<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. )
------------------------
MASSACHUSETTS ELECTRIC COMPANY
(NAME OF ISSUER)
NEW ENGLAND ELECTRIC SYSTEM
(NAME OF PERSON FILING STATEMENT)
<TABLE>
<CAPTION>
TITLE CUSIP NUMBER
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<S> <C>
Massachusetts Electric Company, Cumulative Preferred Stock
4.44% Series.................................................... 575634 20 9
4.76% Series.................................................... 575634 30 8
6.99% Series.................................................... 575634 70 4
Preferred Stock-Cumulative, 6.84% Series............................. 575634 80 3
</TABLE>
(TITLE OF CLASS OF SECURITIES) (CUSIP NO. OF CLASS OF SECURITIES)
MICHAEL E. JESANIS
VICE PRESIDENT AND TREASURER
KIRK L. RAMSAUER
ASSOCIATE GENERAL COUNSEL
NEW ENGLAND ELECTRIC SYSTEM
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582-0099
(508) 389-2972
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON
BEHALF OF THE PERSON FILING STATEMENT)
NOVEMBER 7, 1997
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$54,400,000 $10,880
</TABLE>
- ---------------
* Solely for purposes of calculating the filing fee and computed pursuant to
Section 13(e)(3) of the Securities Exchange Act of 1934, as amended, and Rule
0-11(b)(1) thereunder, the transaction value equals the total amount of funds,
excluding fees and other expenses, required to purchase all outstanding shares
of each series of securities listed above pursuant to the Offer described in
the Offer to Purchase and Proxy Statement filed as an Exhibit hereto.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: Not applicable
--------------------------------------------------------------------
Form or Registration No.: Not applicable
--------------------------------------------------------------------
Filing Party: New England Electric System
--------------------------------------------------------------------
Date Filed: November 7, 1997
--------------------------------------------------------------------
</TABLE>
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ITEM 1. SECURITY AND ISSUER.
(a) Incorporated herein by reference to the information appearing on the
front cover of the Offer to Purchase and Proxy Statement, dated November 6,
1997, filed as Exhibit 9(a)(1) to this Issuer Tender Offer Statement on Schedule
13E-4 (the "Offer to Purchase and Proxy Statement").
(b) Incorporated herein by reference to the information appearing on the
front cover of the Offer to Purchase and Proxy Statement, and to the information
appearing under the captions "Terms of the Offer -- Number of Shares; Purchase
Prices; Expiration Date; Dividends" and "Transactions and Agreements Concerning
the Shares" in the Offer to Purchase and Proxy Statement.
(c) Incorporated herein by reference to the information appearing under the
caption "Price Range of Shares; Dividends" in the Offer to Purchase and Proxy
Statement.
(d) New England Electric System, a Massachusetts voluntary association
("NEES"), is the person filing this Statement and is the owner of 100% of the
common stock of the issuer, Massachusetts Electric Company ("Mass. Electric").
NEES' principal office is at 25 Research Drive, Westborough, Massachusetts
01582-0099. The name "New England Electric System" means the trustee or trustees
for the time being (as trustee or trustees but not personally) under an
agreement and declaration of trust dated January 1, 1926, as amended, which is
hereby referred to, and a copy of which as amended has been filed with the
Secretary of the Commonwealth of Massachusetts. Any agreement, obligation or
liability made, entered into or incurred by or on behalf of New England Electric
System binds only its trust estate, and no shareholder, director, trustee,
officer or agent thereof assumes or shall be held to any liability therefore.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Incorporated herein by reference to the information appearing under
the caption "Source and Amount of Funds" in the Offer to Purchase and Proxy
Statement.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE
Incorporated herein by reference to the information appearing under the
caption "Purpose of the Offer, Proposed Amendment, and Proxy Solicitation," and
"Terms of the Offer -- Certain Effects of the Offer" in the Offer to Purchase
and Proxy Statement.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Incorporated herein by reference to the information appearing under the
caption "Transactions and Agreements Concerning the Shares" in the Offer to
Purchase and Proxy Statement.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
Incorporated herein by reference to the information appearing under the
caption "Transactions and Agreements Concerning the Shares" in the Offer to
Purchase and Proxy Statement.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Incorporated herein by reference to the information appearing under the
caption "Fees and Expenses Paid to Dealers" in the Offer to Purchase and Proxy
Statement.
1
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ITEM 7. FINANCIAL INFORMATION.
(a) Incorporated herein by reference to the financial statements included
in the Annual Report on Form 10-K for the year ended December 31, 1996 and the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 of Mass.
Electric and to the information appearing under the caption "Summary of
Financial Information" in the Offer to Purchase and Proxy Statement.
(b) Not applicable.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) Incorporated herein by reference to the information appearing under the
caption "Terms of the Offer -- Certain Conditions of the Offer" in the Offer to
Purchase and Proxy Statement.
(c) Not applicable.
(d) Not applicable.
(e) See Exhibits 9(a)(1) and 9(a)(2).
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------
<S> <C>
9(a)(1) Offer to Purchase and Proxy Statement, dated November 6, 1997.
9(a)(2) Forms of Letter of Transmittal and Proxy for Dividend Series Preferred Stock
and Preferred Stock -- Cumulative.
9(a)(3) Notice of Guaranteed Delivery and Proxy.
9(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies, and other
Nominees.
9(a)(5) Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies, and
other Nominees.
9(a)(6) Forms of Letters to Shareholders for Dividend Series Preferred Stock and
Preferred Stock -- Cumulative, dated November 6, 1997.
9(a)(7) Summary Instructions for Participating in the Offer.
9(a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
9(b) Not applicable.
9(c) Not applicable.
9(d) Tax Opinion of Hale and Dorr LLP
9(e) Not applicable.
9(f) Not applicable.
9(g) Annual Report on Form 10-K for the year ended December 31, 1996 (incorporated
by reference).
9(h) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (incorporated
by reference).
</TABLE>
2
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 7, 1997
NEW ENGLAND ELECTRIC SYSTEM
By: /s/ MICHAEL E. JESANIS
------------------------------------
Vice President and Treasurer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------
<S> <C>
9(a)(1) Offer to Purchase and Proxy Statement, dated November 6, 1997.
9(a)(2) Forms of Letter of Transmittal and Proxy for Dividend Series Preferred Stock
and Preferred Stock -- Cumulative.
9(a)(3) Notice of Guaranteed Delivery and Proxy.
9(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies, and other
Nominees.
9(a)(5) Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies, and
other Nominees.
9(a)(6) Forms of Letters to Shareholders for Dividend Series Preferred Stock and
Preferred Stock -- Cumulative, dated November 6, 1997.
9(a)(7) Summary Instructions for Participating in the Offer.
9(a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
9(b) Not applicable.
9(c) Not applicable.
9(d) Tax Opinion of Hale and Dorr LLP
9(e) Not applicable.
9(f) Not applicable.
9(g) Annual Report on Form 10-K for the year ended December 31, 1996 (incorporated
by reference).
9(h) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (incorporated
by reference).
</TABLE>
<PAGE> 1
OFFER TO PURCHASE AND PROXY STATEMENT
LOGO
NEW ENGLAND ELECTRIC SYSTEM
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF PREFERRED STOCK OF
MASSACHUSETTS ELECTRIC COMPANY
75,000 SHARES, DIVIDEND SERIES PREFERRED STOCK, $100 PAR VALUE, 4.44% SERIES AT
A PURCHASE PRICE OF $87.92 PER SHARE CUSIP NUMBER 575634 20 9
75,000 SHARES, DIVIDEND SERIES PREFERRED STOCK, $100 PAR VALUE, 4.76% SERIES AT
A PURCHASE PRICE OF $94.26 PER SHARE CUSIP NUMBER 575634 30 8
200,000 SHARES, DIVIDEND SERIES PREFERRED STOCK, $100 PAR VALUE, 6.99% SERIES AT
A PURCHASE PRICE OF $120.73 PER SHARE CUSIP NUMBER 575634 70 4
600,000 SHARES, PREFERRED STOCK -- CUMULATIVE, $25 PAR VALUE, 6.84% SERIES AT A
PURCHASE PRICE OF $27.00 PER SHARE CUSIP NUMBER 575634 80 3
------------------------
MASSACHUSETTS ELECTRIC COMPANY
PROXY STATEMENT
25 RESEARCH DRIVE, WESTBOROUGH, MASSACHUSETTS 01582
SPECIAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1997
------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD
TIME, ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED.
------------------------
New England Electric System, a Massachusetts voluntary association (NEES),
invites the holders of each series of Preferred Stock listed above (each a
Series of Preferred or a Series, and each holder thereof a Preferred
Shareholder) of Massachusetts Electric Company, a Massachusetts corporation and
direct utility subsidiary of NEES (Mass. Electric or the Company), to tender any
and all of their shares of any Series of Preferred (the Shares) for purchase at
the purchase price per Share listed above, plus accrued dividends, net to the
seller in cash, upon the terms and subject to the conditions set forth in this
Offer to Purchase and Proxy Statement (the Booklet) and in the accompanying
Letter of Transmittal and Proxy (which together constitute the Offer). NEES will
purchase all Shares validly tendered and not withdrawn, upon the terms and
subject to the conditions of the Offer. See Terms of the Offer -- Certain
Conditions of the Offer and Terms of the Offer -- Extension of Tender Period;
Termination; Amendments.
THE OFFER FOR A SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF ANY SERIES BEING TENDERED AND EACH IS INDEPENDENT OF THE
OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER, HOWEVER, IS CONDITIONED
UPON, AMONG OTHER THINGS, THE APPROVAL AND ADOPTION OF THE PROPOSED AMENDMENT,
AS DESCRIBED BELOW, AT THE SPECIAL MEETING OF SHAREHOLDERS. SEE TERMS OF THE
OFFER -- CERTAIN CONDITIONS OF THE OFFER.
Concurrently with the Offer, the Board of Directors of Mass. Electric is
soliciting proxies from the Preferred Shareholders for use at the Special
Meeting of Shareholders of Mass. Electric to be held at Mass. Electric's
principal office, 25 Research Drive, Westborough, Massachusetts, on December 12,
1997 at 4:30 p.m., Eastern Standard Time, or any adjournment or postponement of
such meeting (the Special Meeting). The Special Meeting is being held to
consider an amendment (the Proposed Amendment) to Mass. Electric's By-Laws and
Articles of Organization (the Provisions), which would remove from the
Provisions a limitation on Mass. Electric's ability to issue unsecured debt
without the prior approval of the Preferred Shareholders. PREFERRED SHAREHOLDERS
WHO WISH TO TENDER THEIR SHARES MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT.
THE OFFER IS FURTHER CONDITIONED UPON THE APPROVAL AND ADOPTION OF THE PROPOSED
AMENDMENT AT THE SPECIAL MEETING. IF THE PROPOSED AMENDMENT IS APPROVED AND
ADOPTED BY MASS. ELECTRIC'S PREFERRED SHAREHOLDERS, MASS. ELECTRIC WILL MAKE A
SPECIAL CASH PAYMENT (AS DEFINED HEREIN) IN THE AMOUNT OF $1.00 PER SHARE TO
EACH DIVIDEND SERIES PREFERRED SHAREHOLDER AND $0.25 PER SHARE TO EACH PREFERRED
STOCK -- CUMULATIVE SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT,
BUT DID NOT TENDER SUCH SHARES PURSUANT TO THE OFFER. THOSE PREFERRED
SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE
PURCHASE PRICE PER SHARE LISTED ABOVE BUT NOT THE SPECIAL CASH PAYMENT.
------------------------
MASS. ELECTRIC'S BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE PROPOSED
AMENDMENTS.
------------------------
This Booklet is first being mailed to Preferred Shareholders on or about
November 7, 1997.
------------------------
The Company will pay to a Soliciting Dealer (as defined herein) a
solicitation fee for any Shares tendered, accepted for payment, and paid for
pursuant to the Offer and for each Share not tendered but voted in favor of the
Proposed Amendment, subject to certain conditions. See Fees and Expenses Paid to
Dealers.
------------------------
NEITHER NEES, MASS. ELECTRIC, THEIR RESPECTIVE BOARDS OF DIRECTORS, ANY OF
THEIR RESPECTIVE OFFICERS, NOR ANY OTHER PERSON AUTHORIZED BY THEM MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL
SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
------------------------
Each Series of Preferred is traded in the over-the-counter market (the OTC)
and is not listed on any national securities exchange. Through October 31, 1997,
the last reported sales prices for the 4.44% Series, the 4.76% Series, the 6.99%
Series, and the 6.84% Series were $68.00, $73.05, $108.50, and $24.75,
respectively, as reported by the Nasdaq Stock Market, Inc. Preferred
Shareholders are urged to obtain a current market quotation, if available, for
their Shares.
------------------------
Questions or requests for assistance may be directed to Georgeson & Company,
Inc. (Georgeson or the Information Agent) or to Merrill Lynch & Co. (Merrill
Lynch or the Dealer Manager) at their respective telephone numbers and addresses
set forth on the back cover of this Booklet. Requests for additional copies of
this Booklet, the Letter of Transmittal and Proxy, or other tender offer or
proxy materials may be directed to the Information Agent, and such copies will
be furnished promptly at Mass. Electric's expense. Preferred Shareholders may
also contact their local broker, dealer, commercial bank, or trust company for
assistance concerning the Offer.
------------------------
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
November 6, 1997
<PAGE> 2
IMPORTANT
Any Preferred Shareholder desiring to accept the Offer and tender any or
all Shares should, on or prior to the Expiration Date (as defined below), either
(i) request such Preferred Shareholder's broker, dealer, commercial bank, trust
company, or other nominee to effect the transaction for such Preferred
Shareholder pursuant to the procedure for book-entry transfer set forth below
under Terms of the Offer -- Procedure for Tendering Shares, or (ii) complete
and sign the Letter of Transmittal and Proxy in accordance with the instructions
in the Letter of Transmittal and Proxy, and mail or deliver it, the certificates
for such Shares, and any other required documents to IBJ Schroder Bank & Trust
Company (the Depositary). A Preferred Shareholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company, or other nominee
must contact such broker, dealer, commercial bank, trust company, or other
nominee if such Preferred Shareholder desires to tender such Shares. Any
Preferred Shareholder who desires to tender Shares and whose certificates for
such Shares are not immediately available, or who cannot comply in a timely
manner with the procedure for book-entry transfer, should tender such Shares by
following the procedures for guaranteed delivery set forth below under Terms of
the Offer -- Procedure for Tendering Shares -- Guaranteed Delivery Procedure.
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY FOR SUCH SERIES OF PREFERRED
OR A NOTICE OF GUARANTEED DELIVERY MAY BE USED TO TENDER SHARES OF SUCH SERIES
OF PREFERRED.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY NEES OR MASS. ELECTRIC.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
SUMMARY............................................................................... 4
PURPOSE OF THE OFFER, PROPOSED AMENDMENT, AND PROXY SOLICITATION...................... 7
Proposed Amendment.................................................................. 7
Purpose of the Offer................................................................ 7
TERMS OF THE OFFER.................................................................... 7
Number of Shares; Purchase Prices; Expiration Date; Dividends....................... 7
Procedure for Tendering Shares...................................................... 8
Withdrawal Rights................................................................... 10
Acceptance of Shares for Payment and Payment of Purchase Price and Dividends........ 10
Certain Conditions of the Offer..................................................... 11
Extension of Tender Period; Termination; Amendments................................. 13
Certain Effects of the Offer........................................................ 13
Other Information................................................................... 15
PROPOSED AMENDMENT AND PROXY SOLICITATION............................................. 16
Notice of Special Meeting of Stockholders........................................... 16
Special Meeting..................................................................... 17
Proxies............................................................................. 17
Relationship to the Offer; Special Cash Payment..................................... 17
Voting Securities, Rights and Procedures............................................ 17
Security Ownership of Certain Beneficial Owners and Management...................... 18
DESCRIPTION OF THE PROPOSED AMENDMENT................................................. 19
Explanation of the Proposed Amendment............................................... 19
Reasons for the Proposed Amendment.................................................. 20
Recommendation of Board of Directors................................................ 20
Certain Effects of the Proposed Amendment........................................... 21
Other Matters....................................................................... 21
PRICE RANGE OF SHARES; DIVIDENDS...................................................... 22
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS........................................ 23
Tax Considerations for Tendering Preferred Shareholders............................. 23
Tax Considerations for Non-Tendering Preferred Shareholders......................... 24
Tax Considerations of Accrued and Unpaid Dividends Payment.......................... 24
Tax Considerations of Special Cash Payment.......................................... 24
Backup Withholding.................................................................. 25
SOURCE AND AMOUNT OF FUNDS............................................................ 25
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES..................................... 25
FEES AND EXPENSES PAID TO DEALERS..................................................... 26
Dealer Manager Fees................................................................. 26
Solicited Tender Fees............................................................... 26
Stock Transfer Taxes................................................................ 27
SUMMARY OF FINANCIAL INFORMATION...................................................... 28
CERTAIN INFORMATION REGARDING NEES AND MASS. ELECTRIC; INCORPORATION BY REFERENCE..... 29
MISCELLANEOUS......................................................................... 30
</TABLE>
3
<PAGE> 4
SUMMARY
The following summary is provided solely for the convenience of the
Preferred Shareholders. This summary is not intended to be complete and is
qualified in its entirety by reference to the full text and more specific
details contained in this Booklet and the Letter of Transmittal and Proxy and
any amendments hereto or thereto. Preferred Shareholders are urged to read these
documents in their entirety. Each of the capitalized terms used in this summary
and not defined herein has the meaning set forth elsewhere in this Booklet.
The Companies.............. NEES, 25 Research Drive, Westborough, Massachusetts
01582, is a registered holding company under the
Public Utility Holding Company Act of 1935, as
amended (the Holding Company Act), which owns,
directly or indirectly, all of the outstanding
common stock of its electric utility subsidiaries,
including Mass. Electric. The service area of NEES'
electric utility subsidiaries covers portions of
Massachusetts, New Hampshire, and Rhode Island. The
name "New England Electric System" means the
trustee or trustees for the time being (as trustee
or trustees but not personally) under an agreement
and declaration of trust dated January 2, 1926, as
amended, which is hereby referred to, and a copy of
which as amended has been filed with the Secretary
of the Commonwealth of Massachusetts. Any
agreement, obligation or liability made, entered
into or incurred by or on behalf of New England
Electric System binds only its trust estate, and no
shareholder, director, trustee, officer or agent
thereof assumes or shall be held to any liability
therefor.
Mass. Electric, 25 Research Drive, Westborough,
Massachusetts 01582, is a retail electric utility
incorporated and doing business solely in
Massachusetts. Electric service is provided to
approximately 960,000 customers in 146 cities and
towns having a population of approximately
2,160,000.
The Shares................. 4.44% Dividend Series Preferred Stock, $100 par
value,
CUSIP Number 575634 20 9
4.76% Dividend Series Preferred Stock, $100 par
value,
CUSIP Number 575634 30 8
6.99% Dividend Series Preferred Stock, $100 par
value,
CUSIP Number 575634 70 4
6.84% Preferred Stock - Cumulative, $25 par value,
CUSIP Number 575634 80 3
The Offer and Purchase
Price...................... Offer to purchase any or all shares of each Series
of Preferred listed below at the price set forth
below.
$87.92 for 4.44% Series
$94.26 for 4.76% Series
$120.73 for 6.99% Series
$27.00 for 6.84% Series
Dividends.................. NEES will pay to tendering Preferred Shareholders
any accrued dividends through the Expiration Date
(as defined herein).
Independent Offer.......... The Offer for a Series of Preferred is not
conditioned upon any minimum number of Shares of
any Series being tendered and each is independent
of the Offer for any other Series of Preferred. The
Offer, however, is conditioned upon, among other
things, the approval and adoption of the Proposed
Amendment, as described below, at the Special
Meeting. See Terms of the Offer -- Certain
Conditions of the Offer. It is a condition to the
Offer that Preferred Shareholders who tender their
Shares must vote
4
<PAGE> 5
in favor of the Proposed Amendment. NEES will not
be required to accept or pay for tendered Shares if
the Proposed Amendment is not approved and unless
certain other conditions are met.
Expiration Date of the
Offer...................... The Offer expires at 5:00 p.m., Eastern Standard
Time, on December 12, 1997, unless extended (the
Expiration Date).
How to Tender Shares....... See Terms of the Offer -- Procedure for Tendering
Shares. For further information, call the
Information Agent or the Dealer Manager or consult
your broker for assistance.
Withdrawal Rights.......... Tendered Shares of any Series of Preferred may be
withdrawn at any time until the Expiration Date
with respect to such Series of Preferred and,
unless previously accepted for payment, may also be
withdrawn after January 12, 1998. See Terms of the
Offer -- Withdrawal Rights. A withdrawal of a
tender does not in and of itself revoke a proxy.
Purpose of the Offer....... NEES is making the Offer because NEES believes that
the purchase of Shares is economically attractive
to Mass. Electric and indirectly to NEES and its
shareholders. In addition, the Offer gives
Preferred Shareholders the opportunity to sell
their Shares at a price which NEES believes to be a
premium over the market price and without the usual
transaction costs associated with a market sale.
See Purpose of the Offer, Proposed Amendment, and
Proxy Solicitation -- Purpose of the Offer; and
Terms of the Offer -- Certain Effects of the Offer.
Certain Effects of the
Offer...................... Preferred Shareholders should consider carefully
the possible effects of consummation of the Offer
on the liquidity of any Shares which are not
tendered and on voting power and redemption rights.
See Purpose of the Offer, Proposed Amendment, and
Proxy Solicitation -- Other Information and Terms
of the Offer -- Voting Power.
Brokerage Commissions...... Not payable by Preferred Shareholders.
Solicitation Fee........... NEES will pay to each designated Soliciting Dealer
(as defined herein) a solicitation fee of (i) $1.50
per Share for any Dividend Series Preferred Stock
and (ii) $0.375 per Share for any Preferred
Stock -- Cumulative tendered, accepted for payment,
and paid for pursuant to the Offer and for each
Share not tendered but voted in favor of the
Proposed Amendment (except that for transactions
for beneficial owners equal to or exceeding 2,500
Shares of all Series of Preferred combined, NEES
will pay a solicitation fee of (i) $1.00 per Share
for any Dividend Series Preferred Shares and (ii)
$0.25 per Share for any Preferred Stock --
Cumulative Shares, of which at least eighty percent
(80%) shall be paid to the Dealer Manager). A
Soliciting Dealer will not be entitled to a
solicitation fee for Shares beneficially owned by
such Soliciting Dealer. See Fees and Expenses Paid
to Dealers -- Solicited Tender Fees.
Proposed Amendment......... Concurrently with the Offer, the Board of Directors
of Mass. Electric is soliciting proxies from the
Preferred Shareholders for use at the Special
Meeting. The Special Meeting is being held to
consider the Proposed Amendment to the Provisions
which would remove a provision that limits Mass.
Electric's ability to issue unsecured debt. If the
Proposed Amendment is approved by the Preferred
Shareholders, Mass. Electric's ability to issue or
assume unsecured indebtedness will no longer be
subject to approval of any Shares that remain
outstanding after the consummation of the Offer.
See Purpose of the Offer, Proposed Amend-
5
<PAGE> 6
ment, and Proxy Solicitation -- Purpose of the
Offer; and Proposed Amendment and Proxy
Solicitation -- Certain Effects of the Proposed
Amendment.
Record Date................ November 12, 1997.
Special Cash Payment....... Preferred Shareholders of record who do not tender
their Shares have the right to vote for or against
the Proposed Amendment. If the Proposed Amendment
is approved and adopted by Mass. Electric's
Preferred Shareholders, Mass. Electric will make a
Special Cash Payment of $1.00 per Share to each
Dividend Series Preferred Shareholder and $0.25 per
Share to each Preferred Stock -- Cumulative
Shareholder who voted in favor of the Proposed
Amendment but who did not tender such Shares (the
Special Cash Payment). Preferred Shareholders who
validly tender their Shares will be entitled only
to the purchase price per Share listed on the front
cover of this Booklet plus an amount in cash
equivalent to any dividends accrued through the
Expiration Date (as defined herein).
