UNDERWRITING AGREEMENT
May 11, 2004
To: Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center, 24th Floor
New York, New York 10080,
As Representatives of the Several Underwriters
Dear Sirs:
Subject to the terms and conditions stated or incorporated by reference herein,
Consolidated Edison, Inc. (the "Company") hereby agrees to sell to the
Underwriters named in Schedule I hereto (the "Underwriters") and the
Underwriters hereby agree to purchase, severally and not jointly, the number of
common shares set forth opposite their names in Schedule I hereto (the
"Designated Securities") at the purchase price per Designated Security set forth
in Schedule II hereto, and up to an additional 1,400,000 common shares ($.10 par
value) of the Company ("Option Securities") as set forth below, to cover
over-allotments, if any.
The representatives named on the signature page hereof (the "Representatives")
represent that the Underwriters have authorized the Representatives to enter
into this Underwriting Agreement and to act hereunder on their behalf.
Except as otherwise provided in Schedule II hereto, each of the provisions of
the Company's Underwriting Agreement Basic Provisions, dated April 5, 2004, as
filed as Exhibit 1.2 to Registration Statement No. 333-114222 (the "Basic
Provisions"), is incorporated herein by reference in its entirety, and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
had been set forth in full herein. Unless otherwise defined herein, terms
defined in the Basic Provisions are used herein as therein defined.
The Company hereby grants the Underwriters, severally and not jointly, an option
to purchase up to the number of the Option Securities specified above at a price
per Option Security equal to the purchase price per Designated Security, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Designated Securities but not payable on the Option
Securities. Such option will expire thirty (30) days after the date of this
Underwriting Agreement, and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which
may be made in connection with the offering and distribution of the Designated
Securities upon written notice by the Representatives to the Company setting
forth the number of Option Securities as to which the several Underwriters are
then exercising the option and the time, date and place of payment and delivery
for such Option Securities. Any such time, date and place of payment and
delivery (each, a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Time of Delivery. If the
option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Designated Securities each such Underwriter has severally agreed
to purchase as set forth in Schedule I bears to the total number of Designated
Securities, subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of a fractional
number of Option Securities.
Payment of the purchase price for the Designated Securities will be made against
delivery thereof to the Representatives for the accounts of the respective
Underwriters at the time and place set forth in Schedule II hereto. In addition,
if the Underwriters have exercised their option to purchase any or all of the
Option Securities, payment of the purchase price for such Option Securities (the
"Designated Option Securities") will be made against delivery thereof to the
Representatives for the accounts of the respective Underwriters at the price set
forth above and at the time, date and place of payment determined by the
Representatives as specified in the written notice discussed above from the
Representatives to the Company with respect to the exercise of the option to
purchase such Option Securities.
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If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon acceptance hereof by you, on behalf
of each of the Underwriters, this letter and such acceptance hereof, including
the Basic Provisions incorporated herein by reference, shall constitute a
binding agreement between each of the Underwriters and the Company.
Very truly yours,
CONSOLIDATED EDISON, INC.
By:/s/ Joan S. Freilich
Joan S. Freilich
Executive Vice President and
Chief Financial Officer
Confirmed and Accepted as of the date hereof on behalf of itself and each other
Underwriter, if any:
CITIGROUP GLOBAL MARKETS INC.
By: /s/ Douglas Adams
Name: Douglas Adams
Title: Managing Director
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Karl W. Newlin
Name: Karl W. Newlin
Title: Vice President
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SCHEDULE I
Number of
Designated Securities
Underwriter to be Purchased
Citigroup Global Markets Inc. 4,270,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 4,270,000
Credit Suisse First Boston LLC 1,204,000
J.P. Morgan Securities Inc. 1,204,000
Morgan Stanley & Co. Incorporated 1,204,000
A.G. Edwards & Sons, Inc. 224,000
BNY Capital Markets, Inc. 224,000
HSBC Securities (USA) Inc. 224,000
Janney Montgomery Scott LLC 224,000
Jefferies & Company, Inc. 224,000
KeyBanc Capital Markets, a Division of McDonald
Investments Inc. 224,000
Lehman Brothers Inc. 224,000
M.R. Beal & Company 140,000
The Williams Capital Group, L.P. 140,000
-----------
Total 14,000,000
===========
SCHEDULE II
I. Title of Designated Securities:
Common Stock ($.10 par value) of Consolidated Edison, Inc.
