As filed with the Securities and Exchange Commission on February 24, 1998
Registration No. 333-46799
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
AMENDMENT NO. 1
TO
FORM S-4
Registration Statement under The Securities Act of 1933
_______________________________________________________
BERKSHIRE ENERGY RESOURCES
(Exact name of Registrant as specified in its charter)
______________________________________________________
Massachusetts 6719 04-3408946
State or other jurisdiction (Primary standard industrial (I.R.S. employer
of incorporation or classification code number) identification no.)
organization)
115 Cheshire Road, Pittsfield, MA 01201-1879, (413) 442-1511
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Cheryl M. Clark
Secretary
115 Cheshire Road, Pittsfield, MA 01201-1879, (413) 442-1511
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
_____________________
<PAGE> 2
With Copies To:
James M. Avery, Esq.
Rich, May, Bilodeau & Flaherty, P.C.
294 Washington Street
Boston, Massachusetts 02108
(617) 482-1360
______________
Approximate date of commencement of proposed sale of the securities to
the public: At the effective time of the merger of a wholly-owned
subsidiary of the Registrant with and into The Berkshire Gas Company, which
shall occur as soon as practicable after the effective date of this
Registration Statement and the satisfaction or waiver of all conditions to
closing of such merger as described in the enclosed Proxy
Statement/Prospectus.
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 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 number of the earlier effective registration
statement for the same offering. [ ] _________________
________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Amount to be Registered Offering Price Per Unit Aggregate Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Shares,
without par value 2,385,252 shares $22-11/16(1) $54,115,404.75(1) $15,964.05(1)
- --------------------
<F1> The Registration Fee was calculated in accordance with Rule 457(f)(1),
based on the average of the high and low sales prices for shares of
Common Stock of The Berkshire Gas Company as quoted in the NASDAQ
National Market System on February 18, 1998.
</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
<PAGE> 3
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
[THE BERKSHIRE GAS COMPANY LETTERHEAD]
March 25, 1998
Dear Shareholder:
You are cordially invited to attend the Special Meeting of
Shareholders of The Berkshire Gas Company ("Berkshire Gas") on Friday,
May 8, 1998 at 1:00 p.m. at the Berkshire Gas offices, 115 Cheshire
Road, Pittsfield, Massachusetts 01201-1879.
At the Special Meeting you will be asked to consider and vote on a
proposal to form a holding company for Berkshire Gas. The Board of
Directors and management of Berkshire Gas consider this change to be in the
best interests of Berkshire Gas and its shareholders. The new structure is
designed to enable Berkshire Gas to respond more effectively and efficiently
to competitive changes occurring in the natural gas utility industry and to
new business opportunities that may arise from these changes. The new
structure will allow clear separation of the new holding company's regulated
and unregulated lines of business in a manner consistent with the utility
industry restructuring principles outlined by the Massachusetts Department
of Telecommunications and Energy (formerly the Department of Public
Utilities) and in recent amendments to legislation affecting Massachusetts
gas companies. Nearly all Massachusetts investor-owned electric utilities
are already organized in this manner, as are a number of Massachusetts
investor-owned natural gas utilities.
The attached series of questions and answers provides information on
the proposed holding company, what it is and how it would affect the
individual shareholder. The enclosed Proxy Statement/Prospectus contains a
more extensive discussion of the proposal.
The Board of Directors and management of Berkshire Gas unanimously
recommend approval of the holding company structure and urge you to vote for
the proposed restructuring. A two-thirds majority of all shareholders is
required to approve the proposal, and your vote is critical to achieving a
successful outcome.
Your vote at the Special Meeting is important, regardless of the
number of shares that you own. Whether or not you plan to attend the
Special Meeting, please sign, date and return your proxy as soon as possible
in the envelope provided.
Sincerely,
<PAGE> 4
/s/ Franklin M. Hundley /s/ Scott S. Robinson
___________________________ __________________________
Franklin M. Hundley Scott S. Robinson
Chairman of the Board President and Chief Executive Officer
THE HOLDING COMPANY AND HOW IT WOULD AFFECT YOU
The proxy statement for the Special Meeting contains an extensive discussion
of a proposal to form a holding company structure for The Berkshire Gas
Company ("Berkshire Gas"). This proposal is briefly summarized below. Each
answer references to the page or pages of the Proxy Statement/Prospectus in
which the topic is discussed in more detail. Shareholders are urged to read
the Proxy Statement/Prospectus and the appendices thereto in their entirety.
WHAT IS BEING PROPOSED?
The Board of Directors of Berkshire Gas proposes to form a holding company,
a structure which is commonly used throughout the utility industry,
including Massachusetts, where nearly every investor-owned electric utility
already has such a structure, as well as several investor-owned natural gas
utilities. Berkshire Gas would become a subsidiary of the new holding
company. Current holders of Berkshire Gas' common stock would own common
shares of the holding company instead of stock in Berkshire Gas itself.
(Please see pages 8 to 10 of the Proxy Statement/Prospectus.) New
subsidiary companies could be formed, which would be separate from Berkshire
Gas, but owned by the new holding company. First, retail propane operations
now performed through a division of Berkshire Gas would be transferred to a
new subsidiary. Second, a management services company would be formed to
provide certain administrative services to Berkshire Gas, the new holding
company and other subsidiaries of the holding company for a charge based
upon the cost attributable to providing such services. Finally, in the
event that new business opportunities in the competitive marketplace are
pursued, a new subsidiary company (or companies) could be formed.
The charts below depict Berkshire Gas' current structure and the proposed
holding company structure:
___________________________________________________________________________
| CURRENT STRUCTURE |
|___________________________________________________________________________|
| |
| HOLDERS OF COMMON STOCK |
| AND HOLDERS OF 4.8% CUMULATIVE PREFERRED STOCK |
| : |
| : |
| Berkshire Gas |
|___________________________________________________________________________|
___________________________________________________________________________
| |
| PROPOSED STRUCTURE |
|___________________________________________________________________________|
| HOLDERS OF COMMON SHARES |
| : |
| : |
<PAGE> 5
|HOLDERS OF 4.8% CUMULATIVE Holding |
|PREFERRED STOCK Company |
| : : |
| : : |
| : ........................................... |
| : : : : : |
| : : : : : |
| Berkshire Gas Berkshire Potential New Management Services |
| Propane Subsidiaries Company |
|___________________________________________________________________________|
WHY IS A HOLDING COMPANY BEING FORMED?
In recent years, many state utility commissions, including the Massachusetts
Department of Telecommunications and Energy ("Massachusetts DTE"; formerly
the Department of Public Utilities), have initiated inquiries into
restructuring the natural gas utility industry with a goal of promoting
competition and extending to all customers the broadest possible choice of
natural gas suppliers. In November, 1997 the Massachusetts legislature
enacted a comprehensive bill to restructure the electric utility industry
(the "Restructuring Act"), many provisions of which will affect gas
utilities.
The Massachusetts DTE's decisions, as well as the Restructuring Act, are
establishing new competitive markets for energy and other related services.
The Massachusetts DTE has specifically recognized the changing nature of the
energy marketplace and the need for utilities to restructure in order to
participate effectively in these new markets while, at the same time,
protecting ratepayers' interests. Berkshire Gas' management believes that
the Massachusetts DTE's rules and decisions and the Restructuring Act
suggest that an effective means for gas utilities to participate in these
competitive markets is through unregulated affiliates within a holding
company corporate structure.
The Massachusetts DTE's decisions regarding the restructuring of the
electricity and natural gas markets, as well as the Restructuring Act,
advance several central components to seek an appropriate balance of the
needs of all participants in the natural gas market. First, the
Massachusetts DTE's decisions and the Restructuring Act have sought to
achieve the "functional separation" and distinct pricing of the services
traditionally provided on a consolidated or "bundled" basis by gas utilities
so as to enhance the development of certain competitive markets. On July
18, 1997, the Massachusetts DTE sent a letter to Berkshire Gas and other
Massachusetts local distribution companies mandating the establishment of a
collaborative forum to establish principles and procedures for such
functional separation and pricing, sometimes referred to as "unbundling," of
all natural gas and local distribution companies' ("LDC's") services with a
goal of creating a more competitive natural gas market. The Massachusetts
DTE stated that a more competitive gas market would: 1) provide the broadest
possible customer choice; 2) provide all customers with an opportunity to
share in the benefits of increased competition; 3) ensure full and fair
competition in the gas supply market; 4) functionally separate supply from
local distribution services; 5) support and further the goals of
environmental regulation; and, 6) rely on incentive regulation where a fully
competitive market cannot exist, or does not exist. Such collaborative
forum is currently underway. In addition, in a letter of August 18, 1997 to
<PAGE> 6
Massachusetts LDC's, the Massachusetts DTE stated that each Massachusetts
LDC eventually will be required to submit its own unbundling proposal for
the Massachusetts DTE's review and that, as a condition precedent to a
meaningful unbundling proposal, each LDC will be required to provide fully
unbundled rates for each rate class served by each local distribution
company. Specifically, the Department stated that it expects that Berkshire
Gas will submit, for an effective date no later than November 1, 1998, such
fully unbundled rates for each rate class.
The second component of the above-described utility industry restructuring
initiatives involves the continuing regulation of other traditional utility
activities, such as the distribution function, by the Massachusetts DTE so
as to ensure the continuing provision of safe and reliable service to
customers at reasonable rates. After the proposed corporate restructuring,
Berkshire Gas will continue to provide many traditional utility services and
will be subject to the continuing regulation of the Massachusetts DTE.
The third component of Massachusetts DTE and legislative restructuring
initiatives relates to the development of competitive markets for energy and
other related services, with utilities participating in such markets through
affiliates subject to appropriate standards of conduct. Berkshire Gas'
opportunities for long-term growth will, in part, be dependent upon its
ability to compete in new competitive markets. The Massachusetts DTE's
rules and the Restructuring Act both include provisions relating to the
specific limitations upon which regulated utilities may participate in the
new competitive energy markets so as to avoid unfair competitive advantages
or the cross-subsidization of such activities by utility ratepayers. The
Massachusetts DTE's rules include specific requirements relating to the
functional and legal separation of the activities of regulated utilities and
their competitive affiliates.
Given this emerging regulatory structure, the Massachusetts DTE has
recognized a utility company's need for flexibility and speed in order to
respond in a timely manner to the opportunities and challenges in the
changing energy marketplace. Many competitive opportunities could be
frustrated or lost if pursued by a utility or through a subsidiary of a
utility due to the requirements of the regulatory process, including, for
example, the need to obtain Massachusetts DTE approval for a gas company to
invest in a subsidiary. The Massachusetts DTE has also recognized that
alternative organizational structures may afford a utility the flexibility
to accomplish its objectives while also furthering the Massachusetts DTE's
goals of unbundling and fostering competition, maintaining appropriate
separation between regulated and non-regulated activities and also
streamlining regulatory review. The Massachusetts DTE has acknowledged that
the holding company structure is one means by which a utility may achieve
these objectives.
Assuming that natural gas industry restructuring in Massachusetts continues
to proceed consistent with the above described requirements, at a minimum,
Berkshire Gas has identified the need to adopt a corporate structure that:
1) can facilitate such unbundling; 2) permits the necessary separation of
regulated and competitive operations; and 3) will afford the appropriate
flexibility to pursue opportunities in new competitive markets. Berkshire
Gas' management believes that the increasingly competitive natural gas
industry, together with new energy-related technologies, may create
significant new opportunities for energy service providers like Berkshire
Gas in non-utility business ventures. Berkshire Gas' management believes
<PAGE> 7
that the pursuit of these new opportunities can be well accommodated in a
holding company structure and is a key element of Berkshire Gas' strategy
for long-term growth to benefit its shareholders and customers.
The holding company structure is a well-established form of organization for
companies conducting multiple lines of business, particularly entities
engaging in both regulated and unregulated activities. The holding company
structure would provide increased financial, managerial and organizational
flexibility in order to better position Berkshire Gas to operate in this
changing natural gas utility industry. Moreover, the new structure will
facilitate clear separation of the new holding company's regulated and
unregulated lines of business in a manner consistent with the principles
outlined by the Massachusetts DTE and mandated in applicable legislation and
regulation regarding competitive affiliates of Massachusetts gas companies.
(Please see pages 8 to 14 of the Proxy Statement/Prospectus.)
IN WHAT TYPES OF BUSINESSES WOULD THE HOLDING COMPANY INVEST?
The primary focus of the holding company initially would be maintaining the
strength of Berkshire Gas' core business of serving the natural gas utility
and propane needs of its customers. While authorized to engage in any form
of business, the new holding company would initially endeavor to develop
businesses that are generally related to the provision of energy and energy-
related services. For example, on February 6, 1998 Berkshire Gas formed a
limited strategic marketing alliance with Conectiv/CNE, LLC, a joint venture
of a subsidiary of Connecticut Energy Corporation, a public utility holding
company, and a subsidiary of Delmarva Power & Light Company, a Delaware
public utility, to market electricity, natural gas and energy-related
services to customers in Massachusetts, Connecticut, Vermont and New York
states. The holding company system would provide the flexibility for the
legal and functional separation of such strategic marketing alliance (and
other non-utility businesses) from the core business of Berkshire Gas.
(Please see pages 9 to 14 of the Proxy Statement/Prospectus.)
WHY WOULD THE NEW HOLDING COMPANY BE ORGANIZED AS A MASSACHUSETTS BUSINESS
TRUST INSTEAD OF A CORPORATION?
The new holding company would be formed as a Massachusetts business trust
rather than a corporation due primarily to the potential Massachusetts
income tax savings to the trust. The parent holding companies of all other
investor-owned Massachusetts utility holding systems are also organized as
business trusts. (Please see pages 19 to 22 of the Proxy
Statement/Prospectus.)
HOW WOULD MY OWNERSHIP OF BERKSHIRE GAS STOCK BE AFFECTED BY THE NEW
STRUCTURE?
Owners of Berkshire Gas' common stock automatically would become owners of
the holding company's common shares on a share-for-share basis. It is
expected that the holding company's common shares would be traded on the
<PAGE> 8
NASDAQ National Market System under the symbol "BERK." (Please see page
18 of the Proxy Statement/Prospectus.)
HOW WOULD THE HOLDING COMPANY STRUCTURE AFFECT COMMON AND PREFERRED STOCK
DIVIDENDS?
While future dividends on the new holding company's common shares would
depend primarily upon the earnings, financial condition and capital
requirements of its subsidiaries, the trustees of the proposed holding
company have no current intention to change the current Berkshire Gas
dividend policy. In addition, it is expected that such dividends of the
holding company would be declared and paid on approximately the same
schedule of dates as that now followed by Berkshire Gas with respect to its
common stock dividends. The preferred stock would continue to be a security
of Berkshire Gas, not the holding company, and holders of the preferred
stock would continue to have priority as to Berkshire Gas dividends.
(Please see pages 17 to 18 of the Proxy Statement/Prospectus.)
WHAT WOULD HAPPEN TO BERKSHIRE GAS' SHARE OWNER DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN?
Berkshire Gas' Share Owner Dividend Reinvestment and Stock Purchase Plan
would be assumed by the holding company. Participants in the Plan
automatically would become participants in the corresponding holding company
plan. (Please see page 24 of the Proxy Statement/Prospectus.)
WOULD SHAREHOLDERS NEED TO TURN IN THEIR CURRENT STOCK CERTIFICATES?
It would not be necessary for holders of Berkshire Gas' common stock to
exchange their stock certificates. Certificates for Berkshire Gas' common
stock automatically would represent the same number of common shares of the
holding company. New certificates bearing the name of the holding company
would be issued in the future as outstanding certificates are presented for
transfer. (Please see page 14 of the Proxy Statement/Prospectus.)
HOW WOULD FORMATION OF A HOLDING COMPANY AFFECT PERSONAL FEDERAL INCOME
TAXES?
Berkshire Gas' management believes that the formation of a holding company
would not affect personal federal income taxes. The proposed transaction
was structured so that there would be no gain or loss to you for federal
income tax purposes on the conversion of your shares of Berkshire Gas common
stock into the holding company shares pursuant to the restructuring. For
capital gain purposes, the tax basis of the holding company shares received
in exchange for shares of Berkshire Gas' common stock would be the same as
the tax basis of your shares in Berkshire Gas, and the holding period of the
holding company shares would include the holding period of your shares of
Berkshire Gas' common stock, provided such stock is held as a capital asset
at the time of the exchange. (Please see pages 16 to 17 of the Proxy
Statement/Prospectus.)
<PAGE> 9
WHAT EFFECT WOULD THERE BE ON HOLDERS OF BERKSHIRE GAS' PREFERRED STOCK AND
DEBT SECURITIES?
Berkshire Gas' preferred stock and long-term debt securities, consisting
primarily of first mortgage bonds and medium-term and senior notes, would be
maintained in the reorganization and would remain as preferred stock and
debt securities of Berkshire Gas. Berkshire Gas expects to negotiate
acceptable consents with the holders of its long-term debt securities so as
to effect the reorganization. (Please see page 17 of the Proxy
Statement/Prospectus.)
WHAT WOULD THE NEW HOLDING COMPANY BE CALLED?
The name for the holding company is "Berkshire Energy Resources." (Please
see page 9 of the Proxy Statement/Prospectus.)
WHO WOULD MANAGE THE HOLDING COMPANY AFTER THE HOLDING COMPANY STRUCTURE IS
APPROVED BY THE SHAREHOLDERS?
The Board of Directors and the principal executive officers of Berkshire Gas
would serve as the trustees and executive officers of the holding company
upon completion of the reorganization. (Please see pages 22 to 23 of the
Proxy Statement/Prospectus.)
HOW SOON WOULD THE HOLDING COMPANY STRUCTURE BE FORMED IF IT IS APPROVED BY
THE SHAREHOLDERS?
Management intends to form the holding company structure by the end of 1998.
However, any delays in obtaining the required approvals from regulatory
agencies, such as the Massachusetts DTE, could impact that schedule.
(Please see pages 18 to 19 of the Proxy Statement/Prospectus.)
WHAT VOTE IS REQUIRED TO APPROVE THE HOLDING COMPANY PROPOSAL?
order for the holding company proposal to be approved under Massachusetts
law, it must receive favorable votes, in person or by proxy, of the holders
of two-thirds of the outstanding shares of Berkshire Gas' common stock.
(Please see page 14 of the Proxy Statement/Prospectus.) In
addition, the consent of the holders of at least two-thirds of the total
number of shares of Berkshire Gas' 4.8% Cumulative Preferred Stock then
outstanding will be required in connection with the reorganization.
CAN THE BROKER WHO HOLDS MY SHARES OF BERKSHIRE GAS COMMON STOCK VOTE THOSE
SHARES ON MY BEHALF?
Your broker may not vote your shares without your specific direction because
<PAGE> 10
the National Association of Securities Dealers considers votes to form a
holding company as non-discretionary. Your vote at the Special Meeting is
important regardless of the number of shares that you own. Whether or not
you plan to attend, please sign, date and return your proxy card as soon as
possible in the envelope provided so that your shares can be voted in
accordance with your instructions. (Please see page 24 of the
Proxy Statement/Prospectus.)
THE ENCLOSED PROXY STATEMENT/PROSPECTUS
CONTAINS A THOROUGH AND DETAILED DISCUSSION OF
BERKSHIRE GAS' PROPOSAL TO FORM A HOLDING COMPANY STRUCTURE.
(Berkshire Gas Logo)
THE BERKSHIRE GAS COMPANY
THE BERKSHIRE GAS COMPANY
115 Cheshire Road
Pittsfield, Massachusetts 01201-1879
Notice of Special Meeting of Shareholders
to be held on May 8, 1998
To the Holders of Common Stock:
The Special Meeting of Shareholders of The Berkshire Gas Company
("Berkshire Gas") will be held at the company's offices, 115 Cheshire Road,
Pittsfield, Massachusetts 01201-1879, on Friday, May 8, 1998 at
1:00 p.m., for the following purposes:
1. To approve a proposal to adopt a holding company structure for
Berkshire Gas, all as more fully described in the accompanying
Proxy Statement/Prospectus.
2. To transact any other business which may properly come before
the Special Meeting or any adjournment thereof.
Further information as to the matters to be considered and acted on at
the Special Meeting can be found in the accompanying Proxy
Statement/Prospectus.
Only the holders of common stock of Berkshire Gas as of the close of
business on March 12, 1998, are entitled to notice of and to vote at the
Special Meeting or any adjournment thereof.
Please sign, date and return the accompanying proxy in the enclosed
addressed envelope, which requires no postage if mailed in the United
States. Your proxy may be revoked at any time before the vote is taken by
delivering to the Clerk a written revocation or a proxy bearing a later date
or by oral revocation in person to the Clerk at the Special Meeting.
<PAGE> 11
By Order of the Board of Directors,
/s/ Cheryl M. Clark
Cheryl M. Clark
Clerk
Pittsfield, Massachusetts
March 25, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
THE BERKSHIRE GAS COMPANY
115 Cheshire Road
Pittsfield, Massachusetts 01201-1879
(413) 442-1511
PROXY STATEMENT/PROSPECTUS
This Proxy Statement/Prospectus, together with the accompanying proxy,
is being furnished to shareholders of The Berkshire Gas Company, a
Massachusetts gas company ("Berkshire Gas"), in connection with solicitation
of proxies by the Board of Directors of Berkshire Gas to be voted at the
Special Meeting of Shareholders to be held on Friday, May 8, 1998 at
Berkshire Gas' offices, 115 Cheshire Road, Pittsfield, Massachusetts (the
"Special Meeting") for the following purposes:
1. To approve a proposal to adopt a holding company structure for
Berkshire Gas, all as more fully described in this Proxy
Statement/Prospectus.
2. To transact any other business which may properly come before
the Special Meeting or any adjournment thereof.
At the Special Meeting, the shareholders will be asked to approve the
formation of a holding company structure for Berkshire Gas. The holding
company structure will be established pursuant to a transaction governed by
an Agreement and Plan of Merger (the "Merger Agreement") among Berkshire
Gas, Berkshire Energy Resources, a Massachusetts business trust formed by
Berkshire Gas ("Holdco"), and Berkshire Gas Mergeco Gas Company, Inc., a
Massachusetts gas company formed by Holdco ("Mergeco"). At the time of the
transaction contemplated within the Merger Agreement, Mergeco will be a
wholly-owned subsidiary of Holdco, formed solely for the purpose of the
transaction necessary to establish a holding company. Pursuant to the
Merger Agreement, Mergeco will (i) merge with and into Berkshire Gas (the
<PAGE> 12
"Merger") with Berkshire Gas being the surviving company and (ii) each
outstanding share of the common stock of Berkshire Gas, $2.50 par value per
share ("Berkshire Gas Common Stock"), will automatically be converted into
one common share of Holdco ("Holdco Common Share"). As a result of the
Merger, Berkshire Gas will therefore become a subsidiary of Holdco and the
holders of Berkshire Gas Common Stock will become holders of Holdco Common
Shares. The outstanding shares of Berkshire Gas 4.8% Cumulative Preferred
Stock will be unchanged and will continue to be outstanding securities of
Berkshire Gas. See "Proposal Regarding Plan of Restructuring -- General."
If the restructuring is implemented, it will not be necessary for
holders of Berkshire Gas Common Stock to surrender their existing stock
certificates for Holdco share certificates. See "Proposal Regarding Plan of
Restructuring -- Exchange of Certificates Not Required."
This Proxy Statement/Prospectus also serves as the prospectus for
Holdco under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the issuance of up to 2,385,252 common shares of Holdco in
connection with the restructuring. Further information concerning the
shares offered hereby is contained in "Proposal Regarding Plan of
Restructuring -- Holdco's Declaration of Trust and Comparative Shareholders'
Rights" and "Proposal Regarding Plan of Restructuring -- Holdco Common
Shares."
____________________
NEITHER THE MERGER NOR THE HOLDCO COMMON SHARES TO BE ISSUED IN
CONNECTION WITH THE MERGER PROPOSED HEREIN HAVE BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
____________________
The principal executive offices of Berkshire Gas and Holdco are
located at 115 Cheshire Road, Pittsfield, Massachusetts 01201-1879,
telephone number (413) 442-1511. This Proxy Statement/Prospectus and the
accompanying proxy, solicited on behalf of the Board of Directors of
Berkshire Gas, were first mailed to shareholders on or about March 25,
1998.
The accompanying proxy, if properly executed and delivered by a
shareholder entitled to vote, will be voted at the Special Meeting as
specified in the proxy, but may be revoked at any time before the vote is
taken by the signer delivering to the Clerk of Berkshire Gas a written
revocation or a proxy bearing a later date or by oral revocation in person
to the Clerk at the Special Meeting. If choices are not specified on the
accompanying proxy, the shares will be voted FOR the Proposal Regarding Plan
of Restructuring.
All the costs of preparing, assembling and mailing the enclosed
material and any additional material which may be sent in connection with
the solicitation of the enclosed proxies will be paid by Berkshire Gas, and
<PAGE> 13
no part thereof will be paid directly or indirectly by any other person.
Berkshire Gas has retained Corporate Investor Communications, Inc. to assist
in the solicitation of proxies at a fee of $4,000, plus usual and customary
expenses. Some employees may devote a part of their time to the
solicitation of proxies or for attendance at the Special Meeting but no
additional compensation will be paid to them for the time so employed and
the cost of such additional solicitation will be nominal. Berkshire Gas
will reimburse brokerage firms, banks, trustees and others for their actual
out-of-pocket expenses in forwarding proxy material to the beneficial owners
of Berkshire Gas Common Stock.
On January 31, 1998, there were issued and outstanding 2,269,820
shares of Berkshire Gas Common Stock (and 115,432 shares of Berkshire Gas
Common Stock reserved for issuance pursuant to Berkshire Gas' Share Owner
Dividend Reinvestment and Stock Purchase Plan). Only holders of record of
Berkshire Gas Common Stock at the close of business on that date shall be
entitled to notice of and to vote at the Special Meeting or any adjournments
thereof, and those entitled to vote will have one vote for each share held.
To the knowledge of management, no person owns beneficially more than 5
percent of the outstanding voting securities of Berkshire Gas.
The date of this Proxy Statement/Prospectus is March 17, 1998.