Stock Transfer Tax......... Except as described herein, NEES will pay or cause
to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its
order pursuant to the Offer. See Instruction 6 of
the applicable Letter of Transmittal and Proxy. See
Terms of the Offer -- Acceptance of Shares for
Payment and Payment of Purchase Price and
Dividends.
Payment Date............... Promptly after the Expiration Date or any extension
thereof.
Further Information........ Additional copies of this Booklet and the
applicable Letter of Transmittal and Proxy may be
obtained by contacting Georgeson, Wall Street
Plaza, New York, New York 10005, telephone (800)
223-2064 (toll-free) and (212) 440-9800 (banks and
brokers). Questions about the Offer should be
directed to Merrill Lynch at (888) ML4-TNDR
(toll-free) ((888)-654-8637 (toll-free)).
6
<PAGE> 7
PURPOSE OF THE OFFER, PROPOSED AMENDMENT,
AND PROXY SOLICITATION
The Offer and the Proposed Amendment constitute an integrated strategic
response by NEES and Mass. Electric to the need to achieve greater flexibility
in their financing.
PURPOSE OF THE OFFER
NEES believes that the purchase of the Shares at this time in conjunction
with the Proposed Amendment represents an attractive economic opportunity that
will benefit NEES, its shareholders, Mass. Electric, and Mass. Electric's
utility customers by (1) contributing to the elimination of the provisions
concerning unsecured indebtedness and (2) retiring of outstanding Shares of
Mass. Electric's Preferred Stock in contemplation of their potential replacement
with comparatively less expensive financing alternatives.
In addition, the Offer gives Preferred Shareholders the opportunity to sell
their Shares at a price which NEES believes to be a premium to the market price
on the date of the announcement of the Offer and without the usual transaction
costs associated with such a sale.
PROPOSED AMENDMENT
In order to increase its financial flexibility and to better face the
challenges of a competitive electric industry, and as discussed further under
Proposed Amendment and Proxy Solicitation -- Reasons for the Proposed Amendment,
Mass. Electric seeks to amend the Provisions to eliminate the limitation on the
Company's ability to issue unsecured debt without the approval of a majority
vote of the holders of the Preferred, voting together as a single class.
TERMS OF THE OFFER
NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS
Upon the terms and subject to the conditions described herein and in the
applicable Letter of Transmittal and Proxy, NEES will purchase any and all
Shares that are validly tendered on or prior to the Expiration Date (and not
properly withdrawn in accordance with the procedures set forth under Withdrawal
Rights) at the purchase price per Share listed on the front cover of this
Booklet for the Shares tendered, plus accrued dividends for the Shares tendered
through the Expiration Date, net to the seller in cash. See Certain Conditions
of the Offer and Extension of Tender Period; Termination; Amendments.
THE OFFER FOR A SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES BEING TENDERED AND IS INDEPENDENT OF THE OFFER
FOR ANY OTHER SERIES. THE OFFER, HOWEVER, IS CONDITIONED UPON, AMONG OTHER
THINGS, APPROVAL AND ADOPTION OF THE PROPOSED AMENDMENT, AS DESCRIBED HEREIN, AT
THE SPECIAL MEETING. SEE CERTAIN CONDITIONS OF THE OFFER.
The Offer is being sent to all persons in whose names Shares are registered
on the books of Mass. Electric as of the close of business on November 6, 1997,
as well as to all persons in whose names Shares are registered on November 12,
1997, the Record Date. Only a record holder of Shares on the Record Date may
vote in person or by proxy at the Special Meeting. No record date is fixed for
determining which persons are permitted to tender Shares. Any person who is the
beneficial owner but not the record holder of Shares on the Record Date must
arrange for the record transfer of such Shares prior to tendering. The Shares
will trade "with proxy" during the period which begins two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
as further discussed under Proposed Amendment and Proxy Solicitation -- Voting
Securities, Rights and Procedures.
With respect to each Series, the Expiration Date is the later of 5:00 p.m.,
Eastern Standard Time, on Friday, December 12, 1997 or the latest time and date
to which the Offer with respect to such Series of
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<PAGE> 8
Preferred is extended. NEES expressly reserves the right, in its sole
discretion, and at any time and/or from time to time, to extend the period of
time during which the Offer for any Series is open, by giving oral or written
notice of such extension to the Depositary and making a public announcement
thereof, without extending the period of time during which the Offer for any
other Series is open. There is no assurance whatsoever that NEES will exercise
its right to extend the Offer for any Series. If NEES decides, in its sole
discretion, to (i) decrease the number of Shares of any Series being sought,
(ii) increase or decrease the consideration offered in the Offer to holders of
any Series, or (iii) increase or decrease the Soliciting Dealers' fees and, at
the time that notice of such increase or decrease is first published, sent, or
given to holders of such Series in the manner specified herein, the Offer for
such Series is scheduled to expire at any time earlier than the tenth business
day from the date that such notice is first so published, sent, or given, such
Offer will be extended until the expiration of such ten-business-day period. For
purposes of the Offer, a business day means any day other than a Saturday,
Sunday, or Federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, Eastern Standard Time.
NO ALTERNATIVE, CONDITIONAL, OR CONTINGENT TENDERS WILL BE ACCEPTED.
NEES will pay to tendering Preferred Shareholders any accrued dividends
through the Expiration Date.
PROCEDURE FOR TENDERING SHARES
To tender Shares of any Series of Preferred pursuant to the Offer, the
tendering owner of Shares must either:
(a) send to the Depositary (at one of its addresses set forth on the
back cover of this Booklet) a properly completed and duly executed Letter
of Transmittal and Proxy, together with any required signature guarantees
and any other documents required by the Letter of Transmittal and Proxy
(and either (i) tender certificates for the Shares to the Depositary at one
of its addresses or (ii) deliver such Shares pursuant to the procedures for
book-entry transfer described herein (and a confirmation of such delivery
must be received by the Depositary (a Book-Entry Confirmation)), in each
case on or prior to the Expiration Date); or
(b) comply with the guaranteed delivery procedure described under
Guaranteed Delivery Procedure below.
A tender of Shares made pursuant to any method of delivery set forth herein
or in the Letter of Transmittal and Proxy will constitute a binding agreement
between the tendering holder and NEES upon the terms and subject to the
conditions of the Offer.
The Depositary will establish an account with respect to the Shares of each
Series of Preferred at The Depository Trust Company and the Philadelphia
Depository Trust Company (each a Book-Entry Transfer Facility) for purposes of
the Offer within two business days after the date of this Booklet, and any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make delivery of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the procedures of the Book-Entry Transfer Facility. Although delivery of
Shares may be effected through book-entry transfer, such delivery must be
accompanied by either (i) a properly completed and duly executed Letter of
Transmittal and Proxy, together with any required signature guarantees and any
other required documents or (ii) an Agent's Message (as hereinafter defined)
and, in any case, must be received by the Depositary at one of its addresses set
forth on the back cover of this Booklet on or prior to the Expiration Date.
DELIVERY OF SUCH LETTER OF TRANSMITTAL AND PROXY AND ANY OTHER REQUIRED
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY OR TO NEES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility, received by the Depositary, and forms a part of the
Book-Entry Confirmation when the tender is initiated, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant in such Book-Entry Transfer Facility tendering Shares that the
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and Proxy and that NEES may enforce such agreement against the
participant.
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<PAGE> 9
Except as otherwise provided below, all signatures on a Letter of
Transmittal and Proxy must be guaranteed by a firm that is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc. (the NASD), or by a commercial bank or trust company
having an office or correspondent in the United States that is a participant in
an approved Signature Guarantee Medallion Program (each of the foregoing being
referred to as an Eligible Institution). Signatures on a Letter of Transmittal
and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is
signed by the registered owner of the Shares tendered therewith and such owner
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy
or (b) such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal and Proxy. If Shares are
registered in the name of a person other than the signatory on the Letter of
Transmittal and Proxy, or if unpurchased Shares are to be issued to a person
other than the registered holder(s), the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holder(s) appear on the Shares with the
signature(s) on the Shares or stock powers guaranteed as stated above. See
Instructions 4, 6, and 7 to the Letter of Transmittal and Proxy.
Guaranteed Delivery Procedure. If a Preferred Shareholder desires to
tender Shares pursuant to the Offer and such Shareholder's certificates are not
immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary on or prior to the Expiration Date, such Shares may
nevertheless be tendered if all of the following guaranteed delivery procedures
are complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by NEES and Mass. Electric
herewith, is received (with any required signatures or signature
guarantees) by the Depositary as provided below on or prior to the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
and any other documents required by the Letter of Transmittal and Proxy,
are received by the Depositary no later than three New York Stock Exchange,
Inc. (NYSE) trading days after the date of execution of such Notice of
Guaranteed Delivery. A NYSE trading day is any day on which the NYSE is
open for business.
The Notice of Guaranteed Delivery may be either delivered by hand or mailed
to the Depositary and must include an endorsement by an Eligible Institution in
the form set forth in such Notice of Guaranteed Delivery.
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal and Proxy or, if applicable,
an Agent's Message, is received by the Depositary.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or an Agent's Message with
respect to) such Shares, a Letter of Transmittal and Proxy, properly completed
and duly executed, with any required signature guarantees, and all other
documents required by the Letter of Transmittal and Proxy.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT
IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A
TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING PREFERRED
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<PAGE> 10
SHAREHOLDER WHO IS A UNITED STATES PERSON MUST NOTIFY THE DEPOSITARY OF THE
CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY
PROPERLY COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER
OF TRANSMITTAL AND PROXY (OR, IN THE CASE OF A FOREIGN SHAREHOLDER, FORM W-8
OBTAINABLE FROM THE DEPOSITARY). SEE CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS.
EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH SUCH PREFERRED
SHAREHOLDER'S OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER.
All questions as to the form of documents and the validity, eligibility
(including the time of receipt), and acceptance for payment of any tender of
Shares will be determined by NEES, in its sole discretion, and its determination
will be final and binding. NEES reserves the absolute right to reject any or all
tenders of Shares that (i) it determines are not in proper form or (ii) the
acceptance for payment of or payment for which may, in the opinion of NEES's
counsel, be unlawful. NEES also reserves the absolute right to waive any defect
or irregularity in any tender of Shares. None of NEES, Mass. Electric, the
Dealer Manager, the Depositary, the Information Agent, or any other person will
be under any duty to give notice of any defect or irregularity in tenders, nor
shall any of them incur any liability for failure to give any such notice. Any
condition to the Offer may be waived by NEES, in whole or in part, at any time
and from time to time in its sole discretion.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
on or prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they may be withdrawn after January 12, 1998, unless previously
accepted for payment as provided in this Booklet.
To be effective, a written notice of withdrawal must be timely received by
the Depositary, at one of its addresses set forth on the back cover of this
Booklet, and must specify the name of the person who tendered the Shares to be
withdrawn and the number of Shares to be withdrawn. If the Shares to be
withdrawn have been delivered to the Depositary, a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution (except in the case of
Shares tendered by an Eligible Institution) must be submitted prior to the
release of such Shares. In addition, such notice must specify, in the case of
Shares tendered by delivery of certificates, the name of the registered owner
(if different from that of the tendering Shareholder) and the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn or,
in the case of Shares tendered by book-entry transfer, the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and the name of the registered holder (if different from the
name of such account). Withdrawals may not be rescinded, and Shares withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be re-tendered by again following one of the
procedures described in Terms of the Offer -- Procedure for Tendering Shares at
any time on or prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by NEES, in its sole discretion, and
its determination will be final and binding. None of NEES, Mass. Electric, the
Dealer Manager, the Depositary, the Information Agent, or any other person will
be under any duty to give notification of any defect or irregularity in any
notice of withdrawal or will incur any liability for failure to give any such
notification.
ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS
Upon the terms and subject to the conditions of the Offer, and as promptly
as practicable after the Expiration Date, NEES will accept for payment (and
thereby purchase) and pay for Shares validly tendered and not withdrawn as
permitted in Terms of the Offer -- Withdrawal Rights. Thereafter, payment for
all Shares validly tendered on or prior to the Expiration Date and accepted
pursuant to the Offer will be made by the Depositary by check as promptly as
practicable after the Expiration Date. In all cases, payment for Shares accepted
for payment pursuant to the Offer will be made promptly but only after timely
receipt by the
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<PAGE> 11
Depositary of certificates for such Shares (or an Agent's Message), a properly
completed and duly executed Letter of Transmittal and Proxy, and any other
required documents.
For purposes of the Offer, NEES will be deemed to have accepted for payment
(and thereby purchased) Shares that are validly tendered and not withdrawn as,
if, and when it gives oral or written notice to the Depositary of its acceptance
for payment of such Shares. NEES will pay for Shares that it has purchased
pursuant to the Offer by depositing the purchase price therefor (plus accrued
and unpaid dividends thereon) with the Depositary, which will act as agent for
tendering Preferred Shareholders for the purpose of receiving payment from NEES
and transmitting payment to the tendering Shareholders. Under no circumstances
will interest be paid on amounts to be paid to tendering Preferred Shareholders,
regardless of any delay in making such payment.
Certificates for all Shares not validly tendered will be returned or, in
the case of Shares tendered by book-entry transfer, such Shares will be credited
to an account maintained with the Book-Entry Transfer Facility, as promptly as
practicable, without expense to the tendering Preferred Shareholder.
If certain events occur, NEES may not be obligated to purchase Shares
pursuant to the Offer. See Certain Conditions of the Offer.
NEES will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or Shares not
tendered or not purchased are to be registered in the name of, any person other
than the registered owner, or if tendered Shares are registered in the name of
any person other than the person signing the Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered owner,
such other person, or otherwise) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes, or exemption therefrom, is submitted. See Instruction
6 of the accompanying Letter of Transmittal and Proxy.
CERTAIN CONDITIONS OF THE OFFER
NEES WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES OF
ANY SERIES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE
SPECIAL MEETING OR IF THE TENDERING PREFERRED SHAREHOLDER DID NOT VOTE IN FAVOR
OF THE PROPOSED AMENDMENT.
In addition, notwithstanding any other provision of the Offer, NEES will
not be required to accept for payment or pay for any Shares tendered, and may
terminate or amend the Offer (by oral or written notice to the Depositary and
timely public announcement) or may postpone (subject to the requirements of the
Securities Exchange Act of 1934, as amended (the Exchange Act), for prompt
payment for or return of Shares) the acceptance for payment of, or payment for,
Shares tendered, if at any time after November 5, 1997, and on or prior to the
Expiration Date, any of the following shall have occurred (which shall not have
been waived by NEES):
(a) there shall have been threatened, instituted, or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency, authority, or tribunal or any other person, domestic
or foreign, or before any court, authority, agency, or tribunal that (i)
challenges the acquisition of Shares pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the reasonable
judgment of NEES, would or might materially and adversely affect the
business, condition (financial or otherwise), income, operations, or
prospects of NEES and its subsidiaries taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of NEES or any of its subsidiaries or materially impair the
Offer's contemplated benefits to NEES;
(b) there shall have been any action threatened, pending, or taken, or
approval withheld, or any statute, rule, regulation, judgment, order, or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced, or deemed to be applicable to the Offer or NEES or any
of its subsidiaries, by any legislative body, court, authority, agency, or
tribunal that, in NEES's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for,
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<PAGE> 12
some or all of the Shares illegal or otherwise restrict or prohibit
consummation of the Offer; (ii) delay or restrict the ability of NEES, or
render NEES unable, to accept for payment or pay for some or all of the
Shares; (iii) materially impair the contemplated benefits of the Offer to
NEES or Mass. Electric (including materially increasing the effective
interest cost of certain types of unsecured debt); or (iv) materially
affect the business, condition (financial or otherwise), income,
operations, or prospects of NEES and its subsidiaries taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of NEES or any of its subsidiaries;
(c) there shall have occurred (i) any significant decrease in the
market price of the Shares; (ii) any change in the general political,
market, economic, or financial conditions in the United States or abroad
that, in the reasonable judgment of NEES, would or might have a material
adverse effect on NEES's business, operations, prospects, or ability to
obtain financing generally or the trading in the Shares or equity
securities of NEES; (iii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation on, or any event that, in NEES's reasonable judgment, would or
might affect the extension of credit by lending institutions in the United
States; (iv) the commencement or escalation of war, armed hostilities, or
other international or national calamity directly or indirectly involving
the United States; (v) any general suspension of trading in, or limitation
on prices for, securities on any national securities exchange or in the
over-the-counter market; (vi) in the case of any of the foregoing existing
at the time of the commencement of the Offer, in NEES's reasonable
judgment, a material acceleration or worsening thereof; (vii) any decline
in either the Dow Jones Industrial Average or the Standard and Poor's
Composite 500 Stock Index by an amount in excess of 10% measured from the
close of business on November 5, 1997; or (viii) a decline in the ratings
accorded any of NEES's or Mass. Electric's securities by Standard & Poor's,
a division of The McGraw Hill Companies (S&P), Moody's Investors Service,
Inc. (Moody's), or Duff & Phelps, Inc. (D&P) or an announcement by S&P,
Moody's, or D&P that it has placed any such rating under surveillance or
review with negative implications;
(d) any tender or exchange offer with respect to some or all of the
Shares (other than the Offer) or any equity securities of NEES, or a
merger, acquisition, or other business combination proposal for NEES, shall
have been proposed, announced, or made by any person or entity;
(e) there shall have occurred any event or events that have resulted,
or, in NEES's reasonable judgment, may result, in an actual or threatened
change in the business, condition (financial or otherwise), income,
operations, stock ownership, or prospects of NEES and its subsidiaries; or
(f) the SEC shall have withheld approval, under the Holding Company
Act, of the acquisition of the Shares by NEES pursuant to the Offer or the
approval and adoption of the Proposed Amendment at the Special Meeting;
and, in the sole judgment of NEES, such event or events make it undesirable or
inadvisable to proceed with the Offer or with such acceptance for payment or
payment. With respect to the approval of the SEC referenced in clause (f) above,
the SEC must find that the acquisition of the Shares by NEES is not detrimental
to the public interest or the interests of the investors or consumers, and that
the consideration paid in connection with the acquisition and the adoption of
the Proposed Amendment, including fees, commissions, and other remuneration, is
reasonable.
The foregoing conditions (including the condition that the Proposed
Amendment be approved and adopted at the Special Meeting) are for the sole
benefit of NEES and may be asserted by NEES regardless of the circumstances
(including any action or inaction by NEES) giving rise to any such condition,
and any such condition may be waived by NEES, in whole or in part, at any time
and from time to time in its sole discretion. A decision by NEES to terminate or
otherwise amend the Offer, following the occurrence of any of the foregoing,
with respect to one Series will not create an obligation on behalf of NEES to
terminate or otherwise amend in a similar manner the Offer with respect to any
other Series. The failure by NEES at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by NEES concerning the events described above will be
final and binding on all parties.
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<PAGE> 13
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
NEES expressly reserves the right, in its sole discretion, and at any time
and from time to time on or prior to the Expiration Date, to extend the period
of time during which the Offer for any Series is open by giving oral or written
notice of such extension to the Depositary, without extending the period of time
during which the Offer for any other Series is open. There can be no assurance,
however, that NEES will exercise its right to extend the Offer for any Series.
During any such extension, all Shares of the subject Series previously tendered
will remain subject to the Offer, except to the extent that such Shares may be
withdrawn as set forth in Withdrawal Rights.
NEES also expressly reserves the right, in its sole discretion, to, among
other things, terminate the Offer and not accept for payment or pay for any
Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act, which
requires NEES either to pay the consideration offered or to return the Shares
tendered promptly after the termination or withdrawal of the Offer upon the
occurrence of any of the conditions specified in Certain Conditions of the Offer
by giving oral or written notice of such termination to the Depositary, and
making a public announcement thereof.
Subject to compliance with applicable law, NEES further reserves the right,
in its sole discretion, to amend the Offer in any respect. Amendments to the
Offer may be made at any time and from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., Eastern Standard Time, on the next business day
after the previously scheduled Expiration Date. Any public announcement made
pursuant to the Offer will be disseminated promptly to Preferred Shareholders
affected thereby in a manner reasonably designed to inform such Preferred
Shareholders of such change. Without limiting the manner in which NEES may
choose to make a public announcement, except as required by applicable law, NEES
shall have no obligation to publish, advertise, or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service.
If NEES materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, NEES
will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which the Offer must remain open following material changes in the terms
of the Offer or information concerning the Offer (other than a change in price,
a change in percentage of securities sought, or a change in the dealer's
solicitation fee) will depend on the facts and circumstances, including the
relative materiality of such terms or information. The SEC has stated that, in
its view, an offer should remain open for a minimum of five business days from
the date that a notice of such a material change is first published, sent, or
given. If the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that NEES publishes, sends, or gives to Preferred Shareholders a notice
that it will (i) increase or decrease the price it will pay for Shares, (ii)
decrease the percentage of Shares it seeks, or (iii) increase or decrease the
soliciting dealers' fees, the Offer will be extended until the expiration of
such period of ten business days.
THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES. IF NEES EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO ONE SERIES OF
PREFERRED FOR ANY REASON, NEES WILL HAVE NO OBLIGATION TO EXTEND THE OFFER FOR
ANY OTHER SERIES OF PREFERRED.
CERTAIN EFFECTS OF THE OFFER
Shares validly tendered to the Depositary pursuant to the Offer and not
withdrawn in accordance with the procedures set forth herein shall be held until
the Expiration Date (or returned to the extent the Offer is terminated in
accordance herewith). To the extent that the Proposed Amendment is approved and
the Shares tendered are accepted for payment and paid for in accordance with the
terms hereof, NEES intends either to sell its Shares to Mass. Electric or to
donate the Shares to Mass. Electric as a capital contribution. At that time, it
is expected that Mass. Electric will retire and cancel the Shares. However, in
the event the Proposed Amendment is not adopted at the Special Meeting, NEES may
elect, but is not obligated, to waive, subject to applicable law, such
condition. Mass. Electric anticipates that, subsequent to that waiver and
purchase of the
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<PAGE> 14
Shares, it would call another special meeting of its shareholders and solicit
proxies therefrom for an amendment substantially similar to the Proposed
Amendment. At that meeting, NEES would vote any Shares acquired by it pursuant
to the Offer or otherwise (together with its shares of common stock) in favor of
such amendment, thereby maximizing the prospects for the adoption of such
amendment.
Trading and Liquidity. Any purchase of Shares by NEES will reduce the
number of Shares of each of the Series of Preferred that might otherwise trade
publicly or become available for purchase or sale and will likely reduce the
number of owners of Shares of each of the Series of Preferred, which could
adversely affect the liquidity and sale value of the Shares not purchased in the
Offer.
To the extent that Shares of any Series of the Preferred are tendered and
accepted for payment in the Offer, the trading market for Shares of such Series
that remain outstanding may be significantly more limited, which might adversely
affect the liquidity, market value, and price volatility of such Shares. Equity
securities with a smaller outstanding market value available for trading (the
float) may command a lower price than would comparable equity securities with a
greater float. Therefore, the market price for Shares that are not tendered in
the Offer may be affected adversely to the extent that the amount of Shares
purchased pursuant to the Offer reduces the float. The reduced float may also
make the trading price of the Shares that are not tendered and accepted for
payment more volatile. Holders of the remaining Shares may attempt to obtain
quotations for the Shares from their brokers, through the Electronic Bulletin
Board, or otherwise; however, there can be no assurance that any trading market
will exist for such Shares following consummation of the Offer. To the extent a
market continues to exist for the Shares after the Offer, the Shares may trade
at a discount compared to present trading, depending on the market for Shares
with similar features, the performance of Mass. Electric, and other factors.
There is no assurance that an active market in the Shares will exist and no
assurance as to the prices at which the Shares may trade.
The Shares are currently registered under Section 12(g) of the Exchange
Act. If the Shares are no longer held by more than 300 owners of record, Mass.
Electric may apply to the SEC for termination of such registration. Such
termination would substantially reduce the information required to be furnished
by Mass. Electric to holders of the Preferred Stock and could make certain
provisions of the Exchange Act no longer applicable to Mass. Electric.