II. Aggregate Number of Shares of Designated Securities:
14,000,000 shares.
III. Price to Public:
As set forth in the Prospectus.
IV. Purchase Price by Underwriters:
$36.6078
V. Specified funds for, and manner of, payment of purchase price:
Funds in respect of the purchase price for the Designated Securities and
any Designated Option Securities will be delivered by wire transfer of
immediately available funds pursuant to the Company's written
instructions to the Representatives.
VI. Exchange on which the Designated Securities and any Option Securities
will be Listed:
New York Stock Exchange
VII. Time of Delivery:
10:00 a.m., on May 14, 2004.
VIII. Closing Location:
Room 1618-S at the Company, 4 Irving Place, New York, NY 10003.
IX. Information expressly furnished by or on behalf of the Underwriters for
use in the Prospectus for the Designated Securities:
Paragraphs 3, 6, 10 and 12 under the caption "Underwriting" on page S-7
of the Prospectus Supplement.
X. Addresses of Representatives:
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Attention: Henry A. Clark III
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center, 24th Floor
New York, New York 10080
Attention: Karl Newlin
XI. Captions in the Prospectus and Prospectus Supplement referred to in
Section 6(c)(xi) of the Basic Provisions:
Description of Common Shares
XII. Modification of Basic Provisions:
A. Throughout the Basic Provisions, change all references to
"Representative" to "Representatives."
B. In Section 1:
1. In subsections (j) and (k), after each reference to
"Designated Securities", add the words "and Option
Securities".
2. Delete subsection (a) and replace with the following:
"(a) Registration statements in respect of the Designated
Securities and Option Securities have been filed with the
Securities and Exchange Commission (the "Commission"); the
registration statements have been declared effective by the
Commission; and no stop order suspending the effectiveness of the
registration
2
statements have been issued and no proceeding for
that purpose has been initiated or threatened by the Commission.
The Company proposes to file pursuant to Rule 424 under the
Securities Act of 1933 (the "Act") a prospectus supplement
specifically relating to the Designated Securities and Option
Securities and has previously advised the Underwriters of all
information to be set forth therein. The term "Registration
Statement" means the registration statements as amended to the
date of this Agreement pursuant to Rule 429 of the Act. The term
"Basic Prospectus" means the prospectus included in the
Registration Statement bearing Registration Statement No.
333-114222. The term "Prospectus" means the Basic Prospectus
together with the prospectus supplement specifically relating to
the Designated Securities and Option Securities, as first filed
with the Commission pursuant to Rule 424. The term "Preliminary
Prospectus" means a preliminary prospectus supplement
specifically relating to the Designated Securities and Option
Securities together with the Basic Prospectus. As used herein,
the terms "Registration Statement", "Basic Prospectus",
"Prospectus" and "Preliminary Prospectus" shall include in each
case the material, if any, incorporated by reference therein."
3. In subsection (j), add the words "in all material respects"
after "will conform."
4. In subsection (c) add the word "expressly" after the word
"information" in the fourth line from the bottom of such
subsection.
5. Add after subsection (m):
"(n) The documents incorporated by reference in the
prospectus do not include non-GAAP financial measures
within the meaning of Regulation G or Item 10 of
Regulation S-K of the Commission."
6. Add, after subsection (n):
"(o) The Company and each of its Subsidiaries (A)
make and keep accurate books and records and (B) maintain
internal accounting controls which provide reasonable
assurance that (i) transactions are executed in accordance
with management's authorization, (ii) transactions are
recorded as necessary to permit preparation of its
financial statements and to maintain accountability for
its assets, (iii) access to its assets is permitted only
in accordance with management's authorization and (iv) the
reported accountability for its assets is compared with
existing assets at reasonable intervals."
C. In Sections 2 and 3, after each reference to "Designated Securities"
add the words "and any Designated Option Securities".
D. In Section 4:
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1. After the words "Designated Securities" in the lead in add the
words "and Option Securities".
2. In subsection (a) add the word "reasonable" before "best
efforts".
3. In subsections (a), (b) and (c), after the words "Designated
Securities" add the words "and Option Securities".
4. Delete subsection (e).
5. Add, after subsection (d):
(e) During a period of ninety days after the date of this
Underwriting Agreement, the Company will not, without
the prior written consent of the Representatives,
directly or indirectly, issue, sell, offer or
contract to sell, grant any option for the sale of,
or otherwise dispose of, its common stock, except for
Common Stock issued (i) pursuant to this Underwriting
Agreement, (ii) in connection with the Company's
existing employee or director stock option or other
compensation plans, employee investment plans or
automatic dividend reinvestment and cash payment
plan."
