THE CITIZENS EXECUTIVE DEFERRED SAVINGS PLAN


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                                      INDEX
      Section                                                           Page No.
      -------                                                           --------

SECTION 1:   Purpose                                                          1

SECTION 2:   Definitions                                                      1

SECTION 3:   Administration                                                   4

SECTION 4:   Deferrals                                                        5

SECTION 5:   Company Matching Credits                                         6

SECTION 6:   Growth of Accounts                                               7

SECTION 7:   Distribution                                                     8

SECTION 8:   Hardship Withdrawals                                             9

SECTION 9:   Discretionary Payment                                           10

SECTION 10:  Change in Control                                               11

SECTION 11:  Beneficiary Designation                                         12

SECTION 12:  General Provisions                                              12

SECTION 13:  Withholding                                                     13

SECTION 14:  Amendment, Suspension, or Termination                           14


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Section 1. Purpose

            1.1 The purpose of The Citizens Executive Deferred Savings Plan (the
      "Plan") is to (a) provide incentives and rewards to employees who occupy
      certain management and highly compensated positions; (b) assure that the
      Company's compensation programs for senior management are in alignment
      with the strategic direction of the Company; and (c) assist the Company in
      attracting, retaining, and motivating employees of high caliber and
      experience.

Section 2. Definitions

            2.1 "Account" or "Accounts" shall mean each of a Participant's
      Deferral Account, and Company Matching Account or any such Accounts or all
      of such Accounts, as the context requires.

            2.2 "Account Balance" shall mean (a) the sum of (1) the amounts
      credited to a Participant's Deferral Account, (2) the amounts credited to
      a Participant's Company Matching Account, and (3) earnings and losses
      credited to a Participant's Accounts, minus (b) distributions from a
      Participant's Accounts, including without limitation, Hardship Withdrawals
      from a Participant's Deferral Account, and forfeitures.

            2.3 "Administrative Committee" shall mean the committee appointed by
      the Plan Committee to supervise the day to day operation of the Plan.

            2.4 "Beneficiary" shall mean the person or persons designated by a
      Participant to receive the Participant's Account Balance upon the death of
      the Participant or a Participant's deemed beneficiary pursuant to Section
      11 hereof.

            2.5 "Board" shall mean the Board of Directors of the Company.


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            2.6 "Change in Control" shall mean the occurrence of any of the
      following:

            (a)   A "change in control" as such term is used in Item 6(e) of
                  Schedule 14A of Regulation 14A promulgated under the
                  Securities Exchange Act of 1934, as in effect at the date
                  hereof (the "Act"); or

            (b)   If there has occurred a change in control as the term
                  "control" is defined in Rule 12b-2 promulgated under the Act;
                  or

            (c)   When any "person" (as such term is defined in Sections 3(a)(9)
                  and 13(d)(3) of the Act) becomes a beneficial owner, directly
                  or indirectly, of securities of the Company representing 20%
                  or more of the Company's then outstanding securities having
                  the right to vote on the election of directors; or

            (d)   If the shareholders of the Company approve a plan of complete
                  liquidation of the Company; or

            (e)   A change in the ownership of a substantial portion of the
                  assets of the Company (within the meaning of Section
                  280G(b)(2) of the Internal Revenue Code of 1986, as amended).

            2.7 "Company" shall mean Citizens Utilities Company, its successors
      and such of its subsidiary companies as shall be designated by the Board
      to participate in the Plan.

            2.8 "Company Matching Account" shall mean the separate account
      maintained for a Participant on the books of the Company reflecting all
      Company Matching Credits adjusted for earnings and losses thereon.


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            2.9 "Company Matching Credit" shall have the meaning set forth in
      Section 5.1.

            2.10 "Compensation" shall mean a Participant's base salary for a
      Plan Year without reduction for Deferrals, including before-tax
      contributions made by a Participant to the Company's 401(k) Plan and
      contributions to any plan maintained by the Company pursuant to Section
      125 of the Internal Revenue Code of 1986, as amended (the "Code").

