<PAGE>
As filed with the Securities and Exchange Commission on October __, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
Consolidated Edison, Inc.
(Exact name of registrant as specified in its charter)
New York 4931
13-3965100
(State or Other Jurisdiction of (Primary Standard
Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code
Number) Identification Number)
4 Irving Place
New York, New York 10003
(212) 460-3900
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Joan S. Freilich
Senior Vice President
and Chief Financial Officer
4 Irving Place
New York, New York 10003
(212) 460-2818
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Peter J. O'Shea, Jr., Esq. and M. Douglas Dunn, Esq.
Senior Vice President Milbank, Tweed, Hadley & McCloy
and General Counsel 1 Chase Manhattan Plaza
Consolidated Edison, Inc. New York, New York 10005
4 Irving Place
New York, New York 10003
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement is declared effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is to be filed to register additional securities for an
offering pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. / /
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------
Title of Each Amount to be Proposed Maximum Proposed Maximum Amount of
Class Registered Offering Aggregate Registration Fee
of Securities to (1) Price Per Unit Offering Price (2) (3)
be Registered (2)
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------==================
<S> <C> <C> <C> <C>
Common Shares, 235,595,561 $33.10 $7,798,213,069 $793,440
$.10 Par Value Shares
- ---------------------------------------------------------------------------==================
(1) The maximum number of shares of Common Shares, par value $.10 per share,
of Consolidated Edison, Inc. issuable to holders of shares of Common
Stock, par value $2.50, of Consolidated Edison Company of New York, Inc.
("Con Edison") pursuant to the Agreement and Plan of Exchange described
herein.
(2) Pursuant to Rules 457(c) and 457(f)(1) of the Securities Act of 1933, as
amended, and solely for the purpose of calculating the registration fee,
the proposed maximum aggregate offering price is based on the product of
(a) 235,595,561 shares and (b) $33.10, the average of the high and low
prices of Con Edison's Common Stock as reported in the consolidated
reporting system on October 28, 1997.
(3) Pursuant to Rule 457(b) the required fee of $2,363,095 has been reduced by
$1,569,655, the amount paid with respect to the transaction on September
19, 1997 pursuant to Section 14a-6(i)(1) of the Securities Exchange Act of
1934, as amended, in connection with the filing of the preliminary proxy
materials for the transaction.
</TABLE>
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, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
[CON EDISON LETTERHEAD]
October 31, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders
of your Company on Friday, December 12, 1997 at 10:00 a.m. The meeting will be
held at the Company's headquarters, 4 Irving Place, New York, NY 10003.
The meeting will give you the opportunity to consider and vote on a
proposal to provide your Company with financial and regulatory flexibility
needed to engage effectively in competitive businesses while it continues to
operate its regulated electric, gas and steam utility business. The Board of
Trustees has unanimously approved a holding company structure for Con Edison in
which Con Edison will become a subsidiary of a holding company and holders of
Con Edison's common stock will become the holders of the holding company's
common stock. The Company's preferred stockholders will remain holders of Con
Edison's preferred stock. The holding company will be named Consolidated Edison,
Inc.
The meeting will also give you the opportunity to consider and vote on
a proposal to amend Con Edison's Certificate of Incorporation to change the
authorized number of Trustees to "not more than 16" from "not less than 13 nor
more than 20."
I encourage you to vote "FOR" each of the proposals. Please sign and
return your proxy card, whether or not you plan to attend the meeting, in the
enclosed postage-paid envelope. You may vote in person at the meeting even if
you previously sent in a proxy.
Every vote counts. Approval of the holding company proposal will
require the affirmative vote of the holders of two-thirds of the outstanding
shares of Con Edison's Common Stock and $5 Cumulative Preferred. An abstention
or failure to vote will have the same effect as a vote against the proposals.
Sincerely,
Eugene R. McGrath
<PAGE>
[CON EDISON LETTERHEAD]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
December 12, 1997
Dear Stockholder:
A Special Meeting of Stockholders of Consolidated Edison Company of New
York, Inc. ("Con Edison") will be held at the Company's headquarters, 4 Irving
Place, New York, NY 10003, on Friday, December 12, 1997 at 10:00 a.m.
for the following purposes:
1. To adopt a holding company structure for Con Edison in which Con
Edison will become a subsidiary of a holding company,
Consolidated Edison, Inc. (the "Holding Company"), pursuant to an
Agreement and Plan of Exchange that provides for all of the
outstanding shares of Con Edison's Common Stock to be exchanged
automatically on a share-for-share basis for shares of the
Holding Company's Common Stock, as more fully described in the
accompanying Proxy Statement and Prospectus (the "Holding Company
Proposal");
2. To authorize an amendment to Con Edison's Certificate of
Incorporation to change the authorized number of Trustees to "not
more than 16" from "not less than 13 nor more than 20" (the "Con
Edison Board Proposal"); and
3. To act upon such other matters as may properly come before the
meeting, or any adjournments or postponements of the meeting.
Holders of record of outstanding shares of Con Edison stock as of the
close of business on October 28, 1997, the record date, are entitled to receive
notice of the meeting. However, only holders of record of shares of Con Edison's
Common Stock and $5 Cumulative Preferred Stock (voting together as a single
class, the "Voting Stock") on the record date are entitled to vote at the
meeting.
If the Holding Company Proposal is implemented, a holder of record of Con
Edison's Common Stock on the record date who did not vote "FOR" the Holding
Company Proposal will be entitled to receive payment, in cash, of the fair value
of the holder's shares if the holder follows the procedures provided in Sections
623 and 910 of the New York Business Corporation Law (included in Exhibit D to
the accompanying Proxy Statement and Prospectus).
Please sign and return your proxy card in the enclosed postage-paid
envelope. Approval of the Holding Company Proposal will require the affirmative
vote of the holders of two-thirds of the outstanding shares of the Voting Stock.
The Con Edison Board Proposal must be approved by the affirmative vote of the
holders of a majority of the outstanding shares of the Voting Stock. An
abstention or failure to vote will have the same effect as a vote against the
proposals.
By Order of the Board of Trustees,
ARCHIE M. BANKSTON
Secretary
Dated: October 31, 1997
<PAGE>
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
CONSOLIDATED EDISON, INC.
PROXY STATEMENT AND PROSPECTUS
This Proxy Statement and Prospectus contains information relating to two
separate proposals to be voted upon at a Special Meeting of Stockholders of
Consolidated Edison Company of New York, Inc. ("Con Edison") to be held on
Friday, December 12, 1997 at 10:00 a.m. or at any adjournment or postponement of
the meeting (the "Special Meeting"). The Special Meeting will be held at Con
Edison's headquarters, 4 Irving Place, New York, NY 10003.
Proposal No. 1 - The "Holding Company Proposal" is to adopt a holding
company structure for Con Edison in which, pursuant to an Agreement and
Plan of Exchange (the "Plan of Exchange"), Con Edison will become a
subsidiary of Consolidated Edison, Inc. (the "Holding Company") and the
outstanding shares of Con Edison's Common Stock, $2.50 par value ("Con
Edison Common Stock") will be exchanged automatically on a share-for-share
basis (the "Share Exchange") for shares of the Holding Company's Common
Shares, $.10 par value ("Holding Company Common Stock"). Up to 235,595,561
shares of Holding Company Common Stock may be issued in the Share
Exchange. The Plan of Exchange may be amended or terminated and the Share
Exchange is subject to certain conditions. See "PROPOSAL NO. 1 - THE
HOLDING COMPANY PROPOSAL - Amendment or Termination and Conditions to the
Share Exchange."
Proposal No. 2 - The "Con Edison Board Proposal" is to authorize an
amendment to Con Edison's Certificate of Incorporation to change the
authorized number of Trustees to "not more than 16" from "not less than 13
nor more than 20."
CON EDISON'S BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED THE HOLDING
COMPANY PROPOSAL AND THE CON EDISON BOARD PROPOSAL, AND RECOMMENDS THAT YOU
VOTE "FOR" BOTH PROPOSALS.
Please vote for the proposals and mail your proxy card to us in the
enclosed postage-paid envelope. The Holding Company Proposal must be approved by
the affirmative vote of the holders of two-thirds of the outstanding shares of
Con Edison Common Stock and Con Edison's $5 Cumulative Preferred Stock (the "$5
Preferred"), voting together as a single class (the "Voting Stock"). The Con
Edison Board Proposal must be approved by the affirmative vote of the holders of
a majority of the outstanding shares of the Voting Stock. This means that an
abstention or failure to vote will have the same effect as a vote against the
proposals.
- ------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
regulator has approved the stock of Consolidated Edison, Inc. to be issued
under this Proxy Statement and Prospectus, or determined if the Proxy
Statement and Prospectus is accurate or adequate. Any representation to the
contrary is a criminal offense.
- ------------------------------------------------------------------------------
Proxy Statement and Prospectus, dated October 31, 1997, and first mailed to
stockholders on or about November __, 1997
<PAGE>
- ------------------------------------------------------------------------------
37
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Questions and Answers About the Holding Company Proposal....................3
List of Defined Terms ......................................................9
Introduction............................................................ 10
Record Date and Voting Rights........................................10
Execution and Revocation of Proxy....................................11
Attendance and Procedures at the Special Meeting.....................11
Stockholder Proposals for 1998 Annual Meeting........................12
Proposal No. 1 - The Holding Company Proposal..............................12
The Holding Company Proposal.........................................12
Reasons for the Holding Company Proposal.............................12
General........................................................12
Changing Regulatory Environment................................12
Flexibility for Utility and Competitive Businesses.............13
The Holding Company's Business.......................................14
The Holding Company............................................14
Con Edison.....................................................15
Other Holding Company Subsidiaries.............................18
Directors and Officers...............................................19
Dividends............................................................20
Certificate of Incorporation and By-laws of the Holding Company......21
Holding Company Capital Stock..................................21
Comparative Stockholder Rights ................................22
Possible Effect of Certain Holding Company Provisions and New York Law24
Authorized But Unissued Shares.................................24
Directors and Officers.........................................25
Advance Notice By-law..........................................25
Section 912 of the NYBCL......................................26
Section 70 of the NYPSL........................................26
Preferred Stock of Con Edison........................................27
Debt of Con Edison...................................................28
Implementation of the Holding Company Proposal.......................28
Vote Required........................................................28
Conditions to the Share Exchange.....................................29
Regulatory Approvals.................................................29
Amendment or Termination.............................................30
Exchange of Stock Certificates.......................................30
Listing of Holding Company Common Stock..............................30
Con Edison Stock Plans...............................................30
Material Federal Income Tax Consequences.............................31
Accounting Treatment.................................................32
Statutory Appraisal Rights...........................................32
Validity of Holding Company Common Stock.............................34
Experts..............................................................34
Proposal No. 2 - The Con Edison Board Proposal.............................35
The Con Edison Board Proposal........................................35
Reasons for the Proposal.............................................35
Con Edison's Board of Trustees.......................................35
Vote Required........................................................36
Where You Can Get More Information.........................................36
Agreement and Plan of Exchange Exhibit A
Restated Certificate of Incorporation of the Holding Company Exhibit B
By-laws of the Holding Company Exhibit C
Sections 623 and 910 of the New York Business Corporation Law Exhibit D
2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE HOLDING COMPANY PROPOSAL
These questions and answers address the Holding Company Proposal that will be
voted on at a Special Meeting of Stockholders of Con Edison to be held on
Friday, December 12, 1997 at 10:00 a.m. (the "Special Meeting"), but may not
include all the information about the proposal that is important to you. For
more complete information, please read this entire Proxy Statement and
Prospectus, including the Exhibits, and the other documents referred to in this
document. See "Where You Can Get More Information" on page 36 of this Proxy
Statement and Prospectus.
WHAT IS THE HOLDING COMPANY PROPOSAL AND WHY IS IT BEING PROPOSED?
The Holding Company Proposal is to adopt a holding company structure for Con
Edison in which Con Edison will become a subsidiary of the Holding Company. Upon
implementation of the Holding Company Proposal, Holding Company Common Stock
will be held by the former holders of Con Edison Common Stock.
Federal and state initiatives are promoting competition in the sale of
electricity and gas by "unbundling" the integrated services that electric and
gas utilities have traditionally provided and enabling customers to purchase
electricity and gas directly from suppliers other than their local utilities. In
September 1997, the New York State Public Service Commission ("PSC") approved a
settlement agreement between Con Edison and the PSC staff (the "PSC Settlement
Agreement") that provides for a transition to a competitive electric market.
(See pages 15 to 17 of this Proxy Statement and Prospectus.) The holding company
structure will provide financial and regulatory flexibility needed to engage
effectively in competitive businesses and take advantage of the opportunities
presented by the changing environment while Con Edison continues to operate its
regulated electric, gas and steam utility business. The Holding Company will be
able to establish and fund new businesses without PSC approval and the delay
occasioned by the PSC approval process.
The Board of Trustees has unanimously approved the Holding Company Proposal and
recommends that you vote "FOR" the proposal at the Special Meeting.
WHAT DO I NEED TO DO NOW?
Please read this Proxy Statement and Prospectus and mail your signed proxy card
in the enclosed postage-paid return envelope as soon as possible, so that your
shares will be represented at the Special Meeting.
CAN MY BROKER VOTE FOR ME?
No, only you or someone authorized in writing by you to do so can vote your
Voting Stock. Your broker may not vote your Voting Stock on the Holding Company
Proposal because a vote to form a holding company is "non-discretionary" under
New York Stock Exchange rules.
WHO CAN I CALL IF I HAVE ANY QUESTIONS?
Please call Morrow & Co., which is assisting in this proxy solicitation, at
1-800-566-9061.
3
<PAGE>
WHAT WILL BE THE BUSINESS OF THE HOLDING COMPANY?
Upon implementation of the Holding Company Proposal, Con Edison will become a
subsidiary of the Holding Company and Holding Company Common Stock will be held
by the former holders of Con Edison Common Stock. Two current Con Edison
subsidiaries, Consolidated Edison Solutions, Inc. (formerly ProMark Energy,
Inc.) and Consolidated Edison Development, Inc. (formerly Gramercy Development,
Inc.), and any new Con Edison subsidiaries established before the Holding
Company Proposal is implemented will also become subsidiaries of the Holding
Company. The Holding Company may establish other subsidiaries from time to time,
including one or more intermediate, subsidiary holding companies to hold its Con
Edison Common Stock and the stock of its other subsidiaries. The investment
performance of Holding Company Common Stock will depend on the results of
operations of Con Edison and the Holding Company's other subsidiaries. (See
pages 14 to 19 of this Proxy Statement and Prospectus.)
Con Edison will continue to operate its utility business subject to regulation
by the PSC, the Federal Energy Regulatory Commission ("FERC"), the Nuclear
Regulatory Commission ("NRC") and other governmental agencies. The PSC
regulates, among other things, Con Edison's electric, gas and steam rates and
the issuance of its securities. The FERC regulates, among other things, Con
Edison's rates for sales at wholesale, rates for electric transmission and
interconnections with other utilities. The NRC regulates Con Edison's Indian
Point nuclear facilities.
The Holding Company will not be subject to regulation by the PSC, FERC, or the
NRC, except to the extent that the rules or orders of these agencies impose
restrictions on the Holding Company's relationships with Con Edison or Con
Edison's relationships with the Holding Company's other subsidiaries. The
Holding Company expects to be an exempt public utility holding company under the
Public Utility Holding Company Act of 1935. (See page 15 of this Proxy Statement
and Prospectus.)
WHAT WILL THE HOLDING COMPANY STRUCTURE LOOK LIKE?
PRESENT STRUCTURE
Consolidated Edison Company of New York, Inc.
Holding Company Consolidated Edison Consolidated Edison
Development, Inc. Solutions, Inc.
PROPOSED STRUCTURE*
Holding Company
Consolidated Edison Consolidated Edison Consolidated Edison
Company of New York, Inc. Development, Inc. Solutions,Inc.
- -------
*The Holding Company may establish other subsidiaries from time to time,
including one or more intermediate, subsidiary holding companies to hold its Con
Edison Common Stock and the stock of its other subsidiaries. Any new Con Edison
subsidiaries established before the Holding Company Proposal is implemented will
also become subsidiaries of the Holding Company.
4
<PAGE>
WHO WILL MANAGE THE HOLDING COMPANY?
The Trustees of Con Edison will also become the directors of the Holding Company
if the Holding Company Proposal is implemented. In the future, the Trustees of
Con Edison and the directors of the Holding Company may or may not be the same
persons. Certain officers of Con Edison will also serve as officers of the
Holding Company. Eugene R. McGrath will be Chairman, President, Chief Executive
Officer and a director of the Holding Company and will continue as Chairman,
President, Chief Executive Officer and a Trustee of Con Edison. (See page 19 of
this Proxy Statement and Prospectus.)
WHAT VOTE IS REQUIRED FOR APPROVAL OF THE HOLDING COMPANY PROPOSAL?
Holders of record as of the close of business on October 28, 1997 of Con Edison
Common Stock and $5 Cumulative Preferred Stock (voting together as a single
class, the "Voting Stock") are entitled to vote at the Special Meeting.
Two-thirds of the outstanding shares of Voting Stock must be voted "FOR" the
Holding Company Proposal to approve the proposal.
HOW WILL THE HOLDING COMPANY PROPOSAL BE IMPLEMENTED?
The Holding Company Proposal will be implemented pursuant to an Agreement and
Plan of Exchange (which is included as Exhibit A to this Proxy Statement and
Prospectus, the "Plan of Exchange") that provides for all of the outstanding
shares of Con Edison Common Stock to be exchanged automatically on a
share-for-share basis (the "Share Exchange") for an equal number of new shares
of Holding Company Common Stock. Following the Share Exchange, the Holding
Company will own all of the outstanding Con Edison Common Stock. Each person who
owned Con Edison Common Stock immediately prior to the Share Exchange will own
the same number of shares of Holding Company Common Stock immediately following
the Share Exchange (assuming the person does not elect the statutory appraisal
rights discussed below).
WHEN WILL THE HOLDING COMPANY PROPOSAL BE IMPLEMENTED?
Con Edison expects that the Holding Company Proposal will be implemented as soon
as practicable following approval of the proposal by the holders of the Voting
Stock. However, implementation is subject to certain conditions, including the
receipt of certain regulatory approvals, the listing of Holding Company Common
Stock on the New York Stock Exchange and the filing of the Holding Company's
Restated Certificate of Incorporation, and a certificate of exchange, with the
New York State Department of State. (See page 29 of this Proxy Statement and
Prospectus.)
Con Edison's Board of Trustees may amend or terminate the Plan of Exchange,
abandon the Share Exchange or amend the Holding Company's Restated Certificate
of Incorporation, at any time before or after approval of the Holding Company
Proposal by holders of the Voting Stock. No amendment, however, may materially
and adversely affect the rights of Con Edison's stockholders, as determined in
the sole judgment of the Board of Trustees.(See page 30 of this Proxy Statement
and Prospectus.)
5
<PAGE>
WHAT REGULATORY APPROVALS ARE REQUIRED?
PSC, FERC and NRC approval are required. In September 1997, the PSC approved the
PSC Settlement Agreement which provides for a transition to a competitive
electric market and authorizes a corporate reorganization of Con Edison into a
holding company structure. (See pages 15 to 17 of this Proxy Statement and
Prospectus.) In October 1996, FERC issued an order authorizing Con Edison to
adopt the holding company structure. In December 1996, Con Edison notified the
NRC of the Share Exchange. (See page 29 of this Proxy Statement and Prospectus.)
The Holding Company proposal is subject to the receipt and continued
effectiveness of all necessary regulatory approvals. The Holding Company will
file with the SEC for an exemption from the Public Utility Holding Company Act
of 1935. (See page 15 of this Proxy Statement and Prospectus.)
WILL CON EDISON PREFERRED STOCK OR DEBT BE EXCHANGED?
No. Con Edison's $5 Preferred and Cumulative Preferred Stock ($100 par value)
(the "Cumulative Preferred") will not be exchanged and will remain outstanding
shares of Con Edison. Con Edison's $5 Preferred and Cumulative Preferred 4.65%
Series C ($100 Par Value) are traded on the New York Stock Exchange, and the
Share Exchange will not affect those listings. Con Edison has called its
Cumulative Preference Stock, 6% Convertible Series B for redemption on December
16, 1997 at the redemption price of $100 per share. Con Edison's debt issues
will remain the obligations of Con Edison and will not be obligations of the
Holding Company. (See pages 27 and 28 of this Proxy Statement and Prospectus.)
