SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO
SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-12
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RIDGEWOOD ELECTRIC POWER TRUST I
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction: $___________
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(5) Total fee paid: $_____________
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/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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RIDGEWOOD POWER LLC
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Robert E. Swanson, President
TO: All Ridgewood Power Shareholders November 5, 2001
RE: Enclosed Consent Solicitation Statements
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Enclosed please find a Consent Solicitation Statement and Consent Form for each
Ridgewood Power Trust in which you are an investor. We are sending the identical
cover letter to Ridgewood Power Shareholders in each Trust. We are sending
separate Consent Solicitation Statements and Consent Forms for each Trust in
which you are an investor. About 70% of the Ridgewood Power Shares are owned by
repeat investors (people in at least two programs). A large number of investors
are in four, five, or all six Ridgewood Power Trusts. Some of you will receive
one Consent Solicitation Statement, and must vote once; other Shareholders will
receive multiple Consent Solicitation Statements and must vote once for each
Ridgewood Trust that you own. If you do not vote, it has the same effect as a
"no" vote. If you own shares in more than one Trust, voting on one Consent Form
will only count for one Trust and not the others. You must complete each Trust's
form.
THE PURPOSE OF THESE PROPOSALS
The legal and regulatory status of the respective Ridgewood Power Trusts have
evolved over a period of approximately ten years. As a result, the individual
terms and regulatory status of each individual Ridgewood Power Trust varies to
some degree from the terms and status of each other Ridgewood Power Trust.
Assuming that the proposals described in the Consent Solicitation Statements are
approved by the required Shareholder vote in each of the six Trusts, the end
result will be that the terms and regulatory status of all Ridgewood Power
Trusts will all be the same. Thereafter, if we proceed to a consolidation of the
Ridgewood Power Trusts, those activities can be more easily effectuated.
Presently, Ridgewood Power Trusts I, II, and III are regulated as Business
Development Companies (BDC's) under the 1940 Investment Company Act. Trusts IV
and V, The Ridgewood Power Growth Fund, and the Ridgewood/Egypt Fund are not
regulated as BDC's (but are subject to other provisions of the securities laws).
The purpose of these proposals is to have all of the Ridgewood Power Trusts have
the same legal and regulatory status. Among other things enumerated in the
Consent Solicitation Statements, Shareholders of Power Trusts I, II, and III are
being asked to approve the elimination of BDC status for those three Trusts so
that they will have the same status as the other four Trusts. In addition to
eliminating BDC status, the Consent Solicitation Statements also include
proposals that will amend the Declaration of Trust to eliminate provisions that
were included to meet the BDC requirements. These include elimination of the
requirement that the Trusts have a board, a majority of whose members are
independent trustees.
Power Trust IV originally had been a BDC. In October 1996 Shareholders voted to
approve termination of BDC status. As the Trust IV Consent Solicitation
Statement enumerates, the Declaration of Trust continues to include provisions
that were originally included to meet the requirements applicable to BDC's.
These included a requirement of a board of independent trustees. We are now
asking you to amend the Declaration of Trust to eliminate these requirements.
Power Trust V and The Growth Fund never elected BDC status in the first place.
The Declaration of Trust for these two trusts included some provisions that were
similar to those included for the Trusts that were BDC's, including an
independent panel made up of independent members. In order to conform all of the
Trusts, we propose to eliminate these provisions.
The Managing Shareholder believes that the elimination of BDC status for Trusts
I, II and III, and the changes to the Declaration of Trust for all of the Trusts
will simplify the operations of the Trusts and eliminate administrative burdens
and expenses. Accordingly, the Managing Shareholder believes that the proposals
are in the best interests of the Shareholders and recommends that the
Shareholders vote for the proposals.
The Shareholders should note that compliance with the BDC requirements and
approval of certain transactions by independent Trustees could provide certain
benefits to the Shareholders. The Managing Shareholder believes that the
benefits from the proposals outweigh any potential disadvantages and recommends
that the Shareholders approve the proposals. The benefits and risks from the
proposals are discussed in more detail in the Consent Solicitation Statement for
your Trust.
PLEASE READ EACH CONSENT SOLICITATION STATEMENT CAREFULLY
DO NOT CONSIDER THIS LETTER as a summary or an explanation of the Consent
Solicitation Statement. This letter is merely an introduction to them so that
they have a context as you read them. We believe an introduction is particularly
important for Shareholders who are receiving several Consent Solicitation
Statements. We realize that there is a great deal to read.
We have separate Consent Forms for each Trust so that we may have an original
ballot in the file for each Trust.
Thank you for your cooperation.
/s/ Robert E. Swanson
RIDGEWOOD ELECTRIC POWER TRUST I
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
NOTICE OF SOLICITATION OF CONSENTS
To the Investors of RIDGEWOOD ELECTRIC POWER TRUST I:
Notice is Hereby Given that Ridgewood Power LLC, the Managing Shareholder (the
"Managing Shareholder"), is soliciting the consent of the holders of the
Investor Shares of Ridgewood Electric Power Trust I, a Delaware business trust
(the "Trust") to proposals to (i) withdraw the Trust's election to be a business
development company (the "Conversion") under the Investment Company Act of 1940,
as amended, and (ii) amend the Trust's Declaration of Trust in connection
therewith to, among other things, eliminate the requirement that the Trust have
a Board and Independent Trustees. The Managing Shareholder believes that
approval of the Conversion and the amendment proposals will eliminate
administrative burdens to which the Trust is currently subject as a business
development company and simplify the operations of the Trust.
Only Investors of record at the close of business on October 29, 2001, will be
entitled to notice of the solicitation and to grant or withhold consents. The
consents will be tabulated at the Managing Shareholder's principal offices,
located at 947 Linwood Avenue, Ridgewood, New Jersey 07450-2939 at 5:00 p.m.,
prevailing local time, on Friday, December 7, 2001, or on such later date (but
not later than January 7, 2002) to which the Managing Shareholder may adjourn
the tabulation.
By order of the Managing Shareholder: Mary Louise Olin, Secretary
November 5, 2001
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CONTENTS OF PROXY STATEMENT
Page
Summary Of Proposals..........................................................1
Introduction..................................................................1
Proposal To End The Business Development Company Status Of The Trust..........2
Proposal To Amend The Declaration To Eliminate Provisions That Are No
Longer Required If The Trust Is Not A Business Development Company
Including The Requirement That The Trust Have A Board And Independent
Trustees......................................................................5
Current Legal Status Of The Trust.............................................11
Other Information.............................................................14
Exhibit A - Proposed Amendment to the Declaration of Trust
Exhibit B - Listing of Statutory Provisions Affected by Conversion and
Amendment Proposals
RIDGEWOOD ELECTRIC POWER TRUST I
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
Telephone: (201) 447-9000 fax: (201) 447-0474
PROXY STATEMENT
for Solicitation of Consents
November 5, 2001
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SUMMARY OF PROPOSALS
The consents of the Investors of Ridgewood Electric Power Trust I (the "Trust")
are being requested for ending the Trust's status as a business development
company. In addition consents are being requested to amend the Trust's
Declaration of Trust (the "Declaration") in connection therewith. The amendments
to the Declaration will eliminate provisions that were required because the
Trust was a business development company. Such provisions include requirements
that the Trust have a Board and Independent Trustees and that certain actions of
the Trust be approved by the Board and the Independent Trustees. These consents
are being solicited by the Managing Shareholder on behalf of the Trust.
The purpose of the termination of the Trust's status as a business development
company (the "Conversion") and the amendment of the Declaration is to eliminate
the regulatory requirements to which the Trust is subject under the Investment
Company Act of 1940, as amended (the "1940 Act").
It is expected that this Notice of Solicitation of Consents and this Proxy
Statement and the Consent Form will be mailed to Investors on or about November
5, 2001. Investors are asked to give their written consent to the Conversion and
the amendment of the Declaration no later than December 7, 2001 (the "Response
Date"), unless the Managing Shareholder extends the Response Date, by returning
the enclosed consent form to the Trust at 947 Linwood Avenue, Ridgewood, New
Jersey 07450-2939 or by faxing it to (201) 447-0474. The Managing Shareholder
may extend the Response Date if it does not receive approval for the Conversion
and the amendment of the Declaration on or prior to the expiration of the
original Response Date. The written consent of the holders of no less than a
majority of the outstanding Investor Shares of the Trust (other than the
Managing Shareholder and its affiliates) is required for approval of the
proposals described herein.