TABLE OF CONTENTS
AVAILABLE INFORMATION 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 2
SUMMARY OF PROXY STATEMENT/PROSPECTUS 3
Proposal Regarding Plan of Restructuring 3
THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE PROPOSED
RESTRUCTURING TO FORM A HOLDING COMPANY 3
Business of Berkshire Gas 3
Proposed Restructuring 3
Berkshire Gas Shareholders Meeting 3
Special Considerations Applicable to the Restructuring 4
Reasons for the Restructuring 4
Certain Effects on Shareholders 6
Vote Required 6
Exchange of Certificates Not Required 6
Stock Listing 6
Conditions to the Restructuring 7
Dividend Policy 7
Certain Federal Income Tax Consequences 7
No Appraisal Rights 7
PROPOSAL REGARDING PLAN OF RESTRUCTURING 8
General 8
Business of Berkshire Gas 8
The Restructuring 9
Special Considerations Applicable to the Restructuring 10
Reasons for the Restructuring 11
<PAGE> 14
Benefits of Holding Company Structure 13
Recommendations of the Board 14
Vote Required 14
Exchange of Certificates Not Required 14
Merger Agreement 14
Amendment or Termination of Plan of Merger 15
Effectiveness of the Restructuring 16
Certain Federal Income Tax Consequences 16
Treatment of Preferred Stock 17
Treatment of Indebtedness 17
Dividend Policy 17
Stock Listing 18
Regulatory Approval of the Restructuring 18
Regulatory Matters 18
Holdco's Declaration of Trust and Comparative Shareholders' Rights 19
Holdco Common Shares 22
Trustees and Management of Holdco 22
No Appraisal Rights 23
Share Owner Dividend Reinvestment and Stock Purchase Plan 24
Price Range of Berkshire Gas Common Stock 24
Stock Ownership by Directors and Executive Officers 24
Transfer Agent and Registrar 25
Financial Statements 25
Legal Opinion 26
Experts 26
OTHER MATTERS 26
Voting Procedures 26
Adjournment of Meeting 26
Independent Accountants 27
Proposals of Shareholders 27
Other Business 27
APPENDICES
A. Agreement and Plan of Merger between and among The Berkshire Gas
Company, Berkshire Energy Resources and Berkshire Gas Mergeco
Gas Company, Inc. A-1
B. Declaration of Trust of Berkshire Energy Resources B-1
C. By-laws of Berkshire Energy Resources C-1
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES OFFERED BY THIS
PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY IN ANY
JURISDICTION TO OR FROM ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR
THE ISSUANCE OR SALE OF ANY SECURITIES HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR INCORPORATED HEREIN BY REFERENCE SINCE THE
DATE HEREOF.
<PAGE> 15
AVAILABLE INFORMATION
Berkshire Gas is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "SEC"). Such reports,
proxy statements and other information may be inspected and copied at the
Public Reference Facilities maintained by the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the SEC's
regional offices at 7 World Trade Center, Suite 1300, New York, New York
10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material may be obtained
at prescribed rates from the Public Reference Facilities maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. Berkshire Gas' common stock is traded on the NASDAQ National Market
System ("NASDAQ-NMS"), where reports, proxy statements and other information
concerning Berkshire Gas may also be inspected. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC,
including Berkshire Gas. The address of such Web site is
http://www.sec.gov. Following completion of the Merger, Holdco will file
such reports and other information as required under the Exchange Act and
the rules of NASDAQ.
Holdco has filed with the SEC a registration statement on Form S-4
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), registering the Holdco Common Shares that will be issued in exchange
for shares of Berkshire Gas Common Stock pursuant to the Merger described
herein. See "Proposal Regarding Plan of Restructuring." This Proxy
Statement/Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in schedules
and exhibits to the Registration Statement as permitted by the rules and
regulations of the SEC. Statements made in this Proxy Statement/Prospectus
as to the contents of any contract, agreement or other document referred to
are not necessarily complete. With respect to each such contract, agreement
or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the
matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. Items and information omitted from this Proxy
Statement/Prospectus but contained in the Registration Statement may be
inspected and copied at the Public Reference Facilities maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549.
Upon completion of the Merger, the Holdco Common Shares will be listed
on the NASDAQ NMS. At the time of such listing, Berkshire Gas Common Stock
will be withdrawn from listing and registration under Section 12 of the
Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE CERTAIN
DOCUMENTS WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF
ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS THEY ARE
SPECIFICALLY INCORPORATED BY REFERENCE, ARE AVAILABLE WITHOUT CHARGE TO ANY
<PAGE> 16
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY
STATEMENT/PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST TO: CHERYL M.
CLARK, CLERK, THE BERKSHIRE GAS COMPANY, 115 CHESHIRE ROAD, PITTSFIELD,
MASSACHUSETTS 01201-1879, TELEPHONE: (413) 442-1511. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY April 28,
1998.
The following documents filed with the SEC (File No. 0-1857-3)
pursuant to the Exchange Act are incorporated by reference into this Proxy
Statement/Prospectus:
1. Berkshire Gas' Annual Report on Form 10-K for the year ended
June 30, 1997, (and Berkshire Gas' Annual Report to Shareholders
for the year ended June 30, 1997 and Berkshire Gas' definitive
proxy statement filed with the SEC on October 3, 1997
incorporated therein); and
2. Berkshire Gas' Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1997 and December 31, 1997.
This Proxy Statement/Prospectus is accompanied by Berkshire Gas'
Annual Report on Form 10-K for the year ended June 30, 1997, Annual Report
to Shareholders for the year ended June 30, 1997, definitive Proxy Statement
filed with the SEC on October 3, 1997 and Quarterly Reports on Form 10-Q for
the quarters ended September 30, 1997 and December 31, 1997.
All other documents filed by Berkshire Gas pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the termination of the offering made
hereby shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing such documents. Any statement contained
herein or in any document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Proxy Statement/Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
SUMMARY OF PROXY STATEMENT/PROSPECTUS
The following is intended as a summary of the information contained in
the Proxy Statement/Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained in,
attached to or incorporated by reference in this Proxy Statement/Prospectus
and the Appendices hereto. Shareholders are urged to read this Proxy
Statement/Prospectus and the Appendices in their entirety.
Proposal Regarding Plan of Restructuring
THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE PROPOSED PLAN OF
RESTRUCTURING TO FORM A HOLDING COMPANY
Business of Berkshire Gas
<PAGE> 17
Berkshire Gas is a Massachusetts gas utility company engaged in the
distribution and sale of natural gas for residential, commercial and
industrial use. Berkshire Gas also markets liquefied petroleum gas and
maintains an appliance division that sells and leases gas burning equipment.
See "Proposal Regarding Plan of Restructuring -- Business of Berkshire Gas."
Proposed Restructuring
The Berkshire Gas Board of Directors has authorized, subject to
shareholder and regulatory approval, a plan to restructure the corporate
organization of Berkshire Gas to form a holding company structure. The
result of the restructuring will be to have Berkshire Gas become a separate
subsidiary of a parent holding company, Berkshire Energy Resources
("Holdco").
The holding company structure will be established pursuant to a merger
transaction (the "Merger") governed by an Agreement and Plan of Merger (the
"Merger Agreement") among Berkshire Gas, Holdco, that was organized by
Berkshire Gas as a Massachusetts business trust, and Berkshire Gas Mergeco
Gas Company, Inc., a Massachusetts gas company formed and wholly-owned by
Holdco. The formation of a holding company structure will be achieved by way
of the merger of Mergeco with and into Berkshire Gas, with holders of
Berkshire Gas Common Stock exchanging their shares for Holdco Common Shares
on a share-for-share basis and Holdco becoming the sole holder of Berkshire
Gas Common Stock. Accordingly, the present holders of Berkshire Gas Common
Stock will become holders of Holdco Common Shares. Berkshire Gas' 4.8%
Cumulative Preferred Stock will remain as securities and obligations of
Berkshire Gas. Berkshire Gas will seek to negotiate acceptable consents
with the holders of its long-term debt securities so as to effect the
reorganization. (These proposed changes to the corporate structure of
Berkshire Gas are generally referred to in this Proxy Statement/Prospectus
as the "restructuring.")
Berkshire Gas Shareholders Meeting
Berkshire Gas' shareholders will meet at Berkshire Gas' offices at 115
Cheshire Road, Pittsfield, Massachusetts on Friday, May 8, 1998 at 1:00 p.m.
The purpose of the meeting is to consider and vote upon a proposal to adopt
a holding company corporate structure, as more fully described in the Proxy
Statement/Prospectus. The record date for determining shareholders of
Berkshire Gas who are entitled to notice of and to vote at the Berkshire Gas
shareholders meeting is March 12, 1998 (the "Record Date'). On the record
date there were approximately 1,938 record holders of Berkshire Gas Common
Stock and 2,282,458 shares of Berkshire Gas Common Stock outstanding. The
presence in person or by proxy of the holders of a majority of the
outstanding shares of Berkshire Gas Common Stock constitutes a quorum.
The affirmative vote of at least two-thirds of the outstanding shares
of Common Stock entitled to vote at the special meeting, in person or by
proxy, is required to adopt and approve the proposed restructuring and the
Merger.
Special Considerations Applicable to the Restructuring
The restructuring proposal involves certain special factors that
<PAGE> 18
should be considered by shareholders, including the fact that non-utility
business opportunities pursued after the restructuring may involve more
risk, initially dividends on Holdco common shares will be dependent upon
common stock dividends paid by Berkshire Gas and from propane operations,
and the potential effects on shareholders of a business trust. See "Proposal
Regarding Plan of Restructuring -- Special Considerations Applicable to the
Restructuring" and "Proposal Regarding Plan of Restructuring -- Holdco's
Declaration of Trust and Comparative Shareholders' Rights."
Reasons for the Restructuring
In recent years, many state utility commissions, including the
Massachusetts Department of Telecommunications and Energy ("Massachusetts
DTE"; formerly the Department of Public Utilities), have initiated inquiries
into restructuring the natural gas utility industry with a goal of promoting
competition and extending to all customers the broadest possible choice of
natural gas suppliers. Further in November, 1997 the Massachusetts
legislature recently enacted a comprehensive bill to restructure the
electric utility industry (the "Restructuring Act"), many provisions of
which will affect gas utilities.
The Massachusetts DTE's decisions, as well as the Restructuring Act,
are establishing new competitive markets for energy and other related
services. The Massachusetts DTE's rules and decisions and the Restructuring
Act suggest that the best means for gas utilities to participate in these
competitive markets is through unregulated affiliates. The Massachusetts
DTE has specifically recognized the changing nature of the energy
marketplace and the need for utilities to restructure in order to
participate effectively in these new markets while, at the same time,
protecting ratepayers' interests.
The Massachusetts DTE's decisions regarding the restructuring of the
electricity and natural gas markets as well as the Restructuring Act advance
several central components to seek an appropriate balance of the needs of
all participants in the natural gas market. First, the Massachusetts DTE's
decisions and the Restructuring Act have sought to achieve the "functional
separation" and distinct pricing of the services traditionally provided on a
consolidated or "bundled" basis by gas utilities so as to enhance the
development of certain competitive markets. On July 18, 1997, the
Massachusetts DTE sent a letter to Berkshire Gas and other Massachusetts
local distribution companies mandating the establishment of a collaborative
forum to establish principles and procedures for such functional separation
and pricing, sometimes referred to as "unbundling," of all natural gas and
local distribution companies ("LDC's") services with a goal of creating a
more competitive natural gas market. Such collaborative forum is currently
underway. In addition, in a letter of August 18, 1997, the Massachusetts
DTE stated that each Massachusetts LDC eventually will be required to submit
its own unbundling proposal for Massachusetts DTE review and that, as a
condition precedent to a meaningful unbundling proposal, each LDC will be
required to provide fully unbundled rates for each rate class served by such
local distribution company. Specifically, the Department stated that it
expects that Berkshire Gas will submit, for an effective date no later than
November 1, 1998, such fully unbundled rates for each rate class.
The second component of the above-described utility industry
restructuring initiatives involves the continuing regulation of other
traditional utility activities, such as the distribution function, by the
Massachusetts DTE so as to ensure the continuing provision of safe and
<PAGE> 19
reliable service to customers at reasonable rates. After the proposed
corporate restructuring, Berkshire Gas will continue to provide many
traditional utility services and will be subject to the continuing
regulation of the Massachusetts DTE.
The third component of Massachusetts DTE and legislative restructuring
initiatives relates to the development of competitive markets for energy and
other related services, with utilities participating in such markets through
affiliates subject to appropriate standards of conduct. Berkshire Gas'
opportunities for long-term growth will, in part, be dependent upon its
ability to compete in new competitive markets. The Massachusetts DTE's
rules and the Restructuring Act both include provisions relating to the
specific limitations under which regulated utilities may participate in the
new competitive energy markets so as to avoid unfair competitive advantages
or the cross-subsidization of such activities by utility ratepayers. The
Massachusetts DTE's rules include specific requirements relating to the
functional and legal separation of the activities of regulated utilities and
their competitive affiliates.
Given this emerging regulatory structure, the Massachusetts DTE has
recognized a utility company's need for flexibility and speed in order to
respond in a timely manner to the opportunities and challenges in the
changing energy marketplace. Many competitive opportunities could be
frustrated or lost if pursued by a utility or through a subsidiary of a
utility due to the requirements of the regulatory process, including, for
example, the need to obtain Massachusetts DTE approval for a gas company to
invest in a subsidiary. The Massachusetts DTE has also recognized that
alternative organizational structures may afford a utility the flexibility
to accomplish its objectives while also furthering the Massachusetts DTE's
goals of unbundling and fostering competition, maintaining appropriate
separation between regulated and non-regulated activities and streamlining
regulatory review. The Massachusetts DTE has acknowledged that the holding
company structure is one means by which a utility may achieve these
objectives.
Assuming that natural gas industry restructuring in Massachusetts
continues to proceed consistent with the above described requirements, at a
minimum, Berkshire Gas has identified the need to adopt a corporate
structure that: 1) can facilitate such unbundling; 2) permit the necessary
separation of regulated and competitive operations; and 3) will afford the
appropriate flexibility to pursue opportunities in new competitive markets.
Berkshire Gas' management believes that the increasingly competitive natural
gas industry, together with new energy-related technologies, may create
significant new opportunities for energy service providers like Berkshire
Gas in non-utility business ventures. Berkshire Gas' management believes
that the pursuit of these new opportunities can be well accommodated in a
holding company structure and is a key element of Berkshire Gas' strategy
for long-term growth to benefit its shareholders and customers.
The holding company structure is a well-established form of
organization for companies conducting multiple lines of business,
particularly entities engaging in both regulated and unregulated activities.
Berkshire Gas' management believes that the holding company structure would
provide increased financial, managerial and organizational flexibility in
order to better position Berkshire Gas to operate in this changing natural
gas utility industry. Moreover, the new structure will facilitate
separation of the new holding company's regulated and unregulated lines of
business in a manner consistent with the principles outlined by the
<PAGE> 20
Massachusetts DTE and mandated in applicable legislation and regulation
regarding competitive affiliates of Massachusetts gas companies. See
"Proposal Regarding Plan of Restructuring -- Reasons for Restructuring" and
"Proposal Regarding Plan of Restructuring -- Benefits of Holding Company
Structure."
Certain Effects on Shareholders
Holdco has been formed as a Massachusetts business trust primarily due
to the potential Massachusetts income tax savings to the trust. Holdco's
shareholders will have rights and liabilities generally comparable to those
of shareholders of a corporation. Pursuant to certain decisions of the
Massachusetts courts, shareholders of a Massachusetts business trust that
exercise too much control over the affairs of a Massachusetts business trust
may be held personally liable as partners for the obligations of a trust to
the extent not satisfied by the trust. Even if, however, Holdco was held to
be a partnership, the possibility of its shareholders incurring personal
liability is remote because (a) Holdco's Declaration of Trust (as defined
below) contains an express disclaimer of shareholder liability for the
obligations of Holdco, requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by Holdco
and provides that no person has authority to enter into an agreement,
obligation or instrument except in accordance with those requirements, (b)
most of Holdco's operations will be conducted by incorporated subsidiaries
such that the activities of Holdco will be limited to the ownership of
securities rather than the operation of physical assets (c) Holdco will
maintain insurance against tort liability, and (d) Holdco's Declaration of
Trust provides for indemnification out of the trust property for any
shareholder held personally liable for the obligations of Holdco. Use of a
Massachusetts business trust as the parent holding company of a
Massachusetts public utility is a common practice. The parent holding
companies of all other investor-owned Massachusetts utility holding systems
are also organized as business trusts. See "Proposal Regarding Plan of
Restructuring -- Special Considerations Applicable to the Restructuring" and
"Proposal Regarding Plan of Restructuring, Holdco's Declaration of Trust and
Comparative Shareholders' Rights."
Vote Required
Only holders of record of Berkshire Gas Common Stock as of the record
date will be entitled to receive notice of and vote at the Special Meeting
and any adjournments thereof with respect to approval of the Merger
Agreement and the restructuring. Holders of Berkshire Gas Common Stock
entitled to vote will have one vote for each share held. In order for the
holding company proposal to be approved under Massachusetts law, it must
receive the favorable vote, in person or by proxy, of the holders of two-
thirds of the outstanding shares of Berkshire Gas Common Stock. As of the
record date, 2,282,458 shares of Berkshire Gas Common Stock were issued and
outstanding. To the knowledge of management, no person owns beneficially
more than 5 percent of the outstanding voting securities of Berkshire Gas.
The consent of the holders of at least two-thirds of the total number of
shares of Berkshire Gas' 4.8% Cumulative Preferred Stock then outstanding
will be required in connection with the reorganization. See "Proposal
Regarding Plan of Restructuring -- Vote Required" and "Proposal Regarding
Plan of Restructuring -- Stock Ownership of Directors and Executive
Officers."
<PAGE> 21
Exchange of Certificates Not Required
If the new holding company structure is implemented, it will not be
necessary for holders of Berkshire Gas Common Stock to surrender their
existing stock certificates for Holdco share certificates. Certificates
representing Berkshire Gas Common Stock will automatically represent the
corresponding number of Holdco Common Shares upon consummation of the
Merger. See "Proposal Regarding Plan of Restructuring -- Exchange of
Certificates Not Required."
Stock Listing
Shares of Berkshire Gas Common Stock are currently traded on the
NASDAQ National Market System under the stock symbol "BGAS." Application
will be made so that Holdco Common Shares may be traded on the NASDAQ
National Market System ("NASDAQ-NMS"), with such shares expected to be
traded under the stock symbol "BERK." See "Proposal Regarding Plan of
Restructuring -- Stock Listing."
Conditions to the Restructuring
The Merger Agreement provides that the consummation of the Merger and
the restructuring into a holding company is subject to approval of the
Merger Agreement by the shareholders of Berkshire Gas, Holdco and Mergeco,
as is set forth more fully below under "Proposal Regarding Plan of
Restructuring -- Vote Required," and to the approval by the National
Association of Securities Dealers of Holdco Common Shares for trading on the
NASDAQ-NMS. If the shareholders of Berkshire Gas approve the Merger,
Berkshire Gas will then cause the shares of Holdco and Mergeco to be voted
in favor of the restructuring into a holding company.
In addition, the decision to proceed with the Merger and restructuring
is subject to, among other things, the receipt, on terms satisfactory to the
Board of Directors of Berkshire Gas, of authorization from the Massachusetts
DTE to form a holding company structure for Berkshire Gas and such other
consents and approvals as the Board may deem necessary or appropriate,
including, without limitation, appropriate waivers or consents from the
holders of Berkshire Gas' long-term debt securities. Following the
restructuring, Holdco is expected to qualify for an exemption under the
Public Utility Holding Company Act of 1935 (the "Holding Company Act"). See
"Proposal Regarding Plan of Restructuring -- Regulatory Approval of the
Restructuring" and "Proposal Regarding Plan of Restructuring -- Regulatory
Matters."
Dividend Policy
While future dividends on Holdco Common Shares will depend primarily
upon the earnings, financial condition and capital requirements of its
subsidiaries, it is contemplated that Holdco initially will make dividend
payments on Holdco Common Shares at the rate currently applicable to
Berkshire Gas Common Stock. In addition, it is expected that such dividends
of Holdco will be declared and paid on approximately the same schedule of
dates as that now followed by Berkshire Gas with respect to Berkshire Gas
Common Stock dividends. The most recent dividend declared by the Board of
Directors of Berkshire Gas was $0.285 per share of Berkshire Gas Common
Stock and is scheduled to be paid on April 15, 1998. See "Proposal
Regarding Plan of Restructuring -- Dividend Policy."
<PAGE> 22
Certain Federal Income Tax Consequences
Berkshire Gas' management believes that, for federal income tax
purposes, no gain or loss will be recognized by the holders of shares of
Berkshire Gas Common Stock whose shares are exchanged for Holdco Common
Shares. See "Proposal Regarding Plan of Restructuring -- Certain Federal
Income Tax Consequences."
No Appraisal Rights
Under Massachusetts law governing the proposed Merger, neither a
dissenting holder of Berkshire Gas Common Stock nor a holder of Berkshire
Gas 4.8% Cumulative Preferred Stock, has a right to demand payment of the
fair value of his or her shares if the Merger is consummated.
PROPOSAL REGARDING PLAN OF RESTRUCTURING
General
The Board of Directors and management of Berkshire Gas consider it to
be in the best interests of Berkshire Gas and its shareholders to revise its
corporate structure to establish a holding company structure whereby
Berkshire Gas will become a separate, wholly-owned subsidiary of a new
parent company. Pursuant to the proposed restructuring, the present holders
of Berkshire Gas Common Stock will become shareholders of the new parent.
It is currently contemplated that several new subsidiaries will be formed,
that would be legally and functionally separate from Berkshire Gas. See
"Proposal Regarding Plan of Restructuring -- The Restructuring" and
"Proposal Regarding Plan of Restructuring -- Reasons for the Restructuring."
The holding company structure is a well-established form of
organization for companies conducting multiple lines of businesses,
particularly entities engaging in both regulated and unregulated activities.
Nearly all investor-owned Massachusetts electric utilities are currently
organized in a holding company structure, as are several investor-owned
Massachusetts natural gas utilities. The holding company structure is
intended to provide increased financial, managerial and organizational
flexibility in order to better position Berkshire Gas to operate in the
changing natural gas utility industry. Specifically, the new structure
would allow increased flexibility and will facilitate the clear separation
of Holdco's regulated and unregulated lines of business, enabling it to
pursue non-utility business ventures in a manner consistent with the utility
industry restructuring principles outlined by the Massachusetts Department
of Telecommunications and Energy ("Massachusetts DTE") and the Massachusetts
legislature. Such separation will facilitate the financing of each separate
line of business consistent with the requirements of each industry in which
Holdco is engaged. Although Berkshire Gas could seek to continue to pursue
non-utility business opportunities on its own, management and the Board of
Directors believe it is in the best interests of Berkshire Gas and its
shareholders to allow the flexibility to conduct such non-utility activities
through a holding company structure. See "Proposal Regarding Plan of
Restructuring -- Benefits of Holding Company Structure."
Business of Berkshire Gas
Berkshire Gas was incorporated in the Commonwealth of Massachusetts in
1853 and is a publicly-held utility company engaged in the distribution and
sale of natural gas for residential, commercial and industrial use.
<PAGE> 23
Berkshire Gas maintains an appliance rental division that sells and leases
gas burning equipment. Through its Berkshire Propane division, Berkshire
Gas markets liquefied petroleum gas.
Berkshire Gas' utility service territory includes 19 communities in
the western portion of the Commonwealth of Massachusetts, including the
cities of Pittsfield and North Adams, the towns of Adams, Amherst, Great
Barrington, Greenfield and Williamstown, and twelve smaller municipalities.
The population of the area served is approximately 190,000 and is primarily
residential in character, but the territory also includes industrial,
agricultural, educational, cultural and resort facilities. Berkshire Gas
also markets propane throughout the western portion of Massachusetts,
eastern New York and southern Vermont. Berkshire Gas currently serves over
32,000 natural gas and 5,000 propane customers.
Berkshire Gas has recently formed a strategic marketing alliance with
Conectiv/CNE, LLC, a joint venture formed by a subsidiary of Connecticut
Energy Corporation, a public utility holding company, and a subsidiary of
Delmarva Power and Light Company, a Delaware public utility, to market
electricity, natural gas and energy-related services to customers in
Massachusetts, Vermont, Connecticut and New York states. Such marketing
alliance is in the start-up phase and has not yet secured any customers.
The new holding company would initially endeavor to develop these
businesses, as well as identify other non-utility businesses which are
related to the provision of energy and energy-related services. The holding
company system would provide the flexibility for the legal and functional
separation of regulated and competitive activities, including the marketing
and sale of propane or other competitive opportunities that may be pursued.
See "Proposal Regarding Plan of Restructuring -- The Restructuring."
Berkshire Gas is and will remain subject to the regulatory authority
of the Massachusetts DTE with respect to various matters, including rates,
financing, certain gas supply contracts, demand-side management programs and
planning and safety matters. Berkshire Gas is and will remain subject to
standards prescribed by the Secretary of Transportation under the Natural
Gas Pipeline Safety Act of 1968 with respect to the design, installation,
testing, construction and maintenance of pipeline facilities. The
enforcement of these standards has been delegated to the Massachusetts DTE
which has taken an active role in such enforcement. The regulation of
prices, terms and conditions of interstate pipeline transportation and sales
of natural gas is subject to the jurisdiction of the Federal Energy
Regulation Commission (FERC). Berkshire Gas is not under the direct
jurisdiction of FERC, but monitors, and periodically participates in,
proceedings before FERC which involve Berkshire Gas' pipeline gas
suppliers/transporters and other matters pertinent to Berkshire Gas'
business.
The current corporate structure of Berkshire Gas is as follows:
___________________________________________________________________________
| HOLDERS OF COMMON STOCK |
| AND HOLDERS OF 4.8% CUMULATIVE PREFERRED STOCK |
| : |
| : |
| Berkshire Gas |
|___________________________________________________________________________|
<PAGE> 24
The Restructuring
To carry out the restructuring, Berkshire Gas has formed Berkshire
Energy Resources ("Holdco"), a Massachusetts business trust, and Holdco's
wholly-owned subsidiary, Berkshire Gas Mergeco Gas Company, Inc.
("Mergeco"), a Massachusetts utility corporation, neither of which entities
has any present business or operations of its own. The outstanding Holdco
Common Shares are currently owned by Berkshire Gas, while the authorized
stock of Mergeco is presently subscribed for by Holdco and will be issued to
Holdco upon approval of the Massachusetts DTE. Berkshire Gas, Mergeco and
Holdco have entered into an Agreement and Plan of Merger (the "Merger
Agreement") under which, subject to certain conditions, including
shareholder approval, as required by Massachusetts law, and approval by the
Massachusetts DTE, Berkshire Gas will become a subsidiary of Holdco through
the merger of Mergeco with and into Berkshire Gas. In the Merger, the
Berkshire Gas Common Stock will be exchanged share-for-share for Holdco
Common Shares. A copy of the Merger Agreement is attached to this Proxy
Statement/Prospectus as Appendix A.
After the restructuring, Holdco will also have the flexibility to
engage in non-utility business activities through a new subsidiary or
subsidiaries, as deemed appropriate in the future, in order to separate
legally and functionally its regulated and unregulated businesses. Berkshire
Gas expects that several new subsidiaries could be formed by Holdco that
would be separate from Berkshire Gas, but owned by Holdco. First, the
retail propane operations now pursued through a division of Berkshire Gas
would be transferred to a new subsidiary. Second, a management services
company would be formed to provide certain administrative services to
Berkshire Gas, Holdco or other subsidiaries of Holdco for a charge based
upon the cost attributable to providing such services. Finally, in the
event that new business opportunities in the competitive marketplace are
pursued, a new subsidiary company (or companies) could be formed. If the
proposed restructuring is consummated, it is intended that advances to and
other investments in non-utility businesses will be made primarily by Holdco
rather than by Berkshire Gas and that the proceeds of financings by
Berkshire Gas will be used entirely in the conduct of its natural gas
utility business.
Berkshire Gas' 4.8% Cumulative Preferred Stock will, assuming the
requisite consent of holders thereof, continue to be outstanding securities
and obligations of Berkshire Gas. Berkshire Gas expects to negotiate
acceptable consents with the holders of its long-term debt securities,
consisting primarily of first mortgage bonds and medium-term and senior
notes in order to effect the proposed restructuring. Berkshire Gas'
management and the Board of Directors believe that the restructuring will
have no adverse affect on the holders of its 4.8% Cumulative Preferred Stock
and debt securities. See "Proposal Regarding Plan of Restructuring --
Treatment of Preferred Stock" and "Proposal Regarding Plan of Restructuring
- -- Treatment of Indebtedness."