6. In subsection (f), after the words "Designated
Securities" add the words "and Designated Option
Securities."
E. In Section 5:
1. After each reference to the words "Designated Securities"
add the words "and Designated Option Securities," except
in the first place the words "Designated Securities"
appear in Section 5 add the words "and Option Securities"
after the words "Designated Securities."
F. In Section 6:
1. The introductory paragraph shall be revised to read as
follows:
"The obligations of the Underwriters under this
Underwriting Agreement shall be subject, in the discretion
of the Underwriters, (i) to the condition that all
representations and warranties and other statements of the
Company herein are, at and as of the Time of Delivery for
the Designated Securities, and shall be at and as of the
Date of Delivery for any Designated Option Securities,
true and correct and (ii) to the condition that the
Company shall have performed all of its obligations
theretofore to be performed pursuant to this Underwriting
Agreement, and (iii) to the following conditions set forth
below in this Section 6, and, if any condition specified
in this Section 6 shall not have been fulfilled
4
when and as required to be fulfilled (a) with respect to
the Time of Delivery for the Designated Securities, this
Underwriting Agreement may be terminated by the
Representatives by notice to the Company or (b) with
respect to the Underwriters' exercise of the option to
purchase any Designated Option Securities on a Date of
Delivery after the Time of Delivery, the obligations of
the Underwriters to purchase the Designated Option
Securities on such date may be terminated by the
Representatives by notice to the Company."
2. Change subsection (c)(vi) to read "The Designated
Securities and the Designated Option Securities have been
duly authorized, and, when delivered to and paid for by
the Underwriters in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid
and non-assessable and will not be subject to preemptive
or other similar rights of any securityholder of the
Company;".
3. Revise subsection (c)(vii) to read "The issue and sale of
the Designated Securities and Designated Option Securities
and the compliance by the Company with all the provisions
of the Designated Securities and Designated Option
Securities and this Underwriting Agreement and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a
default under, (i) any statute, agreement or instrument
known to him to which the Company or any Subsidiary is a
party or by which it or any Subsidiary is bound or to
which any of the property of the Company or of any
Subsidiary is subject, (ii) any order, rule or regulation
known to him of any court, governmental agency or
body having jurisdiction over the Company or any of its
properties, except in each of (i) or (ii) for such
conflicts, defaults or breaches as would not have a
Material Adverse Effect, or (iii) the Certificate of
Incorporation or the Company's by-laws;"
4. After each reference to the words "Designated Securities"
in subsection c (viii) add the words "and Option
Securities."
5. Change subsection (d) to read, "(i) On May 11, 2004, the
Representatives shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in
form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letter
for each of the other Underwriters, containing statements
and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial
information contained in the Registration Statement and
the Prospectus, and (ii) at the Time of Delivery, the
Representatives shall have received from
PricewaterhouseCoopers LLP a letter, dated the Time of
Delivery, to the effect that they reaffirm the statements
made in the letter furnished pursuant to (i) of this
Section 6(d), except that the specified date referred to
shall be a date not more than three business days prior to
the Time of Delivery;"
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6. In subsection (e) add "business prospects," before
"general affairs."
7. Add to subsection (g) (iii) the words "or crisis" after
"calamity" and the words "or Designated Option Securities,
as applicable" after "Designated Securities."
8. In subsection (h) delete "knowledge,"" in the second to
last line of such subsection and replace with
"knowledge"),".
9. Change subsection (i) in its entirety to read, "The
Designated Securities and any Designated Option Securities
shall have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance."
10. Add these subsections after subsection (i):
"(j) In the event that the Underwriters exercise their
option to purchase all or any portion of the Option
Securities, the representations and warranties of the
Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be
true and correct as of each Date of Delivery, as defined
below, and, at the relevant Date of Delivery, the
Representatives shall have received:
(i) A certificate, dated such Date of
Delivery, of officers of the Company, confirming
that the certificate delivered at the Time of
Delivery pursuant to Section 6(h) of the Basic
Provisions remains true and correct as of such Date
of Delivery.
(ii) The favorable opinion of counsel for
the Company, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of
Delivery, relating to the Designated Option
Securities and otherwise to the same effect as the
opinion required by Section 6(c) of the Basic
Provisions.