As of September 29, 1997, there were 17 registered holders of the 4.44%
Series, 27 registered holders of the 4.76% Series, 1 registered holder of the
6.99% Series, and 15 registered holders of the 6.84% Series.
Future Purchases or Redemption of Shares. Preferred Shareholders are not
under any obligation to tender Shares pursuant to the Offer. The Offer does not
constitute a notice of redemption of any Series of Preferred pursuant to Mass.
Electric's Provisions, neither does NEES or Mass. Electric intend to effect any
such redemption by making the Offer. Further, the Offer does not constitute a
waiver by Mass. Electric of any option it has to redeem Shares.
Shares which are not tendered will continue to be subject to their current
redemption and liquidation provisions. The various Series of the Preferred are
redeemable in whole or in part upon not less than thirty days' notice at the
applicable redemption prices plus accrued dividends through the date fixed for
redemption. The redemption prices for the 4.44% Series and the 4.76% Series are
$104.068 and $103.730, respectively. The 6.99% Series is redeemable after August
1, 2003 at a price equal to $103.50. The 6.84% Series is redeemable after
October 1, 1998 at a price equal to $25.80. There are no sinking funds for any
of the Series of Preferred. The Preferred Shareholders have no preemptive or
conversion rights.
Upon liquidation, dissolution, or winding up of the affairs of Mass.
Electric or any distribution of capital of Mass. Electric, owners of the Shares
of each Series of Preferred would be entitled to receive an amount equal to the
full distributive amounts fixed therefor together with accrued dividends through
the date fixed for the payment of such distributive amounts. In case any
liquidation, dissolution, or winding up of Mass. Electric is voluntary, owners
of the Shares of each Series of Preferred shall be entitled to receive said
redemption prices plus accrued dividends through the date fixed for the payment
of such distributive amounts; if involuntary, to $100 per Share for Dividend
Series Preferred Stock and $25 for Preferred Stock -- Cumulative plus in each
case accrued dividends through the date fixed for the payment of such
distributive amounts.
14
<PAGE> 15
After the consummation of the Offer, NEES or Mass. Electric may purchase
additional Shares on the open market, in privately negotiated transactions,
through one or more tender offers, or otherwise. Any such purchases may be on
the same terms as, or on terms which are more or less favorable to holders of
Shares than, the terms of the Offer. However, Rule 13e-4(f)(6) under the
Exchange Act prohibits NEES and its affiliates (including Mass. Electric) from
purchasing any Shares of a Series of Preferred, other than pursuant to the
Offer, until at least ten business days after the Expiration Date with respect
to that Series of Preferred. Any future purchases of Shares by NEES or Mass.
Electric would depend on many factors, including the market price of the Shares,
NEES's business and financial position, and legal restrictions on NEES's ability
to purchase Shares, as well as general economic and market conditions.
OTHER INFORMATION
As discussed in the documents incorporated herein by reference, the NEES
companies are divesting themselves of or attempting to divest themselves of
their generation business. This process will result in reductions in employees
and may result in reallocation of executive and Board responsibilities. Although
Mass. Electric itself has no generation facilities, it expects to be impacted by
this process. Further, the NEES companies have considered various strategies to
enhance their competitive business, including business combinations with other
companies. Except as disclosed herein and in the documents incorporated by
reference, neither NEES nor Mass. Electric has plans or proposals that would
relate to or result in (a) the acquisition by any person or entity of additional
securities of Mass. Electric or the disposition of securities of Mass. Electric,
other than in the ordinary course of business; (b) an extraordinary corporate
transaction, such as a merger, reorganization, or liquidation, involving Mass.
Electric; (c) a sale or transfer of a material amount of assets of Mass.
Electric; (d) any change in the present Board or management of Mass. Electric;
(e) any material change in the present dividend rate or policy, or indebtedness
or capitalization of Mass. Electric; (f) any other material change in Mass.
Electric's corporate structure or business; (g) any change in the Provisions or
any actions that may impede the acquisition of control of Mass. Electric by any
person; (h) a class of equity securities of Mass. Electric being no longer
authorized to be quoted on the OTC; (i) a class of equity securities of Mass.
Electric becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act; or (j) the suspension of Mass. Electric's
obligation to file reports pursuant to Section 15(d) of the Exchange Act.
15
<PAGE> 16
PROPOSED AMENDMENT AND PROXY SOLICITATION
LOGO
MASSACHUSETTS ELECTRIC COMPANY
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582
NOVEMBER 6, 1997
To the Holders of Common Stock, Preferred Stock -- Cumulative and Dividend
Series Preferred Stock of
MASSACHUSETTS ELECTRIC COMPANY
You are hereby notified that the Special Meeting of Stockholders of
Massachusetts Electric Company will be held in the Directors Room, 25 Research
Drive, Westborough, Massachusetts, on December 12, 1997, at 4:30 p.m., Eastern
Standard Time, for the following purposes:
1. Amendment of the Articles of Organization and By-laws to delete in
its entirety Article XVIII, Section 4E(4), limiting Mass. Electric's
ability to issue unsecured indebtedness; and
2. Transaction of such other business as may be appropriate and
incidental to the foregoing purposes or which may properly come before the
meeting or any adjourned session thereof.
Stockholders entitled to vote will be determined on the basis of the
records of the Company at the close of business on November 12, 1997.
The accompanying material contains further information about the matters to
be considered at the meeting.
By order of the Board of Directors.
ROBERT KING WULFF
Clerk
16
<PAGE> 17
SPECIAL MEETING
This Booklet is first being mailed on or about November 7, 1997 to the
Preferred Shareholders of Mass. Electric in connection with the solicitation of
proxies by the Board of Directors of Mass. Electric (the Board) for use at the
Special Meeting. At the Special Meeting, the Preferred Shareholders of record of
Mass. Electric will vote upon the Proposed Amendment to its Provisions.
PROXIES
THE PROXY INCLUDED IN THE LETTER OF TRANSMITTAL AND PROXY IS SOLICITED FROM
THE HOLDERS OF THE PREFERRED STOCK BY THE BOARD, WHICH RECOMMENDS VOTING FOR THE
PROPOSED AMENDMENT. All shares of Mass. Electric's common stock will be voted in
favor of the Proposed Amendment. Shares of Mass. Electric's Preferred Stock
represented by properly executed proxies received at or prior to the Special
Meeting will be voted in accordance with the instructions thereon. If no
instructions are indicated, duly executed proxies will be voted in accordance
with the recommendation of the Board. It is not anticipated that any other
matters will be brought before the Special Meeting. However, the enclosed proxy
gives discretionary authority to the proxy holders named therein should any
other matters be presented at the Special Meeting, and it is the intention of
the proxy holders to act on any other matters in accordance with their best
judgment.
Execution of a proxy will not prevent a Preferred Shareholder from
attending the Special Meeting and voting in person. Any Preferred Shareholder
giving a proxy may revoke it at any time before it is voted by delivering to the
Clerk of Mass. Electric written notice of revocation bearing a later date than
the proxy, by delivering a duly executed proxy bearing a later date, or by
voting in person by ballot at the Special Meeting. Withdrawal of Shares tendered
pursuant to the Offer will not revoke a properly executed proxy.
RELATIONSHIP TO THE OFFER; SPECIAL CASH PAYMENT
As noted above, the Offer and Proposed Amendment constitute an integrated
strategy of NEES and Mass. Electric to achieve greater flexibility in their
financing. See Purpose of the Offer, Proposed Amendment, and Proxy Solicitation.
Preferred Shareholders who wish to tender their Shares pursuant to the
Offer are required to vote in favor of the Proposed Amendment. Further, the
Offer is conditioned upon the Proposed Amendment being approved and adopted at
the Special Meeting.
Subject to the terms and conditions set forth in this Booklet, if (but only
if) the Proposed Amendment is approved and adopted by Mass. Electric's
shareholders, Mass. Electric will make a Special Cash Payment in the amount of
$1.00 per Share to each Dividend Series Preferred Shareholder of record and
$0.25 per Share to each Preferred Stock -- Cumulative Shareholder of record who
voted in favor of the Proposed Amendment, provided that such Shares have not
been tendered pursuant to the Offer. Mass. Electric intends to make the Special
Cash Payment although there is no binding legal precedent as to the
permissibility of such payment and there can be no assurance as to how a court
would rule on the question. Nevertheless, Mass. Electric believes the Offer is
fair to Preferred Shareholders and has decided to make the payment. If a
Preferred Shareholder votes against the Proposed Amendment or abstains, such
Preferred Shareholder shall not be entitled to the Special Cash Payment
(regardless of whether the Proposed Amendment is approved and adopted). The
Special Cash Payment will be paid out of Mass. Electric's general funds promptly
after the Proposed Amendment shall have become effective. However, no accrued
interest will be paid on the Special Cash Payment regardless of any delay in
making such payments.
VOTING SECURITIES, RIGHTS, AND PROCEDURES
Only holders of record of Mass. Electric's voting securities at the close
of business on November 12, 1997, the Record Date (or their legal
representatives or attorneys-in-fact), will be entitled to vote in person or by
proxy at the Special Meeting and to receive the Special Cash Payment from Mass.
Electric. Any beneficial holder of Shares who is not the registered holder of
such Shares as of the Record Date (as would be the case for any beneficial
holder whose Shares are registered in the name of such holder's broker, dealer,
commercial
17
<PAGE> 18
bank, trust company, or other nominee) must arrange with the holder of record on
the Record Date to execute and deliver a proxy form on such beneficial owner's
behalf. If a beneficial holder of Shares intends to attend the Special Meeting
and vote in person, such beneficial holder must obtain a legal proxy form from
the beneficial holder's broker, dealer, commercial bank, trust company, or other
nominee.
The Shares will trade, during the period which begins two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbols "MSSDT" for the 4.44% Series,
"MSSGT" for the 4.76% Series, "MSSIT" for the 6.99% Series, and "MSSJT" for the
6.84% Series, indicating that such Shares are trading "with proxy." A Preferred
Shareholder who acquires Shares during this period must obtain, or have his or
her authorized representative obtain, an assignment of proxy (which is included
in the applicable Letter of Transmittal and Proxy) at settlement from the
seller. The NASD and The Depository Trust Company have issued notices informing
their members and participants that the Shares will trade "with proxy" and that
settlement of all trades during the period described above should include an
assignment of proxy from the seller.
Mass. Electric's outstanding voting securities consist of common stock,
Dividend Series Preferred Stock, and Preferred Stock -- Cumulative. There are
three series of Dividend Series Preferred Stock currently outstanding. There is
only one series of Preferred Stock -- Cumulative. The common stock votes as one
class. The three series of Dividend Series Preferred Stock and the one series of
Preferred Stock -- Cumulative will vote together as a single class. The Shares
outstanding as of the Record Date, and the vote to which each Share is entitled
in consideration of the Proposed Amendment, are as follows:
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING VOTES PER SHARE
--------------------------------------------------- ------------------ ---------------
<S> <C> <C>
Common............................................. 6,449,896 one
Dividend Series Preferred
4.44%............................................ 75,000 one
4.76%............................................ 75,000 one
6.99%............................................ 200,000 one
Preferred Stock -- Cumulative
6.84%............................................ 600,000 one-quarter
Total Preferred Votes
voting as a class................................ 500,000
</TABLE>
The affirmative vote of more than two-thirds of the outstanding shares of
each of Mass. Electric's (i) common stock voting as a class, and (ii) Dividend
Series Preferred Stock and Preferred Stock -- Cumulative, all series voting
together as a single class, is required to approve the Proposed Amendment to be
presented at the Special Meeting. Abstentions and broker non-votes will have the
same effect as votes cast against the Proposed Amendment. NEES has advised Mass.
Electric that it intends to vote all of the outstanding shares of common stock
of Mass. Electric in favor of the Proposed Amendment.
There are no rights of appraisal in connection with the Proposed Amendment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As noted above, NEES owns all the outstanding common stock of Mass.
Electric.
Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a
security is any person who directly or indirectly has or shares voting or
investment power over such security. No person or group is known by management
of Mass. Electric to be the beneficial owner of more than 5% of the outstanding
shares of Mass. Electric's Preferred Stock as of the Record Date.
18
<PAGE> 19
NEES and Mass. Electric's directors and executive officers do not
beneficially own any Shares as of the Record Date. The beneficial ownership of
NEES's common shares held by each Mass. Electric director, as well as Mass.
Electric directors and executive officers as a group, as of October 1, 1997, is
set forth in the following table.
<TABLE>
<CAPTION>
NAME SHARES
--------------------------------------------------------------------------- --------
<S> <C>
Urville J. Beaumont........................................................ 308
Joan T. Bok................................................................ 17,504
Sally L. Collins........................................................... 310
Kalyan K. Ghosh............................................................ 53
Charles B. Housen.......................................................... 20
Robert L. McCabe........................................................... 9,924
Patricia McGovern.......................................................... 167
John F. Reilly............................................................. 310
Lawrence J. Reilly......................................................... 2,861
John W. Rowe............................................................... 23,105
Nancy H. Sala.............................................................. 8,013
Richard P. Sergel.......................................................... 8,723
Roslyn M. Watson........................................................... 310
Directors and officers as a group (representing less than 1% of the
outstanding Shares)...................................................... 132,425
</TABLE>
Listed below is the only person or group known to NEES as of October 1,
1997, to beneficially own 5% or more of NEES's common shares. However, T. Rowe
Price Trust Company disclaims beneficial ownership of all such shares. The
amount of common shares listed below is as of September 8, 1997.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP COMMON SHARES
- ---------------------------------------------------- ------------------------- -------------
<S> <C> <C>
T. Rowe Price Trust Company......................... 5,358,604 shares as 8.3%
trustee
100 East Pratt Street for Company employee
Baltimore, MD 21202 benefits plans
</TABLE>
DESCRIPTION OF THE PROPOSED AMENDMENT
THE FOLLOWING STATEMENTS, UNLESS THE CONTEXT OTHERWISE REQUIRES, ARE
SUMMARIES OF THE SUBSTANCE OR GENERAL EFFECT OF A SECTION OF THE PROVISIONS, AND
ARE QUALIFIED IN THEIR ENTIRETY BY THE PROVISIONS (AS DESCRIBED BELOW).
EXPLANATION OF THE PROPOSED AMENDMENT
The purpose of the Proxy Solicitation is the elimination of the section in
the Provisions restricting the ability of Mass. Electric to incur certain
unsecured indebtedness.
ARTICLE XVIII, Section 4E(4) of the Provisions provides that, without a
vote of a majority of the outstanding Dividend Series Preferred Stock and
Preferred Stock -- Cumulative (voting together as a single class), Mass.
Electric will not:
issue or assume any unsecured notes, debentures or other securities
representing unsecured indebtedness for purposes other than (x) the
refunding of outstanding unsecured indebtedness theretofore issued or
assumed by the corporation resulting in maturities later than the maturity
of the indebtedness being refunded or (y) the reacquisition, redemption or
other retirement of any indebtedness which reacquisition, redemption or
other retirement has been authorized under the provisions of the Public
Utility Holding Company Act of 1935, if, immediately after such issue or
assumption, the total principal amount of all unsecured notes, debentures
or other securities representing both long and short-term unsecured
indebtedness issued or assumed by the corporation and then to be
outstanding (but excluding unsecured
19
<PAGE> 20
indebtedness theretofore so voted for by holders of Preferred Stock and
Preferred Stock -- Cumulative) would exceed twenty per cent (20%) of total
capitalization, or if, immediately after such issue or assumption, such
short-term unsecured indebtedness issued or assumed by the corporation
after September 30, 1998 and then to be outstanding (but excluding
short-term unsecured indebtedness theretofore so voted for by holders of
Preferred Stock and Preferred Stock -- Cumulative) would exceed ten per
cent (10%) of total capitalization; provided, however, that in the event
such short-term unsecured indebtedness (but excluding short-term unsecured
indebtedness theretofore so voted for by holders of Preferred Stock and
Preferred Stock -- Cumulative) exceeds such latter limit, no unsecured
securities representing unsecured indebtedness shall be issued or assumed
(except for the purposes specified in clauses (x) and (y) above) unless
such ratio of short-term unsecured indebtedness immediately after such
issue or assumption is not in excess of such limit.
"Short-term unsecured indebtedness" as used in this subsection E(4)
means unsecured indebtedness of an original maturity of less than ten years
and "long-term unsecured indebtedness" means unsecured indebtedness of an
original maturity of ten years or more. For the purposes hereof, when any
long-term unsecured indebtedness becomes due within five years, or when any
long-term unsecured indebtedness is to be retired within five years through
a sinking fund or otherwise, such long-term unsecured indebtedness, in each
case, shall be considered short-term unsecured indebtedness. "Total
capitalization" as used in this subsection E(4) means the aggregate of (i)
the total principal amount of all bonds and other securities representing
secured indebtedness issued or assumed by the corporation and then
outstanding and (ii) the capital, premium and surplus of the corporation as
then stated on the books of account of the corporation.
It is proposed to delete the above section in its entirety; conforming changes
to cross references elsewhere in the Provisions will also be made.
REASONS FOR THE PROPOSED AMENDMENT
Mass. Electric believes that the prudent use of unsecured debt is important
to the effective financial management of its business. Unsecured debt provides
flexibility in meeting temporary fluctuations in cash requirements, can be used
when unfavorable conditions prevail in the market for long-term capital, acts as
a bridge between issues of permanent capital, and may present more flexibility
in terms and conditions than secured debt. If the Proposed Amendment is adopted,
Mass. Electric will have increased flexibility (i) to choose among different
types of debt financing and (ii) to finance projects using the most cost
effective means. The availability and flexibility of unsecured debt is necessary
to take full advantage of changing conditions in the securities and financial
markets.
In addition, although Mass. Electric's earnings currently are sufficient to
meet the earnings coverage tests that must be satisfied before issuing
additional first mortgage bonds and preferred stock, other utilities have been
unable to issue mortgage bonds during certain periods because of restrictive
covenants in their mortgages. Any inability by Mass. Electric to issue first
mortgage bonds or preferred stock in the future, combined with the inability to
issue additional unsecured debt, would limit its financing options to more
costly securities, including additional common equity.
RECOMMENDATION OF BOARD OF DIRECTORS
IT IS FOR ALL THE ABOVE REASONS THAT MASS. ELECTRIC'S BOARD BELIEVES THE
BEST LONG-TERM INTERESTS OF THE PREFERRED SHAREHOLDERS ARE SERVED BY, AND
ENCOURAGES PREFERRED SHAREHOLDERS TO VOTE FOR, THE ADOPTION OF THE PROPOSED
AMENDMENTS.
The Proposed Amendment to the Provisions and the Offer are subject to
approval by the SEC under the Holding Company Act. NEES and Mass. Electric have
filed a declaration with the SEC with respect to the Proposed Amendment and the
acquisition of the Shares by NEES pursuant to the Offer.
20
<PAGE> 21
CERTAIN EFFECTS OF THE PROPOSED AMENDMENT
If the Proposed Amendment becomes effective, Preferred Shareholders of
Shares that are not tendered and purchased pursuant to the Offer will no longer
be entitled to the benefits of the unsecured debt limitation provision. As
discussed above, the debt limitation provision places restrictions on Mass.
Electric's ability to issue or assume unsecured indebtedness. Although future
Mass. Electric debt instruments may contain certain restrictions on Mass.
Electric's ability to issue or assume debt, any such restrictions may be waived
and the increased flexibility afforded Mass. Electric by the deletion of the
debt limitation provision may permit Mass. Electric to take certain actions that
may increase the credit risks with respect to Mass. Electric, adversely
affecting the market price and credit rating of the remaining Shares, or that
may otherwise be materially adverse to the interests of the remaining Preferred
Shareholders.
OTHER MATTERS
The foregoing is the only business which management intends to present or
is advised that others will present for action at the Special Meeting or any
adjournment thereof. If any other matters should properly come before the
Special Meeting, the proxies for NEES and for any other stockholders who have
sent in their proxies will be voted by the persons named therein, or their
substitutes, in accordance with their judgment.
The expense of preparing and mailing this Booklet and the incidental
expenses of soliciting the Preferred Shareholders will be paid by Mass.
Electric. Mass. Electric has engaged Georgeson to act as Information Agent in
connection with the solicitation of proxies for a fee of $6,000 plus
reimbursement of reasonable out-of-pocket expenses. Mass. Electric has requested
that brokers, dealers, and other custodians, nominees, and fiduciaries forward
solicitation materials to the beneficial owners of Shares held of record by such
persons and will reimburse such brokers and other fiduciaries for their
reasonable out-of-pocket expenses incurred in connection therewith. In addition
to the use of the mails, proxies from holders of the Preferred Stock may be
solicited by officers and regular employees connected with Mass. Electric or its
affiliates, personally or by telephone or telegraph, without any additional
compensation. The Information Agent has not been retained to make, and will not
make, solicitations or recommendations in connection with the Proposed
Amendment.
While Mass. Electric has no audit committee, its parent NEES has an audit
committee which recommends an independent auditor to audit the accounts of the
parent and its subsidiaries. Coopers and Lybrand have been auditors of Mass.
Electric for many years and their selection as auditors for the current year was
approved at the Annual Meeting on March 19, 1997. It is not expected that
representatives of Coopers and Lybrand will be present at the Special Meeting on
December 12, 1997, but they will be available on short notice to attend to
answer questions regarding the Proposed Amendment, if any holder of Shares so
requests in writing prior to December 10, 1997.
21
<PAGE> 22
PRICE RANGE OF SHARES; DIVIDENDS
Trading in the Shares has generally been sporadic. Each Series of Preferred
is traded in the OTC and is not listed on any national securities exchange.
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF
AVAILABLE, FOR THE SHARES.
The following table sets forth the high and low sales prices of each Series
of Preferred and Preferred Stock -- Cumulative as reported by the Nasdaq Stock
Market, Inc., and the cash dividends paid thereon for the fiscal quarters
indicated.
DIVIDENDS AND PRICE RANGES OF PREFERRED STOCK
BY QUARTERS (1997, 1996 AND 1995)
<TABLE>
<CAPTION>
1997 - QUARTERS 1996 - QUARTERS
--------------------------------------- ------------------------------------------
1ST 2ND 3RD 4TH* 1ST 2ND 3RD 4TH
--------- --------- --------- --------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DIVIDEND SERIES PREFERRED STOCK:
4.44% SERIES
Dividends Paid Per Share.......... $ 1.11 $ 1.11 $ 1.11 $ 1.11 $ 1.11 $ 1.11 $ 1.11 $ 1.11
Market Price Per Share (OTC)
-- High......................... 68.68 64.75 69.125 69.75 61.00 62.225 65.40 58.00
-- Low.......................... 58.00 59.50 64.25 68.00 61.00 58.00 58.00 58.00
4.76% SERIES
Dividends Paid Per Share.......... $ 1.19 $ 1.19 $ 1.19 $ 1.19 $ 1.19 $ 1.19 $ 1.19 $ 1.19
Market Price Per Share (OTC)
-- High......................... 71.608 67.70 73.50 -- 71.00 67.25 69.15 74.52
-- Low.......................... 62.00 63.875 64.125 -- 63.50 62.00 62.625 62.00
6.99% SERIES
Dividends Paid Per Share.......... $ 1.7475 $ 1.7475 $ 1.7475 $ 1.7475 $ 1.7475 $ 1.7475 $ 1.7475 $ 1.7475
Market Price Per Share (OTC)
-- High......................... -- -- -- 108.50 103.50 97.32 100.125 105.29
-- Low.......................... -- -- -- 100.00 96.00 97.32 100.125 100.25
PREFERRED STOCK -- CUMULATIVE
6.84% SERIES
Dividends Paid Per Share.......... $ 0.4275 $ 0.4275 $ 0.4275 $ 0.4275 $ 0.4275 $ 0.4275 $ 0.4275 $ 0.4275
Market Price Per Share (OTC)
-- High......................... 24.875 25.25 25.25 25.125 26.15 24.15 24.75 24.75
-- Low.......................... 23.875 23.90 24.25 24.50 22.75 21.00 22.125 23.125
<CAPTION>
1995 - QUARTERS
-------------------------------------------
1ST 2ND 3RD 4TH
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
DIVIDEND SERIES PREFERRED STOCK:
4.44% SERIES
Dividends Paid Per Share..........$ 1.11 $ 1.11 $ 1.11 $ 1.11
Market Price Per Share (OTC)
-- High......................... 58.125 59.50 64.05 58.00
-- Low.......................... 48.25 54.25 56.75 58.00
4.76% SERIES
Dividends Paid Per Share..........$ 1.19 $ 1.19 $ 1.19 $ 1.19
Market Price Per Share (OTC)
-- High......................... 53.50 70.50 68.70 67.875
-- Low.......................... 53.50 54.50 60.25 63.00
6.99% SERIES
Dividends Paid Per Share..........$ 1.7475 $ 1.7475 $ 1.7475 $ 1.7475
Market Price Per Share (OTC)
-- High......................... -- 102.00 -- 105.39
-- Low.......................... -- 97.875 -- 104.50
PREFERRED STOCK -- CUMULATIVE
6.84% SERIES
Dividends Paid Per Share..........$ 0.4275 $ 0.4275 $ 0.4275 $ 0.4275
Market Price Per Share (OTC)
-- High......................... 21.90 25.58 24.60 25.75
-- Low.......................... 19.50 20.875 22.95 23.625
</TABLE>
- ---------------
* Prices through October 31
Note -- The above bid and asked quotations represent prices between dealers and
do not represent actual transactions. A dash indicates that a quotation was not
available.