HOW WILL MY RIGHTS AS A STOCKHOLDER BE AFFECTED?
Following implementation of the Holding Company Proposal, the former holders of
Con Edison Common Stock will automatically become holders of Holding Company
Common Stock, and their rights will be governed by the Holding Company's
Restated Certificate of Incorporation and by-laws (the forms of which are
included as Exhibits B and C, respectively, to this Proxy Statement and
Prospectus) rather than those of Con Edison. Since Con Edison's preferred stock
is not being exchanged, the Share Exchange will not change the rights of holders
of preferred stock currently existing in Con Edison's Certificate of
Incorporation.
The Holding Company's Restated Certificate of Incorporation provides the Holding
Company with broad corporate powers to engage in any lawful act or activity for
which a corporation may be formed under New York law. In contrast, Con Edison is
organized as an electric, gas and steam corporation. The Holding Company's
Restated Certificate of Incorporation and by-laws will be different from Con
Edison's Certificate of Incorporation and by-laws with respect to authorized
shares, advance notice of stockholder proposals and director nominations and
certain other matters. (See pages 21 to 26 of this Proxy Statement and
Prospectus.)
6
<PAGE>
HOW WILL DIVIDENDS BE AFFECTED?
Following implementation of the Holding Company Proposal, former Con Edison
Common Stockholders, who will then be Holding Company Common Stockholders, will
receive the dividends on Holding Company Common Stock declared by the Board of
Directors of the Holding Company. Dividends declared on Con Edison's Common
Stock will be paid to the Holding Company. Dividends on Con Edison preferred
stock will continue to be declared by Con Edison's Board of Trustees and paid by
Con Edison to its preferred stockholders.
Dividends on Holding Company Common Stock are expected to be paid initially at
least at the same rate and on the same schedule as is now paid on Con Edison
Common Stock. The most recent dividend paid on Con Edison Common Stock was $.52
1/2 per share, which was paid on September 15, 1997. In October 1997, Con Edison
declared a dividend of $.52 1/2 per share of Con Edison Common Stock payable on
December 15, 1997 to holders of record as of November 19, 1997. The Holding
Company Proposal will not affect the payment of this dividend on December 15,
1997.
Dividends on Holding Company Common Stock will depend primarily on the dividends
and other distributions that Con Edison and the other subsidiaries of the
Holding Company pay to the Holding Company and the capital requirements of the
Holding Company and its subsidiaries. Under the PSC Settlement Agreement, with
certain exceptions, Con Edison may not pay dividends in excess of income
available for dividends. (See page 20 of this Proxy Statement and Prospectus.)
There can be no assurance that the subsidiaries of the Holding Company other
than Con Edison will have earnings or pay any dividends to the Holding Company
in the foreseeable future.
ARE THERE FEDERAL INCOME TAX CONSEQUENCES TO COMMON STOCKHOLDERS?
Con Edison has received an opinion from its special tax counsel, Reid & Priest.
No income, gain or loss will be recognized under federal income tax laws as a
result of the implementation of the Holding Company Proposal. Immediately
following implementation, the aggregate tax basis for any future gain or loss on
any sale of Holding Company Common Stock will be the same as the aggregate tax
basis in Con Edison Common Stock immediately before implementation. (See pages
31 and 32 of this Proxy Statement and Prospectus.)
HOW WILL MY PARTICIPATION IN THE DIVIDEND REINVESTMENT PLAN BE AFFECTED?
All shares of Con Edison Common Stock held under the Automatic Dividend
Reinvestment and Cash Payment Plan for Common Stockholders will be automatically
exchanged for shares of Holding Company Common Stock. Following implementation
of the Holding Company Proposal, the plan will provide for transactions in
Holding Company Common Stock.
7
<PAGE>
WHAT ARE MY "STATUTORY APPRAISAL RIGHTS"?
If the Holding Company Proposal is implemented, holders of Con Edison Common
Stock who did not vote for the Holding Company Proposal and who timely dissent
and follow precisely the procedures in Sections 623 and 910 of the New York
Business Corporation Law (see Exhibit D to this Proxy Statement and Prospectus),
will have certain rights to demand payment in cash for the "fair value" of their
shares of Con Edison Common Stock. The amount obtainable upon a valid exercise
of those rights is subject to determination by judicial proceedings and cannot
be predicted. Holders receiving payment in accordance with those rights will not
also be entitled to receive Holding Common Company Stock. Holders of Con Edison
preferred stock will not be entitled to statutory appraisal rights with respect
to the Holding Company Proposal. (See pages 32 to 34 of this Proxy Statement and
Prospectus.)
WHERE WILL HOLDING COMPANY COMMON STOCK BE TRADED?
Holding Company Common Stock will be listed on the New York Stock Exchange and
will trade under the symbol "ED" at prices that will be reported in newspapers.
Con Edison Common Stock is currently listed and traded on the New York Stock
Exchange, as well as on the Chicago Stock Exchange and the Pacific Exchange,
under the symbol "ED" at prices that are reported in newspapers. The closing
price of Con Edison Common Stock on the New York Stock Exchange on October 30,
1997 was $33 3/4 per share. Following the implementation of the Holding Company
Proposal, Con Edison Common Stock, which will then be owned by the Holding
Company, will no longer trade on any stock exchange and it will be delisted and
deregistered.
WILL I HAVE TO EXCHANGE MY STOCK CERTIFICATES?
No. Your Con Edison Common Stock certificates will automatically represent an
equal number of shares of Holding Company Common Stock when the Holding Company
Proposal is implemented and will no longer represent Con Edison Common Stock.
FOR CON EDISON EMPLOYEES AND RETIREES:
HOW WILL STOCK-BASED AND OTHER EMPLOYEE BENEFIT PLANS BE AFFECTED?
Con Edison's Thrift Savings Plan for Management Employees, Tax Reduction Act
Stock Ownership Plan, Retirement Income Savings Plan for Weekly Employees,
Discount Stock Purchase Plan and 1996 Stock Option Plan will be amended to
provide for Holding Company Common Stock instead of Con Edison Common Stock. Con
Edison Common Stock held in these plans, or subject to plan options, will
automatically become an equal number of shares of, or options on, Holding
Company Common Stock. Benefits under Con Edison's other employee benefit plans,
such as the defined benefit pension plans and health plans, will not change as a
result of the implementation of the Holding Company Proposal.
8
<PAGE>
You should rely only on the information contained or incorporated by reference
in this Proxy Statement and Prospectus. We have not authorized any one to
provide you with different information. This document is dated October 31, 1997.
Do not assume that the information contained or incorporated by reference in
this document is accurate as of any date other than that date, and neither the
mailing of this document nor the issuance of Holding Company Common Stock shall
create any implication to the contrary.
LIST OF DEFINED TERMS
DEFINED TERM PAGES
CED................................................ 18
CESI............................................... 18
CON EDISON......................................... 1
CON EDISON BOARD PROPOSAL.......................... 1
CON EDISON COMMON STOCK............................ 1
CON EDISON'S FORM 10-K............................. 17
CUMULATIVE PREFERRED............................... 6
DISSENTING HOLDERS................................. 32
EXCHANGE ACT....................................... 27
FERC............................................... 4, 13
$5 PREFERRED....................................... 1
HOLDING COMPANY.................................... 1
HOLDING COMPANY COMMON STOCK....................... 1
HOLDING COMPANY PROPOSAL........................... 1
NRC................................................ 4, 14
NYBCL.............................................. 24
NYPSL.............................................. 13
PLAN OF EXCHANGE................................... 1, 5
PSC................................................ 3, 13
PSC SETTLEMENT AGREEMENT........................... 3, 13
RECORD DATE........................................ 10
SEC................................................ 15
SHARE EXCHANGE..................................... 1, 5
SPECIAL MEETING.................................... 1, 3
TRANSITION......................................... 15
VOTING STOCK....................................... 1, 5
1935 ACT........................................... 15
9
<PAGE>
INTRODUCTION
This Proxy Statement and Prospectus and the accompanying proxy relate to
the solicitation of proxies on behalf of the Board of Trustees of Con Edison
(which has its principal executive offices at 4 Irving Place, New York, New York
10003, telephone number: 212-460-4600) for use at the Special Meeting.
This solicitation of proxies for the Special Meeting is being made by the
management of Con Edison on behalf of Con Edison's Board of Trustees and will be
made by mail and by telephone, facsimile or overnight delivery. In addition,
Morrow & Co. of New York, New York, has been retained to assist in the
solicitation of proxies by the means described above. Proxies may also be
solicited in advertisements and in person by officers and employees of Con
Edison. Con Edison will bear the expenses of the solicitation. The expense will
include reimbursement for postage and clerical expenses to brokerage houses and
other custodians, nominees or fiduciaries for forwarding proxy material and
other documents to beneficial owners of stock held in their names. The estimated
cost of Morrow's services is $75,000, plus out-of-pocket expenses.
Record Date and Voting Rights
Holders of record of outstanding Con Edison stock as of the close of
business on October 28, 1997 (the "Record Date") are entitled to receive notice
of the Special Meeting. However, only the holders of record of Voting Stock are
entitled to vote at the Special Meeting. As of October 28, 1997, there were
outstanding 1,915,319 shares of the $5 Preferred and 235,043,399 shares of Con
Edison Common Stock, each entitled to one vote per share. As of the Record Date,
all officers and Trustees of Con Edison, as a group, beneficially owned less
than one percent of the outstanding shares of Con Edison Common Stock.
The proxy enclosed for record holders of Voting Stock is for the number of
shares registered in your name with Con Edison, together with any additional
full shares held in your name in Con Edison's Automatic Dividend Reinvestment
and Cash Payment Plan. The instructions on the proxy card provide that any
shares registered in your name and any full shares held for your account in the
plan will be voted in the same manner.
The proxy provides you with the opportunity to specify your approval or
disapproval of, or abstention with respect to, the Holding Company Proposal and
the Con Edison Board Proposal. The Holding Company Proposal requires the
approval of the holders of two-thirds of the outstanding shares of Voting Stock
(not just two-thirds of the votes cast). The Con Edison Board Proposal requires
the approval of the holders of a majority of the outstanding shares of Voting
Stock (not just a majority of the votes cast). An abstention or broker non-vote
WILL NOT be counted as a vote in favor of adoption of either of these proposals,
and as a result will have the effect of a vote AGAINST the proposals. If the
approval of the Holding Company Proposal by the holders of two-thirds of the
outstanding shares of Voting Stock is obtained, it will satisfy an additional
requirement that the proposal be approved by a majority of the outstanding
shares of Con Edison Common Stock.
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With respect to all matters, other than the Holding Company Proposal and
the Con Edison Board Proposal, that may properly come before the Special
Meeting, the affirmative vote of the majority of shares of Voting Stock present
in person or represented by proxy at the Special Meeting, voting on the subject
matter, in person or by proxy, will be the act of the stockholders. Abstentions
and broker non-votes are voted neither "for" nor "against," and have no effect
on the vote on these matters, but are counted in the determination of a quorum.
The Holding Company Proposal is considered "non-discretionary," and brokers who
have received no instructions from their clients do not have the authority to
vote on the proposal.
Execution and Revocation of Proxy
Shares represented by proxies properly signed and returned will be voted
at the Special Meeting in accordance with the stockholder's specifications. If a
proxy is signed but no specification is made, the shares represented by the
proxy will be voted "FOR" the Holding Company Proposal and the Con Edison Board
Proposal and in accordance with the recommendations of the Board of Trustees on
any other proposals that may properly come before the Special Meeting.
A stockholder who gives a proxy may revoke it at any time before the proxy
is voted at the Special Meeting. The proxy is revocable by a written instrument
signed in the same manner as the proxy and received by the Secretary of Con
Edison at or before the Special Meeting. Also, a stockholder who attends the
Special Meeting in person may vote by ballot at the meeting, thereby canceling
any proxy previously given.
Attendance and Procedures at the Special Meeting
Attendance at the Special Meeting will be limited to stockholders of
record, beneficial owners of Con Edison stock entitled to vote at the meeting
having evidence of ownership, the authorized representative (one only) of an
absent stockholder, and invited guests of the management. Any person claiming to
be an authorized representative of a stockholder must, upon request, produce
written evidence of the authorization. In order to assure a fair and orderly
meeting and to accommodate as many stockholders as possible who may wish to
speak at the meeting, management will permit only stockholders or their
authorized representatives to address the meeting. In addition, management will
require that any signs, banners, placards and similar materials be left outside
the meeting room.
Con Edison may adjourn the Special Meeting one or more times, and continue
to solicit proxies under certain circumstances, including if there are
insufficient affirmative votes to approve either the Holding Company Proposal or
the Con Edison Board Proposal.
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Stockholder Proposals for 1998 Annual Meeting
To be included in the proxy statement and form of proxy for Con Edison's
1998 Annual Meeting of Stockholders, stockholder proposals must be received no
later than December 8, 1997 at the following address: Con Edison, 4 Irving
Place, Room 1618-S, New York, New York 10003, Attention: Secretary. If the
Holding Company Proposal is implemented, the Annual Meeting will be a combined
meeting of stockholders of the Holding Company and stockholders of Con Edison
and a combined proxy statement will be furnished in connection with the meeting.
In that event, a properly submitted proposal by a holder of Con Edison Common
Stock would be included in the combined proxy statement, would apply to the
Holding Company (not Con Edison) and would be included in the Holding Company's
form of proxy. A properly submitted proposal by a holder of the $5 Preferred
would be included in the combined proxy statement, apply to Con Edison (not the
Holding Company) and be included in Con Edison's form of proxy. For information
about other requirements that will apply to any proposals and director
nominations by holders of Holding Company Common Stock considered at the Annual
Meeting, see pages 25 and 26 of this Proxy Statement and Prospectus.
PROPOSAL NO. 1 -- THE HOLDING COMPANY PROPOSAL
The Holding Company Proposal
The Holding Company Proposal is to adopt a holding company structure for
Con Edison in which, pursuant to the Plan of Exchange, Con Edison will become a
subsidiary of the Holding Company. Holding Company Common Stock will be owned by
the former owners of Con Edison Common Stock. As a subsidiary of the Holding
Company, Con Edison will continue to operate its regulated electric, gas and
steam utility business. The Holding Company will also have subsidiaries that
engage in competitive businesses.
CON EDISON'S BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED THE HOLDING
COMPANY PROPOSAL, AND RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Reasons for the Holding Company Proposal
General
A holding company structure for Con Edison will provide financial and
regulatory flexibility needed to engage effectively in competitive businesses
while continuing to operate its regulated electric, gas and steam utility
business. This structure is a well-established form of organization for
companies engaging in multiple lines of business, and is increasingly prevalent
in the utility industry.
Changing Regulatory Environment
In recent years, federal and state initiatives have promoted the
development of competition in the sale of electricity and gas. In general, these
initiatives have sought to unbundle the integrated services that electric and
gas utilities have traditionally provided and to enable customers to purchase
electricity and gas directly from suppliers other than their local utilities.
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Competition in the wholesale market for electricity is intensifying.
Non-utility generators and power marketers are supplying an increasing
percentage of the national electrical demand at the wholesale level. In April
1996, the Federal Energy Regulatory Commission ("FERC") issued its Order 888,
requiring electric utilities to file open access transmission tariffs that would
make the utility transmission systems available to wholesale sellers and buyers
of electric energy on a non-discriminatory basis. Con Edison filed an open
access tariff with the FERC in July 1996. In January 1997, Con Edison, along
with the other New York State electric utilities, submitted a filing to FERC for
approval of a restructuring of the wholesale electric market in New York State,
including the establishment of an "independent system operator" that would
control and operate most electric transmission facilities in New York as an
integrated system on a non-discriminatory basis, and a "power exchange" that
would establish visible spot market prices for wholesale electricity.
At the retail level many states are implementing "retail access" programs
giving electric and gas retail customers the option to choose among energy
suppliers. The New York State Public Service Commission ("PSC"), in its
"Competitive Opportunities" proceeding, endorsed a fundamental restructuring of
the electric utility industry in New York State based on competition in the
generation and energy services sectors of the industry. In September 1997, the
PSC approved a settlement agreement between Con Edison and the PSC staff (and
other parties to the Competitive Opportunities proceeding) with respect to this
proceeding (the "PSC Settlement Agreement") which provides for a transition to a
competitive electric market and authorizes a corporate reorganization of Con
Edison into a holding company structure. See "PROPOSAL NO. 1 - THE HOLDING
COMPANY PROPOSAL - The Holding Company's Business - Con Edison."
Similar events have already occurred in the gas utility industry. A decade
ago, the price of gas was regulated from the original producer and supplier
through the ultimate end-user. Currently, there is no regulation over the sale
price of natural gas as a commodity, and the regulation of interstate
transmission at the federal level has been reduced. All Con Edison gas
customers, either individually or by aggregating their demand with other
customers, have had the option to purchase gas from other suppliers since 1996.
Flexibility for Utility and Competitive Businesses
Con Edison operates under the regulatory requirements of the New York
Public Service Law ("NYPSL") and the PSC. Under Section 107 of the NYPSL, Con
Edison must obtain the PSC's approval before it may invest in any business other
than its own utility business. Prior to the PSC Settlement Agreement, Con Edison
received limited authority from the PSC to invest up to $100 million in
Consolidated Edison Solutions, Inc. (formerly ProMark Energy, Inc.), its energy
services subsidiary, and up to $50 million in Consolidated Edison Development,
Inc. (formerly Gramercy Development, Inc.), which was formed in late 1996 to
invest in energy infrastructure projects and to market Con Edison's technical
services. The limited nature of these approvals and the delay brought about by
the approval process for these investments in competitive businesses represented
a significant constraint on Con Edison's ability to move rapidly in an
increasingly competitive and fast-evolving environment. Pursuant to the PSC
Settlement Agreement, Con Edison is authorized under Section 107 of the NYPSL to
use up to 5 percent of its consolidated capital (approximately $ 526 million as
of September 30, 1997) to fund other businesses. The Holding Company will not be
subject to Section 107 of the NYPSL.
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Under Section 69 of the NYPSL, Con Edison cannot issue debt or equity
securities for other than certain specified utility purposes. This restriction
has not posed a practical problem in the past because Con Edison's competitive
businesses have been limited in both scope and magnitude. However, such a
restriction is no longer appropriate given the prospective regulatory and
competitive environment, particularly because many of Con Edison's present and
potential competitors are not subject to similar constraints. The Holding
Company and its subsidiaries other than Con Edison will be able, without PSC
approval, to issue securities for their general corporate purposes and to
finance various transactions that may be undertaken, including possible
acquisitions of other companies and repurchases of Holding Company Common Stock.
The Holding Company's Business
The Holding Company
The Holding Company is a New York corporation incorporated by Con Edison
for purposes of implementing the Holding Company Proposal. The principal
executive offices of the Holding Company are located at 4 Irving Place, New
York, New York 10003, and its telephone number is 212-460-3900. The Holding
Company has not had any business operations. The currently outstanding shares of
Holding Company Common Stock are owned by Con Edison and will be canceled when
the Holding Company Proposal is implemented.
Following implementation of the Holding Company Proposal, the Holding
Company will own all the outstanding Con Edison Common Stock and the stock of
other subsidiaries that will engage in competitive businesses. See "PROPOSAL NO.
1 - THE HOLDING COMPANY PROPOSAL - Other Holding Company Subsidiaries." The
investment performance of Holding Company Common Stock will depend on the
results of operations of Con Edison and the Holding Company's other
subsidiaries. The Holding Company may establish one or more intermediate,
subsidiary holding companies to hold its Con Edison Common Stock and the stock
of its other subsidiaries.
The Holding Company will finance its operations, investments in its
subsidiaries and various transactions that may be undertaken, including possible
acquisitions of other companies and repurchases of Holding Company Common Stock,
from dividends and other distributions it receives from Con Edison and its other
subsidiaries, borrowings and the sale of equity or debt securities. The PSC
Settlement Agreement, with certain exceptions, limits the dividends that Con
Edison can pay to the Holding Company to not more than 100 percent of Con
Edison's income available for dividends, calculated on a two-year rolling
average basis. See "PROPOSAL NO. 1 - THE HOLDING COMPANY PROPOSAL - Dividends."