(iii) The favorable opinion of Dewey
Ballantine LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Designated
Option Securities and otherwise to the same effect
as the opinion required by Section 6(b) of the
Basic Provisions.
(iv) A letter from PricewaterhouseCoopers
LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery,
substantially in the same form and substance as the
letter furnished to the Representatives pursuant to
Section 6(d)(ii) hereof, except that the "specified
date" on the letter furnished pursuant to this
paragraph shall be a date not more than three
business days prior to such Date of Delivery.
(v) Since the time of execution of this
Underwriting Agreement, there shall not have
occurred a downgrading in, or withdrawal of, the
6
rating assigned to any of the Company's or
Consolidated Edison of New York, Inc.'s securities
by a rating organization, and no such rating
organization shall have publicly announced that it
has under surveillance or review its rating of the
Securities or any of the Company's or Consolidated
Edison Company of New York, Inc.'s other
securities.
(k) Shearman & Sterling LLP, counsel for the Company,
shall have furnished to the Underwriters a written
opinion, dated the Time of Delivery for the Designated
Securities, in form and substance satisfactory to the
Representatives to the effect that:
(i) On the basis of the information we
gained in the course of performing the services
referred to above, no facts came to our attention
which gave us reason to believe that the Prospectus
(other than the financial statements and other
financial or statistical data contained therein or
omitted therefrom, as to which we have not been
requested to comment), as of the date of the
Prospectus Supplement or the date hereof, contained
or contains an untrue statement of a material fact
or omitted or omits to state a material fact
necessary in order to make the statements therein,
in the light of the circumstances under which they
were made, not misleading."
G. In Section 7(d), after each reference to the words "Designated
Securities" add the words "and Designated Option Securities."
H. Replace Section 8 in its entirety with the following:
"8. If, at the Time of Delivery or any Date of Delivery, as
the case may be, any one or more of the Underwriters shall
default in its obligation to purchase any of the Designated
Securities or Designated Option Securities, as applicable, and
the aggregate number of shares of the Designated Securities or
Designated Option Securities, as applicable, is not more than
one-tenth of the aggregate number of shares of the Designated
Securities or Designated Option Securities, as applicable, to
be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of
shares of Designated Securities set forth opposite their
respective names in Schedule I to the Underwriting Agreement
bears to the aggregate number of shares of Designated
Securities set forth opposite the names of all of the
non-defaulting Underwriters, or in such other proportions as
the Underwriters may agree, to purchase the Designated
Securities or Designated Option Securities, as applicable, as
to which the defaulting Underwriter or Underwriters so
defaulted on that date; provided that in no event shall the
number of shares of Designated Securities or Designated Option
Securities, as applicable, that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to
this Section 8 by an amount in excess of one-ninth of the
aggregate number of shares of Designated Securities or
Designated Option Securities, as applicable, without the
written consent of the Underwriter. If at the Time of Delivery
7
any Underwriter or Underwriters shall default in its or their
obligation to purchase Designated Securities and the aggregate
number of shares of Designated Securities set forth opposite
the name or names of the defaulting Underwriter or
Underwriters in Schedule I to the Underwriting Agreement is
more than one-tenth of the aggregate number of shares of
Designated Securities, and arrangements satisfactory to the
Underwriters and the Company for the purchase of said
Designated Securities are not made within 36 hours after the
default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company,
except as provided in Sections 5 and 7 hereof. In any such
case, either the Underwriters or the Company shall have the
right to postpone the Time of Delivery, but in no event for
longer than seven days in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in
any other documents or arrangements may be effected. If on any
Date of Delivery any Underwriter or Underwriters shall default
in its or their obligation to purchase Designated Option
Securities and the aggregate number of shares of Designated
Option Securities with respect to which such default occurs is
more than one-tenth of the aggregate number of shares of
Designated Option Securities to be purchased on such Date of
Delivery, the non-defaulting Underwriters shall have the
option to (i) terminate their obligation hereunder to purchase
such Designated Option Securities to be sold on such Date of
Delivery or (ii) purchase not less than the number of shares
of Designated Option Securities that such non-defaulting
Underwriter would have been obligated to purchase in the
absence of such default. Any action taken under this Section 8
shall not relieve any defaulting Underwriter from liability in
respect of any default of said Underwriter under this
Agreement.
I. In Section 9 add the words "and any Designated Option
Securities" after the words "Designated Securities.
J. Change Section 10 to read [Reserved].