Dividends for a Series of Preferred are payable when, as and if declared by
Mass. Electric's Board at the rate per annum included in such title of the
Series of Preferred. NEES will pay to tendering Preferred Shareholders any
accrued dividends through the Expiration Date.
22
<PAGE> 23
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
EACH HOLDER OF SHARES IS URGED TO CONSULT AND RELY UPON SUCH HOLDER'S OWN
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO THE HOLDER OF TENDERING
SHARES PURSUANT TO THE OFFER.
In the opinion of Hale and Dorr LLP, tax counsel to NEES and Mass.
Electric, the following summary describes the principal United States Federal
income tax consequences of sales of Shares pursuant to the Offer, the receipt of
accrued and unpaid dividends and the receipt of Special Cash Payments in
connection with the approval and adoption of the Proposed Amendment. This
summary is based on the Internal Revenue Code of 1986, as amended to the date
hereof (the "Code"), administrative pronouncements, judicial decisions and
existing and proposed Treasury Regulations, changes to any of which subsequent
to the date of this Booklet may adversely affect the tax consequences described
herein, possibly on a retroactive basis. This summary is addressed to Preferred
Shareholders who hold Shares as capital assets within the meaning of Section
1221 of the Code. This summary does not discuss all of the tax consequences that
may be relevant to a Preferred Shareholder in light of such Preferred
Shareholder's particular circumstances or to Preferred Shareholders subject to
special rules (including certain financial institutions, tax-exempt
organizations, insurance companies, dealers in securities or currencies, foreign
persons or entities selling Shares pursuant to the Offer who own or have owned,
actually or constructively, more than five percent of the outstanding amount of
such Shares, Preferred Shareholders who acquired their Shares pursuant to the
exercise of stock options or other compensation arrangements with Mass. Electric
or Preferred Shareholders holding the Shares as part of a conversion
transaction, as part of a hedge or hedging transaction, or as a position in a
straddle for tax purposes). Preferred Shareholders should consult their tax
advisors with regard to the application of the United States Federal income tax
laws to their particular situations as well as any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction.
As used herein, the term "United States Holder" means an owner of a Share
that is (i) for United States Federal income tax purposes a citizen or resident
of the United States; (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof; (iii) an estate, or, for taxable years beginning on or
before December 31, 1996, in general, any trust, the income of which is subject
to United States Federal income taxation regardless of its source; or (iv) for
taxable years beginning after December 31, 1996, any trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust and one or more United States fiduciaries have the authority to
control all substantial decisions of such trust. A "Non-United States Holder" is
a Preferred Shareholder that is not a United States Holder.
TAX CONSIDERATIONS FOR TENDERING PREFERRED SHAREHOLDERS
Characterization of the Sale. A sale of Shares by a Preferred Shareholder
pursuant to the Offer will be a taxable transaction for Federal income tax
purposes.
United States Holders. A United States Holder will recognize gain or loss
equal to the difference between the tax basis of such Holder's Shares and the
amount of cash received from NEES in exchange therefor. A United States Holder's
gain or loss will be long-term capital gain or loss if the holding period for
the Shares is more than one year as of the date of the sale of such Shares. The
excess of net long-term capital gains over net short-term capital losses is
taxed at a lower rate than ordinary income for certain non-corporate taxpayers.
Capital gain on Shares held by non-corporate taxpayers for more than eighteen
months prior to the date of the sale of such Shares will be subject to a reduced
tax rate. The distinction between long-term capital gain or loss and short-term
gain or loss is also relevant for purposes of, among other things, limitations
on the deductibility of capital losses.
NEES will treat a portion of the cash received by a tendering Preferred
Shareholder pursuant to the Offer as consideration paid in exchange for the vote
of such Preferred Shareholder in favor of the Proposed Amendment, rather than as
consideration paid in exchange for its tendered Shares (the "Special Cash
Payment Equivalent Amount"). The Special Cash Payment Equivalent Amount will be
equal to the Special Cash Payment a tendering Preferred Shareholder would have
been eligible to receive if such Preferred
23
<PAGE> 24
Shareholder had voted in favor of the Proposed Amendment but had not tendered
its Shares. While the appropriate characterization of the Special Cash Payment
Equivalent Amount for United States Federal income tax purposes is not entirely
clear, for Federal income tax withholding and information reporting purposes,
NEES will treat the Special Cash Payment Equivalent Amount as ordinary,
nondividend income to tendering Preferred Shareholders.
Non-United States Holders. Any gain realized upon the sale of Shares by a
Non-United States Holder pursuant to the Offer generally will not be subject to
United States Federal income tax unless (i) such gain is effectively connected
with a trade or business in the United States of the Non-United States Holder,
or (ii) in the case of a Non-United States Holder who is an individual, such
individual is present in the United States for 183 days or more in the taxable
year of such sale and certain other conditions are met.
A Non-United States Holder with gain described in clause (i) above will be
taxed on the net gain derived from the sale at regular graduated United States
Federal income tax rates. If a Non-United States Holder that is a foreign
corporation has gain described under clause (i) above, it may also be subject to
an additional "branch profits tax" at a 30% rate (or such lower rate as may be
specified by an applicable income tax treaty). Unless an applicable tax treaty
provides otherwise, an individual Non-United States Holder described in clause
(ii) above will be subject to a flat 30% tax on the gain derived from the sale,
which may be offset by United States capital losses (notwithstanding the fact
that the individual is not considered a resident of the United States).
NEES will treat a portion of the cash paid to a tendering Non-United States
Holder pursuant to the Offer as a Special Cash Payment Equivalent Amount, in the
same manner described above under "United States Holders." Subject to certain
exceptions to the withholding requirements summarized below with respect to the
Special Cash Payments under Tax Considerations of Special Cash
Payment -- Non-United States Holders, NEES will treat the Special Cash Payment
Equivalent Amount as subject to withholding of United States Federal income tax
at a 30% rate.
TAX CONSIDERATIONS FOR NON-TENDERING PREFERRED SHAREHOLDERS
Non-Tendering Preferred Shareholders, whether or not they receive Special
Cash Payments, will not recognize any taxable gain or loss with respect to the
Shares as a result of the modification of the Provisions by the Proposed
Amendment.
TAX CONSIDERATIONS OF ACCRUED AND UNPAID DIVIDENDS PAYMENT
Payment of accrued and unpaid dividends received by the tendering Preferred
Shareholder with respect to rights to dividends declared prior to the Offer will
be treated as dividends to the extent of the Preferred Shareholder's allocable
portion of Mass. Electric's current and accumulated earnings and profits as
determined under United States Federal income tax principles and not as proceeds
from the sale of such Shares. Such dividend payments will be taxed to the
Preferred Shareholder in the same manner as prior dividend payments customarily
have been taxed.
TAX CONSIDERATIONS OF SPECIAL CASH PAYMENT
United States Holders. There is no direct authority concerning the Federal
income tax consequences of the receipt of Special Cash Payments. Mass. Electric
will, for information reporting purposes, treat Special Cash Payments as
ordinary, non-dividend income to recipient United States Holders.
Non-United States Holders. Mass. Electric will treat Special Cash Payments
paid to a Non-United States Holder of Shares as subject to withholding of United
States Federal income tax at a 30% rate. However, Special Cash Payments that are
effectively connected with the conduct of a trade or business by the Non-United
States Holder within the United States are not subject to the withholding tax
(provided such Non-United States Holder provides two originals of Internal
Revenue Service ("IRS") Form 4224 stating that such Special Cash Payments are so
effectively connected), but instead are subject to United States Federal income
tax on a net income basis at applicable graduated individual or corporate rates.
Any such
24
<PAGE> 25
effectively connected Special Cash Payments received by a foreign corporation
may, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate (or such lower rate as may be specified by an applicable
income tax treaty).
A Non-United States Holder of Shares eligible for a reduced rate of United
States withholding tax pursuant to an income tax treaty may obtain a refund of
any excess amounts withheld by filing an appropriate claim for refund with the
IRS.
BACKUP WITHHOLDING
ANY TENDERING PREFERRED SHAREHOLDER OR PREFERRED SHAREHOLDER WHO VOTES IN
FAVOR OF THE PROPOSED AMENDMENT (BUT DOES NOT TENDER), AND WHO FAILS TO COMPLETE
AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE APPLICABLE LETTER OF
TRANSMITTAL (OR, IN THE CASE OF A FOREIGN PREFERRED SHAREHOLDER, FORM W-8
OBTAINABLE FROM THE DEPOSITARY) MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX
BACKUP WITHHOLDING OF 31% OF (1) IN THE CASE OF THE TENDERING PREFERRED
SHAREHOLDER, THE GROSS AMOUNT PAYABLE TO SUCH PREFERRED SHAREHOLDER IN EXCHANGE
FOR THE SHARES (INCLUDING THE SPECIAL CASH PAYMENT EQUIVALENT AMOUNT) OR (2) IN
THE CASE OF A NON-TENDERING PREFERRED SHAREHOLDER WHO VOTES IN FAVOR OF THE
PROPOSED AMENDMENT, THE SPECIAL CASH PAYMENT. To prevent backup United States
Federal income tax withholding with respect to the purchase price of Shares
purchased pursuant to the Offer (including the special cash payment equivalent
amount) or the special cash payment, as applicable, a United States Holder must
provide the Depositary with the Preferred Shareholder's correct taxpayer
identification number and certify that the Preferred Shareholder is not subject
to backup withholding of Federal income tax by completing the Substitute Form
W-9 included in the applicable Letter of Transmittal. Certain Preferred
Shareholders (including, among others, all corporations and certain foreign
shareholders) are exempt from backup withholding. For a corporate United States
Holder to qualify for such exemption, such Preferred Shareholder must provide
the Depositary with a properly completed and executed Substitute Form W-9
attesting to its exempt status. In order for a foreign Preferred Shareholder to
qualify as an exempt recipient, the foreign holder must submit a Form W-8,
Certificate of Foreign Status, signed under penalties of perjury, attesting to
that Preferred Shareholder's exempt status. A copy of Form W-8 may be obtained
from the Depositary.
Unless a Preferred Shareholder provides the appropriate certification,
under the applicable law and regulations concerning "backup withholding" of
United States Federal income tax, the Depositary will be required to withhold,
and will withhold, 31% of the gross amount otherwise payable to such Preferred
Shareholder or other payee. The amount of any backup withholding from a payment
to a Preferred Shareholder will be allowed as a credit against such Preferred
Shareholder's United States Federal income tax liability and may entitle such
Preferred Shareholder to a refund, provided that the required information is
furnished to the IRS. However, backup withholding is not required for amounts
subject to withholding discussed above under Tax Considerations for Tendering
Preferred Shareholders -- Non-United States Holders and Tax Considerations of
Special Cash Payments -- Non-United States Holders.
SOURCE AND AMOUNT OF FUNDS
Assuming that NEES purchases all outstanding Shares of each Series of
Preferred pursuant to the Offer, the total amount required by NEES to purchase
such Shares will be approximately $55 million, exclusive of the payment of
accrued dividends, but including fees and other expenses. NEES intends to fund
the Offer through the use of its general funds (which, in the ordinary course,
include funds from Mass. Electric) and funds borrowed pursuant to NEES'
committed lines of credit, including any bank revolving credit agreements. The
interest rates depend upon the timing, amount of borrowings, and market rates at
that time. NEES currently has regulatory authority to borrow $100 million and is
seeking to increase that amount.
25
<PAGE> 26
Mass. Electric sells commercial paper directly to commercial paper dealers
who reoffer the commercial paper to investors.
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
Each of NEES and Mass. Electric has been advised by its directors and
executive officers that no directors or executive officers of the respective
companies own any Shares. Based upon the companies' records and upon information
provided to each company by its directors and executive officers, neither
company nor, to the knowledge of either, any of their subsidiaries, affiliates,
directors, or executive officers, or any associates of the foregoing, has
engaged in any transactions involving Shares during the 40 business days
preceding the date hereof. Neither company nor, to the knowledge of either, any
of their directors or executive officers or any associate of the foregoing is a
party to any contract, arrangement, understanding, or relationship relating
directly or indirectly to the Offer with any other person or entity with respect
to any securities of Mass. Electric.
FEES AND EXPENSES PAID TO DEALERS
DEALER MANAGER FEES
Merrill Lynch will act as Dealer Manager for NEES in connection with the
Offer. NEES has agreed to pay the Dealer Manager a fee of $0.50 for each Share
of Dividend Series Preferred Stock and $0.125 for each Share of Preferred
Stock -- Cumulative tendered, accepted for payment, and paid for pursuant to the
Offer and a fee of $0.50 for each Share of Dividend Series Preferred Stock and
$0.125 for each Share of Preferred Stock -- Cumulative that are not tendered
pursuant to the Offer but which vote in favor of the Proposed Amendment. The
Dealer Manager will also be reimbursed by NEES for its reasonable out-of-pocket
expenses, including attorneys' fees, and will be indemnified against certain
liabilities, including certain liabilities under the federal securities laws, in
connection with the Offer. The Dealer Manager has rendered, is currently
rendering, and is expected to continue to render various investment banking and
other advisory services to NEES and Mass. Electric. The Dealer Manager has
received, and will continue to receive, customary compensation from NEES and
Mass. Electric for such services. NEES has retained IBJ Schroder Bank & Trust
Company as Depositary and Georgeson & Company, Inc. as Information Agent in
connection with the Offer. The Depositary and the Information Agent will receive
reasonable and customary compensation for their services and will also be
reimbursed for reasonable out-of-pocket expenses, including attorney fees.
Neither the Depositary nor the Information Agent has been retained to make
solicitations or recommendations in connection with the Offer.
SOLICITED TENDER FEES
Upon the terms and subject to the conditions of the Offer and pursuant to
Instruction 10 of the accompanying Letter of Transmittal and Proxy, NEES will
pay to designated brokers and dealers a solicitation fee of (i) $1.50 per Share
for any Dividend Series Preferred Stock and (ii) $0.375 per Share for any
Preferred Stock -- Cumulative Shares tendered, accepted for payment, and paid
for pursuant to the Offer and for each such Share not tendered but voted in
favor of the Proposed Amendment (except that for transactions for beneficial
owners equal to or exceeding 2,500 Shares, NEES will pay a solicitation fee of
(i) $1.00 per Share for any Dividend Series Preferred Stock and (ii) $0.25 per
Share for any Preferred Stock -- Cumulative, of which eighty percent (80%) shall
be paid to the Dealer Manager and twenty percent (20%) to the Soliciting Dealer
(which may be the Dealer Manager)). With respect to fees payable pursuant to
this paragraph involving transactions for beneficial owners whose ownership is
less than 2,500 Shares, any fees payable hereunder shall be paid in full to the
Dealer Manager unless a Soliciting Dealer is designated (as described below), in
which case such fee shall be payable in full to such designated Soliciting
Dealer (which designated Soliciting Dealer may be the Dealer Manager). The
Letter of Transmittal and Proxy must include the name of an entity which
obtained the tender or proxy and which is either (a) a broker or dealer in
securities, including the Dealer Manager in its capacity as a broker or dealer,
which is a member of a national securities
26
<PAGE> 27
exchange or of the NASD, (b) a foreign broker or dealer not eligible for
membership in the NASD which agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (c) a bank or trust company (each of which is
referred to herein as a Soliciting Dealer). No solicitation fee shall be payable
to a Soliciting Dealer with respect to the tender of Shares or delivery of a
proxy unless the Letter of Transmittal and Proxy accompanying such tender or
delivery designates such Soliciting Dealer. No solicitation fee shall be payable
to a Soliciting Dealer in respect of Shares registered in the name of such
Soliciting Dealer unless such Shares are held by such Soliciting Dealer as
nominee and such Shares are being tendered or delivered for the benefit of one
or more beneficial owners identified on the Letter of Transmittal and Proxy or
on the Notice of Solicited Tenders. No solicitation fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a depositing holder (other than itself). No
solicitation fee shall be paid to a Soliciting Dealer with respect to Shares
tendered or delivered for such Soliciting Dealer's own account. A Soliciting
Dealer shall not be entitled to a solicitation fee for Shares beneficially owned
by such Soliciting Dealer. No broker, dealer, bank, trust company, or other
nominee shall be deemed to be the agent of NEES, Mass. Electric, the Depositary,
the Information Agent, or the Dealer Manager for purposes of the Offer.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b), and (c) above even when the activities of such organizations
in connection with the Offer consist solely of forwarding to clients materials
relating to the Offer, including the Letter of Transmittal and Proxy and
tendering Shares or delivering a proxy as directed by beneficial owners thereof.
No Soliciting Dealer is authorized to make any recommendation to holders of
Shares as to whether to tender or refrain from tendering in the Offer. No
assumption is made, in making payment to any Soliciting Dealer, that its
activities in connection with the Offer included any activities other than those
described above, and for all purposes noted in all materials relating to the
Offer, the term "solicit" shall be deemed to mean no more than processing Shares
tendered or forwarding to customers materials regarding the Offer.
STOCK TRANSFER TAXES
NEES will pay all stock transfer taxes, if any, payable on account of the
acquisition of Shares by NEES pursuant to the Offer, except in certain
circumstances where special payment or delivery procedures are utilized pursuant
to Instruction 6 of the accompanying Letter of Transmittal and Proxy.
27
<PAGE> 28
SUMMARY OF FINANCIAL INFORMATION
Set forth below is certain historical financial information of Mass.
Electric. The historical financial information (other than the ratios of
earnings to fixed charges) was derived from the audited financial statements
included in Mass. Electric's Annual Report on Form 10-K for the year ended
December 31, 1996 and the unaudited consolidated financial statements included
in Mass. Electric's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997.
CONDENSED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- -----------------------
1996 1995 1997 1996
---------- ---------- -------- --------
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C>
Operating Revenues......................... $1,538,537 $1,505,676 $775,060 $749,298
Operating Income........................... 71,961 61,670 43,938 34,470
Allowance for Borrowed and Equity Funds
Used During Construction (credit)........ (740) (657) (216) (464)
Net Income................................. 37,926 29,101 23,989 16,190
Preferred Stock Dividend Requirements...... 3,114 3,114 1,557 1,557
Earnings Applicable to Common Stock........ 34,812 25,987 22,432 14,633
Ratio of Earnings to Fixed Charges......... 2.82 2.45 3.12(a) 2.85(a)
</TABLE>
- ---------------
(a) Ratio for the twelve months ended June 30.
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, JUNE 30,
------------------------- ---------------------------
1996 1995 1997 1996
---------- ---------- ---------- ----------
(THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Net Utility Plant in Service............ $1,079,311 $1,020,358 $1,089,964 $1,046,636
Construction Work in Progress........... 9,119 21,118 17,608 18,628
Cash and Cash Equivalents............... 2,356 1,840 1,163 997
Other Current Assets.................... 233,453 234,694 215,786 222,861
Other Assets............................ 66,019 65,090 51,047 61,147
---------- ---------- ---------- ----------
$1,390,258 $1,343,100 $1,375,568 $1,350,269
========== ========== ========== ==========
LIABILITIES:
Common Equity........................... $ 427,061 $ 411,433 $ 432,706 $ 415,275
Cumulative Preferred Stock.............. 50,000 50,000 50,000 50,000
Long-term Debt (less amounts due within
one year)............................. 343,321 353,267 333,415 338,356
Current Liabilities..................... 329,748 278,012 329,396 308,013
Other Liabilities....................... 240,128 250,388 230,051 238,625
---------- ---------- ---------- ----------
$1,390,258 $1,343,100 $1,375,568 $1,350,269
========== ========== ========== ==========
</TABLE>
28
<PAGE> 29
CERTAIN INFORMATION REGARDING NEES AND MASS. ELECTRIC;
INCORPORATION BY REFERENCE
Mass. Electric, a Massachusetts corporation, is a wholly owned subsidiary
of NEES. Mass. Electric is a retail electric utility incorporated and doing
business solely in Massachusetts. Electric service is provided to approximately
960,000 customers in 146 cities and towns having a population of approximately
2,160,000.
NEES and Mass. Electric are subject to the informational requirements of
the Exchange Act and in accordance therewith file reports and other information
with the SEC. Such reports and other information may be inspected and copied at
the public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington D.C. 20549 at prescribed rates. The SEC
maintains a Web site at http://www.sec.gov containing reports, proxy, and other
information regarding registrants that file electronically with the SEC,
including NEES and Mass. Electric. Reports, proxy materials, and other
information about NEES are also available at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005. In connection with the
Offer NEES has filed an Issuer Tender Offer Statement on Schedule 13E-4 with the
SEC that includes certain additional information relating to the Offer. NEES's
Schedule 13E-4 will not be available at the SEC's regional offices.
The following documents, which have heretofore been filed by NEES and Mass.
Electric with the SEC pursuant to the Exchange Act, are incorporated by
reference herein and shall be deemed a part hereof:
(1) Annual report on Form 10-K for the year ended December 31, 1996,
which contains or incorporates by reference financial statements and
financial statement schedules of NEES and Mass. Electric as of December 31,
1996, and for each of the three years in the period ended December 31,
1996, incorporates by reference or includes the related reports of Coopers
& Lybrand, independent certified public accountants;
(2) Quarterly reports on Form 10-Q for NEES for the quarters ended
March 31, 1997 and June 30, 1997;
(3) Quarterly reports on Form 10-Q for Mass. Electric for the quarters
ended March 31, 1997 and June 30, 1997;
(4) Reports on Form 8-K for NEES for the periods ended April 14, 1997,
May 20, 1997, and August 6, 1997; and
(5) Reports on Form 8-K for Mass. Electric for the periods ended May
20, 1997 and August 6, 1997.
All reports filed by NEES and Mass. Electric with the SEC pursuant to these
sections subsequent to the date of this Booklet and prior to the Expiration Date
(or any extension thereof) shall be incorporated herein by reference and shall
be deemed a part hereof on the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Booklet to the extent that a statement contained herein or
in any other subsequently filed documents which 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 Booklet.
NEES and Mass. Electric hereby undertake to provide without charge to each
person to whom a copy of this Booklet has been delivered, upon the written or
oral request of such person, a copy of any or all of the documents referred to
above which have been or may be incorporated by reference in this Booklet, other
than exhibits to such documents. Written or oral requests for such copies should
be directed to the Treasurer, Massachusetts Electric Company, 25 Research Drive,
Westborough, Massachusetts 01582, telephone (508) 389-2000.
29
<PAGE> 30
The information relating to NEES and Mass. Electric contained in this
Booklet does not purport to be comprehensive and should be read together with
the information contained in the documents incorporated by reference.
MISCELLANEOUS
The Offer is not being made to, nor will NEES accept tenders from, owners
of Shares in any jurisdiction in which the Offer or its acceptance would not be
in compliance with the laws of such jurisdiction. NEES is not aware of any
jurisdiction where the making of the Offer or the tender of Shares would not be
in compliance with applicable law. If NEES becomes aware of any jurisdiction
where the making of the Offer or the tender of Shares is not in compliance with
any applicable law, NEES will make a good faith effort to comply with such law.