            2.11 "Deferral" shall mean the amount credited to a Participant's
      Deferral Account for a Plan Year to reflect Compensation otherwise payable
      to a Participant during such Plan Year which such Participant has elected
      to defer pursuant to Section 5.

            2.12 "Deferral Account" shall mean the separate account maintained
      for a Participant on the books of the Company to reflect Deferrals
      (adjusted for earnings and losses thereon).

            2.13 "Disability" shall mean a Participant's inability to engage in
      the customary activities required by his employment by reason of any
      medically determinable physical or mental impairment as certified by a
      physician acceptable to the Plan Committee.

            2.14 "Effective Date" shall mean January 1, 1996.

            2.15 "Eligible Employee" shall mean any individual employed by the
      Company with a base compensation of $100,000 or more who is actively
      employed by the Company on December 31 of the year preceding the Plan Year
      of Deferral.

            2.16 "401(k) Plan" shall mean The CUC 401(k) Employee Benefit Plan.

            2.17 "Participant" shall mean an Eligible Employee who elects to
      make Deferrals for the Plan Year.


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            2.18 "Plan" shall mean The Citizens Executive Deferred Savings Plan.

            2.19 "Plan Committee" shall mean the Compensation Committee of the
      Board.

            2.20 "Plan Year" shall mean the period commencing on the Effective
      Date and ending on December 31, 1996 and thereafter, the calendar year.

          2.21 "Retirement" shall mean termination of employment after attaining
    eligibility for a retirement benefit under the terms of the Citizens Pension
    Plan.

            2.22 "Termination for Cause" or "Terminated for Cause" shall mean
      any of the following:

          (a)   The Participant shall have willfully failed to perform any of
                his material obligations as an employee of the Company and shall
                have failed to cure such failure within ten (10) days after
                receiving written notice thereof from the Company; or

          (b)   The Participant shall have committed an act of fraud, theft or
                dishonesty which, in the reasonable opinion of the Company, is
                likely to result in financial harm to the Company; or

          (c)   The Participant shall be convicted of (or pleaded nolo
                contendere to) any felony or misdemeanor involving moral
                turpitude, which misdemeanor might, in the reasonable opinion of
                the Company, cause embarrassment to the Company.

Section 3. Administration

            3.1 The Plan Committee shall retain overall supervisory authority
      and responsibility for the Plan, and shall appoint the Administrative
      Committee. The Plan shall be administered by the Administrative Committee.
      The Administrative Committee shall have full power and authority to


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      construe and interpret the Plan, establish and amend administrative
      regulations to further the purposes of the Plan, and take any other action
      necessary to administer the Plan. The Plan Committee's and the
      Administrative Committee's decisions, actions, and interpretations
      regarding the Plan shall be final and binding upon all Participants and
      Beneficiaries.

            3.2 The Administrative Committee shall consist of not less than
      three (3) members. The Administrative Committee shall act by vote or
      written consent of a majority of its members. Members of the
      Administrative Committee who are either eligible to become Participants or
      who are Participants may vote on or participate in any matter affecting
      the administration of the Plan, provided however, that no member of the
      Administrative Committee may vote on or participate in a request for a
      Hardship Withdrawal to such member or any other matter concerning the
      benefits of such member.

            3.3 The Administrative Committee shall: (a) notify employees who are
      eligible to become a Participant for a Plan Year; (b) formulate and
      recommend to the Plan Committee such changes in the Plan as may facilitate
      the administration of the Plan; (c) value Accounts, and maintain Accounts
      and records of Deferrals, Company Matching Credits and earnings and losses
      thereon, payment of Account Balances, and Beneficiary designations; (d)
      prepare communications to Participants and Beneficiaries; (e) prepare
      reports and data required by the Company; (f) determine Hardship
      Withdrawals; (g) obtain necessary consents and approvals; (h) obtain any
      data requested by the Plan Committee; and (i) take any other actions
      requested by the Plan Committee or as are otherwise necessary or
      appropriate, as determined by the Administrative Committee, for effective
      implementation and administration of the Plan.