There can be no assurance that the subsidiaries of the Holding Company other
than Con Edison will have earnings or pay any dividends to the Holding Company.
The Holding Company will not be subject to regulation by the PSC, FERC or
the Nuclear Regulatory Commission ("NRC"), except to the extent that the rules
or orders of these agencies impose restrictions on the Holding Company's
relationships with Con Edison or Con Edison's relationships with the Holding
Company's other subsidiaries. See "PROPOSAL NO. 1 - THE HOLDING COMPANY PROPOSAL
- - The Holding Company's Business - Con Edison."
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The Holding Company will be a "public utility holding company" under the
Public Utility Holding Company Act of 1935 (the "1935 Act"). The staff of the
Securities and Exchange Commission ("SEC"), which administers the 1935 Act, has
recommended, and several bills have been introduced in Congress that would
accomplish, the repeal of the 1935 Act. Unless or until the 1935 Act is
repealed, the Holding Company expects to seek an exemption under Section 3(a)(1)
of the 1935 Act on the basis that the Holding Company and Con Edison are each
organized and carry on their utility businesses substantially in the State of
New York and that neither will derive any material part of its income from a
public utility company organized outside of the State of New York. This
exemption is available even though Holding Company subsidiaries that are neither
an "electric utility company" nor a "gas utility company" under the 1935 Act
will engage in interstate activities. The exemption would exempt the Holding
Company from all provisions of the 1935 Act except Section 9(a)(2) (which
requires SEC approval for a direct or indirect acquisition of 5 percent or more
of the voting securities of any other electric or gas utility company). To
maintain this exemption, the Holding Company must file an exemption statement
each year prior to March 1 with the SEC. The exemption may be revoked by the SEC
if a substantial question of law or fact exists as to whether the Holding
Company is within the parameters of the exemption, or if it appears that the
exemption may be detrimental to the public interest or the interest of investors
or consumers.
Con Edison
Con Edison, incorporated in New York State in 1884, supplies electric
service in all of New York City (except part of Queens) and most of Westchester
County, New York, an approximately 660 square mile service area with a
population of more than 8 million. Con Edison also supplies gas in Manhattan,
The Bronx and parts of Queens and Westchester, and steam in part of Manhattan.
Following implementation of the Holding Company Proposal, Con Edison will
continue to operate its regulated electric, gas and steam utility business.
Con Edison's utility business is subject to regulation by the PSC, FERC,
the NRC and other governmental agencies. The PSC regulates, among other things,
Con Edison's electric, gas and steam rates and the issuance of its securities.
The FERC regulates, among other things, Con Edison's rates for sales at
wholesale, rates for electric transmission and interconnections with other
utilities. The NRC regulates Con Edison's Indian Point nuclear facilities.
The PSC Settlement Agreement. The PSC, in its "Competitive Opportunities"
proceeding, endorsed a fundamental restructuring of the electric utility
industry in New York State based on competition in the generation and energy
services sectors of the industry. The PSC Settlement Agreement provides for a
transition to a competitive electricity market over the period ending March 31,
2002 (the "Transition"). The PSC Settlement Agreement will remain effective
whether or not the Holding Company Proposal is implemented. In the event that
the Holding Company Proposal is not implemented, Con Edison will not be able to
realize the benefits it expects from the holding company structure. The material
provisions of the PSC Settlement Agreement are:
Retail Access. Con Edison will implement a retail access program, beginning
by June 1998, which will permit other sellers of electricity to use Con
Edison's distribution facilities to make sales to Con Edison's customers.
The program will be phased in and is targeted to be available to all of Con
Edison's customers not later than December 31, 2001.
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Rate Plan. The rate plan reduces the generation-related revenues that Con
Edison would have received over the Transition had rate levels in effect on
March 31, 1997 remained in effect by approximately $1 billion, exclusive of
additional revenue reductions from lower gross receipts taxes (or
approximately, $1.2 billion including such additional reductions).
Financing savings from any securitization of strandable costs (see
"Recovery of Prior Investments and Commitments," below), in excess of the
amount of such savings, if any, that is allocated by the PSC for research
and development, energy efficiency programs, programs to assist low-income
customers and environmental programs, and any further reductions in New
York State utility taxes will be utilized for additional rate reductions.
In general, base electric rates will not otherwise be changed during the
Transition except in the event of changes in costs above anticipated annual
levels resulting from legal or regulatory requirements (including a
requirement or interpretation resulting in Con Edison's refunding its
tax-exempt debt), inflation in excess of a 4 percent annual rate, property
tax increases and environmental costs, or in the event Con Edison's rate of
return becomes unreasonable for the provision of safe and adequate service.
Divestiture Commitment. Con Edison will divest to unaffiliated third
parties at least 50 percent of its New York City fossil-fueled generating
capacity no later than December 2002. Con Edison fossil-fueled electric
generating units not divested to unaffiliated third parties will be
transferred to an unregulated affiliate of Con Edison. Con Edison will
retain for its shareholders the first $50 million of any net after-tax
gains, calculated in accordance with the PSC Settlement Agreement, from the
divestiture of generating capacity. Any additional net gains, or net
losses, from the divestiture, or transfer to an affiliate of Con Edison, of
generating capacity during the Transition will be deferred for disposition
by the PSC. After the Transition, the difference between the remaining book
cost of generating plant and the "`market values' defined by divestiture"
will be reflected in the strandable costs to be recovered following the
Transition.
Recovery of Prior Investments and Commitments. During the Transition, Con
Edison will continue to recover its potential electric strandable costs
(i.e., those prior utility investments and commitments that might otherwise
not be recoverable in a competitive electric market) in the rates it
charges all customers, and also will provide for $75 million of additional
depreciation for its generating units. Following the Transition, Con Edison
will be given a reasonable opportunity to recover remaining electric
strandable costs, as adjusted for net gains or losses relating to Con
Edison's electric fossil generating capacity, including a reasonable return
on investments, through a non-bypassable charge to customers. With respect
to its contracts with non-utility generators of electricity, any potential
disallowance after the Transition will be limited to the lower of (i) 10%
of the amount by which the actual costs of its purchases under the
contracts exceed market value after the Transition or (ii) $300 million (in
2002 dollars). The potential disallowance will be offset by mitigation of
non-utility generation costs achieved by Con Edison after the beginning of
the Transition and 10 percent of the gross proceeds of generating unit
sales to third parties. Con Edison will be permitted a reasonable
opportunity to recover any costs subject to disallowance that are not
offset by these two factors if it makes good faith efforts in implementing
provisions of the PSC Settlement Agreement leading to the development of a
competitive electric market in its service territory and the development of
an independent system operator, which is to administer the wholesale
electric market in New York State.
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Corporate Structure and Other Provisions. The PSC Settlement Agreement
authorizes a holding company structure for Con Edison. With certain
exceptions, it limits the dividends that Con Edison can pay to not more
than 100 percent of Con Edison's income available for dividends, calculated
on a two-year rolling average basis. See "PROPOSAL NO. 1 THE HOLDING
COMPANY PROPOSAL - Dividends." Without PSC approval, Con Edison is
prohibited from making loans to, or guaranteeing the obligations of, the
Holding Company or any other subsidiary of the Holding Company, or pledging
its assets as security for the indebtedness of the Holding Company or any
affiliate of the Holding Company. Con Edison and the Holding Company's
other subsidiaries must operate as separate entities, and transfers of
assets, services and information between Con Edison and its affiliates are
subject to certain restrictions. Con Edison and the Holding Company's other
subsidiaries must have separate operating employees, and non-administrative
operating officers of Con Edison may not be operating officers of any of
the Holding Company's other subsidiaries. Transfers of employees from Con
Edison to the Holding Company's other subsidiaries are also restricted. To
fund competitive businesses prior to stockholder approval of the Holding
Company Proposal and receipt of required regulatory approvals, Con Edison
is authorized under Section 107 of the NYPSL to use up to 5 percent of its
consolidated capital (approximately $526 million as of September 30, 1997).
Accounting Effect. As a result of the Settlement Agreement, there have been
changes to certain of Con Edison's accounting policies. Con Edison's
accounting policies conform to generally accepted accounting principles
which, for regulated public utilities, include Statement of Financial
Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of
Certain Types of Regulation." In September 1997, Con Edison applied the
standards in SFAS No. 101, "Regulated Enterprises Accounting for the
Discontinuation of Application of FASB Statement No. 71" to the non-nuclear
electric supply portion of its business that is being deregulated as a
result of the Settlement Agreement. This application of SFAS No. 101 had no
material adverse effect on Con Edison's financial position or results of
operations.
For additional information about the PSC Settlement Agreement, including
information about effects of the PSC Settlement Agreement on Con Edison's
accounting policies, see (i) "Liquidity and Capital Resources - PSC Settlement
Agreement" in the Management's Discussion and Analysis sections of Con Edison's
Annual Report on Form 10-K for the year ended December 31, 1996 ("Con Edison's
Form 10-K") and Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1997, June 30, 1997 and September 30, 1997, (ii) Con Edison's Current
Reports on Form 8-K, dated August 29, 1997 and September 23, 1997, and (iii)
"WHERE YOU CAN GET MORE INFORMATION."
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Other Holding Company Subsidiaries
Under Con Edison's current plans, the Holding Company will i have two
subsidiaries in addition to Con Edison: Consolidated Edison Solutions, Inc.
(formerly ProMark Energy, Inc., "CESI") and Consolidated Edison Development,
Inc. (formerly Gramercy Development, Inc., "CED"). These corporations are
wholly-owned subsidiaries of Con Edison that will be transferred to the
Holding Company.
CESI, which was formed by Con Edison in 1993 to market gas and related
services, is expanding its operations to become a full-service energy services
company. CESI is expected to engage in both wholesale and retail sales of
electricity, natural gas and oil, and may also offer other market-based services
to customers, such as ensuring power quality and helping customers improve the
energy efficiency of their buildings. At September 30, 1997, Con Edison's
investment in CESI was $20.4 million (approximately 0.2 percent of Con Edison's
total consolidated capitalization).
CED was formed by Con Edison in late 1996 to invest in energy
infrastructure projects and the marketing of Con Edison's technical services.
CED will develop other opportunities in both the energy and non-energy fields
domestically and internationally. At September 30, 1997, Con Edison's investment
in CED was $7.6 million (less than 0.1 percent of Con Edison's total
consolidated capitalization.)
Under Section 107 of the NYPSL, Con Edison must obtain the PSC's approval
before it may invest in any business other than its own utility business. Prior
to the PSC Settlement Agreement, Con Edison received limited authority from the
PSC to invest up to $100 million in CESI and up to $50 million in CED. Pursuant
to the PSC Settlement Agreement, Con Edison is authorized under Section 107 of
the NYPSL to use up to 5 percent of its consolidated capital (approximately $
526 million as of September 30, 1997) to fund other businesses, including CESI
and CED. Con Edison expects that any new subsidiaries established and funded
pursuant to this authorization would also be transferred to the Holding Company
upon implementation of the Holding Company Proposal. The Holding Company will
not be subject to Section 107 of the NYPSL.
The Holding Company (or Con Edison prior to the implementation of the
Holding Company Proposal) may establish one or more energy supply or
telecommunications subsidiaries. An energy supply subsidiary could become an
unregulated owner and operator of electric generating plants (including any that
Con Edison may transfer to it) and marketer of electricity. Energy supply
subsidiaries might also market electricity directly to energy service companies
and through exchanges where buyers and sellers trade electricity, contract for
operations and maintenance work and participate in building new generating
facilities. A telecommunications subsidiary could own, lease, operate or invest
in facilities used for telecommunications or otherwise compete in the
telecommunications industry.
The Holding Company may also establish other subsidiaries to engage in
competitive businesses and one or more intermediate, subsidiary holding
companies to hold its Con Edison Common Stock and the stock of its other
subsidiaries. The PSC Settlement Agreement authorizes the formation of a
subsidiary holding company to hold Con Edison Common Stock.
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The subsidiaries of the Holding Company, other than Con Edison, may
encounter competitive and other business factors and different, and perhaps
greater, investment risks than those involved in the utility business of Con
Edison. There can be no assurance that these subsidiaries will be successful, or
if unsuccessful, that they will not have an adverse effect on the Holding
Company. In any event, these subsidiaries will not be available as a source of
cash for the payment of dividends on Con Edison's preferred stock.
Directors and Officers
The Trustees of Con Edison will also become directors of the Holding
Company when the Holding Company Proposal is implemented and will serve as the
directors/Trustees of both companies, subject to re-nomination and re-election
by the stockholders annually. In the future, the Trustees of Con Edison and the
directors of the Holding Company may or may not be the same persons.
Under the Holding Company's Restated Certificate of Incorporation, the
number of directors of the Holding Company shall be not more than 16, the exact
number of the directors to be determined from time to time solely by the
affirmative vote of a majority of the directors then in office. If the Con
Edison Board Proposal is implemented Con Edison's Certificate of Incorporation
would be amended to change the authorized number of Trustees to "not more than
16" from "not less than 13 nor more than 20." See "PROPOSAL NO. 2 - THE CON
EDISON BOARD PROPOSAL."
It is expected that the majority of the Holding Company officers will
initially also be officers of Con Edison or one or more other subsidiaries of
the Holding Company and that the Holding Company will have few employees. In the
future, the Holding Company may employ additional officers and employees.
The following persons currently hold the offices indicated opposite their
names with both the Holding Company and Con Edison and are expected to hold the
same offices following implementation of the Holding Company Proposal:
Eugene R. McGrath Chairman, President and Chief Executive Officer
Joan S. Freilich Senior Vice President and Chief Financial Officer
Peter J. O'Shea, Jr. Senior Vice President, General Counsel and Secretary
Messrs. McGrath and O'Shea and Ms. Freilich will serve as the only
directors of the Holding Company until the Holding Company Proposal is
implemented. Mr. O'Shea has announced his intention to retire from the
Holding Company and Con Edison effective March 31, 1998.
Information concerning the names, ages, positions and business experience
of the executive officers and Trustees of Con Edison and information about
executive compensation, security ownership of certain beneficial owners and
management and certain relationships and related transactions is incorporated by
reference herein from Items 1, 10, 11, 12 and 13 of Con Edison's Form 10-K
(which incorporates portions of Con Edison's definitive proxy statement, dated
April 7, 1997, for its Annual Meeting of Stockholders held on May 19, 1997).
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Dividends
Following implementation of the Holding Company Proposal, former Con
Edison Common Stockholders, who will then be Holding Company Common
Stockholders, will receive dividends on Holding Company Common Stock when, as
and if declared by the Board of Directors of the Holding Company. Dividends
declared on Con Edison Common Stock will be paid to the Holding Company.
Dividends on Con Edison preferred stock will continue to be declared by Con
Edison's Board of Trustees and paid by Con Edison to its preferred stockholders.
Dividends on Holding Company Common Stock are expected to be paid
initially at least at the same rate and on the same schedule as are now paid on
Con Edison Common Stock. The most recent dividend paid on Con Edison Common
Stock was $.52 1/2 per share, which was paid on September 15, 1997. In October
1997, Con Edison declared a dividend of $.52 1/2 per share of Con Edison Common
Stock payable on December 15, 1997 to holders of record as of November 19, 1997.
The Holding Company Proposal will not affect the payment of this dividend on
December 15, 1997.
Dividends on Holding Company Common Stock will depend primarily on the
dividends and other distributions that Con Edison and the other subsidiaries of
the Holding Company pay to the Holding Company and the capital requirements of
the Holding Company and its subsidiaries. There can be no assurance that the
subsidiaries of the Holding Company other than Con Edison will have earnings or
pay any dividends to the Holding Company in the foreseeable future. See
"PROPOSAL No. 1 - THE HOLDING COMPANY PROPOSAL - The Holding Company's
Business."
The PSC Settlement Agreement limits the dividends that Con Edison may pay
(which, in turn, could reduce the funds available to the Holding Company to pay
dividends on Holding Company Common Stock) following the implementation of the
Holding Company Proposal to not more than 100 percent of Con Edison's income
available for dividends, calculated on a two-year rolling average basis.
Excluded from the calculation of "income available for dividends" are non-cash
charges to income resulting from accounting changes or charges to income
resulting from significant unanticipated events. The restriction will also not
apply to dividends necessary to transfer to the Holding Company proceeds from
major transactions, such as asset sales, or to dividends reducing Con Edison's
equity capital ratio to a level appropriate to Con Edison's business risk.
Payment of Con Edison Common Stock dividends to the Holding Company is
subject to certain additional restrictions. No dividends may be paid, or funds
set apart for payment, on Con Edison Common Stock unless all dividends accrued
on the $5 Preferred and Cumulative Preferred have been paid, or declared and set
apart for payment, and unless Con Edison is not in arrears on its mandatory
redemption obligation for its Cumulative Preferred. No dividends may be paid on
any of Con Edison's capital stock during any period in which Con Edison has
deferred payment of interest on its subordinated deferrable interest debentures.
Con Edison and the Holding Company may each issue additional preferred
stock in the future to meet their capital requirements. Con Edison preferred
stock has preferential dividend rights over Con Edison Common Stock. Holding
Company preferred stock will have preferential dividend rights over Holding
Company Common Stock if so fixed by the Holding Company's Board of Directors in
connection with the issuance of the preferred stock.
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Certificate of Incorporation and By-laws of the Holding Company
When the Holding Company Proposal is implemented, holders of Con Edison
Common Stock will become holders of Holding Company Common Stock, and their
rights will be governed by Holding Company's Restated Certificate of
Incorporation and by-laws rather than Con Edison's Certificate of Incorporation
and by-laws. Approval of the Holding Company Proposal by the holders of the
Voting Stock will also be considered approval and ratification of the Holding
Company's Restated Certificate of Incorporation. Con Edison may amend the
Holding Company's Restated Certificate of Incorporation at any time prior to
implementation of the Holding Company Proposal. See "PROPOSAL No. 1 - THE
HOLDING COMPANY PROPOSAL - Amendment or Termination." References in this Proxy
Statement and Prospectus to the Holding Company's Restated Certificate of
Incorporation and by-laws are qualified in their entirety by reference to the
forms thereof that are included as Exhibits B and C, respectively, to this Proxy
Statement and Prospectus.
Holding Company Capital Stock
The Holding Company's Restated Certificate of Incorporation authorizes the
Holding Company to issue 500,000,000 shares of Holding Company Common Stock and
6,000,000 shares of preferred stock. The Holding Company's Board of Directors is
authorized from time to time to issue the preferred stock as preferred stock of
any series and, in connection with the creation of each such series, to fix by
the resolution or resolutions providing for the issuance thereof the number of
shares of such series, and the designations, relative rights, preferences and
limitations of such series to the full extent permitted by the law of the State
of New York, except that holders of the preferred stock shall not be entitled to
more than one vote for each share of preferred stock held.
When issued in the Share Exchange, shares of Holding Company Common
Stock will be fully paid and nonassessable. Holders of Holding Company
Common Stock are not entitled to preemptive rights.
Dividends. Subject to any prior rights of Holding Company preferred stock
(if any should become outstanding), Holding Company Common Stock is entitled to
dividends when, as and if declared by the Holding Company's Board of Directors,
and the Holding Company may purchase or otherwise acquire outstanding shares of
Holding Company Common Stock out of funds legally available therefor. See
"PROPOSAL NO. 1 - THE HOLDING COMPANY PROPOSAL Dividends."
Liquidation Rights. Subject to any prior rights of Holding Company
preferred stock (if any should become outstanding), upon liquidation of the
Holding Company, any remaining net assets of the Holding Company are
distributable pro rata to the holders of Holding Company Common Stock.
Voting Rights. Holders of Holding Company Common Stock are entitled to one
vote for each share. There are no cumulative voting rights. Holders of Holding
Company preferred stock shall have no voting rights unless, in connection with
the issuance of a series of preferred stock, the Holding Company's Board of
Directors provides voting rights (in which event the voting rights shall not be
more than one vote for each share of preferred stock held) or unless otherwise
required by law.
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Transfer Agent and Registrar. The transfer agent for Holding Company
Common Stock will be Con Edison Investor Services, P.O. Box 149, Cooper
Station, New York, New York 10276-0149. The registrar will be ChaseMellon
Shareholder Services, L.L.C.