The remainder of this Proxy Statement contains important information regarding
the amendment of the Declaration and Investors should read it in its entirety
before deciding whether to give their written consent. Investors who wish
further information may contact the Trust at the address above or by calling
Mary Louise Olin, Vice President, at (201) 447-9000, or by e-mail at
molin@ridgewoodpower.com.
Background:
Companies that hold themselves out as investing in securities or that own more
than specified percentages of their assets in investment securities and do not
qualify for an exemption must register an investment companies under the 1940
Act. Investment companies are subject to many legal restrictions that impair the
Trust's operations. When the Trust was organized, it was not clear whether it
would be required to register as an investment company. The Trust elected
business development company status, a less restrictive alternative under the
1940 Act, so that it would be in compliance with the 1940 Act in the event that
the development of its business required it to register as an investment
company.
Termination of the Business Development Company Status of the Trust
The Managing Shareholder has determined that it would be in the best interest of
the Trust and its Investors to terminate its status as a business development
company for several reasons:
oThe Managing Shareholder believes that, as a result of the development of
the Trust's business operations, it does not fall within the definition of an
investment company, as set forth in the 1940 Act. As a result, it does not need
to remain a business development company.
oAs a business development company, the Trust is subject to numerous
regulatory requirements under the 1940 Act. These requirements are complex and
compliance requires additional time, creating additional administrative burdens
and expenses. This would be unnecessary if the Trust withdrew its election to be
a business development company.
oAs a business development company, the Trust's financial statements are
prepared using an accounting method different than the one used by other
companies, including affiliates of the Trust that are not business development
companies. There are relatively few business development companies. Members of
the business community, including lenders, financial analysts, and others with
whom the Trust does business, are unfamiliar with the rules and regulations
applicable to business development companies, such as the differing accounting
methods. The Managing Shareholder believes that this unfamiliarity creates
confusion in the business community and complicates the ability of lenders or
others doing business with the Trust to understand the Trust's operating results
and financial condition. This hinders the Trust's ability to conduct business.
oSubstantive requirements of the 1940 Act applicable to business
development companies affect the Trust's ability to pursue beneficial
transactions. For example, the Trust is prohibited from co-investing or engaging
in other transactions with other Ridgewood Funds (as hereinafter defined)
without the approval of the Securities and Exchange Commission (the
"Commission"). While the Trust currently has no contemplated transactions with
any other Ridgewood Fund (other than the Consolidation described below), this
requirement makes beneficial transactions that allow the Trust to diversify and
grow more difficult and, inherently, less likely to complete and close.
oFinally, the Managing Shareholder intends to propose a transaction
under which the Trust and the other Ridgewood Funds would be consolidated into a
new entity (the "Consolidation"). Initially, it is expected that the shares of
the new entity would not be traded on a stock exchange. However, the Managing
shareholder believes that, if market conditions are favorable, the new entity
may seek to raise capital in the future and list its common stock on a national
securities exchange. This transaction could also include an acquisition of the
Managing Shareholder and Ridgewood Power Management LLC, which provides
management service to the Ridgewood Funds, by the new entity. The Consolidation
would require the approval of the Commission and the Independent Trustees, if
the Trust remained a business development company. The Managing Shareholder
believes that if the Trust remains a business development company, the
Commission and the Independent Trustee review process required for the
Consolidation will create additional administrative hurdles to the
Consolidation, resulting in uncertainty and delay, and will create considerable
additional expense for the Trust.
Amendments to the Declaration of Trust
The Managing Shareholder has also determined that it would be in the best
interest of the Trust and its Investors to amend the Declaration. The current
Declaration contains certain provisions that were required to comply with
requirements applicable to business development companies under the 1940 Act.
For example, under the current Declaration, the Trust is required to have a
"board", a majority of whose members are Independent Trustees. Certain
transactions must be approved by at least a majority of the Independent
Trustees. The Managing Shareholder believes that it is no longer necessary to
retain a board and Independent Trustees and that these requirements should be
eliminated.
Following the termination of the Trust's status as a business development
company, there will no longer be a statutory requirement for a board and
Independent Trustees. However, the Managing Shareholder will continue to be
subject to fiduciary duties to the Trust and the Investors. The Managing
Shareholder believes that their elimination will simplify, and reduce the cost
of, the Trust's operations. In addition, if the Conversion and amendment of the
Declaration to eliminate the board and the Independent Trustees are not
approved, the contemplated Consolidation would require the Trust to retain, at
its expense, separate legal counsel and separate investment bankers to advise
the Independent Trustees in connection with the Consolidation. These additional
procedures would result in a substantial increase in time and expense for the
Trust and would delay or even prevent completion of the Consolidation.
Certain Considerations in Connection with the Approval of the Proposals:
There may be potential benefits to the Investors from the continuation of the
Trust as a business development company and the Commission's approval and the
review by Independent Trustees of transactions involving the Managing
Shareholder. However, the Managing Shareholder believes that the factors
described above outweigh these benefits. It should be noted that the Managing
Shareholder may be subject to conflicts of interest in acting on behalf of the
Trust and other Ridgewood Funds in considering and approving material
transactions as described herein. However, if the amendment to the Declaration
is approved certain of such transactions would require the approval of the
holders of a majority of the outstanding Investor Shares of the Trust.
Status of the Trust if the Conversion is approved:
The Trust will continue to be a reporting company that will file 10-K's, 10-Q's
and other public reports. Although the Commission will no longer be required to
review the fairness of transactions such as the Consolidation, the Trust will be
required to comply with all of the Commission's requirements under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, including all applicable disclosure rules. In connection with the
Consolidation, it will be necessary for the acquiring company to file a
registration statement with the Commission and the transaction will be required
to meet the Commission's disclosure rules and other rules applicable to
roll-ups. However, these rules do not include a review of the fairness of the
transaction.
The Trust will not be subject to any of the provisions of the 1940 Act
applicable to business development companies. Such provisions relate to, among
other things, the filing of reports with the Commission, procedural
requirements, financial reporting standards, and the requirement that the Trust
have a board and independent trustees and that the approval of the independent
trustees be obtained for certain transactions. However, if the amendment to the
Declaration is approved, the consent of the holders of the majority of the
outstanding Investor Shares of the Trust would be required for certain
transactions with affiliates of the Trust.
Forward-Looking Statements:
This Notice of Solicitation of Consents and Proxy Statement and the accompanying
letter contain forward-looking statements. These forward-looking statements
include statements concerning the Managing Shareholder's plans to propose the
Consolidation transaction. These forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ materially from
those set forth in these forward-looking statements. Risks and other factors
that might cause such a difference include, but are not limited to, the effect
of economic and market conditions; market conditions specifically applicable to
the independent power business; and market conditions for debt and equity
financing.
INTRODUCTION
The consent which is requested in the foregoing Notice of Solicitation of
Consents is being solicited by Ridgewood Power LLC, the "Managing Shareholder"
of Ridgewood Electric Power Trust I, a Delaware business trust (the "Trust")
with respect to proposals (i) to end its status as a business development
company under the Investment Company Act of 1940, as amended (the "1940 Act")
(the "Conversion"), and (ii) to amend the Declaration of Trust of the Trust (the
"Declaration") to amend or eliminate provisions of the Declaration that are no
longer required once the Trust is no longer a business development company
subject to the 1940 Act. Among other things, the proposed amendment provides for
the elimination of the requirement that the Trust have a Board (the "Board"), a
majority of whose members must be Independent Trustees, and that the approval of
the Independent Trustees be obtained for certain transactions.
These proposals are being submitted to eliminate the regulatory burdens to which
the Trust is subject under the 1940 Act and certain provisions which are no
longer required if the Trust is no longer a business development company. The
Managing Shareholder has determined that it would be in the best interest of the
Trust and its Investors that the Investors vote in favor of both of these
proposals. The consents will be tabulated at 5:00 p.m., prevailing local time,
on a date (the "Tabulation Date") which is the later of Friday, December 7, 2001
or a later date (but not later than January 7, 2002) to which the Managing
Shareholder may adjourn the tabulation.
The mailing address and principal executive office of the Trust is 947 Linwood
Avenue, Ridgewood, New Jersey 07450-2939. Its telephone number is (201) 447-9000
and its facsimile number is (201) 447-0474. Consents must be given in writing
and any consent given may be revoked by the Investor who gives the consent by
notifying the Secretary of the Trust in writing at any time prior to the
tabulation thereof. Consents and revocations may be mailed or delivered to the
Trust at its principal executive office, as stated above, or may be sent by
facsimile to the number stated above. All consents received will be tabulated
unless revoked. The consents will be received at and will be tabulated at the
principal executive office of the Trust. It is expected that the Notice of
Solicitation Consents and Proxy Statement and the form of consent will be mailed
to Investors on or about November 5, 2001.