Section 4. Deferrals

            4.1 Each employee who is eligible to become a Participant for a Plan
      Year may become a Participant for such Plan Year (or, during the first
      year of employment, the portion thereof after electing to participate) by
      electing, prior to the commencement of the Plan Year or for the first year
      of employment, within 30 days after commencement of employment on such


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      form as shall be provided to the Participant by the Administrative
      Committee, to make Deferrals for such Plan Year. A Participant's Deferral
      for a Plan Year shall not exceed 50% of the Participant's Compensation for
      such Plan Year; provided however that such 50% limit shall be reduced by
      the before-tax contributions, if any, made by the Participant for such
      Plan Year to the 401(k) Plan for such year. A Participant's Deferral for a
      Plan Year (or a portion thereof) shall not be less than $1,000.

            4.2 Each election of Deferral shall be effective only in the Plan
      Year to which such election of Deferral applies. Elections to make
      Deferrals for a Plan Year and the amount of such Deferrals for such Plan
      Year shall be irrevocable.

            4.3 A Participant's Deferrals shall be credited to a Participant's
      Deferral Account in accordance with procedures determined by the
      Administrative Committee.

Section 5. Company Matching Credits

            5.1 Effective for each Plan Year, the Company shall accrue a Company
      Matching Credit on behalf of each Participant who elects to make Deferrals
      for such Plan Year. For purposes of the Plan "Company Matching Credit"
      shall mean the amount credited to a Participant's Company Matching Account
      for a Plan Year based on a rate determined by the Board of Directors at
      its discretion. The Company Matching Credit may be represented by a
      hypothetical amount in shares of Citizens Utilities Company Series B stock
      or such other property as the Board may determine at its discretion.
      Notwithstanding the foregoing provisions of this Section 5.1, the Company
      Matching Credit for a Plan Year shall be reduced (but not below zero) by
      any Company Matching Contributions (as defined under the 401(k) Plan) made
      for the Participant for such Plan Year under the 401(k) Plan in respect of
      before-tax contributions.

            5.2 Company Matching Credits, if any, for a Plan Year shall be
      accrued in each Participant's Company Matching Account on or about the
      time that the Company Matching Contribution (as defined under the 401(k)
      Plan) for such Plan Year is made to the 401(k) Plan.


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      Upon attaining the age of 55 years, a Participant may elect to transfer
      amounts from his/her "Company Matching Account" to any of the investment
      categories then available and/or elect to have participating Company
      Matching Credits invested in the investment categories elected for their
      elective Deferred Account.

            5.3 Subject to Section 5.4 below, a Participant shall be vested in
      Company Matching Credits and the earnings and losses accrued in his/her
      Company Matching Account upon the earliest of the following events: (a)
      retirement, or (b) completion of five years of service. A Participant is
      always fully vested in salary deferrals and earnings and losses on salary
      deferrals.

            Notwithstanding the foregoing, (a) in the event of a Change in
      Control, a participant shall be deemed to be 100% vested in his/her
      Company Matching Account, and (b) a Participant whose employment by the
      Company ceases on account of death or Disability shall be 100% vested in
      his/her Company Matching Account. For purposes of this Section 5.3, the
      term Years of Service shall have the same meaning and shall be calculated
      in the same manner as set forth under the 401(k) Plan.

            5.4 Notwithstanding anything set forth in Section 5.3 above, in the
      event that a Participant's employment with the Company is Terminated for
      Cause, then such Participant shall be deemed to have forfeited any and all
      non-vested Company Matching Credits and earnings, gains and losses thereon
      theretofore accrued in his/her Company Matching Account.

Section 6. Growth of Accounts

            6.1 Subject to Section 6.3 below and Section 5.1, a Participant's
      Deferral and Company Matching Accounts shall be increased by the amount of
      income and gains and reduced by the amount of losses which would be
      realized if the amounts credited to each such account were invested in one
      or more investment mutual funds made available by the Plan Committee under
      the Plan or in shares of Citizens Utilities Company Series B stock, as
      elected by the Participant or for the company matching accounts, as
      determined by the Board of Directors.


