Here’s the complete official doc while awaiting Single Justice ruling. More to come.

EXHIBIT A

VIA EMAIL February 9, 2018
William F. Lee, Esq. WilmerHale 60 State Street Boston, MA 02109
Re: Sale of Works of Art by Trustees of the Berkshire Museum
Dear Attorney Lee,

Thank you for your and the Trustees of the Berkshire Museum’s (the “Museum”) continued cooperation while the Attorney General’s Office (“AGO”) investigated the proposed sale of 40 of the Museum’s most valuable works of fine art in order to fund a “New Vision.” As the AGO indicated to the Museum last September, after reviewing the proposed sale of all 40 items and planned use of proceeds ($76 million or more based on auction estimates), the AGO concluded that the objects that have been deaccessioned and offered for sale are subject to restrictions that prohibit the Museum from selling them in the manner proposed absent court approval lifting or modifying the restrictions. As we have also discussed, and as we outline further in this letter, while we continue to believe that these restrictions apply, the investigation has led us to agree with the Museum that it would be impracticable for the Museum to continue its operations without a sale, subject to, however, certain guidelines. Therefore, the AGO is prepared to support the Museum in its request to the Supreme Judicial Court for approval to sell up to 40 items subject to certain agreed-upon sale parameters.

Proposed Sale:
The Museum first provided notice of the planned sale on June 22, 2017. The notice indicated that the Museum was proposing to sell 40 works of fine art from its collection in order to fund a “New Vision,” which will include the creation of a $40 million “endowment” and dedicate $20 million to facilities upgrades and repairs. Over the course of further communications with the AGO pertaining to the AGO’s investigation, the Museum asserted that it is in dire financial need and requires a significant capital infusion in order for the Museum to be able to continue to fulfill its charitable mission. Further, the Museum asserted that the only way it could achieve that necessary capital infusion was by selling the identified 40 of works of fine art from its permanent collection. The Museum stated that it had come to this decision as part of a two-year process undertaken by the Board of Directors to consider alternative directions for the Museum that would create a more sustainable financial future for the Museum.

-page 2 of 5-

AGO Investigation:
Upon receipt of the Museum’s June 22, 2017 notice letter, the AGO undertook a careful investigation of the Museum’s plans. As part of this review, the AGO requested and reviewed over 2300 documents bearing on the Museum and its Board’s decision-making process as well as donor intent and restrictions on objects donated or bequeathed to the Museum. These documents included, inter alia, board materials, minutes and agendas, committee materials, meeting minutes and agendas, board retreat materials. Museum policies and procedures, other internal Museum and board communications, files associated with each of the artworks that the Museum plans to sell, archival director files, and other historical files. The AGO also interviewed Museum employees, board members, and third party witnesses regarding, inter alia, the Museum’s history, the Board’s efforts to date to stabilize the Museum’s finances, the Board’s decisionmaking process related to deaccessioning and selling art from its collection, the Museum’s consideration of alternatives to selling art to revitalize the Museum, the intent of donors, and employee experience at the Museum.

In addition to the AGO’s review of documents and interviews with witnesses, the AGO also worked to understand all components of the Museum’s decision. In doing so, the AGO consulted with and relied on experts to provide the AGO with information regarding museum industry best practices, the Museum’s finances, and the impact of a decision to deaccession and sell art from a museum’s permanent collection.

The AGO is charged with review of the proposed sale for compliance with charities law, including an assessment of such factors as whether there are any restrictions that limit or prohibit the Museum from selling the chosen objects and whether, if such restrictions exist, it is impossible or impracticable for the Museum to fulfill its charitable mission and meet the intent of the donors without seeking court approval to lift or amend those restrictions. A summary of our conclusions related to this part of our review is described below.

1. Restrictions On The Works of Art Proposed for Sale
As detailed elsewhere (e.g., in its filings in the litigation referenced above) the AGO believes that all of the works of art deaccessioned and proposed for sale are subject to one or more restrictions that limit the Museum’s ability to proceed with its planned sale and use of proceeds to fund an endowment, pay for operating expenses and fund renovations. The Museum continues to believe no restrictions (beyond the Museum’s charitable purposes) apply. In light of certain findings from the AGO’s investigation described below, and in an effort to avoid unnecessary expenditure of charitable and government resources on litigation to determine which view of the restrictions would ultimately be found to be legally correct, the AGO and the Museum have agreed on a framework for requesting authorization for a sale under specific conditions. First, all of the 40 works of art identified for sale have been, until recently, part of the Museum’s permanent collection. These works of art constitute most of the monetary value of the Museum’s fine art collection and have historically been devoted to fulfilling the art component of the Museum’s three-part mission. The Museum has also long represented itself to donors and the public as an art museum (even though not solely an art museum). Further, the Museum policies and professional affiliations in place at the time the objects were selected for deaccessioning reflect a commitment by the Museum to hold its art for art puiposes, and