Except for the contemplated transfer of certain of Berkshire Gas'
propane assets to a subsidiary of Holdco, assets and liabilities of
Berkshire Gas immediately before the Merger and restructuring will be
substantially the same as the assets and liabilities of Berkshire Gas
immediately after the Merger and restructuring.
The reorganized corporate structure of Holdco and Berkshire Gas after
the Merger and completion of the proposed restructuring is expected to be as
follows:
<PAGE> 25
___________________________________________________________________________
| PROPOSED STRUCTURE |
|___________________________________________________________________________|
| |
| HOLDERS OF COMMON SHARES |
| : |
| : |
|HOLDERS OF 4.8% CUMULATIVE Holding |
|PREFERRED STOCK Company |
| : : |
| : : |
| : |
| : : : : : |
| : : : : : |
| Berkshire Gas Berkshire Potential New Management Services |
| Propane Subsidiaries Company |
|___________________________________________________________________________|
Special Considerations Applicable to Restructuring
The following factors should be considered carefully in evaluating the
proposal to establish a holding company corporate structure to be considered
at the Special Meeting of Berkshire Gas.
Non-Utility Business Activities May Involve More Risk. The future
performance of Holdco and the future value of Holdco Common Shares cannot be
predicted. Following consummation of the restructuring, Holdco will be able
to make investments in non-utility businesses and issue securities for the
purpose of financing such investments without obtaining the prior approval
of the Massachusetts DTE. The restructuring, therefore, will provide Holdco
with more flexibility to pursue business opportunities that might involve a
higher degree of risk than would be permitted for a regulated utility, but
with the possibility of higher potential returns commensurate with such
risk. Pursuit of business opportunities with greater risk could, in turn,
have either a positive or an adverse effect on the value of a shareholder's
investment, depending upon the return actually realized from such
opportunities. Such business opportunities may encounter competitive and
other business factors not previously experienced by Berkshire Gas to the
same degree and may have different, and perhaps greater, investment risk
than those involved in Berkshire Gas' regulated natural gas supply and
distribution business. There can be no assurance that such businesses will
be successful or, if unsuccessful, that they will not have a direct or
indirect adverse effect on Holdco. Any losses incurred by such businesses
will not be recoverable in Berkshire Gas' regulated rates. To the extent
Holdco becomes increasingly engaged in non-utility business activities, such
activities will have an increasing impact on the market price of Holdco's
Common Shares.
Initially Dividends On Holdco Common Shares Will Be Dependent Upon
Common Stock Dividends Paid By Berkshire Gas and From Propane Operations.
For a period of time following the restructuring, the funds required by
Holdco to enable it to pay dividends on Holdco's Common Shares are expected
to be derived primarily from the dividends paid to Holdco by Berkshire Gas
and from the subsidiary expected to be formed to engage in the non-regulated
sale of liquid propane now performed by a division of Berkshire Gas.
Accordingly, the ability of Holdco to pay such dividends, as a practical
matter, will be governed by the ability of Berkshire Gas and the new
subsidiary of Holdco that will be engaged in propane operations to pay
<PAGE> 26
dividends on their common stock. The ability of Berkshire Gas to pay
dividends on its common stock will continue to be subject to the
preferential dividend rights of the holders of the outstanding Berkshire Gas
4.8% Cumulative Preferred Stock. In addition, although it has no current
intention to do so, it is expected that Berkshire Gas may need to issue
additional preferred stock in the future to meet its capital needs. Such
additional preferred stock is likely to also have preferential dividend
rights. The trustees of Holdco have no current intention to change the
current Berkshire Gas dividend policy with respect to the continuing
operations of Berkshire Gas or the subsidiary that will engage in propane
operations.
Potential Effects on Shareholders. Holdco has been formed as a
Massachusetts business trust primarily due to the potential Massachusetts
income tax savings to the trust. Holdco's shareholders will have rights and
liabilities generally comparable to those of shareholders of a corporation.
Pursuant to certain decisions of the Massachusetts courts, shareholders who
exercise too much control over the affairs of a Massachusetts business trust
may be held personally liable as partners for the obligations of a trust to
the extent not satisfied by the trust, with respect to tort claims, contract
claims (where shareholder liability is not negated as described below),
claims for taxes and certain statutory liabilities. Even if, however,
Holdco were held to be a partnership, the possibility of its shareholders
incurring personal liability is remote because (a) Holdco's Declaration of
Trust contains an express disclaimer of shareholder liability for the
obligations of Holdco, requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by Holdco
and provides that no person has authority to enter into an agreement,
obligation or instrument except in accordance with those requirements, (b)
most of Holdco's operations will be conducted by incorporated subsidiaries
such that the activities of Holdco will be limited to the ownership of
securities rather than the operation of physical assets (c) Holdco will
maintain insurance against tort liability, and (d) Holdco's Declaration of
Trust provides for indemnification out of the trust property for any
shareholder held personally liable for the obligations of Holdco. See
Proposal Regarding Plan of Restructuring -- Holdco's Declaration of Trust
and Comparative Shareholders' Rights."
Reasons for the Restructuring
In recent years, many state utility commissions, including the
Massachusetts DTE, have initiated inquiries into restructuring the natural
gas utility industry with a goal of promoting competition and extending to
all customers the broadest possible choice of natural gas suppliers. In
November, 1997 the Massachusetts legislature enacted the comprehensive
Restructuring Act to restructure the electric utility industry, many
provisions of which will affect gas utilities.
The Massachusetts DTE's decisions, as well as the Restructuring Act,
are establishing new competitive markets for energy and other related
services. The Massachusetts DTE has specifically recognized the changing
nature of the energy marketplace and the need for utilities to restructure
in order to participate effectively in these new markets while, at the same
time, protecting ratepayers' interests. Berkshire Gas' management believes
that the Massachusetts DTE's rules and decisions and the Restructuring Act
suggest that an effective means for gas utilities to participate in these
competitive markets is through unregulated affiliates within a holding
company corporate structure.
<PAGE> 27
The Massachusetts DTE's decisions regarding the restructuring of the
electricity and natural gas markets, as well as the Restructuring Act,
advance several central components to seek an appropriate balance of the
needs of all participants in the natural gas market. First, the
Massachusetts DTE's decisions and the Restructuring Act have sought to
achieve the "functional separation" and distinct pricing of the services
traditionally provided on a consolidated or "bundled" basis by gas utilities
so as to enhance the development of certain competitive markets. On July
18, 1997, the Massachusetts DTE sent a letter to Berkshire Gas and other
Massachusetts local distribution companies mandating the establishment of a
collaborative forum to establish principles and procedures for such
functional separation and pricing, sometimes referred to as "unbundling," of
all LDC's services with a goal of creating a more competitive natural gas
market. The Massachusetts DTE stated that a more competitive gas market
would: 1) provide the broadest possible customer choice; 2) provide all
customers with an opportunity to share in the benefits of increased
competition; 3) ensure full and fair competition in the gas supply market;
4) functionally separate supply from local distribution services; 5) support
and further the goals of environmental regulation; and, 6) rely on incentive
regulation where a fully competitive market cannot exist, or does not exist.
Such collaborative forum is currently underway. In addition, in a letter of
August 18, 1997 to Massachusetts LDC's, the Massachusetts DTE stated that
each Massachusetts LDC eventually will be required to submit its own
unbundling proposal for the Massachusetts DTE's review and that, as a
condition precedent to a meaningful unbundling proposal, each LDC will be
required to provide fully unbundled rates for each rate class served by such
local distribution company. Specifically, the Department stated that it
expects that Berkshire Gas will submit, for an effective date no later than
November 1, 1998, such fully unbundled rates for each rate class.
The second component of the above-described utility industry
restructuring initiatives involves the continuing regulation of other
traditional utility activities, such as the distribution function, by the
Massachusetts DTE so as to ensure the continuing provision of safe and
reliable service to customers at reasonable rates. After the proposed
corporate restructuring, Berkshire Gas will continue to provide many
traditional utility services and will be subject to the continuing
regulation of the Massachusetts DTE.
The third component of Massachusetts DTE and legislative restructuring
initiatives relates to the development of competitive markets for energy and
other related services, with utilities participating in such markets through
affiliates subject to appropriate standards of conduct. Berkshire Gas'
opportunities for long-term growth will, in part, be dependent upon its
ability to compete in new competitive markets. The Massachusetts DTE's
rules and the Restructuring Act both include provisions relating to the
specific limitations upon which regulated utilities may participate in the
new competitive energy markets so as to avoid unfair competitive advantages
or the cross-subsidization of such activities by utility ratepayers. The
Massachusetts DTE's rules include specific requirements relating to the
functional and legal separation of the activities of regulated utilities and
their competitive affiliates.
Given this emerging regulatory structure, the Massachusetts DTE has
recognized a utility company's need for flexibility and speed in order to
respond in a timely manner to the opportunities and challenges in the
changing energy marketplace. Many competitive opportunities could be
frustrated or lost if pursued by a utility or through a subsidiary of a
<PAGE> 28
utility due to the requirements of the regulatory process, including, for
example, the need to obtain Massachusetts DTE approval for a gas company to
invest in a subsidiary. The Massachusetts DTE has also recognized that
alternative organizational structures may afford a utility the flexibility
to accomplish its objectives while also furthering the Massachusetts DTE's
goals of unbundling and fostering competition, maintaining appropriate
separation between regulated and non-regulated activities and streamlining
regulatory review. The Massachusetts DTE has acknowledged that the holding
company structure is one means by which a utility may achieve these
objectives.
Assuming that natural gas industry restructuring in Massachusetts
continues to proceed consistent with the above described requirements, at a
minimum, Berkshire Gas has identified the need to adopt a corporate
structure that: 1) can facilitate such unbundling; 2) permits the necessary
separation of regulated and competitive operations; and 3) will afford the
appropriate flexibility to pursue opportunities in new competitive markets.
Berkshire Gas' management believes that the increasingly competitive natural
gas industry, together with new energy-related technologies, may create
significant new opportunities for energy service providers like Berkshire
Gas in non-utility business ventures. Berkshire Gas' management believes
that the pursuit of these new opportunities can be well accommodated in a
holding company structure and is a key element of Berkshire Gas' strategy
for long-term growth to benefit its shareholders and customers.
Benefits of Holding Company Structure
The holding company structure is a well-established form of
organization for companies conducting multiple lines of business,
particularly entities engaging in both regulated and unregulated activities.
The holding company structure would provide increased financial, managerial
and organizational flexibility in order to better position Berkshire Gas to
operate in this changing natural gas utility industry. Moreover, the new
structure will facilitate clear separation of the new holding company's
regulated and unregulated lines of business in a manner consistent with the
principles outlined by the Massachusetts DTE and mandated in applicable
legislation and regulation regarding competitive affiliates of Massachusetts
gas companies.
Many electric and gas utilities have been organized as holding
companies for many years, and other utilities have recently changed their
organization to a holding company structure. While Berkshire Gas could seek
to continue to pursue non-utility business opportunities on its own, the
Board of Directors and management believe it is more desirable in the long-
term to adopt a framework that provides the flexibility to conduct non-
utility activities through a holding company structure. The benefits of a
holding company structure include:
Timely Response to Business Opportunities. The holding company
structure, by providing flexibility to separate non-utility businesses into
corporations that will not be subsidiaries of Berkshire Gas, will enable
Holdco to pursue non-utility business opportunities without the delays
inherent in the regulatory process. For example, the holding company
structure will enable Holdco to make investments in non-utility businesses,
and to issue securities for the purpose of financing such investments,
without obtaining the approval of the Massachusetts DTE. This will allow
Holdco to respond to competitive forces and pursue non-utility businesses in
a more timely and responsive fashion.
<PAGE> 29
Flexible Financing Opportunities. The holding company corporate
structure also will permit the use of financings that are more directly
suited to the particular requirements, characteristics and risks of non-
utility operations without affecting the capital structure or
creditworthiness of Berkshire Gas. The holding company structure will allow
the design and implementation of capitalization ratios appropriate for the
capital and business requirements of each industry in which Holdco is
engaged.
Separation. The holding company structure will separate Berkshire
Gas' natural gas utility business from the non-utility businesses of other
Holdco subsidiaries. As a result, it will provide a better structure for
regulators to assure that there is no cross-subsidization of cost or
transfer of business risk from unregulated to regulated lines of business.
In addition, the holding company structure will facilitate the analysis and
valuation of the holding company's individual lines of business by the
investment community. The holding company structure also will mitigate the
potential impact on Berkshire Gas, its preferred stock and debt security
holders and its customers, of the risks of non-utility businesses and will
permit the capital structure of Berkshire Gas to continue to be managed
efficiently.
Recommendations of the Board
The Board of Directors and management of Berkshire Gas recommend the
approval of the restructuring as proposed in the accompanying Notice of
Special Meeting. The Board of Directors and management believe that the
restructuring is in the best interest of Berkshire Gas and its shareholders.
In making its decision to recommend the restructuring to the shareholders,
the Board of Directors considered many factors, including the factors set
forth above under "Proposal Regarding Plan of Restructuring -- Reasons for
the Restructuring" and "Proposal Regarding Plan of Restructuring -- Benefits
of Holding Company Structure."
Vote Required
In order for the restructuring into a holding company to be approved
under Massachusetts law, it must receive favorable votes, in person or by
proxy, of the holders of two-thirds of the outstanding shares of Berkshire
Gas Common Stock. In addition, Berkshire Gas' articles of organization
require that the restructuring be approved by the holders of at least two-
thirds of the outstanding shares of its 4.8% Cumulative Preferred Stock.
See "Other Matters -- Voting Procedures."
The persons named in the accompanying proxy intend to vote such proxy
in favor of the restructuring unless a contrary choice is indicated thereon.
Exchange of Certificates Not Required
If the proposed restructuring is consummated, it will not be necessary
for holders of shares of Berkshire Gas Common Stock to exchange their
existing stock certificates for Holdco share certificates. Holders of
Berkshire Gas Common Stock will automatically become holders of Holdco
Common Shares, and their stock certificates will automatically represent
Holdco Common Shares. After the restructuring, whenever presently
outstanding certificates are presented for transfer, new certificates
bearing the name of Holdco will be issued.
<PAGE> 30
Merger Agreement
The Merger Agreement has been unanimously approved by the Boards of
Directors or Trustees of Berkshire Gas, Holdco and Mergeco, and these
companies have executed the Merger Agreement, subject to certain conditions
including the approval and adoption thereof by vote of Berkshire Gas'
shareholders as required by Massachusetts law and described herein. The
Merger Agreement provides that:
(1) Mergeco will merge with and into Berkshire Gas with Berkshire Gas
being the surviving company.
(2) each outstanding share of Berkshire Gas Common Stock, $2.50 par value
per share, will be converted into one Holdco Common Share;
(3) each outstanding share of Berkshire Gas 4.8% Cumulative Preferred
Stock, $100 par value per share, will continue as one issued and
outstanding share of Berkshire Gas 4.8% Cumulative Preferred Stock,
$100 par value per share, with the same preferences, designations,
relative rights, privileges and powers, and subject to the same
restrictions, limitations and qualifications as were applicable to
such stock prior to the Merger;
(4) each outstanding share of Mergeco Common Stock, $1.00 par value per
share, will be converted into one new share of Berkshire Gas Common
Stock, $2.50 par value per share, all of which will then be owned by
Holdco; and
(5) the Holdco Common Shares presently held by Berkshire Gas will be
canceled.
As a result of the Merger, Berkshire Gas will become a subsidiary of
Holdco, and all of the Holdco Common Shares outstanding immediately after
the Merger will be owned by the holders of Berkshire Gas Common Stock
outstanding at the effective time of the Merger.
If and when the Merger becomes effective, holders of Berkshire Gas
Common Stock will automatically become holders of Holdco Common Shares. The
terms, conditions and provisions of Berkshire Gas 4.8% Cumulative Preferred
Stock will not be altered in the Merger. Berkshire Gas will seek to
negotiate acceptable consents with the holders of its long-term debt
securities so as to effect the reorganization.
Amendment or Termination of Plan of Merger
By mutual consent of their respective Boards of Directors or Trustees,
Berkshire Gas, Holdco and Mergeco may amend, modify or supplement the Merger
Agreement in such manner as may be agreed upon by them in writing at any
time before or after approval of the Merger Agreement by the shareholders of
Berkshire Gas; provided, however, that no such amendment, modification or
supplement shall, in the sole judgment of the Board of Directors of
Berkshire Gas, materially and adversely affect the rights of the holders of
Berkshire Gas Common Stock.
The Merger Agreement provides that it may be terminated, and the
Merger and other transactions incident to the restructuring plan abandoned,
at any time, whether before or after approval of the Merger Agreement by the
<PAGE> 31
shareholders of Berkshire Gas, by action of the Board of Directors of
Berkshire Gas if the Board determines for any reason that the consummation
of the restructuring would for any reason be inadvisable or not in the best
interests of Berkshire Gas or its shareholders. The Board of Directors of
Berkshire Gas expects to terminate and abandon the restructuring if
Berkshire Gas has not received, within a reasonable period after shareholder
approval, satisfactory approval of the Merger by the Massachusetts DTE as
required by Massachusetts law (see "Proposal Regarding Plan of Restructuring
- -- Regulatory Approval of the Restructuring"), acceptable consents from the
holders of its 4.8% Cumulative Preferred Stock and its long-term debt
securities or approval for the trading of Holdco Common Shares on the
NASDAQ-NMS National Market System (see "Proposal Regarding Plan of
Restructuring -- Stock Exchange Listing"). Berkshire Gas is unable to
predict under what other circumstances the restructuring would be terminated
and abandoned.
Effectiveness of the Restructuring
The Merger Agreement contemplates that the Merger will become
effective, and all other steps in the restructuring plan will be completed,
as soon as practical after the required shareholder and regulatory
approvals, consents and listing authorization for Holdco Common Shares have
been received, unless the Board of Directors of Berkshire Gas theretofore
has elected to abandon such plan.
Certain Federal Income Tax Consequences
General. The following general discussion summarizes certain federal
income tax considerations relating to the Merger. This summary is provided
for general information only, and does not discuss all aspects of income
taxation that may be relevant to a particular holder of Berkshire Gas Common
Stock in light of the holder's personal tax circumstances or to certain
types of holders of Berkshire Gas Common Stock subject to special treatment
under the income tax laws of any jurisdiction including persons who are not
United States persons, dealers in securities, tax-exempt entities, and
shareholders who do not hold Berkshire Gas Common Stock as "capital assets"
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code").
The legal conclusions set forth in this summary reflect the opinion of
Berkshire Gas' counsel, Rich, May, Bilodeau & Flaherty, P.C. No ruling has
been requested from the Internal Revenue Service. EACH HOLDER OF BERKSHIRE
GAS COMMON STOCK SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR AS TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER, INCLUDING THE
APPLICATION AND EFFECT OF FOREIGN, STATE OR LOCAL INCOME AND OTHER TAX LAWS.
The following discussion is based on existing statutes, existing and
proposed regulations and existing administrative interpretations and court
decisions. Future legislation, regulations, administration interpretations,
or court decisions could significantly change such authorities either
prospectively or retroactively, and could affect the legal conclusions set
forth in the following discussions.
For federal income tax purposes, the Merger is intended to qualify as
a tax-free exchange pursuant to Section 351 of the Internal Revenue Code.
Tax Implications to the Holders of Berkshire Gas Common Stock. For
<PAGE> 32
federal income tax purposes, no gain or loss will be recognized by the
holders of Berkshire Gas Common Stock on their exchange of Berkshire Gas
Common Stock for Holdco Common Shares pursuant to the Merger. For federal
income tax purposes, the tax basis of the Holdco Common Shares received by
each such holder pursuant to the Merger will be the same as the holder's
basis in the Berkshire Gas Common Stock surrendered in the Merger, and the
holding period of such Holdco Common Shares will include the period during
which such holder held the Berkshire Gas Common Stock surrendered in the
Merger, provided that such Berkshire Gas Common Stock was held as a capital
asset on the date of the exchange.
Other Tax Aspects. Apart from the federal income tax consequences of
the Merger discussed herein, no attempt has been made to determine the tax
consequences to a holder of Berkshire Gas Common Stock under the laws of any
country, state or jurisdiction. Holders of Berkshire Gas Common Stock may be
subject to special federal income tax treatment or to other taxes, such as
state or local income taxes that may be imposed by various jurisdictions,
and also may be subject to intangible property, estate and inheritance taxes
in their state of domicile. Each holder of Berkshire Gas Common Stock
should consult the holder's own tax advisors to determine the particular tax
consequences of the Merger to the holder.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INTENDED TO
PROVIDE ONLY A GENERAL SUMMARY AND DOES NOT ADDRESS TAX CONSEQUENCES WHICH
MAY VARY WITH, OR ARE CONTINGENT UPON, INDIVIDUAL CIRCUMSTANCES. MOREOVER,
THIS DISCUSSION DOES NOT ADDRESS ANY FOREIGN, FEDERAL, STATE OR LOCAL TAX
CONSEQUENCES OF THE DISPOSITION OF STOCK IN BERKSHIRE GAS BEFORE OR IN
HOLDCO AFTER THE MERGER. ACCORDINGLY, EACH HOLDER OF SUCH STOCK IS STRONGLY
URGED TO CONSULT WITH SUCH HOLDER'S TAX ADVISORS TO DETERMINE THE PARTICULAR
TAX CONSEQUENCES OF THE MERGER OR SUCH DISPOSITION TO SUCH HOLDER.
Treatment of Preferred Stock
Berkshire Gas will seek the requisite consent of the holders of its
4.8% Cumulative Preferred Stock for the proposed restructuring. The
proposed restructuring is not expected to result in any change in Berkshire
Gas' 4.8% Cumulative Preferred Stock. The decision by the Board of
Directors and management to have the 4.8% Cumulative Preferred Stock
continue as securities of Berkshire Gas is based upon, among other factors,
a desire not to alter or potentially alter substantially the nature of the
investment essentially represented by such series of stock, namely
investment in a regulated utility. Subject to the negotiation of acceptable
consents, there will be no change in the preferences, designations, relative
rights, privileges and powers of the 4.8% Cumulative Preferred Stock, and
the shares will be subject to the same restrictions, limitations and
qualifications as were applicable thereto prior to the restructuring.
Treatment of Indebtedness
Berkshire Gas will seek to negotiate acceptable consents with the
holders of its long-term debt securities. Such debt securities contain
covenants or restrictions that directly or indirectly preclude the proposed
restructuring. Subject to the negotiation of acceptable consents, all of
Berkshire Gas' long-term indebtedness outstanding immediately prior to the
Merger, is expected to continue to be outstanding indebtedness of Berkshire
Gas after the Merger. The decision to have the indebtedness of Berkshire
Gas continue as obligations of Berkshire Gas is based upon a desire not to
alter, or potentially alter, substantially the nature of the investment
<PAGE> 33
essentially represented by such obligations, namely a direct investment in a
regulated utility, or to require any additional financing by Berkshire Gas.
Dividend Policy
While future dividends on Holdco Common Shares will depend primarily
upon the earnings, financial condition and capital requirements of its
subsidiaries, it is contemplated that Holdco initially will make dividend
payments on Holdco Common Shares at the rate currently applicable to
Berkshire Gas Common Stock. In addition, it is expected that such dividends
of Holdco will be declared and paid on approximately the same schedule of
dates as that now followed by Berkshire Gas with respect to Berkshire Gas
Common Stock dividends. The most recent quarterly dividend declared by the
Board of Directors of Berkshire Gas was $0.285 per share of Berkshire Gas
Common Stock and is scheduled to be paid on April 15, 1998.
Subject to the availability of earnings and the needs of its natural
gas utility business, Berkshire Gas intends to make regular cash payments to
Holdco in the form of dividends on Berkshire Gas Common Stock in amounts
which, to the extent not otherwise provided by Holdco's other subsidiaries,
if any, would be sufficient for Holdco to pay cash dividends on Holdco
Common Shares as referred to above, for operating expenses of Holdco and for
such other purposes as the Board of Trustees of Holdco may determine.
Berkshire Gas does not currently contemplate any material loans or advances
to Holdco in the near future and would not be free to make such loans or
advances without prior approval of the Massachusetts DTE. Berkshire Gas is
not party to any agreement or subject to any laws or regulations which
materially restrict the payment of dividends by it to Holdco, other than
pursuant to its long-term debt obligations and its 4.8% Cumulative Preferred
Stock. Berkshire Gas anticipates negotiating acceptable waivers or consents
with respect to such restrictions. See "Proposal Regarding Plan of
Restructuring -- Treatment of Indebtedness."
Dividends on the Berkshire Gas 4.8% Cumulative Preferred Stock will
continue to be paid at the times and at the rates provided for such stock,
depending upon the earnings, financial condition and other factors affecting
Berkshire Gas.
Stock Listing
Holdco will apply for authorization to trade Holdco Common Shares on
the NASDAQ-NMS. It is expected that such authorization will become
effective on the effective date of the Merger, subject to NASD rules, and
that such shares would be traded under the stock symbol "BERK." At the time
of the listing of Holdco Common Shares, Berkshire Gas Common Stock will be
delisted from trading on NASDAQ-NMS.
Regulatory Approval of the Restructuring
The proposed Merger of Berkshire Gas and Mergeco must be approved by
the Massachusetts DTE before the restructuring can become effective. Under
applicable state law, the application for approval by the Massachusetts DTE
cannot be filed until after the holders of Berkshire Gas Common Stock have
approved the Merger. Upon filing of the application, the Massachusetts DTE,
after notice and a public hearing, must determine that the Merger and the
terms thereof are consistent with the public interest. See "Proposal
<PAGE> 34
Regarding Plan of Restructuring -- Regulatory Matters."
Regulatory Matters
After the restructuring, Berkshire Gas will continue to operate its
natural gas utility businesses and will remain subject to regulation by the
Massachusetts DTE. Holdco, however, will not be subject to regulation by
the Massachusetts DTE, except that Holdco will be required to file an annual
statement of ownership of Berkshire Gas with the Massachusetts DTE, which
may examine the books, accounts, contracts, records and memoranda of Holdco
and may require it to furnish reports and information with respect to its
relations and dealings with Berkshire Gas. In addition, the reasonableness
of any payment, charge, contract, purchase, sale, obligation or other
arrangement between Berkshire Gas and Holdco or any subsidiary of Holdco may
come into question in retail rate making and finance proceedings before the
Massachusetts DTE. In that event, Berkshire Gas will have the burden of
establishing and proving such reasonableness.
After the restructuring is completed, Holdco will be a public utility
holding company under the Public Utility Holding Company Act of 1935 (the
"Holding Company Act"). Nevertheless, upon the filing of an appropriate
exemption statement pursuant to Rule U-2 under Section 3(a)(1) of the
Holding Company Act (and subject to the filing of annual exemption
statements thereafter), Berkshire Gas' management believes that Holdco will
be entitled to an exemption from regulation as a "registered holding
company" under the Holding Company Act. The basis of the exemption is that
Berkshire Gas, Holdco's only public utility subsidiary, is organized in the
same state as Holdco (i.e. Massachusetts), and is predominantly intrastate
in character and carries on its business substantially in the state of its
incorporation. The exemption will be available as long as the utility
business of Berkshire Gas, and of any other public utility subsidiary from
which Holdco derives a material portion of its income, are organized in
Massachusetts and remain predominantly intrastate in character.
