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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
WASHINGTON ENERGY COMPANY
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(Name of Issuer)
Common Stock, $5.00 par value
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(Title of Class of Securities)
93881510
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(CUSIP Number)
Donald E. Gaines
Treasurer
Puget Sound Power & Light Company
411 - 108th Avenue N.E.
Bellevue, Washington 98004-5515
(206) 454-6363
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 18, 1995
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(Date of Event Which Requires Filing
of This Statement)
Copy to:
Stephen A. McKeon
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Washington 98101
(206) 583-8888
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. / /
Check the following box if a fee is being paid with this statement. / X /
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Page 1 of 14 pages.
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SCHEDULE 13D
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CUSIP No. 93881510 Page 2 of 14 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PUGET SOUND POWER & LIGHT COMPANY
I.R.S. IDENTIFICATION NO. 91-6374630
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC; OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED TO ITEMS 2(d)
or 2(e) / /
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF WASHINGTON
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7 SOLE VOTING POWER
4,789,960*
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NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH 0
REPORTING PERSON ---------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
4,789,960*
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,789,960*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
N/A
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
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14 TYPE OF REPORTING PERSON
CO
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*Beneficial ownership disclaimed. See Item 5 below.
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ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par value $5.00 per share
(the "Company Common Stock"), of Washington Energy Company, a Washington
corporation (the "Company" or "WECo"). The principal executive offices of the
Company are located at 815 Mercer Street, Seattle, Washington 98109.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) This statement is being filed by Puget Sound Power &
Light Company, a Washington corporation ("Puget").
The principal executive offices of Puget are located at 411 - 108th
Avenue N.E., Bellevue, Washington 98004-5515.
Puget is predominantly an operating public utility engaged in the
generation, transmission and distribution of electricity throughout a
4,500-square-mile service area, principally in the Puget Sound region of
Washington State.
As to each of Puget's executive officers and directors, the name,
business or residence address and present principal occupation or employment,
and the name and principal address of any corporation or other organization in
which such employment is conducted, are set forth on Schedule I hereto, which is
incorporated herein by reference. Each of such persons is a citizen of the
United States.
(d) During the last five years, neither Puget nor, to the best of
Puget's knowledge, any of the individuals named in Schedule I hereto has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, neither Puget nor, to the best of
Puget's knowledge, any of the individuals named in Schedule I hereto has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Concurrently with entering into the Merger Agreement (as defined in
Item 4 below), Puget was granted the Option (as defined in Item 4 below). None
of the triggering events permitting exercise of the Option have occurred as of
the date of this Schedule 13D. In the event that the Option becomes exercisable
and Puget wishes to purchase for cash the Company Common Stock subject thereto,
Puget will fund the exercise price from working capital or through other
sources, which could include borrowings.
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ITEM 4. PURPOSE OF TRANSACTION.
Puget, the Company and Washington Natural Gas, a Washington corporation
and wholly owned subsidiary of the Company ("WNG"), have entered into an
Agreement and Plan of Merger, dated as of October 18, 1995 (the "Merger
Agreement"), which provides for a strategic business combination involving
Puget, the Company and WNG in a "merger-of-equals" transaction (the "Merger").
The Merger, which was unanimously approved by the Boards of Directors of the
constituent companies, is expected to close shortly after all the conditions to
consummation of the Merger, including obtaining applicable regulatory approvals,
are met or waived. The regulatory approval process is expected to be completed
within 12 months.
The Merger Agreement is incorporated herein by reference to Exhibit 2.1
to Puget's Current Report on Form 8-K dated October 18, 1995 (the "Puget 8-K"),
as filed with the Securities and Exchange Commission (the "SEC") on October 23,
1995. The description of the Merger Agreement set forth herein does not purport
to be complete and is qualified in its entirety by the provisions of the Merger
Agreement.
At the time of effectiveness of the Merger (the "Effective Time"), each
of WECo and WNG will be merged with and into Puget, with Puget being the
surviving corporation (after the Effective Time, the "Surviving Corporation").