The close of business on October 29, 2001 has been fixed as the time for the
determination of the Investors entitled to consent. Each share of beneficial
interest in the Trust (an "Investor Share"), is entitled to one vote and
fractional Investor Shares to corresponding fractional votes, except that any
Investor Share owned by the Managing Shareholder or any person that controls, is
controlled by or is under common control with the Managing Shareholder (an
"Affiliate") will not be treated as outstanding and the holder thereof will not
be entitled to consent. There are approximately 104 Investor Shares outstanding
whose holders are entitled to consent in response to the Notice of Solicitation
of Consents. Although there is no quorum for giving of consents, no action can
be taken pursuant to this solicitation unless holders of no less than a majority
of the outstanding Investor Shares (excluding the Managing Shareholder and its
Affiliates) of the Trust entitled to consent, grant their consents to the
action.
Votes made by consents returned prior to the Tabulation Date will be counted by
the Managing Shareholder. Abstentions and failures by record holders to vote the
shares owned by beneficial owners (including "broker non-votes") will not be
counted as voting on the Conversion and the amendment proposals. Because the
Conversion and the amendment proposals require the vote of holders of no less
than a majority of the outstanding Investor Shares (excluding the Managing
Shareholder, the Independent Trustees, the Corporate Trustee and their
affiliates) of the Trust entitled to consent, a failure to vote or a broker-non
vote has the effect of a vote against the Conversion and the amendment
proposals.
A copy of the Trust's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, as filed with the Securities and Exchange Commission (the "
Commission"), including financial statements and schedules thereto, will be
furnished by the Trust without charge to each person to whom this Proxy
Statement is delivered, upon written or oral request of such person to the Trust
at 947 Linwood Avenue, Ridgewood, New Jersey 07450-2939, Attention: Secretary,
or by telephone request to the Trust at (201) 447-9000 during normal business
hours.
PROPOSAL TO END THE BUSINESS DEVELOPMENT COMPANY STATUS OF THE TRUST
As a business development company, the Trust is subject to many regulatory
requirements that apply only to such companies. These requirements restrict the
Trust's ability to function optimally. Therefore, the Managing Shareholder has
proposed the Conversion to end the Trust's status as a business development
company under the 1940 Act.
Background
When the Trust was organized, the Managing Shareholder had contemplated that it
would invest in independent electric power projects and similar capital projects
("Projects") in two ways. First, the Trust might make majority or controlling
investments in Projects with the intention of operating those Projects itself.
Second, the Trust might invest in other Projects together with the developers of
the Projects or others and the developers or other managers unaffiliated with
the Trust would manage those Projects. Thus, the Trust might act as an active
investor with managerial control over certain Projects ("Operated Projects") and
might have the status of a more passive investor in other Projects
("Non-Operated Projects").
However, to the extent the Trust were to invest in Non-Operated Projects, its
ownership interests in such Non-Operated Projects might be considered to be
investment securities under the 1940 Act and the Trust would, under certain
circumstances, be an investment company required to register under the 1940 Act.
The Managing Shareholder concluded that the 1940 Act's restrictions on
investment companies, however, would have made the Trust's business plan
extremely difficult to carry out.
The 1940 Act provides business development company status as an alternative to
investment company registration for companies that meet certain investment
requirements, which were not inconsistent with the Trust's business plan and
would allow the Trust to comply with the 1940 Act in the event the Trust were
considered to be an investment company. Therefore, in order to reduce legal
risks at a time when the Trust's status under the 1940 Act was uncertain, the
Trust elected to become a business development company and has operated as such
since its registration under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), became effective The Trust, however, has invested only in
Operated Projects which it actively manages, and expects that it will continue
to do so. It has not invested in any Non-Operated Projects which might be deemed
to trigger the requirement that the Trust register as an investment company
under the 1940 Act. Therefore, because the Trust does not require the business
development company safe harbor from the provisions of the 1940 Act, and for the
other reasons set forth below, the Managing Shareholder has proposed the
Conversion.
Reasons for the Conversion
No Legal Requirement to Maintain the Business Development Company Status of the
Trust
As discussed above, the Trust has invested in Operated Projects and not in
Non-Operated Projects. Therefore the rationale that originally caused the
Managing Shareholder to register the Trust as a business development company,
namely, to obtain a safe harbor from the provisions of the 1940 Act, is no
longer applicable.
The Compliance with the Requirements of the 1940 Act Increases the Complexity of
Operating the Trust
So long as the Trust remains a business development company, it continues to be
subject to the applicable requirements of the 1940 Act. These requirements are
often complex and require additional time and expense to determine and comply
with the requirements under the 1940 Act. For example, under the 1940 Act the
Trust is required to file periodic reports with and follow certain procedural
requirements of the Commission. The compliance of the Trust with these
requirements may be reviewed by the Commission. In addition, the 1940 Act limits
the type of transactions that the Trust may enter into and imposes procedural
requirements applicable to such transactions. The Conversion would simplify the
operations of the Trust.
The Managing Shareholder or its affiliates act as manager to the Trust, two
other trusts which are business development companies, Ridgewood Electric Power
Trust II and Ridgewood Electric Power Trust III, and four other trusts which are
not business development companies, Ridgewood Electric Power Trust IV, Ridgewood
Electric Power Trust V, The Ridgewood Power Growth Fund and Ridgewood/Egypt Fund
(collectively, the "Ridgewood Funds"). The Ridgewood Funds which are business
development companies are reviewed by a different branch of the Commission from
the other Ridgewood Funds. This increases the complexity, administrative burden
and expense of operating the Ridgewood Funds.
As a business development company, the Trust's financial statements are prepared
using an accounting method different than the one used by other companies,
including affiliates of the Trust that are not business development companies.
There are relatively few business development companies. Members of the business
community, including lenders, financial analysts, and others with whom the Trust
does business, are unfamiliar with the rules and regulations applicable to
business development companies, such as the differing accounting methods. The
Managing Shareholder believes that this unfamiliarity creates confusion in the
business community and complicates the ability of lenders or others doing
business with the Trust to understand the Trust's operating results and
financial condition. This hinders the Trust's ability to conduct business.
Because the Managing Shareholder and affiliates transact business with lenders
and others on behalf of both the Trust and the other Ridgewood Funds, the
Managing Shareholder and its affiliates provide these entities with financial
statements and other information on behalf of both the Trust and the Ridgewood
Funds which are not business development companies. As a result, and in light of
the differing information being provided due to the Trust's status as a business
development company, it is more difficult for lenders and others doing business
with the Ridgewood Funds to understand and analyze the financial statements of
the Trust. This difficulty increases the Trust's costs and affects its ability
to obtain financing and enter into certain larger and more diverse and
potentially profitable transactions.
The Substantive Requirements of the 1940 Act Affect the Operations of the Trust
Further, substantive requirements of the 1940 Act applicable to business
development companies affect the Trust's ability to pursue beneficial
transactions. For instance, the 1940 Act prohibits business development
companies from investing in business ventures in which certain "affiliated
persons" (as defined by the 1940 Act) also invest, unless the Commission reviews
the transaction to determine whether the proposed co-investment would comply
with the requirements of Section 57 of the 1940 Act (which include in part a
mandate that the parties invest on identical terms) and issues an exemptive
order permitting the co-investment. The Managing Shareholder and the other
Ridgewood Funds it sponsors are affiliated persons of the Trust. Therefore, with
limited exceptions that are not useful to the Trust, without the Commission's
approval, the Trust may not invest in any business venture in which another
Ridgewood Fund invests. This, in most cases, effectively restricts the Trust's
investments to ownership in small Projects or forces the Trust to invest in
single larger Projects, thus creating higher risks to Investors because of less
diversification of investments. The Managing Shareholder believes that this
restriction unnecessarily limits the Trust and may reduce diversification of its
portfolio, with corresponding increased risks to Investors. While the Trust
currently has no plans to enter into transactions with other Ridgewood Funds
(other than the Consolidation discussed below), this requirement could affect
the ability of the Trust to enter into a future transaction that would allow the
Trust to diversify and be beneficial to the Trust.