-page 3-

specifically, to only use proceeds from the sale of art to further the art collection. Thus, the Museum’s historical treatment of the objects presented for sale, representations to donors and the public about the role of art at the Museum, as well as the Museum’s own policies and guidelines for deaccessioning, reflect that the works of fine art are restricted for use to further the Museum’s art pmpose, or more specifically, to promote the study of art for the people of Berkshire County by means of museums and collections.

Second, the Museum holds 19 of the 40 works of art pursuant to Chapter 134 of the Acts of 1932, which established the Museum as its own institution and authorized the transfer of a number of objects to the Museum from the Trustees of the Berkshire Athenaeum (“Athenaeum”). The Athenaeum originally held the objects pursuant to its own statutory charter, which restricted gifts given to the Athenaeum such that no properly owned by the Athenaeum “shall ever be removed from the town of Pittsfield.” This restriction, which attached to the objects when they were donated to or purchased by the Athenaeum, was not lifted by the 1932 Act that incorporated the Museum and authorized the transfer of ownership of the objects in question. Further, in the AGO’s view, the Museum holds any item donated to the Athenaeum pursuant to the donor’s implied understanding that the Athenaeum, and any successors, could not remove the item from the city of Pittsfield For these reasons, it is the AGO’s view that all items that were transferred to the Museum from the Athenaeum are subject to the same restrictions under which the Athenaeum held those assets, namely that they may not be removed from the town of Pittsfield.

Finally, interviews with third parties and review of documents provided to our office reflected that Norman Rockwell and the Museum’s then-Executive Director, Stuart Flemy, shared a close personal relationship that spilled over into Rockwell’s interactions with the Museum. Notably, a letter from Henry to Rockwell indicated that the Museum received the gift of Shuffleton’s Barbershop “for the permanent collection.” Taken together with other information gathered, the AGO believes that Rockwell donated the paintings with the intent that they be used to benefit the Museum’s permanent collection, and especially with regard to Shuffleton’s Barbershop, that it remain in the permanent collection. As such, it is the view of AGO that the paintings are restricted for use for those purposes and may not be sold with the intention that the proceeds be used to fund an endowment or operational expenses.
2. There is Evidence to Support a Claim of Impracticability
The initial phase of the AGO’s investigation raised several questions. The AGO identified evidence of restrictions described above and notified the Museum in September 2017 that it believed court approval would be required for the sale of at least some of the items proposed for sale. In addition, the initial phase of the AGO’s investigation revealed that the Museum’s consultant had identified an “opening bid” need level of $25.6 million to stabilize the Museum. This raised questions about the basis for the Museum’s articulated goal of raising the far greater amount of $60 million. In addition, while the AGO was aware that the Museum had explored a possible merger with Hancock Shaker Village as a means of addressing its financial stress, it was not clear whether it had explored other alternatives to the proposed art sale. These questions remained unanswered at the time litigation over the matter began in late October of 2017. As you know, we advised the courts that our investigation was not yet complete and requested additional time to finish it.

-page 4-

The final phase of the AGO’s investigation, enabled by the injunction and stay of litigation issued by the Single Justice of the Appeals Court, provided answers to these questions. To assess the financial state of the Museum and understand the true financial need of the institution, the AGO reviewed financial reports, met with the Museum’s nonprofit consultants, and spoke with individuals with nonprofit financial expertise. Our investigation revealed that the Museum relied on a qualified expert for advice about its financial needs and considered the challenges facing the Museum, including changing regional dynamics, dwindling donor support, and increased competition in the art museum community. With the benefit of our full investigation, we understand that the consultant advised the board that providing a firm foundation for sustainable operations would require considerably more than the “opening bid” of $25.6 million, which the consultant had presented as only addressing current deficits. The consultant had advised that sustainable continued operation would require a larger infusion of at least $50 million, and ideally more than that, as well as a new strategy and plan for operations. (footnote 1)

The final stage of the AGO’s investigation also revealed, through both interviews and document review, that the Museum had explored a number of possible ways to access the funds and support it needed, such as exploring partnerships with other area institutions including, but not limited to, Hancock Shaker Village. It also revealed that the Museum had engaged in fundraising efforts, but had determined, in part with the assistance of its consultant, that its fundraising potential would not come close to yielding the level of funds it needed. After considering all of the alternatives it identified, the Museum determined that the only way to raise the amount of funds needed to secure the future of the Museum was to sell some of its most valuable pieces of art.