The exemption from the provisions of the Holding Company Act may be
revoked on a finding by the SEC that such exemption may be detrimental to
the public interests or the interest of investors or consumers. The prior
approval of the SEC under the Holding Company Act would be required if
Holdco proposed the acquisition or creation, directly or indirectly, of
additional utility subsidiaries. Moreover, there also may be limits on the
extent to which Holdco and any non-utility subsidiaries can diversify
without raising questions about Holdco's exempt status. Current SEC
policies regarding the scope of permissible non-utility activities are
subject to change. Holdco intends to rely upon and comply with regulations
relating to the foregoing exemption and has no present intention of becoming
a registered holding company subject to regulation by the SEC under the
Holding Company Act.
In June 1995, the SEC Division of Investment Management issued a
report recommending significant revisions to, or limited repeal of, the
Holding Company Act. Several proposals regarding the repeal or amendment of
the Holding Company Act have been considered in Congressional hearings.
Holdco and Berkshire Gas, however, cannot predict whether Congress will take
any such action. Pending such action, the SEC indicated that it would
revise its rules and interpretations to modernize and simplify holding
company regulation. At this time, however, neither Holdco nor Berkshire Gas
can predict the likelihood, timing or impact of such actions.
<PAGE> 35
Following the restructuring, Holdco will be subject to the reporting
requirements of the Exchange Act by virtue of having securities registered
thereunder.
Holdco's Declaration of Trust and Comparative Shareholders' Rights
Holdco has been organized under Chapter 182 of the Massachusetts
General Laws as an unincorporated voluntary association with transferable
shares of beneficial interest, commonly referred to as a "Massachusetts
business trust." Holdco was organized as a Massachusetts business trust,
rather than a corporation, primarily because of the potential Massachusetts
income tax savings to the trust. While a publicly traded parent holding
company formed as a Massachusetts business trust would be taxed as a
corporation for federal tax purposes, it would not be treated as a
corporation for Massachusetts tax purposes and therefore would not be
subject to tax with respect to its income or net worth under the
Massachusetts corporate excise, or subject to the utility franchise tax on
income. Although Massachusetts business trusts are generally subject to the
Massachusetts personal income tax, the personal income tax does not apply at
the entity level to a Massachusetts business trust that qualifies as a
"holding company" under Massachusetts law (the Board of Directors of
Berkshire Gas currently intends to operate Holdco so that it will so
qualify). Instead, dividends paid by such a trust would generally be
subject to tax. This entity-level tax treatment contrasts with the
Massachusetts tax treatment of a parent corporate holding company, which
would be subject to a tax on 5% of dividends received from subsidiaries and
on 100% of any other income (in each case after apportionment, which in the
case of a holding company for Berkshire Gas, would likely be, at least
initially, at or near 100% in Massachusetts) at the rate of 9.5%. In
Massachusetts, corporate holding companies are also subject to a "net worth"
tax. The Board of Directors and management of Berkshire Gas believe that
the extent of potential savings associated with organizing Holdco as a
Massachusetts business trust could be significant since they depend, in
large part, upon the amount and nature of any dividends received by Holdco
from Berkshire Gas. As previously described, at least initially, dividends
from Berkshire Gas and from a subsidiary of Holdco that will engage in
propane operations will be Holdco's primary sources of income for the
payment of dividends to its shareholders.
The following summary should be read in the context of, and is
qualified by reference to, Holdco's Declaration of Trust (the "Declaration
of Trust") and Holdco's By-laws, copies of which substantially in the form
they will be in as of the effective date of the Merger are attached as
Appendices B and C, respectively, to this Proxy Statement/Prospectus and
incorporated herein by reference.
The rights of holders of Berkshire Gas Common Stock are governed by
Chapter 164 of the Massachusetts General Laws governing electric and gas
utilities, and by Berkshire Gas' Articles of Organization and By-laws. If
the Merger is consummated, the rights of the present holders of Berkshire
Gas Common Stock thereafter will be determined by Holdco's Declaration of
Trust and By-laws. Except as noted below, the rights of holders of Holdco
Common Shares will be largely the same as the present rights of the holders
of Berkshire Gas Common Stock.
Pursuant to certain decisions of the Massachusetts courts,
shareholders who exercise too much control over the affairs of a
<PAGE> 36
Massachusetts business trust may be held personally liable as partners for
the obligations of a trust to the extent not satisfied by the trust, with
respect to tort claims, contract claims (where shareholder liability is not
negated as described below), claims for taxes and certain statutory
liabilities. Even if, however, Holdco were held to be a partnership, the
possibility of its shareholders incurring personal liability is remote
because (a) Holdco's Declaration of Trust contains an express disclaimer of
shareholder liability for the obligations of Holdco, requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by Holdco and provides that no person has authority to
enter into an agreement, obligation or instrument except in accordance with
those requirements, (b) most of Holdco's operations will be conducted by
incorporated subsidiaries such that the activities of Holdco will be limited
to the ownership of securities rather than the operation of physical assets
(c) Holdco will maintain insurance against tort liability, and (d) Holdco's
Declaration of Trust provides for indemnification out of the trust property
for any shareholder held personally liable for the obligations of Holdco.
Holdco's Declaration of Trust provides that the property and affairs
of Holdco will be held and managed by its trustees who will have all of the
powers and authority necessary and convenient to carry out Holdco's
business. The trustees may appoint officers and agents to carry out
Holdco's business. See "Proposal Regarding Plan of Restructuring --
Trustees and Management of Holdco." The powers and responsibilities of the
trustees and officers of Holdco will be comparable to those of directors and
officers of a corporation with no material differences. The trustees will
be selected by a plurality of the vote of the holders of Holdco Common
Shares properly cast at an annual meeting.
Holdco's Declaration of Trust includes "super-majority" and
"classified board" provisions comparable to those adopted by Berkshire Gas'
shareholders (see "Proposal Regarding Plan of Restructuring -- Holdco Common
Shares" below) and comparable indemnification and limitations on directors'
liability provisions (applicable to the trustees) that were adopted by
Berkshire Gas' shareholders to enhance Berkshire Gas' ability to attract and
retain qualified directors and officers.
Under Chapter 164, Berkshire Gas may be merged with another utility
subject to Chapter 164 upon a two-thirds vote of each class of stock
outstanding and entitled to vote on the matter, and the approval of the
Massachusetts DTE. Subject to the "super-majority" provisions in the
Declaration of Trust, Holdco, like a Massachusetts business corporation, may
be merged with another trust or corporation, or terminated and liquidated,
upon a two-thirds vote of the shares outstanding and entitled to vote
thereon (except that a change of form into another trust or into a
corporation may be done on approval of a majority of the common
shareholders).
Under Chapter 164, shareholders of an natural gas utility company have
no appraisal rights. Similarly, Holdco's Declaration of Trust provides that
shareholders shall have no appraisal rights.
Under Chapter 164, the Articles of Organization of Berkshire Gas may
be amended upon a majority vote of the common shareholders, except with
respect to certain provisions requiring a two-thirds vote of Berkshire Gas'
common shareholders. The Holdco Declaration of Trust may be amended by a
written instrument signed by a majority of the trustees then in office if
<PAGE> 37
such amendment has been authorized by a majority vote of Holdco's common
shareholders, and such other vote, if any, as may be required by the rights
and preferences relating to any class or series of shares provided that
amendments which, in the judgment of the trustees, are of a fundamental
character must be approved by a vote of the holders of a majority of the
shares outstanding and entitled to vote thereupon. In addition, the
"classified board" provisions can only be amended upon a vote of 75% of the
outstanding Holdco Common Shares unless such amendment is authorized or
recommended by at least two-thirds of the trustees. Certain other
provisions cannot be changed without a two-thirds vote as provided in the
Declaration of Trust. Amendments for the purpose of changing the name of
Holdco or of supplying any ambiguity or curing, correcting or supplementing
any defective or inconsistent provision contained in the Declaration of
Trust shall not require authorization by vote of the shareholders.
Under Massachusetts law, the authority to adopt, amend or repeal the
bylaws of a Massachusetts corporation is in the shareholders; provided that
if authorized by the Articles of Organization, the By-laws may provide that
the directors may also make, amend or repeal the bylaws. Berkshire Gas' By-
laws provide such authority to the Board of Directors. Holdco's Declaration
of Trust, among other provisions, authorizes the trustees to adopt By-laws
in order to fix the fiscal year; regulate the affairs of the trustees,
including provisions for the nomination thereof; provide for such committees
as the trustees shall deem appropriate, including an executive committee
which shall be vested with all of the powers and authorities of the trustees
when the trustees are not in session; provide for the appointment of a
chairman of the trustees, a president, one or more vice presidents, a
treasurer, a secretary and such other officers as the trustees may deem
appropriate, and the manner of their appointment and removal, and their
respective powers and duties; provide for the appointment of transfer agents
or officers and registrars, and contain such further provisions relating to
the above matters or otherwise, incidental or in addition to but not
inconsistent with the provisions of the Declaration of Trust, as the
trustees shall deem appropriate. The By-laws may only be amended by the
trustees.
Under Massachusetts law and Berkshire Gas' By-laws, the Board of
Directors can act without a meeting only by unanimous written consent.
Under Holdco's Declaration of Trust, the trustees may act without a meeting
only by unanimous written consent of the trustees.
As with a Massachusetts business corporation, Holdco's Declaration of
Trust provides that no action may be brought by a shareholder on behalf of
Holdco unless a prior demand regarding such matter has been made on the
trustees and the shareholders.
Holdco's Declaration of Trust, like the Articles of Organization of
Berkshire Gas, contains certain provisions that may be viewed as having an
anti-takeover effect, including provisions establishing classes of trustees
and requiring a super-majority vote of the disinterested shareholders to
approve certain business transactions. Holdco is also subject to Chapter
110F of the Massachusetts General Laws, which, in general, provides that for
three years after an acquiror has purchased 5% or more of the stock of a
company, the acquiror may not complete the acquisition through merger, sell
or pledge the assets of the company, or engage in other self-dealing
transactions. The Holdco Declaration of Trust will also contain a provision
(substantially the same as provisions of Massachusetts law currently
<PAGE> 38
applicable to Berkshire Gas) allowing the trustees to consider various
constituencies and community and societal considerations, as well as the
long-term and short-term interests of the company, in determining what he or
she reasonably believes to be in the best interests of the Holdco.
Holdco Common Shares
Holdco will issue shares of beneficial interest, referred to in this
Proxy Statement as "Holdco Common Shares," and may in the future issue other
equity and debt securities. The initial authorized capital stock of Holdco
will be 10,000,000 common shares, without par value, and 1,000,000 preferred
shares, par value $100 per share. The authorized capital shares may be
issued from time to time by the trustees without the necessity of obtaining
further consent of the shareholders or any approvals from the Massachusetts
DTE. Holdco capital shares may be issued for money, services or property,
or as a distribution to shareholders, and upon such terms as the trustees
may in their absolute discretion determine. Upon consummation of the
Merger, the number of outstanding Holdco Common Shares will be the same as
the number of outstanding shares of Berkshire Gas Common Stock immediately
prior to the Merger and no Holdco preferred shares will be outstanding.
Holdco preferred shares may be issued by the trustees in one or more
classes or series within a class and shall have such designations,
preferences, voting rights, voting powers, full or limited, or no voting
rights, participating, optional or other special rights, and such
preferences, relative rights, qualifications, limitations or restrictions,
all as may be determined by the trustees. Authorization of preferred shares
in addition to the 1,000,000 shares initially authorized in the Declaration
of Trust requires the vote of the holders of two-thirds of the shares
outstanding and entitled to vote thereon. Under current provisions of the
Holding Company Act, and the rules and regulations thereunder, issuance of
Holdco preferred shares may be restricted.
The holders of the Holdco Common Shares, subject to any prior rights
or preferences of Holdco preferred shares outstanding at the time, will be
entitled to such dividends thereon as the trustees in their discretion
lawfully declare (see "Proposal Regarding Plan of Restructuring -- Dividend
Policy" above) and will be vested with all voting rights. Each Holdco
Common Share will be entitled to one vote. The Holdco Common Shares will
not have cumulative voting rights in the election of trustees. In the event
of voluntary or involuntary liquidation or dissolution, the holders of the
Holdco Common Shares, subject to any prior rights or preferences of Holdco
preferred shares outstanding at the time, will share ratably in the assets
of Holdco. Holdco will have no right to call the Holdco Common Shares for
redemption. The holders of the Holdco Common Shares will have no preemptive
rights to subscribe to additional shares issued by Holdco.
Holdco has no agreement, understanding or plan for the issuance of any
Holdco Common Shares, except in connection with the proposed Merger and
except in connection with Holdco's assumption of Berkshire Gas' Share Owner
Dividend Reinvestment and Stock Purchase Plan, or any Holdco preferred
shares. Holdco may issue and sell Holdco Common Shares in connection with
the acquisition of stock or assets of other companies, to finance
expenditures, additions and improvements to the property of Berkshire Gas or
any of its subsidiaries, which have not been financed with other permanent
securities and for other corporate purposes, or to repay or refinance
outstanding indebtedness. Dividend requirements and any redemption, sinking
<PAGE> 39
fund or conversion provisions pertaining to Holdco preferred shares, if
authorized and issued, may have an adverse effect on the availability of
earnings for distribution to holders of the Holdco Common Shares and for use
with respect to other corporate purposes. See also "Proposal Regarding
Plan of Restructuring -- Share Owner Dividend Reinvestment and Stock
Purchase Plan" below for information concerning Holdco's intention to issue
additional Holdco Common Shares pursuant to such plan.
Trustees and Management of Holdco
The current directors of Berkshire Gas will be the trustees of Holdco
upon the completion of the restructuring plan. In approving the
restructuring, shareholders will be considered to have ratified the election
of the following persons, now serving as directors of Berkshire Gas, as
trustees of Holdco:
Class A Trustees whose terms expire at the 2000 Annual Meeting.
Paul L. Gioia
Franklin M. Hundley
Scott S. Robinson
Class B Trustees whose terms expire at the 1998 Annual Meeting.
George R. Baldwin
John W. Bond
Class C Trustees whose terms expire at the 1999 Annual Meeting.
James R. Keys
Robert B. Trask
The officers of Holdco, each of whom currently holds a comparable office in
Berkshire Gas, are as follows:
Name Office
- ---- ------
Scott S. Robinson President and Chief Executive Officer
Michael J. Marrone Vice President, Treasurer and Chief Financial Officer
Cheryl M. Clark Secretary
Initially, Holdco does not expect to have any employees of its own and does
not expect to render services to Berkshire Gas or any other subsidiary,
although it may do so in the future.
Following the restructuring and subject to their continuing
qualification for such office, the present officers of Berkshire Gas will,
at least initially, continue to hold their present offices and enjoy
substantially the same remuneration and employee benefits now afforded.
Following the restructuring, most of the present members of Berkshire Gas'
Board of Directors will resign. Michael J. Marrone and Robert M. Allessio,
currently officers of Berkshire Gas, will be elected to serve on the Board
of Directors of Berkshire Gas with Scott S. Robinson. Separate Boards of
Directors and officers will be appointed for the management services
company, the subsidiary for propane operations and any other subsidiary
company established to pursue non-regulated market opportunities. Given
<PAGE> 40
that Holdco will be the sole Stockholder of Berkshire Gas and other
subsidiary companies, the Trustees of Holdco will have authority to vote
such shares and to elect the directors of Berkshire Gas and any other
subsidiary company. See "Proposed Regarding Plan of Restructuring -- The
Restructuring."
No Appraisal Rights
Under Massachusetts law governing the proposed Merger, neither a
dissenting holder of Berkshire Gas Common Stock nor the holders of Berkshire
Gas 4.8% Cumulative Preferred Stock has a right to demand payment of the
fair value of his or her shares if the Merger is consummated.
Share Owner Dividend Reinvestment and Stock Purchase Plan
Following the effectiveness of the restructuring, Holdco will assume
Berkshire Gas' existing Share Owner Dividend Reinvestment and Stock Purchase
Plan. Participants in such plan will continue to be able to make initial
purchases of Holdco Common Shares, reinvest their dividends on Holdco Common
Shares to purchase additional Holdco Common Shares and to make optional
payments to acquire additional Holdco Common Shares.
Price Range of Berkshire Gas Common Stock
The Company's Common Stock is traded on the NASDAQ-NMS and quoted
through the NASDAQ System. The table below sets forth the high and low
average of the bid and asked prices for shares of the Company's Common
Stock, as reported by the National Quotation Bureau, Incorporated, for the
periods indicated.
High Low
---- ---
1996: First Quarter $16-3/4 $15
Second Quarter 16 14-3/4
Third Quarter 16-3/4 14-7/8
Fourth Quarter 18 15-1/4
1997: First Quarter 17-1/2 15-1/4
Second Quarter 16 15
Third Quarter 17-3/8 15-1/4
Fourth Quarter 23-1/2 16-1/4
1998: First Quarter 23-1/2 21-1/2
(through February 18,
1998)
These quotations represent prices between dealers and do not include
retail markup, markdown or commission. They do not necessarily represent
actual transactions. The daily high and low sales prices on February 18,
1998 were $22-7/8 and $22-1/2, respectively.
Stock Ownership by Directors and Executive Officers
The following table sets forth the number of shares of Berkshire Gas
Common Stock beneficially owned as of January 31, 1998 by each director of
Berkshire Gas as well as the executive officers named in the Summary
<PAGE> 41
Compensation Table of the proxy statement for Berkshire Gas' 1997 annual
meeting, and the directors and executive officers of Berkshire Gas as a
group. Except as indicated below, all of the shares listed are held by the
persons named with both sole voting power and sole investment power.
<TABLE>
<CAPTION>
Percentage of Shares
Shares of Common Stock of Common Stock
Beneficially Owned Outstanding as
Name of Beneficial Owner as of January 31, 1998* of January 31, 1998**
------------------------ ----------------------- ---------------------
<S> <C> <C>
George R. Baldwin 2,221 .10%
John W. Bond 4,136 (1) .18
Paul L. Gioia 3,568 (2) .16
Les H. Hotman 220 .01
Franklin M. Hundley 2,642 .11
James R. Keys 1,185 .05
Michael J. Marrone 1,195 .05
Scott S. Robinson 6,591 (3) .29
Robert B. Trask 8,945 (4) .39
All directors and officers of
Berkshire gas, 10 persons as a
group 30,895 (5) 1.36
<F*> As used in this Proxy Statement/prospectus, "beneficial ownership"
means direct or indirect, sole or shared power to vote, or to direct
the voting of, and/or investment power to dispose of, or to direct the
disposition of, shares of the Common Stock of Berkshire Gas. Except
as indicated in the footnotes below, the listed beneficial owners held
direct and sole voting and investment power with respect to the stated
shares.
<F**> As of January 31, 1998 there were 2,269,820 shares of Berkshire Gas
Common Stock outstanding.
<F1> Includes 273 shares held Mr. Bond's spouse, who has sole voting and
investment power over such shares.
<F2> All of Mr. Giola's shares are held jointly with his spouse, with
shared voting and investment power over such shares.
<F3> Comprised of 6,145 shares are held in trust, for which Mr. Robinson
and his spouse are joint Trustees, with shared voting and investment
power.
<F4> 6,045 of Mr. Trask's shares are held jointly with his spouse, with
shared voting and investment power over such shares. 2,900 of Mr.
Trask's shares are owned by a private, non-profit foundation of which
Mr. Trask is a trustee.
<F5> Aggregate record or imputed beneficial ownership, with sole or shared
voting and investment power.
</TABLE>
Transfer Agent and Registrar
The State Street Bank and Trust Company, the Transfer Agent and
Registrar of the Berkshire Gas Common Stock, will serve in the same
<PAGE> 42
capacities for the Holdco Common Shares.
Financial Statements
No consolidated financial statements of Holdco and its subsidiary are
presented herein since Holdco presently has no assets or liabilities other
than the stock of Mergeco, and any pro forma consolidated financial
statements of Holdco would reflect no change from the financial statements
of Berkshire Gas prior to implementation of the restructuring plan.
Legal Opinion
The validity of the Holdco Common Shares to be issued upon
consummation of the Merger is being passed upon by Rich, May, Bilodeau &
Flaherty, P.C., 294 Washington Street, Boston, Massachusetts 02108.
Franklin M. Hundley, Of Counsel to Rich, May, Bilodeau & Flaherty, P.C., and
formerly a Managing Director of such firm, is Chairman of the Board of
Berkshire Gas.
Experts
The financial statements and the related financial statement schedule
incorporated in this Proxy Statement/Prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended June 30, 1997 and
the Berkshire Gas Company's Annual Report to Shareholders for the year ended
June 30, 1997 have been audited by Deloitte & Touche LLP independent auditors,
as stated in their reports, which are incorporated herein by reference, and
have been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
OTHER MATTERS
Voting Procedures
Consistent with state law and under Berkshire Gas' Bylaws, a majority
of the shares entitled to be cast on a particular matter, present in person
or represented by proxy, constitutes a quorum as to such matter. Votes cast
by proxy or in person at the Special Meeting will be counted by persons
appointed by Berkshire Gas to act as election inspectors for the meeting.
The Proposal Regarding Plan of Restructuring requires the affirmative
vote of two-thirds of the outstanding Berkshire Gas Common Stock. The
election inspectors will count the total number of votes cast "for" approval
of the Proposal Regarding Plan of Restructuring for purposes of determining
whether sufficient affirmative votes have been cast. The election
inspectors will count shares represented by proxies that reflect abstentions
and "broker non-votes" (i.e., shares represented at the meeting held by
brokers or nominees as to which (i) instructions have not been received from
the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have the discretionary voting power on a particular matter)
only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum. For purposes of the
Proposal Regarding Plan of Restructuring, abstentions and broker non-votes
have the effect of votes cast against the proposal.
Adjournment of Meeting
<PAGE> 43
If sufficient votes in favor of the proposal set forth in the Notice
of Special Meeting are not received by the time scheduled for the meeting,
the persons named as proxies may propose one or more adjournments of the
meeting to permit further solicitation of proxies with respect to any such
proposal. Any adjournment will require the affirmative vote of a majority of
the votes cast on the question in person or by proxy at the session of the
meeting to be adjourned. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in favor of
such proposal. They will vote against any such adjournment those proxies
required to be voted against such proposal. Berkshire Gas will pay the
costs of any additional solicitation and of any adjourned session.
Independent Accountants
Representatives of Deloitte & Touche, LLP, Berkshire Gas' independent
accountants, will not be present at the Special Meeting.
Proposals of Shareholders
Shareholders' proposals intended to be presented at the 1998 Annual
Meeting must be received by the Office of the Clerk of The Berkshire Gas
Company, 115 Cheshire Road, Pittsfield, Massachusetts 01201-1879 by June 6,
1998.
Other Business
The management has no reason to believe that any other business will
be presented at the Special Meeting, but if any other business shall be
properly presented, votes pursuant to the proxy will be cast thereon in
accordance with the discretion of the persons named in the accompanying
proxy.
The greater part of the stock of Berkshire Gas is widely held in small
lots. It is important, therefore, in order to secure representation at the
Special Meeting of the number of shares necessary to take action, that all
shareholders who cannot be present in person, however small their holdings,
fill in, sign and return the enclosed proxy without delay to State Street
Bank and Trust Company, Corporate Services Department, P.O. Box 592, Boston,
MA 02102. A self-addressed, stamped envelope is enclosed for this purpose.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IF
YOU PLAN TO ATTEND, PLEASE SO INDICATE ON THE ENCLOSED PROXY CARD.
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of February 19,
1998, by and among The Berkshire Gas Company, a Massachusetts gas utility
corporation ("Berkshire Gas"), Berkshire Gas Mergeco Gas Company, Inc., a
Massachusetts gas utility corporation ("Mergeco"), and Berkshire Energy
Resources, a Massachusetts business trust ("Holdco").
WITNESSETH:
<PAGE> 44
WHEREAS, Berkshire Gas has an authorized capitalization consisting of
(i) 4,600,000 shares of common stock, par value $2.50 per share ("Berkshire
Gas Common Stock"), of which 2,269,821 shares are issued and outstanding and
115,432 shares have been reserved for issuance pursuant to Berkshire Gas's
Share Owner Dividend Reinvestment and Stock Purchase Plan; and (ii) 105,000
shares of cumulative preferred stock, par value $100.00 per share
("Berkshire Gas Preferred Stock"), 3,212 shares of which are issued and
outstanding; the number of shares of issued and outstanding Berkshire Gas
Common Stock being subject to increase to the extent that shares reserved
for issuance are issued prior to the Effective Time (as defined below) of
the Merger;
WHEREAS, Mergeco has an authorized capitalization consisting of
200,000 shares of common stock, par value $1.00 per share ("Mergeco Common
Stock"), of which 100 shares have been subscribed for by Holdco and, once
the issuance thereof has been approved by the Massachusetts Department of
Telecommunications and Energy as required by law, will be issued to and
owned beneficially and of record by Holdco;
WHEREAS, Holdco has an authorized capitalization consisting of (i)
10,000,000 shares of beneficial interest, without par value ("Holdco Common
Shares", each a "Holdco Common Share"), of which 100 shares are issued and
outstanding and owned beneficially and of record by Berkshire Gas; and (ii)
1,000,000 preferred shares, par value $100.00 per share, of which no shares
are issued and outstanding; and
WHEREAS, the Boards of Directors or the Board of Trustees of the
respective parties hereto deem it advisable and in the best interests of
Berkshire Gas and its shareholders to merge Mergeco with and into Berkshire
Gas (the "Merger") in accordance with Section 96 of Chapter 164 of the
Massachusetts General Laws and pursuant to this Agreement and the Articles
of Merger attached hereto as ANNEX I and incorporated herein (the
"Articles"), whereby the holders of shares of Berkshire Gas Common Stock
will exchange their shares for Holdco Common Shares;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties
hereto agree that Mergeco shall be merged with and into Berkshire Gas, which
shall be the corporation surviving the Merger, and that the terms and
conditions of the Merger, the mode of carrying it into effect, and the
manner of converting and exchanging shares shall be as follows:
ARTICLE I
THE MERGER
(a) Subject to and in accordance with the provisions of this
Agreement, the Articles shall be executed and acknowledged by each of
Berkshire Gas and Mergeco and thereafter delivered to the Secretary of State
of The Commonwealth of Massachusetts for filing, as provided in Section 102A
of Chapter 164 of the Massachusetts General Laws. The Merger shall become
effective at such time as the Articles are filed as required by law with the
Secretary of State of The Commonwealth of Massachusetts or such date, not
more than thirty days after such filing, as may be specified in the Articles
(the "Effective Time"). At the Effective Time, the separate existence of
Mergeco shall cease and Mergeco shall be merged with and into Berkshire Gas
(Mergeco and Berkshire Gas being sometimes referred to collectively herein
as the "Constituent Corporations" and Berkshire Gas, the corporation
<PAGE> 45
designated in the Articles as the surviving corporation being sometimes
referred to herein as the "Surviving Corporation");
(b) Prior to and after the Effective Time, Holdco, Berkshire Gas and
Mergeco, respectively, shall take all such actions as may be necessary or
appropriate in order to effectuate the Merger. In this connection, Holdco
shall issue the Holdco Common Shares which the holders of Berkshire Gas
Common Stock are entitled to receive as provided in Article II hereof. In
the event that at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of either of the Constituent
Corporations, the officers and directors of each of the Constituent
Corporations as of the Effective Time shall take all such further action.