The Managing Shareholder intends to propose the Consolidation transaction which
may be affected if the Trust continues as a business development company. In
connection with such transaction, the Trust and the other Ridgewood Funds would
be consolidated into a new entity ("Newco"). Initially, it is expected that the
shares of the new entity would not be traded on a stock exchange. However, the
Managing shareholder believes that, if market conditions are favorable, the new
entity may seek to raise capital in the future and list its common stock on a
national securities exchange. This transaction could also include an acquisition
of the Managing Shareholder and Ridgewood Power Management LLC, which provides
management service to the Ridgewood Funds, by the new entity. However, because
the Ridgewood Funds are affiliated persons of the Trust, the Trust may not
effect a Consolidation, absent a Conversion, without the Commission's approval.
In addition, regardless of whether the Conversion occurs and the amendment to
the Declaration is approved, the Consolidation will require the consent of the
holders of a majority of the outstanding shares of each of the Ridgewood Funds
pursuant to a consent solicitation statement/prospectus included in a
registration statement filed under the Securities Act of 1933, as amended, and
declared effective by the Commission. Investors should recognize that the
Consolidation proposal is still in the preliminary stages and that the Managing
Shareholder can make no assurances that the Consolidation will be consummated.
The Commission by order may grant an exemption from the transactional
prohibitions (with respect to co-investment by the Trust and affiliated parties
or with respect to the Consolidation ) so long as the Trust participates in the
transactions on terms at least as advantageous as the terms enjoyed by any other
affiliated participants and meets other statutory requirements. For the
Commission to waive any of these prohibitions in its discretion, it must find
that the transaction's terms are reasonable, fair, not overreaching, consistent
with the Trust's investment policy and consistent with the general purposes of
the 1940 Act. The approval process for such an order requires notice to the
public, a public comment period and careful review of the Trust's filing by the
Commission's staff. At the completion of the process, there is no assurance that
any application will be approved and there is no assurance that the proposed
transaction can be completed in accordance with the terms of the order or within
the time period permitted by the waiver.
Although the requirement of the 1940 Act that the Commission approve certain
types of transactions may offer some benefit to Investors, by providing for a
review by the Commission of such transactions, the Managing Shareholder believes
that the disadvantages of such requirement, as described above, outweigh such
benefit.
PROPOSAL TO AMEND THE DECLARATION TO ELIMINATE PROVISIONS THAT ARE NO LONGER
REQUIRED IF THE TRUST IS NOT A BUSINESS DEVELOPMENT COMPANY INCLUDING THE
REQUIREMENT THAT THE TRUST HAVE A BOARD AND INDEPENDENT TRUSTEES
Because the Trust elected to have business development company status, the
Declaration includes certain provisions required to comply with the 1940 Act.
These include the requirement that the Trust have a Board, a majority of which
are Independent Trustees. The Independent Trustees may not be "interested
persons" of the Trust and must approve certain matters specified in the 1940
Act. Under the Declaration, the approval either the Board and the Independent
Trustees or the holders of a majority of the Investor Shares is required for the
following matters:
oAppointment of the independent accountants of the Trust;
oCertain transactions with persons having defined relationships with
the Trust, including a new management agreement between the Trust and the
Managing Shareholder;
oSales of shares below net asset value;
oTerms of any new series of shares that are issued by the Trust;
oValuation of the assets of the Trust; and
oAny other transaction for which the approval of the Board or the
Independent Trustees is required under the 1940 Act.
The Board also has the power to supervise and review the Managing Shareholder's
actions, and has the right to require action by the Managing Shareholder, to the
extent necessary to carry out the fiduciary duties of the Board's members. The
Board also has the power to remove the Managing Shareholder. Following the
Conversion and the amendment of the Declaration, the Board and the Independent
Trustees will no longer exercise these functions and the Trust will be managed
solely by the Managing Shareholder. However, if the amendment to the Declaration
is approved, the consent of the holders of a majority of the outstanding
Investor Shares of the Trust to certain transactions with affiliates of the
Trust will be required.
The Managing Shareholder believes that the elimination of the Board and the
Independent Trustees is in the best interest of the Investors. The requirement
that there be a Board and Independent Trustees was originally included in the
Declaration solely to comply with the requirements of the 1940 Act applicable to
business development companies and to provide the approvals required of
independent directors under the 1940 Act. Although the Board and the Independent
Trustees have the powers described above, in practice, the Managing Shareholder
has had the primary responsibility for the operations of the Trust. The role of
the Board and the Independent Trustees has been, generally, limited to the
specific items required under the 1940 Act.
Accordingly, the Managing Shareholder believes that the Investors have relied on
the Managing Shareholder and not on the Board and the Independent Trustees to
manage and control the operations of the Trust. Following the Conversion, there
will no longer be a statutory requirement for a Board or Independent Trustees
and the elimination of the Board and of the Independent Trustees will simplify
and reduce the cost of the operations of the Trust. The Managing Shareholder
does not believe that the operations of the Trust will be adversely affected by
the elimination of the Board and of the Independent Trustees.
In addition, in the event that the contemplated Consolidation occurs without the
proposed amendments to the Declaration being approved, substantial additional
procedures would be required to enable the Independent Trustees to meet their
fiduciary duties and minimize their risk of liability. Among other things, if
the Independent Trustees remained, it would be necessary for the Trust to
retain, at considerable expense, separate counsel and separate investment
bankers to advise the Independent Trustees in connection with the Consolidation.
The Consolidation would also require the Independent Trustees to spend
substantially more time in performing their duties as Independent Trustees than
was originally contemplated and would create a risk of liability to the
Independent Trustees. These additional procedures could delay or even prevent
the Consolidation.
The review and supervision by the Board and the Independent Trustees of certain
transactions of the Trust and of the actions of the Managing Shareholder, and
the ability of the Board to require action by the Managing Shareholder, may
protect the Investors by providing an independent consideration of whether
certain transactions are in the best interests of the Trust and whether the
relevant terms are fair to the Trust. For example, in transactions between the
Trust and the Managing Shareholder or other affiliates of the Trust, such as the
Consolidation, the Managing Shareholder may have a conflict of interest.
If the proposal to amend the Declaration is approved and the Board and the
Independent Trustees are eliminated, the Managing Shareholder will no longer be
subject to their independent review. However, even in the absence of the
Independent Trustees, the Managing Shareholder would still have to review such
transactions and determine their fairness to the Investors. The Managing
Shareholder intends to also obtain a fairness opinion with respect to the
Consolidation transaction. While the Managing Shareholder is subject to
conflicts of interest, the Managing Shareholder believes that it will be able,
in exercise of its fiduciary duties, to review and determine whether any
proposed transaction is fair and in the best interests of the Investors.
In addition, certain transactions, including transactions with affiliated
parties (unless they only involve transactions with other Ridgewood Funds or
transactions in the ordinary course of business pursuant to which the Managing
Shareholder or its affiliates and any Ridgewood Fund jointly acquire goods or
services from third parties, on an arm's length basis) such as the
Consolidation, would also require the approval of the holders of a majority of
the outstanding Investor Shares of the Trust. The Managing Shareholder believes
that the benefits associated with the elimination of the Independent Trustees,
such as simplification of the Trust's operations and reduced operational and
administrative costs, clearly outweigh any perceived detriment from the
elimination of the Independent Trustees.
Potential Conflicts of Interests and Benefits to Related Parties
If the Conversion and the proposal to amend the Declaration are approved and a
transaction between the Trust and any of its, or the Managing Shareholder's,
affiliates is proposed by the Managing Shareholder, the Managing Shareholder
might be considered to have potential conflicts of interest arising from its
duties to the Trust and to itself, any of its affiliates, or any other Ridgewood
Fund considering such transaction. However, as discussed below, such
transactions would be subject to applicable laws, including laws governing
conflicts of interest.
The Managing Shareholder may be considered to benefit from the Conversion and
the elimination of the requirement that the Trust have a Board and Independent
Trustees if a Consolidation is completed following such Conversion, because the
Managing Shareholder or its affiliates would receive common stock in the
combined entity in exchange for its interest in the Trust and the Management
Company. Because the Conversion will eliminate the requirement that the
Commission approve a Consolidation and the amendment to the Declaration will
eliminate the requirement that the Board supervise and review the actions of the
Managing Shareholder (and the right of the Board to require action by the
Managing Shareholder), the Conversion and amendment may increase the likelihood
that affiliates of the Managing Shareholder will receive securities of the
combined entity in connection with the Consolidation. In addition, the terms of
a Consolidation may be more favorable to the Managing Shareholder and its
affiliates than they would have been if the Board reviewed the Consolidation.
However, in the event that the Conversion and amendment are approved, the
holders of a majority of the outstanding Investor Shares of the Trust will still
be required to separately approve any such Consolidation.