Comparative Stockholder Rights
Certain differences between the rights of holders of Holding Company
Common Stock and those of holders of Con Edison Common Stock are summarized
below.
Purpose Clause. Both the Holding Company and Con Edison are New York
corporations. The Holding Company's Restated Certificate of Incorporation
provides the Holding Company with broad corporate powers to engage in any lawful
act or activity for which a corporation may be formed under New York law. In
contrast, Con Edison is organized as an electric, gas and steam corporation to
manufacture, produce or otherwise acquire and to supply for public use,
artificial or natural gas or a mixture of both gases and electricity and steam
for light, heat or power.
Authorized Shares. 500,000,000 shares of Holding Company Common Stock are
authorized. 340,000,000 shares of Con Edison Common Stock are authorized. As of
October 28, 1997, there were 235,043,399 shares of Con Edison Common Stock
outstanding and 42,474 shares of Con Edison's Cumulative Preference Stock, 6%
Convertible Series B ($100 par value) outstanding that were convertible at the
option of their holders into an aggregate of 552,162 shares of Con Edison Common
Stock. (See "PROPOSAL NO.1 - THE HOLDING COMPANY PROPOSAL - The Preferred Stock
of Con Edison.") Accordingly, up to 235,595,561 shares of Holding Company Common
Stock may be issued in the Share Exchange.
The authorized shares of Con Edison include the $5 Preferred and its
Cumulative Preferred and Cumulative Preference Stock ($100 par value). As of
October 28_, 1997, there were authorized and outstanding, respectively,
1,915,319 shares and 1,915,319 shares of the $5 Preferred, 6,000,000 shares and
1,430,176 shares of Cumulative Preferred and 2,250,000 shares and 42,474 shares
of Cumulative Preference Stock ($100 par value). Con Edison has called its
outstanding Cumulative Preference Stock for redemption on December 16, 1997. The
authorized shares of Holding Company include 6,000,000 shares of preferred
stock, none of which are outstanding.
Preferred Stock. Both the Holding Company's Board of Directors and Con
Edison's Board of Trustees are authorized to issue preferred stock in series.
The voting rights and certain preferences of the Con Edison preferred
stock are determined pursuant to Con Edison's Certificate of Incorporation.
Holders of the $5 Preferred are entitled to one vote for each share. Except as
otherwise required by law, holders of Con Edison's Cumulative Preferred have no
right to vote; provided, however, that, after the $5 Preferred shall no longer
be outstanding, the Cumulative Preferred shall entitle any holder thereof to one
vote for each share and, in addition, whenever dividends are in default for
certain periods the holders shall be entitled to certain rights with respect to
the election of Con
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Edison's Trustees. Without the consent of the holders of the Cumulative
Preferred, Con Edison may not create or authorize any kind of stock ranking
prior to the Cumulative Preferred or, if such actions would affect the holders
of the Cumulative Preferred adversely, be a party to any consolidation or
merger, create or amend the terms of the Cumulative Preferred or reclassify the
Cumulative Preferred.
Following the implementation of the Holding Company Proposal, outstanding
Con Edison preferred stock will continue as equity securities of Con Edison with
the same preferences, designations, relative rights, privileges and powers, and
subject to the same restrictions, limitations and qualifications, as were
applicable to outstanding Con Edison preferred stock prior to the
implementation. See "PROPOSAL NO. 1 - THE HOLDING COMPANY PROPOSAL - Preferred
Stock of Con Edison."
The Holding Company's Restated Certificate of Incorporation provides that
the Holding Company preferred stock shall have no voting rights except as fixed
by the Holding Company Board of Directors (in which event the voting rights
shall not be more than one vote for each share of preferred stock held) or as
otherwise required by law. The Restated Certificate of Incorporation does not
establish rights, preferences or limitations with respect to Holding Company
preferred stock. The Holding Company's Board of Directors is authorized from
time to time to issue the preferred stock as preferred stock of any series and,
in connection with the creation of each series, to fix by the resolution or
resolutions providing for the issuance thereof the number of shares of the
series, and the designations, relative rights, preferences, and limitations of
the series, to the full extent now or hereafter permitted by the law of the
State of New York, except that holders of the preferred stock shall not be
entitled to more than one vote for each share of preferred stock held.
Required Vote for Certain Transactions. The NYBCL currently requires the
approval of the board of directors of a corporation followed by the affirmative
vote of two-thirds of all outstanding shares entitled to vote thereon to
authorize a merger or consolidation (Section 903), the sale, lease, exchange or
other disposition of all or substantially all the assets of a corporation
(Section 909) or a binding share exchange (Section 913). The Holding Company's
Restated Certificate of Incorporation, as permitted pursuant to amendments to
the NYBCL which will become effective in February 1998, requires that any such
transaction with respect to the Holding Company (other than a merger between the
Holding Company and a subsidiary of the Holding Company for which authorization
by the stockholders of the Holding Company is not required by applicable law) be
authorized by the approval of the Holding Company's Board of Directors followed
by the affirmative vote of a majority of all outstanding shares of the Holding
Company entitled to vote thereon. Con Edison's Certificate of Incorporation does
not address such transactions and, therefore, any such transaction with respect
to Con Edison requires approval of Con Edison's Board of Trustees followed by
the affirmative vote of two-thirds of all outstanding shares of Con Edison
entitled to vote thereon. The lower vote required to authorize such transactions
with respect to the Holding Company will facilitate the authorization of such
transactions if they have been approved by the Holding Company's Board of
Directors.
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Par Value. A designated par value per share is not required under the New
York Business Corporation Law ("NYBCL") and serves no useful purpose in modern
corporate practice. Pursuant to Section 180 of the New York State Tax Law, every
corporation organized under New York law is subject to a tax of one-twentieth of
one percent on the amount of the par value of all the shares that it is
authorized to issue. Authorized stock without par value is taxed (based upon an
assumed par value of $100 per share) at $.05 per share. To reduce taxes in
connection with the formation of the Holding Company, the respective par values
of shares of Holding Company Common Stock ($.10 par value) and the Holding
Company preferred stock ($1.00 par value) have been designated as a lower amount
than those of the Con Edison Common Stock ($2.50 par value ) and Con Edison
preferred stock ($100 par value, other than the $5 Preferred which has no par
value). It is not anticipated that the lower par value of shares of Holding
Company Common Stock or the Holding Company preferred stock will affect the
market value of these shares.
Other Provisions. As described in the next section, the Holding Company's
Restated Certificate of Incorporation and by-laws are also different from Con
Edison's Certificate of Incorporation and by-laws with respect to advance notice
of stockholder proposals and director nominations and certain other matters.
Possible Effect of Certain Holding Company Provisions and New York Law
It is not the intention of Con Edison's Board of Trustees or the Holding
Company's Board of Directors to discourage legitimate offers to enhance
stockholder value. However, certain provisions of the Holding Company's Restated
Certificate of Incorporation and by-laws and New York law may have the effect of
discouraging unilateral tender offers or other attempts to acquire the Holding
Company. To the extent that these provisions discouraged potential takeover
bids, they might limit the opportunity for the Holding Company's stockholders to
sell their shares at a premium over then prevailing market prices.
Authorized But Unissued Shares
Upon implementation of the Holding Company Proposal, not less than
264,404,439 shares of Holding Company Common Stock and 6,000,000 shares of
Holding Company preferred stock will be authorized but unissued. As of October
28, 1997, there were 104,956,601 shares of Con Edison Common Stock and 6,777,850
shares of Con Edison preferred stock authorized but unissued. The existence of
authorized but unissued shares may make more difficult or discourage a
transaction to obtain control of the Holding Company. Such shares might be
issued without stockholder approval in transactions that might prevent or render
more difficult or costly the completion of a takeover transaction. In this
regard, the Holding Company's Restated Certificate of Incorporation grants the
Holding Company's Board of Directors, as Con Edison's Certificate of
Incorporation grants Con Edison's Board of Trustees, broad corporate power to
establish the rights and preferences of preferred stock, one or more classes or
series of which could be issued which would entitle holders to exercise rights
which could have the effect of impeding a takeover, including rights to convert
or exchange the stock into shares of Holding Company Common Stock or other
securities or to demand redemption of the stock at a specified price under
prescribed circumstances related to a change of control.
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Directors and Officers
Removal for Cause Only. Section 706 of the NYBCL provides that directors
can be removed without cause by vote of stockholders if the certificate of
incorporation or by-laws of corporation so provide. Neither Con Edison's
Certificate of Incorporation nor its by-laws includes a provision with respect
to removal of a Trustee of Con Edison, and therefore a Trustee may be removed
only for cause. The Holding Company's Restated Certificate of Incorporation
provides that a director of the Holding Company may be removed from office only
for cause, except that any director elected by a series of Holding Company
preferred stock may be removed upon such terms as may be fixed by the Board of
Directors in connection with the creation of the series of preferred stock.
Limitation of Liability and Indemnification. The Holding Company's
Restated Certificate of Incorporation provides that, except to the extent
limitation of liability or indemnification is not permitted by applicable law:
(i) a director or officer of the Holding Company shall not be liable to the
Holding Company or any of its shareholders for damages for any breach of duty in
such capacity, and (ii) the Holding Company shall fully indemnify any person
made, or threatened to be made a party to an action or proceeding, whether civil
or criminal, including an investigative, administrative or legislative
proceeding, and including an action by or in the right of the Holding Company or
any other enterprise, by reason of the fact that the person is or was a director
or officer of the Holding Company, or is or was serving at the request of the
Holding Company any other enterprise as a director, officer or in any other
capacity, against any and all damages incurred as a result of or in connection
with such action or proceeding or any appeal thereof. Any repeal or modification
of this provision will not adversely affect any limitation of liability or
right, indemnity, immunity or protection of a director or officer of the Holding
Company or any other person under the provision with respect to any act or
omission occurring prior to the repeal or modification.
Con Edison's Certificate of Incorporation provides for limitation of
liability of a Trustee of Con Edison, and Con Edison's by-laws provide for
indemnification of Trustees and officers of Con Edison, to a similar extent as
is provided in the Holding Company's Restated Certificate of Incorporation for
directors and officers of the Holding Company.
Advance Notice By-law
Under the Holding Company's by-laws, written notice of any proposal to be
presented by any stockholder or any person to be nominated by any stockholder
for election as a director must be received by the Secretary of the Holding
Company at the principal executive offices of the Holding Company not less than
70 nor more than 90 days prior to the anniversary of the preceding year's annual
meeting (the anniversary date for the Holding Company's first annual meeting
shall be deemed to be May 19, 1998); provided, however, that if the date of the
annual meeting as first publicly announced or disclosed (in a public filing or
otherwise) is less than 80 days prior to the date of the meeting, such notice
shall be given not more than ten days after such date is first so announced or
disclosed. Neither Con Edison's Certificate of Incorporation nor its by-laws
includes a provision with respect to advance notice of stockholder proposals or
director nominations.
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These advance notice by-laws provisions are intended to provide an orderly
process for stockholder action and provide the Holding Company's Board of
Directors with a meaningful opportunity to consider a proposal or director
nomination by a stockholder and, to the extent deemed necessary or desirable by
the Board, inform all of its stockholders of any recommendation of the Board.
The provisions may provide sufficient time for the Holding Company to institute
litigation or take other steps to respond to a stockholder proposal, or to
prevent the proposal from being acted upon, if such response or prevention is
thought to be necessary or desirable. The provisions for advance notice of
director nominations may inhibit stockholders who do not have any intention of
controlling the Holding Company or the Holding Company's Board of Directors from
participating in the nomination process for directors; such provisions may also
provide sufficient time for the Holding Company to institute litigation or take
other steps to prevent the nominee from being elected or serving if such
prevention is thought to be necessary or desirable.
Section 912 of the NYBCL
Section 912 of the NYBCL applies to Con Edison and would apply to the
Holding Company following implementation of the Holding Company Proposal.
Section 912 prohibits a "business combination" (as defined in Section 912,
generally including mergers, sales and leases of assets, issuances of securities
and similar transactions) by a company or its subsidiary with an "interested
stockholder" (as defined in Section 912, generally the beneficial owner of 20
percent or more of the company's voting stock) within five years after the
person or entity becomes an interested stockholder, unless prior to the person
or entity becoming an interested stockholder, the business combination or the
transaction pursuant to which the person or entity became an interested
stockholder is approved by the company's board of directors. After five years,
the business combination may be consummated only if approved by the holders of a
majority of the outstanding stock of the company entitled to vote thereon,
excluding shares held by the interested stockholder, at a meeting called for the
purpose, or pursuant to a stringent "fair price" formula.
Section 70 of the NYPSL
Under Section 70 of the NYPSL, unless authorized by the PSC, no electric
or gas corporation, such as Con Edison, may directly or indirectly acquire the
stock or bonds of any other corporation incorporated for, or engaged in, the
same or a similar business, or proposing to operate or operating under a
franchise from New York State or any other state or any other municipality. In
general, no stock corporation other than a gas corporation or electric
corporation or street railroad corporation may purchase or acquire, take or
hold, more than ten percent of the voting capital stock of any electric or gas
corporation organized or existing under or by virtue of the laws of New York
except with the consent of, and subject to the terms and conditions set by, the
PSC. No consent may be given by the PSC to any such acquisition unless it has
been shown that the acquisition is in the public interest.
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Preferred Stock of Con Edison
Implementation of the Holding Company Proposal will not alter the rights
of the holders of Con Edison preferred stock as provided in Con Edison's
Certificate of Incorporation. Shares of Con Edison preferred stock will not be
exchanged in the Share Exchange but will continue as shares of Con Edison
preferred stock. Con Edison preferred stock will continue to rank senior to Con
Edison Common Stock as to dividends and as to the distribution of Con Edison's
assets upon any liquidation.
Implementation of the Holding Company Proposal is not expected to affect
adversely the holders of Con Edison preferred stock. Dividends on Con Edison
preferred stock will continue to be paid as before, depending upon the earnings,
financial condition and other relevant factors affecting Con Edison. However,
the assets or earnings of the Holding Company's subsidiaries other than Con
Edison will not be available to pay dividends on Con Edison preferred stock or
to make distributions with respect to such preferred stock in the event of a
liquidation if the Holding Company Proposal is implemented. See "PROPOSAL NO. 1
- - THE HOLDING COMPANY PROPOSAL - The Holding Company's Business - Other Holding
Company Subsidiaries."
Appraisal rights under the NYBCL are not available to holders of Con
Edison preferred stock because the preferred stock is not being exchanged and
will continue as Con Edison preferred stock following implementation of the
Holding Company Proposal.
Following implementation of the Holding Company Proposal, Con Edison will
continue to be subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and will continue to hold
annual shareholder meetings. However, Con Edison may decide not to solicit
proxies from holders of the $5 Preferred in connection with the election of Con
Edison's Trustees and in connection with other matters requiring the approval of
stockholders but not requiring a class vote of the holders of the $5 Preferred
or Con Edison's Cumulative Preferred ($100 par value), since the shares of Con
Edison Common Stock owned by Holding Company will have sufficient voting power
to take action without the vote of the holders. The $5 Preferred and Con
Edison's Cumulative Preferred, 4.65% Series C ($100 par value) are currently
listed on the New York Stock Exchange, and the listing will not be affected by
the Share Exchange. Con Edison will not discontinue proxy solicitation in those
cases where the applicable rules of the New York Stock Exchange require
continued proxy solicitation.
Con Edison has called its Cumulative Preference Stock, 6% Convertible
Series B ($100 par value) for redemption on December 16, 1997 at the redemption
price of $100 per share.] As of October 28, 1997, there were outstanding 42,474
shares of the Series B Preference Stock that were convertible at the option of
their holders into an aggregate of 552,162 shares of Con Edison Common Stock.
The last reported trading price per share of the Series B Preference Stock, as
reported on the New York Stock Exchange on October 3, 1997 was $448 1/2. Shares
of Con Edison Common Stock issued upon conversion of shares of the Series B
Preference Stock prior to the redemption date would be exchanged in the Share
Exchange for shares of Holding Company Common Stock.
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Debt of Con Edison
The debt of Con Edison will continue as obligations of Con Edison
following implementation of the Holding Company Proposal. This debt will not be
obligations of the Holding Company.
Implementation of the Holding Company Proposal
The Holding Company Proposal will be implemented pursuant to the Plan of
Exchange (included as Exhibit A to this Proxy Statement and Prospectus and
incorporated herein by reference) that provides for the Share Exchange, in which
each share of Con Edison Common Stock outstanding immediately prior to the Share
Exchange will be automatically exchanged for one share of Holding Company Common
Stock, the Holding Company will become the owner of all outstanding Con Edison
Common Stock and the shares of Holding Company Common Stock held by Con Edison
immediately prior to the Share Exchange will be canceled. The Plan of Exchange
has been unanimously adopted by Con Edison's Board of Trustees and the Holding
Company's Board of Directors.
Each person who owns Con Edison Common Stock immediately prior to the
Share Exchange will own the same number of shares of Holding Company Common
Stock immediately following the Share Exchange (assuming the person does not
elect the statutory appraisal rights discussed below).
Vote Required
The affirmative vote of the holders of record on the Record Date of
two-thirds of the outstanding shares of Voting Stock is required to approve the
Holding Company Proposal. Approval by two-thirds of the Voting Stock will
necessarily satisfy an additional statutory requirement that a majority of the
outstanding shares of Con Edison Common Stock approve the Share Exchange.
Because the requirement for this proposal is the affirmative vote of two-thirds
of the outstanding shares of Voting Stock, broker non-votes and abstentions will
have the effect of a "no" vote. Holders of Con Edison preferred stock are
entitled to receive notice of the Special Meeting, but only holders of Voting
Stock on the Record Date are entitled to vote at the Special Meeting.
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Conditions To The Share Exchange
In addition to approval of the Holding Company Proposal by the holders of
Voting Stock, the Share Exchange is subject to the satisfaction of the following
conditions:
(i) all necessary orders, authorizations, approvals or waivers from the
PSC and all other applicable regulatory bodies, boards or agencies shall
have been received or remain in full force and effect, as the case may be,
and shall not include, in the sole judgment of Con Edison's Board of
Trustees, unacceptable conditions; (see "PROPOSAL NO. 1 - THE HOLDING
COMPANY PROPOSAL - Regulatory Approvals")
(ii) shares of Holding Company Common Stock to be issued in connection
with the exchange shall have been listed, subject to official notice of
issuance, by the New York Stock Exchange;
(iii) the Holding Company's Restated Certificate of Incorporation shall
have been filed with the New York State Department of State pursuant to
Section 807 of the NYBCL; and
(iv) a certificate of exchange with respect to the Share Exchange shall
have been filed with the New York State Department of State pursuant to
Section 913(d) of the NYBCL.
Regulatory Approvals
The Share Exchange requires the approval of the PSC pursuant to Section 70
of the NYPSL. In September 1997, the PSC approved the PSC Settlement Agreement,
which authorizes a corporate reorganization of Con Edison into a holding company
structure. See "PROPOSAL NO. 1. THE HOLDING COMPANY PROPOSAL - The Holding
Company's Business - Con Edison."
The FERC has held that the transfer of a public utility's common stock
from its existing stockholders to a holding company constitutes a transfer of
the ownership and control of the utility's jurisdictional facilities and is thus
a "disposition of facilities" subject to FERC review and approval under Section
203 of the Federal Power Act. In October 1996, FERC issued an order authorizing
Con Edison to adopt the proposed holding company structure.
A provision in the Atomic Energy Act requires that the NRC consent to the
transfer of control of NRC licenses. The NRC's staff has in the past asserted
that this provision applies to the creation of a holding company by an
NRC-licensed utility company in a transaction such as the Share Exchange. Con
Edison holds NRC licenses, including an operating license, for its Indian Point
2 nuclear generating station. In December 1996, Con Edison submitted a letter to
the NRC informing the NRC of the proposed holding company transaction, and while
reserving its right to contest the NRC's jurisdiction over the transaction,
requested that if the NRC determines that it has jurisdiction, it consent to the
proposed transaction. Con Edison is awaiting NRC action on its letter.
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Amendment or Termination
Con Edison's Board of Trustees and the Holding Company's Board of
Directors may amend or terminate the Plan of Exchange, abandon the Share
Exchange or amend the Holding Company's Restated Certificate of Incorporation or
by-laws at any time prior to the implementation of the Holding Company Proposal.