ARTICLE II
TERMS OF CONVERSION AND EXCHANGE OF SHARES
At the Effective Time:
(a) Each share of Berkshire Gas Common Stock issued and outstanding
immediately prior to the Merger thereupon shall be changed and converted
into one Holdco Common Share, which thereupon shall be issued, fully paid
and nonassessable;
(b) The shares of Berkshire Gas Preferred Stock issued and
outstanding immediately prior to the Merger shall not be converted or
otherwise affected by the Merger, and each such share shall continue to be
issued and outstanding and to be one fully paid and nonassessable share of
the particular series of preferred stock of the Surviving Corporation;
(c) Each share of Mergeco Common Stock issued and outstanding
immediately prior to the Merger shall be converted into one share of common
stock of the Surviving Corporation, which thereupon shall be issued, fully
paid and nonassessable; and
(d) Each Holdco Common Share issued and outstanding immediately prior
to the Merger shall be canceled.
ARTICLE III
ARTICLES OF ORGANIZATION AND BYLAWS
From and after the Effective Time, and until thereafter amended as
provided by law, the Articles of Organization of Berkshire Gas as in effect
immediately prior to the Merger shall be and continue to be the Articles of
Organization of the Surviving Corporation. The purposes of the Surviving
Corporation, the total number of shares and par value of each class of stock
which the Surviving Corporation is authorized to issue and a description of
each class of stock authorized at the Effective Time, with the preferences,
voting powers, qualifications, special or relative rights or privileges as
to each class and any series thereof then established, are as stated in such
Articles of Organization, which are attached hereto as Annex II and
incorporated herein. From and after the Effective Time, the Bylaws of
Berkshire Gas shall be and continue to be the Bylaws of the Surviving
Corporation until amended in accordance with law.
<PAGE> 46
ARTICLE IV
DIRECTORS AND OFFICERS
The persons who are directors and officers of Berkshire Gas
immediately prior to the Merger shall continue as directors and officers,
respectively, of the Surviving Corporation and shall continue to hold office
as provided in the Bylaws of the Surviving Corporation. If, at or following
the Effective Time, a vacancy shall exist in the Board of Directors or in
the position of any officer of the Surviving Corporation, such vacancy may
be filled in the manner provided in the Bylaws of the Surviving Corporation.
ARTICLE V
STOCK CERTIFICATES
Following the Effective Time, each holder of an outstanding
certificate or certificates theretofore representing shares of Berkshire Gas
Common Stock may, but shall not be required to, surrender the same to Holdco
for cancellation or transfer, and each such holder or transferee will be
entitled to receive certificates representing the same number of Holdco
Common Shares as shares of Berkshire Gas Common Stock previously represented
by the surrendered stock certificates. Until so surrendered or presented
for transfer, each outstanding certificate which, prior to the Effective
Time, represented Berkshire Gas Common Stock shall be deemed and treated for
all corporate purposes to represent the ownership of the same number of
Holdco Common Shares as though such surrender or transfer and exchange had
taken place. The stock transfer books for the Berkshire Gas Common Stock
shall be deemed to be closed at the Effective Time and no transfer of
outstanding shares of Berkshire Gas Common Stock outstanding prior to the
Effective Time shall be made thereafter on such books.
ARTICLE VI
CONDITIONS OF THE MERGER
Consummation of the Merger is subject to the satisfaction of the
following conditions:
(a) The Merger shall have received the approval of the holders of
each class of common stock outstanding and entitled to vote thereupon of
each of the Constituent Corporations as required by Section 96 of Chapter
164 of the Massachusetts General Laws.
(b) The issuance of Mergeco Common Stock and the Merger shall have
been approved by the Massachusetts Department of Telecommunications and
Energy as required by Chapter 164 of the Massachusetts General Laws and all
other governmental agencies whose approval is necessary, appropriate or
desirable.
(c) The Holdco Common Shares to be issued and to be reserved for
issuance pursuant to the Merger shall have been approved for trading on the
NASDAQ National Market System.
(d) Rich, May, Bilodeau & Flaherty, P.C. or such other counsel as
shall be acceptable to the Board shall have delivered an opinion,
satisfactory to the Board of Directors of Berkshire Gas, with respect to the
tax consequences of the Merger.
<PAGE> 47
ARTICLE VII
AMENDMENT AND TERMINATION
The parties hereto by mutual consent of their respective Boards of
Directors may amend, modify or supplement this Agreement in such manner as
may be agreed upon by them in writing, at any time before or after approval
of this Agreement by the stockholders of Berkshire Gas; PROVIDED, HOWEVER,
that no such amendment, modification or supplement shall, in the sole
judgment of the Board of Directors of Berkshire Gas, materially and
adversely affect the rights of the stockholders of Berkshire Gas.
This Agreement may be terminated and the Merger and other transactions
herein provided for abandoned at any time, whether before or after approval
of this Agreement by the stockholders of Berkshire Gas, by action of the
Board of Directors of Berkshire Gas if said Board of Directors determines
for any reason that the consummation of the transactions provided for herein
would for any reason be inadvisable or not in the best interests of
Berkshire Gas or its stockholders.
ARTICLE VIII
EFFECTIVE TIME OF THE MERGER
Subject to the prior satisfaction of the conditions of the Merger set
forth in Article VI hereof and the authority to terminate this Agreement as
set forth in Article VII hereof, the Constituent Corporations and Holdco
shall do all such acts and things as shall be necessary or desirable in
order to make the Effective Time occur as soon thereafter as practicable.
ARTICLE IX
ASSUMPTION OF BERKSHIRE GAS'S STOCK PLAN
Holdco shall take all required action to assume Berkshire Gas's
obligations under the Share Owner Dividend Reinvestment and Stock Purchase
Plan.
ARTICLE X
MISCELLANEOUS
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, Berkshire Gas, Mergeco and Holdco, pursuant to
approval and authorization duly given by resolutions adopted by their
respective Boards of Directors or Board of Trustees, have each caused this
Agreement and Plan of Merger to be executed as of the date first written
above by its President or one of its Vice Presidents and Treasurer or
Assistant Treasurer and its corporate or common seal to be affixed hereto
and attested by its Clerk or Secretary.
ATTEST: THE BERKSHIRE GAS COMPANY
<PAGE> 48
/s/ Cheryl M. Clark By: /s/ Scott S. Robinson
- ----------------------------------- --------------------------------
Cheryl M. Clark, Clerk Name: Scott S. Robinson
Title: President and Chief
Executive Officer
[THE BERKSHIRE GAS COMPANY SEAL] By: /s/ Michael J. Marrone
--------------------------------
Name: Michael J. Marrone
Title: Vice President, Treasurer
and Chief Financial Officer
ATTEST: BERKSHIRE GAS MERGECO GAS
COMPANY, INC.
/s/ Cheryl M. Clark By: /s/ Scott S. Robinson
- ----------------------------------- --------------------------------
Cheryl M. Clark, Clerk Name: Scott S. Robinson
Title: President and Chief
Executive Officer
[THE BERKSHIRE GAS MERGECO GAS By: /s/ Michael J. Marrone
--------------------------------
COMPANY, INC. SEAL Name: Michael J. Marrone
Title: Vice President and
Treasurer
ATTEST: BERKSHIRE ENERGY RESOURCES
/s/ Cheryl M. Clark By: /s/ Scott S. Robinson
- ----------------------------------- --------------------------------
Cheryl M. Clark, Secretary Name: Scott S. Robinson
Title: President and Chief
Executive Officer
[BERKSHIRE ENERGY RESOURCES SEAL]
By: /s/ Michael J. Marrone
--------------------------------
Name: Michael J. Marrone
Title: Vice President, Treasurer
and Chief Financial Officer
ANNEX I
to
Agreement and Plan of Merger
ARTICLES OF MERGER
of
<PAGE> 49
THE BERKSHIRE GAS COMPANY
(A Massachusetts Utility Corporation)
and
BERKSHIRE GAS MERGECO GAS COMPANY, INC.
(A Massachusetts Utility Corporation)
and
BERKSHIRE ENERGY RESOURCES
(A Massachusetts Business Trust)
Pursuant to the provisions of Section 102A of Chapter 164 of the
Massachusetts General Laws, the undersigned corporations adopt the following
Articles of Merger for the purpose of merging Berkshire Gas Mergeco Gas
Company, Inc. with and into The Berkshire Gas Company, which shall be the
Surviving Corporation:
1. Attached hereto and incorporated herein by reference is the
Agreement and Plan of Merger dated as of February __, 1998, of the
undersigned corporations. The Surviving Corporation will furnish a copy of
said agreement to any of its stockholders, or to any person who was a
stockholder of a Constituent Corporation, upon written request and without
charge. The Effective Time as defined therein is 5:00 P.M., Boston time on
____________, 1998.
2. The undersigned president or vice president and clerk or
secretary or assistant clerk or secretary of each undersigned corporation
hereby state under the penalties of perjury that the attached Agreement and
Plan of Merger has been duly executed on behalf of such corporation and has
been approved by the stockholders of such corporation and by the Department
of Telecommunications and Energy of The Commonwealth of Massachusetts in the
manner required by Section 96 of Chapter 164 of the Massachusetts General
Laws.
3. The post office address of the initial principal office of the
Surviving Corporation is 115 Cheshire Road, Pittsfield, Massachusetts 01201.
4. The name, residence and post office address of each of the
initial directors and the chairman, president, treasurer and clerk of the
Surviving Corporation are as follows:
<TABLE>
<CAPTION>
POST OFFICE
NAME TITLE RESIDENCE ADDRESS
<S> <C> <C> <C>
George R. Baldwin Director c/o 115 Cheshire Road
Pittsfield, MA 01201
John W. Bond Director c/o 115 Cheshire Road
Pittsfield, MA 01201
Paul L. Gioia Director c/o 115 Cheshire Road
Pittsfield, MA 01201
<PAGE> 50
Franklin M. Hundley Chairman and c/o 115 Cheshire Road
Director Pittsfield, MA 01201
James R. Keys Director c/o 115 Cheshire Road
Pittsfield, MA 01201
Robert B. Trask Director c/o 115 Cheshire Road
Pittsfield, MA 01201
Scott S. Robinson Director, 115 Cheshire Road
President and Pittsfield, MA 01201
Chief Executive
Officer
Michael J. Marrone Vice President, 115 Cheshire Road
Treasurer and Pittsfield, MA 01201
Chief Financial
Officer
Cheryl M. Clark Clerk 115 Cheshire Road
Pittsfield, MA 02101
</TABLE>
5. The fiscal year of the Surviving Corporation initially adopted
shall end on the last day of the month of June in each year.
6. The date and time initially fixed in the Bylaws for the annual
meeting of the stockholders of the Surviving Corporation is 10:00 a.m. on
the second Wednesday in November of each year.
IN WITNESS WHEREOF, Berkshire Gas, Mergeco and Holdco, pursuant to
approval and authorization duly given by resolutions adopted by their
respective Boards of Directors or Board of Trustees, have each caused these
Articles of Merger to be executed by its president or one of its vice
presidents and its clerk or one of its assistant clerks.
Dated: _________________ THE BERKSHIRE GAS COMPANY
By: ______________________________
Name: Scott S. Robinson
Title: President and Chief Executive
Officer
By: _____________________________
Name: Cheryl M. Clark
Title: Clerk
BERKSHIRE GAS MERGECO GAS COMPANY, INC.
By: _________________________
Name: Scott S. Robinson
Title: President and Chief Executive
Officer
<PAGE> 51
By: _____________________________
Name: Cheryl M. Clark
Title: Clerk
BERKSHIRE ENERGY RESOURCES
By: _____________________________
Name: Scott S. Robinson
Title: President and Chief Executive
Officer
By: _____________________________
Name: Cheryl M. Clark
Title: Secretary
APPENDIX B
DECLARATION OF TRUST
OF
BERKSHIRE ENERGY RESOURCES
Dated February 17, 1998
TABLE OF CONTENTS
1. NAME; PURPOSE B-4
2. DEFINITIONS B-4
3. LIMITATIONS ON LIABILITY B-5
4. NONASSESSABILITY OF SHAREHOLDERS B-5
5. RELIANCE OF THIRD PERSONS B-5
6. PLACE OF BUSINESS B-6
7. TRUST ESTATE; CONVERSION INTO PERSONAL ESTATE B-6
8. POWERS OF TRUSTEES B-6
9. NUMBER AND ELECTION B-10
10. RESIGNATION; VACANCIES; REMOVALS B-11
11. VESTING IN NEW TRUSTEES B-12
12. COMPENSATION B-12
13. UNISSUED SHARES B-12
14. DETERMINATION OF CAPITAL AND INCOME B-12
15. DIVIDENDS B-12
16. FISCAL YEAR; ACCOUNTS B-13
17. ACTION BY BOARD; QUORUM B-13
18. BY-LAWS B-13
19. CERTIFICATE EVIDENCING VOTES B-13
<PAGE> 52
20. TRUSTEES AND OFFICERS B-13
21. LIABILITY B-14
22. BOOKS AND REPORTS B-14
23. ADVANCE OF EXPENSES B-14
24. RIGHTS NOT EXCLUSIVE; DEFINITIONS B-14
25. SHAREHOLDERS B-14
26. SHAREHOLDERS, TRUSTEES, OFFICERS AND AGENTS B-15
27. AUTHORIZATION OR RATIFICATION BY SHAREHOLDERS B-15
28. NUMBER; NONASSESSABLE B-15
29. SHARES PERSONAL PROPERTY; TRUST ONLY B-16
30. RIGHTS OF SHAREHOLDERS; LIMITATION ON RIGHTS OF ACTION B-16
31. ADDITIONAL SHARES B-16
32. PREFERRED SHARES B-16
33. ALL OTHER CHANGES IN SHARES B-16
34. CONSIDERATION FOR ISSUE B-16
35. NO PREEMPTIVE OR PREFERENTIAL RIGHTS OF SUBSCRIPTION B-17
36. TREASURY SHARES B-17
37. TRANSFER BOOKS B-17
38. TRANSFER AGENT B-17
39. SHARE CERTIFICATES B-17
40. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES B-17
41. TRANSFER OF SHARES B-17
42. TRANSFERS BY OPERATION OF LAW B-17
43. JOINT OWNERS B-18
44. NO DUTY TO EXAMINE INTO TRUSTS, PLEDGES, ETC., TO WHICH
SHARES ARE SUBJECT B-18
45. ANNUAL MEETING B-18
46. SPECIAL MEETINGS B-18
47. PRESIDING OFFICER B-18
48. BUSINESS TO BE TRANSACTED B-19
49. NOTICES B-19
50. VOTING; QUORUM B-19
51. ADJOURNMENT OF MEETING B-19
52. REQUISITE VOTE TO ACT B-20
53. RECORD DATE FOR VOTING, DIVIDENDS AND OFFERINGS B-20
54. DURATION OF TRUST B-20
55. DEATH OF SHAREHOLDER OR TRUSTEE NOT TO TERMINATE TRUST B-20
56. TERMINATION; COMBINATION; AFFILIATION B-20
57. CERTAIN TRANSACTIONS B-20
58. AMENDMENTS B-23
59. CERTIFICATE OF TERMINATION OR AMENDMENT B-24
60. DISPOSITION OF TRUST ESTATE ON TERMINATION B-24
61. FILING B-24
62. PROTECTION OF COMPANY, STOCK OF WHICH HELD BY TRUST B-25
63. AUTHORITY OF THE TRUSTEES TO CONSTRUE TERMS HEREOF B-25
64. EFFECT OF CAPTIONS AND TABLE OF CONTENTS B-25
65. COUNTERPARTS B-25
66. GOVERNING LAW B-25
67. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS B-25
DECLARATION OF TRUST
OF
BERKSHIRE ENERGY RESOURCES
<PAGE> 53
THIS DECLARATION OF TRUST made this 17th day of February, 1998 at
Pittsfield, in Berkshire County, The Commonwealth of Massachusetts, by and
between Scott S. Robinson of 741 East Street, Lenox, MA 01240, Michael J.
Marrone of Colonial Acres, Rural Route #3, Pittsfield, MA 01201, and Cheryl
M. Clark of 1645 Dublin Road, Richmond, MA 01254, and those who shall hold
certificates of shares to be issued hereunder.
WHEREAS it is desired to create under and in accordance with the
provisions of this instrument a voluntary business association with
transferable shares for the acquisition of property and the conduct of
business as hereinafter set forth;
NOW, THEREFORE, this DECLARATION OF TRUST WITNESSETH that said Scott
S. Robinson, Michael J. Marrone and Cheryl M. Clark, for themselves, their
heirs, executors, administrators, successors and assigns, do hereby declare
that they and their successors from time to time, as Trustees hereunder,
will hold, manage and dispose of the trust estate, as hereinafter defined in
trust in the manner and with and subject to the powers and provisions
hereinafter contained concerning the same, for the benefit of the
Shareholders (as hereinafter defined) according to the number and kind of
shares held by them respectively.
NAME; PURPOSE
1. NAME; PURPOSE. The Trustees as trustees hereunder, though not in
their individual capacities, shall be designated Berkshire Energy Resources
and are hereinafter referred to as the "Company." So far as may be
practicable, all things relating to the trust hereby created shall be done
under such name. The purpose of the Company shall be to engage, either
directly or through direct or indirect subsidiaries, joint ventures,
partnerships, limited liability companies or other combinations or
associations, in any manufacturing, mercantile, selling, management, service
or other business, operation or activity related to energy generation,
transmission or distribution, utilization, conservation or transportation,
construction, telecommunications, or any other manufacturing, mercantile,
selling, management, service or other business, operation or activity,
whether or not related to the forgoing enumerated areas, that a corporation
organized under the Business Corporation Law of The Commonwealth of
Massachusetts could carry on.
DEFINITIONS
2. DEFINITIONS. Except where the context otherwise requires, the
following terms when used herein shall mean the following:
(a) "Trustee" or "Trustees" means the person which is the
trustee hereunder for the time being, if there is only one, or if
more than one, the persons who are the trustees hereunder for the
time being, whether, in each case, original, additional or
successor;
(b) "Trust estate" means the property at any time
received by the Trustees or otherwise acquired and held on behalf
of the Company as hereinafter provided;
(c) "Shareholder" or "Shareholders" mean the person or
persons, natural or corporate, at the time registered as the
holder or holders of the shares of the Company and, except to the
<PAGE> 54
extent limited by any subscription or by any subscription
certificate or part-paid shares accepted or issued, include the
person or persons, natural or corporate, at the time registered as
the holder or holders of such subscription certificates and part-
paid shares; and
(d) "Share" or "shares" mean the transferable share or
shares of beneficial interest provided for in Article 29 and
include any subscription certificate or part-paid share issued
except to the extent limited in such subscription certificate or
part-paid share.
RIGHTS OF THIRD PERSONS
3. LIMITATIONS ON LIABILITY. The Trust estate shall be directly
liable for the payment and satisfaction of all obligations and liabilities
incurred in the carrying on of the business of the Company. No Trustee
shall be held to any liability whatever for the payment of any sum of money,
or for damages or otherwise under any contract, obligation or undertaking
made, entered into or issued by the Company or by any Trustee, officer,
agent or representative thereof, or in tort or otherwise, and no such
contract, obligation or undertaking shall be enforceable against the
Trustees, the Shareholders, or the officers, agents or other representatives
of the Company or any of them in their, his or her individual capacities or
capacity and all such contracts, obligations and undertakings shall be
enforceable only against the Company; and every person, firm, association,
trust and corporation shall look only to the Trust estate for the payment or
satisfaction of any liability, damages, claim or demand. In every agreement
and obligation entered into and in every writing by or on behalf of the
Company, reference shall be made to this declaration of trust, and the
substance of such parts of the preceding sentence of this Article 3 as are
applicable shall be set forth; and neither the Trustees nor any officer,
agent or representative of the Company shall have any power or authority to
enter into any agreement or obligation on behalf of the Company except in
accordance with the provisions of this Article 3. Failure to comply with
the provisions of this Article shall, however, in no event render any
Trustee, Shareholder, officer, or agent personally liable to the Company or
its Shareholders.
4. NONASSESSABILITY OF SHAREHOLDERS. No Trustee, officer, agent or
representative of the Company shall be entitled to look to the Shareholders
personally for indemnity against any liability incurred by them in the
execution of this trust or to call upon the Shareholders for the payment of
any sum of money or any assessment whatever, except when and to the extent
that shares in the Company are by their express terms issued part-paid and
assessable.
5. RELIANCE OF THIRD PERSONS. The receipts of the Company for moneys
or things paid or delivered to it shall be effective discharges to the
person, firm, association, trust or corporation paying or delivering the
same and from all liability to see to the application thereof. No purchaser
or person, firm, association, trust or corporation dealing with the Company
or with the Trustees, officers, agents or representatives of the Company
shall be bound to ascertain or inquire whether any consent, resolution or
other authorization of the Trustees or Shareholders, as is herein required
or provided for, has been obtained or passed or as to the existence or
occurrence of any event or purpose in or for which a sale, lease, mortgage,
pledge or charge is herein authorized or directed, or otherwise as to the
<PAGE> 55
purpose or regularity of any of the acts of the Trustees or the officers,
agents or representatives of the Company purporting to be done in pursuance
of the trust or powers herein contained, or as to the regularity of the
removal, resignation or appointment of any Trustee or any officer, agent or
representative; and a transfer of the Trust estate, or any part thereof,
executed by the Trustees in whom the same shall be vested at the time of any
such removal, resignation or appointment (including any retiring Trustee who
shall be willing to act and shall act in executing such transfer but not
otherwise including any such retiring Trustee) for the purpose of vesting
the same in a successor Trustee or providing evidence of such vesting
independently of such removal, resignation or appointment, shall, as to the
property comprised in such transfer, be conclusive evidence in favor of any
such purchaser or other person, firm, association, trust or corporation
dealing with the Company of the validity of such transfer and of the matters
therein recited relating to such removal, resignation or appointment or the
occasion thereof or the occasion of such transfer.
PLACE OF BUSINESS; TRUST ESTATE
6. PLACE OF BUSINESS. The principal place of business of the Company
shall be 115 Cheshire Road, Pittsfield, MA 01201, or at such other place in
Massachusetts as the Trustees shall from time to time determine.
7. TRUST ESTATE; CONVERSION INTO PERSONAL ESTATE. All property at
any time and from time to time subject to this trust shall, subject to the
provisions of Articles 8(c) and 8(g), be transferred to and vested in the
Trustees. Notwithstanding any other provisions hereof, all real estate at
any time forming part of the Trust estate shall be held upon trust for sale
and conversion into personal estate at such time or times and in such manner
and upon such terms as the Trustee shall approve, but the Trustees shall
have power, until the termination of this trust, to postpone such conversion
so long as they in their uncontrolled discretion shall think fit, and for
the purpose of determining the nature of the interest of the Shareholders
therein, all such real estate shall at all times be considered as personal
estate; and the real estate and personal property comprised in the Trust
estate shall constitute a single fund. For the purpose of such sale and
conversion of real estate the Trustees shall have full power to sell or
exchange the same and to execute and deliver proper deeds and instruments of
conveyance thereof.