Even if the Consolidation does not occur, the Managing Shareholder may be viewed
as benefiting from the elimination of a Board and Independent Trustees, since
the Board currently has the power to review the Managing Shareholder's actions
and to remove the Managing Shareholder. However, following the Conversion, the
holders of a majority of the outstanding Investor Shares of the Trust will
retain the power to remove the Managing Shareholder.
Amendment to Declaration
The Conversion would be completed by amending the Declaration and by filing a
withdrawal of election to be a business development company with the Commission.
The Trust anticipates that it will do so as soon after the Tabulation Date as
possible. The text of the amendment to the Declaration (the "Amendment") is
attached as Exhibit A.
In summary, the Amendment authorizes the Trust to withdraw the business
development company election. Once the Trust withdraws such election, the Trust
will not be subject to any of the provisions of the 1940 Act or the rules
promulgated thereunder. A summary of the provisions of the 1940 Act that are
applicable to business development companies is attached hereto as Exhibit B,
but for a comprehensive discussion of these provisions, each Investor should
consult its legal counsel and the 1940 Act.
The Amendment will eliminate from the Declaration of Trust the requirement that
the Trust have a Board, a majority of whose members are Independent Trustees,
and terminate those functions previously exercised by such parties. See -
Reasons for the Conversion, above. Pursuant to the Amendment, the persons who
previously served as Independent Trustees will be entitled to the same rights of
exculpation, indemnification and reimbursement as they had prior to the
Amendment. In addition, the Managing Shareholder has agreed to indemnify the
Independent Trustees to the same extent.
Although the Trust will no longer be subject to the requirements of the 1940
Act, the Declaration will be amended to provide that an Affiliate Transaction
(excluding transactions with other Ridgewood Funds and transactions in the
ordinary course of business pursuant to which the Managing Shareholder or its
affiliates and any Ridgewood Fund jointly acquire goods or services from third
parties, on an arm's length basis) must be approved by the holders of a majority
of the outstanding Investor Shares of the Trust. The Consolidation, for example,
would require the approval of the holders of a majority of the outstanding
Investor Shares of the Trust. The Amendment defines an "Affiliate Transaction"
as a transaction with a Managing Person (which includes the Managing Shareholder
and its affiliates, and excludes any existing and new Ridgewood Funds). If the
Declaration is amended, transactions between the Trust and other Ridgewood Funds
in which the Managing Shareholder was not a party would not necessarily require
shareholder approval even though such transactions might involve a potential
conflict of interest for the Managing Shareholder. Following the Conversion, the
Investors will retain the power to remove the Managing Shareholder. However, in
the event that the Managing Shareholder is removed, it may be entitled to
receive certain payments from the Trust.
Copies of the Declaration of Trust reflecting all changes proposed by this Proxy
Statement are available from the Trust without charge on request by any
Investor. Requests should be made to the Trust at 947 Linwood Avenue, Ridgewood,
New Jersey 07450-2939, Attention: Secretary, or by telephone to the Trust at
(201) 447-9000 during normal business hours.
Effects of Conversion and Amendment of Declaration
Upon the Conversion, the Trust will not be subject to any of the provisions or
the 1940 Act. Although this section summarizes certain notable effects of the
Conversion and the amendment of the Declaration, for a complete review of the
provisions of the 1940 Act, each Investor should consult its legal counsel, the
1940 Act, the Declaration and the Amendment.
The Conversion would end supervision of the Trust by the Commission under the
1940 Act and thus would end the Commission's ability to bring administrative or
court proceedings against the Trust and its affiliates under the 1940 Act. For
example, under Section 36 of the 1940 Act, the Commission and the Investors in
the Trust are empowered to bring actions against officers, directors and other
persons involved in the management of the Trust for breach of their fiduciary
duties (where such breach involves personal misconduct) to the Trust. This
fiduciary duty standard is higher than the standard applicable under Delaware
and other federal laws. Following the Conversion, the Commission and Investors
will retain rights of action under laws other than the 1940 Act and Investors
will have contractual rights of action for breach by the Managing Shareholder of
the protections that are granted to the Investors under the Declaration.
As a result of the Conversion, the Trust would not be required to file any
reports required of business development companies with the Commission or any
other regulatory agency. In addition, the Commission will not have the ability
to regulate the Trust under the 1940 Act, because the Trust will no longer be
subject to the Commission's authority over business development companies.
The Conversion would eliminate the following prohibitions on Affiliate
Transactions, which so long as the Trust remains a business development company
can only be lifted by an order of the Commission:
a. purchases of property from other Ridgewood Funds or companies they control or
invest in;
b. sales of property to other Ridgewood Funds or companies they control or
invest in (including transactions such as the Consolidation), except for
Investor Shares in some cases;
c. loans to other Ridgewood Funds or companies they control or invest in; and
d. acting as a joint or joint and several participant in any transaction or
venture with other Ridgewood Funds or companies they control or invest in, if
the Trust may have a less advantageous position than other participants
(although a joint enterprise is permissible if no affiliate or insider has a
financial interest in a party to the transaction and the Trust or its investees
do not commit more than 5% of their total assets to the transaction).
Following the Conversion and the amendment of the Declaration, the Board and the
Independent Trustees will be eliminated and they will cease to perform the
functions described above. The Managing Shareholder will be solely responsible
for managing the business and operations of the Trust. See - Reasons for the
Conversion, above. However, new Affiliate Transactions, including the
Consolidation, would require the consent of holders of a majority of the
outstanding Investor Shares of the Trust, in lieu of the current requirement for
Commission approval.
Currently, the Management Agreement between the Trust and the Managing
Shareholder is renewed annually as long as it is approved at least annually by
the Board or by holders of a majority of the outstanding Investor Shares of the
Trust. Following the Conversion and the amendment of the Declaration, holders of
a majority of the outstanding Investor Shares of the Trust will retain the power
to remove the Managing Shareholder, subject to the right of the Managing
Shareholder to receive certain payments from the Trust in connection with such
termination. The holders of a majority of the outstanding Investor Shares of the
Trust will also retain the right to approve a new Management Agreement with the
Managing Shareholder. See - Amendment to Declaration, above. However, the
existing Management Agreement will be renewed automatically, for consecutive one
(1) year terms, unless the Investors vote to terminate the Management Agreement
in accordance with the terms of the Declaration.
The 1940 Act requires business development companies to transmit financial
reports containing prescribed information to their security holders at least
semiannually. Power is given to the Commission to obtain annual and periodic
reports including financial statements. The Commission has also promulgated
uniform accounting standards that are applicable to business development
companies which require such companies, among other things, to value its
securities semiannually. Although, following a Conversion, these requirements
would terminate, the Trust would remain subject to all other applicable legal
requirements with respect to financial reporting.
For example, the Conversion will not affect the status of the Trust as a
business trust organized under Delaware law. The Trust's Investor Shares will
continue to be registered under the Securities Exchange Act of 1934 ("Exchange
Act"), which requires the Trust to file annual, quarterly and current reports
(10-K, 10-Q and 8-K) and to comply with the proxy solicitation rules,
short-swing insider trading rules, tender offer rules and other rules applicable
to "public companies" generally. In addition, the Trust will be required to
comply with all of the Commission's requirements under the Securities Act of
1933, as amended, and the Exchange Act in connection with the Consolidation.
Therefore, in connection with the Consolidation, it will be necessary for the
acquiring company to file a registration statement with the Commission and the
Consolidation transaction will be required to meet the Commission's disclosure
rules and other rules applicable to roll-ups. However, these rules do not
include a review of the fairness of the Consolidation transaction by the
Commission.
Federal Income Tax Consequences
The Conversion and the amendment of the Declaration will not have any federal
income tax consequences to the Investors.
Absence of Dissenter's Rights
There are no dissenter's or appraisal rights with respect to the Conversion and
the amendment of the Declaration, which means that Investors who do not grant
their consent to the Conversion and the amendment of the Declaration do not have
the right to receive payment of the fair value of their shares.
No Additional Anti-Takeover Effects
The Conversion and the amendment of the Declaration will not cause the Trust to
be subject to any business combination statute limiting the ability of
corporations to merge with or enter into transactions involving interested
stockholders and the proposed amendment of the Declaration does not contain
provisions making a change of control of the Trust more difficult. However, it
is possible that the elimination of the Board, who currently has the power to
remove the Managing Shareholder, could be considered to make a change of control
of the Trust more difficult. See - Amendment to Declaration, above.