No amendment, however, may materially and adversely affect the rights of Con
Edison's stockholders, as determined in the sole judgment of Con Edison's Board
of Trustees. Following implementation of the Holding Company Proposal, the
Holding Company's Restated Certificate of Incorporation and by-laws may be
amended in accordance with applicable law.
Exchange of Stock Certificates
If the Holding Company Proposal is implemented, it will not be necessary
for holders of Con Edison Common Stock to physically exchange their existing
stock certificates for certificates of Holding Company Common Stock. The
certificates which represent shares of Con Edison Common Stock outstanding
immediately prior to the implementation of the Holding Company Proposal will
automatically represent an equal number of shares of Holding Company Common
Stock immediately after the implementation and will no longer represent Con
Edison Common Stock. Thereafter, new certificates bearing the name of the
Holding Company will be issued if and as certificates representing shares of Con
Edison Common Stock outstanding immediately prior to the implementation of the
Holding Company Proposal are presented for exchange or transfer.
Listing of Holding Company Common Stock
The Holding Company is applying to have Holding Company Common Stock
listed on the New York Stock Exchange to trade under the symbol "ED". It is
expected that such listing will become effective when the Holding Company
Proposal is implemented. Quotations will be carried in newspapers as they have
been for Con Edison Common Stock. Following implementation of the Holding
Company Proposal, Con Edison Common Stock, which will then be owned by the
Holding Company, will no longer trade on any stock exchange and will be delisted
and deregistered pursuant to Section 12 of the Exchange Act. The $5 Preferred
and Con Edison's Cumulative Preferred 4.65% Series C ($100 Par Value) are traded
on the New York Stock Exchange, and the Share Exchange will not affect those
listings.
Con Edison Stock Plans
Pursuant to the Plan of Exchange, all shares of Con Edison Common Stock
(including uncertificated whole and fractional shares) held under the Con
Edison's Automatic Dividend Reinvestment and Cash Payment Plan, Thrift Savings
Plan for Management Employees, Tax Reduction Act Stock Ownership Plan,
Retirement Income Savings Plan for Weekly Employees and Discount Stock Purchase
Plan, and all options on shares under Con Edison's 1996 Stock Option Plan, will
be automatically exchanged for an equal number of shares, or options on shares
(in the case of the 1996 Stock Option Plan), of Holding Company Common Stock and
the plans will be amended to provide for transactions in Holding Company Common
Stock instead of Con Edison Common Stock. Approval of the Holding Company
Proposal by the holders of the Voting Stock will also be considered approval of
this amendment to the plans.
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Material Federal Income Tax Consequences
Con Edison and the Holding Company have received an opinion from Reid &
Priest LLP, their special tax counsel, regarding material federal income tax
consequences of the implementation of the Holding Company Proposal. The
following is a summary of Reid & Priest's opinion, which is based on certain
assumptions and factual representations:
(1) no income, gain or loss will be recognized by a holder of Con
Edison Common Stock upon the exchange solely of such holder's Con
Edison Common Stock solely for Holding Company Common Stock;
(2) no income, gain or loss will be recognized on account of the Share
Exchange by holders of outstanding shares of Con Edison preferred
stock with respect to their shares of Con Edison preferred stock so
long as such holders do not sell or exchange (including as a result of
a redemption) their shares of Con Edison preferred stock in a
transaction to which Con Edison or an affiliate of Con Edison is a
party and which is treated as part of the Share Exchange;
(3) the tax basis of shares of Holding Company Common Stock received
by a former holder of shares of Con Edison Common Stock in an exchange
described in (1) above in the aggregate will equal the tax basis of
such former holder's shares of Con Edison Common Stock exchanged
therefor, and the holding period for such shares of Holding Company
Common Stock will include the holding period for shares of Con Edison
Common Stock exchanged therefor to the extent that such shares of Con
Edison Common Stock were held as a capital asset at the effective time
of the Share Exchange;
(4) no gain or loss will be recognized by the Holding Company or Con
Edison on account of the Share Exchange or the issuance of shares of
Holding Company Common Stock to the former holders of shares of Con
Edison Common Stock pursuant to the Plan of Exchange; and
(5) the consummation of the Share Exchange will not result in the
termination of the existence of the affiliated group of corporations
of which Con Edison has been the common parent, and Con Edison will be
included in such affiliated group of corporations of which the Holding
Company will become the new common parent.
The former holders of shares of Con Edison Common stock will be required
to attach to their income tax returns, and maintain a permanent record of, a
complete statement of all the facts relating to the Share Exchange. The facts to
be disclosed by a former holder include the former holder's basis in the shares
of Con Edison Common Stock transferred to the Holding Company and the nature and
number of shares of Holding Company Common Stock received in the Share Exchange.
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The United States federal income tax discussion set forth above is based
upon current law and may not apply for certain taxpayers subject to special
treatment under the federal income tax laws (for example, foreign corporations
and individuals who are not citizens or residents of the United States). The
foregoing is not intended to be a comprehensive discussion of all possible
federal income tax consequences of the Share Exchange. Furthermore this Proxy
Statement and Prospectus does not provide any information regarding the tax
consequences of the Share Exchange under the tax laws of any state or any local
or foreign jurisdiction. Holders of Con Edison Common Stock are urged to consult
their own tax advisors with respect to specific tax consequences of the Share
Exchange.
Accounting Treatment
The consolidated assets and liabilities of the Holding Company and its
subsidiaries immediately after the Holding Company Proposal is implemented will
be the same as the consolidated assets and liabilities of Con Edison immediately
before implementation. The Holding Company, on an unconsolidated basis, will
record its investment in Con Edison and in subsidiaries transferred by Con
Edison to the Holding Company at their net book value. The Share Exchange will
result in the Holding Company becoming the owner of the Con Edison Common Stock.
This change in ownership has no accounting effect on Con Edison. The transfers
of subsidiaries by Con Edison to the Holding Company will reduce Con Edison's
retained earnings by an amount equal to the net book value of the subsidiaries.
Statutory Appraisal Rights
If the Holding Company Proposal is implemented, holders of Con Edison
Common Stock who did not vote for the Holding Company Proposal and who timely
dissent and follow the procedures in Sections 623 and 910 of the NYBCL set forth
in Exhibit D to this Proxy Statement and Prospectus ("Dissenting Holders") will
have certain rights to demand payment in cash for the "fair value" of their
shares of Con Edison Common Stock to the extent and on the basis provided in
Sections 623 and 910. Failure to follow precisely any required procedure on a
timely basis may result in the loss of those rights. Dissenting Holders
receiving payment pursuant to those rights would not also be entitled to receive
Holding Company Common Stock. Since Con Edison preferred stock is not being
exchanged in the Share Exchange, holders of Con Edison preferred stock will not
be entitled to statutory appraisal rights.
The following summary of the applicable provisions of Sections 623 and 910
of the NYBCL is not intended to be a complete statement of the provisions and is
qualified in its entirety by reference to the full text of Sections 623 and 910,
copies of which are included as Exhibit D to this Proxy Statement and
Prospectus.
THIS SUMMARY AND EXHIBIT D SHOULD BE REVIEWED CAREFULLY BY ANY COMMON
STOCKHOLDER OF CON EDISON WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS OR
WHO WISHES TO PRESERVE THE RIGHT TO DO SO. FAILURE TO STRICTLY COMPLY WITH ANY
OF THE PROCEDURAL REQUIREMENTS OF SECTION 623 OR SECTION 910 MAY RESULT IN A
TERMINATION OR WAIVER OF APPRAISAL RIGHTS.
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A PERSON HAVING A BENEFICIAL INTEREST IN SHARES OF CON EDISON COMMON STOCK THAT
ARE HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER OR NOMINEE,
MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW THE STEPS SUMMARIZED
BELOW PROPERLY AND IN A TIMELY MANNER TO PERFECT WHATEVER APPRAISAL RIGHTS THE
BENEFICIAL OWNER MAY HAVE.
A Dissenting Holder must file a written objection to the proposal with Con
Edison before the Special Meeting, or at the Special Meeting but before the vote
on the Holding Company Proposal is taken. The written objection must include (i)
a notice of the holder's election to dissent, (ii) the holder's name and
residence address, (iii) the number of shares of Con Edison Common Stock as to
which the holder dissents, and (iv) a demand for payment of the fair value of
the holder's shares of Con Edison Common Stock if the Holding Company Proposal
is implemented. An objection is not required from any Dissenting Holder to whom
Con Edison did not give notice of the Special Meeting in accordance with the
NYBCL. Any written objection must be addressed to Consolidated Edison Company of
New York, Inc., 4 Irving Place, Room 1618-S, New York, New York 10003,
Attention: Secretary.
For purposes of perfecting appraisal rights pursuant to Section 623 of the
NYBCL, the written objection of a Dissenting Holder, which is addressed as
provided above, shall be deemed filed with Con Edison upon receipt of the
objection by Con Edison. Neither voting against nor failure to vote for the
Holding Company Proposal will constitute the written objection required to be
filed by a Dissenting Holder. Failure to vote against the Holding Company
Proposal, however, will not constitute a waiver of rights under Sections 623 and
910 of the NYBCL, provided that a written objection has been properly filed. A
stockholder voting to adopt the Holding Company Proposal will be deemed to have
waived the stockholder's appraisal rights.
A Dissenting Holder may not dissent as to less than all the shares of Con
Edison Common Stock held of record that such holder beneficially owns. A nominee
or fiduciary may not dissent on behalf of any beneficial owner as to less than
all the shares of Con Edison Common Stock of the beneficial owner, as to which
the nominee or fiduciary has a right to dissent, held of record by the nominee
or fiduciary. Furthermore, if the shares of Con Edison Common Stock are owned of
record in a fiduciary capacity, such as by a trustee, guardian or custodian, the
demand must be made in that capacity, and if the shares of Con Edison Common
Stock are owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand must be made by or for all owners of record. An
authorized agent, including one of two or more joint owners, may execute the
demand for appraisal for a holder of record; however, the agent must identify
the record owner or owners and expressly state in the demand that the agent is
acting as agent for the record owner or owners of the shares of Con Edison
Common Stock. A record holder, such an a broker or an agent, who holds shares of
Con Edison Common Stock as a nominee for beneficial owners, some of whom desire
to demand appraisal, must exercise appraisal rights on behalf of the beneficial
owners who desire to demand appraisal with respect to the shares of Con Edison
Common Stock held for the beneficial owners.
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Within ten days after the date the Holding Company Proposal is approved by
vote of the Voting Stock, Con Edison or the Holding Company, as the case may be,
will give written notice of the adoption by registered mail to each Dissenting
Holder. At the time of filing a notice of election to dissent, or within one
month thereafter, a Dissenting Holder must submit the certificate or
certificates representing the holder's shares of Con Edison Common Stock to Con
Edison, for a notation thereon of the election to dissent, after which the
certificates will be returned to the holder or other person who submitted them
on behalf of the holder. Any Dissenting Holder who fails to submit the
certificates for notation will, at the election of Con Edison or the Holding
Company (exercised by written notice to such holder within 45 days from the date
of filing of the notice to dissent), lose the holder's appraisal rights unless a
court, for good cause shown, otherwise directs.
Within 15 days after the expiration of the period within which holders of
shares of Con Edison Common Stock may file their notices of election to dissent,
or within 15 days after the implementation of the Holding Company Proposal,
whichever is later (but in no case later than 90 days after the stockholders'
vote adopting the Holding Company Proposal), Con Edison or the Holding Company,
as the case may be, is required to make a written offer (which, if the Holding
Company proposal has not been implemented, may be conditioned on such
implementation) by registered mail to each Dissenting Holder to pay for the
holder's shares of Con Edison Common Stock at a specified price which Con Edison
or the Holding Company, as the case may be, considers to be their fair value. If
Con Edison or the Holding Company, as
the case may be, and a Dissenting Holder are unable to agree as to the value,
Con Edison or the Holding Company, as the case may be, in accordance with
Section 623(h) of the NYBCL intends to institute a special proceeding in the New
York Supreme Court, New York County to determine the fair value.
Validity of Holding Company Common Stock
The validity of the shares of Holding Company Common Stock to be issued in
the Share Exchange will be passed upon by Milbank, Tweed, Hadley & McCloy,
counsel to Con Edison and the Holding Company, One Chase Manhattan Plaza, New
York, New York 10005.
Experts
The consolidated financial statements incorporated in this Proxy Statement
and Prospectus by reference to Con Edison's Form 10-K, have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
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PROPOSAL NO. 2: THE CON EDISON BOARD PROPOSAL
The Con Edison Board Proposal
The Con Edison Board Proposal is to amend Con Edison's current Certificate
of Incorporation to change the authorized number of Trustees. Article EIGHTH of
Con Edison's Certificate of Incorporation currently provides as follows:
"EIGHTH: The number of Trustees shall be not less than thirteen nor
more than twenty."
If the Con Edison Board Proposal is implemented, Article EIGHTH of Con
Edison's Certificate of Incorporation will provide as follows:
"EIGHTH: The number of Trustees shall be not more than 16."
CON EDISON'S BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED THE CON EDISON
BOARD PROPOSAL, AND RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Reasons for the Con Edison Board Proposal
The Con Edison Board Proposal will promote the efficient and effective
management of Con Edison. The proposed change in the authorized number of
Trustees is consistent with recent corporate governance trends toward smaller
boards of directors. It is also consistent with the Holding Company's Restated
Certificate of Incorporation, which provides for a board of not more than 16.
The elimination of the minimum authorized number of Trustees provides assurance
that the Board of Trustees (i) will not be required to fill a vacancy merely to
comply with an arbitrary minimum number of Trustees, and (ii) will have a
meaningful opportunity to identify qualified persons to fill any unexpected
vacancies in the Board. Con Edison does not intend to reduce the number of
Trustees to the minimum number permitted under New York law. Pursuant to Section
702 of the NYBCL, the number of directors is not to be less than three.
Amendments to the NYBCL, which will become effective in February 1998, will
permit a board of directors to consist of one or more directors.
Con Edison's Board of Trustees
Thirteen Trustees were elected to Con Edison's Board of Trustees at Con
Edison's Annual Meeting of Stockholders held on May 19, 1997. The Trustees were
elected to serve until Con Edison's next Annual Meeting of Stockholders and
until their respective successors shall have been elected and qualified. Two of
the current Trustees will not stand for election at Con Edison's next Annual
Meeting of Stockholders because they will have reached the mandatory retirement
age of 72. For information about the Trustees, see Con Edison's definitive proxy
statement, dated April 7, 1997, for its Annual Meeting of Stockholders held on
May 19, 1997. If the Holding Company Proposal is implemented, the Trustees of
Con Edison will also become directors of the Holding Company, subject to
re-nomination and re-election by the stockholders annually. In the future, the
Trustees of Con Edison and the directors of the Holding Company may or may not
be the same persons. The Holding Company (as owner of the outstanding Con Edison
Common Stock) and the holders of the $5 Preferred will participate in the
election of Con Edison's Trustees. The holders of the Holding Company Common
Stock (the former holders of the Con Edison Common Stock) and the holders of any
35
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Holding Company preferred stock (if any should become outstanding and be
entitled to do so) will participate in the election of the Holding Company's
directors.
Vote Required
The affirmative vote of the holders of record on the Record Date of a
majority of the outstanding shares of Voting Stock is required to approve the
Con Edison Board Proposal. Broker non-votes and abstentions will have the effect
of a "no" vote.
WHERE YOU CAN GET MORE INFORMATION
Con Edison files annual, quarterly and special reports, proxy statements
and other information with the SEC. Following implementation of the Holding
Company Proposal, the Holding Company will also make these filings. You may read
and copy any information Con Edison has filed or the Holding Company will file
at the SEC's public reference rooms in Washington, D.C., New York, N.Y. and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Con Edison's and the Holding Company's SEC
filings are also be available to the public from commercial document retrieval
services or at the Internet web site maintained by the SEC at
"http://www.sec.gov." In addition, Con Edison's SEC filings may be inspected at
the New York and Chicago Stock Exchanges and the Pacific Exchange.
The Holding Company has filed a Registration Statement on Form S-4 to
register with the SEC Holding Company Common Stock to be issued when the Holding
Company Proposal is implemented. This Proxy Statement and Prospectus is a part
of that Registration Statement and constitutes a prospectus of the Holding
Company in addition to being a proxy statement of Con Edison for the Special
Meeting. As permitted by SEC rules, this Proxy Statement and Prospectus does not
contain all the information you can find in the Registration Statement or in its
exhibits. Statements made in this Proxy Statement and Prospectus about the
contents of any document included as an exhibit are qualified in their entirety
by reference to that exhibit.
The SEC allows Con Edison to "incorporate by reference" information into
this Proxy Statement and Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is legally deemed to be part
of this Proxy Statement and Prospectus, except for any information superseded by
information in this Proxy Statement and Prospectus or information that is
subsequently incorporated by reference in this Proxy Statement and Prospectus.
The following Con Edison documents, which have been filed with the SEC (File No.
1-1217) are incorporated by reference in this Proxy Statement and Prospectus:
Annual Report on Form 10-K for the year ended December 31, 1996;
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31,
1997, June 30, 1997 and September 30, 1997;
Current Reports on Form 8-K, dated March 13, 1997, June 17, 1997, August
29, 1997 and September 23, 1997; and
Definitive proxy statement, dated April 7, 1997, for the Annual Meeting of
Stockholders held on May 19, 1997.
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Con Edison is also incorporating by reference any additional documents
that Con Edison files with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act between the date of this Proxy Statement and
Prospectus and up until the implementation of the Holding Company Proposal.
If you are a Con Edison stockholder, you may have already received some of
the documents incorporated by reference. If you need copies of the documents,
you can obtain them through the SEC's Internet website or as otherwise described
above. In addition, Con Edison stockholders may obtain from Con Edison copies of
documents that have been or may be incorporated in this Proxy Statement and
Prospectus, other than exhibits to certain documents, by requesting them in
writing or by telephone from:
CON EDISON INVESTOR SERVICES
P.O. BOX 149
Cooper Station
New York, New York 10276-0149
800-522-5522
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EXHIBIT A
AGREEMENT AND PLAN OF EXCHANGE
Between
Consolidated Edison, Inc.
and
Consolidated Edison Company of New York, Inc.
1. The name of the acquiring corporation is Consolidated Edison, Inc. (the
"Acquiring Corporation"). The name of the subject corporation is
Consolidated Edison Company of New York, Inc. (the "Subject
Corporation"). The Subject Corporation was originally incorporated on
November 10, 1884 under the name "Consolidated Gas Company of New York."
2. (a) The Restated Certificate of Incorporation (as defined below) of
the Acquiring Corporation authorizes the Acquiring Corporation to issue
500,000,000 shares of Common Shares ($.10 par value) ("Common Shares")
and 6,000,000 shares of Preferred Shares ($1.00 par value). As of the
date hereof, 100 shares of Common Shares and no Preferred Shares ($1.00
par value) are outstanding. Holders of the Common Shares of the
Acquiring Corporation are entitled to one vote for every share pursuant
to Section 612 of the Business Corporation Law of the State of New York
("NYBCL"). Holders of the Preferred Shares ($1.00 par value) of the
Acquiring Corporation are not entitled to vote except as fixed by its
Board of Directors pursuant to ARTICLE Fourth of the Restated
Certificate of Incorporation of the Acquiring Corporation and as
otherwise required by applicable law. This specification of the
classes of shares of the shares of the Acquiring Corporation that are
entitled to vote is qualified in its entirety by reference to the
Restated Certificate of Incorporation of the Acquiring Corporation.