THE TRUSTEES
8. POWERS OF TRUSTEES. Subject to the provisions and conditions
contained herein, the Trustees shall have power from time to time, in
addition to the specific powers and authorities herein expressly granted, to
take any action which they deem to be necessary or convenient to carry out
the business of the Company, including without limitation of the generality
of the foregoing, the powers hereinafter specified:
(a) HOLD INVESTMENTS. To purchase, subscribe for or
otherwise acquire stocks, shares, bonds or other securities,
property or obligations of any corporation, wherever incorporated,
or of any trust, association or other entity, or of any nation,
state, municipality or other governmental or public agency,
division or body or certificates or other evidences of interest in
any real or personal property, and to be a member of any company,
syndicate or joint undertaking, or the beneficiary of any trust,
<PAGE> 56
and all whether or not any such company be domestic or foreign,
and whether or not the purposes of or character of business
carried on or assets held by any such company, syndicate or joint
undertaking, or comprised of any such real or personal property,
be similar to the purposes of or business carried on or assets
held by the Company, and whether or not any such securities,
membership or beneficial interest might be considered speculative,
hazardous, nonproductive or wasting or would ordinarily be
considered a proper or prudent investment or activity for a
trustee and, whether or not any contingent or other liability may
arise or exist in respect thereof and irrespective of the
proportion of the Trust estate invested in one or more of said
securities, properties or companies, and to exercise all the
rights and privileges of an owner thereof and, without limiting
the generality of the foregoing, to acquire, by exchange, purchase
or otherwise, the shares and dividend and profit rights in, and
the bonds and other securities and obligations of, the Company;
(b) ASSUME OBLIGATIONS. To assume any obligations or
liabilities of any corporation, wherever incorporated, or of any
trust, association or other entity, and to discharge or liquidate
such obligations or liabilities;
(c) BORROW. To borrow money for the purposes of the
Company, and to issue, whether for borrowed money or for other
consideration, bonds or other securities or obligations therefor
if desired, which may mature at any time or times, and may be
convertible or after the issuance thereof may be made convertible,
with or without additional consideration for such conversion
right, into other securities of the Company or into other
securities, all for such periods and upon such terms as the
Trustees may determine, and to secure the payment thereof if
desired by mortgage, pledge, assignment, transfer or conveyance of
or charge on the whole or any part of the Trust estate then owned
or thereafter acquired, which bonds or other securities or
obligations may be signed on behalf of the Company by the
chairman, the president or a vice president and by the treasurer
or an assistant treasurer, or by facsimiles of such signatures if
the bonds or other securities or obligations are authenticated or
certified by a trustee or by a registrar other than a trustee,
officer or employee of the Company, and may have affixed thereto
the common seal of the Company or a facsimile thereof and may
carry interest coupons authenticated by the facsimile signature of
the treasurer; provided that even though any officer who has
signed or whose facsimile signature has been placed on any bond or
other security or obligation shall have ceased to be such officer
before such bond, security or obligation is issued, such bond,
security or obligation may nonetheless be issued by the Company;
(d) LEND AND AID. To advance or lend money to, and
otherwise aid by endorsement, guarantee or otherwise, and with or
without security, and to make capital contributions to, any
corporation, trust, association or other entity, any of the
stocks, shares, bonds or other securities or obligations of which
shall have been acquired or subscribed for by or on behalf of the
Company or in which the Company has any business interest
(including, without limitation of the generality of the foregoing,
the power to guarantee the performance of any undertaking or
<PAGE> 57
obligation or the payment of dividends on stock), and to discharge
and cancel without payment any indebtedness thus arising or to
convert the same into stocks, shares, bonds, or other obligations
of such corporation, trust association or other entity, or any
other with or into which it may be consolidated or merged, or to
which its property may be transferred or leased, and in like
manner to advance or lend money to and otherwise aid any person or
company (whether or not a Shareholder), whenever the Trustees
shall deem such action to be necessary or convenient in the
business or conducive to the advantage of the Company;
(e) EXERCISE POWERS OF HOLDER OF INVESTMENTS. To exercise
any and all powers and rights belonging to the holder of any
stocks, shares, bonds, securities, property or obligations forming
part of the Trust estate, whether by voting or by giving any
consent, request or notice, or otherwise, either in person or by
proxy or attorney, and to give proxies or powers of attorney
therefor, with or without power of substitution, which proxies and
powers of attorney may be for meetings or action generally or for
any particular meeting, meetings or action, and may include the
exercise of any discretionary powers; and, without limiting the
generality of the foregoing, to vote in favor of or to consent to
the creation of any mortgage, lien or other encumbrance upon all
or part of the franchises and property, real and personal, then
owned or thereafter acquired, of any or all of the corporations,
trusts, associations and other entities, any of the stocks,
shares, bonds, securities or obligations of which may at the time
be subject to this trust, or to vote in favor of or to consent to
the merger or consolidation of any such corporation, trust
association or other entity with any other corporation, trust
association or other entity, or the sale, lease, surrender or
abandonment of all or part of the franchises and property, real
and personal, of any such corporation, trust association or other
entity;
(f) SELL. To sell at public auction or by private contract
or otherwise use and deal in and with the whole or any part of the
Trust estate, free and discharged of this trust, and to convert,
exchange or refund the whole or any part of the Trust estate for
or into any shares, bonds or other securities or obligations,
property or effects in which the Company might, under the
provisions hereof, invest any moneys; provided, however, that
except as provided in Article 8(o), Article 57 or Article 60, no
sale or other disposition of the Trust estate as a whole or
substantially as a whole shall be made without authorization or
approval by vote, at a meeting duly called and held, of the
holders of two-thirds of the shares outstanding and entitled to
vote thereon, but this proviso shall not apply to any disposition
pursuant to any mortgage, pledge, or charge;
(g) TRANSFER SECURITIES INTO NAMES OF OTHERS. To cause any
real or personal property, including without limitation of the
generality of the foregoing, securities forming all or part of the
Trust estate, to be transferred into the name of the Company or
transferred into the name of or vested in the Trustees, or to
cause or allow any real or personal property to remain in the name
of, or to be transferred into the name of, any other person, firm,
association, or other entity, trust, corporation or other entity
<PAGE> 58
and in any such case in such manner as not to give notice that the
same are affected by any trust;
(h) DELEGATE POWERS. To employ and act through and to
delegate any or all of the powers and discretions of the Company
to, and to permit any or all of such powers and discretions to be
exercised by, any of the officers, agents or representatives of
the Company or of the Trustees, including without limitation the
officers, employees, agents and representatives referred to in the
last paragraph of this Article 8;
(i) COLLECT FUNDS. To collect, sue for, receive and
receipt for all sums of money coming due to the Company, to
consent to the extension of the time for payment, or to the
renewal, of any bonds or other securities, property or obligations
subject to this trust, and to prosecute, defend, compound,
compromise, abandon or adjust, by arbitration or otherwise, any
actions, suits, proceedings, disputes, claims, demands and things
relating to the Trust estate, and to extend time, with or without
security, for the payment or delivery of any debts or property and
to execute and enter into releases, agreements and other
instruments and to pay or satisfy any debts or claims upon any
evidence that the Trustees shall think sufficient;
(j) DEPOSIT FUNDS. To deposit any moneys included in the
Trust estate in any bank or trust company including any bank or
trust company that may at the time be the Trustee, and to entrust
to any such bank or trust company for safekeeping any of the stock
or share certificates, bonds or other securities, property or
obligations and any documents and papers comprised in or relating
to the Trust estate;
(k) PAY TAXES. To pay any and all taxes or liens of
whatever nature or kind imposed upon or against the Company or the
Trustees in connection with the Trust estate, or upon or against
the Trust estate or any part thereof;
(l) ESTABLISH SURPLUS FUNDS. To set apart, from time to
time, as surplus funds, such sums as the Trustees may deem proper
out of any sources which according to generally accepted
accounting principles may be considered surplus, which surplus
funds shall be applicable to any purposes to which money forming
part of the capital or income of the Trust estate may be applied,
including the payment of dividends;
(m) ADOPT SEAL. To adopt and use a common seal;
(n) PURCHASE INSURANCE. To take out and maintain insurance
or establish self-insurance programs in such amounts and of such
kinds and in such companies and through such brokers and agents as
may be necessary, convenient or desirable, including insurance
policies insuring the Trustees, officers, employees and agents of
the Company against claims and liabilities of every nature arising
by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or
omitted by any such person as a Trustee, officer, employee or
agent, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Company
<PAGE> 59
would have the power to indemnify such person against such
liability;
(o) TRANSFER TO NEW TRUST OR CORPORATION. When authorized
by a majority vote of Shareholders at a meeting, to sell and
convey as an entirety and going concern all the property and
assets of the Company to a corporation or a new association or
trust organized for the purpose of acquiring the same and
organized with the same authorized classes of shares as the
Company shall then have with the same or substantially the same
preferences, voting powers, restrictions and qualifications
thereof as attach to the shares of the Company, the consideration
for such sale and conveyance to be the assumption by such new
corporation, association or trust of all liabilities and
obligations of the Company then outstanding and the issuance and
delivery by such new corporation or association or trust to the
Company, or upon its order, for distribution as hereinafter
provided for, of such shares as will enable the Company to
exchange its shares, share for share and class for class, for the
shares of such new corporation or association or trust and
thereupon such exchange shall be made, and this trust shall be
terminated, and each Shareholder of the Company by becoming a
Shareholder shall agree to receive and accept in such case the
shares of such new corporation or association or trust in exchange
on the basis aforesaid as a full and final distributive share of
the proceeds in liquidation of such sale and conveyance, and
further agrees that in such case his or her shares in the Company
shall thereafter have no rights and privileges whatsoever except
the right and privilege of being exchanged for shares of such new
corporation or association or trust on the basis aforesaid;
(p) INVEST CAPITAL. To invest and re-invest the capital or
other funds of this trust in real or personal property of any
kind, or in any interest therein;
(q) ESTABLISH PENSION AND OTHER COMPENSATION PLANS. To
establish and carry out pension, profit-sharing, share bonus,
share purchase, share option, savings, thrift and other
retirement, incentive, health, welfare and benefit plans, trusts
and provisions for any or all of the Trustees, officers, employees
and retired employees of the Company or of any of its
subsidiaries;
(r) PARTNERSHIPS AND OTHER VENTURES. To enter into or
become partners or members in joint ventures, general or limited
partnerships, limited liability companies and any other
combinations or associations;
(s) ACQUIRE AND DISPOSE OF PROPERTY AND RIGHTS. To
purchase, acquire, hold, utilize, lease, carry on, sell, exchange
and dispose of any other business or property, rights, or
privileges which may be deemed to be suitable, convenient or
profitable for or in connection with any of the purposes of the
Company;
(t) GRANT RIGHTS OR OPTIONS. To grant rights or options
good for any period of time, including an unlimited period of time
(but not exceeding the duration of the Company) to purchase from
<PAGE> 60
the Company any securities of the Company which have been
authorized but remain unissued or are held in the treasury, at
such prices and on such terms and conditions as may be fixed from
time to time by the Trustees; and to create and issue warrants or
other instruments representing such rights or options in such form
as the Trustees may determine;
(u) PERFORM OTHER NECESSARY THINGS. To do each and every
thing necessary, suitable, desirable, convenient or proper for the
accomplishment of any of the purposes or the attainment of any one
or more of the objects hereinbefore enumerated or incidental to
the powers herein named and, without limiting the generality of
the foregoing, to deal with the Trust estate and manage and
conduct the business of the trust hereunder as fully as if the
Company were the absolute owner of the Trust estate and in so
doing to execute all contracts, agreements, deeds, covenants and
instruments, and do all such things as the Trustees may deem
proper for the purposes of the Company, whether or not involving
action of a kind or extent legal or customary for a trustee or for
the management of trust funds.
The powers and authority, whether discretionary or otherwise,
conferred upon the Trustees by this Article 8 and elsewhere in this
declaration of trust may be delegated to committees, officers, employees,
agents and representatives of the Company, and shall not be deemed to be
mandatory but shall, together with any and all implied powers and
discretions, be exercised by the Trustees from time to time to the extent
deemed to be advantageous to the Company, and may be exercised either alone
or in association with others and to the same extent and as fully as
individuals might or could do as principals, agents, contractors or
otherwise and either alone or in conjunction with or in partnership with
others, and both within and without The Commonwealth of Massachusetts. The
acts of any committee, officers and agents, within the scope of their
respective authorities, shall be as agents and delegates of the Trustees,
and shall be deemed to be the acts of the Trustees and not of the
Shareholders. When authorized by the Trustees, mortgages, conveyances and
other instruments of transfer of real or other property may be executed by
any officer of the Company on behalf of the Trustees.
THE TRUSTEES
9. NUMBER AND ELECTION. The persons signing this Declaration of
Trust shall be the original Trustees. At such time as the outstanding
shares of the Company are not wholly owned by The Berkshire Gas Company (the
"Transition Date"), the following provisions shall apply. The number of
Trustees shall be determined from time to time by the Trustees, but shall
not be less than three nor more than nine, divided into classes and elected
for terms as set forth below, shall be elected at the annual meeting of the
Shareholders by such Shareholders as have the right to vote at such
election. The number of Trustees may be increased at any time or from time
to time to any number not more than nine either by the Shareholders or by
the Trustees by vote of a majority of the Trustees then in office. The
number of Trustees may be decreased to any number not less than three at any
time or from time to time either by the Shareholders or by the Trustees by a
vote of a majority of the Trustees then in office, but only to eliminate
vacancies existing by reason of the death, resignation or removal of one or
more Trustees. No decrease in the number of Trustees should shorten the
term of any Trustee.
<PAGE> 61
The Trustees shall be elected as follows. The Trustees shall be
divided as nearly equally as possible into three classes, with each class to
consist of approximately one-third of the number of Trustees. The first
Trustees of the Company shall consist of the directors of The Berkshire Gas
Company divided into the same three classes. The term of office of the
Trustees of the first class shall continue until the first annual meeting of
the Shareholders following the Transition Date, the term of office of the
Trustees of the second class shall continue until the second annual meeting
of the Shareholders following the Transition Date, and the term of office of
the Trustees of the third class shall continue until the third annual
meeting of the Shareholders following the Transition Date, and, in each
case, until their respective successors are chosen and qualified (unless
otherwise required by law) or until the Trustee sooner dies, resigns or is
removed.
At each annual meeting beginning with the first annual meeting of the
Shareholders following the Transition Date, the Trustees elected to succeed
those whose terms expire shall be of one class and shall be elected for a
term which shall continue until the third succeeding annual meeting, and
until a successor shall be elected (unless otherwise required by law) or
until the Trustee sooner dies, resigns or is removed. Any Trustee elected
to fill a vacancy caused by death, resignation or removal shall be elected
for a term which shall coincide with the term of the class of the vacant
trusteeship. Any Trustee elected to fill an additional trusteeship
resulting from an increase in the number of Trustees shall be of the class
whose term continues and shall be elected to serve until the annual meeting
of the Shareholders closest to three years from the date of the increase,
and until a successor shall be elected and qualified (unless otherwise
required by law) or until the Trustee sooner dies, resigns or is removed.
The number of Trustees shall not be increased or decreased at a time when,
or to the extent that, it would result in the Trustees not being divided as
nearly equally as possible into three classes each consisting of
approximately one-third of the number of Trustees. The total number of
Trustees need not be an exact multiple of three. A Trustee may succeed
himself or herself. Whenever the holders of any one or more classes or
series of shares of the Company other than common shares shall have the
right, voting separately by class or series, to elect Trustees at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such trusteeship shall be governed by the
terms of such class or series of shares, and such Trustees shall not be
divided into classes pursuant to this Article 9 unless expressly provided by
such terms. References in this Article 9 to an annual meeting of
Shareholders shall be deemed to include a special meeting held in place of
an annual meeting. This Article 9 may be amended only by vote of the
holders of 75% of the shares issued and outstanding and entitled to vote
generally in the election of Trustees; provided, however, that such 75% vote
shall not be required for any alteration, amendment or repeal that has been
recommended by two-thirds vote of the Trustees then in office.
10. RESIGNATION; VACANCIES; REMOVALS. A Trustee may resign by
presenting his or her resignation in writing at a meeting of the Trustees or
delivering the same at the principal office of the Company, addressed to the
chairman, president or secretary of the Company, and its acceptance by the
Trustees shall not be required unless so stated in the resignation. Any
vacancy in the number of Trustees not required to be filled by the
Shareholders may be filled by the Trustees by vote of a majority of the
remaining Trustees then in office. Any Trustees so chosen shall continue in
office for the remainder of the full term of the class of Trustees in which
<PAGE> 62
the new trusteeship was created or the vacancy occurred and until his or her
successor, if there be one, is chosen and qualified. The remaining Trustees
may act notwithstanding any vacancy in their numbers. Except as otherwise
provided in this declaration of trust, a Trustee (including persons elected
by the Trustees to fill any vacancies) may be removed from office: (i) for
cause by the vote of the holders of a majority of the shares issued and
outstanding and entitled to vote generally in the election of Trustees; (ii)
without cause by the vote of 75% of the shares issued and outstanding and
entitled to vote generally in the election of Trustees; or (iii) for cause
by vote of a majority of the Trustees then in office. A Trustee may be
removed for cause only after reasonable notice and opportunity to be heard
before the body proposing to remove him or her. Except where a right to
receive compensation shall be expressly provided in a duly authorized
written agreement with the Company, no Trustee resigning or removed shall
have any right to any compensation as such Trustee for any period following
his or her resignation or removal, or any right to damages on account of
such removal, whether his or her compensation be by the month or by the year
or otherwise, unless the body acting on the removal, shall in their or its
discretion provide for compensation.
11. VESTING IN NEW TRUSTEES. Upon the resignation or removal of a
Trustee hereunder and upon the election or appointment of a new Trustee
hereunder, such instruments shall be executed, acknowledged and delivered as
the remaining Trustees or the new Trustees shall deem necessary or
convenient for confirming or providing evidence of the vesting of the Trust
estate in the Trustees for the time being or providing evidence of such
vesting independently of such election or appointment. Notwithstanding the
failure to execute any conveyance, the Trust estate shall always (not
restricting the same to the above enumerated cases) vest in the Trustees for
the time being acting hereunder.
12. COMPENSATION. Each Trustee shall receive such reasonable
compensation as the Trustees may determine, and shall not be limited by any
provision of law with regard to the compensation of trustees of an express
trust.
13. UNISSUED SHARES. In particular, and without limiting the
generality of the foregoing, the Trustees may, subject to any requirement of
law, at any time issue all or from time to time any part of the unissued
shares of the Company from time to time authorized and may determine,
subject to any requirements of law, the consideration for which such shares
are to be issued and the manner of allocating such consideration between
capital and surplus. Unless the Trustees otherwise specify, the excess of
the consideration for any share with par value issued by it over such par
value shall be paid-in surplus. The Trustees may allocate to capital stock
less than all of the consideration for any share without par value issued by
it, in which case the balance of such consideration shall be paid-in
surplus. All surplus shall be available for any corporate purpose,
including the payment of dividends.
14. DETERMINATION OF CAPITAL AND INCOME. The Trustees shall have
power to determine what constitutes capital or income, what constitutes the
income of the Trust estate for any year or other period, in what manner any
expenses or disbursements are to be allocated between capital and income,
and the amount of the net earnings and of the earned surplus; and every such
determination, whether express or implied in the acts or proceedings of the
Trustees, shall be conclusive and binding upon all persons interested.
<PAGE> 63
15. DIVIDENDS. The Trustees may from time to time in their
discretion declare dividends out of the net earnings of the Trust estate or
out of the earned surplus or capital surplus, payable out of the Trust
estate, at any date fixed by the Trustees, in cash or property, including
without limitation bonds or other obligations of and the shares in the
Company, and for that purpose may capitalize all or any part of the earned
surplus; but no Shareholder shall have any right to any dividends except
when and as the same are declared by the Trustees, and no Trustee or
Shareholder, officer, agent or representative of the Company shall be liable
therefor, and any Shareholder entitled thereto shall look only to the Trust
estate for the payment of any such dividends. The Company shall pay and
distribute the said dividends so declared to the Shareholders according to
the number of shares held by them respectively.
16. FISCAL YEAR; ACCOUNTS. The Trustees may determine the fiscal
year for the Company, and the form in which the accounts of the Company
shall be kept, and may from time to time change the fiscal year or form of
accounts.
17. ACTION BY BOARD; QUORUM. The action of the Trustees in respect
of any matter shall be by vote passed by the Trustees at a meeting or by a
written vote without a meeting signed by all of the Trustees. At any
meeting of the Trustees, a majority of the Trustees then in office shall
constitute a quorum. Any meeting may be adjourned from time to time by a
majority of the votes cast on the question, and the meeting may be held as
adjourned without further notice. Except as herein otherwise provided, when
a quorum is present at any meeting a majority of the Trustees in attendance
thereat shall decide any questions before such meeting. Nothing in this
Article 17 shall be construed as limiting the delegation of any power to a
committee of the Trustees.
18. BY-LAWS. The Trustees may by vote of a majority of the Trustees
then in office, make and from time to time amend, add to or rescind by-laws
for the Company (the "By-laws"). The By-laws may, subject to the provisions
of this declaration of trust: (a) fix the fiscal year; (b) regulate the
affairs of the Trustees, including provisions for the nomination thereof;
(c) provide for such committees as the Trustees shall deem appropriate,
including an executive committee which shall be vested with all of the
powers and authorities of the Trustees in the intervals between meetings of
the Trustees; (d) provide for the appointment of a chairman of the
Trustees, a president, one or more vice presidents, a treasurer, a secretary
and such other officers as the Trustees may deem appropriate, and the manner
of their appointment and removal, and their respective powers and duties;
(e) provide for the manner in which documents shall be executed, including
share certificates; (f) provide for the appointment of transfer agents or
officers and registrars, and (g) contain such further provisions relating to
the above matters or otherwise, incidental or in addition to but not
inconsistent with the provisions of this declaration of trust, as the
Trustees shall deem appropriate.
19. CERTIFICATE EVIDENCING VOTES. A certificate signed by the
chairman, the president, the treasurer, the secretary or any assistant or
temporary secretary, or one or more of the Trustees, shall be conclusive
evidence, in favor of every person, firm, association, trust and corporation
acting in good faith in reliance thereon, as to the contents of any vote of
the Trustees, or any committee thereof, or of the Shareholders, and as to
all matters in such certificate contained relating to the meeting, if any,
at which any vote is therein certified to have been passed, including the
<PAGE> 64
regularity of the said meeting and the passage of any vote thereat, and as
to all other matters and things stated in such certificate, and no person,
firm, association, trust or corporation shall be obligated to make any
inquiry as to any of the said matters, or as to the election or appointment
of any person acting as a Trustee at such meeting, or as to the holding of
any shares by any person, firm, association, trust or corporation acting as
a Shareholder at such meeting, or be affected by actual or implied notice of
any irregularity whatsoever therein.
INDEMNIFICATION AND LIMITATION OF LIABILITY
20. TRUSTEES AND OFFICERS. To the extent legally permissible, each of
the Company's Trustees and officers, as defined in Article 24, shall be
indemnified by the Trust estate against any loss, liability or expense,
including amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees, imposed upon or reasonably incurred
by such person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, in which such person
may be involved or with which such person may be threatened, while in office
or thereafter, by reason of such person's being or having been such a
Trustee or officer, except with respect to any matter as to which such
person shall have been adjudicated in such action, suit or proceeding not to
have acted in good faith in the reasonable belief that his or her action was
in the best interests of the Company.
21. LIABILITY. No Trustee, officer or agent of the Company shall be
liable except for acts or failures to act which at the time would impose
liability on him or her if this trust were a Massachusetts business
corporation and he or she were a director, officer or agent thereof
respectively. In determining what he or she reasonably believes to be in
the best interests of the Company, a Trustee may consider the interests of
the Company's employees, suppliers, creditors and customers, the economy of
the state, region and nation, community and societal considerations, and the
long-term and short-term interests of the Company, its subsidiaries and its
Shareholders, including the possibility that these interests may best be
served by the continued independence of the Company. Notwithstanding any
provision of law or this Article 21 or any other provision in this
declaration of trust contained, a Trustee shall not be liable to the Company
or any Shareholder for monetary damages for breach of fiduciary duty as a
Trustee. No amendment to or repeal of this Article shall apply to or have
any effect on the liability or alleged liability of any Trustee for or with
respect to any acts or omissions of such Trustee occurring prior to such
amendment or repeal.
22. BOOKS AND REPORTS. In discharging his or her duties a Trustee or
officer of the Company, when acting in good faith, shall be fully protected
in relying upon the books of account of the Company or of another
organization in which he or she serves as contemplated by Article 24,
reports made to the Company or to such other organization by any of its
officers or employees or by counsel, accountants, appraisers or other
experts or consultants selected with reasonable care by the Trustees or
similar governing body of such other organization, or upon other records of
the Company or of such other organization.
23. ADVANCE OF EXPENSES. Expenses, including counsel fees, reasonably
incurred by any Trustee or officer with respect to the defense or
disposition of any action, suit or proceeding referred to in Article 20 may
be advanced by the Company prior to the final disposition of such action,
<PAGE> 65
suit or proceeding, upon receipt of an undertaking by or on behalf of the
recipient to repay such amount unless it is ultimately determined that he or
she is entitled to indemnification.
24. RIGHTS NOT EXCLUSIVE; DEFINITIONS. The rights of indemnification
provided in Article 20 shall not be exclusive of or affect any other rights
to which any Trustee or officer may be entitled and such rights shall inure
to the benefit of his or her successors, heirs, executors, administrators
and other legal representatives. Such other rights shall include all
powers, immunities and rights of reimbursement which would be allowed under
the laws of The Commonwealth of Massachusetts were the Company a business
corporation organized under such laws. As used in Articles 20, 21, 22 and
23 and this Article 24, the terms "Trustee" and "officer" include persons
who serve at the request of the Company as directors, officers, or trustees
of another organization in which the Company has any direct or indirect
interest as a shareholder, creditor or otherwise. An "interested" Trustee
or officer is one against whom in such capacity the proceeding in question
or another proceeding on the same or similar grounds is then pending.
Nothing contained in Articles 20, 21, 22 and 23 and this Article 24 shall
affect any rights to indemnification to which Company personnel other than
Trustees and officers may be entitled by contract or otherwise under law.
No Trustee shall be obligated to give any bond or other security for the
performance of any of his or her duties.
25. SHAREHOLDERS. In case any Shareholder shall at any time for any
reason be held to or be under any personal liability solely by reason of his
or her being or having been a Shareholder and not by reason of his or her
acts or omissions as a Shareholder, then such Shareholder (or his or her
heirs, executors, administrators, or other legal representatives) shall be
entitled out of the Trust estate to be held harmless from, and indemnified
against, all loss, liability or expense by reason of such liability.
INTERESTED TRUSTEE, SHAREHOLDERS, AND OFFICERS;
RATIFICATION BY SHAREHOLDERS
26. SHAREHOLDERS, TRUSTEES, OFFICERS AND AGENTS. No agreement,
dealing, relationship or arrangement of any kind with the Company, or with
any company which may be controlled by the Company or in which the Company
may have any interest, in which any Shareholder, Trustee, officer, agent or
other representative of the Company shall have a personal interest shall be
void or voidable or otherwise affected by such interest nor shall such
Shareholder, Trustee, officer, agent or other representative so interested
be liable to account in respect thereof, except such effect or liability, if
any, as would have resulted under the same circumstances had the Company
been a business corporation organized under the laws of The Commonwealth of
Massachusetts. No Trustee, officer, agent or other representative of the
Company shall be precluded, by his or her office, from acquiring shares or
stock in or bonds or other obligations of or from holding any office or
place of profit in the Company or any company in which the Company shall be
interested as stockholder or otherwise. No Shareholder, by reason of his or
her holding such shares, however great in amount, shall be precluded from
holding any office or place of profit hereunder or under any company in
which the Company or the Trustees shall be interested as stockholder or
otherwise.
27. AUTHORIZATION OR RATIFICATION BY SHAREHOLDERS. Regardless of
whether the foregoing provisions have or have not been complied with, any
agreement, dealing, relationship or arrangement entered into by or on behalf
<PAGE> 66
of the Company or by the Trustees, officers, agents or other representatives
of the Company, or by or on behalf of any company in which the Company or
the Trustees shall be interested as stockholder, or otherwise, shall not be
voided by reason of the interest therein of any Shareholder, Trustee,
officer, agent or other representative nor shall any Shareholder, Trustee,
officer, agent or other representative being so interested be liable to
account to the Company or to the Trustees, officers or Shareholders, or
otherwise, for any profit or benefit realized through any such agreement,
dealing, relationship or arrangement by reason of such Shareholder, Trustee,
officer, agent or other representative holding that position or of the
fiduciary relation thereby established, if such agreement, dealing,
relationship or arrangement shall have been authorized or ratified by the
Shareholders or by the stockholders of any such company, as the case may be,
after notice of the fact of the interest therein (including a general
statement of the nature and extent of such interest) of such Shareholder,
Trustee, officer, agent or other representative, except that if such
agreement, dealing, relationship or arrangement was with a Shareholder or
Shareholders the authorization or ratification shall be by a majority vote
of disinterested Shareholders at a meeting.
SHARES OF BENEFICIAL INTEREST
28. NUMBER; NONASSESSABLE. The entire beneficial interest in the
Trust estate and in all business conducted by the Company and all profits
earned by it shall be, and during the continuance of this trust shall
remain, in the owners from time to time of transferable shares of beneficial
interest. The shares of beneficial interest shall consist of (i) 10,000,000
common shares all of the same class, without par value, and (ii) 1,000,000
preferred shares, each with a par value of one hundred dollars ($100.00) and
may be issued from time to time by the Trustees without the necessity of
obtaining the consent of the Shareholders. Subject to the limitations
prescribed by law and the provisions of this declaration of trust, the
Trustees are authorized to issue the preferred shares from time to time in
one or more series, each of such series to have such voting powers, full or
limited, or no voting powers, participating, optional or other special
rights, and such qualifications, limitations or restrictions thereof, as
shall be determined by the Trustees in a resolution or resolutions providing
for the issue of such preferred shares. Subject to the powers, preferences
and rights of any preferred shares, including any series thereof, having any
preference or priority over, or rights superior to, the common shares and
except as otherwise provided by law, the holders of the common shares shall
have and possess all powers and voting and other rights pertaining to the
shares of this Company and each common share shall be entitled to one vote.
All shares issued and to be issued shall be fully paid and nonassessable
except to the extent otherwise specifically provided in the certificates
representing such shares. In any issue of common shares, fractional shares
may be issued if authorized by the Trustees; and in lieu thereof the
Trustees may issue transferable or nontransferable instruments representing
or relating to fractional interests (on such terms and in such form as the
Trustees shall determine) and may appoint an exchange agent or exchange
agents to assist Shareholders in buying or selling such fractional
interests.
29. SHARES PERSONAL PROPERTY; TRUST ONLY. Shares shall be personal
property entitling the holders only to the rights and interest in the Trust
estate set forth in these presents, and it is expressly declared and agreed
by and between the Shareholders, Trustees and officers of the Company that a
trust and not a partnership is deemed to be created by this instrument and
<PAGE> 67
that irrespective of whether any different status may be held to exist as
far as others are concerned, nevertheless as between the said Shareholders,
Trustees and officers the Shareholders shall be deemed to hold only the
relationship of CESTUIS QUE TRUSTENT to the Trustees, with only such rights
as are conferred upon them as such CESTUIS QUE TRUSTENT hereunder.
