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Prospectus or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company as herein stated by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation thereof; and provided further that such indemnity with respect to a prospectus included in the registration statement or any amendment thereto prior to the supplementing thereof with the Prospectus Supplement shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, claim, damage or liability purchased the Debt Securities which are the subject thereof if such person did not receive a copy of the Prospectus as amended or supplemented (but without the documents incorporated by reference therein) at or prior to the confirmation of the sale of such Debt Securities to such person in any case where such delivery is required by the Act and the untrue statement or omission of a material fact contained in the Prospectus was corrected in the Prospectus as amended or supplemented. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the Registration Statement and each person, if any, who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Underwriters but only in relation to written information furnished to the Company by or on behalf of such Underwriter through the Representatives specifically for use in the preparation of the Prospectus, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party, or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Representatives in the case of subsection (a), representing the indemnified parties under subsection (a) or (b), as the case may be, who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such claims (i) or (iii). It is understood that all such fees and expenses shall be reimbursed as they are incurred. (d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in subparagraphs (a) and (b) is due in accordance with its terms but is for any reason unavailable from the Company or the Underwriters or insufficient to hold the Underwriters, the Company or any party covered by the foregoing indemnification harmless in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, the Company and the Underwriters shall contribute to the aggregate losses, claims, damages and liabilities (or actions in respect thereof) to which the Company and one or more of the Underwriters may be subject, as a result of such losses, claims, damages or liabilities (or actions in respect thereof), in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other equitable considerations, including relative benefit. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering of the Debt Securities (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters with respect to the offering of the Debt Securities, in each case as set forth in the table on the cover page of the Prospectus Supplement. Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was guilty of such fraudulent misrepresentation. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by a party entitled to contribution as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such party in connection with investigating or defending any such action or claim. The Underwriters' obligation under this subsection (d) are several in proportion to their respective underwriting obligations and not joint. For purposes of this subsection (d), each person, if any, who controls an Underwriter within the meaning of either the Act or the Exchange Act, and each officer, director and employee of an Underwriter shall have the same rights to contribution as such Underwriter, and each person, if any, who controls the Company within the meaning of either the Act or the Exchange Act, each officer, director and employee of the Company shall have the same rights to contribution as the Company, subject to the fourth sentence of this subsection (d). 9. Default by an Underwriter. If any one or more of the Underwriters shall fail to purchase and pay for all of the Debt Securities agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in respective proportions which the amount of Debt Securities set forth opposite their names in Schedule II hereto bears to the aggregate amount of Debt Securities set forth opposite the names of all the remaining Underwriters) the Debt Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event that the aggregate amount of Debt Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate amount of Debt Securities set forth in Schedule II hereto, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligations to purchase any of, the Debt Securities , and if such nondefaulting Underwriters do not purchase all of the Debt Securities, this Agreement will terminate without liability on the part of any nondefaulting Underwriter or the Company. In the event of a default by any Underwriter, as set forth in this Section, the Closing Date shall be postponed for such period, not exceeding seven days, as the Representatives shall determine in order that the required changes in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Nothing herein contained shall relieve any defaulting Underwriter of its liability, if any, to the Company or any nondefaulting Underwriter for damages occasioned by its default hereunder. 10. Representations and Indemnities to Survive Delivery. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or any of their respective officers, directors or employees or any controlling person within the meaning of the Act, and will survive delivery of and payment for the Debt Securities. 11. Termination. This Agreement shall be subject to termination by the Underwriters by notice given by the Representatives to the Company prior to delivery of and payment for all Debt Securities that the Representatives elect to terminate this Agreement on the grounds that trading in debt securities generally on the New York Stock Exchange shall have been suspended or limited or minimum price shall have been established on such Exchange, a banking moratorium shall have been declared either by Federal or New York State authorities, or there shall have occurred any new outbreak or material escalation of major hostilities or other calamity or crisis the effect of which on the financial markets in the United States is such as to make it, in the judgment of the Representatives, impracticable to sell the Debt Securities or enforce contracts for the sale of the Debt Securities. If this Agreement shall be terminated pursuant to Section 9 hereof, the Company shall not then be under any liability to any Underwriter except as provided in Sections 5, 8 and 10 hereof; but if for any other reason the Debt Securities are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Underwriters, through you, for all out-of-pocket expenses approved in writing by you, (up to a maximum of $__________) including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparation for the purchase, sale and delivery of the Debt Securities, but the Company shall then be under no further liability to any Underwriter except as provided in Sections 5, 8 and 10 hereof. 12. Representation of the Underwriters. The Representatives represent and warrant to the Company that they are authorized to act as the representatives of the Underwriters in connection with this financing and that the Representatives' execution and delivery of this Agreement and any action under this Agreement taken by such Representatives will be binding upon all Underwriters. 13. Notices. All communications hereunder will be in writing and, if sent to the Representatives, shall be mailed, delivered or telegraphed and confirmed to them at their address set forth for that purpose in Schedule I hereto or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at High Ridge Park, P.O. Box 3801, Stamford, Connecticut 06905, attention of Robert J. DeSantis, Vice President and Treasurer. 14. Parties in Interest. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Section 9 and Section 10 hereof, the officers and directors and controlling persons referred to in Section 8 hereof, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right or by virtue of this Agreement. No purchaser of any of the Debt Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 15. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York. 16. Counterparts. This Agreement may be executed in counterparts, all of which, taken together, shall constitute a single agreement among the parties to such counterparts. 17. Interpretation When No Representatives. In the event no Underwriters are named in Schedule II hereto, the term "Underwriters" shall be deemed for all purposes of this Agreement to be the Underwriter or Underwriters named as such in Schedule I hereto, the principal amount of the Debt Securities to be purchased by any such Underwriter shall refer to that set opposite its name in Schedule I hereto and all references to the "Representatives" shall be deemed to refer to the Underwriters named in Schedule I. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the several Underwriters. Very truly yours, CITIZENS UTILITIES COMPANY By__________________________________ Name: Robert J. DeSantis Title: Vice President and Treasurer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. For themselves and as Representatives for each of the several Underwriters named in Schuedule II to the foregoing Agreement. - -------------------------------------- - -------------------------------------- By: _________________________________ By:_________________________________ Name: Title: SCHEDULE I Underwriting Agreement dated _______________________ Registration Statement No. _____________ Representatives and Address: Principal Amount of Debt Securities to be purchased by Underwriters: $_____________ Debt Securities: Designation: _% Debentures Due ____ Principal Amount: $_________________ Supplemental Indenture dated as of ___________________. Date of Maturity: _____________________ Interest Rate: __% per annum, payable each ______ and __________ of each year, commencing ______________. Form: Book Entry Purchase Price: __________% of the principal amount thereof, plus accrued interest from ______________, to the date of payment and delivery. Sinking Fund Provisions: None Redemption Provisions: None Closing Date, Time and Location: ________________________ at the offices of ______________________________ ______________________________ ______________________________ SCHEDULE II Principal Amount of Debt Name of Underwriter Securities $ 00,000,000 00,000,000 ____________ Total................................................$000,000,000 ============ EX-1 3 Exhibit 1.2 Draft 5/3/96 CITIZENS UTILITIES COMPANY Common Stock UNDERWRITING AGREEMENT New York, New York [Date] To the Representatives named in Schedule I of each of the several Underwriters named in Schedule II hereto Dear Sirs: Citizens Utilities Company, a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell severally and not jointly to the Underwriters named in Schedule II hereto (the "Underwriters") for whom you are acting as representatives (the "Representatives") (i) that number of shares of Common Stock Series A and Series B (par value $.25 per share) of the Company ("Common Stock") specified in Schedule I hereto and (ii) an option described in Section 2 hereof to purchase all or any part of the number of additional shares of Common Stock to cover overallotments as is specified in Schedule I hereto. The shares of Common Stock to be purchased initially by the Underwriters (the "Initial Shares"), together with all or any part of the shares of Common Stock subject to the option described in Section 2 hereof (the "Option Shares"), are collectively hereinafter called the "Shares". I. Representations and Warranties by the Company. The Company represents and warrants to each Underwriter that: (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933 (the "Act") and has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form, including a prospectus, for the registration under the Act of the Shares, which registration statement has become effective. Such registration statement and prospectus may have been amended or supplemented from time to time prior to the date of this Agreement. Any such amendment or supplement was filed with the Commission and any such amendment has become effective. Promptly upon execution of this Agreement, the Company will file with the Commission a prospectus supplement (the "Prospectus Supplement") relating to the Shares pursuant to Rule 424 under the Act. Copies of such registration statement and prospectus, any such amendment or supplement, the Prospectus Supplement and all documents incorporated by reference therein which were filed with the Commission on or prior to the date of this Agreement have been delivered to you. The registration statement and prospectus as amended or supplemented prior to the date of this Agreement, and as supplemented by the Prospectus Supplement are hereinafter called the "Registration Statement" and the "Prospectus", respectively. Any reference herein to the Registration Statement or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934 (the "Exchange Act") on or before the date of this Agreement, and any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement or the Prospectus shall be deemed to include the filing of any document under the Exchange Act deemed to be incorporated by reference therein after the date of this Agreement. (b) (i) The Registration Statement, at the time it became effective, any post-effective amendment thereto, at the time it became effective, the Prospectus, at the date of this Agreement and at the Closing Date (as hereinafter defined), any amendments thereof and supplements thereto complied or will comply in all material respects with the Act and the Exchange Act and the respective rules thereunder and (ii) the Registration Statement did not contain and, as amended by any amendment thereto, will not contain any untrue statement of a material fact or omitted or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and the Prospectus and any amendment thereof or supplement thereto does not contain and will not contain any untrue statement of a material fact or omits or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to the information contained in or omitted from the Registration Statement or the Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation of the Prospectus. (c) The documents incorporated by reference in the Prospectus conformed in all material respects to the requirements of the Act or the Exchange Act and the rules and regulations of the Commission thereunder, and any documents so filed and incorporated by reference subsequent to the date of this Agreement will, when they are filed with the Commission, conform in all material respects to the requirements of the Act and the Exchange Act, and the rules and regulations of the Commission thereunder; and none of such documents include or will include any untrue statement of a material fact or omit or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as set forth in the Registration Statement and the Prospectus, there has not been any material adverse change in the business, properties or financial condition of the Company and its subsidiaries, considered as a whole, and there have not been any transactions entered into by the Company or any of its subsidiaries which is material to the Company and its subsidiaries, considered as a whole, other than transactions in the ordinary course of business and transactions contemplated by the Registration Statement or Prospectus. (e) Neither the issuance or sale of the Initial Shares nor the Option Shares, nor the performance of the terms and provisions thereof and of this Agreement, will conflict with, result in a breach of or constitute a default under the terms of the Certificate of Incorporation or By-Laws of the Company or any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it is bound or any order or regulation applicable to the Company of any Court, regulatory body, administrative agency or governmental body having jurisdiction over the Company. (f) The Shares conform to the description thereof contained in the Prospectus and are duly and validly authorized, and, when delivered to the Underwriters as provided herein against payment of the consideration set forth in the Pricing Agreement, will be validly issued and outstanding, fully paid and non-assessable with no personal liability attaching to the ownership thereof, and listed on the New York Stock Exchange. 2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to you and each other Underwriter, severally and not jointly, and you and each other Underwriter agree, severally and not jointly, to purchase from the Company, at the purchase price set forth in Schedule I hereto, the number of Initial Shares set forth opposite such Underwriter's name in Schedule II hereto plus any additional number of Option Shares which such Underwriter may become obligated to purchase pursuant to the provisions of Section 9 hereof. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase up to the number of additional shares of Common Stock set forth on Schedule I hereto at the price set forth on Schedule I hereto. The option hereby granted will expire 30 days after the date of this Underwriting Agreement, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Shares upon notice by the Representatives to the Company setting forth the number of Option Shares as to which the Underwriters are then exercising the option and the time, date and place of payment and delivery for such Option Shares. Any such time and date of delivery (a "Date of Delivery") shall be determined by the Representatives, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Date, as hereinafter defined, unless otherwise agreed upon by the Representatives and the Company. If the option is exercised as to all or any portion of the option Shares, the Option Shares shall be sold by the Company and shall be purchased by the Underwriters, severally and not jointly, in proportion to their respective Initial Share underwriting obligations as set forth in Schedule II. 3. Delivery, Payment and Offering. Delivery of and payment for the Initial Shares shall be made at the place, date and time specified in Schedule I hereto (or such other place, date and time not later than ten full business days thereafter as the Representatives and the Company shall designate), which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 9 hereof (such date and time being herein called the "Closing" or "Closing Date"). Delivery of the Initial Shares shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company by official bank check or checks payable in clearing house funds. The Initial Shares shall be in definitive form and shall be registered in such names and in such authorized denominations as the Representatives may request not less than three full business days in advance of the Closing Date. The Company agrees to have the Initial Shares available for inspection, checking and packaging by the Representatives in New York, New York, not later than 10:00 A.M., New York City Time, on the last business day prior to the Closing Date. In addition, in the event that any or all of the Option Shares are purchased by the Underwriters, delivery of and payment for the Option Shares shall be made on the Date of Delivery at the offices designated on Schedule I at 10:00 A.M. New York City Time (or such other time and place as the Representatives and the Company shall designate), which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 9 hereof and which date may also be the Closing Date. Delivery of the Option Shares shall be made to the Representatives for the respective accounts of the several Underwriters against payment by or on behalf of the Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company by official bank check or checks payable in clearing house funds. The Option Shares shall be in definitive form and shall be registered in such names and in such authorized denominations as the Representatives may request not less than three full business days in advance of the Date of Delivery. The Company agrees to have the Option Shares available for inspection, checking and packaging by the Representatives in New York, New York, not later than 10:00 a.m., New York City time, on the last business day prior to the Date of Delivery. It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Shares which it has agreed to purchase. ______________ ____________, individually and not as Representatives of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Shares to be purchased by any Underwriter whose check has not been received by the Closing Date, but such payment shall not relieve such Underwriter from its obligations hereunder. Subject to the terms and conditions of this Agreement, the Underwriters agree to make a bona fide public offering of the Shares as soon as the Representatives deem advisable after this Agreement has been executed and delivered. 4. Agreements. The Company agrees with the several Underwriters that: (a) With your consent, the Company will file the Prospectus Supplement pursuant to Rule 424 under the Act and will notify the Representatives promptly of such filing. During the period for which a prospectus relating to the Shares is required to be delivered under the Act, the Company will promptly advise the Representatives (i) when any amendment to the Registration Statement shall have become effective, (ii) when any subsequent supplement to the Prospectus has been filed or mailed for filing, (iii) of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceedings for that purpose, and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. The Company will not file any amendment to the Registration Statement or supplement to the Prospectus (other than any prospectus supplement relating to the offering of Shares registered under the Registration Statement or a prospectus or prospectus supplement relating to an offering of debt or additional equity securities which offering is permitted by Section 4(f) hereof, and other than any document required to be filed under the Exchange Act which upon filing is deemed to be incorporated by reference in the Registration Statement or Prospectus) unless the Company has furnished to the Representatives a copy for their review prior to filing and will not file any such proposed amendment or supplement to which they reasonably object. The Company will furnish to the Representatives prior to the filing thereof a copy of any such prospectus supplement and any document which upon filing is deemed to be incorporated by reference in the Registration Statement or Prospectus. (b) If, at any time when a prospectus relating to the Shares is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary at any time to amend or supplement the Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will prepare and file with the Commission, subject to paragraph (a) of this Section 4, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance. (c) The Company will furnish such information, execute such instruments and take such action as may be required to qualify the Shares for sale under the laws of those states specified in a writing heretofore delivered by you and countersigned by the Company and such other jurisdictions as the Representatives may designate in which there is a change of law or regulation after the date hereof affecting the status of the Shares as exempt Shares under such laws and will maintain such qualifications in effect so long as required for the distribution of the Shares; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general or unlimited service of process in any jurisdiction where it is not now so subject. (d) The Company will furnish to the Representatives a signed copy of the registration statement as originally filed and of each amendment thereto, including copies of all documents incorporated by reference in the Prospectus, all powers of attorney, consents and exhibits filed therewith (other than exhibits incorporated by reference), and will deliver to the Representatives conformed copies of the Registration Statement, the Prospectus, including any documents incorporated by reference therein at or after the date thereof and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act, all amendments of and supplements to such documents, in each case as soon as available and in such quantities as the Representatives may reasonably request. (e) For a period of five calendar years from the date of this Agreement, the Company will furnish (or cause to be furnished) to each of the Representatives, upon request, copies of (i) all reports to stockholders of the Company and (ii) all reports and financial statements filed with the Commission or with the New York Stock Exchange. (f) During the period beginning from the date of this Agreement and continuing to and including the earlier of (i) the termination of trading restrictions on the Initial Shares, as notified to the Company by the Representatives, and (ii) the _________ day after the Closing Date for the Initial Shares, the Company will not offer, sell, or otherwise dispose of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for any such shares of Common Stock (except for stock dividends paid in the normal course, stock splits or stock splits carried out in the form of stock dividends, shares sold under the Company's stock dividend sale plan, shares issued under employee or director stock option or other employee or director benefit or stock ownership plans and shares issued under stockholder ownership plans, shares issued as consideration in connection with acquisitions which have been disclosed to you and securities under prior contractual commitments, if any, which have been disclosed to you), without the prior written consent of the Representatives, which consent shall not be unreasonably withheld. (g) The Company will make generally available to its security holders and to the Representatives, as soon as practicable, but not later than sixteen months after the "effective date" of the Registration Statement (as such term is defined in Rule 158(c) under the Act), a consolidated earning statement (which need not be audited) of the Company, covering a period of twelve-months beginning after such effective date which will satisfy the provisions of Section 11(a) of the Act. 5. Expenses. The Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement and the Prospectus and amendments and supplements thereto and the furnishing of copies thereof and of any preliminary Prospectus to the Underwriters and dealers, all fees, if any, payable to the National Association of Securities Dealers, Inc. or New York Stock Exchange; (ii) the cost of printing this Agreement and the Blue Sky Survey; (iii) all expenses including fees and disbursements of counsel (up to a maximum of $________) in connection with the qualification of the Shares under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and the preparation of a Blue Sky Survey; (iv) the cost of preparing certificates for the Shares; and (v) all other costs and expenses incident to the performance of the Company's obligations hereunder which are not otherwise specifically provided for in this Section 5. Except as provided in Section 5 and Section 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Initial Shares by them, and any advertising expenses connected with any offers they may make. The Company shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits. 6. (a) Conditions to the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Initial Shares shall be subject to the accuracy in all material respects of the representations and warranties on the part of the Company contained herein (except insofar as such representations and warranties have already been qualified as to materiality therein) as of the date hereof and the Closing Date, to the accuracy of the statements of Company officers made in any certificates given pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions: (i) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; (ii) There shall be in full force and effect, on the date of this Agreement and on the Closing Date, an order or orders, if necessary, of the Federal Energy Regulatory Commission ("FERC") authorizing the issue and sale of the Initial Shares on the terms set forth or contemplated in this Agreement and no additional order of FERC shall be necessary for such issuance and sale; (iii) At the Closing Date, the Company shall have received all authorizations from any state regulatory commission (other than pursuant to any state "Blue Sky" laws), necessary for the issuance and sale of the Initial Shares and related transactions on the terms set forth or contemplated in this Agreement and containing no provision unacceptable to the Representatives, which such authorizations shall be in full force and effect and no order or additional order of any such Commission shall be necessary for such issuance and sale which has not been obtained; (iv) The Shares shall have been approved for listing on the New York Stock Exchange; (v) At the Closing Date, the Representatives shall have been furnished with the following opinions, addressed to the Underwriters (with conformed copies thereof for each of the other Underwriters), in form and substance satisfactory to the Representatives, dated the Closing Date or a date not more than three days prior thereto: (A) Opinion of Boulanger, Hicks & Churchill, P.C., New York, New York, counsel to the Company; (B) Opinions of Brown & Bain, P.A., Phoenix, Arizona; LeBouef, Lamb, Greene & MacRae, Denver, Colorado; Cades Schutte Fleming & Wright, Honolulu, Hawaii; Marshall Ordemann, counsel to the Louisiana Gas Division of the Company, Harvey, Louisiana; Miller, Eggleston and Rosenberg, Ltd., Burlington, Vermont; Stokes & Bartholomew, Nashville, Tennessee; and Jackson & Kelly, Charleston, West Virginia (or other local counsel to the Company), counsel to the Company; and (C) Opinion of Simpson Thacher & Bartlett, New York, New York, counsel to the Underwriters with respect to the validity of the Shares, the Registration Statement, the Prospectus, and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters; (vi) On the Closing Date, the Representatives shall have been furnished a letter dated the Closing Date, in form and substance satisfactory to the Representatives, from KPMG Peat Marwick, the Company's independent public accountants, containing statements and information heretofore agreed upon with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus; (vii) At the Closing Date, the Representatives shall have received a certificate, dated the Closing Date, signed by an officer of the Company, to the effect that, (A) since the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been any material adverse change in the business, properties or financial condition of the Company and its subsidiaries, considered as a whole, and (B) since such dates, there has not been any transaction entered into by the Company or any of its subsidiaries other than transactions referred to in, or contemplated by, the Registration Statement and Prospectus and transactions which are not material to the Company and its subsidiaries considered as a whole; and (viii) At the Closing Date, the Representatives shall have received a certificate, dated the Closing Date signed by an officer of the Company, to the effect that, since the respective dates as of which information is given in the Registration Statement and Prospectus, neither the Company nor any of its subsidiaries shall have sustained a loss by fire, flood, accident or other calamity which is substantial with respect to the property of the Company and its subsidiaries, considered as a whole. At the Closing the Representatives shall have been furnished with certificates satisfactory to the Representatives as to the accuracy of its representations and warranties herein at and as of the Closing and as to the performance by the Company of all of its obligations hereunder to be performed at or prior to the Closing, and the Company also shall have furnished to you a certificate satisfactory to you as to the matters set forth in subsections (i) and (ii) of this Section 6. (b) Option Share Closing: In the event the Underwriters exercise their option granted in Section 2 hereof to purchase all or any portion of the Option Shares, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company hereunder shall be true and correct as of each Date of Delivery, and the Representatives shall have received: (i) A certificate of the Chairman or the President or any Vice President and of the Treasurer or Assistant Treasurer of the Company, dated such Date of Delivery, confirming that the certificate delivered on the Closing Date pursuant to Section 6(a)(viii) hereof remains true as of such Date of Delivery. (ii) A certificate of an officer of the Company dated such Date of Delivery confirming that the certificate delivered on the Closing Date pursuant to Section 6(a)(vii) hereof remains true as of such Date of Delivery. (iii) The opinion of Boulanger, Hicks & Churchill, P.C., counsel for the Company, dated such Date of Delivery relating to the Option Shares and otherwise to the same effect as the opinion required by Section 6(a)(v)(A) hereof. (iv) The opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated such Date of Delivery, relating to the Option Shares and otherwise to the same effect as the opinion required by Section 6(a)(v)(C) hereof. (v) A letter from KPMG Peat Marwick, dated such Date of Delivery, substantially the same in scope and substance as the letter furnished to the Representatives pursuant to Section 6(a)(vi) hereof, except that the "specified date" in the letter furnished pursuant to this Section 6(b) shall be a date not more than six days prior to such Date of Delivery. (vi) Prior to the Date of Delivery the Company shall have furnished to the Representatives such further information, certificates and documents confirming as of such date the Company's representations and warranties contained herein as they may reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled when and as required by this Agreement, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Company in writing, or by telephone or telegraph confirmed in writing. 7. Conditions of Company's Obligations. The obligations of the Company to sell and deliver the Shares are subject to the following conditions: (a) Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) The conditions referred to in subsections (ii) and (iii) of Section 6(a) shall have been met and no order or authorization referred to therein shall contain any provision unacceptable to the Company. If any of the conditions specified in this Section 7 shall not have been fulfilled, this Agreement and all obligations of the Company hereunder, except as stated in Section 11, may be canceled on or at any time prior to the Closing Date by the Company. Notice of such cancellation shall be given to the Representatives in writing or by telephone or telegraph confirmed in writing. 8. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person who controls any Underwriter within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Initial Shares as originally filed or in any amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Prospectus or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company as herein stated by or on behalf of any Underwriter through the Representatives specifically for use in connection with the preparation thereof and provided further that such indemnity with respect to a prospectus included in the registration statement or any amendment thereto prior to the supplementing thereof with the Prospectus Supplement shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, claim, damage or liability purchased the Shares which are the subject thereof if such person was not sent or given by or on behalf of such Underwriter a copy of the Prospectus as amended or supplemented (but without the documents incorporated by reference therein) at or prior to the confirmation of the sale of such Shares to such person in any case where such delivery is required by the Act and the untrue statement or omission of a material fact contained in the Prospectus was corrected in the Prospectus as amended or supplemented. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the Registration Statement and each person, if any, who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Underwriters but only in relation to written information furnished to the Company by or on behalf of such Underwriter through the Representatives specifically for use in the preparation of the Prospectus, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party, or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Representatives in the case of subsection (a), representing the indemnified parties under subsection (a) or (b), as the case may be, who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such claims (i) or (iii). It is understood that all such fees and expenses shall be reimbursed as they are incurred. (d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in subparagraphs (a) and (b) is due in accordance with its terms but is for any reason unavailable from the Company or the Underwriters or insufficient to hold the Underwriters, the Company or any party covered by the foregoing indemnification harmless in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, the Company and the Underwriters shall contribute to the aggregate losses, claims, damages and liabilities (or actions in respect thereof) to which the Company and one or more of the Underwriters may be subject, as a result of such losses, claims, damages or liabilities (or actions in respect thereof), in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other equitable considerations, including relative benefit. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering of the Shares (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters with respect to the offering of the Shares, in each case as set forth in the table on the cover page of the Prospectus Supplement. Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was guilty of such fraudulent misrepresentation. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by a party entitled to contribution as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such party in connection with investigating or defending any such action or claim. The Underwriters' obligations under this subsection (d) are several in proportion to their respective underwriting obligations and not joint. Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public exceeds the amount of any damages of the kind described in Section 8(a) which such Underwriter has otherwise paid in respect of such losses, liabilities, claims and damages. For purposes of this subsection (d), each person, if any, who controls an Underwriter within the meaning of either the Act or the Exchange Act, and each officer, director and employee of an Underwriter shall have the same rights to contribution as such Underwriter, and each person, if any, who controls the Company within the meaning of either the Act or the Exchange Act, each officer, director and employee of the Company shall have the same rights to contribution as the Company, subject to the fourth sentence of this subsection (d). 9. Default by an Underwriter. If any one or more of the Underwriters shall fail to purchase and pay for all of the Shares agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in respective proportions which the amount of Shares set forth opposite their names in Schedule II hereto bears to the aggregate amount of Shares set forth opposite the names of all the remaining Underwriters) the Shares which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event that the aggregate amount of Shares which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate amount of Shares set forth in Schedule II hereto, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any of, the Shares, and if such nondefaulting Underwriters do not purchase all of the Shares, this Agreement will terminate without liability on the part of any nondefaulting Underwriter or the Company. In the event of a default by any Underwriter, as set forth in this Section, the Closing Date shall be postponed for such period, not exceeding seven days, as the Representatives shall determine in order that the required changes in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Nothing herein contained shall relieve any defaulting Underwriter of its liability, if any, to the Company or any nondefaulting Underwriter for damages occasioned by its default hereunder. In the event of a default by an Underwriter as set forth in this section, either the Representatives or the Company shall have the right to postpone the Closing Date or the Date of Delivery for a period of not exceeding 7 days in order that any required changes in the Registration Statement or Prospectus or in any other documents or arrangements may be effected. 10. Representations and Indemnities to Survive Delivery. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or any of their respective officers, directors or employees or any controlling person within the meaning of the Act, and will survive delivery of and payment for the Shares. 11. Termination. This Agreement shall be subject to termination by the Underwriters by notice given by the Representatives, to the Company prior to the Closing Date or Date of Delivery that the Representatives elect to terminate this Agreement on the grounds that trading in any of the Company's securities on the New York Stock Exchange shall have been suspended or limited or minimum price shall have been established on such Exchange, a banking moratorium shall have been declared either by Federal or New York State authorities, or there shall have occurred any new outbreak or material escalation of major hostilities or other calamity or crisis the effect of which on the financial markets in the United States is such as to make it, in the judgment of the Representatives, impracticable to sell the Shares or enforce contracts for the sale of the Shares. If this Agreement shall be terminated pursuant to Section 9 hereof, the Company shall not then be under any liability to any Underwriter except as provided in Sections 5, 8 and 10 hereof; but if for any other reason the Shares are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Underwriters, through you for all out-of-pocket expenses approved in writing by you (up to a maximum of $_______), including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparation for the purchase, sale and delivery of the Shares, but the Company shall then be under no further liability to any Underwriter except as provided in Sections 5, 8 and 10 hereof. 12. Representation of the Underwriters. The Representatives represent and warrant to the Company that they are authorized to act as the representatives of the Underwriters in connection with this financing and that the Representatives' execution and delivery of this Agreement and any action under this Agreement taken by such Representatives will be binding upon all Underwriters. 13. Notices. All communications hereunder shall be in writing and, if sent to the Representatives, shall be mailed, delivered or telegraphed and confirmed to them at their address set forth for that purpose in Schedule I hereto or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at High Ridge Park, P.O. Box 3801, Stamford, Connecticut 06905, attention of Robert J. DeSantis, Vice President and Treasurer. 14. Parties in Interest. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Section 9 and Section 10 hereof, the officers and directors and controlling persons referred to in Section 8 hereof, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right or by virtue of this Agreement. No purchase of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 15. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York. 16. Counterparts. This Agreement may be executed in counterparts, all of which, taken together, shall constitute a single agreement among the parties to such counterparts. 17. Interpretation When No Representatives. In the event no Underwriters are named in Schedule II hereto, the term "Underwriters" shall be deemed for all purposes of this Agreement to be the Underwriter or Underwriters named as such in Schedule I hereto, the number of the Shares to be purchased by any such Underwriter shall refer to that set opposite its name in Schedule I hereto and all references to the "Representatives" shall be deemed to refer to the Underwriter or Underwriters named in Schedule I. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the several Underwriters. Very truly yours, CITIZENS UTILITIES COMPANY By__________________________________ Name: Robert J. DeSantis Title: Vice President and Treasurer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. [Name(s) of Representative(s) of Underwriters] By: Name: Title: For themselves and as Representatives of the several Underwriters named in Schedule II to the foregoing Agreement. CITIZENS UTILITIES COMPANY SCHEDULE I Underwriting Agreement dated _________ 199_ Registration Statement No. ________ Representatives and Address: Security: Designation: Common Stock Series A Common Stock Series B Number of Initial Shares to be purchased by Underwriters: -----------------. Number of Option Shares to be purchased by Underwriters: -----------------. Initial Public Offering Price: $______________. Purchase Price: $________ per share being an amount equal to the initial public offering price set forth above less $________ per share. Closing Date, Time and Location: ________, 199_ at the offices of SCHEDULE II Number of Shares Names of Underwriters to be Purchased Total......................................______________________ EX-3 4 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF CITIZENS UTILITIES COMPANY * * * * * * * * * * * * * * CITIZENS UTILITIES COMPANY, a corporation organized and existing under the laws of the State of Delaware (the "Company"), hereby certifies as follows: 1. The name of the corporation is CITIZENS UTILITIES COMPANY The date of filing its original Certificate of Incorporation with the Secretary of State was November 12, 1935. 2. The provisions of the Amended and Restated Certificate of Incorporation of the Company as heretofore amended, are hereby amended and restated and integrated into the single instrument which is hereinafter set forth, and which is entitled Amended and Restated Certificate of Incorporation of Citizens Utilities Company without any further amendments and without any further discrepancy between the provisions of the Amended and Restated Certificate of Incorporation as heretofore amended and the provisions of the said single instrument hereinafter set forth. 3. The amendments and the restatement of the Amended and Restated Certificate of Incorporation herein certified have been duly adopted by the stockholders and the Board of Directors, respectively, of the Company in accordance with the provisions of Section 242 and of Section 245 of the General Corporation Law of the State of Delaware. 4. The capital of the Company will not be reduced under or by reason of any amendment in this Amended and Restated Certificate of Incorporation hereinafter set forth. 5. The text of the Amended and Restated Certificate of Incorporation shall upon the effective date of this Amended and Restated Certificate of Incorporation read as follows: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF CITIZENS UTILITIES COMPANY FIRST: The name of this corporation is CITIZENS UTILITIES COMPANY. SECOND: Its principal office in the State of Delaware is to be located at 1013 Centre Road, in the City of Wilmington, County of New Castle, and its resident agent is The Prentice-Hall Corporation System, Inc. THIRD: The nature of the business and the objects and purposes to be transacted, promoted, and carried on are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do, and in any part of the world, viz.: (a) To purchase or otherwise acquire, own, operate and dispose of all or any part of the business and properties of persons, partnerships, associations, and other corporations engaged in any business, including that of operating public utilities, and to make payment therefor by the issuance of securities of this corporation or in any other manner permitted by law, and in connection therewith to assume any or all of the bonds, mortgages, franchises, leases, contracts, indebtedness, liabilities, and obligations of such corporations, and to do any things necessary or expedient in connection therewith or with the carrying out of any plan of reorganization of predecessor company or any modification therefor. (b) To generate, produce, buy, or in any manner acquire, and to sell, dispose of, and distribute electricity for light, heat, power, and other purposes and to carry on the business of furnishing, supplying, manufacturing, and vending light, heat, power, gas, water, steam heat, ice, refrigeration, and any and all businesses incident thereto, and to build, construct, develop, improve, acquire, hold, own, lease, maintain, and operate plants, facilities, and works for the manufacture, generation, production, accumulation, transmission, and distribution of electric energy, gas and steam, for light, power, heat and other purposes, and to acquire, construct, maintain, and operate systems of water works, gas works, steam heating plants, for the supply of water, gas, and steam heat, and to exercise rights of condemnation and eminent domain in connection with the doing of its business objects and purposes as herein set forth so far as may be permissible by law; to acquire, maintain, operate, and exercise all the rights of ownership of any telephone, telegraph, and/or other communication system or systems. (c) To build, construct, develop, improve, acquire, hold, own, lease, maintain and operate, by electricity or other power, street railways and interurban railways for the transportation of passengers, mail, express, merchandise, or other freight in any part of the world. (d) To produce, mine, buy, sell, store, market, deal in, and prospect for coal and minerals of all kinds and the products and by-products thereof. (e) To organize, incorporate, reorganize, finance, and to aid and assist financially or otherwise, companies, corporations, joint stock companies, syndicates, partnerships, and associations of all kinds, and to underwrite, subscribe for, and endorse the bonds, stocks, securities, debentures, notes, or undertakings of any such company, corporation, joint stock company, syndicate partnership or association, and to make any guarantee in connection therewith or otherwise for the payment of money or for the performance of any obligation or undertaking, and to do any and all things necessary or convenient to carry any of such purposes into effect. (f) To carry on the business of engineering and contracting in all of its branches; to appraise, value, design, build, construct, enlarge, develop, improve, extend, and repair works, plants, systems, lines, stations, buildings, structures, mines, shafts, tunnels, wells, canals, viaducts, highways, facilities, apparatus, machinery, equipment, appliances and appurtenances, of any and every nature and kind whatsoever. (g) To purchase and acquire securities, assets, and property of every kind and description at judicial, judiciary, trustee's, pledgee's, mortgagee's or liquidating or public or private sales, either pursuant to a plan of reorganization or otherwise, and to carry on a general salvage, liquidation, and realization business; and also to do a general commission and brokerage business. (h) To hold in trust, issue on commission, make advances upon or sell, lease, license, transfer, organize, reorganize, incorporate, or dispose of any of the undertakings or resulting investments aforesaid, or the stock or securities thereof; to act as agent or depositary for any of the above or like purposes or any purpose herein mentioned, and to act as fiscal agent of any other person, firm or corporation. (i) To obtain the grant of, purchase, lease, or otherwise acquire any concessions, rights, options, patents, privileges, lands, rights of way, sites, properties, undertakings or businesses, or any right, option or contract in relation thereto, and to perform, carry out, and fulfill the terms and conditions thereof and to carry the same into effect, and to develop, maintain, lease, sell, transfer, dispose of, and otherwise deal with the same. (j) From time to time to apply for, obtain the grant of, purchase or acquire by assignment, transfer or otherwise, and to exercise, carry out and enjoy any license, power, authority, franchise, ordinance, order, right or privilege, which any government or authority, supreme, municipal or local, or any corporation or other public body shall enact, make, or grant. (k) To issue shares of the capital, stock, bonds, debentures, debenture stock, notes, and other obligations of this corporation for cash, for labor done, for property, real or personal, or leases thereof, or for any combination of any of the foregoing, or for services rendered or in exchange for the stock debentures, debenture stock, bonds, securities, or obligations of any person, firm, association, corporation, or other organization. (l) To purchase, acquire, and lease, and to sell, lease, and dispose of water, water rights, water records, power privileges, and appropriations for power, light, heat, mining, milling, irrigation, agricultural, domestic or any other use or purpose. (m) To acquire by purchase, lease, own, hold, sell, mortgage, and encumber both improved and unimproved real estate wherever situate; to survey, subdivide, plat, colonize, and improve the same for the purposes of sale or otherwise; and to construct and erect