(b) The Certificate of Incorporation of the Subject Corporation authorizes
the Subject Corporation to issue (i) 340,000,000 shares of Common Stock
($2.50 Par Value) ("Common Stock"), of which 235,043,399 are outstanding
as of the date hereof; (ii) 1,915,319 shares of $5 Cumulative Preferred
Stock (without par value), of which 1,915,319 shares are outstanding as of
the date hereof; (iii) 6,000,000 shares Cumulative Preferred Stock ($100
Par Value) of which, as of the date hereof, 70,612 shares are outstanding
as 5 3/4% Series A, 138,438 shares are outstanding as 5 1/4% Series B,
153,296 shares are outstanding as 4.65% Series C, 222,330 shares are
outstanding as 4.65% Series D, 475,000 shares are outstanding as 7.20%
Series I, and 370,000 shares are outstanding as 6 1/8% Series J; and (iv)
2,250,000 shares of Cumulative Preference Stock ($100 Par Value), of which
42,474 shares are outstanding on the date hereof as 6% Convertible Series
B. Holders of the Common Stock and $5 Cumulative Preferred Stock (without
par value) of the Subject Corporation are entitled to one vote for every
share pursuant to Section 612 of the NYBCL. Except as otherwise required
by law, holders of the Cumulative Preferred Stock ($100 Par Value) of the
Subject Corporation are not entitled to vote; provided, however, that,
after the $5 Cumulative Preferred Stock (without par value) shall no
longer be outstanding, the Cumulative Preferred Stock shall entitle any
holder thereof to one vote for each share and, in addition, whenever
dividends are in default for certain periods the holders shall be entitled
to certain rights with respect to the election of the Trustees of the
Subject Corporation. Without the consent of the holders of the Cumulative
Preferred Stock ($100 Par Value), the Subject Corporation may not create
or authorize any kind of stock ranking prior to the Cumulative Preferred
Stock or, if such actions would affect the holders of the Cumulative
Preferred Stock adversely, be a party to any consolidation or merger,
create or amend the terms of the Cumulative Preferred Stock or reclassify
the Cumulative Preferred Stock. Holders of the Cumulative Preference Stock
($100 Par Value) of the Subject Corporation are not entitled to vote
except as otherwise required by law. This specification of the classes and
series of shares of the shares of the Subject Corporation that are
entitled to vote is qualified in its entirety by reference to the
Certificate of Incorporation, as amended, of the Subject Corporation.
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(c) The number of outstanding shares of the Cumulative Preference Stock,
6% Convertible Series B ($100 Par Value) and Common Stock of the Subject
Corporation is subject to change prior to the Effective Time (as defined
below) if holders of the Cumulative Preference Stock, 6% Convertible
Series B ($100 Par Value) exercise their right to convert such shares into
shares of Common Stock or if, as provided in Section 4(b) hereof, the
Cumulative Preference Stock, 6% Convertible Series B ($100 Par Value) is
redeemed.
3. Subject to the terms and conditions of this Agreement and Plan of
Exchange, the Exchange (as defined below) shall become effective upon the
filing of a certificate of exchange for the Exchange pursuant to Section
913(d) of the NYBCL ("Certificate of Exchange") by the New York State
Department of State (the "Department of State") or on such date and time
subsequent thereto, not to exceed thirty days, as shall be set forth in
such certificate (the "Effective Time").
4. Prior to the Effective Time,
(a) this Agreement and Plan of Exchange shall be submitted for adoption by
the holders of the Common Stock and $5 Cumulative Preferred Stock (without
par value) of the Subject Corporation, voting together as a single class
(the "Voting Stock") in accordance with Section 913(c) of the NYBCL;
(b) subject to the approval of the New York State Public Service
Commission (the "PSC"), the Subject Corporation shall redeem the
Cumulative Preference Stock, 6% Convertible Series B ($100 Par Value) of
the Subject Corporation; and
(c) the Certificate of Incorporation of the Acquiring Corporation
shall be amended and restated as set forth in Attachment No. 1 to this
Agreement and Plan of Exchange (the "Restated Certificate of
Incorporation").
5. At the Effective Time,
(a) each share of Common Stock of the Subject Corporation shall be
automatically exchanged for one share of the Common Shares of the
Acquiring Corporation (the "Exchange"), which shares of the Acquiring
Corporation shall be fully paid and non-assessable;
(b) the Acquiring Corporation shall acquire and become the owner and
holder of each issued and outstanding share of Common Stock of the Subject
Corporation;
(c) each share of Common Shares of the Acquiring Corporation outstanding
prior to the Effective Time shall be deemed canceled and restored to the
status of authorized but unissued shares;
(d) each share of Common Stock of the Subject Corporation held under each
of the Automatic Dividend Reinvestment and Cash Payment Plan, Thrift
Savings Plan for Management Employees, Tax Reduction Act Stock Ownership
Plan, Retirement Income Savings Plan for Weekly Employees, and Discount
Stock Purchase Plan of the Subject Corporation (the "Stock Plans'") shall
be deemed exchanged for a like number of shares (including any fractional
and uncertificated shares) of Common Shares of the Acquiring Corporation,
which shares shall be held under, or issued under, the Stock Plans as
provided in the Stock Plans for shares of Common Stock of the Subject
Corporation;
A-2
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(e) each unexpired and unexercised option to purchase shares of Common
Stock of the Subject Corporation under the 1996 Stock Option Plan (the
"Option Plan") of the Subject Corporation, whether vested or unvested, (an
"Original Option") will be deemed converted into an option (a "Substitute
Option") to purchase a number of shares of Common Shares of the Acquiring
Corporation equal to the number of shares of Common Stock of the Subject
Corporation that could have been purchased immediately prior to the
Effective Time (assuming full vesting) under the Original Option. In
accordance with Section 424(a) of the Internal Revenue Code of 1986, as
amended, each Substitute Option shall provide the option holder with
rights and benefits that are no less and no more favorable to the holder
than under the Original Option; and
(f) subject to Sections 623 and 910 of the NYBCL, the former holders of
shares of Common Stock of the Subject Corporation shall be entitled only
to receive shares of Common Shares of the Acquiring Corporation in
exchange therefor as provided in this Agreement and Plan of Exchange.
6. The Subject Corporation hereby assigns and the Acquiring Corporation
hereby assumes and succeeds to, effective as of the Effective Time, the
Automatic Dividend Reinvestment and Cash Payment Plan, Discount Stock
Purchase Plan and the Option Plan of the Subject Corporation.
7. The Stock Plans, the Option Plan and the Executive Incentive Plan of the
Subject Corporation are hereby amended, effective as of the Effective
Time, to provide for shares of Common Shares of the Acquiring Corporation
instead of shares of Common Stock of the Subject Corporation.
8. The effectiveness of the Exchange shall be subject to the satisfaction
of the following conditions:
(a) this Agreement and Plan of Exchange shall have been adopted by the
holders of the Voting Stock in accordance with Section 913(c) of the
NYBCL;
(b) all necessary orders, authorizations, approvals or waivers from the
PSC and all other applicable regulatory bodies, boards or agencies shall
have been received, remain in full force and effect, and shall not
include, in the sole judgment of the Board of Trustees of the Subject
Corporation, unacceptable conditions;
(c) shares of Common Shares of the Acquiring Corporation shall have been
listed, subject to official notice of issuance, by the New York Stock
Exchange;
(d) the Restated Certificate of Incorporation of the Acquiring Corporation
shall have been filed with the Department of State pursuant to Section 807
of the NYBCL; and
(e) the Certificate of Exchange shall have been filed with the Department
of State pursuant to Section 913(d) of the NYBCL.
9. It shall not be necessary for holders of Common Stock of the Subject
Corporation to physically exchange their existing stock certificates
for certificates of Common Shares of the Acquiring Corporation. The
certificates which represent shares of Common Stock of the Subject
Corporation outstanding immediately prior to the Effective Time shall
automatically represent an equal number of shares of Common Shares of
the Acquiring Corporation immediately after the Effective Time and will
no longer represent Common Stock of the Subject Corporation.
Thereafter, new certificates bearing the name of the Acquiring
Corporation shall be issued if and as certificates representing shares
of Common Stock of the Subject Corporation outstanding immediately
prior to the Effective Time are presented for exchange or transfer.
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10. Notwithstanding satisfaction of the conditions specified in Section 8
hereof, this Agreement and Plan of Exchange may be amended or
terminated, the Exchange abandoned or the Restated Certificate of
Incorporation of the Acquiring Corporation amended at any time prior to
the filing of the Certificate of Exchange with the Department of
State. No amendment, however, may materially and adversely affect the
rights of the stockholders of the Subject Corporation, as determined in
the sole judgment of the Board of Trustees of the Subject Corporation.
IN WITNESS WHEREOF, this Agreement and Plan of Exchange has been entered into on
October 28, 1997.
Consolidated Edison, Inc.
By: /s/ Eugene R. McGrath
Eugene R. McGrath
Chairman, President and
Chief Executive Officer
Consolidated Edison Company of New York, Inc.
By: /s/ Joan S. Freilich
Joan S. Freilich
Senior Vice President and
Chief Financial Officer
A-4
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EXHIBIT B
RESTATED CERTIFICATE OF INCORPORATION
OF
CONSOLIDATED EDISON, INC.
under
Section 807 of the Business Corporation Law
The undersigned, being the Senior Vice President and Chief Financial Officer and
the Senior Vice President, General Counsel and Secretary of Consolidated Edison,
Inc., a New York corporation, DO HEREBY CERTIFY as follows:
1. The name of the corporation is Consolidated Edison, Inc.
2. The certificate of incorporation of the corporation was filed by the
Department of State
of the State of New York on September 3, 1997.
3. This restated certificate of incorporation was authorized by the board of
directors of the corporation by unanimous written consent, dated _______,
1997, followed by the unanimous written consent of the shareholder of the
corporation, dated ________________, 1997.
4. The certificate of incorporation of the corporation is hereby amended,
as authorized by the Business Corporation Law of the State of New York,
to (i) increase the authorized number of Common Shares from 100 to
500,000,000; (ii) authorize the issuance of 6,000,000 Preferred Shares
of the par value of $1.00 per share; and (iii) provide for the
limitation of liability and indemnification of directors or officers, a
maximum number of directors, removal of directors only for cause,
amendment of the by-laws by the board of directors, shareholders not to
have any preemptive rights and the required approval for certain
transactions. The text of the certificate of incorporation of the
corporation is hereby restated as so amended to read as follows:
FIRST. The name of the corporation is Consolidated Edison, Inc. (the
"Company").
SECOND. The purpose for which the Company is formed is to engage in any
lawful act or activity for which corporations may be organized under the
Business Corporation Law of the State of New York; provided, however, that
the Company is not formed to engage in any act or activity requiring the
consent or approval of any state official, department, board, agency, or
other body without such consent or approval first being obtained.
THIRD. The office of the Company in the State of New York is to be
located in the County of New York, State of New York.
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FOURTH. Authorized Shares.
1. The aggregate number of shares which the Company shall have
authority to issue is 506,000,000, of which 6,000,000 shares of the par
value of $1.00 per share shall be designated "Preferred Shares" and
500,000,000 shares of the par value of $.10 per share shall be designated
"Common Shares."
2. Authority is hereby expressly granted to the Board of Directors
of this Company from time to time to issue the Preferred Shares as
Preferred Shares of any series and, in connection with the creation of
each such series, to fix by resolution or resolutions providing for the
issuance thereof the number of shares of such series, and the
designations, relative rights, preferences, and limitations of such
series, including provisions for sharing dividends and other distributions
of assets with other series of Preferred Shares in the event that
dividends and amounts payable on liquidation are not paid in full, to the
full extent now or hereafter permitted by the law of the State of New
York, except that that holders of Preferred Shares shall not be entitled
to more than one vote for each share of Preferred Shares held. The
Preferred Shares shall have no voting rights except as fixed by the Board
of Directors pursuant to this paragraph and as otherwise required by
applicable law.
FIFTH. The Secretary of State of the State of New York is hereby
designated as the agent of the Company upon whom process against it may be
served, and the post office address to which the Secretary of State shall
mail a copy of any process against the Company which may be served upon
him or her is: Consolidated Edison, Inc., 4 Irving Place, New York, New
York 10003; Attention: Corporate Secretary.
SIXTH. Except to the extent limitation of liability or indemnification is
not permitted by applicable law: (i) a Director or officer of the Company
shall not be liable to the Company or any of its shareholders for damages
for any breach of duty in such capacity, and (ii) the Company shall fully
indemnify any person made, or threatened to be made, a party to an action
or proceeding, whether civil or criminal, including an investigative,
administrative or legislative proceeding, and including an action by or in
the right of the Company or any other corporation of any type or kind,
domestic or foreign, or any partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise ("Other
Enterprise"), by reason of the fact that the person, or the testator or
intestate of the person, is or was a Director or officer of the Company,
or is or was serving at the request of the Company any Other Enterprise as
a director, officer or in any other capacity, against any and all damages
incurred as a result of or in connection with such action or proceeding or
any appeal thereof, and, except in the case of an action or proceeding
specifically approved by the Board of Directors of the Company, the
Company shall pay expenses incurred by or on behalf of such person in
defending such action or proceeding or any appeal thereof in advance of
the final disposition thereof promptly upon receipt by the Company, from
time to time, of a written demand of the person for the advancement,
together with an undertaking by or on behalf of the person to repay any
expenses so advanced to the extent that the person is ultimately found not
to be entitled to indemnification for the
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expenses. For purposes of this Article Sixth, "damages" shall mean
judgments, fines, amounts paid in settlement, penalties, punitive damages,
excise or other taxes assessed with respect to an employee benefit plan
and reasonable expenses, including attorneys' fees and disbursements
actually and necessarily incurred. This Article Sixth shall be deemed to
constitute contractual obligations of the Company, subject to any
amendment of this Certificate of Incorporation, and shall not limit or
exclude, but shall be in addition to, any other rights which may be
granted by or pursuant to any statute, certificate of incorporation,
by-law, resolution or agreement. Any repeal or modification of this
Article Sixth shall not adversely affect any limitation of liability or
right, indemnity, immunity or protection of a Director or officer of the
Company or other person existing hereunder with respect to any act or
omission occurring prior to the repeal or modification. The Company may,
if authorized by the Board of Directors, enter into an agreement with any
person who is, or is about to become, a Director or officer of the
Company, or who is serving, or is about to serve, at the request of the
Company, any Other Enterprise as a director, officer or in any other
capacity, which agreement may provide for indemnification of the person
and advancement of defense expenses to the person upon such terms, and to
the extent, as may be permitted by law. It is the intent of this Article
Sixth to require the Company to indemnify the persons referred to herein
for the aforementioned damages, in each and every circumstance in which
such indemnification could lawfully be permitted by an express provision
of this Certificate of Incorporation, and the indemnification required by
this Article Sixth shall not be limited by the absence of an express
recital of the circumstances.
SEVENTH. The number of Directors of the Company shall be not more than 16,
the exact number of the Directors to be determined from time to time
solely by the affirmative vote of a majority of the total number of
Directors the Company would have if there were no vacancies in the Board
of Directors. A Director may be removed from office only for cause, except
that any Director elected by a series of Preferred Shares may be removed
upon such terms as may be fixed by the Board of Directors in connection
with the creation of the series of Preferred Shares pursuant to Article
Fourth hereof.
EIGHTH. The By-laws of the Company may be adopted, amended or
repealed by the affirmative vote of a majority of the Directors then in
office.
NINTH. No holder of shares of the Company of any class shall have any
preemptive right to purchase or subscribe for any part of the shares of
the Company or of any shares of the Company to be issued by reason of any
increase of the authorized shares of the Company, or to purchase or
subscribe for any bonds, certificates of indebtedness, debentures or other
securities convertible into or carrying rights, options or warrants to
purchase shares of the Company or to purchase or subscribe for any shares
of the Company purchased by or on behalf of the Company, or to have any
preemptive rights as now or hereafter defined by applicable law.
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TENTH. Except as otherwise required by applicable law, the approval of the
Board of Directors followed by the affirmative vote of a majority of all
outstanding shares of the Company entitled to vote thereon shall be
required for (i) a merger or consolidation to which the Company is a
party, other than a merger between the Company and a subsidiary of the
Company for which authorization by the shareholders of the Company is not
required by applicable law; (ii) the sale, lease, exchange or other
disposition of all or substantially all the assets of the Company; or
(iii) a binding share exchange to which the Company is a party.
IN WITNESS WHEREOF, we have made, signed, and subscribed this restated
certificate of incorporation this ___day of ________ 1997 and affirm that the
statements contained herein are true under the penalties of perjury.
Joan S. Freilich
Senior Vice President and
Chief Financial Officer
Peter J. O'Shea, Jr.
Senior Vice President,
General Counsel and Secretary
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<PAGE>
EXHIBIT C
BY-LAWS
OF
CONSOLIDATED EDISON, INC.
Effective as of __________________
Shareholder's Meetings
SECTION 1. Meetings of the shareholders of the Company may be held at such time
and at such place within or without the State of New York as may be designated
by the Board of Directors or stockholders holding one-fourth of the outstanding
shares entitled to vote at such meeting, except that the annual meeting of
shareholders of the Company for the election of Directors and such other
business as may properly come before such meeting shall be held on the third
Monday in May of each year, unless otherwise determined by the Board of
Directors.
Notice
Shareholders'
Meeting
SECTION 2. Notice of the time and place of each shareholders' meeting and the
purpose of the meeting shall be mailed by the Secretary of the Company, or other
officer performing his or her duties, not less than the minimum nor more than
the maximum number of days permitted under New York law, to each shareholder of
record, at his or her last known Post Office address; provided, however, that if
a shareholder be present at a meeting, in person or by proxy, without protesting
prior to the conclusion of the meeting the lack of notice of such meeting, or in
writing waives notice thereof before or after the meeting, the mailing to the
shareholder of notice of the meeting is unnecessary.
Quorum
Shareholders
SECTION 3. The holders of a majority of the outstanding shares of the Company
entitled to vote at a shareholders' meeting, present in person or by proxy,
shall constitute a quorum, but less than a quorum shall have power to adjourn.
Chairman,
Secretary,
Shareholders' Meetings
SECTION 4. The Chairman of the Board of Directors, or in his or her absence the
President of the Company, shall preside over each shareholders' meeting as
Chairman of the meeting. In their absence, a Vice President designated by the
Board of Directors shall preside as Chairman of the meeting. The Chairman of the
meeting is authorized to establish such procedures for the conduct of the
meeting, and to make all determinations with respect to the conduct of the
meeting, that the Chairman, in his or her sole discretion, deems appropriate,
including determinations as to whether business was properly brought before the
meeting. If the Chairman of the meeting shall determine, in his or her sole
discretion, that any business was not properly brought before the meeting or was
not in compliance, or conflicts, with the procedures for the conduct of the
meeting, these By-laws, the Company's Certificate of Incorporation or any
applicable law or regulation, then such business shall not be voted upon, or
otherwise considered, at the meeting. The Secretary of the Company shall act as
Secretary of the meeting, if present. In his or her absence, the Chairman of the
meeting may appoint any person to act as Secretary of the meeting.
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Adjournment of Shareholders' Meetings
SECTION 5. A shareholders' meeting may be adjourned by the Chairman of the
meeting, or by the vote of a majority of the shares of the Company that are
represented, in person or by proxy, at the meeting whether or not a quorum is
present.
Inspectors of Election
SECTION 6. At each meeting of shareholders at which votes are to be taken by
ballot there shall be at least two and not more than five inspectors of election
of shareholders' votes, who shall be either designated prior to such meeting by
the Board of Trustees or, in the absence of such designation, appointed by the
Chairman of the meeting.
Shareholder Proposals
SECTION 7. Business properly brought before any shareholders' meeting shall
include matters specifically set forth in the Company's notice of the meeting
given to shareholders and matters which the Chairman of the meeting, in his or
her sole discretion, causes to be placed on the agenda of any such meeting. Such
business shall also include any proposal of a shareholder of this Company and
any nomination by a shareholder of a person or persons for election as director
or directors, if such shareholder has made a written request to this Company to
have such proposal or nomination considered at such meeting, as provided herein,
and further provided that such proposal or nomination is otherwise proper for
consideration under the procedures for the conduct of the meeting, these
By-laws, the Company's Certificate of Incorporation or any applicable law or
regulation.
Written notice of any proposal to be presented by any shareholder or any person
to be nominated by any shareholder for election as a Director must be received
by the Secretary of the Company at its principal executive office not less than
70 nor more than 90 days prior to the anniversary date of the previous year's
annual meeting (the anniversary date for the Company's first annual meeting
shall be deemed to be May 19, 1998); provided, however, that if the date of the
annual meeting is first publicly announced or disclosed (in a public filing or
otherwise) less than 80 days prior to the date of the meeting, such notice shall
be given not more than ten days after such date is first so announced or
disclosed. Public notice shall be deemed to have been given more than 80 days in
advance of the annual meeting if the Company shall have previously disclosed, in
these By-laws or otherwise, that the annual meeting in each year is to be held
on a determinable date, unless and until the Board of Directors determines to
hold the meeting on a different date.