30. RIGHTS OF SHAREHOLDERS; LIMITATION ON RIGHTS OF ACTION. No
Shareholder shall have or acquire at any time any interest in any specific
property, real or personal, at any time forming part of the Trust estate, or
any right to any division or partition thereof or any other rights with
reference thereto, except to have said property dealt with as herein
provided, to receive dividends therefrom, as herein provided, and to share
in the distribution of the cash proceeds thereof, or distributions in kind,
or both, upon the termination of the trust, as herein provided. No action
may be brought by a Shareholder on behalf of the Company unless a prior
demand regarding such matter has been made on the Trustees and the
Shareholders of the Company.
31. ADDITIONAL SHARES. Additional common shares may be authorized
from time to time by a majority vote of the Shareholders at a meeting. Such
additional common shares shall rank equally and be in all respects identical
with the common shares originally authorized and may be issued from time to
time by the Trustees without the necessity of obtaining the consent of the
Shareholders.
32. PREFERRED SHARES. Additional preferred shares may be authorized
from time to time by vote, at a meeting duly called and held, of the holders
of two-thirds of the shares outstanding and entitled to vote thereon, and
such additional shares may be issued in one or more classes and in one or
more series within a class and shall have such voting powers, full or
limited, or no voting powers, participating, optional or other special
rights, and such qualifications, limitations or restrictions thereof, as
shall be determined in the vote authorizing them or by the Trustees pursuant
to authority granted to them by such vote or as provided in Article 28.
33. ALL OTHER CHANGES IN SHARES. Any authorized shares, whether
issued or unissued, may, by vote, at a meeting duly called and held, of the
holders of a majority of the shares outstanding and entitled to vote
thereon, be changed by increasing or decreasing their par value, be reduced
in number, be changed into the same or a different number of shares of any
class or classes with or without par value, or be classified or
reclassified. In connection with any of the foregoing, the Trustees may
increase, decrease or adjust the capital accounts of the Company.
34. CONSIDERATION FOR ISSUE. Unless otherwise prescribed by vote of
the Shareholders, all shares may be issued for money, services or property
(including other shares of the Company at the time outstanding), or as a
distribution to Shareholders, and upon such terms as to valuation of shares,
services or property and otherwise, as the Trustees may in their absolute
discretion determine.
35. NO PREEMPTIVE OR PREFERENTIAL RIGHTS OF SUBSCRIPTION. No holder
of shares of any class and no holder of other securities of the Company,
convertible or otherwise, shall have any preemptive or preferential right of
subscription to, or purchase of, any securities of the Company.
36. TREASURY SHARES. Shares in the Company acquired by the Company
may be canceled and the number of shares issued may thereby be reduced, or
<PAGE> 68
such shares may be held in the treasury and be disposed of by the Company,
when authorized by the Trustees, as the trustees may from time to time
determine; but such shares while so held in the treasury shall not be
entitled to any voting rights or to any dividends and shall not be deemed
outstanding in computing proportions or percentages of shares hereunder or
for any other purpose hereof. Shares canceled pursuant to this Article 36
shall have the status of authorized but unissued shares.
37. TRANSFER BOOKS. A register or registers shall be kept under the
direction of the Trustees, which shall contain the names and addresses of
the Shareholders and the number and kind of shares held by them respectively
and a record of all transfers thereof. No Shareholder shall be entitled to
receive payment of any dividend declared, nor to have any notice given to
him or her as herein provided, until he or she has given his or her address
to the transfer agent, or such other officer or agent of the Company as
shall keep the said register, for entry thereon.
38. TRANSFER AGENT. The Company, when authorized by the Trustees,
may employ in the City of Boston or in any other cities the Trustees may
designate a transfer agent or transfer agents and a registrar or registrars.
The transfer agent or transfer agents shall keep the said registers and
record therein the transfers of any of the said shares and countersign
certificates of shares issued to the persons entitled to the same. The
transfer agents and registrars shall perform the duties usually performed by
transfer agents and registrars of certificates of stock in a corporation,
except as modified by the Trustees.
39. SHARE CERTIFICATES. No certificates certifying the ownership of
shares need be issued unless the Trustees otherwise determine from time to
time. The Trustees may make such rules as they consider appropriate for the
issuance of share certificates, the form thereof, and similar matters.
40. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES. In the event the
Trustees authorize the issuance of share certificates, a new certificate may
be issued to replace any certificate previously issued, on satisfactory
evidence that the said certificate previously issued has been worn out,
mutilated, lost or destroyed and on such terms, if any, as to indemnity and
otherwise, as the Trustees shall deem proper.
41. TRANSFER OF SHARES. Every transfer of any certificated shares
(otherwise than by operation of law) shall be signed by the transferor or by
his or her agent thereunto duly authorized in writing, and upon delivery
thereof to the Company or a transfer agent of the Company, accompanied by
the existing certificate for such shares and such evidence of the
genuineness of such transfer, authorization and other matters as may
reasonably be required, shall be recorded in the register, and a new
certificate therefor shall be issued to the transferee, and in case of a
transfer of only a part of the shares represented by any certificate a new
certificate for the residue thereof shall be issued to the transferor. A
Shareholder of record shall be deemed to be the holder of the share or
shares represented thereby for all purposes hereof, and neither the Trustees
nor any transfer agent or registrar nor any officer or agent of the Company
shall be affected by any notice of a transfer until due presentment of the
certificate for such shares or shares for registration of transfer. The
Trustees may determine from time to time procedures for the transfer of
uncertificated shares.
42. TRANSFERS BY OPERATION OF LAW. Any person becoming entitled to
<PAGE> 69
any shares in consequence of the death, bankruptcy or insolvency of any
Shareholder, or otherwise by operation of law, shall be recorded in the
register as the holder of the said shares, and receive a new certificate for
the same, upon production of the proper evidence thereof and delivery of the
existing certificate to the Company or a transfer agent of the Company.
Until such production of evidence and delivery of the existing certificate,
the Shareholder of record shall be deemed to be the holder of such shares
for all purposes hereof, and neither the Trustees nor any transfer agent or
registrar nor any officer or agent of the Company shall be affected by any
notice of such death, bankruptcy, insolvency or other event. The Trustees
may determine from time to time procedures for the transfer by operation of
law of uncertificated shares.
43. JOINT OWNERS. Any two or more persons in whose names any share
is registered shall be treated as joint owners of the entire interest
therein, and no entry shall be made in the register or in any certificate
that any person is entitled to any future, limited or contingent interest in
any share. However, any person registered as a holder of any share may,
subject to the provisions hereinafter contained, be described in the
register or in any certificate as a trustee or fiduciary of any kind, and
appropriate words may be added to the description to identify such trust.
44. NO DUTY TO EXAMINE INTO TRUSTS, PLEDGES, ETC., TO WHICH SHARES
ARE SUBJECT. The Company shall not, nor shall the Trustees or the
Shareholders or any officer of the Company or any transfer agent or other
agents of the Company, or the Trustees, be bound to take notice or be
affected by notice of any trust, whether express, implied or constructive,
or of any charge, pledge or equity to which any of the said shares or the
interest of any of the Shareholders in this trust may be subject, or to
ascertain or inquire whether any sale or transfer of any such shares or
interest by any such Shareholder or his or her personal representatives is
authorized by such trust, charge, pledge or equity, or to recognize any
person as having any interest therein, except the persons registered as such
Shareholders. The receipt of the person in whose name any share is
registered, or, if such share is registered in the names of more than one
person, the receipt of any one of such persons, or the receipt of the duly
authorized agent of any such person, shall be a sufficient discharge for all
dividends and other money and for all shares, bonds, obligations and other
property payable, issuable or deliverable in respect of such share and from
all liability to see to the application thereof.
MEETINGS OF SHAREHOLDERS
45. ANNUAL MEETING. An annual meeting of the Shareholders shall be
held on such date as shall be established in the By-laws of the Company or
as the Trustees or the chairman or the president may from time to time fix,
at the principal office of the Company or at such other place in
Massachusetts as may be designated by the Trustees, the chairman or the
president, for the purpose of electing Trustees and for such other purposes
as may be prescribed by law and hereby or as may be specified in the notice
by the Trustees or by the chairman or by the president of the Company. If
such annual meeting is omitted as herein provided for, a special meeting may
be held in lieu thereof, and any business transacted or election held at
such special meeting shall have the same effect as if transacted or held at
such annual meeting.
46. SPECIAL MEETINGS. The Trustees, chairman or president of the
Company may, whenever any of them think fit, call or direct any officer of
<PAGE> 70
the Company to call a special meeting of the Shareholders to be held at the
principal office of the Company or, in their discretion, at any other place
in Massachusetts, and such special meeting shall be so called by the
secretary, or in the case of the death, incapacity or refusal of the
secretary, by another officer, upon written application of one or more
Shareholders who hold at least forty percent in interest of the shares
entitled to vote at such special meeting.
47. PRESIDING OFFICER. The chairman or, if there is no chairman or
the chairman is absent, the president shall preside at every meeting of the
Shareholders, but if neither the chairman nor the president is present at
the commencement of the meeting, a vice president or the treasurer shall
preside at the meeting of the Shareholders.
48. BUSINESS TO BE TRANSACTED. At any annual or special meeting of
Shareholders, no business shall be transacted other than such as is referred
to in the notice of the meeting.
49. NOTICES. A written or printed notice of each meeting of the
Shareholders, whether annual or special, specifying the time, place and
purposes thereof, shall be given as hereinafter provided by the secretary or
any assistant secretary or by an officer designated by the Trustees to each
of the Shareholders entitled to vote thereat at least seven (7) days
(including Sundays and holidays) before such meeting. Every notice to any
Shareholder required or provided for herein may be given to him or her
personally or by mailing it to him or her, postage prepaid, at his or her
address specified in the records of the Company. Notice shall be deemed to
have been given at the time when it is so mailed. In respect of any share
held jointly by several persons, notice so given to any one of them shall be
sufficient notice to all of them. Any notice so sent to the address of any
Shareholder shall be deemed to have been duly sent in respect of any such
share whether held by him or her solely or jointly with others,
notwithstanding he or she be then deceased or be bankrupt or insolvent or
legally incompetent, and whether the Trustees or any person sending such
notice have knowledge or not of his or her death, bankruptcy or insolvency
or legal incompetence, until some other person or persons shall be
registered as holders. The certificate of the person or persons giving such
notice shall be sufficient evidence thereof, and shall protect all persons
acting in good faith in reliance on such certificate. Whenever notice of
meeting is required to be given to a Shareholder under any provision of
Massachusetts law applicable to the Company or of this declaration of trust,
a written waiver thereof, executed before or after the meeting by such
Shareholder or Shareholder's attorney thereunto authorized and filed with
the records of the meeting, shall be deemed equivalent to such notice.
50. VOTING; QUORUM. At all meetings every Shareholder shall, subject
to the provisions of Article 53, have one vote for each share held by him or
her and may vote at any meeting or any adjournment or adjournments thereof
in person or by proxy in writing dated not more than six months before the
meeting named therein, which proxies shall be filed with the secretary or
other person responsible to record the proceedings of the meeting before
being voted; and, except as otherwise provided herein, the holders of a
majority of all the shares issued and outstanding and entitled to vote shall
constitute a quorum for the transaction of business. The placing of a
shareholder's name on a proxy pursuant to telephonic or electronically
transmitted instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such shareholders
shall constitute execution of such proxy by or on behalf of such
<PAGE> 71
shareholder. Shares owned directly or indirectly by the Company, if any,
shall not be deemed outstanding for this purpose, and the Company shall not,
directly or indirectly, vote any share of its own shares. When any share is
held jointly by several persons, any one of them may vote at any meeting in
person or by proxy in respect of such share, but if more than one of them
shall be present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be cast, such
vote shall not be received in respect of such share. If the holder of any
share is a minor or a person of unsound mind, or subject to guardianship or
to the legal control of any other person as regards the charge or management
of such share, he or she may vote by his or her guardian or such other
person appointed or having such control, and such vote may be given in
person or by proxy. No ballot shall be required for any election unless
requested by a Shareholder present or represented at the meeting and
entitled to vote in the election.
51. ADJOURNMENT OF MEETING. Any meeting (or portion thereof) may be
adjourned from time to time by a majority of the votes properly cast upon
the question, whether or not a quorum is present, and the meeting (or
portion thereof) may be held as adjourned without further notice.
52. REQUISITE VOTE TO ACT. Except as otherwise herein provided, when
a quorum is present at any meeting, a plurality of votes properly cast for
election to any office shall elect to such office, and a majority of the
shares represented at the meeting and entitled to vote upon any question
properly brought before the meeting shall decide such question. Provisions
hereunder for a majority vote of Shareholders at a meeting mean a vote of
the holders of a majority of those shares entitled to vote thereon which are
represented in person or by proxy at such meeting.
53. RECORD DATE FOR VOTING, DIVIDENDS AND OFFERINGS. For the purpose
of determining the Shareholders who are entitled to vote or act at any
meeting or any adjournment thereof, or who are entitled to receive payment
of any dividend or of any other distribution or offering, the trustees may
from time to time fix in advance a time, which shall be not more than sixty
(60) days before the date of any meeting of Shareholders or the date for the
payment of any dividend or of any other distribution or the date of the
offering, as the record date for determining the Shareholders having the
right to notice of and to vote at such meeting and any adjournment thereof
or the right to receive such dividend or distribution or such offering, and
in such case only Shareholders of record on such record date shall have such
right, notwithstanding any transfer of shares on the books of the Company
after the record date; or without fixing such record date the Trustees may
for any of such purposes close the register or transfer books for all or any
part of such period. If no record date is fixed and the transfer books are
not closed, (i) the record date for determining Shareholders having the
right to notice of or to vote at a meeting of Shareholders shall be at the
close of business on the date next preceding the day on which notice is
given, and (ii) the record date for determining Shareholders for any other
purpose shall be at the close of business on the day on which the Trustees
acts with respect thereto.
DURATION AND TERMINATION OF TRUST;
COMBINATION; AMENDMENTS
54. DURATION OF TRUST. Unless terminated as provided in Article 8(o)
or Article 56, this trust shall continue without limitation of time.
<PAGE> 72
55. DEATH OF SHAREHOLDER OR TRUSTEE NOT TO TERMINATE TRUST. The
death of a Trustee hereunder or of a Shareholder or the dissolution of a
Shareholder hereunder during the continuance of this trust shall not operate
to terminate this trust, nor shall it entitle the legal representatives of
any such Trustee or Shareholder to an accounting or to take any action in
the courts or otherwise.
56. TERMINATION; COMBINATION; AFFILIATION. Except as provided in
Article 57 below, the Trustees may terminate this trust at any time, or may
cause the Company to be merged, combined, consolidated or otherwise
affiliated with another trust, association, company, corporation or other
entity, if such termination, merger, combination, consolidation, or
affiliation has been authorized by vote, at a meeting duly called and held,
of the holders of two-thirds of the shares outstanding and entitled to vote
thereon or has been authorized pursuant to Article 8(o). Such termination,
merger, combination, consolidation or affiliation shall become effective
only upon presentation to the Trustees, as required by Article 59, of the
counterpart of the certificate referred to in said Article 59, or at such
later time as may be specified in the vote effecting such action.
57. CERTAIN TRANSACTIONS.
A. HIGHER VOTE FOR CERTAIN BUSINESS TRANSACTIONS. In
addition to any affirmative vote required by law or otherwise in
this declaration of trust, and except as otherwise expressly
provided in this Article 57:
(1) any merger or consolidation of the Company or any
Subsidiary (as hereinafter defined) with (a) any Interested
Shareholder (as hereinafter defined) or (b) any other company
(whether or not itself an Interested Shareholder) which is or
after such merger or consolidation would be an Affiliate (as
hereinafter defined) or Associate (as hereinafter defined) of an
Interested Shareholder; or
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) to or with any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder involving
any assets or securities of the Company, any Subsidiary or any
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder having an aggregate Fair Market Value (as
hereinafter defined) in excess of 5% of the total consolidated
book value of the total assets of the Company and its
Subsidiaries as of the end of the Company's most recent fiscal
year prior to the time the determination is made; or
(3) the adoption of any plan or proposal for the
termination, liquidation or dissolution of the Company proposed
by or on behalf of an Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder; or
(4) any reclassification of securities (including any
reverse stock split) or recapitalization of the Company or any
merger or consolidation of the Company with any of its
Subsidiaries or any other transaction (whether or not with or
otherwise involving an Interested Shareholder) that has the
effect, directly or indirectly, of increasing the proportionate
<PAGE> 73
share of any class or series of Capital Stock (as hereinafter
defined), or any securities convertible into Capital Stock or
into equity securities of any Subsidiary, that is beneficially
owned by any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder; or
(5) any tender offer or exchange offer made by the
Company for shares of Capital Stock which may have the effect of
increasing an Interested Shareholder's percentage beneficial
ownership (as hereinafter defined) so that following the
completion of the tender offer or exchange offer the Interested
Shareholder's percentage beneficial ownership of the outstanding
Capital Stock may exceed 110% of the Interested Shareholder's
percentage beneficial ownership immediately prior to the
commencement of such tender offer or exchange offer; or
(6) any agreement, contract or other arrangement
providing for any one or more of the actions specified in the
foregoing clauses (1) to (5);
shall require the affirmative vote of seventy-five percent
(75%) of the then outstanding Voting Shares, provided that the
75% voting requirement shall not be applicable to the approval
by the Company's shareholders of a Business Transaction (as
hereinafter defined) authorized by a two-thirds vote of the
Trustees. The provisions of this Section A of this Article 57
shall also not be applicable to any direct or indirect purchase
or other acquisition by the Company or any Subsidiary of any
shares of Capital Stock from an Interested Shareholder. Such
affirmative vote shall be required notwithstanding the fact that
no vote may be required, or that a lesser percentage may be
specified, by law or any agreement with any national securities
exchange or otherwise.
B. DEFINITION OF "BUSINESS TRANSACTION." For the
purposes of this Article 57 the term "Business Transaction"
shall mean any transaction that is referred to in any one or
more of clauses (1) through (6) of Section A of this Article 57.
C. CERTAIN DEFINITIONS. For purposes of this Article 57:
(1) The term "Capital Stock" shall mean all the shares
of beneficial interest of the Company authorized to be issued
from time to time under Article 28 of this declaration of trust.
(2) The term "person" shall mean any individual, firm,
corporation or other entity and shall include any group
comprised of any person and any other person with whom such
person or any Affiliate or Associate of such person has any
agreement, arrangement or understanding, directly or indirectly,
for the purpose of acquiring, holding, voting or disposing of
Capital Stock.
(3) The term "Interested Shareholder" shall mean any
person (other than the Company or any Subsidiary and other than
any profit-sharing, employee stock ownership or other employee
benefit plan of the Company or any Subsidiary or any trustee of
or fiduciary with respect to any such plan when acting in such
<PAGE> 74
capacity) who or which (a) is the beneficial owner of Voting
Shares representing 5% or more of the votes entitled to be cast
by the holders of all then outstanding Voting Shares; or (b) is
an Affiliate of the Company and at any time within the two-year
period immediately prior to the date in question was the
beneficial owner of Voting Shares representing 5% or more of the
votes entitled to be cast by the holders of all the outstanding
Voting Shares.
(4) A person shall be a "beneficial owner" of any
Capital Stock (a) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; (b) which
such person or any of its Affiliates or Associates has, directly
or indirectly, (i) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote pursuant to any
agreement, arrangement or understanding; or (iii) which is
beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares of
Capital Stock. For the purposes of determining whether a person
is an Interested Shareholder pursuant to paragraph 3 above, the
number of shares of Capital Stock deemed to be outstanding shall
include shares deemed beneficially owned by such person through
application of this paragraph 4, but shall not include any other
shares of Capital Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(5) An "Affiliate" of a specified person is a person
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
the person specified.
(6) The term "Associate" used to indicate a
relationship with any person means (a) any company (other than
the Company or any Subsidiary) of which such person is an
officer or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities, (b) any
trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee
or in a similar fiduciary capacity, and (c) any relative or
spouse of such person, or any relative of such spouse, who has
the same home as such person or who is a Trustee or officer of
the Company or any of its parents or subsidiaries.
(7) The term "Subsidiary" means any company of which a
majority of any class of equity security is beneficially owned
by the Company, PROVIDED, HOWEVER, that for the purposes of the
definition of Interested Shareholder set forth in paragraph 3
above and the definition of Associate set forth in paragraph 6
above, the term "Subsidiary" shall mean only a company of which
a majority of each class of equity security is beneficially
owned by the Company.
<PAGE> 75
(8) The term "Voting Shares" means all Capital Stock
which by its terms may be voted generally in the election of
Trustees of the Company.
(9) The term "Disinterested Trustee" means any Trustee
who is not an Affiliate or Associate or representative of the
Interested Shareholder and was a Trustee prior to the time that
the Interested Shareholder became an Interested Shareholder, and
any Trustee who is a successor of a Disinterested Trustee, is
not an Affiliate or Associate or representative of the
Interested Shareholder and is recommenced or elected to succeed
the Disinterested Trustee by a majority of the Disinterested
Trustees.
D. POWERS OF THE DISINTERESTED TRUSTEES. A majority of
the Disinterested Trustees shall have the power and duty to
determine for purposes of this Article 57, on the basis of
information known to them after reasonable inquiry, (1) whether
a person is an Interested Shareholder, (2) the number of shares
of Capital Stock or other securities beneficially owned by any
person, and (3) whether a person is an Affiliate or Associate of
another.
E. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED
SHAREHOLDERS. Nothing contained in this Article 57 shall be
construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
F. ALTERATION, AMENDMENT, REPEAL. Notwithstanding any
other provisions of this declaration of trust (and
notwithstanding the fact that a lesser percentage or separate
class vote may be specified by law or in this declaration of
trust), the affirmative vote of the holders of 75% of the then
outstanding Voting Shares shall be required to alter, amend or
repeal this Article 57; PROVIDED, HOWEVER, that this Section F
shall not apply to, and such 75% vote shall not be required for,
any alteration, amendment or repeal recommended by a two-thirds
vote of the Trustees.
58. AMENDMENTS. The declaration of trust may be altered, amended,
added to or rescinded by an instrument in writing signed by a majority of
the Trustees, if the same has been authorized by majority vote of the
Shareholders at a meeting, and such other vote, if any, as may be required
by the rights or preferences relating to any class or series of shares;
provided that if such alteration, amendment, addition or rescission shall in
the judgment of the Trustees be of a fundamental character it shall require
authorization by vote, at such a meeting, of the holders of a majority of
the shares outstanding and entitled to vote thereon; and provided further
that any alteration, amendment, addition or rescission of any provision
requiring a vote of the holders of a specified percentage of the shares
shall be only by vote of the holders of such percentage; and provided
further that the provisions of Articles 3 and 4 exempting from personal
liability the Shareholders, Trustees, officers, agents and other
representatives of the Company may be amended only by unanimous vote of the
holders of all shares entitled to vote at the time such vote is taken and
such amendment shall take effect only prospectively. Such alteration,
amendment, addition or rescission shall become effective at such time as may
be specified in the vote effecting such action. Notwithstanding anything
<PAGE> 76
preceding in this Article to the contrary but subject to the provisions of
Article 57, the vote of the holders of 75% of the shares issued and
outstanding and entitled to vote generally in the election of Trustees shall
be required for any alteration, amendment or repeal of Articles 9 and 10;
provided, however, that such 75% vote shall not be required for any
alteration, amendment or repeal adopted or recommended by 75% of the
Trustees then in office. Amendments for the purpose of changing the name of
the Company or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision
contained in this declaration of trust shall not require authorization by
vote of the Shareholders.
59. CERTIFICATE OF TERMINATION OR AMENDMENT. In case this trust
shall be terminated or any merger, combination, consolidation or affiliation
shall be effected, or any of the terms, powers and provisions herein
contained shall be altered, amended, added to or rescinded, pursuant to the
provisions of Article 8(o), Article 56 or Article 58 or other authority, a
certificate in any number of counterparts deemed desirable, setting forth
such termination, alteration, amendment, addition or rescission or the terms
of such merger, combination, consolidation or affiliation and either that
the Shareholders have authorized the same in accordance with the provisions
of said Article 8(o), Article 56 or Article 58, or the other authority
pursuant to which the same has been made, shall be signed by the chairman or
president and by the secretary or any assistant secretary and shall be
acknowledged by either the chairman or president signing the same and shall
be recorded or filed in the various public offices, if any, in which this
declaration of trust is then recorded or filed and at the principal office
of the Company and in such places as may be required by law, but failure to
record or file any such vote or resolution shall not affect the validity
thereof.
60. DISPOSITION OF TRUST ESTATE ON TERMINATION. Upon the termination
of this trust the Trustees shall, upon such terms as shall be determined by
the Trustees, sell and convert into money or into shares, bonds or other
securities or obligations, whether of the purchaser or otherwise, the whole
or any part of the Trust estate and shall apportion the proceeds thereof and
any property forming part of the Trust estate excepted from such sale among
all the Shareholders in accordance with their respective rights ratably
according to the number and kind of shares held by them respectively. In
making any sale under this provision the Trustees shall have power to sell
by public auction or private contract and to buy in or rescind or vary any
contract of sale and to resell, without being answerable for loss, and for
the said purposes to execute or cause to be executed all proper deeds and
instruments and to do all proper things. The Trustees may, after the
distribution of the full amounts of money, if any, due upon liquidation or
termination on any preferred shares of any class or series which may be
outstanding, divide the whole or any part of the remaining Trust estate in
its actual state of investment among the Shareholders in accordance with
their respective rights ratably according to the number and kind of shares
held by them respectively, and for such purposes the Trustees shall have
power to determine the values of the property comprising said remaining
Trust estate.
MISCELLANEOUS
61. FILING. This instrument and any amendment hereto shall be filed
with the Secretary of The Commonwealth of Massachusetts and in such other
places as may be required under the laws of The Commonwealth of
<PAGE> 77
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Unless any such amendment sets forth some later
time for the effectiveness of such amendment, such amendment shall be
effective upon its filing with the Secretary of The Commonwealth of
Massachusetts. A restated declaration of trust, integrating into a single
instrument all of the provisions of this instrument which are then in effect
and operative, may be executed from time to time by the Trustees and shall,
upon filing with the Secretary of The Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained therein and may hereafter be
referred to in lieu of this instrument and the various amendments thereto.
62. PROTECTION OF COMPANY, STOCK OF WHICH HELD BY TRUST. No
corporation, trust, association or body politic shall be affected by notice
that any of its shares or bonds or other securities or obligations are
subject to this trust or be bound to see to the execution of this trust or
to ascertain or inquire whether any transfer of any such shares, bonds or
securities or obligations by the Company is authorized, notwithstanding such
authority may be disputed by some other person, firm, association, trust or
corporation.
63. AUTHORITY OF THE TRUSTEES TO CONSTRUE TERMS HEREOF. The Trustees
shall have the authority to construe any of the terms, powers and provisions
herein contained and to act on any such construction, and its construction
of the same and any action taken pursuant thereto by the Trustees, or any
committee, officer or agent in good faith shall be final and conclusive.