thereon factories, works, plants, shops, stores, mills, hotels, houses, buildings, and other structures, and to own, use, maintain, manage, and operate the same or any thereof. (n) To own and control and acquire, by lease, purchase, construction, or otherwise, steamships, boats, barges, hydroplanes, and vessels of all kinds or interests therein and to operate the same either on Alaska Waters and on the Waters of Puget Sound and on all navigable rivers and waters connected therewith and elsewhere, or both, for the transportation of passengers and freight of all kinds, with power to purchase, build, construct, repair, lease, sell, convey, and operate vessels of all kinds, and all machinery, appliances and apparatus incident, necessary or convenient thereto, or in any way connected therewith; with power also to do a towing business, and also to purchase, own, lease, construct, control, and operate and sell docks, wharves, landings floats, warehouses, dry docks and dock machinery, appliances and apparatus of all kinds; and with the power also to do a general shipbuilding, stevedore, dockage, warehouse, and commission business; to conduct a general cold storage and refrigeration business. (o) To subscribe for, or cause to be subscribed for, buy, own, hold, purchase, receive, or acquire, and/or to sell, negotiate, guarantee, assign, deal in, exchange, transfer, mortgage, pledge and/or otherwise dispose of shares of the capital stock, scrip, bonds, coupons, mortgages, debentures, debenture stock, securities, notes, acceptances, drafts, and/or evidences of indebtedness issued and/or created by any government or by any political subdivision thereof or by any other corporations, joint stock companies, or associations, whether public, private, or municipal, or any corporate body, and while the owner thereof, to possess and to exercise in respect thereof all the rights, powers, and privileges of ownership, including the right to vote thereon; to guarantee the payment of dividends on any shares of the capital stock of any of the corporations, joint stock companies, or associations in which this corporation has or may at any time have an interest, and to become surety in respect of, endorse, or otherwise guarantee the payment of the principal of or interest on any scrip, bonds, coupons, mortgages, debentures, debenture stock, securities, notes, drafts, bills of exchange, or evidences of indebtedness, issued or created by any such corporations, joint stock companies, or associations; to assume and agree to pay all or part of the indebtedness, evidenced by bonds or otherwise, of any corporation, and to assume and agree to perform any covenants, conditions, or agreements contained in any mortgage or trust indenture, and to assume any other obligation, or liability of any corporation; to become surety for or guarantee the carrying out and performance of any and all contracts, leases, and obligations of every kind of any corporations, joint stock companies, or associations, and in particular of any corporation, joint stock company, or association any of whose shares, scrip, bonds, coupons, mortgages, debentures, debenture stock, securities, notes, drafts, bills of exchange, or evidences of indebtedness, are at any time held by or for this corporation, and to do any acts or things designed to protect, preserve, improve or enhance the value of any such shares, scrip, bonds, coupons, mortgages, debentures, debenture stock, securities, notes, drafts, bills of exchange, or evidences of indebtedness, provided, however, that this Subdivision (o) shall not be construed to authorize this corporation to engage in the business of banking. (p) To manufacture, buy, sell, and generally deal in, goods, wares, merchandise, property, and commodities of any and every class and description, and all articles used or useful in connection therewith; to engage in any business whether manufacturing or otherwise which -this corporation may deem advantageous or useful in connection with any or all of the foregoing, and to purchase, acquire, manufacture, market, or prepare for market, sell or otherwise dispose of any article, commodity, or thing which this corporation may use in connection with its business. (q) To manage, operate, conduct and supervise the business, properties, and affairs, in whole or in part, of any companies, corporations, joint stock companies, syndicates, partnerships, and associations of all kinds whether it owns any or all of the securities and/or obligations of such companies, corporations, joint stock companies, syndicates, partnerships, and associations or not. (r) To secure, purchase, acquire, apply for, register, own, hold, sell, or dispose of any and all copyrights, trademarks and other trade rights. (s) To organize, or cause to be organized, under the laws of the State of Delaware, or of any other state, territory, or country, or the District of Columbia, a corporation or corporations for the purpose of accomplishing any or all of the objects for which this corporation is organized, and to dissolve, wind up, liquidate, merge or consolidate any such corporation, or corporations, or to cause the same to be dissolved, wound up, liquidated, merged, or consolidated. (t) To purchase, apply for, obtain, or otherwise acquire any and all letters patent, licenses, patent rights, patented processes, and similar rights granted by the United States or any other government or country, or any interest therein, or any inventions which may seem capable of being used for or in connection with any of the objects or purposes of this corporation, and to use, exercise, develop, sell, dispose of, lease, grant licenses in respect to, or other interests in the same, and otherwise turn the same to account, and to carry on any business, manufacturing or otherwise, which may be deemed to directly or indirectly aid, effectuate, or develop, the objects or any of them of this corporation. (u) To lend money, to borrow money for any of the purposes of this corporation, and to issue bonds, debentures, debenture stock, notes, and other obligations, and to secure the same by pledge or mortgage of the whole or any part of the property, of this corporation, either real or personal, or to issue bonds, debentures, debenture stock, notes, or other obligations without any such security. (v) To enter into, make, perform, and carry out contracts of every kind for any lawful purpose, without limit as to amount, with any person, firm, association, or corporation. (w) In connection with its business, to draw, make, accept, endorse, discount, guarantee, execute, and issue promissory notes, bills of exchange, drafts, warrants and all kinds of obligations and certificates and negotiable or transferable instruments. (x) To purchase, hold, sell, and transfer shares of its own capital stock, bonds, notes, and other obligations of this corporation from time to time to such extent and in such manner and upon such terms as its Board of Directors shall determine; provided that any purchase of any of the shares of the capital stock of the corporation shall not be made when such purchase would cause any impairment of the capital of the corporation; and provided further that shares of its own capital stock belonging to this corporation shall not be voted upon directly or indirectly. (y) To have one or more offices, to carry on any or all of its operations and business and without restriction or limit as to amount, to purchase, lease, or otherwise acquire, hold, and own, and to mortgage, sell, convey, lease or otherwise dispose of, real and personal property of every class and description in any of the states or territories of the United States and in the District of Columbia, and in any and all foreign countries, subject to the laws of such state, district, territory, or country. (z) To do any and all things herein set forth, and in addition such other acts and things as are necessary or convenient to the attainment of the purposes of this corporation, or any of them, to the same extent as natural persons lawfully might or could do in any part of the world. The foregoing clauses shall be construed both as objects and powers and it is hereby expressly provided that the foregoing enumeration of specific power shall not be held to limit or restrict in any manner the powers of this corporation, and are in furtherance of, and in addition to, and not in limitation of the general powers conferred by the laws of the State of Delaware. It is the intention that the purposes, objects and powers specified in this Article Third and all subdivisions thereof shall, except as otherwise expressly provided, in nowise be limited or restricted by reference to or inference from the terms of any other clause or paragraph of this Article, and that each of the purposes, objects, and powers specified in this Article Third shall be regarded as independent purposes, objects, and powers. FOURTH: (a) The total number of shares of stock which this corporation shall have authority to issue is six hundred and fifty million (650,000,000) shares of which fifty million (50,000,000) shares shall be shares of Preferred Stock with a par value of one cent ($.01) each, amounting in aggregate to five hundred thousand dollars ($500,000), two hundred fifty million (250,000,000) shares shall be shares of Common Stock Series A of the par value of twenty-five cents ($.25) each, amounting in the aggregate to sixty two million five hundred thousand dollars ($62,500,000), and three fifty hundred million (350,000,000) shares shall be of common Stock Series B of the par value of twenty-five cents ($.25) each, amounting in the aggregate to eighty-seven million five hundred thousand dollars ($87,500,000). (b) The Preferred Stock may be issued from time to time in one or more series, and in such amounts as may be determined by the Board of Directors. The designations, powers, preferences and relative, participating optional, conversion and other rights, and the qualifications, limitations and restrictions thereof, of the Preferred Stock of each series, which shall not be fixed by the Certificate of Incorporation, shall be such as may be fixed or altered by resolution or resolutions by the Board of Directors (authority so to do being hereby expressly granted to, and vested in, the Board of Directors) to the full extent now or hereafter permitted by the laws of Delaware. (c) The designations, powers, preferences and relative, participating, optional, conversion and other special rights, and the qualifications, limitations and restrictions thereof, of the Common Stock Series A and the Common Stock Series B shall be as follows: (1) Whenever full dividends have been paid or declared and funds set apart for the payment of dividends on each series of Preferred-Stock which may be issued and outstanding, for the current dividend period and for all past dividend periods in respect of which dividends are cumulative and remain unpaid, and a cash dividend upon the Common Stock Series B shall at any time and from time to time be declared and paid, there shall at that time or at any time thereafter but within the time limits hereinafter in this paragraph set forth, be declared and paid a stock dividend or dividends on the Common Stock Series A payable in shares of Common Stock Series A, the fair value as of the respective dates of declaration (as hereinafter defined) of such stock dividend or dividends paid or payable on each share of Common Stock Series A during any calendar year to be equivalent to the cash dividend or dividends paid or payable on each share of Common Stock Series B during such calendar year pursuant to this paragraph. For the purpose of the foregoing sentence the determination of the fair value of the Common Stock Series A shall be made as of the respective dates of declaration of such dividend or dividends by the Board of Directors of the corporation in its sole discretion and such determination shall be final and conclusive. Without limiting the generality of the foregoing, the Board of Directors may, in making such determination of fair value, consider the bid and asked price of the Common Stock Series A on the business day next preceding the date of the declaration of such dividend (or if not available for such date on the next preceding date on which such quotation is available) as quoted by the National Quotation Bureau, Inc. or an organization performing functions similar thereto and such other factors as the Board of Directors may deem to be relevant, including without limitation, that the value of such stock after the record date may be reduced by the declaration of the dividend and any factors which would affect the market value of such stock dividend shares. The Board of Directors of the corporation may in its sole discretion declare a dividend or dividends on the Common Stock. Series A on dates different from the date on which a cash dividend or dividends are declared on the Common Stock Series B and may fix separate record dates and/or separate payment dates different from the record dates or payment dates of the cash dividend or dividends declared on the Common Stock Series B, provided however, that the record date and the payment date of any dividend on the Common Stock Series A shall be within one year from the date of declaration thereof, and provided further that the fair value as of the respective dates of declaration (as herein defined) of all stock dividends paid on each share of Common Stock Series A during any calendar year pursuant to this Paragraph shall be equivalent to the total cash dividends paid only on each share of Common Stock Series B during such calendar year pursuant to this paragraph. This paragraph shall be applicable only where a dividend is declared on the Common Stock Series B payable only in cash and the Board of Directors does not at the same time declare a dividend in an equal amount only in cash on the Common Stock Series A, which the Board of Directors shall have the right to do. The provisions of this paragraph are not intended to cover, or apply to, any case where a dividend is declared on the Common Stock Series B payable in stock or any other property in which event the same dividend shall be declared at the same time on the Common Stock Series A as provided in paragraph (4) of subdivision (c) of this Article FOURTH. The corporation shall not issue fractional shares in satisfaction of any stock dividend but in lieu of fractional shares it shall issue scrip certificates (exchangeable, together with other scrip certificates aggregating one or more full shares, for stock certificates representing such full share or shares of stock), for any fraction of a share of stock. The terms and form of which are to be approved by the Board of Directors of the corporation. Until the exchange thereof for certificates for full shares of stock, the holders of such scrip certificates shall not be entitled to receive dividends or to vote or to any other rights and/or privileges as stockholders of the corporation. The Board of Directors of the corporation shall, in any instance, have the full power and authority to prescribe other methods by which settlement for fractional shares shall be made, in lieu of delivering such scrip certificates for fractional shares, and may, without limiting the generality of the foregoing, make a cash settlement in respect thereof in such amount as shall be determined by the Board of Directors or provide for the combination of such fractions into a number of whole shares of stock equal to the aggregate of the fractional shares which the holders of the shares of Common Stock of the corporation would otherwise be entitled to receive and the delivery thereof to the corporation or its designee as agent for said stockholders to sell the said whole shares of stock and to pay the net proceeds of the sale to those stockholders who would otherwise have been entitled to fractional shares pro rata in accordance with their respective fractional share interests and upon such other terms as may be provided by the Board of Directors of the corporation. (2) The Common Stock Series A, at the option of the respective holders thereof, shall be exchangeable for Common Stock Series B of the corporation, from time to time, subject to the provisions hereinafter set forth in the ratio of one (1) share of Common Stock Series B for one (1) share of Common Stock Series A (whether or not any dividend shall have been declared on the Common Stock Series A and remain unpaid but this shall not prevent a stockholder who shall exchange his shares after a record date from receiving any dividend payable to Series A stockholders of record on that date), upon surrender to the corporation or to its transfer agent of the certificates of Common Stock Series A, so to be exchanged, duly endorsed in blank for transfer; provided however that if any such shares of Common Stock Series A are surrendered for exchange on or between the date on which a cash dividend is declared on the Common Stock Series B and the date fixed by the Board of Directors of the corporation for determining the holders of the Common Stock Series B entitled to receive such cash dividend, the said shares of Common Stock Series A shall be exchanged for shares of Common Stock Series B on and as of the business day next following the record date for determining the holders of the Common Stock Series B entitled to receive such cash dividend and until such exchange is so made any such stockholder shall be treated for all purposes as the holder of the shares of Common Stock Series A so surrendered for exchange. So long as any of the Common Stock Series A remains outstanding, there shall be reserved such number of shares of Common Stock Series B for exchange as shall be required pursuant to the provisions herein contained. (3) The Board of Directors of the corporation shall have the right, in its solo discretion, to require all of the holders of the Common Stock Series A to exchange all of their Common Stock Series A for Common Stock Series