If, after such good faith effort, NEES cannot comply with such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
owners of Shares residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky, or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on NEES's behalf by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NEW ENGLAND ELECTRIC SYSTEM
MASSACHUSETTS ELECTRIC COMPANY
The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby referred
to, and a copy of which as amended has been filed with the Secretary of the
Commonwealth of Massachusetts. Any agreement, obligation or liability made,
entered into or incurred by or on behalf of New England Electric System binds
only its trust estate, and no shareholder, director, trustee, officer or agent
thereof assumes or shall be held to any liability therefor.
30
<PAGE> 31
The Letter of Transmittal and Proxy and, if applicable, certificates for
Shares should be sent or delivered by each tendering or voting Preferred
Shareholder of Mass. Electric or such Preferred Shareholder's broker, dealer,
bank, or trust company to the Depositary at one of its addresses set forth
below.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery:
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Reorganization Department
Attn: Reorganization Department Securities Processing Window SC-1
By Facsimile: To Confirm:
(212) 858-2611 (212) 858-2103
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Requests for additional copies of this Booklet, the Letter of
Transmittal and Proxy, or other tender offer or proxy materials may be directed
to the Information Agent and such copies will be furnished promptly at the
companies' expense. Preferred Shareholders may also contact their broker,
dealer, commercial bank, trust company, or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON AND COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (toll-free)
Banks and Brokers call collect:
(212) 440-9800
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
250 Vesey Street
New York, New York 10281
(888)-ML4-TNDR (toll-free)
(888) 654-8637 (toll-free)
ATTENTION
Preferred Shareholders who have lost certificates, please call New England
Electric System, Shareholder Services Department, at (800) 466-7215 for
assistance.
<PAGE> 1
LETTER OF TRANSMITTAL AND PROXY
RELATING TO
SHARES OF 4.44% SERIES OF DIVIDEND SERIES PREFERRED STOCK
OF
MASSACHUSETTS ELECTRIC COMPANY
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
BY
NEW ENGLAND ELECTRIC SYSTEM,
DATED NOVEMBER 6, 1997,
FOR PURCHASE AT A PURCHASE PRICE OF
$87.92 PER SHARE
AND/OR
VOTED PURSUANT TO THE PROXY STATEMENT,
DATED NOVEMBER 6, 1997,
OF
LOGO MASSACHUSETTS ELECTRIC COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON FRIDAY, DECEMBER 12, 1997, OR ON SUCH DATE TO WHICH
THE MEETING IS ADJOURNED OR POSTPONED.
To: IBJ Schroder Bank & Trust Company (the Depositary)
By First-Class Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attn: Reorganization Department
By Facsimile:
(212) 858-2611
By Hand or Overnight Delivery:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attn: Reorganization Department
Securities Processing Window SC-1
To Confirm:
(212) 858-2103
ATTENTION
THIS LETTER OF TRANSMITTAL AND PROXY IS TO BE USED BY BOTH (1) PREFERRED
SHAREHOLDERS WHO ARE TENDERING AND VOTING SHARES PURSUANT TO THE OFFER AND (2)
PREFERRED SHAREHOLDERS WHO ARE ONLY VOTING ON THE PROPOSED AMENDMENT AND NOT
TENDERING SHARES.
ANY PREFERRED SHAREHOLDER WHO HAS ANY QUESTIONS AS TO HOW TO COMPLETE THIS
LETTER OF TRANSMITTAL AND PROXY SHOULD CONTACT THE INFORMATION AGENT AT (800)
223-2064 (TOLL-FREE) AND FOR BANKS AND BROKERS (212) 440-9800 (CALL COLLECT).
<PAGE> 2
All capitalized terms used herein and not defined herein have the meanings
ascribed to them in the Offer to Purchase and Proxy Statement.
DIVIDEND SERIES PREFERRED SHAREHOLDERS (INCLUDING DIVIDEND SERIES PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE
TO VALIDLY TENDER THEIR SHARES UNLESS THEY HAVE SUBMITTED A DULY COMPLETED,
VALID AND UNREVOKED PROXY INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR
INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED
AMENDMENT AT THE SPECIAL MEETING. NEW ENGLAND ELECTRIC SYSTEM, A MASSACHUSETTS
VOLUNTARY ASSOCIATION (NEES), WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY
FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT
THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE ON THE
PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY CASTING
THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF TRANSMITTAL AND
PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE PROPOSED AMENDMENT
IS APPROVED AND ADOPTED, MASSACHUSETTS ELECTRIC COMPANY, A MASSACHUSETTS
CORPORATION AND A DIRECT UTILITY SUBSIDIARY OF NEES (MASS. ELECTRIC), WILL MAKE
A SPECIAL CASH PAYMENT TO EACH DIVIDEND SERIES PREFERRED SHAREHOLDER WHO VOTED
IN FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED
PURSUANT TO THE OFFER.
DIVIDEND SERIES PREFERRED SHAREHOLDERS WHO PURCHASE OR WHOSE PURCHASE
SETTLES OR IS REGISTERED AFTER THE CLOSE OF BUSINESS ON NOVEMBER 12, 1997 (THE
RECORD DATE) AND WHO WISH TO TENDER IN THE OFFER MUST ARRANGE WITH THEIR SELLER
TO RECEIVE A DULY COMPLETED, VALID AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM
OF AN IRREVOCABLE ASSIGNMENT OF PROXY AS SET FORTH IN THIS LETTER OF TRANSMITTAL
AND PROXY) FROM THE HOLDER ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO
FACILITATE RECEIPT OF PROXIES, SHARES SHALL, DURING THE PERIOD WHICH COMMENCES
NOVEMBER 10, 1997 AND WHICH WILL END AT THE CLOSE OF BUSINESS ON THE EXPIRATION
DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A PROXY PROVIDING THE TRANSFEREE
WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN THE PROXY SOLICITATION.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW. IF
SHARES ARE NOT BEING TENDERED, YOU NEED ONLY COMPLETE THE BOXES BELOW
TITLED "PROXY" (OR, IF APPLICABLE, "IRREVOCABLE PROXY") AND
"SIGNATURES(S) OF REGISTERED HOLDER(S)" AND THE SUBSTITUTE FORM W-9.
The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby referred
to, and a copy of which as amended has been filed with the Secretary of the
Commonwealth of Massachusetts. Any agreement, obligation or liability made,
entered into or incurred by or on behalf of New England Electric System binds
only its trust estate, and no shareholder, director, trustee, officer or agent
thereof assumes or shall be held to any liability therefor.
2
<PAGE> 3
PLEASE COMPLETE:
PROXY
The undersigned hereby appoints John G. Cochrane, Michael E. Jesanis, and
Robert King Wulff, and each of them, proxies, with full power of substitution,
to represent the shareholder(s) at the Special Meeting to be held on December
12, 1997, and at any and all adjournments thereof, and to vote thereat the
number of shares (Shares) of 4.44% Series of Dividend Series Preferred Stock of
Massachusetts Electric Company (Mass. Electric) which the shareholder(s) would
be entitled to vote if then personally present, with all the powers the
shareholder(s) would then possess, but especially, without limiting the
foregoing, to vote as specified herein on the proposal set forth in the proxy
statement.
NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE
CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY.
THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF MASS. ELECTRIC. The proxy contained herein, when properly
executed, will be voted in the manner directed herein by the undersigned
shareholder(s). If no direction is made, the proxy will be voted FOR Item 1.
INDICATE YOUR VOTE BY AN (X). THE BOARD OF DIRECTORS OF MASS. ELECTRIC
RECOMMENDS VOTING FOR ITEM 1.
HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE "FOR" THE
PROPOSED AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL
MEETING.
ITEM 1.
Amendment of the Articles of Organization and By-laws to delete in its
entirety Article XVIII, Section 4E(4), limiting Mass. Electric's ability to
issue unsecured indebtedness.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
NOTE: IF SHARES ARE BEING VOTED "FOR" THE PROPOSED AMENDMENT, THE SUBSTITUTE
FORM W-9 BELOW SHOULD BE COMPLETED TO AVOID BACK-UP WITHHOLDING ON THE
SPECIAL CASH PAYMENT.
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED "FOR" THE PROPOSED AMENDMENT AND OTHERWISE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF MASS.
ELECTRIC, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Any holder of Shares held of record on the Record Date in the name of
another holder must establish, to the satisfaction of Mass. Electric, such
holder's entitlement to exercise or transfer this Proxy. This will ordinarily
require an assignment by such record holder in blank, or if not in blank, to and
from each successive transferee, including the holder, with each signature
guaranteed by an Eligible Institution. A form of irrevocable assignment of proxy
has been provided herein.
Please check box if you plan to attend the Special Meeting. [ ]
3
<PAGE> 4
PLEASE COMPLETE IF APPLICABLE:
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED(1)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE USE PREADDRESSED LABEL OR FILL IN, IF
BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE SHARE CERTIFICATE(S) AND SHARE(S) TENDERED/VOTED
CERTIFICATE(S) AND SHARE(S) TENDERED) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)(1)
------------------------------------------------------------------------------------------------------------------
NUMBER OF
TOTAL NUMBER SHARES NOT
OF SHARES TENDERED BUT
REPRESENTED NUMBER AS TO WHICH
SHARE CERTIFICATE BY SHARE OF SHARES PROXIES
NUMBER(S)(2) CERTIFICATE(S)(2) TENDERED(3) GIVEN ONLY
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Total Shares:
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If tendering or voting Share(s), please fill in table exactly as
information appears on the Certificate(s).
(2) Need not be completed by Preferred Shareholders tendering by book-entry
transfer.
(3) Unless otherwise indicated, it will be assumed that all Shares represented
by any Certificate(s) delivered to the Depositary are being tendered and a
proxy is being delivered. See Instruction 4. You must vote "FOR" the
Proposed Amendment with respect to any Shares tendered.
- --------------------------------------------------------------------------------
NOTE: IF YOU ARE DELIVERING A PROXY BUT NOT TENDERING SHARES, DO NOT SEND ANY
SHARE CERTIFICATES.
4
<PAGE> 5
PLEASE COMPLETE IF APPLICABLE:
- --------------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S)*
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(SIGNATURE)
Dated: , 1997
--------------------------------------------------------------------
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
--------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please set forth full title and see
Instruction 5.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Dated: , 1997
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
5
<PAGE> 6
IF SELLING SHARES ON OR AFTER NOVEMBER 10, 1997, A RECORD HOLDER MUST
COMPLETE THE FOLLOWING IRREVOCABLE PROXY.
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK PROXY TO A
SUBSEQUENT HOLDER OF PREFERRED STOCK WHO WAS NOT A HOLDER OF RECORD ON NOVEMBER
12, 1997.
- --------------------------------------------------------------------------------
IRREVOCABLE PROXY *
WITH RESPECT TO SHARES OF THE
4.44% SERIES OF DIVIDEND SERIES PREFERRED STOCK (THE SHARES) OF
MASSACHUSETTS ELECTRIC COMPANY (MASS. ELECTRIC)
The undersigned hereby irrevocably appoints:
------------------------------------
TYPE OR PRINT NAME OF TRANSFEREE
as attorney and proxy, with full power of substitution, to vote and otherwise
act for and in the name(s) of the undersigned with respect to the Shares
indicated below which were held of record by the undersigned on November 12,
1997, in the manner in which the undersigned would be entitled to vote and
otherwise act in respect of such Shares on any and all matters.
This proxy shall be effective whether or not the Shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the Shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest and assigned of the
undersigned. The undersigned understands that tenders of Shares pursuant to any
of the procedures described in the Offer to Purchase and Proxy Statement and in
this Letter of Transmittal and Proxy will constitute a binding agreement between
the undersigned and Mass. Electric upon the terms and subject to the conditions
of the Offer.
DESCRIPTION OF PREFERRED STOCK
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S) AGGREGATE NUMBER
(ATTACH LIST IF NECESSARY) OF SHARES
- -------------------------- --------------------------
<S> <C>
1.
- -------------------------- --------------------------
2.
- -------------------------- --------------------------
3.
- -------------------------- --------------------------
Total
--------------------------
</TABLE>
- ---------------
* This irrevocable proxy must be signed on the next page to be effective.
- --------------------------------------------------------------------------------
6
<PAGE> 7
- --------------------------------------------------------------------------------
IRREVOCABLE PROXY
SIGNATURE(S) OF RECORD OR AUTHORIZED SIGNATORY*
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Dated: 1997
--------------------------------------------------------------------,
Tax Identification or Social Security No(s)
-------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Dated: 1997
---------------------------------------------------------------------,
Tax Identification or Social Security No(s)
-------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Record Date on the stock certificate(s) or on a security position listing or
by person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name: --------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title):
----------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Dated: 1997
---------------------------------------------------------------------,
- --------------------------------------------------------------------------------
7
<PAGE> 8
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A FORM
W-8, AS APPLICABLE.
DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER
THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN
THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE SPACE THEREFOR PROVIDED
ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING "FOR" THE PROPOSED
AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS
APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX INFORMATION" BELOW.
DO NOT SEND ANY CERTIFICATES TO NEES, MASS. ELECTRIC, MERRILL LYNCH & CO.,
OR GEORGESON & COMPANY, INC.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED.
This Letter of Transmittal and Proxy is to be used if (a) certificates are
to be forwarded herewith (b) delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth under the heading Terms of the
Offer -- Procedure for Tendering Shares in the Offer to Purchase and Proxy
Statement (as defined below) or (c) Shares are being voted in connection with
the Offer.
Preferred Shareholders who wish to tender Shares but cannot deliver their
Shares and all other documents required hereby to the Depositary on or prior to
the Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth under the heading Terms of the Offer -- Procedure for
Tendering Shares -- Guaranteed Delivery Procedure in the Offer to Purchase and
Proxy Statement. See Instruction 2. DELIVERY OF DOCUMENTS TO NEES, MASS.
ELECTRIC OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE COMPLETE:
<TABLE>
<S> <C>
[ ] CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
A HOLDER TENDERING SHARES PURSUANT TO THIS LETTER OF TRANSMITTAL AND PROXY MUST CHECK ONE
OF THE FOLLOWING BOXES:
[ ] A duly completed, valid and unrevoked proxy indicating a vote "FOR" the Proposed
Amendment is included herein.
[ ] A vote "FOR" the Proposed Amendment will be cast at the Special Meeting.
</TABLE>
8
<PAGE> 9
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE
FOLLOWING:
Name of tendering institution:
-----------------------------------------------------------
(PLEASE PRINT)
Check applicable box: [ ] DTC [ ] PDTC
Account No.
------------------------------------------------------------------------------
Transaction Code No.
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of tendering Preferred Shareholder(s):
-------------------------------------------
-----------------------------------------------------------------------------------------
(PLEASE PRINT)
Date of execution of Notice of Guaranteed Delivery and Proxy:
----------------------------
Name of institution that guaranteed delivery:
--------------------------------------------
If delivery is by book-entry transfer:
Name of tendering institution:
-----------------------------------------------------------
Account No.
------------------------------------------------------- at [ ] DTC or [ ] PDTC
(CHECK ONE)
Transaction Code No.
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A HOLDER ELECTING TO TENDER SHARES PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND PROXY
MUST CHECK ONE OF THE FOLLOWING BOXES:
[ ] A duly completed, valid and unrevoked proxy indicating a vote "FOR" the Proposed
Amendment was included with the Notice of Guaranteed Delivery and Proxy previously sent
to the Depositary.
[ ] A duly completed, valid and unrevoked proxy indicating a vote "FOR" the Proposed
Amendment is being delivered pursuant to a Notice of Guaranteed Delivery and Proxy
previously sent to the Depositary.
[ ] A vote "FOR" the Proposed Amendment will be cast at the Special Meeting.
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE> 10
NOTE: SIGNATURES MUST BE PROVIDED ABOVE
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The above signed hereby tenders to NEES the shares in the amount set forth
in the box above labeled "Description of Shares Tendered" pursuant to NEES'
offer to purchase any and all of the outstanding shares of the 4.44% Series of
Dividend Series Preferred Stock (the Shares) of Mass. Electric, shown above as
to which this Letter of Transmittal and Proxy is applicable at the purchase
price per Share shown above (the Purchase Price), net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
and Proxy Statement, dated November 6, 1997 (the Booklet), receipt of which is
hereby acknowledged, and in this Letter of Transmittal and Proxy (which together
constitute the Offer). PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES
PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO MASS.
ELECTRIC'S BY-LAWS AND ARTICLES OF ORGANIZATION (THE PROVISIONS), AS SET FORTH
IN THE BOOKLET (THE PROPOSED AMENDMENT). THE OFFER IS CONDITIONED UPON THE
PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED
IN THE BOOKLET). See Proposed Amendment and Proxy Solicitation, Terms of the
Offer -- Extension of Tender Period; Termination; Amendments and Terms of the
Offer -- Certain Conditions of the Offer in the Booklet.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the above signed
hereby sells, assigns and transfers to, or upon the order of, NEES all right,
title and interest in and to all the Shares that are being tendered hereby and
hereby constitutes and appoints IBJ Schroder Bank & Trust Company (the
Depositary) the true and lawful agent and attorney-in-fact of the above signed
with respect to such Shares, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares, or transfer ownership of such Shares on the
account books maintained by any of the Book-Entry Transfer Facilities, together,
in any such case, with all accompanying evidences of transfer and authenticity,
to or upon the order of NEES, (b) present such Shares for registration and
transfer on the books of Mass. Electric and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares, all in
accordance with the terms of the Offer.
The above signed hereby represents and warrants that the above signed has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that, when and to the extent the same are accepted for
payment by NEES, NEES will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer thereof, and the same will not be subject to any adverse claims. The
above signed will, upon request, execute and deliver any additional documents
deemed by the Depositary or NEES to be necessary or desirable to complete the
sale, assignment and transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the above signed, and
any obligations of the above signed hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the above signed. Except as
stated in the Offer, this tender is irrevocable.
The above signed understands that tenders of Shares pursuant to any one of
the procedures described under the heading Terms of the Offer -- Procedure for
Tendering Shares in the Booklet and in the instructions hereto will constitute
the above signed's acceptance of the terms and conditions of the Offer,
including the above signed's representation and warranty that (a) the above
signed has a net long position in the Shares being tendered within the meaning
of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended
(the Exchange Act), and (b) the tender of such Shares complies with Rule 14e-4.
NEES' acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the above signed and NEES upon the terms
and subject to the conditions of the Offer.
10
<PAGE> 11
The above signed recognizes that, under certain circumstances set forth in
the Booklet, NEES may terminate or amend the Offer or may not be required to
purchase any of the Shares tendered hereby. In either event, the above signed
understands that certificate(s) for any Shares not tendered or not purchased
will be returned to the above signed.
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions," please issue the check for the Purchase Price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the above signed (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Unless otherwise indicated in the box below under the heading
"Special Delivery Instructions," please mail the check for the Purchase Price of
any Shares purchased and/or any certificates for Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the above signed at
the address shown below. In the event that both "Special Payment Instructions"
and "Special Delivery Instructions" are completed, please issue the check for
the Purchase Price of any Shares purchased and/or return any Shares not tendered
or not purchased in the name(s) of, and mail said check and/or any certificates
to, the person(s) so indicated. The above signed recognizes that NEES has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if NEES does not accept
for payment any of the Shares so tendered.
11
<PAGE> 12
PLEASE COMPLETE IF APPLICABLE:
------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
SEE INSTRUCTIONS 4, 6, AND 7
To be completed ONLY if the check for the Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are
to be issued in the name of someone other than the above signed.
Issue: [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)*
* SEE SUBSTITUTE FORM W-9 BELOW.
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility Account set forth below:
[ ] DTC [ ] PDTC
Account No:
------------------------------------------------------
======================================================
SPECIAL DELIVERY INSTRUCTIONS
SEE INSTRUCTIONS 4, 6, AND 7
To be completed ONLY if the check for the Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are
to be mailed to someone other than the above signed or to the above signed
at an address other than that shown below the above signed's signature(s).
Mail: [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------
PREFERRED SHAREHOLDERS WHO HAVE LOST CERTIFICATES, PLEASE CALL NEW ENGLAND
ELECTRIC SYSTEM'S SHAREHOLDER SERVICES DEPARTMENT, AT (800) 466-7215 FOR
ASSISTANCE.
12
<PAGE> 13
SOLICITED TENDERS
(SEE INSTRUCTION 10)
As provided in the Offer to Purchase and Proxy Statement and Instruction 10
to the Letter of Transmittal and Proxy, NEES will pay to any Soliciting Dealer,
as defined in Instruction 10, a solicitation fee of $1.50 per Share for any
Shares tendered, accepted for payment and paid for pursuant to the Offer and for
each Share not tendered but voted in favor of the Proposed Amendment (except
that for transactions for beneficial owners equal to or exceeding 2,500 Shares,
NEES will pay a solicitation fee of $1.00 per Share). Solicitation fees payable
in transactions for beneficial owners of 2,500 or more Shares shall be paid 80%
to the Dealer Manager and 20% to the Soliciting Dealer (which may be the Dealer
Manager). However, a Soliciting Dealer will not be entitled to a solicitation
fee for Shares beneficially owned by such Soliciting Dealer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Individual Broker or Financial Consultant:
- -----------------------------------------------------------
Telephone Number of Broker or Financial Consultant:
- -------------------------------------------------------
Identification Number (if known):
- ----------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
The following to be completed ONLY if customer's Shares held in nominee
name are tendered. (ATTACH ADDITIONAL LIST IF NECESSARY.)
<TABLE>
<S> <C>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
-
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Exchange Act and the applicable rules and regulations thereunder, in
connection with such solicitation; (b) it is entitled to such compensation for
such solicitation under the terms and conditions of the Offer (unless such
solicitation fee is directed to another Soliciting Dealer); (c) in soliciting
tenders of Shares, it has used no soliciting materials other than those
furnished by NEES; and (d) if it is a foreign broker or dealer not eligible for
membership in the National Association of Securities Dealers, Inc. (the NASD),
it has agreed to conform to the NASD's Rules of Fair Practice in making the
solicitations.
The payment of compensation to any Soliciting Dealer is dependent on such
Soliciting Dealer returning a Notice of Solicited Tenders to the Depositary.
(IF SHARES ARE BEING TENDERED AND/OR VOTED, PLEASE ALSO COMPLETE
SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE)
SIGN HERE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF REGISTERED HOLDER(S))
13
<PAGE> 14
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm
that is a member of a registered national securities exchange or the NASD, or by
a commercial bank or trust company having an office or correspondent in the
United States which is a participant in an approved Signature Guarantee
Medallion Program (an Eligible Institution). Signatures on this Letter of
Transmittal and Proxy need not be guaranteed (a) if this Letter of Transmittal
and Proxy is signed by the registered holder(s) of the Shares (which term, for
purposes of this document, shall include any participant in one of the
Book-Entry Transfer Facilities whose name appears on a security position listing
as the owner of Shares) tendered herewith and such holder(s) has not completed
the box above under the heading "Special Payment Instructions" or the box above
under the heading "Special Delivery Instructions" on this Letter of Transmittal
and Proxy, (b) if such Shares are tendered for the account of an Eligible
Institution or (c) if this Letter of Transmittal and Proxy is being used solely
for the purpose of voting Shares which are not being tendered pursuant to the
Offer. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of
Transmittal and Proxy is to be used if (a) certificates are to be forwarded
herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant
to the procedures set forth under the heading Terms of the Offer -- Procedure
for Tendering Shares in the Booklet or (c) Shares are being voted in connection
with the Offer. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facilities of Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal and Proxy (or
facsimile thereof) and any other documents required by this Letter of
Transmittal and Proxy, must be received by the Depositary at one of its
addresses set forth on the front page of this Letter of Transmittal and Proxy on
or prior to the Expiration Date with respect to all Shares. Preferred
Shareholders who wish to tender their Shares yet who cannot deliver their Shares
and all other required documents to the Depositary on or prior to the Expiration
Date must tender their Shares pursuant to the guaranteed delivery procedure set
forth under the heading Terms of the Offer -- Procedure for Tendering Shares in
the Booklet. Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery and Proxy in the form provided by NEES (with any
required signature guarantees) must be received by the Depositary on or prior to
the applicable Expiration Date and (iii) the certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal and Proxy (or facsimile thereof) and any other documents
required by this Letter of Transmittal and Proxy must be received by the
Depositary within three New York Stock Exchange (NYSE) trading days after the
date of execution of such Notice of Guaranteed Delivery and Proxy, all as
provided under the heading Terms of the Offer -- Procedure for Tendering Shares
in the Booklet. A NYSE trading day is any day on which the NYSE is open for
business.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
Terms of the Offer -- Number of Shares; Purchase Price; Expiration Date;
Dividends in the Booklet. By executing this Letter of Transmittal and Proxy (or
facsimile thereof), the tendering Preferred Shareholder waives any right to
receive any notice of the acceptance for payment of the Shares.