64. EFFECT OF CAPTIONS AND TABLE OF CONTENTS. The captions and Table
of Contents are inserted for convenience of reference, and are not to be
taken as any part of this instrument or to control or affect the meaning,
construction or effect of the same.
65. COUNTERPARTS. This instrument may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument,
which shall be sufficiently evidenced by any such original counterpart.
66. GOVERNING LAW. This instrument is executed by the original
Trustees and delivered in The Commonwealth of Massachusetts, and with
reference to the statutes and law thereof, and the rights of all parties and
the construction and effect of every provision hereof shall be subject to
and construed according to the statutes and law of said Commonwealth.
67. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. The provisions
of this instrument are severable, and if the Trustees shall determine, with
the advice of counsel, that any of such provisions would be inconsistent
with any of the conditions necessary for qualification of the Company as an
exempted holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended, and the rules and regulations thereunder or
is inconsistent with other applicable laws and regulations, such provision
shall be deemed never to have constituted a part of this instrument,
provided that such determination shall not affect any of the remaining
provisions of this instrument or render invalid or improper any action taken
or omitted prior to such determination. If any provision of this instrument
shall be held invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall attach only to such provision in such jurisdiction
and shall not in any manner affect such provision in any other jurisdiction
or any other provision of this instrument in any jurisdiction.
***
<PAGE> 78
IN WITNESS WHEREOF we have hereunto set our hands and seals at
Pittsfield in The Commonwealth of Massachusetts on the date first above
mentioned.
/s/ Scott S. Robinson
------------------------------------
Scott S. Robinson
/s/ Michael J. Marrone
------------------------------------
Michael J. Marrone
/s/ Cheryl M. Clark
------------------------------------
Cheryl M. Clark
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF BERKSHIRE, SS. February 17, 1998
Then personally appeared before me the above-named Scott S. Robinson,
Michael J. Marrone and Cheryl M. Clark, and severally acknowledged the
foregoing instrument to be their free act and deed.
WITNESS MY HAND and official seal at Pittsfield, Massachusetts.
NOTARIAL SEAL /s/ James M. Avery
------------------------------------
James M. Avery, Notary Public
My commission expires: March 8, 2002
Notary Public in and for The Commonwealth of Massachusetts
APPENDIX C
BY-LAWS
OF
BERKSHIRE ENERGY RESOURCES
Section 1. DECLARATION OF TRUST
1.1 DECLARATION OF TRUST. References herein to the Declaration of Trust
shall apply to the Declaration of Trust establishing Berkshire Energy
Resources dated February __, 1998, as the same shall be amended from time to
time. These By-laws and all matters concerning the conduct and regulation
of the business and affairs of the Company shall be subject to such
provisions in regard thereto, if any, as are set forth in the Declaration of
Trust as from time to time in effect.
<PAGE> 79
Section 2. TRUSTEES
2.1. NOMINATIONS. Nominations for the election of Trustees at an annual
meeting may be made by the Trustees or a committee appointed by the Trustees
or by any Shareholder entitled to vote generally in the election of
Trustees; however, any Shareholder entitled to vote generally in the
election of Trustees may nominate one or more persons for election as
Trustees at an annual meeting only if written notice of such Shareholder's
intent to make such nomination or nominations has been given, postage
prepaid, to the secretary not less than 14 days nor more than 50 days prior
to any meeting of the Shareholders called for the election of Trustees.
Each such notice shall set forth: (a) the name and address of the
Shareholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the Shareholder is a holder of
record of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the Shareholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination
or nominations are to be made by the Shareholder; (d) such other
information regarding each nominee proposed by such Shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission; and (e) the consent of each
nominee to serve as a Trustee if so elected. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
2.2. INSPECTORS. The annual election of Trustees, and of such other
officers as may be required to be elected by the Shareholders, shall be
conducted by two inspectors appointed by the presiding officer of the
meeting, which inspectors shall be duly sworn, and shall in writing certify
to the returns. No person who is a candidate for any of the offices to be
filled by such election shall act as inspector, judge or clerk of such an
election.
2.3. ACTION BY TRUSTEES. The action of the Trustees in respect of any
matter shall be by vote passed by the Trustees at a meeting or by a written
vote without a meeting signed by all of the Trustees.
2.4. REGULAR MEETINGS. Regular meetings of the Trustees may be held at such
places and at such times as the Trustees may by vote from time to time
determine, and if so determined no notice thereof need be given, provided,
however, that notice of the first regular meeting following any such
determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without notice immediately after and at the same place
as the annual meeting of the Shareholders or a special meeting of the
Shareholders held in lieu of such annual meeting.
2.5. SPECIAL MEETINGS. A special meeting of the Trustees may be held at
any time and at any place when called by the chairman, president, secretary
or three or more Trustees, by giving to each of the Trustees reasonable
notice thereof.
2.6. ADJOURNMENTS OF MEETINGS. If the holders of the amount of shares
necessary to constitute a quorum shall fail to attend in person or by proxy
at the place, day and hour set by notice for any meetings of the
Shareholders, a majority in interest of the Shareholders present in person
or by proxy may adjourn from time to time, without notice other than by
<PAGE> 80
announcement at the meeting, until holders of the amount of shares requisite
to constitute a quorum shall attend in person or by proxy.
2.7. NOTICE. Without implied limitation, a notice thereof, mailed prepaid,
addressed to any Trustee, at his or her usual address, and posted in the
Commonwealth of Massachusetts, or where the principal office of the Company
is situated, at least forty-eight (48) hours before such meeting, or a
notice given by telephone or telefax at least twenty-four (24) hours before
such meeting, shall be deemed sufficient notice to such Trustee, whether the
same be received by him or her or not. It shall not be necessary to give
notice of any such meeting to any Trustee who is present at the meeting, or
who executes, before or after the meeting, a written waiver of such notice;
and if under the foregoing provisions there is no Trustee to whom notice of
a meeting need be given, such meeting may be held without call at any time
and at any place.
2.8. VOTING. All elections for Trustees shall be by written ballot, and
the polls at every such election shall remain open as long as may be
reasonably necessary to permit all Shareholders present in person or by
proxy to cast their votes. On other matters, upon which Shareholders shall
be entitled to vote, voting may be oral.
2.9. PROXY. The person entitled to vote any share of the Company may
delegate his power to vote that share by a proxy, signed by the person, or
by the holder of his or her duly authorized and executed power of attorney.
Such proxy shall be valid for not more than three years from its date. The
proxy must be delivered to the secretary of the Company before the time when
it is to be used.
2.10. MINUTES OF MEETINGS. The Trustees shall cause to be kept minutes of
all meetings of the Trustees and minutes of all meetings of the
Shareholders, and all such minutes, if signed or certified by the secretary
or any assistant or temporary secretary, shall be conclusive evidence of the
matters therein stated.
2.11. PRESENCE THROUGH COMMUNICATIONS EQUIPMENT. Unless otherwise
prohibited by law, members of the Trustees may participate in a meeting by
means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time and participation by such means shall constitute presence in
person at a meeting.
2.12. COMMITTEES. The Trustees shall, by a vote of the majority of the
Trustees then in office, elect from their number an Executive Committee as
described in Section 2.13. The Trustees may also from time to time appoint
such other committees as it may determine and such committees shall have
such powers as shall be specified by vote of the Trustees. Except as the
Trustees may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Trustees or
such rules, its business shall be conducted as nearly as may be in the same
manner as is provided by the declaration of trust for the conduct of
business by the Trustees.
2.13. EXECUTIVE COMMITTEE. The Executive Committee shall consist of three
of the members of the Trustees, which three members shall include the
Chairman of the Trustees, which shall fix its own rules of proceedings and
shall meet where and as provided by such rules of proceeding or by
resolution of the Trustees, and at every meeting the presence of a majority
<PAGE> 81
shall be necessary to constitute a quorum. All action by the Executive
Committee shall be reported to the Trustees at its meeting next succeeding
such action. The Chairman of the Trustees shall be Chairman of the
Executive Committee and preside at its meetings. During the intervals
between the meetings of the Trustees, the Executive Committee shall possess
and may exercise all the powers of the Trustees in the management and
direction of the business and conduct the affairs of the Company, in such
manner as the Executive Committee shall deem best for the interest of the
Company, except the election of Trustees and members of the Executive
Committee and the declaration of dividends.
Section 3. OFFICERS AND AGENTS
3.1. ENUMERATION; QUALIFICATION. The officers of the Company shall be a
president, a treasurer and a secretary and any other officers, including a
chairman of the Trustees, as the Trustees may from time to time in their
discretion elect or appoint. The Trustees may likewise from time to time
appoint or employ or authorize the appointment or employment of agents,
employees or representatives of the Company, may fix their compensation,
term of employment, duties and powers, or authorize the same to be fixed,
and may remove them or terminate their employment or authorize the same to
be done. The secretary shall be a resident of Massachusetts unless the
Company has a resident agent appointed for the purpose of service of
process. Any action taken and any obligations entered into by such officers
or agents on behalf of the Company pursuant to authority granted to them
shall be binding upon the Trust estate. The Trustees may fix the
compensation and duties and powers of the officers or authorize the same to
be fixed. Any officer may be but need not be a Shareholder or Trustee and
any two or more offices may be held by the same person. Any officer may be
required by the Trustees to give bond for the faithful performance of his or
her duties to the Company in such amounts and with such sureties as the
Trustees may determine.
3.2. RESIGNATION AND REMOVALS. Any officer may resign at any time by
delivering his or her resignation in writing to the chairman of the
Trustees, if any, the president, the treasurer or the secretary or to a
meeting of the Trustees. Such resignation shall be effective upon its
receipt unless specified to be effective at some other time. The Trustees
may remove any officer elected or appointed by them with or without cause by
the vote of a majority of the Trustees then in office. An officer may be
removed for cause only after reasonable notice and opportunity to be heard
before the Trustees. Except where a right to receive compensation shall be
expressly provided in a duly authorized written agreement with the Company,
no officer resigning or removed shall have any right to any compensation as
such officer for any period following his or her resignation or removal, or
any right to damages on account of such removal, whether his or her
compensation be by the month or by the year or otherwise, unless the
Trustees shall in their discretion provide for compensation.
3.3. POWERS. Subject to law, to the Declaration of Trust, and the other
provisions of these By-laws, unless and until the Trustees otherwise
determine, the several officers shall have the authority and perform the
duties usually incident to their respective offices in the case of
corporations and such other duties and powers as the Trustees may from time
to time designate.
3.4. ELECTION. The chairman of the Trustees, if any, and the president,
treasurer and secretary shall be elected annually by the Trustees at their
<PAGE> 82
first meeting following the annual meeting of the stockholders. Other
officers, if any, may be elected or appointed by the Trustees at said
meeting or at any other time. If the office of the president or the
treasurer or secretary becomes vacant, the Trustees may elect a successor by
vote of a majority of the Trustees then in office. If the office of any
other officer becomes vacant, the Trustees may elect a successor by vote of
a majority of the Trustees present. Each such successor shall hold office
until his or her successor is chosen and qualified, or until such officer
sooner dies, resigns, is removed or becomes disqualified.
3.5. TENURE. The chairman of the trustees, the president, the treasurer
and the secretary shall continue in office until the first meeting of the
Trustees following the next succeeding annual meeting of the Shareholders or
the special meeting of the Shareholders held in lieu of such annual meeting,
and until his or her successor, if any, is chosen and qualified, and other
officers shall hold office until any such officer sooner dies, resigns, is
removed or becomes disqualified. Each agent shall retain his or her
authority at the pleasure of the Trustees.
3.6. CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE TRUSTEES, PRESIDENT AND VICE
PRESIDENTS. The Trustees shall designate either the chairman of the
Trustees or the president as the chief executive officer of the Company who
shall have general charge and supervision of the business of the Company,
subject to the control of the Trustees.
The president, if not designated as the chief executive officer, and
any vice presidents shall have the duties and powers as shall be designated
by the Trustees from time to time or the chief executive officer of the
Company.
3.7. TREASURER AND ASSISTANT TREASURERS. The treasurer shall be in charge
of the Company's funds and valuable papers, books of account and accounting
records and shall have such other duties and powers as may be designated
from time to time by the Trustees or by the chief executive officer of the
Company.
Any assistant treasurer shall have such duties and powers as shall be
designated from time to time by the Trustees or the chief executive officer
of the Company.
3.8. SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record all
proceedings of the Shareholders in a book or series of books to be kept
therefor, which book or books shall be kept in the principal office of the
Company or at the office of its transfer agent or of its secretary and shall
be open at all reasonable times to the inspection of any shareholder. In
the absence of the secretary from any meeting of Shareholders, an assistant
secretary, or if there be none or the assistant secretary be absent, a
temporary secretary chosen at the meeting, shall record the proceedings
thereof in the aforesaid book. Unless a transfer agent has been appointed,
the secretary shall keep or cause to be kept the stock and transfer records
of the Company, which shall contain the names and record addresses of all
the Shareholders and the amount of shares held by each. The secretary shall
keep a true record of the proceedings of all meetings of the Trustees and in
the secretary's absence from any such meeting an assistant secretary, or if
there be none or the assistant secretary is absent, a temporary secretary
chosen at the meeting, shall record the proceedings thereof.
Any assistant secretary shall have such duties and powers as shall be
<PAGE> 83
designated from time to time by the Trustees or the chief executive officer
of the Company.
Section 4. CAPITAL STOCK
4.1. STOCK CERTIFICATES. Every Shareholder shall be entitled to receive a
certificate or certificates specifying the number and kind of shares held by
such Shareholder, with such description, if any, as may be necessary to
distinguish them from other shares to which different rights are attached.
Such certificates shall be signed by the chairman, the president or a vice
president and by the treasurer or an assistant treasurer of the Company and
countersigned by the transfer agent, if any, and registered by or on behalf
of the Trustees or by a registrar, if any, and a notation of such
registration shall be endorsed thereon. Such signatures may be facsimiles
if the certificate is signed by a transfer agent or by a registrar other
than a Trustee, officer or employee of the Company. Even though any officer
who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer before such certificate is
issued, such certificate may nevertheless be issued by the Company.
In lieu of issuing share certificates, the Trustees or the transfer
agent may either issue receipts therefor or keep accounts upon the books of
the Company for the record holders of such shares, who shall in either case
be deemed, for all purposes hereunder, to be the holders of certificates for
such shares as if they had accepted such certificates and shall be held to
have expressly assented and agreed to the terms hereof.
4.2. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES. In the event the
Trustees authorized the issuance of share certificates, subject to Section
4.1, a new certificate may be issued to replace any certificate previously
issued, on satisfactory evidence that the said certificate previously issued
has been worn out, mutilated, lost or destroyed and on such terms, if any,
as to indemnity and otherwise, as the Trustees shall deem proper.
Section 5. COMMON SEAL
The seal of the Company shall bear the inscription: BERKSHIRE ENERGY
RESOURCES -- 1998 -- Massachusetts. It may, at any time, be changed by
resolution of the Trustees.
Section 6. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize
the execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts, and other obligations made,
accepted or endorsed on behalf of the Company shall be signed by the
chairman of the Trustees, if any, or by the president or by one or more of
the vice presidents or the treasurer.
Section 7. FISCAL YEAR
Until the Trustees shall change the same, the fiscal year shall begin
on the first day of July in each year.
Section 8. CONTROL SHARE ACQUISITIONS
The provisions of Massachusetts General Laws Chapter 110D as in effect
from time to time shall not apply to control share acquisitions of the
<PAGE> 84
Company.
Section 9. AMENDMENTS
These By-laws may be altered, amended or repealed by vote of the
majority of the Trustees then in office, except with respect to any
provision which by law or by a provision of this trust requires action by
the Shareholders.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Trustees and Officers.
Holdco's Declaration of Trust (the "Declaration Trust") provides that,
to the extent legally permissible, each of Holdco's Trustees and officers
shall be indemnified by the Trust estate against any loss, liability or
expense, including amounts paid in satisfaction of judgments, in compromise
or as fines and penalties, and counsel fees, imposed upon or reasonably
incurred by such person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, in which such
person may be involved or with which such person may be threatened, while in
office or thereafter, by reason of such person's being or having been such a
Trustee or officer, except with respect to any matter as to which such
person shall have been adjudicated in such action, suit or proceeding not to
have acted in good faith in the reasonable belief that his or her action was
in the best interests of Holdco.
In discharging his or her duties, a Trustee or officer of Holdco, when
acting in good faith, shall be fully protected in relying upon the books of
account of Holdco or of another organization in which he or she serves as
contemplated by the indemnification provisions of the Declaration of Trust,
reports made to the Company or to such other organization by any of its
officers or employees or by counsel, accountants, appraisers or other
experts or consultants selected with reasonable care by the Trustees or
similar governing body of such other organization, or upon other records of
the Holdco or of such other organization. The rights of indemnification
provided in the Declaration of Trust shall not be exclusive of or affect any
other rights to which any Trustee or officer may be entitled and such rights
shall inure to the benefit of his or her successors, heirs, executors,
administrators and other legal representatives. As used in this provision,
the terms "Trustee" and "officer" include persons who serve at the request
of Holdco as directors, officers, or trustees of another organization in
which Holdco has any direct or indirect interest as a shareholder, creditor
or otherwise.
Expenses, including counsel fees, reasonably incurred by any
Trustee or officer with respect to the defense or disposition of any action,
suit or proceeding referred to in the indemnification provisions of the
Declaration of Trust may be advanced by Holdco prior to the final
disposition of such action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the recipient to repay such amount unless it
is ultimately determined that he or she is entitled to indemnification.
Nothing contained in this provision shall affect any rights to
indemnification to which Holdco personnel other than Trustees and officers
may be entitled by contract or otherwise under law. No Trustee shall be
<PAGE> 85
obligated to give any bond or other security for the performance of any of
his or her duties.
Holdco maintains a policy of insurance covering Trustees' and
officers' liability and reimbursement of Holdco for indemnification of a
Trustee or officer. The policy covering Trustees' and officers' liability
provides for payment on behalf of a Trustee or officer of any Ultimate Net
Loss (defined to include among other things damages, judgments, settlements,
costs and expenses) arising from claims against such Trustee or officer by
reason of any Wrongful Act (as defined therein) subject to certain
exclusions.
Item 21. Exhibits and Financial Statement Schedules.
The following exhibits are being filed herewith:
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
2.1 Agreement and Plan of Merger dated as of February 19, 1998 (attached
as Appendix A).
3.1.1 Declaration of Trust of Berkshire Energy Resources (attached as
Appendix B).
3.1.2 By-laws of Berkshire Energy Resources (attached as Appendix C).
5.1 Opinion of Rich, May, Bilodeau & Flaherty, P.C. as to the legality of
the securities being issued.*
8.1 Form of Opinion of Rich, May, Bilodeau & Flaherty, P.C. as to certain
federal income tax consequences of the Merger.
13.1 Annual report to Berkshire Gas' shareholders on Form 10-K for the
year ended June 30, 1997 (and Berkshire Gas' Annual Report to
Shareholders for the year ended June 30, 1997 incorporated therein).*
13.2 Berkshire Gas' definitive Proxy Statement filed with SEC on October
3, 1997.*
13.3 Quarterly report to Berkshire Gas' shareholders on Form 10-Q for the
quarter ended September 30, 1997.*
13.4 Quarterly report to Berkshire Gas' shareholders on Form 10-Q for the
quarter ended December 31, 1997.*
23.1 Consent of Rich, May, Bilodeau & Flaherty, P.C. (included in its
Opinions filed as Exhibits 5.1 and 8.1, respectively).
23.2 Consent of Deloitte & Touche, LLP.*
99.1 Form of Proxy.
* Previously filed>
Item 22. Undertakings.
<PAGE> 86
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933 (the "Securities Act"), each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) 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.
(2) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report, to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule14a-3 or Rule 14c-
3 under the Exchange Act; and, where interim financial information required
to be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
(3) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(4) That every prospectus (i) that is filed pursuant to the
immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) That 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
<PAGE> 87
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(6) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, 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.
(7) 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.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pittsfield,
Commonwealth of Massachusetts, on March 13, 1998.
BERKSHIRE ENERGY RESOURCES
/s/ Scott S. Robinson
_____________________________
Scott S. Robinson
President and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed by the following persons in the capacities
indicated on the 13th day of March, 1998.
Signature Capacity
- --------- --------
/s/ Scott S. Robinson
___________________________________
Scott S. Robinson Trustee, President, Chief Executive
Officer (principal executive
officer)
*
___________________________________
Michael J. Marrone Trustee, Vice President, Treasurer,
Chief Financial Officer (principal
financial and accounting officer)
<PAGE> 88
*
___________________________________
Cheryl M. Clark Trustee, Secretary
* By: /s/ Scott S. Robinson
___________________________________
Scott S. Robinson
Attorney-in-Fact
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------ ----------------------- ----
2.1 Agreement and Plan of Merger dated as of
February 19, 1998 (attached as Appendix A).
3.1.1 Declaration of Trust of Berkshire Energy Resources
(attached as Appendix B).
3.1.2 By-laws of Berkshire Energy Resources (attached as
Appendix C).
8.1 Form of Opinion of Rich, May, Bilodeau &
Flaherty, P.C. as to certain federal income
tax consequences of the Merger.
99.1 Form of Proxy.
EXHIBIT 8.1 FORM OF OPINION OF RICH, MAY, BILODEAU & FLAHERTY, P.C.
[RICH, MAY, BILODEAU & FLAHERTY, P.C. LETTERHEAD]
March 13, 1998
The Berkshire Gas Company
115 Cheshire Road
Pittsfield, MA 01201-1879
Re: Certain Federal Income Tax Consequences in Connection with the
Formation of a Holding Company Structure for The Berkshire Gas
Company
<PAGE> 89
Ladies and Gentlemen:
We have acted as counsel to The Berkshire Gas Company, a Massachusetts
gas company ("Berkshire Gas"), in connection with the contemplated formation
of a holding company structure for Berkshire Gas and a related Agreement and
Plan of Merger (the "Merger Agreement") among Berkshire Gas, Berkshire
Energy Resources, a Massachusetts business trust formed by Berkshire Gas
("Holdco"), and Berkshire Gas Mergeco Gas Company, Inc., a Massachusetts gas
company ("Mergeco"). All capitalized terms used herein, unless otherwise
specified, have the meanings assigned to them in the Merger Agreement.
In rendering this opinion, we have examined and relied upon (without
any independent investigation or review thereof) the accuracy and
completeness of the facts, information, covenants and representations
contained in originals or copies, certified or otherwise identified to our
satisfaction, of the Merger Agreement, the Registration Statement on Form S-
4 filed by Holdco with the Securities and Exchange Commission (the
"Registration Statement"), and such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below. In
addition, we have relied upon certain statements and representations made by
executives of Berkshire Gas, as well as other statements, representations
and assumptions. Our opinion is conditioned on, among other things, the
initial and continuing accuracy of such facts, information, covenants,
representations and assumptions.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, the
authenticity of the originals of such documents and that there has been (or
will be by the Effective Time of the Merger) due execution and delivery of
all documents where due execution and delivery are prerequisites to
effectiveness thereof. We have assumed that the Merger will be consummated
pursuant to applicable state law in accordance with the Merger Agreement and
as described in the Registration Statement. We have also assumed that any
representation or statement made "to the best of knowledge" or similarly
qualified is correct without such qualification. As to all matters in which
a person or entity making a representation referred to above has represented
that such person or entity either is not a party to, does not have, or is
not aware of, any plan or intention, understanding or agreement, we have
assumed that there is in fact no such plan, intention, understanding or
agreement.
Based upon and subject to the foregoing, we are of the opinion that
the Merger will be tax-free under section 351 of the Internal Revenue Code
of 1986, as amended (the "Code"). As a result:
1. No gain or loss will be recognized by the holders of Berkshire Gas
Common Stock upon the exchange of their shares of Berkshire Gas Common
Stock solely for Holdco Common Shares pursuant to the Merger.
2. The tax basis of the Holdco Common Shares received pursuant to the
Merger will be the same as the basis of the shares of Berkshire Gas
Common Stock exchanged therefor.
3. The holding period for Holdco Common Shares received pursuant to the
<PAGE> 90
Merger will include the period that the shares of Berkshire Gas Common
Stock exchanged therefor were held by the holder, provided such shares
were a capital asset of the holder.
Our opinion is based upon the Code, Treasury Regulations, Internal
Revenue Service rulings, judicial decisions, and other applicable authority,
all as in effect on the date of this opinion. The legal authorities on
which this opinion is based may be changed at any time. Any such changes
may be retroactively applied and could modify the opinions expressed above.
We disclaim any obligation to notify you or any other person after the date
hereof if any change in fact and/or law should change our opinion with
respect to any matters set forth herein. This opinion does not address any
tax considerations under foreign, state or local laws, or any special tax
considerations applicable to certain holders of Berkshire Gas Common Stock
in light of their particular circumstances, including persons who are not
United States persons, dealers in securities, tax-exempt entities, and
stockholders who do not hold Berkshire Gas Common Stock as "capital assets"
within the meaning of Section 1221 of the Code.
This opinion is rendered solely for your benefit and for the benefit
of holders of Berkshire Gas Common Stock and shall not be relied upon,
circulated or quoted, in whole or in part, by any other party and shall not
be referred to in any report or document furnished to any other party
without our prior written consent. We hereby consent, however, to the
inclusion of this opinion as an exhibit to the Registration Statement and
the reference to this firm under the caption "Certain Federal Income Tax
Consequences" therein.
Very truly yours,
/s/ Rich, May, Bilodeau & Flaherty, P.C.
Rich, May, Bilodeau & Flaherty, P.C.
EXHIBIT 99.1 FORM OF PROXY
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT
The Special Meeting of Shareholders will be held:
DATE: May 8, 1998
LOCATION: OFFICES OF THE BERKSHIRE GAS COMPANY
TIME: 1:00 P.M.
<PAGE> 91
To ensure that your shares are voted on your behalf, please return your
proxy promptly in the enclosed envelope.
/X/ Please mark
votes as in
this example
The Board of Directors recommends a vote FOR Proposal Regarding Plan
of Restructuring.
FOR AGAINST ABSTAIN
Proposal to Approve Plan of / / / / / /
Restructuring to adopt a Holding
Company structure.
MARK HERE / /
TO DISCONTINUE
MULTIPLE
MAILINGS
MARK HERE / /
IF YOU PLAN
TO ATTEND
THE MEETINGS
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please sign name exactly as it appears hereon.
When signing as attorney, agent, guardian, executor, administrator, trustee
or the like, please give your full title as such.
Signature __________________________
Date________________________________
THE BERKSHIRE GAS COMPANY
Proxy for Special Meeting on May 8, 1998
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Franklin M. Hundley, Scott S. Robinson
and Paul L. Gioia and each of them proxies, with power of substitution, to
act and vote in the name of the undersigned, with all the powers that the
undersigned would possess if personally present, on all matters which may
<PAGE> 92
come before the Special Meeting of Shareholders of The Berkshire Gas Company
to be held on May 8, 1998 and any adjournment thereof.
The proxies are hereby authorized and instructed upon the matters
specified in the Notice of Special Meeting as set forth on the reverse side
hereof. IF NO CHOICE IS INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL
VOTE FOR SUCH PROPOSAL. THE PROXIES MAY VOTE IN THEIR DISCRETION ON ANY
OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting dated March 25, 1998 and the related Proxy Statement
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 93