B of the corporation in the ratio of one (1) share of Common Stock Series B for one (1) share of Common Stock Series A (whether or not any dividend shall have been declared on the Common Stock Series A and remain unpaid but this shall not prevent a stockholder who shall exchange his shares after a record date from receiving any dividend payable to Series A stockholders of record on that date). Notice of the requirement for such exchange shall be given by the corporation at least thirty days prior to the date fixed for such exchange to the holders of record of all the outstanding Common Stock Series A and an affidavit of mailing of such notice by an employee of the corporation or any employee of the transfer agent shall be conclusive evidence of the mailing of such notice. If notice of such exchange shall have been duly given as herein provided, and any holder of Common Stock Series A shall not have surrendered all his certificates of Common Stock Series A to the corporation or its transfer agent for exchange, duly endorsed in blank for transfer, then from and after the exchange date so specified in the notice, any and all rights and privileges of such holders of Common Stock Series A, as holders of Common Stock Series A, shall cease and terminate, except the right to receive shares of Common Stock Series B in exchange for his shares of Common Stock Series A as hereinabove provided, and from and after the exchange date so specified in the notice all Common Stock Series A outstanding shall be and become Common Stock Series B with the effect that each holder of the outstanding shares of Common Stock Series A shall thereupon be and become the holder of one share of Common Stock Series B for every share of Common Stock Series A then held by him. (4) In all other respects the designations, powers, preferences and relative, participating, optional, conversion and other special rights, and the qualifications, limitations and restrictions thereof, of the Common Stock Series A and the Common Stock Series B shall be the same, and without limiting the generality of the foregoing, in the event any dividends payable in any class of stock of the corporation, or in any property, are declared upon the shares of Common Stock Series B of the corporation (which the corporation by action of its Board of Directors shall have the full power and authority to do) the same dividend shall be declared upon the Common Stock Series A of the corporation and in the event any dividends payable in any class of stock of the corporation, or in any property, (except stock dividends which are paid to equalize cash dividends as hereinabove set forth) are declared upon the shares of Common Stock Series A of the corporation, (which the corporation by action of its Board of Directors shall have the full power and authority to do) the same dividend shall be declared upon the Common Stock Series B of the corporation and in the event a cash dividend shall be declared on the shares of Common Stock Series A of the corporation (which the corporation by action of its Board of Directors shall have the full power and authority to do, whenever full dividends have been paid or declared and funds set apart for the payment of dividends on each series of Preferred Stock which may be issued and outstanding, for the current dividend period and for all past dividend periods in respect of which dividends are cumulative and remain unpaid) an equal cash dividend shall be declared on the shares of Common Stock Series B of the corporation. (d) Unless otherwise expressly required by applicable law, each holder of Common Stock Series A and Common Stock Series B shall at every meeting of the stockholders be entitled to one vote in person or by written proxy signed by him for each share of Common Stock Series A and Common Stock Series B owned by him and shall be entitled and required to vote as part of a single class, i.e., Common Stock (without distinction as to Series A or Series B) upon all such matters as may come before the stockholders including without limitation the election of directors, which shall be decided by majority vote of the Common Stock present or represented by proxy and entitled to vote at the meeting. The stockholders of this corporation shall have no preemptive right to subscribe to any issue of shares of stock of this corporation now or hereafter made. FIFTH: The minimum amount of capital with which it will commence business is One Thousand Dollars ($1,000.00). SIXTH: The name and place of residence of each of the incorporators are as follows: NAME RESIDENCE L.H. HERMAN Wilmington, Delaware WALTER LENZ Wilmington, Delaware W.T. HOBSON Wilmington, Delaware SEVENTH: This corporation is to have perpetual existence. EIGHTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. NINTH: In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized: To make, alter, and repeal the by-laws subject to the power of the stockholders to change or repeal such bylaws; provided, however, that prior to the second Tuesday in March, 1937, no by-laws shall be adopted or amended by the directors so as to authorize or provide (a) for the holding of any meeting of stockholders for the election of directors at any place other than Minneapolis, Minnesota or at any time prior to the holding of the first annual meeting of stockholders for election of directors on the second Tuesday in March, 1937; or (b) for the holding of meetings of directors, prior to such first meeting of stockholders for the election of directors, at any place other than as provided in the original by-laws; To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to alter or abolish any such reserve; To fix, determine, and vary from time to time the amount to be maintained as surplus and the amount or amounts to be set apart for working capital. All of the powers of this corporation, insofar as the same lawfully may be vested by this Certificate in the Board of Directors, are hereby conferred upon the Board of Directors of this corporation. Directors need not be elected by ballot, unless voting by ballot shall be requested by the holders of ten percent (10%) or more of the shares of stock represented at the meeting of stockholders at which the directors are to be elected. TENTH: This corporation may in its by-laws make any other provisions or requirements for the management or conduct of the business of this corporation provided the same be not inconsistent with the provisions of this Certificate or contrary to the laws of the State of Delaware, and subject to the limitations upon amendment of by-laws contained in this Certificate of Incorporation. ELEVENTH: This corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law and all rights conferred on officers, directors, and stockholders herein are granted subject to this reservation. TWELFTH: A. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article to authorize corporation action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. B. No modification or repeal of the provisions of this Article shall adversely affect any right or protection of any director of the corporation existing at the date of such modification or repeal or create any liablity or adversely affect any such right or protection for any acts or omissions of such director occurring prior to such modification or repeal. IN WITNESS WHEREOF, said CITIZENS UTILITIES COMPANY has caused this Certificate to be signed by L. Russell Mitten, its Vice President, and attested by Charles J. Weiss, its Secretary, on this _______ day of June, 1996. CITIZENS UTILITIES COMPANY By:_______________________________ Livingston E. Ross Vice President ATTEST: By:___________________________ Charles J. Weiss Secretary EX-3 5 BYLAWS* OF CITIZENS UTILITIES COMPANY * As amended March 9, 1937; May 12, 1942; June 15, 1946; October 1, 1946; May 23, 1947; January 7, 1948; April 1, 1948; March 31, 1949; January 26, 1951; April 11, 1952; July 28, 1954; February 24, 1960; November 18, 1963; May 10, 1966; February 3, 1967; April 10, 1968; April 17, 1970; June 11, 1970; June 7, 1974; August 8, 1975; November 7, 1980; January 16, 1981; March 3, 1981; February 20, 1986; June 5, 1987; August 8, 1988; May 5, 1989; May 31, 1989; June 23, 1989; September 11, 1989 (clerical correction); May 1, 1990; April 14, 1992; and February 17, 1993, February 8, 1994 (clerical correction); October 24, 1995. BYLAWS OF CITIZENS UTILITIES COMPANY TITLE 1. The title of this corporation is CITIZENS UTILITIES COMPANY. LOCATION OF OFFICES 2. The principal office of the corporation in Delaware shall be in Wilmington and the resident agent in charge thereof shall be PRENTICE HALL CORPORATION SYSTEM, INC., 32 Loockerman Square. The corporation may also have an office or offices at such other places within or without the State of Delaware as the Board of Directors may from time to time designate. CORPORATE SEAL 3. The corporate seal shall be circular in form and have inscribed thereon the name of the corporation, the year of its incorporation (1935) and the words "Incorporated Delaware". MEETINGS OF STOCKHOLDERS 4. All meetings of stockholders shall be held at the offices of the corporation or such other place as shall be designated by the Board of Directors of the corporation. Annual Meetings of stockholders shall be held on a date and at a time designated by the Board of Directors of the corporation. At each annual meeting the stockholders shall elect a Board of Directors, such election to be by majority of the stock present or represented by proxy, and entitled to vote at the meeting. Each stockholder shall, at every meeting of the stockholders, be entitled to one vote in person or by written proxy signed by him, for each share of stock held by him, but no proxy shall be voted on after one year from its date. Such right to vote shall be subject to the right of the Board of Directors to close the transfer books or to fix a record date for voting stockholders as hereinafter provided. Special meetings of the stockholders may be called by the Chief Executive Officer and shall be called on the request in writing or by vote of a majority of the Board of Directors or on demand in writing of stockholders of record owning thirty-three percent (33%) in amount of the capital stock outstanding and entitled to vote. Notice of each meeting of stockholders, whether annual or special, shall be mailed by the secretary to each stockholder of record, at his or her post office address as shown by the stock books of the Company, at least ten days and not more than sixty days prior to the date of the meeting. If the transfer books are closed or a record date is fixed in connection with an annual meeting, as permitted by By-Law 17, the notice of the meeting shall be given to the stockholders of record as of the time said books are closed or record date is fixed, but if the transfer books are not closed or a record date is not fixed, said notice shall be given to the stockholders of record at the time the notice is mailed. The holders of a majority of the stock outstanding and entitled to vote shall constitute a quorum, but the holders of a smaller amount may adjourn any meeting from time to time without further notice until a quorum is secured. Except as otherwise required by law or the Certificate of Incorporation or these Bylaws, the votes of stockholders representing a majority of the stock voted on any question shall prevail. DIRECTORS 5. The property and business of the corporation shall be managed and controlled by its Board of Directors, which shall consist of not less than seven nor more than thirteen members. The number of Directors shall be fixed from time to time, within the limits prescribed, by resolution of the Board of Directors. As of October 24, 1995, the Board of Directors shall consist of thirteen members, unless a different number shall thereafter be fixed by resolution of the Board of Directors. Vacancies in the Board of Directors (except vacancies resulting from the removal of directors by stockholders), including vacancies in the Board of Directors resulting from any increase in the number of Directors, may be filled by a majority of the Directors then in office, though less than a quorum. Directors shall otherwise be elected by the stockholders at the annual meeting and shall hold office until the next annual election and until their successors are elected and qualified. At all elections of Directors of this corporation each stockholder shall be entitled to one vote in person or by written proxy signed by him, for each share of stock owned by him, and election shall be by majority vote of the stock present or represented by proxy and entitled to vote at the meeting. The stockholders of this corporation shall have no preemptive right to subscribe to any issue of shares of stock of this corporation now or hereafter made. A Director may be designated a "Director Emeritus" of the Company by the vote of the Board of Directors. A Director Emeritus shall be invited to attend all meetings of the Board of Directors but shall not have the right to vote. A Director Emeritus shall receive such compensation as the Board shall determine. A Director Emeritus shall be designated by the Board of Directors for a one-year term (and may be reappointed) at the Annual Meeting of the Board of Directors following the Company's Annual Meeting of Shareholders. The Board of Directors shall have an Executive Committee. The Executive Committee of the Board shall consist of four (4) members, to be appointed by and to serve at the pleasure of the Board. The Chairman of the Board shall be the Chairman of the Executive Committee. During intervals between meetings of the Board, the Committee shall have the power and authority of the Board of Directors of the management of the business affairs and property of the Company. A majority of the Directors in office shall be independent directors as hereinafter defined. At the time that the nominees for the Board of Directors are selected for proposal for election at the Annual Meeting of Shareholders, the Board of Directors will review the circumstances of each nominee and determine whether he or she is an independent director. If it should be determined that a majority of the nominees are not independent directors, the Nominating Committee shall take steps to select and recommend the nomination of a sufficient number of individuals who are independent directors so that a majority of members of the Board of Directors shall be independent directors. The Board of Directors shall have a Nominating Committee. The Nominating Committee shall consist of not less than two directors and not more than four directors, to be appointed by and to serve at the pleasure of the Board. Each member of the Nominating Committee shall be an independent director as hereinafter defined. The Nominating Committee shall consider recommendations of individuals who may be expected to make contributions to the Company or members of the Board of Directors. The Nominating Committee shall establish procedures for the nominating process and make recommendations to the Board of Directors annually for the slate of nominees for the Board of Directors to be proposed at the Annual Meeting of Shareholders. The Board of Directors shall have a Compensation Committee. The Compensation Committee shall consist of not less than two directors and not more than four directors, to be appointed by and to serve at the pleasure of the Board. Each member of the Compensation Committee shall be an independent director as hereafter defined. The Compensation Committee shall consider matters related to compensation of officers, directors and employees of the Company and to make recommendations with respect thereto to the Board of Directors. The Compensation Committee shall have the authority to retain independent legal counsel and compensation advisors. For purposes of this Article 5 of the Bylaws, "independent director" shall mean a director who is: (a) an individual who is not and has not been employed as an executive officer by the Company (or any corporation, the majority of the voting stock of which is owned, directly or indirectly through one or more other subsidiaries, by the Company) within three (3) fiscal years immediately prior to his or her most recent election or appointment as a member of the Board of Directors; or (b) an individual who is not a regular paid advisor or consultant to the Company and who is not an affiliate (within the meaning of Exchange Act Rule 12b-2 of the Securities and Exchange Commission) of any entity that is a regular paid advisor or consultant to the Company; or (c) an individual who is not an employee or owner of five percent (5%) or more of the voting stock of any business or professional entity that has made, during the Company' s last full fiscal year, payments to the Company or its subsidiaries for property, goods or services in excess of five percent (5%) of the lesser of (i) the Company's consolidated gross revenues for its last full fiscal year, or (ii) such other entity's consolidated gross revenues for its last full fiscal year; or (d) an individual who is not an employee or owner of five percent (5%) or more of the voting stock of any business or professional entity to which the Company or its subsidiaries have made, during the Company's last full fiscal year, payments for property, goods or services in excess of five percent (5%) of the lesser of (i) the Company's consolidated gross revenues for its last full fiscal year, or (ii) such other entity's consolidated gross revenues for its last full fiscal year; or (e) an individual who is not a party to a personal service contract with the Company pursuant to which fees or other compensation received by the individual from the Company during his or her last full fiscal year (other than fees received as a member of the Company's Board of Directors or a committee thereof) so as to require description of such contract under Item 404(a) of Regulation S-K promulgated by the Securities and Exchange Commission, as in effect on January 1, 1994; or (f) an individual who is not employed by a tax-exempt organization that received, during its last full fiscal year, contributions from the Company in excess of five percent (5%) of the lesser of (i) the consolidated gross revenues of the Company during its last full fiscal year, or (ii) the contributions received by the tax-exempt organization during its last full fiscal year; or (g) an individual who has not carried out a transaction or did not have a relationship, during the Company's last full fiscal year, such that the specifics of a transaction would be required to be described under Item 404 of Regulation S-K promulgated by the Securities and Exchange Commission, as in effect on January 1, 1994; or (h) an individual who is not employed by a public company at which an executive officer of the Company serves as a member of the board of directors; or (i) an individual who has not had any relationship described in paragraphs (a) - (h) with any corporation, the majority of the voting stock of which is owned directly or indirectly, through one or more subsidiaries, by the Company; or (j) an individual who is not a member of the immediate family of any person described in paragraphs (a) - (i). For these purposes, an individual's immediate family shall include such individual's spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-laws, and brothers- and sisters-in-law. The term "independent director" shall have no legal significance under applicable corporate or securities law or in any respect other than for the purposes of this Bylaw. No inference shall be drawn that a director is "not independent," "interested," or "a party to a contract or transaction" or has a "financial interest" in any contract or transaction within the meaning of any applicable corporate or securities law, and no director shall be disqualified from taking action or refraining from acting on any matter coming before the Board of Directors by reason of his or her status as an independent director under this Bylaw. POWERS OF DIRECTORS 6. The Board of Directors shall have all such powers as may be exercised by the Corporation, subject to the provisions of the statutes, the Certificate of Incorporation, and the Bylaws. MEETINGS OF DIRECTORS 7. Meetings of the Board of Directors shall be held at such place within or without the State of Delaware as may from time to time be fixed by resolution of the Board of Directors, or as may be specified by the Chief Executive Officer in the call of any meeting. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board of Directors and special meetings may be held at any time upon the call of two (2) Directors or of the Chief Executive Officer, by oral, telegraphic or written notice duly served or sent or mailed to each Director not less than five (5) days before such meeting. A meeting of the Board may be held without notice immediately after the annual meeting of stockholders at the same place at which such meeting is held. Notice need not be given of regular meetings of the Board held at times fixed by resolution of the Board. Meetings may be held at any time without notice if all the Directors are present or if those not present waive notice of the meeting in writing. (Telephone Participation in Meetings) Members of the Board of Directors (or any committees thereof) may participate in a meeting of the Board of Directors (or of such committees) by means of conference telephone or other communications equipment via which all persons participating can hear each other. Such participation in the substantive discussion and determinations of a meeting shall constitute presence in person at such meeting. A majority of the Directors shall constitute a quorum, but a smaller number may adjourn any meeting from time to time without further notice until a quorum is secured. OFFICERS OF THE COMPANY 8. The officers of the Company shall be a Chairman of the Board of Directors, a President, one or more vice presidents (with such duties and titles as may be assigned to them), a secretary, a treasurer, one or more assistant vice presidents (with such duties and titles as may be assigned to them), and such other officers as may from time to time be chosen by the Board of Directors. The officers of the Company shall hold office until their successors are elected and qualified. If the office of any officer or officers becomes vacant for any reason, the vacancy shall be filled by the affirmative vote of a majority of the whole Board of Directors. DUTIES OF THE CHAIRMAN 9. The Chairman presides at all meetings of the Board of Directors and at all meetings of the shareholders. It shall be his prerogative to see that all orders, resolutions, and policy determinations of the Board of Directors are carried into effect. He acts in a general oversight and advisory capacity with respect to the affairs of the Company. He provides leadership to the Board in reviewing and deciding upon matters which constitute major policies of the Company, what the Company does and the manner in which the Company business is conducted. DUTIES OF THE CHIEF EXECUTIVE OFFICER 9A. It shall be the duty of the Chief Executive Officer to carry into effect all orders, resolutions, and policy determinations of the Board of Directors; to execute all contracts and agreements; to keep the seal of the Company; and to sign and to affix the seal of the Company to any instrument requiring the same, which seal shall be attested by the signature of the Secretary or Treasurer or Assistant Secretary or Assistant Treasurer. He shall have the general supervision and direction of the other officers of the Company. He shall submit a report of the operations of the Company for the year to the Directors at their meeting next preceding the annual meeting of the stockholders and to the stockholders at their annual meeting. He shall have the general duties and powers of supervision and management usually vested in the chief executive officer of a corporation. The Chief Executive may also hold another office with the Company. Accordingly, the duties and responsibilities of the position may be assigned by the Board of Directors to any Company officer. DUTIES OF THE PRESIDENT 9B. Unless otherwise decided by the Board of Directors, the President shall be the chief executive and administrative officer of the Company. It shall be his duty to see that all orders and policy determination conveyed by the Chairman are carried into effect. He shall have the general supervision and direction of the operations and administration of the affairs of the Company and general supervision and direction of the other officers and employees of the Company and shall see that their duties are properly performed. VICE PRESIDENT 10. The vice president or vice presidents, in the order of their seniority, shall be vested with all the powers and required to perform all the duties of the President in his absence or disability and shall perform such other duties as may be prescribed by the Board of Directors. CHIEF EXECUTIVE PRO TEM 11. In the absence or disability of both the Chairman and President, the Board may appoint a chief executive pro tem. SECRETARY 12. The secretary shall attend all meetings of the corporation and the Board of Directors. He shall act as clerk thereof and shall record all of the proceedings of such meetings in a book kept for that purpose. He shall give proper notice of meetings of stockholders and Directors and shall perform such other duties as shall be assigned to him by the Chairman, President or the Board of Directors. TREASURER 13. The treasurer shall have custody of the funds and securities of the corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board, or Chairman or President, taking proper vouchers for such disbursements and shall render to the Chairman, President and Directors, whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation. He shall keep an account of stock and income notes registered and transferred in such manner and subject to such regulations as the Board of Directors may prescribe. He shall give the corporation a bond, if required by the Board of Directors, in such sum and in form and with security satisfactory to the Board of Directors for the faithful performance of the duties of his office and the restoration to the corporation, in case of his death, resignation, or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession, belonging to the corporation. He shall perform such other duties as the Board of Directors may from time to time prescribe or require. DUTIES OF OFFICERS MAY BE DELEGATED 14. In case of the absence or disability of any officer of the corporation or for any other reason deemed sufficient by a majority of the Board, the Board of Directors may delegate his powers or duties to any other officer or to any Director for the time being. The duties relating to the execution of contracts and agreements and the signing of instruments and affixing the seal of the Company and other matters may be delegated to any officer, from time to time, as the Board shall see fit. CERTIFICATES OF STOCK 15. Certificates of stock shall be signed by the Chairman, President or a vice president and either the treasurer, assistant treasurer, secretary or assistant secretary. If a certificate of stock be lost or destroyed, another may be issued in its stead upon proof of such loss or destruction and the giving of a satisfactory bond of indemnity, in an amount sufficient to indemnify the corporation against any claim. TRANSFER OF STOCK 16. All transfer of stock of the corporation shall be made upon its books upon presentation of the certificate or certificates therefor, properly endorsed by the holder of the shares in person or by his lawfully constituted representative, and upon surrender of such certificate or certificates of stock for cancellation. CLOSING OF TRANSFER BOOKS 17. The Board of Directors shall have the power to close the stock transfer books of the corporation for a period not exceeding sixty days preceding the date for any meeting of stockholders or for payment of any dividend or for the allotment of rights or when any change or conversion or exchange of capital stock shall go into effect, or for a period of not exceeding sixty days in connection with obtaining the consent of stockholders for any purpose. In lieu of so closing the books, the Board of Directors may fix in advance a date, not exceeding sixty days preceding the said above mentioned dates, as a record date for the determination of the stockholders entitled to notice of or to vote at any such meeting, and any adjournment thereof, or entitled to dividends or other rights hereinbefore mentioned, or to give such consent. STOCKHOLDERS OF RECORD 18. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by the laws of Delaware. FISCAL YEAR 19. The fiscal year of the corporation shall begin on the first day in January in each year. DIVIDENDS 20. Dividends, to the extent not restricted by provisions of the corporation's Certificate of Incorporation or by subsisting agreements of the corporation, may be declared by the Board of Directors and paid in cash, in property, or in shares of the capital stock of the corporation to the extent permitted by law, out of net assets in excess of its capital or out of its net profits, provided there shall be no impairment of the capital of the corporation represented by its issued and outstanding stock of all classes having a preference upon the distribution of assets. BOOKS AND RECORDS 21. The books, accounts, and records of the corporation may be kept within or without the State of Delaware, at such place or places as may from time to time be designated by the Bylaws or by resolution of the Directors. NOTICES 22. Notice required to be given under the provisions of these Bylaws to any Director, officer or stockholder shall not be construed to mean personal notice, but may be given in writing by depositing the same in a post office or letter box, in a postpaid sealed or unsealed wrapper, addressed to such stockholder, officer or Director at such address as appears on the books of the corporation, and such notice shall be deemed to be given at the time when the same shall be thus mailed. In computing the number of days notice required for any meeting, the day on which the notice shall be deposited in the mail or sent by telegraph shall be excluded. WAIVER OF NOTICE 23. Any stockholder, officer, or Director may waive in writing, or by telegraph, any notice required to be given under these Bylaws, whether before or after the time stated therein. INDEMNIFICATION OF DIRECTORS AND OFFICERS 24. Paragraph (a). Right of Indemnification. The Corporation shall, to the fullest extent permitted by applicable law as then in effect, indemnify any person (the "indemnitee") who was or is involved in any manner (including, without limitation, as a party or a witness) or was or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal administrative or investigative (including, without limitation, any action or proceeding by or in the right of the Corporation to procure a judgement in its favor) (a "Proceeding") by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, or of a partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to any employee benefit plan), whether the basis of any such Proceeding is alleged action in an official capacity as director or officer or in any other capacity while serving as a director or officer, against all expenses, liability and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to be paid in settlement) actually and reasonably incurred by him in connection with such Proceeding. Such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his heirs, executors, administrators and legal representatives. The right to indemnification conferred in this By-law shall include the right to receive payment of any expenses incurred by the indemnitee in connection with such Proceeding in advance of the final disposition of the Proceeding, consistent with applicable law as then in effect. All rights to indemnification conferred in this By-law, including rights to the advancement of expenses and the evidentiary, procedural and other provisions of this By-law, shall be contract rights. The Corporation may, by action of its Board of Directors, provide indemnification for employees, agents, attorneys and representatives of the Corporation with the same, or with more or less, scope and extent as herein provided for officers and directors. No amendment to the Restated Certificate of Incorporation or amendment or repeal of the By-laws purporting to have the effect of modifying or repealing any of the provisions of this By-law in a manner adverse to the indemnitee shall abridge or adversely affect any right to indemnification or other similar rights and benefits with respect to any acts or omissions occurring prior to such amendment or repeal. This By-law shall be applicable to all Proceedings, whether arising from acts or omissions occurring before or after the adoption of this By-law. The phrases "this By-law" and "By-law" shall refer to "By-laws 24 and 24A," and for all purposes, except the corporate procedure required for amendment of the By-law, this By-law shall be considered as one By-law. Paragraph (b). By-Law Not Exclusive. The right of indemnification, including the right to receive payment in advance of expenses, conferred in this By-law shall not be exclusive of any other rights to which any person seeking indemnification may otherwise be entitled under any provision of the Restated Certificate of Incorporation, By-law, agreement, applicable corporate law and statute, vote of disinterested directors or stockholders or otherwise. The indemnitee is free to proceed under any of the rights or procedures available to him. Paragraph (c). Burden of Proof. In any determination, review of a determination, action, arbitration, or other proceeding relating to the right to indemnification conferred in this By-law, the Corporation shall have the burden of proof that the indemnitee has not met any standard of conduct or belief which may be required by applicable law to be applied in connection with a determination that the indemnitee is not entitled to indemnity and also the burden of proof on any of the issues which may be material to a determination that the indemnitee is not entitled to indemnification. Neither a failure to make such a determination of entitlement nor an adverse determination of entitlement to indemnity shall be a defense of the Corporation in an action or proceeding brought by the indemnitee or by or on behalf of the Corporation relating to indemnification or create any presumption that the indemnitee has not met any such standard of conduct or belief or is otherwise not entitled to indemnity. If successful in whole or in part in such an action or proceeding, the indemnitee shall be entitled to be further indemnified by the Corporation for the expenses actually and reasonably incurred by him in connection with such action or proceeding. Paragraph (d). Advancement of Expenses. All reasonable expenses incurred by or on behalf of indemnitee in connection with any Proceeding shall be advanced from time to time to the indemnitee by the Corporation promptly after the receipt by the Corporation of a statement from the indemnitee requesting such advance, whether prior to or after final disposition of such Proceeding. Paragraph (e). Insurance, Contracts and Funding. The Corporation may purchase and maintain insurance to protect itself and any person who is, or may become an officer, director, employee, agent, attorney, trustee or representative (any of the foregoing being herein referred to as a "Representative") of the Corporation or, at the request of the Corporation, a Representative of another corporation or entity, against any expenses, liability or loss asserted against him or incurred by him in connection with any Proceeding in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such expense, liability or loss under the provisions of this By-law or otherwise. The Corporation may enter into contracts with any Representative of the Corporation, or any person serving as such at the request of the Corporation for another corporation or entity, in furtherance of the provisions of this By-law. Such contracts shall be deemed specifically approved and authorized by the stockholders of the Corporation and not subject to invalidity by reason of any interested directors. The Corporation may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification of any person entitled thereto. Paragraph (f). Severability; Statutory Alternative. If any provision or provisions of this By-law shall be held to be invalid, illegal or unenforceable for any reason whatsoever (i) the validity, legality and enforceability of all of the remaining provisions of this By-law shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the remaining provisions of this By-law shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. In the event that the indemnitee elects, as an alternative to the procedures specified in this By-law, to follow one of the procedures authorized by applicable corporate law or statute to enforce his right to indemnification and notifies the Corporation of his election, the Corporation agrees to follow the procedure so elected by the indemnitee. If in accordance with the preceding sentence, the procedure therefor contemplated herein or the procedure elected by the indemnitee in any specific circumstances (or such election by the indemnitee) shall be invalid or ineffective in bringing about a valid and binding determination of the entitlement of the indemnitee to indemnification, the most nearly comparable procedure authorized by applicable corporate law or statute shall be followed by the Corporation and the indemnitee. 