Vote to Approve
Approval of each of the Conversion and the amendment of the Declaration
proposals requires the affirmative vote of the holders of no less than a
majority of the outstanding Investor Shares (excluding the Managing Shareholder
and its Affiliates) of the Trust entitled to consent. Such Conversion and
amendment will be effective as to all Investors. The Managing Shareholder will
consent to Conversion and amendment.
THE MANAGING SHAREHOLDER RECOMMENDS A VOTE "FOR" APPROVAL OF THE CONVERSION AND
"FOR" THE AMENDMENT OF THE DECLARATION.
CURRENT LEGAL STATUS OF THE TRUST
The 1940 Act
The Trust is a business development company under the 1940 Act and has
registered its Investor Shares under the Exchange Act, which requires the Trust
to file annual, quarterly and other reports (such as Forms 10-K, 10-Q and 8-K)
and to be subject to the proxy rules and other regulatory requirements of that
Act. The registration of the Trust's Investor Shares under the Exchange Act will
be unaffected by the Conversion and the amendment of the Declaration and it will
continue to file the reports required under that Act.
As a business development company, the Trust is treated as if it were a
closed-end company (defined by the 1940 Act as a company that does not offer for
sale or have outstanding any redeemable security) that is regulated under the
1940 Act only as a business development company. The 1940 Act requires that a
majority of the Managing Shareholder and Independent Trustees be persons other
than "interested persons" as defined in that Act. Under the 1940 Act, approval
of the Commission is required for certain transactions of business development
companies involving certain closely affiliated persons. Accordingly, the Trust
currently is required to obtain an exemptive order of the Commission permitting
investments in one or more of the same Projects or Project development companies
by the Trust and other entities sponsored or managed by the Managing
Shareholder, including the Ridgewood Funds, or with affiliates of the Managing
Shareholder. Likewise, the Trust is required to obtain an exemptive order of the
Commission permitting the Consolidation. A business development company may not
change the nature of its business so as to cease to be, or to withdraw its
election as, a business development company unless authorized to do so by at
least a majority vote of its outstanding voting securities.
The 1940 Act restricts the kind of investments a business development company
may make. A business development company may not acquire any asset other than a
"Qualifying Asset", within the meaning of the 1940 Act, unless, at the time the
acquisition is made, Qualifying Assets comprise at least 70% of the company's
total assets by value.
Although the Trust does not anticipate that it will incur material debt, a
business development company is permitted under specified conditions to issue
multiple classes of indebtedness and classes of equity securities senior to the
Shares if its asset coverage (as defined in the 1940 Act) is at least 200%
immediately after each issuance. Although such actions are not anticipated, in
the event the Trust were to issue publicly distributable debt or senior equity
securities, no distribution to holders of Investor Shares would be permitted by
the Trust unless the Trust were to meet the applicable asset coverage ratios at
the time of the distribution. The Trust is also permitted to borrow for
temporary or emergency purposes an amount up to 5% of its total assets.
If the Trust were not a business development company, but met the definition of
an investment company described below, it would be required to register as an
investment company under the 1940 Act in order to continue operation.
The 1940 Act in relevant part defines an investment company as an organization
that either (a) is or holds itself out as being or that will be primarily
engaged in the business of investing in securities, or (b) is engaged or
proposes to engage in the business of investing in securities and that owns or
proposes to own "investment securities" (securities other than U.S. government
securities and securities issued by majority-owned operating subsidiaries of the
company) in an amount exceeding 40% of the company's total assets (excluding
U.S. government securities and cash items).
As mentioned above, the Trust believes that it is not, and is not likely to ever
become, an investment company.
Ownership of Securities by Directors, Executive Officers and Certain Beneficial
Owners
To the knowledge of the Trust, no person owns of record or beneficially more
than 5% of the Trust's Investor Shares.
The following information pertains to the Investor Shares of the Trust
beneficially owned, directly or indirectly, by the Managing Shareholder, the
Independent Trustees, and executive officers individually and by all those
persons as a group. Each person named has an address c/o the Trust at 947
Linwood Avenue, Ridgewood, New Jersey 07450-2939.
--------------------------------------------------------------------------------
Shareholder Name Amount and nature of Percent
beneficial ownership
(Investor Shares)
--------------------------------------------------------------------------------
Managing Shareholder Ridgewood Power LLC 1.00 1
and Affiliates (a)
--------------------------------------------------------------------------------
Independent Trustees John C. Belknap 0 0
Richard D. Propper, M.D. 0 0
Seymour Robin .625 .6
---------------------------------- ---------------------------------------------
All current directors and executive officers
as a group (8) (a): 1.625 1.6
--------------------------------------------------------------------------------
Mr. Swanson is the sole manager of the Managing Shareholder and beneficially
owns all of its equity. He, therefore, beneficially owns all Investor Shares
held by the Managing Shareholder.
Voting Requirements
The Declaration of Trust requires the consent of holders of at least a majority
of the outstanding Investor Shares of the Trust, excluding the Managing
Shareholder and its affiliates, in order to amend the Declaration. Amendment of
the Declaration is necessary for the Conversion.
Section 58 of the 1940 Act also requires the consent of the holders of a
"majority" of the Trust's voting securities to withdraw the business development
company election. Section 2(a)(42) of the 1940 Act defines "majority" in the
alternative: either 67% of the securities present at the meeting if at least
half of the voting securities are represented, or more than 50% of the voting
securities, whichever is less.
Thus, if holders of at least a majority of the outstanding Investor Shares of
the Trust, as required by the Declaration, consent to the Conversion and the
amendment of the Declaration, then more than 50% in interest of all holders of
voting securities will have consented and the statutory requirement will be met.
OTHER INFORMATION
Cost of Consent Solicitation
The cost of preparing, assembling and mailing this Proxy Statement, the Notice
of Solicitation and form of consent will be borne by the Trust. The Trust will
request nominees and fiduciaries to forward the proxy material to the beneficial
owners of the Investor Shares held of record by such persons, and the Trust will
reimburse them, upon request, for reasonable expenses incurred in connection
therewith. In addition to solicitation by mail, the Company' directors,
officers, and regular employees, without additional remuneration, may solicit
proxies by telephone and personal interviews.
Other Matters
No other business is to be presented pursuant to this Proxy Statement or the
solicitation of consents.
Shareholder Proposals
No annual meeting of the Trust is provided for by the Declaration and the Trust
does not currently contemplate that any special meeting of or further consent
solicitation of Investors (except for any special meeting of or consent of
Investors relating to the Consolidation) will occur. In the event that an
Investor meeting or consent solicitation were to occur in the future, Investors
wishing to present proposals for inclusion in proxy materials may do so within a
reasonable time prior to the record date of the consent solicitation or special
meeting. Inclusion of proposals is subject to federal laws and regulations
governing proxy solicitations, which give the Trust in certain cases the right
to refuse to include a proposal. There is no assurance that any proposal, if
submitted, will be included in proxy materials or will be presented for
consideration by Investors.
Transfer Agent and Shareholder Information
The transfer agent for the Investor Shares is the Managing Shareholder, located
at 947 Linwood Avenue, Ridgewood, New Jersey 07450-2939 and its telephone number
is (201) 447-9000. For information concerning the Trust, please contact the
Secretary of the Trust, Mary Louise Olin, at the Trust's principal executive
offices.
On Behalf of the Managing Shareholder: Robert E. Swanson, President
Ridgewood, New Jersey November 5, 2001
EXHIBIT A
AMENDMENT NO. 1
TO DECLARATION OF TRUST
OF RIDGEWOOD ELECTRIC POWER TRUST I
This AMENDMENT NO. 1 (the "Amendment") to the Declaration of Trust, dated as of
July 26, 1994, of Ridgewood Electric Power Trust I, a Delaware business trust
(the "Trust"), is made by Ridgewood Energy Holding Corporation, a Delaware
corporation which is the Corporate Trustee of the Trust (the "Corporate
Trustee"), as of ___________, 2001.
RECITALS
The Corporate Trustee has entered into the Declaration of Trust, dated as of
July 26, 1994, (the "Prior Declaration") for the benefit of the persons admitted
as Investors under the terms of the Prior Declaration. Capitalized terms not
defined in this Amendment shall have the meanings assigned to them by the Prior
Declaration. The Prior Declaration, as modified by this Amendment, is referred
to as the "Declaration."