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      Expenses incurred in connection with any such investment mutual funds
      shall be deducted from a Participant's Accounts. Investment elections
      shall be made in multiples of five percent (5%) of the amount of the
      Participant's Deferral. Any investment election shall be made on a form
      prescribed by the Administrative Committee. Notwithstanding anything to
      the contrary set forth herein, in no event shall the Company, the Plan
      Committee or the Administrative Committee be responsible for and shall not
      be held liable for the investment performance of any investment made
      available hereunder.

            6.2 Subject to Section 6.3, a Participant shall be permitted to
      change his/her deemed investment election with regard to existing and
      future balances in his/her Deferral Account one (1) time during each
      calendar quarter. Any such change in investment election shall be on such
      form as prescribed by the Administrative Committee and in accordance with
      such rules and procedures prescribed by the Administrative Committee. Upon
      attaining the age of 55 years, a participant may elect to transfer amounts
      from his Company Matching Account to any of the other investment
      categories then available and/or redirect any Company Matching Credits to
      any of the investment categories then available.

            6.3 Notwithstanding anything to the contrary set forth herein, the
      Company shall not be required to invest all or any portion of a
      Participant's Deferral Account or Company Matching Account, in any of the
      investment funds set forth in Section 6.1, but may invest such Accounts in
      any manner it may determine, or not invest such Accounts.

Section 7. Distribution

            7.1 Except as set forth in Sections 8, 9 and 10, a Participant shall
      irrevocably elect in writing, and file with the Administrative Committee,
      at the same time as such Participant makes any election to defer
      Compensation, the period of deferral with respect to such election. A
      Participant may elect to defer until termination of employment or for a
      fixed period not exceeding 10 years, subject to the minimum required
      period of deferral, which is two full calendar years following the year of
      deferral. Notwithstanding the foregoing, the two-year minimum deferral


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      period shall not apply to payments made as a result of death, Disability,
      Retirement, or pre-Retirement termination.

            7.2 Except as set forth in Sections 8, 9 and 10, a Participant shall
      irrevocably elect in writing, and file with the Administrative Committee,
      at the same time as any election to defer, a method of payment of vested
      amounts deferred under this Plan from the following methods:

            (a)   Payment of vested amounts credited to the Participant's
                  Account in a specified number of annual installments, the
                  first installment to be paid in January of the year following
                  the year in which the Participant terminates employment due to
                  his retirement, disability or death.

            (b)   Payment of vested amounts credited to the Participant's
                  Account in a single lump sum in the month and year specified
                  by the Participant, or if not specified by the Participant in
                  January of the year next following the year of the
                  Participant's termination for Retirement, Disability, or
                  death.

            (c)   Payment in a lump sum as soon as administratively feasible
                  upon termination prior to age 55 with less than five (5) years
                  of service, after the date of termination.

Section 8. Hardship Withdrawals

            8.1 The Administrative Committee may, in its sole discretion, permit
      a Participant to withdraw all or a portion of the Deferrals credited to
      his/her Deferral Account without regard to earnings thereon if such
      Participant demonstrates a Hardship (as defined in Section 8.2 below) to
      the satisfaction of the Administrative Committee. Hardship Withdrawals
      from a Participant's Company Matching Account shall not be permitted. In
      determining whether to grant a Participant's request for a Hardship
      Withdrawal, the Administrative Committee may consider the resources
      currently available to a Participant and any resources that may in the
      future become available to the Participant.


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          8.2 For purposes of the Plan, the term "Hardship" means a circumstance
    resulting from an immediate and heavy financial need of the Participant and
    arising from an emergency, and shall mean, (a) extraordinary medical
    expenses, (b) the purchase of a primary residence, (c) college education
    expenses for a member of the Participant's immediate family, or (d) any
    other event beyond the Participant's control, as determined in each such
    event, by the Administrative Committee in its discretion.

            8.3 A withdrawal on account of Hardship shall only be granted if the
      Participant demonstrates to the Administrative Committee's satisfaction,
      by submitting written documentation, incorporating such statements and
      evidence that the Administrative Committee deems to be relevant, that the
      Participant's circumstances satisfy the definition of Hardship set forth
      in Section 8.2 and that the Hardship withdrawal is necessary to satisfy
      the Participant's financial need.