24A. Procedures; Presumptions and Effect of Certain Proceedings; Remedies. In furtherance, but not in limitation, of the foregoing provisions of this By-law, the following procedures, presumptions and remedies shall apply with respect to advancement of expenses and the right to indemnification under this By-law: Section 1. Advancement of Expenses. The advancement or reimbursement of expenses to an indemnitee shall be made within 20 days after the receipt by the Corporation of a request therefor from the indemnitee. Such request shall reasonably evidence the expenses incurred or about to be incurred by the indemnitee and, if required by law at the time of such advance, shall include or be accompanied by an undertaking by or on behalf of the indemnitee to repay the amounts advanced if it should ultimately be determined that the indemnitee is not entitled to be indemnified against such expenses. Section 2. Procedure for Determination of Entitlement to Indemnification. Section 2.1. To obtain indemnification (except with respect to the advancement of expenses), an indemnitee shall submit to the Chief Executive Officer or Secretary of the Corporation a written request, including such documentation and information as is reasonably available to the indemnitee and reasonably necessary to determine whether and to what extent the indemnitee is entitled to indemnification (the "Supporting Documentation"). The Secretary of the Corporation shall promptly advise the Board of Directors in writing that the indemnitee has requested indemnification. The determination of the indemnitee's entitlement to indemnification shall be made not later than 60 days after receipt by the Corporation of the written request and Supporting Documentation. Section 2.2. The indemnitee's entitlement to indemnification shall be determined in one of the following ways: (a) by a majority vote of the Disinterested Directors (as hereinafter defined) (which term shall mean the Disinterested Director, if there is only one); (b) by a written opinion of the Independent Counsel (as hereinafter defined) if (i) a majority of the Disinterested Directors so directs; (ii) there is no Disinterested Director, or (iii) a Change of Control (as hereinafter defined) shall have occurred and the indemnitee so requests in which case the Disinterested Directors shall be deemed to have so directed; (c) by the stockholders of the Corporation (but only if a majority of the Disinterested Directors determines that the issue of entitlement to indemnification should be submitted to the stockholders for their determination); or (d) as provided in Section 3 of this By-law. Section 2.3. In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 2.2 of this By-law, a majority of the Disinterested Directors shall select the Independent Counsel, but only an Independent Counsel to which the indemnitee does not reasonably object; provided, however, that if a Change of Control shall have occurred, the indemnitee shall select such Independent Counsel, but only an Independent Counsel to which the Board of Directors does not reasonably object. Section 3. Presumptions and Effect of Certain Proceedings. Except as otherwise expressly provided in this By-law, the indemnitee shall be presumed to be entitled to indemnification upon submission of a request for indemnification together with the Supporting Documentation, and thereafter in any determination or review of any determination, and in any arbitration, proceeding or adjudication the Corporation shall have the burden of proof to overcome that presumption in reaching a contrary determination. In any event, if the person or persons empowered under Section 2.2 of this By-law to determine entitlement to indemnification shall not have been appointed or shall not have made a determination within 60 days after receipt by the Corporation of the request therefor together with the Supporting Documentation, the indemnitee shall be deemed to be entitled to indemnification. In either case, the indemnitee shall be entitled to such indemnification, unless (a) the indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (b) such indemnification is prohibited by law, in either case as finally determined by adjudication or, at the indemnitee's sole option, arbitration (as provided in Section 4 of this By-law). The termination of any Proceeding, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, adversely affect the right of the indemnitee to indemnification or create any presumption with respect to any standard of conduct or belief or any other matter which might form a basis for a determination that the indemnitee is not entitled to indemnification. With regard to the right to indemnification for expenses, (a) if and to the extent that the indemnitee has been successful on the merits or otherwise in any Proceeding, or (b) if a Proceeding was terminated without a determination of liability on the part of the indemnitee with respect to any claim, issue or matter therein or without any payments in settlement or compromise being made by the indemnitee with respect to a claim, issue or matter therein, or (c) if and to the extent that the indemnitee was not a party to the Proceeding, the indemnitee shall be deemed to be entitled to indemnification, which entitlement shall not be defeated or diminished by any determination which may be made pursuant to clauses (a), (b) or (c) of Section 2.2. The indemnitee shall be presumptively entitled to indemnification in all respects for any act, omission or conduct taken or occurring which (whether by condition or otherwise) is required, authorized or approved by any order issued or other action by any commission or governmental body pursuant to any federal statute or state statute regulating the Corporation or any of its subsidiaries by reason of its status as a public utility or public utility holding company or by reason of its activities as such. To the extent permitted by law, the presumption shall be conclusive on all parties with respect to acts, omissions or conduct of the indemnitee if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation or its subsidiary. No presumption adverse to an indemnitee shall be drawn with respect to any act, omission or conduct of the indemnitee if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation or its subsidiary taken or occurring in the absence of, or inconsistent with, any order issued or action by any commission or governmental body. Section 4. Remedies of Indemnitee. Section 4.1. In the event that a determination is made pursuant to Section 2 of this By-law that the indemnitee is not entitled to indemnification under this By-law, (a) the indemnitee shall be entitled to seek an adjudication of his entitlement to such indemnification either, at the indemnitee's sole option, in (i) an appropriate court of the State of Delaware or any other court of competent jurisdiction or (ii) to the extent consistent with law, arbitration to be conducted by three arbitrators (or, if the dispute involves less than $100,000, by a single arbitrator) pursuant to the rules of the American Arbitration Association; (b) any such judicial Proceeding or arbitration shall be de novo and the indemnitee shall not be prejudiced by reason of such adverse determination; and (c) in any such judicial Proceeding or arbitration the Corporation shall have the burden of proof that the indemnitee is not entitled to indemnification under this By-law. Section 4.2. If a determination shall have been made or deemed to have been made, pursuant to Sections 2 or 3 of this By-law, that the indemnitee is entitled to indemnification, the Corporation shall be obligated to pay the amounts constituting such indemnification within five days after such determination has been made or deemed to have been made and shall be conclusively bound by such determination, unless (a) the indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (b) such indemnification is prohibited by law, in either case as finally determined by adjudication or, at the indemnitee's sole option, arbitration (as provided in Section 4.1 of this By-law). In the event that (i) advancement of expenses is not timely made by the Corporation pursuant to this By-law or (ii) payment of indemnification is not made within five days after a determination of entitlement to indemnification has been made or deemed to have been made pursuant to Section 2 or 3 of this By-law, the indemnitee shall be entitled to seek judicial enforcement of the Corporation's obligations to pay to the indemnitee such advancement of expense of indemnification. Notwithstanding the foregoing, the Corporation may bring an action, in an appropriate court in the State of Delaware or any other court of competent jurisdiction, contesting the right of the indemnitee to receive indemnification hereunder due to the occurrence of a circumstance described in subclause (a) of this Section 4.2 or a prohibition of law (both of which are herein referred to as a "Disqualifying Circumstance"). In either instance, if the indemnitee shall elect, at his sole option, that such dispute shall be determined by arbitration (as provided in Section 4.1 of this By-law), the indemnitee and the Corporation shall submit the controversy to arbitration. In any such enforcement action or other proceeding whether brought by the indemnitee or the Corporation, indemnitee shall be entitled to indemnification unless the Corporation can satisfy the burden or proof that indemnification is prohibited by reason of a Disqualifying Circumstance. Section 4.3. The Corporation shall be precluded from asserting in any judicial Proceeding or arbitration commenced pursuant to this Section 4 that the procedures and presumptions of this By-law are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator or arbitrators that the Corporation is bound by all the provisions of this By-law. Section 4.4. In the event that the indemnitee, pursuant to this By-law, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this By-law, or is otherwise involved in any adjudication or arbitration with respect to his right to indemnification, the indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any expenses actually and reasonably incurred by him if the indemnitee prevails in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that the indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by the indemnitee in connection with such judicial adjudication or arbitration shall be prorated accordingly. Section 5. Definitions. For purposes of indemnification under this By-law or otherwise. Section 5.1. "Change in Control" means a change in control of the Corporation of a nature that would be required to be reported in response to Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or not the Corporation is then subject to such reporting requirement; provided that, without limitation, such a change in control shall be deemed to have occurred if (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Corporation representing 20 percent or more of the combined voting power of the Corporation's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such acquisition; (b) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which, members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new Director whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds of the Directors then still in office who were Directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors. Section 5.2. "Disinterested Director" means a Director of the Corporation who is not or was not a material party to the Proceeding in respect of which indemnification is sought by the indemnitee. Section 5.3. "Independent Counsel" means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent (a) the Corporation or the indemnitee in any manner or (b) any other party to the Proceeding giving rise to a claim for indemnification under this By-law. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing under the law of the State of Delaware, would have a conflict of interest in representing either the Corporation or the indemnitee in an action to determine the indemnitee's rights under this By-law. Section 6. Acts of Disinterested Directors. Disinterested Directors considering or acting on any indemnification matter under this By-law or under governing corporate law or otherwise may consider or take action as the Board of Directors or may consider or take action as a committee or individually or otherwise. In the event that Disinterested Directors consider or take action as the Board of Directors, one-third of the total number of Directors in office shall constitute a quorum. AMENDMENTS OF BYLAWS 25. These By-laws may be amended or altered by the vote of a majority of the whole Board of Directors at any meeting provided that notice of such proposed amendment shall have been given in the notice given to the Directors of such meeting. Such authority in the Board of Directors is subject to the power of the stockholders to change or repeal any By-laws by a majority vote of the stockholders present and represented at any annual meeting or at any special meeting called for such purpose, and the Board of Directors shall not repeal or alter any By-laws, other than By-law 24A, adopted by the stockholders. - --------------------- EX-4 6 SEVENTH SUPPLEMENTAL INDENTURE, dated as of ______________, 199_, between CITIZENS UTILITIES COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal administrative offices at High Ridge Park, Building No. 3, Stamford, Connecticut 06905, to CHEMICAL BANK, a New York banking corporation, as Trustee (herein called the "Trustee"), having its principal corporate trust office at 450 West 33rd Street, New York, New York 10001. RECITALS WHEREAS, the Company has entered into an Indenture dated as of August 15, 1991 (the "Indenture"), with the Trustee to provide for the issuance from time to time of the Company's debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series; and WHEREAS, the Company has entered into a First Supplemental Indenture dated as of August 15, 1991 (the "First Supplemental Indenture") with the Trustee to establish the form and terms of a series of Securities designated "8.45% Debentures Due 2001"; and WHEREAS, the Company has entered into a Second Supplemental Indenture dated as of January 15, 1992 (the "Second Supplemental Indenture") with the Trustee to establish the form and terms of a series of Securities designated "7.45% Debentures Due 2004"; and WHEREAS, the Company has entered into a Third Supplemental Indenture dated as of April 15, 1994 (the "Third Supplemental Indenture") with the Trustee to establish the form and terms of a series of Securities designated "7.60% Debentures Due 2006"; and WHEREAS, the Company has entered into a Fourth Supplemental Indenture dated as of October 1, 1994 (the "Fourth Supplemental Indenture") with the Trustee to establish the form and terms of a series of Securities designated "7.68% Debentures Due 2034"; and WHEREAS, the Company has entered into a Fifth Supplemental Indenture dated as of June 15, 1995 (the "Fifth Supplemental Indenture") with the Trustee to establish the form and terms of a series of Securities designated "7.45% Debentures Due 2035"; WHEREAS, the Company has entered into a Sixth Supplemental Indenture dated as of October 15, 1995 (the "Sixth Supplemental Indenture") with the Trustee to establish the form and terms of a series of Securities designated as "7% Debentures Due 2025"; and WHEREAS, Section 901 of the Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Indenture for, among other things, the purpose of establishing the form and terms of the Securities of any series as permitted in Sections 201 and 301 of the Indenture and adding to the covenants of the Company for the benefit of the Holders of any series of Securities; and WHEREAS, the Company by corporate action duly taken has authorized the issuance of a seventh series of Securities designated as the _% Debentures Due ____ (hereinafter sometimes called the "Debentures"), which series is limited in aggregate principal amount to $___________, such Debentures to contain such provisions as have been caused to be determined by or