The Managing Shareholder has proposed to the Investors that the Trust withdraw
its election to be a business development company under the 1940 Act and has
submitted this Amendment to authorize that withdrawal to the Investors on
November 5, 2001. The consents of the Investors were tabulated ___________ __,
2001, at which time the Trust determined that this Amendment had received the
consent of the Investors required under Sections 15.8(b) and 15.2(b) of the
Prior Declaration.
NOW THEREFORE, pursuant to the proposal of the Managing Shareholder and the
consent of holders of a majority of the outstanding Investor Shares of the Trust
(excluding the Managing Shareholder and its Affiliates), the Corporate Trustee
adopts this Amendment to the Prior Declaration as follows:
A. Authorization to Withdraw Business Development Company Election.
The Prior Declaration is amended by adding the following Section 1.9 after the
existing Section 1.8:
1.9. Withdrawal of Business Development Company Election. On and after the date
of the Amendment adopting this Section 1.9, the Trust is authorized, empowered
and directed to withdraw its prior election to operate as a business development
company under the 1940 Act, effective upon the filing of a notice of withdrawal
with the Securities and Exchange Commission.
B. Authorization to Enter into Affiliate Transactions.
(a) Section 1.8(i) of the Prior Declaration (empowering the Trust to do business
as a business development company) is amended by replacing it in its entirety
with the following:
(i) To engage in Affiliate Transactions, subject to the requirements of Section
12.5(a).
(b) Article 2 of the Prior Declaration is amended by adding the following
definitions:
"Affiliate Transaction" -- An "Affiliate Transaction" is any transaction with a
Managing Person, provided, however, that for purposes of the definition of
Affiliate Transaction (i) no Ridgewood Fund shall be deemed to be a Managing
Person, and (ii) no transaction in the ordinary course of business pursuant to
which the Managing Shareholder and any Ridgewood Fund jointly acquire goods or
services from third parties, on an arm's length basis, shall be deemed to be an
Affiliate Transaction.
"Ridgewood Funds" - A "Ridgewood Fund" is each of:
(a) The Trust;
(b) Ridgewood Electric Power Trust II;
(c) Ridgewood Electric Power Trust III;
(d) Ridgewood Electric Power Trust IV;
(e) Ridgewood Electric Power Trust V;
(f) The Ridgewood Power Growth Fund;
(g) and Ridgewood/Egypt Fund; and
(h) any other investment program sponsored by the Managing Shareholder or an
Affiliate of the Managing Shareholder.
C. Conforming Changes to the Declaration
(a) Sections 1.2(c) (authorizing the business development company election) and
12.4(h) (empowering the Managing Shareholder to take actions to maintain
business development company status) of the Prior Declaration are deleted in
their entirety.
(b) Section 1.6 (subjecting the creation of additional series of Shares to the
requisite compliance and approvals required under the 1940 Act) of the Prior
Declaration is amended as set forth below:
If the Managing Shareholder determines that the Trust requires additional funds
to develop or invest in one or more existing or new Projects or Project
Entities, the Trust, subject to compliance with the 1940 Act, may offer
additional Shares or fractional Shares, or create and offer additional series of
Shares. The Managing Shareholder shall determine the persons to whom additional
Shares or series of Shares will be offered and sold, and the terms and
conditions of such Shares or series of Shares and the mode of the offering,
except that existing Investors will have the first opportunity for a limited
time determined by the Trust to purchase the additional Shares, unless market
conditions or the need to raise additional capital on an expedited basis, as
determined by the Trust, precludes an offering to all Investors. Each additional
series of Shares that may be offered shall be limited to Investments in Projects
or Project Entities that are not coextensive with the entire Trust Property.
(c) The definition of "Independent Trustee" contained in Article 2 of the Prior
Declaration is deleted in its entirety and the definition of "Trustee" contained
in Article 2 of the Prior Declaration is amended as set forth below:
"Trustee" - A person serving as a Corporate [DELETION: Trustee or an
Independent] Trustee under this Declaration.
(d) The definition of "Board" contained in Article 2 of the Prior Declaration is
deleted in its entirety.
(e) Section 3.1(b) (limiting powers of the Corporate Trustee) of the Prior
Declaration is amended as set forth below:
(b) The Corporate Trustee shall not exercise any management or administrative
powers except upon the direction of the Managing Shareholder [DELETION: or the
Managing Shareholder and the Independent Trustees acting as the Board, as the
case may be.]
(f) Section 3.2 (liability and obligations of Independent Trustees) of the Prior
Declaration is deleted in its entirety.
(g) Section 3.3(a) (liability and obligations of Managing Shareholder to
Trustees) of the Prior Declaration is amended as set forth below:
(a) The Managing Shareholder shall be liable for any wrongful act or omission of
the Corporate Trustee [DELETION:, the Independent Trustees ] or the Trust, taken
in the ordinary course of the Trust's business or with the authority of [
DELETION: the Independent Trustees or ] the Managing Shareholder, that causes
loss or injury to any person who is not a Shareholder or that incurs any
penalty.
(h) Section 3.6(b) (not invalidating transactions to which a Managing Person is
a party if the requirements of the 1940 Act are met) of the Prior Declaration is
amended as set forth below:
No act of the Trust shall be affected or invalidated by the fact that a Managing
Person may be a party to or has an interest in any contract or transaction of
the Trust if the interest of the Managing Person has been disclosed or is known
to the Shareholders or such contract or transaction is at prevailing rates or on
terms at least as favorable to the Trust as those available from persons who are
not Managing Persons Shareholders or their Affiliates, [INSERTION: provided that
such contract or transaction is approved in accordance with Section 12.5]
[DELETION: provided that the requirements of the1940 Act are met.]
(i) Section 3.8(a)(iii) (expenses incurred by a Managing Person in defending
actions to be paid by the Trust in advance of the final disposition of the
action if certain conditions are satisfied) of the Prior Declaration is amended
as set forth below:
(iii) [DELETION: Either a majority of the ] Independent [DELETION: Trustees who
are not parties to the action, suit or proceeding or independent] legal counsel
in a written opinion determines, based upon a review of the then
readily-available facts, that there is reason to believe that the Managing
Person will be found to be entitled to indemnification under Section 3.7. In so
doing, it shall not be necessary to employ hearing or trial-like procedures.
(j) Section 8.4 (barring distributions to Shareholders to be made to the extent
that they are prohibited by restrictions contained in the 1940 Act) of the Prior
Declaration is amended as set forth below:
Limitation. Distributions to the Shareholders shall not be made to the extent
that they are prohibited by restrictions contained in[DELETION: the 1940 Act, ]
the Delaware Act or this Declaration.
(k) The heading of Article 12 of the Prior Declaration is amended as set forth
below:
POWERS, DUTIES AND LIMITATIONS OF MANAGING SHAREHOLDER [ DELETION: AND
INDEPENDENT TRUSTEES]
(l) The first paragraph of Section 12.4 (subjecting the specific powers of the
Managing Shareholders to the powers of the Board) is amended as set forth below:
12.4 Specific Powers. In addition to the powers and duties otherwise provided
for in this Declaration, the Managing Shareholder has the following powers and
duties, [subject to the supervision and review of the Board under Section 12.5].
(m) Section 12.5 (functions of Independent Trustees) of the Prior Declaration is
deleted in its entirety, and the following language is inserted in lieu thereof:
12.5 Approvals by a Majority of the Shares. The Trust shall not take any of the
following actions except after approval by a Majority of the Investors:
(a) Engage in any new Affiliate Transaction; and
(b) Execution of a new management agreement between the Trust and the Managing
Shareholder or any other agreement under which a person is to act as an
investment advisor for the Trust, provided, however, that the management
agreement between the Trust and the Managing Shareholder, as in effect as of the
date hereof, shall be renewed automatically, for consecutive one (1) year terms,
and no approval by a Majority of the Investors shall be required in connection
therewith.
(n) Section 12.9 (not invalidating transactions to which a Managing Person is a
party if the requirements of the 1940 Act are met) of the Prior Declaration is
amended as set forth below:
Right to Deal with Affiliates. No act of the Trust shall be affected or
invalidated by the fact that a Managing Person may be a party to or have an
interest in any contract or transaction of the Trust, provided that the fact of
the Managing Person's interest shall be disclosed or shall have been known to
the Shareholders or the contract or transaction is at prevailing rates or on
terms at least as favorable to the Trust as those available from persons who are
not Managing Persons, [DELETION: except that no Managing Person shall acquire
assets from the Trust except as permitted under the 1940 Act. The Trust will not
require any asset from a Managing Person except to the extent permitted by the
1940 Act].
(o) Section 12.11(a) (removal of Managing Shareholder) of the Prior Declaration
is amended as set forth below:
(a) The holders of at least 10% of the Investor Shares may propose the removal
of a Managing Shareholder, either by calling a meeting or soliciting consents in
accordance with the terms of this Declaration. On the affirmative vote of a
Majority of the Investors (excluding Investor Shares held by the Managing
Shareholder which is the subject of the vote or by its Affiliates), such
Managing Shareholder shall be removed. [DELETION: A majority of the Independent
Trustees may also remove the Managing Shareholder.]