As a result of the Merger, each outstanding share of Company Common Stock will
be converted into the right to receive .860 share of Common Stock, stated value
$10.00 per share, of the Surviving Corporation ("New Common Stock"), which will
include the associated purchase rights under the Rights Agreement, dated as of
January 15, 1991, between Puget and The Bank of New York (as successor to The
Chase Manhattan Bank, N.A.), as amended. Each outstanding share of a series of
Preferred Stock, par value $25.00 per share, of WNG ("WNG Preferred Stock") will
be converted into the right to receive one share of a series of Preferred Stock,
par value $25.00 per share, of the Surviving Corporation ("New Preferred Stock")
having substantially the same rights and preferences as the WNG Preferred Stock
that is so converted. Pursuant to the Merger Agreement, if, at the shareholders
meetings called in connection with the Merger, the required approval of the
holders of the Company Common Stock and of the holders of the Common Stock,
stated value $10.00 per share, of Puget ("Puget Common Stock") is obtained, but
the approval of the holders of the WNG Preferred Stock is not obtained, then at
the Effective Time, only WECo will be merged with and into Puget (the "Alternate
Merger"; as used herein, the term "Merger" shall refer to the merger of WECo and
WNG with and into Puget as set forth above or the Alternate Merger, as
applicable). If the Alternate Merger is effected, WNG will become a subsidiary
of the Surviving Corporation after the Merger and the WNG Preferred Stock will
remain outstanding and will not be converted as described above. Prior to the
Effective Time, WECo and Puget will jointly select a new name for the Surviving
Corporation.
It is expected that the Surviving Corporation will follow the dividend
policy currently followed by Puget. Puget currently pays a dividend of $1.84
annually per share
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of Puget Common Stock, and WECo currently pays a dividend of $1.00 annually per
share of Company Common Stock.
The Merger Agreement contains certain covenants of the parties pending
the consummation of the Merger. Generally, the parties must carry on their
businesses in the ordinary course consistent with past practice, may not
increase dividends on their common stock, and, subject to limited exceptions,
may not issue any capital stock. The Merger Agreement also requires consent
from both Puget and WECo for either to make, among other things, certain charter
and bylaw amendments; capital expenditures, acquisitions, dispositions or
incurrence of indebtedness above specified levels; certain increases in employee
compensation and benefits; and certain affiliate transactions. (See Article VI
of the Merger Agreement.)
The Merger is subject to the receipt of the approval of the holders of
two-thirds of the outstanding shares of Company Common Stock and Puget Common
Stock and two-thirds of the outstanding shares of both series of WNG Preferred
Stock (each voting separately as a class). The Merger is also subject to
customary closing conditions, including, without limitation, the receipt of all
necessary governmental approvals and the making of all necessary governmental
filings, including the approval of the Washington Utilities and Transportation
Commission, and the filing of the requisite notification with the Federal Trade
Commission and the Department of Justice under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the expiration of the applicable
waiting periods thereunder. The Merger is also subject to receipt of assurances
from the Internal Revenue Service or opinions of counsel that the Merger will
qualify as a tax-free reorganization, and assurances from the parties'
independent accountants that the Merger will qualify as a pooling of interests
for accounting purposes. In addition, the Merger is conditioned upon the
effectiveness of a registration statement to be filed with the SEC with respect
to the New Common Stock and the New Preferred Stock issuable in the Merger and
the approval for listing of such shares on the New York Stock Exchange. (See
Article VIII of the Merger Agreement.) Shareholders meetings to vote upon the
Merger are expected to be held in early 1996.
After the Effective Time, the corporate headquarters and principal
executive offices of the Surviving Corporation will be located in Bellevue,
Washington. The Merger Agreement provides that the Surviving Corporation's
Board of Directors, which will be divided into three classes, will consist of up
to 15 directors, two-thirds of whom will be designated by Puget and one-third of
whom will be designated by WECo. Mr. Richard R. Sonstelie, the current
President and Chief Executive Officer of Puget, will serve as Chairman of the
Board and Chief Executive Officer of the Surviving Corporation after the Merger,
and Mr. William P. Vititoe, the current Chairman of the Board, Chief Executive
Officer and President of WECo and WNG, will serve as President and Chief
Operating Officer of the Surviving Corporation after the Merger. Mr. William S.