            8.4 Hardship Withdrawals shall be limited to the amount, determined
      by the Administrative Committee, in its sole discretion, necessary to
      relieve the Participant's Hardship. Hardship Withdrawals shall be paid as
      soon as practicable after the Administrative Committee's approval of the
      Participant's request. A Participant's Deferral Account shall be reduced
      by the amount of any Hardship Withdrawals distributed to the Participant.

            8.5 Hardship withdrawals shall be allocated by class year spread
      across Vested Account Balances.

Section 9. Discretionary Payment

            9.1 Notwithstanding anything to the contrary set forth herein, the
      Plan Committee may, in its sole and absolute discretion, direct an
      immediate payment to any or all the Participants or their beneficiary(ies)
      of all of his/her vested Account Balances in cash, if the Plan Committee
      determines that such action is in the best interest of either the Company,
      the Participant(s) or their Beneficiary(ies).


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      9.2 In the event that the Plan Committee shall so direct an immediate
payment, in accordance with Section 9.1, then:

      (a)   The vested Account Balances to be paid shall be determined by the
            Plan Committee so as to reflect fairly and equitably appropriate
            earnings since the last preceding valuation and so as to reflect
            fairly and equitably such other facts and circumstances as the Plan
            Committee deems appropriate;

      (b)   Compensation which was deferred or was to be deferred with respect
            to the Plan Year in which such payment occurs shall be paid when
            otherwise payable (such amounts that would otherwise have been
            payable prior to the date of such payment or distribution shall be
            paid as soon as practicable thereafter);

      (c)   In the event that vested Account Balances are not paid or made
            available to a Participant in accordance with Section 9.1 when
            otherwise due, then such Participant may file a claim for such
            payment and, if such Participant is successful, then the Company
            shall reimburse such Participant for reasonable attorneys' fees
            actually paid by such Participant in enforcing such Participant's
            rights to such payment; and

      (d)   In the event that vested Account Balances are not paid or made
            available to Participants in accordance with Section 9.1 when
            otherwise due, then with respect to such unpaid amounts, interest
            will be credited each month on the last day of the month from the
            date it was otherwise due until the date it is actually paid at a
            rate equal to the prime rate in effect at the PNC Bank, Pittsburgh,
            Pennsylvania, on the last business day of each month.


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Section 10. Change in Control

            10.1 Notwithstanding anything to the contrary set forth herein, (a)
      a Participant's Account Balance under the Plan and (b) all Deferrals and
      Company Matching Credits which have been accrued but not yet credited to a
      Participant's Accounts, shall be paid to each Participant in a lump sum on
      the occurrence of a Change in Control or as soon thereafter as
      practicable, but in no event later than five (5) days after the occurrence
      of the Change in Control, unless, in the opinion of the Plan Committee, it
      is not in the best interests of the Company, the Participants and their
      Beneficiaries to cause such payment to be made and to invoke the foregoing
      provisions of this Section 10.1. In the event of any such distribution,
      the amounts of each Participant's Account Balance shall be determined by
      the Plan Committee (which, for this purpose, shall be comprised of members
      of the Board prior to the Change in Control) so as to reflect fairly and
      equitably appropriate interest and dividends since the last preceding
      valuation and so as to reflect fairly and equitably such other facts and
      circumstances as the Plan Committee deems appropriate.

Section 11. Beneficiary Designation

            11.1 Each Participant shall file with the Administrative Committee a
      written designation of a Beneficiary on such form as may be prescribed by
      the Administrative Committee. A Participant may, from time to time, amend
      or revoke the designation of Beneficiary.