3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES
PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO MASS.
ELECTRIC'S PROVISIONS, AS SET FORTH IN THE BOOKLET. THE OFFER IS CONDITIONED
UPON THE PROPOSED AMENDMENT BEING APPROVED AND
14
<PAGE> 15
ADOPTED AT THE SPECIAL MEETING. In addition, Preferred Shareholders have the
right to vote on the Proposed Amendment regardless of whether they tender their
Shares by casting their vote and duly executing the Proxy included in this
Letter of Transmittal and Proxy or by voting in person at the Special Meeting.
By executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder
is deemed to have tendered the Shares described in such Notice of Guaranteed
Delivery and Proxy and to have voted such Shares in accordance with the proxy
contained therein. If no vote is indicated on an otherwise properly executed
proxy contained within this Letter of Transmittal and Proxy (or within a Notice
of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will
be voted in favor of the Proposed Amendment. See "Proposed Amendment and Proxy
Solicitation" in the Booklet. The Offer is being sent to all persons in whose
names Shares are registered on the books of Mass. Electric on November 6, 1997
as well as to all persons in whose name Shares are registered on November 12,
1997, which is the Record Date. Preferred Shareholders who purchase or whose
purchase is registered after the Record Date and who wish to tender in the Offer
must arrange with their seller to receive a proxy from the holder of record on
the Record Date of such Shares. Any holder of Shares held of record on the
Record Date in the name of another holder must establish to the satisfaction of
Mass. Electric such holder's entitlement to exercise or transfer such Proxy.
This will ordinarily require an assignment by such record holder in blank, or if
not in blank, to and from each successive transferee, including the holder, with
each signature guaranteed by an Eligible Institution. See Instruction 5. In
order to facilitate receipt of proxies, Shares shall, during the period which
commences November 10, 1997 and which will end at the close of business on the
Expiration Date, trade in the over-the-counter market with a proxy providing the
transferee with the right to vote such acquired shares in the Proxy
Solicitation. No record date is fixed for determining which persons are
permitted to tender Shares. However, only the holders of record, or holders who
acquire an assignment of proxy from such holders, are permitted to vote for the
Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any
person who is the beneficial owner but not the record holder of Shares must
arrange for the record transfer of such Shares prior to tendering or direct the
record holder to tender on behalf of the beneficial holder.
4. PARTIAL TENDERS. NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-
ENTRY TRANSFER. If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered." In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal and Proxy, unless otherwise provided in the box above
under the heading "Special Payment Instructions" or "Special Delivery
Instructions," as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND NOTICE OF GUARANTEED
DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of
Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together,
the Tender and Proxy Documents) is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered or voted under either Tender and Proxy
Document is held of record by two or more persons, all such persons must sign
such Tender and Proxy Document. If any of the Shares tendered or voted under
either Tender and Proxy Document are registered in different names or different
certificates, it will be necessary to complete, sign and submit as many separate
Tender and Proxy Documents as there are different registrations of certificates.
If either Tender and Proxy Document is signed by the registered holder(s)
of the Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
15
<PAGE> 16
If this Letter of Transmittal and Proxy is signed by a person other than
the registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender and Proxy Document or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to NEES of the authority of such person so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, NEES
will pay or cause to be paid any stock transfer taxes with respect to the sale
and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the Purchase Price is to be made to, or Shares not tendered
or not purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of such taxes, or exemption therefrom, is submitted.
Each Preferred Shareholder will be responsible for paying any income or gross
receipts taxes imposed by any jurisdiction by reason of the Special Cash Payment
(as defined in the Booklet) and/or the sale of the Shares in the Offer. See
Terms of the Offer -- Acceptance of Shares for Payment and Payment of Purchase
Price and Dividends and Certain U.S. Federal Income Tax Considerations in the
Booklet. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO
AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED
HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the
Purchase Price of any Shares purchased is to be issued in the name of, any
Shares not tendered or not purchased are to be returned to, and/or the check for
the Special Cash Payment is to be issued in the name of, a person other than the
person(s) signing this Letter of Transmittal and Proxy or if the check and/or
any certificate for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal and Proxy or
to an address other than that shown in the box above under the heading
"Description of Shares Tendered," then the "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal and Proxy should
be completed. Preferred Shareholders tendering Shares by book-entry transfer
will have any Shares not accepted for payment returned by crediting the account
maintained by such Preferred Shareholder at the Book-Entry Transfer Facility
from which such transfer was made.
8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering and/or voting Preferred
Shareholder is required to provide the Depositary with either a correct Taxpayer
Identification Number (TIN) on Substitute Form W-9, which is provided under
"Important Tax Information" below, or a properly completed Form W-8 unless
exempt therefrom. Failure to provide the information on either Substitute Form
W-9 or Form W-8 may subject the tendering and/or voting Preferred Shareholder to
31% Federal income tax backup withholding on the payment of the Purchase Price
for the Shares or on the Special Cash Payment. The tendering and/or voting
Preferred Shareholder may write "Applied For" in Part I of Substitute Form W-9
and sign the "Certificate of Awaiting Taxpayer Identification Number" of
Substitute Form W-9 if the Preferred Shareholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future. If
"Applied For" is written in Part I of Substitute Form W-9 and the "Certificate
of Awaiting Taxpayer Identification Number" of Substitute Form W-9 is signed and
the Depositary is not provided with a TIN by the time of payment, the Depositary
will withhold 31% on all payments of the Purchase Price for the Shares or the
Special Cash Payment thereafter until a TIN is provided to the Depositary.
16
<PAGE> 17
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Manager at
their respective telephone numbers and addresses listed below. Requests for
additional copies of the Booklet, this Letter of Transmittal and Proxy, or other
tender offer materials may be directed to the Information Agent or the Dealer
Manager and such copies will be furnished promptly at NEES' expense. Preferred
Shareholders may also contact their local broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
10. SOLICITED TENDERS. Upon the terms and subject to the conditions of the
Offer and pursuant to this Instruction, NEES will pay to designated brokers and
dealers a solicitation fee of $1.50 per Share for each Share of Dividend Series
Preferred Stock tendered, accepted for payment, and paid for pursuant to the
Offer and for each Share of Dividend Series Preferred Stock not tendered but
voted in favor of the Proposed Amendment (except that for transactions for
beneficial owners equal to or exceeding 2,500 Shares, NEES will pay a
solicitation fee of $1.00 per Share, of which eighty percent (80%) shall be paid
to the Dealer Manager and twenty percent (20%) to the Soliciting Dealer (which
may be the Dealer Manager)). With respect to fees payable pursuant to this
paragraph involving transactions for beneficial owners whose ownership is less
than 2,500 Shares, any fees payable hereunder shall be paid in full to the
Dealer Manager unless a Soliciting Dealer is designated (as described below), in
which case such fee shall be payable in full to such designated Soliciting
Dealer (which designated Soliciting Dealer may be the Dealer Manager). This
Letter of Transmittal and Proxy must include the name of an entity which
obtained the tender or proxy and which is either (a) a broker or dealer in
securities, including the Dealer Manager in its capacity as a broker or dealer,
which is a member of a national securities exchange or of the NASD, (b) a
foreign broker or dealer not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (c) a bank
or trust company (each of which is referred to herein as a Soliciting Dealer).
No solicitation fee shall be payable to a Soliciting Dealer with respect to the
tender of Shares or delivery of a proxy unless the Letter of Transmittal and
Proxy accompanying such tender or delivery designates such Soliciting Dealer. No
solicitation fee shall be payable to a Soliciting Dealer in respect of Shares
registered in the name of such Soliciting Dealer unless such Shares are held by
such Soliciting Dealer as nominee and such Shares are being tendered or
delivered for the benefit of one or more beneficial owners identified on the
Letter of Transmittal and Proxy or on the Notice of Solicited Tenders. No
solicitation fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
depositing holder (other than itself). No solicitation fee shall be paid to a
Soliciting Dealer with respect to Shares tendered or delivered for such
Soliciting Dealer's own account. A Soliciting Dealer shall not be entitled to a
solicitation fee for Shares beneficially owned by such Soliciting Dealer. No
broker, dealer, bank, trust company, or other nominee shall be deemed to be the
agent of NEES, Mass. Electric, the Depositary, the Information Agent, or the
Dealer Manager for purposes of the Offer.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b), and (c) above even when the activities of such organizations
in connection with the Offer consist solely of forwarding to clients materials
relating to the Offer, including this Letter of Transmittal and Proxy, and
tendering Shares or delivering a proxy as directed by beneficial owners thereof.
No Soliciting Dealer is authorized to make any recommendation to holders of
Shares as to whether to tender or refrain from tendering in the Offer. No
assumption is made, in making payment to any Soliciting Dealer, that its
activities in connection with the Offer included any activities other than those
described above, and for all purposes noted in all materials relating to the
Offer, the term "solicit" shall be deemed to mean no more than processing Shares
tendered or forwarding to customers materials regarding the Offer.
17
<PAGE> 18
11. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by NEES, in its sole discretion, and its
determination shall be final and binding. NEES reserves the absolute right to
reject any and all tenders of Shares that it determines are not in proper form
or the acceptance for payment of or payment for Shares that may, in the opinion
of NEES' counsel, be unlawful. NEES also reserves the absolute right to waive
any of the conditions to the Offer or any defect or irregularity in any tender
of Shares and NEES' interpretation of the terms and conditions of the Offer
(including these instructions) shall be final and binding. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as NEES shall determine. None of NEES, the Dealer Manager, the Depositary,
the Information Agent or any other person shall be under any duty to give notice
of any defect or irregularity in tenders nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the Preferred
Shareholder should promptly call New England Electric System's Shareholder
Services Department at (800) 466-7215 for assistance. The Preferred Shareholder
will then be instructed as to the procedures that must be taken in order to
replace the certificate or tender such Shares. The tender of Shares pursuant to
this Letter of Transmittal and Proxy will not be valid unless on or prior to the
Expiration Date: (a) such procedures have been completed or (b) a Notice of
Guaranteed Delivery and Proxy has been delivered to the Depositary. See
Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY HEREOF),
DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF A
BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY AND PROXY MUST
BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
18
<PAGE> 19
IMPORTANT TAX INFORMATION
Under Federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment, or who will receive a Special Cash Payment as a result
of voting in favor of the Proposed Amendment, is required to provide the
Depositary (as payer) with either such Preferred Shareholder's correct TIN on
Substitute Form W-9 below or a properly completed Form W-8. If such Preferred
Shareholder is an individual, the TIN is such Preferred Shareholder's social
security number. For businesses and other entities, the number is the Federal
employer identification number. If the Depositary is not provided with the
correct TIN or properly completed Form W-8, the Preferred Shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
(a) payments that are made to such Preferred Shareholder with respect to Shares
purchased pursuant to the Offer or (b) Special Cash Payments made to a Preferred
Shareholder with respect to Shares voted pursuant to the proxy solicitation may
be subject to backup withholding. The Form W-8 can be obtained from the
Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" below for additional instructions.
If Federal income tax backup withholding applies, the Depositary is
required to withhold 31% of any payments made to the Preferred Shareholder.
Backup withholding is not an additional tax. Rather, the Federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of the tax withheld. If withholding results in an overpayment of taxes, a refund
may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a Preferred
Shareholder with respect to Shares purchased pursuant to the Offer or on Special
Cash Payments, the Preferred Shareholder is required to notify the Depositary of
his or her correct TIN by completing the Substitute Form W-9 below certifying
that the TIN provided on Substitute Form W-9 is correct and that (a) the
Preferred Shareholder has not been notified by the Internal Revenue Service that
he or she is subject to Federal income tax backup withholding as a result of
failure to report all interest or dividends or (b) the Internal Revenue Service
has notified the Preferred Shareholder that he or she is no longer subject to
Federal income tax backup withholding. Foreign Preferred Shareholders must
submit a properly completed Form W-8 in order to avoid the applicable backup
withholding; provided, however, that backup withholding will not apply to
foreign Preferred Shareholders subject to 30% (or lower treaty rate) withholding
on gross payments received pursuant to the Offer or on the Special Cash
Payments. Foreign Preferred Shareholders that submit a properly completed Form
W-8 may nevertheless be subject to withholding under other provisions of the
Code relating to payments received by them.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Preferred Shareholder is required to give the Depositary the social
security number or employer identification number of the registered owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" below for additional guidance on
which number to report.
19
<PAGE> 20
SEE "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9" FOR ADDITIONAL INSTRUCTIONS.
SUBSTITUTE
FORM W-9
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY, AS DEPOSITARY
- ----------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND ----------------------
DATING BELOW.
---------------------------------------- Social Security Number
PAYER'S REQUEST FOR or Employer
TAXPAYER IDENTIFICATION NAME (Please Print) Identification
NUMBER (TIN) Number
(If Awaiting TIN write
---------------------------------------- "Applied for")
------------------------
DEPARTMENT OF THE TREASURY ADDRESS
INTERNAL REVENUE SERVICE PART II -- For Payees
NOT subject to backup
---------------------------------------- withholding, see the
CITY STATE ZIP CODE "Guidelines for Cer-
tification of Taxpayer
Identification Number
on Substitute Form
W-9" and complete as
instructed therein
---------------------------------------------------------------------------------------------
</TABLE>
PART III -- CERTIFICATION: -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
<TABLE>
<S> <C> <C>
SIGNATURE DATE , 1997
----------------------------------- ------------------------------
</TABLE>
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer subject
to backup withholding do not cross out item (2). Also see instructions in the
enclosed Guidelines.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WRITE "APPLIED FOR"
IN PART I OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver such an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
<TABLE>
<S> <C> <C>
-------------------------------------------- ------------------------------------- , 1997
SIGNATURE DATE
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE "GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9"
FOR ADDITIONAL DETAILS.
20
<PAGE> 21
Any questions or requests for assistance or additional copies of the
Booklet, this Letter of Transmittal and Proxy, the Notice of Guaranteed Delivery
and Proxy or other materials may be directed to the Information Agent at the
address and telephone number set forth below.
The Information Agent for the Offer is:
(LOGO)
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
(800) 223-2064 (CALL TOLL-FREE)
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
Preferred Shareholders may contact the Dealer Manager at its address and
telephone number set forth below with any questions regarding the terms of the
Offer and solicitation of proxies. In addition, Preferred Shareholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer and solicitation of proxies.
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
WORLD FINANCIAL CENTER
250 VESEY STREET
NEW YORK, NEW YORK 10281
(888) ML4-TNDR (TOLL-FREE)
(888) 654-8637 (TOLL-FREE)
<PAGE> 1
LOGO
NOTICE OF GUARANTEED DELIVERY AND PROXY
FOR
NEW ENGLAND ELECTRIC SYSTEM
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES
OF THE FOLLOWING SERIES OF PREFERRED STOCK
OF
MASSACHUSETTS ELECTRIC COMPANY
Dividend Series Preferred Stock
4.44% Series
4.76% Series
6.99% Series
Preferred Stock -- Cumulative
6.84% Series
As set forth in Terms of the Offer -- Procedure for Tendering Shares of the
Booklet (referred to below), this form, or a form substantially equivalent to
this form, must be used to accept the Offer (as defined below) if certificates
for shares of a series of Dividend Series Preferred Stock or Preferred
Stock -- Cumulative of Massachusetts Electric Company (Mass. Electric), a
Massachusetts corporation and direct subsidiary of New England Electric System
(NEES), listed above (each a Series of Preferred or a Series, and each holder
thereof a Preferred Shareholder) to be tendered pursuant to the Offer (the
Shares) are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or if time will not permit all
other documents required by the Letter of Transmittal and Proxy to be delivered
to the Depositary on or prior to the Expiration Date (as defined in the
Booklet). Such form may be delivered by hand or transmitted by mail or by
facsimile transmission, to the Depositary. See Terms of the Offer -- Procedure
for Tendering Shares in the Booklet.
A SEPARATE NOTICE OF GUARANTEED DELIVERY AND PROXY MUST BE USED FOR EACH
SERIES. THE ELIGIBLE INSTITUTION WHICH COMPLETES THIS FORM MUST COMMUNICATE THE
GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND PROXY
AND CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN.
FAILURE TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION.
TO: IBJ SCHRODER BANK & TRUST COMPANY (THE DEPOSITARY)
<TABLE>
<S> <C>
By First-Class Mail: By Hand or Overnight Delivery:
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 Attn: Reorganization Department
Attn: Reorganization Department Securities Processing Window SC-1
By Facsimile: To Confirm:
(212) 858-2611 (212) 858-2103
</TABLE>
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS NOTICE TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal and Proxy is required to be guaranteed by an Eligible
Institution (as defined in the Letter of Transmittal and Proxy) under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the signature box on the Letter of Transmittal and Proxy.
The undersigned hereby tenders to NEES, upon the terms and subject to the
conditions set forth in the Offer to Purchase and Proxy Statement, dated
November 6, 1997 (the Booklet), and the related Letter of Transmittal and Proxy
(which together constitute the Offer), receipt of which is hereby acknowledged,
the number of Shares listed below, pursuant to the guaranteed delivery procedure
set forth in Terms of the Offer -- Procedure for Tendering Shares in the
Booklet. PREFERRED SHAREHOLDERS (INCLUDING SHAREHOLDERS WHO ACQUIRE SHARES
SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE
OFFER MUST VOTE FOR THE PROPOSED AMENDMENT TO MASS. ELECTRIC'S ARTICLES OF
ORGANIZATION AND BY-LAWS AS SET FORTH IN THE BOOKLET (THE PROPOSED AMENDMENT).
PREFERRED SHAREHOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED
AFTER THE CLOSE OF BUSINESS ON NOVEMBER 12, 1997 (THE RECORD DATE) AND WHO WISH
TO TENDER THEIR SHARES IN THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A
DULY COMPLETED, VALID, AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF
IRREVOCABLE ASSIGNMENT OF PROXY ATTACHED HERETO) FROM THE HOLDER OF RECORD ON
THE RECORD DATE AND INCLUDE SUCH PROXY WITH THIS NOTICE OF GUARANTEED DELIVERY
AND PROXY OR VOTE SUCH PROXY FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING
(AS DEFINED IN THE BOOKLET). THE OFFER IS CONDITIONED UPON THE PROPOSED
AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING.
IN ADDITION, SHAREHOLDERS HAVE THE RIGHT TO VOTE ON THE PROPOSED AMENDMENT
BY CASTING THEIR VOTE AND SIGNING THE PROXY OR BY VOTING IN PERSON AT THE
SPECIAL MEETING. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, MASS.
ELECTRIC WILL MAKE A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER WHO
VOTED IN FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT SUCH SHARES WERE NOT
TENDERED PURSUANT TO THE OFFER.
2
<PAGE> 3
PLEASE COMPLETE:
PROXY
The undersigned hereby appoints John G. Cochrane, Michael E. Jesanis, and
Robert King Wulff, and each of them, proxies, with full power of substitution,
to represent the shareholder(s) at the Special Meeting to be held on December
12, 1997, and at any and all adjournments thereof, and to vote thereat the
number of shares which the shareholder(s) would be entitled to vote if then
personally present, with all the powers the shareholder(s) would then possess,
but especially, without limiting the foregoing, to vote as specified herein on
the proposal set forth in the proxy statement.
THIS NOTICE OF GUARANTEED DELIVERY AND PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF MASS. ELECTRIC. The proxy contained herein, when properly
executed, will be voted in the manner directed herein by the undersigned
shareholder(s). If no direction is made, the proxy will be voted FOR Item 1.
INDICATE YOUR VOTE BY AN (X). THE BOARD OF DIRECTORS OF MASS. ELECTRIC
RECOMMENDS VOTING FOR ITEM 1.
ITEM 1.
HOLDERS OF SHARES OF PREFERRED STOCK WHO WISH TO TENDER THEIR SHARES MUST
VOTE "FOR" THE PROPOSED AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING
AT THE SPECIAL MEETING.
Amendment of the Articles of Organization and By-laws to delete in its
entirety Article XVIII, Section 4E(4), limiting Mass. Electric's ability to
issue unsecured indebtedness.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
NOTE: IF SHARES ARE BEING VOTED "FOR" THE PROPOSED AMENDMENT, THE
SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND PROXY SHOULD BE
COMPLETED TO AVOID BACK-UP WITHHOLDING ON THE SPECIAL CASH PAYMENT.
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED "FOR" THE PROPOSED AMENDMENT AND OTHERWISE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF MASS.
ELECTRIC, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Any holder of Shares held of record on the Record Date in the name of
another holder must establish, to the satisfaction of Mass. Electric, such
holder's entitlement to exercise or transfer this Proxy. This will ordinarily
require an assignment by such record holder in blank, or if not in blank, to and
from each successive transferee, including the holder, with each signature
guaranteed by an Eligible Institution. A form of irrevocable assignment of proxy
has been provided herein.
Please check box if you plan to attend the Special Meeting. [ ]
------------------------
SERIES OF PREFERRED (CHECK ONE):
Dividend Series Preferred Stock:
[ ] 4.44% Series [ ] 4.76% Series [
] 6.99% Series
Preferred Stock -- Cumulative
[ ] 6.84%
Number of Shares:
Certificate Nos. (if available):
- ---------------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
3
<PAGE> 4
PLEASE COMPLETE:
SIGNATURE(S) OF REGISTERED HOLDER(S)*
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(SIGNATURE)
DATED: ,1997
NAME(S):
- --------------------------------------------------------------------------------
-----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
- ----------------------------------------------------------------
- --------------------------------------------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation, or other person acting
in a fiduciary or representative capacity, please set forth full title and see
Instruction 5 to the Letter of Transmittal and Proxy.
ELIGIBLE INSTITUTIONS OR BROKERS TO COMPLETE:
If Shares will be tendered by book-entry transfer:
Name of tendering institution:
- ---------------------------------------------------------------------
(PLEASE PRINT)
Check applicable box: [ ] DTC [ ] PDTC
Account No.
- ------------------------------------
Signature(s):
- --------------------------------------------------------------------------------
---------------------------------------------------------------------
Name(s) of Record Holder(s):
- -------------------------------------------------------------------------
-----------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------
PLEASE COMPLETE:
A holder of Shares of Preferred Stock who elects to tender Shares
pursuant to this Notice of Guaranteed Delivery and Proxy must check ONE of the
boxes below:
[ ] A duly completed, valid, and unrevoked proxy indicating a vote "FOR" the
Proposed Amendment is included herein.
[ ] A valid vote "FOR" the Proposed Amendment will be cast at the Special
Meeting.
4
<PAGE> 5
IF SELLING SHARES ON OR AFTER NOVEMBER 10, 1997, A RECORD HOLDER OF
PREFERRED STOCK MUST COMPLETE THE FOLLOWING IRREVOCABLE PROXY.
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK PROXY TO A
SUBSEQUENT HOLDER OF PREFERRED STOCK WHO WAS NOT A HOLDER OF RECORD ON NOVEMBER
12, 1997.
IRREVOCABLE PROXY*
WITH RESPECT TO SHARES OF THE
________% SERIES OF DIVIDEND SERIES PREFERRED STOCK OR
PREFERRED STOCK -- CUMULATIVE OF
MASSACHUSETTS ELECTRIC COMPANY (MASS. ELECTRIC)
(PLEASE INDICATE APPROPRIATE SERIES OF
PREFERRED STOCK IN THE BLANK LOCATED THREE LINES ABOVE.)