A shareholder's notice of any proposal shall set forth the text of the proposal,
a brief statement of the reasons why the shareholder favors the proposal, the
shareholder's name and address, the number and class of all shares of the
Company beneficially owned by the shareholder, any material interest of the
shareholder in the proposal and, if the shareholder intends to solicit proxies
in support of the proposal, a statement to that effect.
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<PAGE>
Shareholder Nominations of Directors
A shareholder's notice of any person to be nominated by the shareholder for
election as a Director shall set forth the name of the person to be nominated,
the number and class of all shares of the Company beneficially owned by the
shareholder's nominee, any information regarding the shareholder's nominee that
would have been required to be included in a proxy statement filed pursuant to
the rules under the Securities Exchange Act of 1934, as amended, if proxies for
such shareholder's nominee had been solicited by the Board of Directors, the
signed consent of the shareholder's nominee to serve as a Director if elected,
the shareholder's name and address, the number and class of all shares of the
Company beneficially owned by the shareholder, a description of all arrangements
or understandings between the shareholder and the shareholder's nominee or any
other person or persons (naming such person or persons) with respect to the
nomination of the shareholder's nominee and, if the shareholder intends to
solicit proxies in support of the proposal, a statement to that effect.
Board of Directors
Vacancies
Fees
SECTION 8. The affairs of the Company shall be managed under the direction of
the Board of Directors, who shall be elected annually by the shareholders by
ballot and shall hold office until their successors are elected and qualified.
Vacancies in the Board of Directors may be filled by the Board by the vote of a
majority of Directors then in office. Members of the Board of Directors shall be
entitled to receive such reasonable fees or other forms of compensation, on a
per diem, annual or other basis, as may be fixed by resolution of the Board of
Directors or the shareholders in respect of their services as such, including
attendance at meetings of the Board and its committees; provided, however, that
nothing herein contained shall be construed as precluding any Director from
serving the Company in any capacity other than as a member of the Board or a
committee thereof and receiving compensation for such other services.
Board Meetings
Notices
Quorum
Participation by Conference Telephone
Action by Unanimous Written Consent
SECTION 9. Meetings of the Board of Directors shall be held at the time and
place fixed by resolution of the Board or upon call of the Chairman of the
Board, the President, or any three Directors. The Secretary of the Company or
officer performing his duties shall give 24 hours' notice of all meetings of the
Board provided that a meeting may be held without notice immediately after the
annual election of Directors, and notice need not be given of regular meetings
held at times fixed by resolution of the Board. Meetings may be held at any time
without notice if all the Directors are present and none protests the lack of
notice either prior to the meeting or at its commencement, or if those not
present waive notice either before or after the meeting. Notice by mailing or
telegraphing, telecopying, electronically mailing or delivering by hand, to the
usual business address, residence or electronic mailbox of the Director not less
than the time above specified before the meeting shall be sufficient. A majority
of the Directors in office, but not less than one-third of the entire Board,
shall constitute a quorum, but less than a quorum shall have power to adjourn.
The Chairman of the Board or, in his or her absence, a Chairman pro tem elected
by the meeting from among the Directors present shall preside at all meetings of
the Board. Any one or more members of the Board may participate in a meeting of
the Board by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at such
meeting. Any action required or permitted to be taken by the Board may be taken
without a meeting if all members of the Board consent in writing to the
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<PAGE>
adoption of a resolution authorizing the action. Each resolution so adopted and
the written consents thereto by the members of the Board shall be filed with the
minutes of the proceedings of the Board.
Appointment of Executive Committee
Executive Committee Quorum
Other Committees
Participation by Conference Telephone
Action by Unanimous Written Consent
SECTION 10. The Board of Directors, as soon as may be after the election of
Directors in each year, may by a resolution passed by a majority of the entire
Board, appoint an Executive Committee, to consist of the Chairman of the Board
and three or more additional Directors as the Board may from time to time
determine, which shall have and may exercise during the intervals between the
meetings of the Board all the powers vested in the Board except that neither the
Executive Committee nor any other committee appointed pursuant to this section
of these By-laws shall have authority as to any of the following matters: the
submission to shareholders of any action as to which shareholders' authorization
is required by law; the filling of vacancies on the Board or on any committee
thereof; the fixing of compensation of any Directors for serving on the Board or
on any committee thereof; the amendment or repeal of these By-laws; or the
adoption of new By-laws; and the amendment or repeal of any resolution of the
Board which by its terms shall not be so amendable or repealable. The Board
shall have the power at any time to change the membership of the Executive
Committee and to fill vacancies in it. The Executive Committee may make rules
for the conduct of its business and may appoint such committees and assistants
as it may deem necessary. Four members of the Executive Committee shall
constitute a quorum. The Chairman of the Board or, in his or her absence, a
Chairman pro tem elected by the meeting from among the members of the Executive
Committee present shall preside at all meetings of the Executive Committee. The
Board may designate one or more Directors as alternate members of any committee
appointed pursuant to this section of the By-laws who may replace any absent
member or members at any meeting of the committee. The Board of Directors may
also from time to time appoint other committees consisting of three or more
Directors with such powers as may be granted to them by the Board of Directors,
subject to the restrictions contained in this section of the By-laws. Any one or
more members of any committee appointed pursuant to this section may participate
in any meeting of the committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at the meeting. Any action required or permitted to be taken
by any committee appointed pursuant to this section may be taken without a
meeting if all members of the committee consent in writing to the adoption of a
resolution authorizing the action. Each resolution so adopted and the written
consents thereto by the members of the committee shall be filed with the minutes
of the proceedings of the committee.
Election of Officers
SECTION 11. The Board of Directors, as soon as may be after the election of
Directors in each year, shall elect from their number a Chairman of the Board,
who shall be the chief executive officer of the Company, and shall elect a
President. The Board shall also elect one or more Vice Presidents, a Secretary
and a Treasurer, and may from time to time elect such other officers as they may
deem proper. Any two or more offices may be held by the same person, except as
otherwise may be required by law.
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<PAGE>
Term of Office
SECTION 12. The term of office of all officers shall be until the next election
of Directors and until their respective successors are chosen and qualify, but
any officer may be removed from office at any time by the Board of Directors.
Vacancies among the officers may be filled by the Board of Directors at any
meeting.
Duties of Executive Officers
Duties of Other Officers
SECTION 13. The Chairman of the Board and the President shall have such duties
as usually pertain to their respective offices, except as otherwise directed by
the Board of Directors or the Executive Committee, and shall also have such
powers and duties as may from time to time be conferred upon them by the Board
of Directors or the Executive Committee. In the absence or disability of the
Chairman of the Board, the President shall perform the duties and exercise the
powers of the Chairman of the Board. In the absence or disability of the
President, one of the Vice Presidents, as designated by the Board of Directors,
shall perform the duties and exercise the powers of the President . The Vice
Presidents and the other officers of the Company shall have such duties as
usually pertain to their respective offices, except as otherwise directed by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President, and shall also have such powers and duties as may from time to time
be conferred upon them by the Board of Directors, the Executive Committee, the
Chairman of the Board or the President.
Depositories
Authorization To Transfer Funds
SECTION 14. The Board of Directors shall select such depositories as they shall
deem proper for the funds of the Company. All checks and other transfers of such
deposited funds shall be authorized only pursuant to resolutions of the Board of
Directors. No officers, agents, employees of the Company, or other person, alone
or with others, shall have power to make any checks, notes, drafts or other
negotiable instruments in the name of the Company or to bind the Company
thereby, except pursuant to resolutions of the Board of Directors.
Share Transfers
SECTION 15. Transfer of shares of the Company will be registered on the books of
the Company maintained for that purpose upon presentation of share certificates
appropriately endorsed. The Board of Directors may, in their discretion, appoint
one or more registrars of the stock.
Limitation of Liability
Indemnification
SECTION 16. The Company shall limit the liability to the Company of, and
indemnify, Directors and officers of the Company and other persons serving at
the request of the Company any other enterprise as a director, officer or in any
other capacity as and to the extent provided in the Certificate of Incorporation
of the Company.
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<PAGE>
EXHIBIT D
SECTIONS 623 AND 910
OF THE NEW YORK BUSINESS CORPORATION LAW
Section 623. PROCEDURE TO ENFORCE STOCKHOLDER'S RIGHT TO RECEIVE PAYMENT
FOR SHARES.--(a) A stockholder intending to enforce his right under a section of
this chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the meeting
of stockholders at which the action is submitted to a vote, or at such meeting
but before the vote, written objection to the action. The objection shall
include a notice of his election to dissent, his name and residence address, the
number and classes of shares as to which he dissents and a demand for payment of
the fair value of his shares if the action is taken. Such objection is not
required from any stockholder to whom the corporation did not give notice of
such meeting in accordance with this chapter or where the proposed action is
authorized by written consent of stockholders without a meeting.
(b) Within ten days after the stockholders' authorization date, which term
as used in this section means the date on which the stockholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite stockholders, the corporation shall give
written notice of such authorization or consent by registered mail to each
stockholder who filed written objection or from whom written objection was not
required, excepting any stockholder who voted for or consented in writing to the
proposed action and who thereby is deemed to have elected not to enforce his
right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any stockholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any stockholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election to
dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.
(d) A stockholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner, as to which such nominee
or fiduciary has a right to dissent, held of record by such nominee or
fiduciary.
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(e) Upon consummation of the corporate action, the stockholder shall cease
to have any of the rights of a stockholder except the right to be paid the fair
value of his shares and any other rights under this section. A notice of
election may be withdrawn by the stockholder at any time prior to his acceptance
in writing of an offer made by the corporation, as provided in paragraph (g),
but in no case later than sixty days from the date of consummation of the
corporate action except that if the corporation fails to make a timely offer, as
provided in paragraph (g), the time for withdrawing a notice of election shall
be extended until sixty days from the date an offer is made. Upon expiration of
such time, withdrawal of a notice of election shall require the written consent
of the corporation. In order to be effective, withdrawal of a notice of election
must be accompanied by the return to the corporation of any advance payment made
to the stockholder as provided in paragraph (g). If a notice of election is
withdrawn, or the corporate action is rescinded, or a court shall determine that
the stockholder is not entitled to receive payment for his shares, or the
stockholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares and he shall be reinstated to all his
rights as a stockholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion, but
without prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
(f) At the time of filing the notice of election to dissent or within one
month thereafter the stockholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the stockholder
or other person who submitted them on his behalf. Any stockholder of shares
represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate bearing
such notation, each new certificate issued therefor shall bear a similar
notation together with the name of the original dissenting holder of the shares
and a transferee shall acquire no rights in the corporation except those which
the original dissenting stockholder had at the time of the transfer.
(g) Within fifteen days after the expiration of the period within which
stockholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action in consummated, whichever is later (but
in no case later than ninety days from the stockholders' authorization date),
the corporation or, in the case of a merger or consolidation, the surviving or
new corporation, shall make a written offer by registered mail to each
stockholder who has filed such notice of election to pay for his shares at a
specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares.
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If the corporate action has been consummated, such offer shall also be
accompanied by (1) advance payment to each such stockholder who has submitted
the certificates representing his shares to the corporation, as provided in
paragraph (f), of an amount equal to eighty percent of the amount of such offer,
or (2) as to each stockholder who has not yet submitted his certificates a
statement that advance payment to him of an amount equal to eighty percent of
the amount of such offer will be made by the corporation promptly upon
submission of his certificates. If the corporate action has not been consummated
at the time of the making of the offer, such advance payment or statement as to
advance payment shall be sent to each stockholder entitled thereto forthwith
upon consummation of the corporate action. Every advance payment or statement as
to advance payment shall include advice to the stockholder to the effect that
acceptance of such payment does not constitute a waiver of any dissenters'
rights. If the corporate action has not been consummated upon the expiration of
the ninety day period after the stockholders' authorization date, the offer may
be conditioned upon the consummation of such action. Such offer shall be made at
the same price per share to all dissenting stockholders of the same class, or if
divided into series, of the same series and shall be accompanied by a balance
sheet of the corporation whose shares the dissenting stockholder holds as of the
latest available date, which shall not be earlier than twelve months before the
making of such offer, and a profit and loss statement or statements for not less
than a twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the foregoing,
the corporation shall not be required to furnish a balance sheet or profit and
loss statement or statements to any stockholder to whom such balance sheet or
profit and loss statement or statements were previously furnished, nor if in
connection with obtaining the stockholders' authorization for or consent to the
proposed corporate action the stockholders were furnished with a proxy or
information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any stockholder agree upon the price to be paid
for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and any
dissenting stockholder or stockholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:
(1) The corporation shall, within twenty days after the expiration
of whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in which
the office of the corporation is located to determine the rights of
dissenting stockholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is a
foreign corporation without an office in this state, such proceeding shall
be brought in the county where the office of the domestic corporation,
whose shares are to be valued, was located.
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(2) If the corporation fails to institute such proceeding within
such period of twenty days, any dissenting stockholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting stockholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon
each dissenting stockholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting stockholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting stockholder,
as to whom the corporation requests the court to make such determination,
is entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
stockholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value
as of the close of business on the day prior to the stockholders'
authorization date. In fixing the fair value of the shares, the court
shall consider the nature of the transaction giving rise to the
stockholder's right to receive payment for shares and its effects on the
corporation and its stockholders, the concepts and methods then customary
in the relevant securities and financial markets for determining fair
value of shares of a corporation engaging in a similar transaction under
comparable circumstances and all other relevant factors. The court shall
determine the fair value of the shares without a jury and without referral
to an appraiser or referee. Upon application by the corporation or by any
stockholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the
shares whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting stockholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the date the corporate
action was consummated to the date of payment. In determining the rate of
interest, the court shall consider all relevant factors, including the
rate of interest which the corporation would have had to pay to borrow
money during the pendency of the proceeding. If the court finds that the
refusal of any stockholder to accept the corporate offer of payment for
his shares was arbitrary, vexatious or otherwise not in good faith, no
interest shall be allowed to him.
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(7) Each party to such proceeding shall bear its own costs and
expenses, including the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in
its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by the corporation against any or all of the
dissenting stockholders who are parties to the proceeding, including any
who have withdrawn their notices of election as provided in paragraph (e),
if the court finds that their refusal to accept the corporate offer was
arbitrary, vexatious or otherwise not in good faith. The court may, in its
discretion, apportion and assess all or any part of the costs, expenses
and fees incurred by any or all of the dissenting stockholders who are
parties to the proceeding against the corporation if the court finds any
of the following: (A) that the fair value of the shares as determined
materially exceeds the amount which the corporation offered to pay; (B)
that no offer or required advance payment was made by the corporation; (C)
that the corporation failed to institute the special proceeding within the
period specified therefor; or (D) that the action of the corporation in
complying with its obligations as provided in this section was arbitrary,
vexatious or otherwise not in good faith. In making any determination as
provided in clause (A), the court may consider the dollar amount or the
percentage, or both, by which the fair value of the shares as determined
exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding,
the corporation shall pay to each dissenting stockholder the amount found
to be due him, upon surrender of the certificate for any such shares
represented by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed
value therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be canceled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.
(j) No payment shall be made to a dissenting stockholder under this
section at a time when the corporation is insolvent or when such payment would
make it insolvent. In such event, the dissenting stockholder shall, at his
option:
(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if
it is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting stockholders,
and if it is not liquidated, retain his right to be paid for his shares,
which right the corporation shall be obliged to satisfy when the
restrictions of this paragraph do not apply.
(3) The dissenting stockholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation
within thirty days after the corporation has given him written notice that
payment for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting stockholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice
given to him within twenty days after the expiration of such period of
thirty days.
D-5
<PAGE>
(k) The enforcement by a stockholder of his right to receive payment for
his shares in the manner provided herein shall exclude the enforcement by such
stockholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in paragraph (e), and except that this
section shall not exclude the right of such stockholder to bring or maintain an
appropriate action to obtain relief on the ground that such corporate action
will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to
be given by a corporation to a stockholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of stockholders).
(m) This section shall not apply to foreign corporations except an
provided in subparagraph (e)(2) of section 907 (Merger or consolidation of
domestic and foreign corporations).
<PAGE>
Section 910. RIGHT OF STOCKHOLDER TO RECEIVE PAYMENT FOR SHARES UPON
MERGER OR CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF
ASSETS, OR SHARE EXCHANGE.--(a) A stockholder of a domestic corporation shall,
subject to and by complying with section 623 (Procedure to enforce stockholders'
right to receive payment for shares), have the right to receive payment of the
fair value of his shares and the other rights and benefits provided by such
section, in the following cases:
(1) any stockholder entitled to vote who does not assent to the taking of
an action specified in subparagraphs (A), (B) and (C).
(A) Any plan of merger or consolidation to which the corporation is a
party; except that the right to receive payment of the fair value of his shares
shall not be available:
(i) To a stockholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary corporations),
or paragraph (c) of section 907 (Merger or consolidation of domestic and
foreign corporations); and
(ii) To a stockholder of the surviving corporation in a merger
authorized by this article, other than a merger specified in subparagraph
(i), unless such merger effects one or more of the changes specified in
subparagraph (b)(6) of section 806 (Provisions as to certain proceedings)
in the rights of the shares held by such stockholder.
(B) Any sale, lease, exchange or other disposition of all or substantially
all of the assets of a corporation which requires stockholder approval under
section 909 (Sale, lease, exchange or other disposition of assets) other than a
transaction wholly for cash where the stockholders' approval thereof is
conditioned upon the dissolution of the corporation and the distribution of
substantially all its net assets to the stockholders in accordance with their
respective interests within one year after the date of such transaction.
(C) Any share exchange authorized by section 913 in which the corporation
is participating as a subject corporation; except that the right to receive
payment of the fair value of his shares shall not be available to a stockholder
whose shares have not been acquired in the exchange.
(2) Any stockholder of the subsidiary corporation in a merger authorized
by section 905 or paragraph (c) of section 907, or in a share exchange
authorized by paragraph (g) of section 913, who files with the corporation a
written notice of election to dissent as provided in paragraph (c) of section
623.
D-6
<PAGE>
II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Sections 721 to 725 of the New York Business
Corporation Law ("NYBCL") which provide for indemnification of directors and
officers. Pursuant to Section 721 of the NYBCL, no indemnification shall be made
to or on behalf of a director or officer if a judgment or other final
adjudication adverse to the director or officer establishes that his or her acts
were committed in bad faith or were the results of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that he
or she personally gained in fact a financial profit or other advantage to which
he or she was not legally entitled. Section 402(b) of the NYBCL permits a
certificate of incorporation to set forth a provision limiting or eliminating
the personal liability of directors to a corporation or its shareholders for
damages for any breach of duty in such capacity, provided that no such provision
shall eliminate or limit the liability of a director (i) if a judgment or other
final adjudication adverse to him or her establishes that his or her acts were
in bad faith or involved intentional misconduct or a knowing violation of law or
(ii) that he or she personally gained in fact a financial profit or other
advantage to which he or she was not legally entitled, or (iii) in certain other
cases specified in Section 719 of the NYBCL.
Article SIXTH of Registrant's Restated Certificate of Incorporation
provides that, except to the extent limitation of liability or indemnification
is not permitted by applicable law: (i) a director or officer of the Registrant
shall not be liable to the Registrant or any of its shareholders for damages for
any breach of duty in such capacity, and (ii) the Registrant shall fully
indemnify any person made, or threatened to be made a party to an action or
proceeding, whether civil or criminal, including an investigative,
administrative or legislative proceeding, and including an action by or in the
right of the Registrant or any other enterprise, by reason of the fact that the
person is or was a director or officer of the Registrant, or is or was serving
at the request of the Registrant any other enterprise as a director, officer or
in any other capacity, against any and all damages incurred as a result of or in
connection with such action or proceeding or any appeal thereof.