(p) Section 12.11(b)(2) (alternative valuation of Trust property) of the Prior
Declaration is amended as set forth below:
(2) In the alternative [DELETION: , subject to the Trust's obtaining an
exemptive order from the Commission, if required], the former Managing
Shareholder may elect to engage a qualified independent appraiser and cause the
Trust to engage a qualified independent appraiser (at the Trust's expense in
each case), who shall value the Trust Property as of the date of such removal or
other incapacity as if the property had been sold at its fair market value so as
to include all unrealized gains and losses. If the two appraisers cannot agree
on a value, they shall appoint a third independent appraiser (whose cost shall
be borne by the Trust) whose determination, made on the same basis, shall be
final and binding. Based on the appraisal, the Trust shall make allocations to
the former Managing Shareholder's Capital Account of Profits, Losses and other
items resulting from the appraisal as of the date of such removal or other
incapacity as if the Trust's fiscal year had ended solely for the purpose of
determining the former Managing Shareholder's Capital Account. If the former
Managing Shareholder has a positive Capital Account after such allocation, the
Trust shall deliver a promissory note of the Trust to the former Managing
Shareholder, the principal amount of which shall be equal to the former Managing
Shareholder's Capital Account and which shall bear interest at a rate per annum
equal to the prime rate in effect at Chase Manhattan Bank, N.A. on the date of
removal or other incapacity, with interest payable annually and principal
payable, if at all, only from 20% of any available cash before any distributions
thereof are made to the Investors under this Declaration. If the Capital Account
of the former Managing Shareholder has a negative balance after such allocation,
the former Managing Shareholder shall contribute to the capital of the Trust in
its discretion either cash in an amount equal to the negative balance in its
Capital Account or a promissory note to the Trust in such principal amount
maturing five years after the date of such removal or other incapacity, bearing
interest at the rate specified above. For purposes of this Section 12.11(b)(2),
from and after the date of any such removal or other incapacity, the former
Managing Shareholder's interest in the Trust shall be terminated and it shall no
longer have any interest in the Trust other than the right to receive the
promissory note and payments thereunder as provided above.
D. Effect of Amendment on Independent Trustees
The persons serving as Independent Trustees prior to the effectiveness of this
Amendment shall be deemed to no longer serve as Independent Trustees of the
Trust effective as of the date of this Amendment. Notwithstanding anything in
this Amendment to the contrary, the persons who served as Independent Trustees
shall be entitled to the same rights of exculpation, indemnification and
reimbursement (including, without limitation, the right to receive advances of
expenses) as they had under the Prior Declaration, and to all of the benefits of
the provisions of Article 3 of the Prior Declaration, with respect to (i) any
act taken or omitted by them in their capacities as Independent Trustees, and
(ii) any liability incurred or claim or liability asserted against them,
regardless of when incurred or asserted, in connection with their serving or
having served as Independent Trustees of the Trust; it being the intent of this
provision that the rights of the persons who served as Independent Trustees (as
opposed to their power and authority to take action on behalf of or in
connection with the management of the Trust after the effective date of this
Amendment) shall not be diminished or impaired in any respect.
E. Construction of Amendment
The Managing Shareholder has power to construe this Amendment and the effects of
the withdrawal of the business development company election and to act upon any
such construction. Its construction of those matters and any action taken
pursuant thereto by the Trust or a Managing Person in good faith shall be final
and conclusive .
IN WITNESS WHEREOF, the Corporate Trustee has executed this Amendment as of the
___ day of _________________, 2001.
RIDGEWOOD ENERGY HOLDING CORPORATION
By:
Name:
Title:
EXHIBIT B
LISTING OF STATUTORY PROVISIONS AFFECTED BY CONVERSION AND AMENDMENT PROPOSALS
The Trust will not comply after the Conversion with any of the statutory
provisions of the 1940 Act, or any of the rules promulgated thereunder
including, without limitation, the following statutory provisions applying to
business development companies:
Section 33 (requiring filing of legal documents in derivative lawsuits with
the Commission)
Section 35(d) (allowing the Commission to challenge names of business
development companies as being misleading)
Section 36 (to the extent empowering the Commission to bring actions for
breach of fiduciary duty)
Section 37 (making larceny or embezzlement of Trust funds a federal crime,
although such actions will remain crimes under other federal and state laws. The
Trust cannot create federal jurisdiction over a crime by agreement with the
Investors.)
Section 38(b) (governing certain filings with the Commission)
Section 40 (procedures for orders and proceedings)
Section 41 (hearing procedures)
Section 42 (power of Commission to investigate and bring legal actions)
Section 43 (procedures for court appeals from Commission)
Section 44 (federal court jurisdiction)
Section 45 (public status of documents filed with Commission)
Section 48 (annual reports of Commission)
Section 49 (criminal penalties)
Section 55 (specifying types of assets in which the Trust may invest)
Section 56 (requiring majority of directors to be persons who are not
interested persons)
Section 57 (restricting transactions with related persons)
Section 58 (requiring majority of holders of securities to cease to be a
business development company)
Section 59 (applying Sections 1, 2, 3, 4, 5, 6, 9, 10(f), 15(a), (c) and
(f), 16(b), 17(f)-(j), 19(a), 20(b), 32(a) and (c), 33 through 47 and 49
through53)
Section 60 (applying certain Section 12 restrictions on investment
companies)
Section 61 (applying Section 18 limitations on capital structure)
Section 62 (applying certain Section 21 limitations on loans to certain
affiliates)
Section 63 (applying certain Section 23 limitations on distribution and
repurchase of the Trust's securities)
Section 64 (applying Section 31 requirements as to books and records and
authorizing the Commission to prescribe risk statements)
Section 65 (applying Section 48 provisions)
CONSENT FORM
Reference is made to the Proxy Statement/Consent Solicitation Statement
dated November 5, 2001, sent with this Consent Form to obtain your consent to
the proposed (i) termination of the business development status (the
"Conversion") of Ridgewood Electric Power Trust I (the "Trust"), and (ii) the
amendments (the "Amendments") to the declaration of trust (the "Declaration of
Trust") of the Trust. The undersigned hereby votes as set forth below with
respect to all beneficial interests in the Trust ("Investor Shares") which the
undersigned may be entitled to vote.
Please put an "X" in the appropriate box to vote "FOR" the Conversion
and "FOR" the Amendments, "AGAINST" the Conversion and "AGAINST" the Amendments
or to "ABSTAIN" from voting with respect to the Conversion and "ABSTAIN" from
voting with respect to the Amendments.
[__] "FOR" the Amendments. [__] "AGAINST" the Amendments. [__] "ABSTAIN" from
voting with
respect to the
Amendments.
[__] "FOR" the Conversion. [__] "AGAINST" the Conversion. [__] "ABSTAIN" from
voting with
respect to the
Conversion.
In order to make certain that proposals are approved you must vote "FOR" the
Conversion and "For" the Amendments.
This Consent Form must be completed and returned to the Trust in the postage
prepaid envelope provided prior to 5:00 p.m., Eastern time, on December 7, 2001
or such later date as may be selected by the managing shareholder of the Trust.
------------------------------ -----------------------------------
Signature of Investor Date Signature of Co-owner (if any) Date
MAILING LABEL PLEASE DATE; SIGN EXACTLY AS
(Includes name of the Trust) YOUR NAME APPEARS ON THE
MAILING LABEL, UNLESS YOUR
NAME IS PRINTED INCORRECTLY.
TO SUBMIT YOUR VOTE, MAIL THIS CONSENT FORM IN THE ENVELOPE PROVIDED;
NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES; OR FAX TO 800-419-3336.
If you sign and return this Consent Form without indicating a vote, you
will be deemed to have voted "FOR" the Conversion and the Amendments.
By signing this Consent Form, you hereby acknowledge receipt of the
Proxy Statement/Consent Solicitation Statement dated November 5, 2001,
furnished herewith.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN COMPLETING THE
CONSENT FORM, PLEASE CALL MARY LOUISE OLIN AT (800) 9442-5550.