            11.2 If a Participant fails to designate a Beneficiary or if a
      Participant's designation of Beneficiary fails for any reason, then the
      Beneficiary or Beneficiaries designated by the Participant, or deemed to
      have been designated by the Participant under the 401(k) Plan shall be
      deemed to be the Participant's Beneficiary. If a Participant does not
      participate in the 401(k) Plan, or if the Participant participates in the
      401(k) Plan and has not designated or been deemed to have designated a
      Beneficiary thereunder, then the Beneficiary or Beneficiaries of such
      Participant under the Company's defined benefit plan (the Retirement Plan)
      shall be deemed to be such Participant's Beneficiary. If a Participant
      does not participate in the Company's Retirement Plan, or if a Participant
      participates in the Retirement Plan and has not designated or been deemed


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      to have designated a Beneficiary thereunder, then the Beneficiary or
      Beneficiaries of such Participant under the Company's Group Life Insurance
      Plan shall be deemed to be such Participant's Beneficiary. If a
      Participant does not participate in the Company's Group Life Insurance
      Plan, or participates in such Plan, but has not designated or been deemed
      to have designated a Beneficiary thereunder, and such Participant dies
      without designating a Beneficiary, then the Administrative Committee shall
      distribute such Participant's Account Balance to the Participant's estate.
      If a Beneficiary does not survive the Participant, then the Administrative
      Committee shall cause such Participant's Account Balance to be distributed
      to the Participant's estate. If the Beneficiary of a deceased Participant
      survives the Participant, and dies before such Participant's Account
      Balance is distributed, then the Plan Committee shall cause such
      Participant's Account Balance to be distributed to the Beneficiary's
      estate.

Section 12. General Provisions

            12.1 The rights of a Participant to the payment of deferred
      compensation as provided in the Plan shall not be assigned, transferred,
      pledged, or encumbered or be subject in any manner to alienation or
      anticipation. No Participant may borrow against his/her Account Balance.
      Accounts shall not be subject in any manner to anticipation, alienation,
      sale, transfer, assignment, pledge, encumbrance, charge, garnishment,
      execution or levy of any kind, whether voluntary or involuntary, including
      but not limited to any liability which is for alimony or other payments
      for the support of a spouse or former spouse, or for any other relative of
      any Participant. Any such attempted assignment or transfer shall be void.

            12.2 The Plan is intended to constitute an unfunded deferred
      compensation arrangement for a select group of management and highly
      compensated employees. Nothing contained in the Plan, and no action taken
      pursuant to the Plan, shall create or be construed to create a trust of
      any kind. The Company's obligations hereunder shall be an unfunded and
      unsecured promise to pay money in the future for tax purposes and for
      purposes of Title I of ERISA. A Participant's right to receive his/her
      Account Balance shall be no greater than the right of an unsecured general
      creditor of the Company. Account Balances shall be paid from the general
      funds of the Company,


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      and no special or separate fund shall be established and no segregation of
      assets shall be made to assure payment of such Account Balances.

            12.3 Nothing contained in the Plan shall give any Participant the
      right to continue in the employment of the Company, or affect the right of
      the Company to discharge a Participant.

            12.4 The Plan shall be construed and governed in accordance with the
      laws of the State of Connecticut.

Section 13. Withholding

            13.1 The Company shall deduct from all amounts paid under this Plan
      any taxes required to be withheld by any federal, state, or local
      government tax statutes. The Participants and their Beneficiaries,
      distributees, and personal representatives will be responsible for the
      payment of any and all federal, foreign, state, local, or other income or
      other taxes imposed on amounts paid under this Plan.

Section 14. Amendment, Suspension, or Termination

            14.1 The Plan Committee reserves the right to amend, suspend, or
      terminate the Plan at any time and for any reason; provided, however, that
      any amendment, suspension, or termination shall not adversely affect the
      rights of the Participants or Beneficiaries to receive Deferrals, vested
      Company Matching Credits, and earnings thereon credited to their accounts
      prior to such action. In the event the Plan is terminated, Account
      Balances shall be distributed to Participants and Beneficiaries, in a lump
      sum, as soon as practicable thereafter.


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Executed as of the 1st day of January, 1996.

                                      Citizens Utilities Company

                                      By: /s/ James D. Ranton
                                        ---------------------
                                         Vice President, Human Resources

                                      Attest: /s/
                                                 ------------------------
                                                        Secretary

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