The undersigned hereby irrevocably appoints:
---------------------------------------------------
Type or Print Name of Transferee
as attorney and proxy, with full power of substitution, to represent the
undersigned at the Special Meeting to be held on December 12, 1997, and at any
and all adjournments thereof, and to vote thereat the Shares indicated below of
the above indicated Series of Dividend Series Preferred Stock or Preferred
Stock -- Cumulative of Massachusetts Electric Company held of record by the
undersigned on November 12, 1997, which the undersigned would be entitled to
vote if personally present with all the powers the undersigned would then
possess, but especially, without limiting the foregoing, to vote on the proposal
set forth in the Proxy Statement.
This proxy shall be effective whether or not the Shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the Shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest, and assigns of the
undersigned. The undersigned understands that tenders of Shares pursuant to any
of the procedures described in the Booklet and in the Letter of Transmittal and
Proxy will constitute a binding agreement between the undersigned and Mass.
Electric upon the terms and subject to the conditions of the Offer.
DESCRIPTION OF PREFERRED STOCK
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S)
(ATTACH LIST IF AGGREGATE NUMBER
NECESSARY) OF SHARES
- ------------------------- -------------------------
<S> <C>
1. -------------------------
- -------------------------
2. -------------------------
- -------------------------
3. -------------------------
- -------------------------
Total:
-----------------------
</TABLE>
- ---------------
* THIS IRREVOCABLE PROXY MUST BE SIGNED ON THE NEXT PAGE TO BE EFFECTIVE.
5
<PAGE> 6
IRREVOCABLE PROXY
SIGNATURE(S) OF RECORD OR AUTHORIZED SIGNATORY*
- --------------------------------------------------------------------------------
(SIGNATURE)
----------------------------------------------------------------------------
(PLEASE PRINT)
Dated: , 199_
Tax Identification or Social Security No(s)
- ------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE)
----------------------------------------------------------------------------
(PLEASE PRINT)
Dated: , 199_
Tax Identification or Social Security No(s)
- ------------------------------------------------------------
- --------------------------------------------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Record Date on the stock certificate(s) or on a security position listing or
by person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent, or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5 of the Letter of Transmittal
and Proxy.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5 OF THE LETTER OF TRANSMITTAL AND PROXY)
(FOR DIVIDEND SERIES PREFERRED STOCK AND PREFERRED STOCK -- CUMULATIVE)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Capacity (Full Title):
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------
Dated: , 199_
6
<PAGE> 7
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, guarantees (a) that the above-named person(s) has a net long position in
the Shares being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, (b) that such tender of Shares
complies with Rule 14e-4 and (c) to deliver to the Depositary at one of its
addresses set forth above certificate(s) for the Shares tendered hereby, in
proper form for transfer, or a confirmation of the book-entry transfer of the
Shares tendered hereby into the Depositary's account at The Depository Trust
Company, together with properly completed and duly executed Letter(s) of
Transmittal and Proxy (or facsimile(s) thereof), with any required signature
guarantee(s) and any other required documents, all within three New York Stock
Exchange (NYSE) trading days after the date hereof. A NYSE trading day is any
day on which the NYSE is open for business.
<TABLE>
<S> <C>
- ------------------------------------------ ------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------ ------------------------------------------
Address Name (Please Print)
- ------------------------------------------ ------------------------------------------
City, State, Zip Code Title
- ------------------------------------------
Area Code and Telephone Number
Dated:
- -------------------------------------, 199
- -
- -----------------------------------------------------------------------------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL AND PROXY.
</TABLE>
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
THE FOLLOWING SERIES OF PREFERRED STOCK OF
MASSACHUSETTS ELECTRIC COMPANY
BY
NEW ENGLAND ELECTRIC SYSTEM
<TABLE>
<CAPTION>
TITLE OF SERIES OF PURCHASE PRICE
PREFERRED STOCK CUSIP NUMBER PER SHARE
------------------ ------------ --------------
<S> <C> <C>
Dividend Series Preferred Stock:
4.44% Series 575634 20 9 $ 87.92
4.76% Series 575634 30 8 $ 94.26
6.99% Series 575634 70 4 $ 120.73
Preferred Stock -- Cumulative
6.84% Series 575634 80 3 $ 27.00
</TABLE>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 199 , UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
November 6, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies, and Other Nominees:
Enclosed for your consideration is the material listed below relating to
the offer of New England Electric System, a Massachusetts voluntary association
(NEES), to the holders of each series of Dividend Series Preferred Stock and of
the Preferred Stock -- Cumulative of Massachusetts Electric Company (Mass.
Electric), a Massachusetts corporation and direct subsidiary of NEES, listed
above (each a Series of Preferred or a Series, and each holder thereof a
Preferred Shareholder) to tender any and all of their shares of a Series (the
Shares) for purchase at the purchase price per Share listed above (the Purchase
Price), net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and Proxy Statement, dated November 6,
1997(the Booklet), and in the Letter of Transmittal and Proxy for the Shares
tendered. As to each Series, the Booklet, together with the applicable Letter of
Transmittal and Proxy, constitutes the Offer. NEES will purchase all Shares
validly tendered and not withdrawn, upon the terms and subject to the conditions
of the Offer.
THE OFFER FOR EACH SERIES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES OF ANY SERIES BEING TENDERED AND EACH IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO NOVEMBER 12, 1997 (THE RECORD DATE)) WHO WISH TO
TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED
AMENDMENT (AS DEFINED IN THE BOOKLET). MOREOVER, THE OFFER IS CONDITIONED UPON,
AMONG OTHER THINGS, THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE
SPECIAL MEETING (AS DEFINED IN THE BOOKLET). PREFERRED SHAREHOLDERS HAVE THE
RIGHT TO VOTE ON THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR
SHARES. SEE PROPOSED AMENDMENT AND PROXY SOLICITATION, TERMS OF THE
OFFER -- CERTAIN CONDITIONS OF THE OFFER, AND TERMS OF THE OFFER -- EXTENSION OF
TENDER PERIOD; TERMINATION; AMENDMENTS IN THE BOOKLET.
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO BUSINESS DAYS
PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN
AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES
<PAGE> 2
AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE
THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH
SERIES OF DIVIDEND SERIES PREFERRED AND PREFERRED STOCK -- CUMULATIVE WILL TRADE
"WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE
PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER.
SEE TERMS OF THE OFFER -- PROCEDURE FOR TENDERING SHARES IN THE BOOKLET.
The Shares will trade, during the period which begins two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbols "MSSDT" for the 4.44% Series,
"MSSGT" for the 4.76% Series, "MSSIT" for the 6.99% Series, and "MSSJT" for the
6.84% Series, indicating that such Shares are trading "with proxy." A Preferred
Shareholder who acquires Shares during this period must obtain, or have such
holder's authorized representative obtain, an assignment of proxy (which is
included in the applicable Letter of Transmittal and Proxy) at settlement from
the seller. The National Association of Securities Dealers, Inc. (the NASD) and
The Depository Trust Company (DTC) have issued notices informing their members
and participants that the Shares will trade "with proxy" and that settlement of
all trades during the period described above should include an assignment of
proxy from the seller.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible.
Upon the terms and subject to the conditions of the Offer and pursuant to
Instruction 10 of the Letter of Transmittal and Proxy, NEES will pay to
designated brokers and dealers a solicitation fee of (i) $1.50 per Share for any
Dividend Series Preferred Stock and (ii) $0.375 per Share for any Preferred
Stock-Cumulative Shares tendered, accepted for payment, and paid for pursuant to
the Offer and for each such Share not tendered but voted in favor of the
Proposed Amendment, (except that for transactions for beneficial owners equal to
or exceeding 2,500 Shares, NEES will pay a solicitation fee of (i) $1.00 per
Share for any Dividend Series Preferred Stock and (ii) $0.25 per Share for any
Preferred Stock -- Cumulative, of which eighty percent (80%) shall be paid to
the Dealer Manager and twenty percent (20%) to the Soliciting Dealer (which may
be the Dealer Manager)). With respect to fees payable pursuant to this paragraph
involving transactions for beneficial owners whose ownership is less than 2,500
Shares, any fees payable hereunder shall be paid in full to the Dealer Manager
unless a Soliciting Dealer is designated (as described below), in which case
such fee shall be payable in full to such designated Soliciting Dealer (which
designated Soliciting Dealer may be the Dealer Manager). The Letter of
Transmittal and Proxy must include the name of an entity which obtained the
tender or proxy and which is either (a) a broker or dealer in securities,
including the Dealer Manager in its capacity as a broker or dealer, which is a
member of any national securities exchange or of the NASD, (b) a foreign broker
or dealer not eligible for membership in the NASD which agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member, or (c) a bank or trust company
(each of which is referred to herein as a Soliciting Dealer). No solicitation
fee shall be payable to a Soliciting Dealer with respect to the tender of Shares
or delivery of a proxy unless the Letter of Transmittal and Proxy accompanying
such tender or delivery of a proxy designates such Soliciting Dealer. No
solicitation fee shall be payable to a Soliciting Dealer in respect of Shares
registered in the name of such Soliciting Dealer unless such Shares are held by
such Soliciting Dealer as nominee and such Shares are being tendered or
delivered for the benefit of one or more beneficial owners identified on the
Letter of Transmittal and Proxy or on the Notice of Solicited Tenders. No
solicitation fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
depositing holder (other than itself). No solicitation fee shall be paid to a
Soliciting Dealer with respect to Shares tendered or delivered for such
Soliciting Dealer's own account. A Soliciting Dealer shall not be entitled to a
solicitation fee for Shares beneficially owned by such Soliciting Dealer. No
broker, dealer, bank, trust company, or other nominee shall be deemed to be the
agent of NEES, Mass. Electric, the Depositary, the Information Agent, or the
Dealer Manager for purposes of the Offer.
2
<PAGE> 3
Soliciting Dealers will include any of the organizations described in
clauses (a), (b), and (c) above even when the activities of such organizations
in connection with the Offer consist solely of forwarding to clients materials
relating to the Offer, including the Letter of Transmittal and Proxy, and
tendering Shares or delivering a proxy as directed by beneficial owners thereof.
No Soliciting Dealer is authorized to make any recommendation to holders of
Shares as to whether to tender or refrain from tendering in the Offer. No
assumption is made, in making payment to any Soliciting Dealer, that its
activities in connection with the Offer included any activities other than those
described above, and for all purposes noted in all materials relating to the
Offer, the term "solicit" shall be deemed to mean no more than processing Shares
tendered or forwarding to customers materials regarding the Offer.
NEES will also, upon request, reimburse Soliciting Dealers for reasonable
and customary handling and mailing expenses incurred by them in forwarding
materials relating to the Offer to their customers. NEES will pay all stock
transfer taxes, if any, payable on account of the acquisition of Shares by NEES
pursuant to the Offer, except in certain circumstances where special payment or
delivery procedures are utilized pursuant to Instruction 6 of the accompanying
Letter of Transmittal and Proxy.
IN ORDER FOR A SOLICITING DEALER TO RECEIVE A SOLICITATION FEE, IBJ
SCHRODER BANK & TRUST COMPANY, AS DEPOSITARY (THE DEPOSITARY), MUST HAVE
RECEIVED FROM SUCH SOLICITING DEALER A PROPERLY COMPLETED AND DULY EXECUTED
NOTICE OF SOLICITED TENDERS IN THE FORM ATTACHED HERETO (OR A FACSIMILE THEREOF)
WITHIN THREE BUSINESS DAYS AFTER THE EXPIRATION OF THE OFFER.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name (or in the name of your nominee), we are
enclosing the following documents:
1. The Booklet, dated November 6, 1997, including the Notice of Special
Meeting of Shareholders;
2. A separate Letter of Transmittal and Proxy for each Series for your use
and for the information of your clients;
3. A letter to shareholders of Mass. Electric from its Treasurer;
4. A Notice of Guaranteed Delivery and Proxy to be used to accept the
Offer if the Shares and all other required documents cannot be
delivered to the Depositary by the applicable Expiration Date (as
defined in the Booklet);
5. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space for obtaining such clients' instructions with regard to the
Offer and with regard to the proxy solicitation by Mass. Electric; and
6. A return envelope addressed to IBJ Schroder Bank & Trust Company, the
Depositary.
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY FOR A PARTICULAR SERIES, OR
A NOTICE OF GUARANTEED DELIVERY AND PROXY, MAY BE USED TO TENDER SHARES OF SUCH
SERIES.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD
TIME, ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED.
NEITHER NEES, MASS. ELECTRIC, THEIR RESPECTIVE BOARDS OF DIRECTORS, ANY OF
THEIR RESPECTIVE OFFICERS, NOR ANY OTHER PERSON AUTHORIZED BY THEM MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL
SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
3
<PAGE> 4
The name "New England Electric System" means the trustee or trustees for
the time being (as trustee or trustees but not personally) under an agreement
and declaration of trust dated January 2, 1926, as amended, which is hereby
referred to, and a copy of which as amended has been filed with the Secretary of
the Commonwealth of Massachusetts. Any agreement, obligation or liability made,
entered into or incurred by or on behalf of New England Electric System binds
only its trust estate, and no shareholder, director, trustee, officer or agent
thereof assumes or shall be held to any liability therefor.
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to Georgeson & Company, Inc., the Information
Agent, or to us, as Dealer Manager, at the respective addresses and telephone
numbers set forth on the back cover of the enclosed Offer to Purchase and Proxy
Statement.
Very truly yours,
Merrill Lynch & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS THE AGENT OF NEES, MASS. ELECTRIC, THE DEALER MANAGER, THE
INFORMATION AGENT, OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
4
<PAGE> 5
4.44% SERIES
NOTICE OF SOLICITED TENDERS
OF DIVIDEND SERIES PREFERRED STOCK
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 4.44% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (TENDER ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
========================================================================================================
========================================================================================================
========================================================================================================
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(TENDER ONLY)
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
============================================================================================================
============================================================================================================
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
5
<PAGE> 6
4.44% SERIES
NOTICE OF SOLICITED TENDERS OF 4.44% SERIES
(CONTINUED)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (PROXY ONLY)
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
===================================================================================
===================================================================================
- -----------------------------------------------------------------------------------
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(PROXY ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
========================================================================================================
========================================================================================================
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
6
<PAGE> 7
4.76% SERIES
NOTICE OF SOLICITED TENDERS
OF DIVIDEND SERIES PREFERRED STOCK
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 4.76% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (TENDER ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
========================================================================================================
========================================================================================================
========================================================================================================
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(TENDER ONLY)
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
============================================================================================================
============================================================================================================
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
7
<PAGE> 8
4.76% SERIES
NOTICE OF SOLICITED TENDERS OF 4.76% SERIES
(CONTINUED)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (PROXY ONLY)
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
===================================================================================
===================================================================================
- -----------------------------------------------------------------------------------
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(PROXY ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
========================================================================================================
========================================================================================================
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
8
<PAGE> 9
6.99% SERIES
NOTICE OF SOLICITED TENDERS
OF DIVIDEND SERIES PREFERRED STOCK
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 6.99% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (TENDER ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
========================================================================================================
========================================================================================================
========================================================================================================
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(TENDER ONLY)
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
============================================================================================================
============================================================================================================
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
9
<PAGE> 10
6.99% SERIES
NOTICE OF SOLICITED TENDERS OF 6.99% SERIES
(CONTINUED)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (PROXY ONLY)
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
===================================================================================
===================================================================================
- -----------------------------------------------------------------------------------
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(PROXY ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
========================================================================================================
========================================================================================================
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
10
<PAGE> 11
6.84% PREFERRED STOCK -- CUMULATIVE
NOTICE OF SOLICITED TENDERS
OF PREFERRED STOCK -- CUMULATIVE
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 6.84% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $0.375 PER
SHARE (TENDER ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
- --------------------------------------------------------------------------------------------------------
========================================================================================================
========================================================================================================
- --------------------------------------------------------------------------------------------------------
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $0.25 PER SHARE
(TENDER ONLY)
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
============================================================================================================
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
11
<PAGE> 12
6.84% PREFERRED STOCK -- CUMULATIVE
NOTICE OF SOLICITED TENDERS OF PREFERRED STOCK -- CUMULATIVE
(CONTINUED)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $0.375 PER
SHARE (PROXY ONLY)
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
===================================================================================
===================================================================================
- -----------------------------------------------------------------------------------
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $0.25 PER SHARE
(PROXY ONLY)
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
========================================================================================================
========================================================================================================
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
12
<PAGE> 13
SOLICITATION FEE PAYMENT INSTRUCTIONS
ISSUE CHECK TO:
Firm
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Attention
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Phone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
- ---------------------------------------------------------
Applicable VOI Number
- ------------------------------ Number of Shares
- ------------------------
If solicitation fees are to be paid to another Eligible Institution(s),
please complete the following:
ISSUE CHECK TO:
Firm
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Attention
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Phone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
- ---------------------------------------------------------
Applicable VOI Number
- ------------------------------ Number of Shares
- ------------------------
Series
- ------------------------------
ISSUE CHECK TO:
Firm
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Attention
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Phone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
- ---------------------------------------------------------
Applicable VOI Number
- ------------------------------ Number of Shares
- ------------------------
Series
- ------------------------------
* NOTE: IF ADDITIONAL PAYMENT INSTRUCTIONS, PLEASE COPY AND ATTACH.
13
<PAGE> 14
All questions as to the validity, form, and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
The undersigned hereby confirms that: (i) it has complied with the
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the applicable rules and regulations thereunder, in connection with such
solicitation (unless such solicitation fee is directed to another Soliciting
Dealer); (ii) it is entitled to such compensation for such solicitation under
the terms and conditions of the Offer; (iii) in soliciting tenders of Shares, it
has used no soliciting materials other than those furnished by NEES; and (iv) if
it is a foreign broker or dealer not eligible for membership in the NASD, it has
agreed to conform to the NASD's Rules of Fair Practice in making solicitations.
<TABLE>
<S> <C>
- ------------------------------------------ -----------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------ -----------------------------------------
Address Name (Please Print)
- ------------------------------------------ -----------------------------------------
City, State, Zip Code Title
- ------------------------------------------ Dated:
Area Code and Telephone Number ------------------------------------ ,
199_
</TABLE>
14
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
THE FOLLOWING SERIES OF PREFERRED STOCK OF
MASSACHUSETTS ELECTRIC COMPANY
BY
NEW ENGLAND ELECTRIC SYSTEM
<TABLE>
<CAPTION>
TITLE OF SERIES OF PURCHASE PRICE
PREFERRED STOCK CUSIP NUMBER PER SHARE
------------------ ------------ --------------
<S> <C> <C>
Dividend Series Preferred Stock:
4.44% Series 575634 20 9 $ 87.92
4.76% Series 575634 30 8 $ 94.26
6.99% Series 575634 70 4 $ 120.73
Preferred Stock -- Cumulative
6.84% Series 575634 80 3 $ 27.00
</TABLE>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 199 , UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
November 6, 1997
To Our Clients:
Enclosed for your consideration is the material listed below relating to
the offer of New England Electric System, a Massachusetts voluntary association
(NEES), inviting tenders of Preferred Shares of Massachusetts Electric Company
(Mass. Electric), a Massachusetts corporation and direct subsidiary of NEES, in
which you own shares. The offer is for each series of Dividend Series Preferred
Stock and of the Preferred Stock -- Cumulative of Mass. Electric, listed above
(each a Series of Preferred or a Series, and each holder thereof a Preferred
Shareholder) (the Shares) for purchase at the price per Share listed above (the
Purchase Price), net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase and Proxy Statement, dated
November 6, 1997(the Booklet), and in the Letter of Transmittal and Proxy for
the Shares tendered. As to each Series, the Booklet, together with the
applicable Letter of Transmittal and Proxy, constitutes the "Offer." NEES will
purchase all Shares validly tendered and not withdrawn, upon the terms and
subject to the conditions of the Offer.
THE OFFER FOR EACH SERIES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES OF ANY SERIES BEING TENDERED AND EACH IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO NOVEMBER 12, 1997 (THE RECORD DATE)) WHO WISH TO
TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED
AMENDMENT (AS DEFINED IN THE BOOKLET). MOREOVER, THE OFFER IS CONDITIONED UPON,
AMONG OTHER THINGS, THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE
SPECIAL MEETING (AS DEFINED IN THE BOOKLET). PREFERRED SHAREHOLDERS HAVE THE
RIGHT TO VOTE ON THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR
SHARES. SEE PROPOSED AMENDMENT AND PROXY SOLICITATION, TERMS OF THE
OFFER -- CERTAIN CONDITIONS OF THE OFFER, AND TERMS OF THE OFFER -- EXTENSION OF
TENDER PERIOD; TERMINATION; AMENDMENTS IN THE BOOKLET.
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO BUSINESS DAYS
PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN
AN IRREVOCABLE PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR
OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING
THE PERIOD DESCRIBED ABOVE, THE SHARES WILL TRADE, DURING THE PERIOD WHICH
BEGINS TWO DAYS PRIOR TO THE RECORD DATE AND WHICH WILL END AT THE CLOSE OF
BUSINESS ON THE EXPIRATION DATE, IN THE OVER-THE-COUNTER MARKET UNDER THE
SYMBOLS "MSSDT" FOR THE 4.44% SERIES, "MSSGT" FOR THE 4.76% SERIES, "MSSIT" FOR
THE 6.99% SERIES, AND "MSSJT" FOR THE 6.84% SERIES, INDICATING THAT SUCH SHARES
ARE TRADING "WITH PROXY." A PREFERRED SHAREHOLDER WHO ACQUIRES SHARES DURING
THIS PERIOD MUST OBTAIN, OR HAVE SUCH HOLDER'S AUTHORIZED
<PAGE> 2
REPRESENTATIVE OBTAIN, AN IRREVOCABLE PROXY (WHICH IS INCLUDED IN THE APPLICABLE
LETTER OF TRANSMITTAL AND PROXY) AT SETTLEMENT FROM THE SELLER. THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. (THE NASD) AND THE DEPOSITORY TRUST
COMPANY (DTC) HAVE ISSUED NOTICES INFORMING THEIR MEMBERS AND PARTICIPANTS THAT
THE SHARES WILL TRADE "WITH PROXY" AND THAT SETTLEMENT OF ALL TRADES DURING THE
PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN IRREVOCABLE PROXY FROM THE SELLER.
SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN
ASSIGNMENT OF PROXY FROM THE SELLER. SEE TERMS OF THE OFFER -- PROCEDURE FOR
TENDERING SHARES IN THE BOOKLET.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT BUT NOT
REGISTERED IN YOUR NAME. A TENDER OR A VOTE OF SUCH SHARES CAN BE MADE ONLY BY
US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. ANY LETTER OF
TRANSMITTAL AND PROXY FURNISHED TO YOU IS SOLELY FOR YOUR INFORMATION AND CANNOT
BE USED BY YOU TO TENDER OR VOTE SHARES HELD BY US FOR YOUR ACCOUNT.
We request your instructions as to whether you wish us to tender and/or
vote any or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer.
PLEASE READ THE FOLLOWING INFORMATION CAREFULLY:
1. The Offer is for any and all Shares outstanding. The Offer for a
Series of Preferred is independent of the Offer for any other Series of
Preferred.
2. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
Standard Time, on Friday, December 12, 1997, unless the Offer is extended
with respect to a Series of Preferred. Your instructions to us should be
forwarded to us in ample time to permit us to submit a tender on your
behalf by the expiration of the Offer. If you would like to withdraw your
Shares that we have tendered, you can withdraw them so long as the Offer
remains open or at any time after the expiration of forty business days
from the commencement of the Offer if such tendered Shares have not been
accepted for payment.
3. Preferred Shareholders who wish to tender their Shares pursuant to
the Offer must vote FOR the Proposed Amendment. The Offer is conditioned
upon the Proposed Amendment being approved and adopted at the Special
Meeting.
4. Preferred Shareholders have the right to vote in favor of the
Proposed Amendment regardless of whether they tender their Shares. If the
Proposed Amendment is approved and adopted, Mass. Electric will make a
special cash payment in the amount of $1.00 per Share to each Dividend
Series Preferred Shareholder of record and $0.25 per share to each
Preferred Stock -- Cumulative Shareholder of record who voted in favor of
the Proposed Amendment, provided that such Shares have not been tendered
pursuant to the Offer.