Ultimately, after reviewing the financial status of the Museum and coming to understand the Museum’s decision making process, the AGO believes that, in these circumstances, the Museum has reasonably concluded that it does not have any alternative sources for the significant infusion of funds it needs in order to continue to fulfill its mission, and the Museum cannot practicably survive without lifting or amending the restrictions on at least some of the works of art to permit their sale.

The Museum’s Equity Complaint:
The AGO’s review has revealed that the Museum’s assessment of its financial need is reasonable, and that a significant capital infusion is necessary to secure the future of the institution so that it may continue to fulfill its charitable purposes. While the AGO has concluded that all of the items proposed for sale by the Museum are subject to restrictions that limit or prohibit their sale, the Museum does not share that view. More important than that difference in view, however, is the fact that the AGO’s investigation revealed considerable basis for the Museum’s need for a capital infusion that cannot practicably be obtained through other measures. Therefore, the AGO believes that it is appropriate for the Museum to petition the

footnote 1 – Although third party analyses of the Museum’s financial information have disputed this level of financial need for the Museum, our review showed that there is evidence to support the Museum’s conclusions that a capital infusion of this scale is necessary to stabilize the institution.

-page 5-

Single Justice of the Supreme Judicial Court for approval to lift or deviate from the restrictions on a limited number of the proposed objects pursuant to the principles of cy pres or deviation.

We have discussed and agreed upon with the Museum a number of conditions and limitations around the structure of the sale that are designed to preserve as nearly as possible the restrictions the AGO believes apply. These include ensuring that Norman Rockwell’s Shuffleton’s Barbershop, considered by many to be the most significant work in the collection and the work for which the AGO found the most direct evidence of specific donor intent supporting restrictions, will remain in a museum collection and on view in the Berkshires for a considerable period; that other works may also be sold to museum buyers; that the Museum will make all reasonable efforts to sell only those works necessary to reach $55 million dollars (an amount that, with additional fundraising, should allow the Museum to attain its $60 million need); and that the Museum will report to the AGO on the sale and on its implementation of the New Vision.

We note that in reaching the determination to support the Museum’s request for relief, it is not the AGO’s role to substitute its judgment for that of the Museum’s Board, nor necessarily to endorse its specific decisions or the manner in which the Museum announced its plans to the public. We have, consistent with the AGO’s role in overseeing public charities, undertaken an investigation to determine whether the Board’s decisions were based on advice from qualified experts, on reasonable assessments of the lack of viable alternatives, and on reasonable determinations about the best interests of the Museum and its broad charitable mission for the future. Based on our investigation, we believe that the Museum’s anticipated request for cy pres relief for the sale of up to 40 items subject to certain parameters limiting the sale conditions and total proceeds is warranted in charities law. The Museum’s anticipated request for cy pres or deviation relief supports the public’s interest in charities generally and its interest in the continuation of the Berkshire Museum, while according appropriate deference to decisions the Board made consistent with its fiduciary duty as the board of a public charity.

The AGO acknowledges the Museum’s cooperation throughout this investigation and in development of an appropriate petition seeking cy pres or deviation relief, to which the AGO will assent for the reasons described above. Should cy pres relief be granted, we also look forward to continuing to work with the Museum and its Board as it undertakes the roll-out of its New Vision with attention to industry and governance best practices.

Sincerely,
Courtney M. Aladro Chief, Non-Profit Organizations/ Public Charities Division Office of the Attorney General
cc: Felicia Ellsworth, Esq.Mark Fleming, Esq. Andrew Dulberg, Esq

“Importantly, the agreement adheres to Massachusetts charities law and sets an important precedent for other museums that charitable organizations must act transparently and seek court approval to modify restrictions and sell charitable assets in accordance with their charitable mission and demonstrated financial need.” – Emily Snyder, AG spokeswoman