at the direction of, the Board of Directors of the Company and as are set forth in this Seventh Supplemental Indenture to the Indenture; and WHEREAS, all conditions have been complied with, all actions have been taken and all things have been done which are necessary to make the Debentures, when executed by the Company and authenticated by or on behalf of the Trustee and when delivered as herein and in the Indenture provided, the valid obligations of the Company, and to make this Seventh Supplemental Indenture a valid and binding supplemental indenture. NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debentures by the holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Debentures, as follows: Section 1. Definitions. For all purposes of this Seventh Supplemental Indenture, except as otherwise herein expressly provided or unless the context otherwise requires: (1) terms used herein in capitalized form and defined in the Indenture shall have the meanings specified in the Indenture; (2) the words "herein", "hereof" and "hereto" and other words of similar import used in this Seventh Supplemental Indenture refer to this Seventh Supplemental Indenture as a whole and not to any particular Section or other subdivision of this Seventh Supplemental Indenture; (3) the provisions of this Seventh Supplemental Indenture shall be read in conjunction with the provisions of the Indenture only with respect to the Debentures and the provisions of the Indenture and the First, Second, Third, Fourth, Fifth and Sixth Supplemental Indentures shall not be modified by this Seventh Supplemental Indenture with respect to any series of the Securities outstanding or to be outstanding under the Indenture, other than the Debentures; and (4) terms defined in this Seventh Supplemental Indenture shall apply only to this Seventh Supplemental Indenture and the Debentures hereunder, and such definitions shall not apply to any supplemental indenture other than this Seventh Supplemental Indenture or to any Securities outstanding or to be outstanding under the Indenture, other than the Debentures. Except as otherwise expressly provided or unless the context otherwise requires, "Seventh Supplemental Indenture" means this instrument as originally executed or, if amended or supplemented pursuant to the applicable provisions of the Indenture, as amended or supplemented. Section 2. Forms of the Debentures. The Debentures shall be in substantially the form set forth in Exhibit A to this Seventh Supplemental Indenture, as such form may be completed pursuant to Section 3 hereof, the terms of which Exhibit A are herein incorporated by reference and made a part of this Seventh Supplemental Indenture. Section 3. Terms of the Debentures. The terms of the Debentures shall be as follows: (1) the Securities to be issued under the Indenture and this Seventh Supplemental Indenture shall be the Debentures and shall be designated as the "_% Debentures Due ____"; (2) the Debentures shall constitute a single series of the Securities under the Indenture, which series is limited in aggregate principal amount to $___________; (3) so long as any Debentures are registered in the name of CEDE & Co., or any other nominee of The Depository Trust Company, and are intended to be Book-Entry Securities, the provisions of Section 311 of the Indenture shall apply to such Debentures. Thereafter the Debentures may be subjected to the requirements of a successor book-entry securities system that may be adopted by the Company in accordance with the provisions of the Indenture and this Seventh Supplemental Indenture; (4) interest on each of the Debentures shall be payable at the rate per annum specified in the designation of the Debenture from ____________, 199_, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually, on ____ and ___________ in each year, commencing on _________, 199_. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the Person in whose name such Debenture (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the _______ or ________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date by virtue of having been such a Holder and shall be paid by the Company as provided in Section 307 of the Indenture; (5) unless otherwise provided with respect to a Book- Entry Security or pursuant to any successor book-entry security system or similar system, payments of interest will be made by check mailed to the Holder of each Debenture at the address shown in the Security Register or, at the option of the Holder, to such other place in the United States of America as the Holder shall designate to the Trustee in writing. The principal amount of the Debentures will be paid at Maturity by check against presentation of the Debentures at the office or agency of Chemical Bank, as Trustee, in New York, New York, or such other address in New York, New York, as the Trustee shall designate by written notice to the Holders of the Debentures; (6) the Debentures shall be issued in registered form only and in denominations of $1,000 or any amount in excess thereof which is an integral multiple of $1,000; (7) principal and interest on the Debentures shall be payable in the coin or currency of the United States of America, which, at the time of payment, is legal tender for public and private debts; and (8) the Debentures shall be subject to defeasance, at the Company's option, as provided for in Sections 1302 and 1303 of the Indenture. Upon the Company's exercise of the option to effect such defeasance under Section 1302 and 1303 of the Indenture in accordance with and subject to the terms thereof, the Company shall be released from its obligations with respect to the Debentures as provided in the applicable Section and other relevant provisions of the Indenture. Section 4. No Redemption by the Company. The Debentures will not be redeemable at the option of the Company prior to maturity and will not be subject to any sinking fund. Section 5. Amendment to Indenture for Purposes of Seventh Series of Debentures. For all purposes of the Debentures and for no other purposes, subsection (4) of Section 501 shall read: "(4) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of a series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of a majority in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or" For all purposes of the Debentures and for no other purposes, the first paragraph of Section 502 shall read: "If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of a majority in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof) of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable." For all purposes of the Debentures and for no other purposes, subsection (2) of Section 507 shall read: "(2) the Holders of a majority in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;" For all purposes of the Debentures and for no other purposes, subsection (5) of Section 507 shall read: "(5) no direction inconsistent with such written request has been given to the Trustee during such 90-day period by the Holders of 66-2/3% in principal amount of the Outstanding Securities of that series." Section 6. Incorporation of Indenture. From and after the date hereof, the Indenture, as supplemented by this Seventh Supplemental Indenture, shall be read, taken and construed as one and the same instrument with respect to the Debentures. Section 7. Acceptance of Trust. The Trustee accepts the trusts created by the Indenture, as heretofore supplemented by the First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture, Fourth Supplemental Indenture, Fifth Supplemental Indenture and Sixth Supplemental Indenture and as hereby supplemented by this Seventh Supplemental Indenture, and agrees to perform the same upon the terms and conditions in the Indenture, as so supplemented. Section 8. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Seventh Supplemental Indenture, such provision of the Act shall control. If any provision of this Seventh Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, such provision of the Act shall be deemed to apply to this Seventh Supplemental Indenture only as so modified and if not so excluded, as the case may be. Section 9. Governing Law. This Seventh Supplemental Indenture, and the Debentures, shall be governed by and construed in accordance with the laws of the State of New York. Section 10. Recitals. The recitals contained in the Indenture, this Seventh Supplemental Indenture and the Debentures, except the Trustee's certificate of authentication, shall be taken as statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of the Indenture, as supplemented by this Seventh Supplemental Indenture. Section 11. Amendments. Notwithstanding any other provisions hereof, all amendments to the Indenture made hereby shall have effect only with respect to the Debentures, and not with respect to the Securities of any other series created subsequent to the date hereof. Section 12. Counterparts. This Seventh Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Seventh Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the date first above written. CITIZENS UTILITIES COMPANY By:______________________________ Title: Vice President and Treasurer Attest: - -------------------------------- Secretary CHEMICAL BANK, as Trustee By:______________________________ Title: Vice President Attest: - ------------------------------- Senior Trust Officer -17- County of Fairfield ) ) ss.: State of Connecticut ) On the day of __________, 199_, before me personally came Robert DeSantis, to me known, who, being by me duly sworn, did depose and say that he is Vice President and Treasurer of CITIZENS UTILITIES COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporations; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. ---------------------------------- Notary Public, State of Connecticut County of New York ) ) ss.: State of New York ) On this day of _________ in the year of 199_ before me personally came _____________________________________________, to me personally known, who being by me duly sworn did depose and say that he resides at ______________________________________, that he is Vice President of CHEMICAL BANK, one of the corporations described in and which executed the foregoing indenture; that he knows the seal of said corporation; that the seal affixed to said instrument opposite the execution thereof on behalf of said corporation is the corporate seal of said corporation; that said instrument was signed and said corporate seal was so affixed on behalf of said corporation by authority and order of its board of directors; that he signed his name thereto by like authority; and he acknowledged said instrument to be his free act and deed and the free act and deed of said Chemical Bank. IN WITNESS WHEREOF I have hereunder set my hand and affixed my official seal, at New York in said State of New York, the day and year first above written. ---------------------------------- Notary Public, State of New York CITIZENS UTILITIES COMPANY TO CHEMICAL BANK (Trustee) SEVENTH SUPPLEMENTAL INDENTURE Dated as of _____________, 199_ Supplemental to the Indenture Dated as of August 15, 1991 EX-5 7 WINTHROP, STIMSON, PUTNAM & ROBERTS One Battery Park Plaza New York, New York 10004-1490 Telephone: 212-858-1000 Telefax: 212-858-1500 Telex: 62854 WINSTIM June 20, 1996 Citizens Utilities Company High Ridge Park Stamford, Connecticut 06905 Gentlemen: As special counsel to Citizens Utilities Company, a Delaware corporation (the "Company"), in connection with the registration under the Securities Act of 1933 (the "Act"), of up to $904,125,000 aggregate amount of the Company's debt and equity securities (the "Securities") to be issued and sold by the Company from time to time in accordance with Rule 415 under the Act, we have examined the registration statement on Form S-3 (the "Registration Statement") in regard thereto, filed under the Act, including the prospectus which is a part thereof, and such other documents as we have considered necessary for the purposes of this opinion. Based upon such examination, we hereby advise you that: (1) We are of the opinion that the Company is a corporation validly organized and duly existing under the laws of the State of Delaware. We are further of the opinion that, in the event that an offering of Securities shall be made from time to time (the "Offered Securities") in accordance with the Registration Statement, as amended and supplemented from time to time and when the steps enumerated in Paragraph (2) hereof shall have been taken, the Offered Securities will be validly issued and binding obligations of the Company. (2) The steps which are referred to in the foregoing Paragraph (1) hereof are: (a) It shall be determined that the public service commissions, or other regulatory agencies or bodies, or other political entities relating to public utilities matters of the pertinent states shall be without jurisdiction, or shall have declined to exercise jurisdiction over the issuance and/or sale of the Offered Securities, or shall have issued an appropriate order approving and authorizing the issuance and/or sale of the Offered Securities and such order shall be in full force and effect; (b) The Board of Directors of the Company shall have taken the appropriate steps to authorize the issuance and sale of the Securities; (c) An appropriate order of the Federal Energy Regulatory Commission with respect to the issuance and sale of the Offered Securities shall have been issued and shall be in full force and effect; (d) The applicable provisions of the Act shall have been complied with; (e) If the Offered Securities are debt securities, a supplemental indenture to the Indenture dated as of August 15, 1991 relating to the Offered Securities (the "Indenture") shall have been duly authorized, executed and delivered in accordance with the terms of said Indenture and said Indenture (as supplemented and to be supplemented) and shall have been qualified under the Trust Indenture Act of 1939; (f) The Offered Securities shall have been duly authorized, executed and delivered and, if debt securities, shall have been authenticated in accordance with terms of said Indenture (as supplemented and to be supplemented); and (g) The Offered Securities shall have been duly issued and paid for. We are members of the bar of the State of New York. In rendering the forgoing opinion we express no opinion as to laws other than the laws of the State of New York, the Delaware General Corporation Law and the Federal laws of the United States. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference made to our firm under "Legal Opinions" in the prospectus constituting part of the Registration Statement. In giving such consent, we do not hereby admit that we are within the category of persons whose consent is required under section 7 of the Act or the rules and regulations of the Securities and Exchange Commission. Very truly yours, /s/ Winthrop, Stimson, Putnam & Roberts - --------------------------------------- EX-12 8 CITIZENS UTILITIES COMPANY & SUBSIDARIES Ratio of Earnings to Combined Fixed Charges and Dividends on Convertible Preferred Securities and Ratio of Earnings to Fixed Charges (In Thousands) Ratio of Earnings to Combined Fixed Charges and Dividends on Convertible Prefer- red Securities Ratio of Earnings to Fixed Charges ------------------ ------------------------------------------------------------ Twelve months ended March 31,1996 For the years ended December 31, ------------------------------------ ------------------------------------------
Proforma Actual Proforma Actual 1995 1994 1993 1992 1991 -------- -------- -------- ------ ------ ------ ------ ------ ------ Net Income per Consolidated State- ment of Income $175,586 $164,488 $181,039 $165,741 $159,536 $143,997 $125,630 $115,013 $112,354 Taxes based on income or profits 86,496 72,365 83,196 71,588 66,817 64,323 52,298 43,767 43,571 -------- -------- -------- -------- -------- -------- -------- -------- -------- Earnings,before income taxes 262,082 236,853 264,235 237,329 226,353 208,320 177,928 158,780 155,925 Fixed charges 97,110 95,565 88,510 93,535 94,227 77,458 40,984 41,676 35,987 -------- -------- -------- -------- -------- -------- -------- -------- -------- Earnings before income taxes and fixed charges $359,192 $332,418 $352,745 $330,864 $320,580 $285,778 $218,912 $200,456 $191,912 ======== ======== ======== ======== ======== ======== ======== ======== ======== Ratio of Earnings to Fixed charges 3.7 3.5 4.0 3.5 3.4 3.7 5.3 4.8 5.3 ===== ===== ===== ===== ===== ===== ===== ===== =====
EX-23 9 Independent Auditor's Consent ----------------------------- The Board of Directors Citizens Utilities Company: We consent to the use of our report incorporated by reference to our firm under the heading "Experts" in the Prospectus. KPMG PEAT MARWICK LLP New York, New York June 27, 1996 EX-25 10 ------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF ---------------------------------------- CHEMICAL BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) --------------------------------------------- CITIZENS UTILITIES COMPANY (Exact name of obligor as specified in its charter) Delaware 06-0619596 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) High Ridge Park, Bldg. No.3 P. O. Box 3801 Stamford, Connecticut 06905 (Address of principal executive offices) (Zip Code) ------------------------------------------ Debt Securities (Title of the indenture securities) ----------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 33-84460, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, Chemical Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 3rd day of May, 1996. CHEMICAL BANK By Thomas J. Foley Vice President Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 33-84460, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, Chemical Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 3rd day of May, 1996. CHEMICAL BANK By /s/ Thomas J. Foley Thomas J. Foley Vice President -----END PRIVACY-ENHANCED MESSAGE-----