5. Any stock transfer taxes applicable to the sale of Shares to NEES
pursuant to the Offer will be paid by NEES, except as otherwise provided in
Instruction 6 of the Letter of Transmittal and Proxy.
NEITHER NEES, MASS. ELECTRIC, THEIR RESPECTIVE BOARDS OF DIRECTORS, ANY OF
THEIR RESPECTIVE OFFICERS, NOR ANY OTHER PERSON AUTHORIZED BY THEM MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL
SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
If you wish to have us tender and/or vote any or all of your Shares held by
us for your account upon the terms and subject to the conditions set forth in
the Offer, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. An envelope
to return your instructions to us is enclosed. If you authorize tender of your
Shares, all such Shares will be tendered unless otherwise specified on the
detachable part hereof. Your instructions should be forwarded to us in ample
time to permit us to submit a tender and/or vote on your behalf by the
expiration of the Offer or the Special Meeting, as applicable.
2
<PAGE> 3
INSTRUCTIONS
WITH RESPECT TO OFFER TO PURCHASE BY
NEW ENGLAND ELECTRIC SYSTEM FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
THE PREFERRED STOCK OF,
AND PROXY SOLICITATION BY,
MASSACHUSETTS ELECTRIC COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase and Proxy Statement, dated November 6, 1997, and a separate
Letter of Transmittal and Proxy for each series of preferred stock of
Massachusetts Electric Company (Mass. Electric) (each a Series of Preferred) in
which the undersigned owns shares (as to each Series of Preferred, the Offer to
Purchase and Proxy Statement, together with the applicable Letter of Transmittal
and Proxy, constitutes the Offer) in connection with the invitation of New
England Electric System (NEES) to the holders of each Series of Preferred to
tender any and all of their shares of a Series of Preferred (Shares) for
purchase at the purchase price per Share listed on the front cover of the Offer
to Purchase and Proxy Statement with accrued, net to the seller in cash, upon
the terms and subject to the conditions of the Offer, and in connection with the
proxy solicitation being conducted by the Board of Directors of Mass. Electric.
This will instruct you to tender to NEES the number of Shares indicated
below (or, if no number is indicated below, all Shares) which are held by you
for the account of the undersigned, upon the terms and subject to the conditions
of the Offer.
<TABLE>
<S> <C>
SERIES OF PREFERRED NUMBER OF SHARES TO BE TENDERED*
============================================ ============================================
============================================ ============================================
- -------------------------------------------- --------------------------------------------
</TABLE>
You are further instructed to vote as designated hereunder in respect of
the Proposed Amendment all Shares which the undersigned is entitled to vote at
the Special Meeting:**
ITEM 1.
Amendment of the Articles of Organization and By-laws to delete in its
entirety Article XVIII, Section 4E(4), limiting Mass. Electric's ability to
issue unsecured indebtedness.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
SIGN HERE
Signature(s):
Name(s):
(Please print)
Address:
Dated: , 1997
Social Security or Taxpayer Identification No.:
- ---------------
* By executing and returning these Instructions, unless otherwise indicated, it
will be assumed that all Shares held by us for your account are to be
tendered.
** By executing and returning these Instructions, unless otherwise indicated, it
will be assumed that all Shares held by us for your account are to be voted
FOR the Proposed Amendment.
<PAGE> 1
MASS. ELECTRIC LOGO MASSACHUSETTS ELECTRIC COMPANY
Dear Preferred Stock -- Cumulative Shareholder:
Please find enclosed important information pertaining to the following two
items:
(i) a proposed amendment (the Proposed Amendment) to the By-Laws and
Articles of Organization (the Provisions) of Massachusetts Electric Company
(Mass. Electric) which will be considered at a Special Meeting of its
shareholders; and
(ii) an offer by New England Electric System (NEES) to purchase the
outstanding shares of Mass. Electric's Preferred Stock -- Cumulative Stock.
We will greatly appreciate your giving prompt attention to the enclosed
material which you are urged to read in its entirety.
The Proposed Amendment relates to the elimination of the restrictions in
the Provisions limiting the ability of Mass. Electric to incur unsecured
indebtedness. Currently, unsecured indebtedness cannot exceed 20% of Mass.
Electric's aggregate of its capital, premium, and secured debt (10% without a
vote of the Dividend Series Preferred Stock and the Preferred
Stock -- Cumulative, voting as a single class). As more fully described in the
attached materials, Mass. Electric believes that the prudent use of unsecured
debt is important to the effective financial management of its business.
Unsecured debt provides flexibility in meeting temporary fluctuations in cash
requirements, can be used when unfavorable conditions prevail in the market for
long-term capital, acts as a bridge between issues of permanent capital, and may
present more flexibility in terms and cash than secured debt. If the Proposed
Amendment is adopted, Mass. Electric will have increased flexibility (i) to
choose among different types of debt financing and (ii) to finance projects
using the most cost effective means. The availability and flexibility of
unsecured debt is necessary to take full advantage of changing conditions in the
securities and financial markets.
In addition, although Mass. Electric's earnings currently are sufficient to
meet the earnings coverage tests that must be satisfied before issuing
additional first mortgage bonds and preferred stock, other utilities have been
unable to issue mortgage bonds during certain periods because of restrictive
covenants in their mortgages. Any inability by Mass. Electric to issue first
mortgage bonds or preferred stock in the future, combined with the inability to
issue additional unsecured debt, would limit its financing options to more
costly securities, including additional common equity.
Concurrently with Mass. Electric's proxy solicitation, NEES is offering to
purchase the outstanding shares of Mass. Electric's Preferred
Stock -- Cumulative. In order to tender your shares, you must vote for the
Proposed Amendment. The offer is further conditioned upon, among other things,
the Proposed Amendment being approved and adopted at the Special Meeting. If you
vote for the Proposed Amendment and it passes, you will be entitled to receive a
Special Cash Payment in the amount of $0.25 per share for each share that you so
vote, provided your shares have not been tendered. Instructions for tendering
your shares and information pertaining to the Special Cash Payment are included
with the enclosed material.
The Shares will trade, during the period which begins two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbol "MSSJT", indicating that such
Shares are trading "with proxy." A Preferred Shareholder who acquires Shares
during this period must obtain, or have such holder's authorized representative
obtain, an assignment of proxy (which is included in the applicable Letter of
Transmittal and Proxy) at settlement from the seller. The National Association
of Securities Dealers, Inc. (NASD) and The Depository Trust Company (DTC) have
issued notices informing their members and participants that the Shares will
trade "with proxy" and that
<PAGE> 2
settlement of all trades during the period described above should include an
assignment of proxy from the seller.
It is important to your interests that all shareholders, regardless of the
number of shares owned, participate in the affairs of the Company. Even if you
plan to attend the Special Meeting, WE URGE YOU TO SIGN AND DATE THE ENCLOSED
PROXY, WHICH IS INCLUDED WITH AN ENCLOSED LETTER(S) OF TRANSMITTAL AND PROXY FOR
PREFERRED STOCK -- CUMULATIVE, AND RETURN IT PROMPTLY TO THE DEPOSITARY IN THE
ENCLOSED ENVELOPE. By signing and returning your proxy promptly, you are
assuring that your shares will be voted.
You are cordially invited to attend the Special Meeting which will be held
at 25 Research Drive, Westborough, Massachusetts, on December 12, 1997, at 4:30
p.m., eastern standard time, or any adjournment or postponement of such meeting.
If you have questions or requests for assistance regarding the Proposed
Amendment, the Special Meeting, or NEES's tender offer, please call Georgeson &
Company Inc., the Information Agent, at (800) 223-2064 (toll-free) and for banks
and brokers (212) 440-9800 (call collect) or Merrill Lynch & Co., the Dealer
Manager, at (888) ML4-TNDR ((888) 654-8637 (toll-free)). Requests for additional
copies of the Booklet, the Letter of Transmittal, or other tender offer or proxy
materials may be directed to the Information Agent and such copies will be
furnished promptly at the companies' expense. Preferred Shareholders may also
contact their local broker, dealer, commercial bank, or trust company for
assistance concerning the Offer.
Thank you for your continued interest in Mass. Electric.
Sincerely yours,
Treasurer
<PAGE> 3
MASS. ELECTRIC LOGO MASSACHUSETTS ELECTRIC COMPANY
Dear Dividend Series Preferred Stock Shareholder:
Please find enclosed important information pertaining to the following two
items:
(i) a proposed amendment (the Proposed Amendment) to the By-Laws and
Articles of Organization (the Provisions) of Massachusetts Electric Company
(Mass. Electric) which will be considered at a Special Meeting of its
shareholders; and
(ii) an offer by New England Electric System (NEES) to purchase the
outstanding shares of Mass. Electric's Dividend Series Preferred Stock.
We will greatly appreciate your giving prompt attention to the enclosed
material which you are urged to read in its entirety.
The Proposed Amendment relates to the elimination of the restrictions in
the Provisions limiting the ability of Mass. Electric to incur unsecured
indebtedness. Currently, unsecured indebtedness cannot exceed 20% of Mass.
Electric's aggregate of its capital, premium, and secured debt (10% without a
vote of the Dividend Series Preferred Stock and the Preferred
Stock -- Cumulative, voting as a single class). As more fully described in the
attached materials, Mass. Electric believes that the prudent use of unsecured
debt is important to the effective financial management of its business.
Unsecured debt provides flexibility in meeting temporary fluctuations in cash
requirements, can be used when unfavorable conditions prevail in the market for
long-term capital, acts as a bridge between issues of permanent capital, and may
present more flexibility in terms and cash than secured debt. If the Proposed
Amendment is adopted, Mass. Electric will have increased flexibility (i) to
choose among different types of debt financing and (ii) to finance projects
using the most cost effective means. The availability and flexibility of
unsecured debt is necessary to take full advantage of changing conditions in
securities and financial markets.
In addition, although Mass. Electric's earnings currently are sufficient to
meet the earnings coverage tests that must be satisfied before issuing
additional first mortgage bonds and preferred stock, other utilities have been
unable to issue mortgage bonds during certain periods because of restrictive
covenants in their mortgages. Any inability by Mass. Electric to issue first
mortgage bonds or preferred stock in the future, combined with the inability to
issue additional unsecured debt, would limit its financing options to more
costly securities, including additional common equity.
Concurrently with the Mass. Electric's proxy solicitation, NEES is offering
to purchase the outstanding shares of the Mass. Electric's Dividend Series
Preferred Stock. In order to tender your shares, you must vote for the Proposed
Amendment. The Offer is further conditioned upon, among other things, the
Proposed Amendment being approved and adopted at the Special Meeting. If you
vote for the Proposed Amendment and it passes, you will be entitled to receive a
Special Cash Payment in the amount of $1.00 per share for each share that you so
vote, provided your shares have not been tendered. Instructions for tendering
your shares and information pertaining to the Special Cash Payment are included
with the enclosed material.
The Shares will trade, during the period which begins two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbols "MSSDT" for the 4.44% Series,
"MSSGT" for the 4.76% Series, and "MSSIT" for the 6.99% Series, indicating that
such Shares are trading "with proxy." A Preferred Shareholder who acquires
Shares during this period must obtain, or have such holder's authorized
representative obtain, an assignment of proxy (which is included in the
applicable Letter of Transmittal and Proxy) at settlement from the seller. The
National Association of Securities Dealers, Inc. (NASD) and The Depository Trust
Company (DTC) have issued notices informing their members and participants that
the Shares will trade "with proxy" and that settlement of all trades during the
period described above should include an assignment of proxy from the seller.
It is important to your interests that all shareholders, regardless of the
number of shares owned, participate in the affairs of the Company. Even if you
plan to attend the Special Meeting, WE URGE YOU
<PAGE> 4
TO SIGN AND DATE THE ENCLOSED PROXY, WHICH IS INCLUDED WITH AN ENCLOSED
LETTER(S) OF TRANSMITTAL AND PROXY FOR EACH OF THE RESPECTIVE SERIES OF DIVIDEND
SERIES PREFERRED STOCK, AND RETURN IT PROMPTLY TO THE DEPOSITARY IN THE ENCLOSED
ENVELOPE. By signing and returning your proxy promptly, you are assuring that
your shares will be voted.
You are cordially invited to attend the Special Meeting which will be held
at 25 Research Drive, Westborough, Massachusetts, on December 12, 1997, at 4:30
p.m., eastern standard time, or any adjournment or postponement of such meeting.
If you have questions or requests for assistance regarding the Proposed
Amendment, call Georgeson & Company Inc., Agent, at (800) 223-2064 (toll-free)
and for banks and brokers (212) 440-9800 (call collect) or Merrill Lynch & Co.,
Dealer Managers at, (888) ML4-TNDR ((888) 654-8637 (toll-free)). Requests for
additional copies of the Booklet, the Letter of Transmittal, or other tender
offer or proxy materials may be directed to the Information Agent and such
copies will be furnished promptly at the companies' expense. Preferred
Shareholders may also contact their local broker, dealer, commercial bank, or
trust company for assistance concerning the Offer.
Thank you for your continued interest in Mass. Electric.
Sincerely yours,
MICHAEL E. JASMISMI
Treasurer
<PAGE> 1
LOGO MASSACHUSETTS ELECTRIC COMPANY
PREFERRED STOCK
SUMMARY INSTRUCTIONS FOR PARTICIPATING IN THE OFFER
(1) CHECK CONTENTS OF PACKAGE. Before proceeding, please confirm that this
package contains each of the following materials:
- Letter from the Treasurer.
- Offer to Purchase and Proxy Statement dated November 6, 1997.
- Letter of Transmittal and Proxy relating to the applicable Series of
Preferred Stock.
- Notice of Guaranteed Delivery and Proxy.
- Return envelope addressed to IBJ Schroder Bank & Trust Company, the
Depositary for the Offer.
- W-9 Instruction Form.
(2) REVIEW MATERIALS CAREFULLY BEFORE DECIDING WHETHER TO PARTICIPATE. Please
review all enclosed materials carefully before deciding whether to
participate in the Offer.
- IF YOUR SHARES ARE REGISTERED IN YOUR NAME and you decide to participate,
you must follow the instructions in paragraphs (3) and (4) below.
- IF YOUR SHARES ARE HELD BY A BROKER OR BANK FOR YOUR ACCOUNT and you
decide to participate, you must contact your broker or bank and advise
them to execute your instructions on your behalf.
(3) COMPLETE THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY. You must follow
these instructions to complete the Letter of Transmittal and Proxy. The
Letter of Transmittal and Proxy for each Series is printed on pink paper.
(a) TENDER OFFER AND PROXY. If you wish to tender your Shares pursuant to
the Offer, you must vote FOR Item 1.
- Indicate your vote by an (X) on page 3 of the Letter of Transmittal
and Proxy.
- Complete the box entitled "Description of Shares Tendered" on page 4.
- Sign and date the box entitled "Signature(s) of Registered Holder(s)"
on page 5 and print your capacity, address and daytime telephone
number.
- Only complete the "Guarantee of Signature" section if the signatures
are different from the registration on the face of the certificate.
- If selling Shares on or after November 10, 1997, complete the
"Irrevocable Proxy," if applicable on pages 6 and 7.
- Complete, if applicable, the box on page 8.
- Complete, sign and date the box entitled "Substitute Form W-9" on page
20.
- The following sections of the Letter of Transmittal and Proxy should
be completed only if applicable:
- Notice of Guaranteed Delivery: If you cannot deliver your preferred
stock certificate(s) to the Depositary before December 12, 1997, a
broker must guarantee delivery of your Shares. The broker must
complete the applicable portion of page 9 of the Letter of
Transmittal and Proxy and submit the separate document entitled
"Notice of Guaranteed Delivery and Proxy."
- Soliciting Dealer: If your tender has been solicited by a Soliciting
Dealer, please complete the box entitled "Solicited Tenders" on page
13 of the Letter of Transmittal and Proxy.
- Special Payment and Special Delivery Instructions: If you would like
the check for the purchase price of Shares purchased pursuant to the
Offer or the certificates for Shares not purchased to be issued in
the name of someone other than the current holder or to be mailed to
<PAGE> 2
someone other than the current holder, or to the current holder at an
address other than that shown on the current certificate, please
complete the boxes on page 12 entitled "Special Payment Instructions"
and/or "Special Delivery Instructions" in the Letter of Transmittal
and Proxy. To do either of these, you must have your signature
guaranteed by an eligible institution. (See Instructions 1 and 5 on
the Letter of Transmittal and Proxy with respect to guarantee of
signatures by an eligible institution.)
(b) PROXY ONLY. If you choose only to vote the proxy and will not
tender your Shares pursuant to the Offer, please follow these
instructions: (Please note that if you wish to receive the Special
Cash Payment, you must vote FOR Item 1. A failure to return a Proxy
is a vote against.)
- Indicate your vote by an (X) on page 3 of the Letter of Transmittal
and Proxy.
- Sign and date the box entitled "Signature(s) of Registered
Holder(s)" on page 5 and print your capacity, address and daytime
telephone number.
- Complete, sign and date the box entitled "Substitute Form W-9" on
page 20.
- The following sections of the Letter of Transmittal and Proxy
should be completed only if applicable:
- SOLICITING DEALER: If your proxy has been solicited by a
Soliciting Dealer, please complete the box entitled "Solicited
Tenders" on page 13 of the Letter of Transmittal and Proxy.
- If you would like the Special Cash Payment to be issued to or
mailed to someone other than the current holder, please complete
the boxes entitled "Special Payment Instructions" and/or "Special
Delivery Instructions" on page 12 of the Letter of Transmittal
and Proxy. To do either of these, you must have your signature
guaranteed by an eligible institution. (See Instructions 1 and 5
on the Letter of Transmittal and Proxy with respect to guarantee
of signatures by an eligible institution.)
(4) MAIL UNSIGNED PREFERRED STOCK CERTIFICATES TOGETHER WITH THE SIGNED LETTER
OF TRANSMITTAL AND PROXY TO THE DEPOSITARY IN THE ENCLOSED RETURN
ENVELOPE. Send the applicable Letter of Transmittal and Proxy together with
the unsigned Preferred Stock certificates to IBJ Schroder Bank & Trust
Company, as Depositary, in the enclosed return envelope at the address shown
on the Letter of Transmittal and Proxy. If you own more than one series of
preferred stock you must complete the specific Letter of Transmittal and
Proxy that relates to each individual series. Use of registered or certified
mail is recommended. PLEASE NOTE: If you are not tendering, DO NOT send in
your certificates. Only send the signed Letter of Transmittal and Proxy to
the Depositary in the enclosed return envelope.
IF YOU HAVE ANY QUESTIONS, HAVE NOT RECEIVED THE APPLICABLE LETTER(S) OF
TRANSMITTAL AND PROXY OR OTHER DOCUMENTS PERTAINING TO THE OFFER, OR NEED
ASSISTANCE IN COMPLETING THE APPLICABLE FORMS, PLEASE CONTACT THE INFORMATION
AGENT: GEORGESON & COMPANY INC. AT (800) 223-2064 (TOLL-FREE) OR FOR BANKS AND
BROKERS (212) 440-9800 (CALL COLLECT).
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
PURPOSE OF FORM. A person who is required to file an information return
with the IRS must obtain your correct taxpayer identification number (TIN) to
report income paid to you, real estate transactions, mortgage interest you paid,
the acquisition or abandonment of secured property, or contributions you made to
an IRA. Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN) and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN W-9 TO REQUEST YOUR TIN,
YOU MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (for
Individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part 1, sign and date the form, and give it to the
requester. Generally, you will than have 60 days to obtain a TIN and furnish it
to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payor must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payor must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payor must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payor is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during that period.
NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED
FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that could be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee compensation, and certain payments
from fishing boat operators, but do not include real estate transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect TIN, or
(3) You are notified by the IRS that you are subject to withholding because
you failed to report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
(4) You do not certify to the requester that you are not subject to backup
withholding under 3 above, (for reportable interest and dividend accounts opened
after 1983 only), or
(5) You do not certify your TIN.
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments are
exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Exempt Payees and Payments
under Signing the Certification, below if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends, all listed payees are exempt except as
listed in item (9). For broker transactions, payees listed in items (1) through
(13) and a person registered under the Investment Advisers Act of 1940 who
regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are
21
<PAGE> 2
exempt from backup withholding for barter exchange transactions and patronage
dividends.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), an IRA, or a
custodial account under section 402(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporation Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
Other types of payments generally not subject to backup withholding include:
- Wages.
- Distributions from a pension, annuity, profit-sharing or stock bonus plan,
or an IRA.
- Distributions from an owner-employee plan.
- Certain surrenders of life insurance contracts.
- Gambling winnings, if withholding is required under section 3402(q).
However, if withholding is not required under section 3402(q), backup
withholding applies if the payee fails to furnish a TIN.
- Real estate transactions reportable under section 6045.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A, and 6050N, and the regulations under those sections.
PENALTIES
FAILURE TO FURNISH TIN. If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
22
<PAGE> 3
NAME -- If you are an individual, you must generally provide the name shown
on your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card, and your new last name.
NUMBER -- If you are a sole proprietor, you must furnish your individual
name and either your SSN or EIN. You may also enter your business name or "doing
business as" name on the business name line. Enter your name(s) as shown on your
social security card and/or as it was used to apply for your EIN on Form SS-4.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
SIGNING THE "PART III -- CERTIFICATION" ON THE SUBSTITUTE FORM W-9
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983 -- You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER, AND BARTER EXCHANGE ACCOUNTS OPENED AFTER
1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983 -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. You must sign the certification. You may
cross out item 2 of the certification.
(4) OTHER PAYMENTS. You are required to furnish your correct TIN, but you
are not required to sign the certification unless you have been notified that
you have previously given an incorrect TIN. Other payments include payments made
in the course of the requester's trade or business for rents, royalties, goods
(other than bills for merchandise), medical and health care services (including
payments to corporations), payments to a nonemployee for services (including
attorney and accounting fees), and payments to certain fishing boat crew
members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. You are required to furnish your correct TIN,
but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a complete Form W-8,
Certificate of Foreign Status.
(7) TIN "APPLIED FOR." Follow the instructions under How To Obtain a TIN, on
page 1, and sign and date this form.
SIGNATURE: For a joint account, only the person whose TIN is shown in Part 1
should sign.
PRIVACY ACT NOTICE: Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a TIN to a payor. Certain penalties may also apply.
23
<PAGE> 4
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
- ---------------------------------------------------
For this type of account: Give name and SSN of:
- ---------------------------------------------------
1. Individual The individual
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under state
law
5. Sole proprietorship The owner(3)
- ---------------------------------------------------
- ---------------------------------------------------
For this type of account: Give name and SSN of:
- ---------------------------------------------------
6. A valid trust, estate, Legal entity(4)
or pension trust
7. Corporate The corporation
8. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt
organization
9. Partnership The partnership
10. A broker or registered The broker or nominee
nominee
11. Account with the The public entity.
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments.
- ---------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
24
<PAGE> 1
EXHIBIT 9(d)
[HALE AND DORR LLP LETTERHEAD]
November 6, 1997
New England Electric System
Massachusetts Electric Company
25 Research Drive
Westborough, MA 01582
Re: Offer to Purchase and Proxy Statement
-------------------------------------
Ladies and Gentlemen:
We have acted as counsel to New England Electric System and
Massachusetts Electric Company in connection with the offer to purchase shares
of preferred stock of Massachusetts Electric Company as described in the Offer
to Purchase and Proxy Statement dated November 6, 1997 (together, the
"Statement"). In rendering this opinion, we have relied upon the factual
accuracy of the information contained in the Statement. We hereby confirm our
opinion that the discussion under the caption "CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS" in the Statement is accurate in all material respects and
fairly summarizes the information required to be disclosed therein.
We hereby consent to the filing of this opinion as an exhibit to the
Statement and to the use of our name under the caption "CERTAIN U.S. FEDERAL
INCOME TAX CONSIDERATIONS" in the Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
Sincerely,
/s/ HALE AND DORR LLP