As permitted by Section 726 of the NYBCL, Registrant has insurance (a) to
indemnify Registrant for obligations it incurs for indemnification of its
directors and officers, and (b) to indemnify directors and officers of
Registrant for losses, costs and expenses incurred by them in actions brought
against them in connection with their acts as directors or officers for which
they are not indemnified by Registrant. No insurance payment will be made to any
director or officer if a judgment or other final adjudication adverse to the
director or officer establishes that his or her acts of active and deliberate
dishonesty were material to the cause of action so adjudicated, or that he or
she personally gained in fact a financial profit or other advantage to which he
or she was not legally entitled. Registrant may also purchase insurance coverage
insuring the directors and officers of Registrant against certain liabilities
that could arise in connection with administration of Registrant's employee
benefit plans.
<PAGE>
II-2
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed herewith.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
2 Agreement and Plan of Exchange. (Included as Exhibit A to the Proxy
Statement and Prospectus in Part I of this Registration Statement.)
3.1 Restated Certificate of Incorporation of Registrant. (Included as
Exhibit B to the Proxy Statement and Prospectus in Part I of this
Registration Statement.)
3.2 By-laws of Registrant. (Included as Exhibit C to the Proxy Statement
and Prospectus in Part I of this Registration Statement.)
3.3.1 Restated Certificate of Incorporation of Consolidated Edison Company
of New York, Inc. ("Con Edison") filed with the New York State
Department of State on December 31, 1984. (Designated in Con
Edison's Annual Report on Form 10-K for the year ended December 31,
1989 (File No. 1-1217) as Exhibit 3(a).)
3.3.2 Certificate of Amendment of Restated Certificate of Incorporation of
Con Edison filed with the New York State Department of State on May
16, 1988. (Designated in Con Edison's Annual Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-1217) as Exhibit 3(b).)
3.3.3 Certificate of Amendment of Restated Certificate of Incorporation of
Con Edison filed with the New York State Department of State on June
2, 1989. (Designated in Con Edison's Annual Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-1217) as Exhibit 3(c).)
3.3.4 Certificate of Amendment of Restated Certificate of Incorporation of
Con Edison filed with the New York State Department of State on
April 28, 1992. (Designated in Con Edison's Current Report on Form
8-K, dated April 24, 1992, (File No. 1-1217) as Exhibit 4(d).)
3.3.5 Certificate of Amendment of Restated Certificate of Incorporation of
Con Edison filed with the New York State Department of State on
August 21, 1992. (Designated in Con Edison's Current Report on Form
8-K, dated August 20, 1992, (File No. 1-1217) as Exhibit 4(e).)
3.4 By-laws of Con Edison. (Designated in Con Edison's Annual Report on
Form 10-K for the year ended December 31, 1996 (File No. 1-1217) as
Exhibit 3.2.)
5 Opinion of Milbank, Tweed, Hadley & McCloy.
8 Opinion of Reid & Priest LLP
23.1 Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5)
23.2 Consent of Reid & Priest LLP(included in Exhibit 8)
23.3 Consent of Price Waterhouse LLP
23.4 Consents of Con Edison's Trustees
99.1 Form of Proxy
99.2 Amended and Restated Agreement and Settlement, dated September 19,
1997, between Con Edison and the Staff of the New York State Public
Service Commission (without Appendices). (Designated in Con Edison's
Current Report on Form 8-K, dated September 23, 1997, (File No.
1-1217) as Exhibit 10.)
(b) The financial statement schedules are incorporated by reference from
Con Edison's Annual Report on Form 10-K for the fiscal year ended December 31,
1996.
<PAGE>
II-3
ITEM 22. UNDERTAKINGS
(a) 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
Securities Act of 1933;
(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
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; and
(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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by 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 Securities Act
of 1933, 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; and
(3)to remove from registration by means of a post-effective amendment any
shares of Holding Company Common Stock which are not issued in the Share
Exchange.
<PAGE>
II-4
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to 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.
(c) Insofar as indemnification for liabilities arising under the Securities
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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on this 31st day of October 1997.
Consolidated Edison, Inc.
By: JOAN S. FREILICH
Joan S. Freilich
Senior Vice President and
Chief Financial Officer
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.
October 31, 1997 EUGENE R. MCGRATH
Eugene R. McGrath
Chairman of the Board of Directors, President,
Chief Executive Officer and Director
(Principal Executive Officer)
October 31, 1997 JOAN S. FREILICH
Joan S. Freilich
Senior Vice President, Chief Financial Officer
and Director
(Principal Financial Officer and
Principal Accounting Officer)
October 31, 1997 PETER J. O'SHEA, JR.
Peter J. O'Shea, Jr.
Senior Vice President and General Counsel
and Director
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
2 Agreement and Plan of Exchange. (Included as Exhibit A to the
Proxy Statement and Prospectus in Part I of this Registration
Statement.)
3.1 Restated Certificate of Incorporation of Registrant. (Included as
Exhibit B to the Proxy Statement and Prospectus in Part I of this
Registration Statement.)
3.2 By-laws of Registrant. (Included as Exhibit C to the Proxy
Statement and Prospectus in Part I of this Registration
Statement.)
3.3.1 Restated Certificate of Incorporation of Consolidated Edison
Company of New York, Inc. ("Con Edison") filed with the New York
State Department of State on December 31, 1984. (Designated in
Con Edison's Annual Report on Form 10-K for the year ended
December 31, 1989 (File No. 1-1217) as Exhibit 3(a).)
3.3.2 Certificate of Amendment of Restated Certificate of Incorporation of
Con Edison filed with the New York State Department of State on May
16, 1988. (Designated in Con Edison's Annual Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-1217) as Exhibit 3(b).)
3.3.3 Certificate of Amendment of Restated Certificate of Incorporation of
Con Edison filed with the New York State Department of State on June
2, 1989. (Designated in Con Edison's Annual Report on Form 10-K for
the year ended December 31, 1989 (File No. 1-1217) as Exhibit 3(c).)
3.3.4 Certificate of Amendment of Restated Certificate of Incorporation
of Con Edison filed with the New York State Department of State
on April 28, 1992. (Designated in Con Edison's Current Report on
Form 8-K, dated April 24, 1992, (File No. 1-1217) as Exhibit
4(d).)
3.3.5 Certificate of Amendment of Restated Certificate of Incorporation
of Con Edison filed with the New York State Department of State
on August 21, 1992. (Designated in Con Edison's Current Report
on Form 8-K, dated August 20, 1992, (File No. 1-1217) as Exhibit
4(e).)
3.4 By-laws of Con Edison. (Designated in Con Edison's Annual Report
on Form 10-K for the year ended December 31, 1996 (File No.
1-1217) as Exhibit 3.2.)
5 Opinion of Milbank, Tweed, Hadley & McCloy.
8 Opinion of Reid & Priest LLP
23.1 Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5)
23.2 Consent of Reid & Priest LLP (included in Exhibit 8)
23.3 Consent of Price Waterhouse LLP
23.4 Consents of Con Edison's Trustees
99.1 Form of Proxy
99.2 Amended and Restated Agreement and Settlement, dated September
19, 1997, between Con Edison and the Staff of the New York State
Public Service Commission (without Appendices). (Designated in
Con Edison's Current Report on Form 8-K, dated September 23,
1997, (File No. 1-1217) as Exhibit 10.)
<PAGE>
[MILBANK, TWEED HADLEY & MCCLOY Letterhead]
October 31, 1997
Consolidated Edison, Inc.
4 Irving Place
New York, N.Y. 10003
Ladies and Gentlemen:
We have acted as counsel for Consolidated Edison, Inc. (the "Company") in
connection with the preparation of a Registration Statement on Form S-4,
including a Proxy Statement and Prospectus constituting a part thereof (the
"Registration Statement"), to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to up to 235,595,561 shares of common shares, $.10 per value, of the
Company (the "Shares") which are proposed to be issued by the Company in
connection with the share exchange contemplated by that certain Agreement and
Plan of Exchange between the Company and Consolidated Edison of New York, Inc.,
dated as of October 28, 1997 (the "Plan of Exchange").
In rendering the opinion expressed below, we have examined originals or
copies certified or otherwise identified to our satisfaction of all such records
of the Company, agreements and other instruments, certificates of public
officials, certificates of officers and representatives of the Company and such
other documents, as we have deemed necessary as a basis for the opinions
expressed below. In our examination, we have assumed and have not verified that
the signatures on all documents which we have examined are genuine, the
authenticity of all documents submitted to us as originals and the conformity
with authentic original documents of all documents submitted to us as copies. As
to various questions of fact material to such opinions we have, when relevant
facts were not independently established, relied upon certifications by officers
of the Company and other appropriate persons and statements contained in the
Registration Statement.
Based on the foregoing, and having regard to legal considerations we
deem relevant, we are of the opinion that the
<PAGE>
Shares will be legally issued,fully paid and non-assessable upon:
1. the filing with the New York State Department of State of the
Restated Certificate of Incorporation of the Company substantially
in the form described in the Proxy Statement and Prospectus included
in the Registration Statement;
2. the issuance of the Shares by the Company as contemplated in the
Proxy Statement and Prospectus included in the Registration
Statement and the Plan of Exchange;
3. the execution of the Shares by proper officers of the Company
and, the authentication of the Shares by the transfer agent and
registrar for the Shares; and
4. the delivery of the Shares to persons entitled thereto pursuant
to the Plan of Exchange in accordance with the terms thereof.
We express no opinion other than as to the federal laws of the
United States of America and the law of the State of New York.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Proxy Statement and Prospectus included in the
Registration Statement.
Very truly yours,
MILBANK, TWEED, HADLEY & MCCLOY
<PAGE>
[REID & PRIEST LETTERHEAD]
New York, New York
October 30, 1997
Consolidated Edison Company of New York, Inc.
4 Irving Place
New York, New York 10003
Consolidated Edison, Inc.
4 Irving Place
New York, New York 10003
Gentlemen:
We have acted as federal income tax counsel to Consolidated Edison
Company of New York, Inc., a New York corporation ("Con Edison"), and
Consolidated Edison, Inc., also a New York corporation ("HoldCo"), in connection
with the Registration Statement on Form S-4 (the "Registration Statement") filed
by HoldCo with the Securities & Exchange Commission in connection with the
Agreement and Plan of Exchange entered into between Con Edison and HoldCo (the
"Exchange Agreement").
In connection with this opinion, we have reviewed the Exchange
Agreement, the Registration Statement and such other documents and public
records as we have deemed necessary or appropriate for the purposes of this
opinion. In addition, we have relied upon certain express representations made
to us by Con Edison and HoldCo set forth in the letter of representations
attached hereto. If any statements contained in the Registration Statement are
not true and accurate, or if any representations made to us are not true and
accurate, then we express no opinion as to the extent that the subject matter of
our opinion is affected thereby. Unless otherwise defined herein, capitalized
terms shall have the meanings ascribed to them in the Registration Statement or
the Exchange Agreement, as appropriate.
This opinion is based upon the Internal Revenue Code of 1986, as
amended to date (the "Code"), including regulations
<PAGE>
- 2 -
promulgated thereunder, and the judicial and administrative interpretations
thereof as they exist on the date hereof. There can be no assurance that the
legal authorities upon which this opinion is based will not be modified,
revoked, supplemented, amended, revised, reversed or overruled. We assume no
obligation to update or supplement this opinion to reflect changes in such legal
authorities.
Based on the foregoing, it is our opinion that for federal income
tax purposes:
1. The Share Exchange constitutes an exchange qualifying for
nonrecognition under Code section 351(a).
2. No income, gain or loss is recognized by Con Edison or
HoldCo as a result of the Share Exchange.
3. The tax basis of the Con Edison common stock received by
HoldCo is the same as Con Edison's net asset tax basis at the
time of the Share Exchange, subject to certain adjustments
under Treasury Regulations for consolidated groups relating to
the fact that HoldCo will not own all of the outstanding stock
of Con Edison.
4. The consolidated group of corporations of which, prior to the
Share Exchange, Con Edison was the common parent for federal
income tax purposes continues after the Share Exchange with
HoldCo as the new parent corporation.
5. No income, gain or loss is recognized by the former holders of
Con Edison common stock from the Share Exchange.
6. The aggregate tax basis of the HoldCo common stock received
pursuant to the Share Exchange by a former holder of Con
Edison common stock is the same as such holder's aggregate tax
basis in the Con Edison common stock surrendered in the Share
Exchange.
<PAGE>
- 3 -
7. The holding period of the HoldCo common stock received
pursuant to the Share Exchange by each former holder of Con
Edison common stock includes, for determining long-term
capital gains for federal income tax purposes, the holding
period during which such holder held the Con Edison common
stock surrendered, provided that the shares of Con Edison
common stock were held as a capital asset on the date of
the exchange.
8. No income, gain or loss is recognized by the holders of Con
Edison preferred stock from the Share Exchange.
9. Con Edison's adjusted tax basis in the assets which it holds
immediately after the Share Exchange will not be affected by
the Share Exchange.
We are also of the opinion that our conclusion in numbered paragraph
5, above, will not be affected by any contributions of cash or other property by
Con Edison to HoldCo or any of its other subsidiaries prior to the Share
Exchange. Rather, it is our opinion that, regardless of whether or not Con
Edison contributes cash or other property to HoldCo or any of its other
subsidiaries prior to the Share Exchange, the former holders of Con Edison
common stock will recognize no income, gain or loss pursuant to the Share
Exchange. Except as set forth in the preceding two sentences, this opinion does
not address the federal income tax consequences with respect to any
contributions of cash or other property by Con Edison to HoldCo prior to the
Share Exchange. Further, this opinion may not apply to a holder of shares of Con
Edison common stock who also owns shares of Con Edison preferred stock and who
sells or exchanges (including as a result of a redemption) any of such holder's
shares of Con Edison preferred stock in a transaction to which Con Edison or an
affiliate is a party and which is treated as part of the Share Exchange. This
opinion also may not apply to holders of shares of Con Edison common stock that
are foreign corporations or individuals who are not citizens or residents of the
United States.
Our opinion is limited to the matters expressly addressed above. No
opinion is expressed and none should be inferred as to any other matter.
<PAGE>
- 4 -
We hereby authorize and consent to the reference to our firm as
federal income tax counsel in the Registration Statement under the caption
"Material Income Tax Consequences". We also confirm our opinion as set forth
under the caption "Material Income Tax Consequences" in the Registration
Statement. Further, we hereby authorize and consent to your use of this opinion
as Exhibit 8 to the Registration Statement. In giving such consent we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Act.
Very truly yours,
REID & PRIEST LLP
REID & PRIEST LLP
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Consolidated
Edison, Inc. of our report dated March 13, 1997, which appears on page 49 of the
Consolidated Edison Company of New York, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1996. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
Price Waterhouse LLP
New York, NY
October 30, 1997
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 30th
day of October 1997.
E. VIRGIL CONWAY
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
GORDON J. DAVIS
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
RUTH M. DAVIS
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
JOAN S.FREILICH
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 30th
day of October 1997.
ELLEN V. FUTTER
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
ARTHUR HAUSPURG
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
SALLY HERNANDEZ-PINERO
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
PETER W. LIKINS
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
EUGENE R. MCGRATH
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 30th
day of October 1997.
DONALD K. ROSS
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
ROBERT G. SCHWARTZ
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
RICHARD A. VOELL
<PAGE>
CONSENT
The undersigned, a Trustee of Consolidated Edison Company of New York, Inc.
("Con Edison"), hereby consents (i) to being named as a prospective director
of Consolidated Edison, Inc. (the "Holding Company") in the Proxy Statement
and Prospectus constituting part of the Registration Statement on Form S-4
registering the Common Shares ($.10 par value) of the Holding Company
issuable to holders of shares of Common Stock ($2.50 par value) of Con Edison
pursuant to an Agreement and Plan of Exchange described therein, and (ii) to
his or her election as a director of the Holding Company when the Holding
Company Proposal described in the Proxy Statement and Prospectus is
implemented.
IN WITNESS WHEREOF, the undersigned has executed this instrument, this 29th
day of October 1997.
STEPHEN R. VOLK
<PAGE>
[CON EDISON LETTERHEAD]
BELOW IS YOUR PROXY CARD. PLEASE READ BOTH SIDES, SIGN, VOTE AND RETURN IT IN
THE ENCLOSED ENVELOPE.
The shares represented by this proxy when signed and returned will be voted as
directed by the shareholder. If no direction is given, such shares will be voted
FOR The Holding Company Proposal and FOR The Con Edison Board Proposal.
The Board of Trustees Recommends a Vote FOR all items listed below:
(1) The Holding Company Proposal.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(2) The Con Edition Board Proposal.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If you plan to attend the meeting and want an admission ticket, check here. [
]
PLEASE PLEASE
SIGN, Mark
DATE Your
AND Ballot
RETURN [X]
THIS
PROXY
PROMPTLY.
- ------------------ -----, 1997 SIGNATURE(S) SHOULD CORRESPOND
SIGNATURE(S) OF DATED WITH THE NAME(S) AS PRINTED.
STOCKHOLDER(S) NO WITNESS IS REQUIRED.
<PAGE>
Consolidated Edison Company of New York, Inc.
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
- - - ------------------------------------------------------------
PLEASE DATE AND
SIGN ON REVERSE
SIDE. TO VOTE IN
ACCORDANCE WITH
THE RECOMMENDA-
TIONS OF THE
BOARD OF TRUSTEES
NO BOXES NEED
BE CHECKED.
The undersigned hereby appoints E. Virgil Conway, Donald K. Ross, Joan S.
Freilich and Peter J. O'Shea, Jr. and each or any of them with power of
substitution, proxies to vote all stock of the undersigned (including any shares
held through the Company's Automatic Dividend Reinvestment and Cash Payment
Plan) at the Special Meeting of Stockholders on Friday, December 12, 1997 at
10:00 A.M. at the Company's Headquarters, 4 Irving Place, New York, N.Y.) or at
any adjournments thereof, and on the proposals more fully set forth in the proxy
statement, and in their discretion on any matters that may come before the
Special meeting.
THIS PROXY WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE, BUT IF NO CHOICE IS
MADE, THIS PROXY WILL BE VOTED "FOR" THE HOLDING COMPANY PROPOSAL AND "FOR" THE
CON EDISON BOARD PROPOSAL.
CON
EDISON
<PAGE>
[CON EDISON LETTERHEAD]
BELOW IS YOUR PROXY CARD. PLEASE READ BOTH SIDES, SIGN, VOTE AND RETURN IT IN
THE ENCLOSED ENVELOPE.
The shares represented by this proxy when signed and returned will be voted as
directed by the shareholder. If no direction is given, such shares will be voted
FOR The Holding Company Proposal and FOR The Con Edison Board Proposal.
The Board of Trustees Recommends a Vote FOR all items listed below:
(1) The Holding Company Proposal.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(2) The Con Edison Board Proposal.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If you plan to attend the meeting and want an admission ticket, check here. [
]
PLEASE PLEASE
SIGN, Mark
DATE Your
AND Ballot
RETURN [X]
THIS
PROXY
PROMPTLY.
- ------------------ -----, 1997 SIGNATURE(S) SHOULD CORRESPOND
SIGNATURE(S) OF DATED WITH THE NAME(S) AS PRINTED.
STOCKHOLDER(S) NO WITNESS IS REQUIRED.
<PAGE>
Consolidated Edison Company of New York, Inc.
$5 CUMULATIVE PREFERRED STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
- - - ------------------------------------------------------------
PLEASE DATE AND
SIGN ON REVERSE
SIDE. TO VOTE IN
ACCORDANCE WITH
THE RECOMMENDA-
TIONS OF THE
BOARD OF TRUSTEES
NO BOXES NEED
BE CHECKED.
The undersigned hereby appoints E. Virgil Conway, Donald K. Ross, Joan S.
Freilich and Peter J. O'Shea, Jr. and each or any of them with power of
substitution, proxies to vote all stock of the undersigned (including any shares
held through the Company's Automatic Dividend Reinvestment and Cash Payment
Plan) at the Special Meeting of Stockholders on Friday, December 12, 1997 at
10:00 A.M. at the Company's Headquarter's, 4 Irving Place, New York, N.Y.) or at
any adjournments thereof, and on the proposals more fully set forth in the proxy
statement, and in their discretion on any matters that may come before the
Special meeting.
THIS PROXY WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE, BUT IF NO CHOICE IS
MADE, THIS PROXY WILL BE VOTED "FOR" THE HOLDING COMPANY PROPOSAL AND "FOR" THE
CON EDISON BOARD PROPOSAL.
CON
EDISON