Weaver, the current Executive Vice President and Chief Financial Officer of
Puget, will serve as Vice Chairman of the Surviving Corporation after the
Merger, and Mr. James P. Torgerson, the current Executive Vice President, Chief
Administrative Officer and Chief Financial Officer
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of WECo and WNG, will serve as Chief Financial Officer of the Surviving
Corporation after the Merger.
The Merger Agreement may be terminated under certain circumstances,
including (i) by mutual consent of the parties; (ii) by any party if the Merger
is not consummated by December 31, 1996 (provided, however, that such
termination date shall be extended to March 31, 1997 if all conditions to
closing the Merger, other than the receipt of certain consents and/or statutory
approvals by any of the parties, have been satisfied by December 31, 1996);
(iii) by any party if WECo's common shareholders vote against the Merger or
Puget's common shareholders vote against the Merger or certain other matters
relating thereto or if any state or federal law or court order prohibits the
Merger; (iv) by a nonbreaching party if there exist breaches of any
representations or warranties contained in the Merger Agreement as of the date
thereof, which breaches, individually or in the aggregate, would result in a
material adverse effect on the breaching party and which are not cured within 20
days after notice; (v) by a nonbreaching party if there occur material breaches
of any covenant or agreement that are not cured within 20 days after notice;
(vi) by either party if the Board of Directors of the other party shall withdraw
or adversely modify its recommendation of the Merger or shall approve any
competing transaction; or (vii) by either party, under certain circumstances, as
a result of a third-party tender offer or business combination proposal which
such party, pursuant to its directors' fiduciary duties, is, in the opinion of
such party's counsel and after the other party has first been given an
opportunity to make concessions and adjustments in the terms of the Merger
Agreement, required to accept.
The Merger Agreement provides that if a breach described in clause (iv)
or (v) of the previous paragraph occurs, then, if such breach is not willful,
the nonbreaching party will be entitled to reimbursement of its out-of-pocket
expenses, not to exceed $7 million. In the event of a willful breach, the
nonbreaching party will be entitled to its out-of-pocket expenses (which shall
not be limited to $7 million) and any remedies it may have at law or in equity,
provided that if, at the time of the breaching party's willful breach, there
shall have been a third-party tender offer or business combination proposal
which shall not have been rejected by the breaching party and withdrawn by the
third party, and within two and one half years of any termination by the
nonbreaching party, the breaching party accepts an offer to consummate or
consummates a business combination with such third party, then such breaching
party, upon the signing of a definitive agreement relating to such a business
combination, or, if no such agreement is signed, then at the closing of such
business combination, will pay to the nonbreaching party an additional fee equal
to $15 million. The Merger Agreement also requires reimbursement of
out-of-pocket expenses (which shall not be limited to $7 million) by one party
(the "Payor") to the other in certain circumstances, if (i) the Merger Agreement
is terminated (x) as a result of the acceptance by the Payor of a third-party
tender offer or business combination proposal or if the Board of Directors of
the Payor shall withdraw or adversely modify its recommendation of the Merger or
shall approve any competing transaction, (y) following the Payor's failure to
obtain the requisite shareholder approval to the Merger, or (z) as a result of
the Payor's
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material failure to convene a shareholders meeting, distribute proxy materials
and, subject to its Board of Directors' fiduciary duties, recommend the Merger
to its shareholders and (ii) at the time of such termination or prior to the
meeting of such party's shareholders there shall have been a third-party tender
offer or business combination proposal. In addition, the Merger Agreement
requires the Payor to pay a termination fee of $15 million if within two and
one-half years of any such termination described in the preceding sentence, the
Payor accepts an offer to consummate or consummates a business combination with
such third party. Such termination fee shall be paid upon the signing of a
definitive agreement between the Payor and the third party or, if no such
agreement is signed, then at the closing of such third-party business
combination. The termination fees payable by WECo or Puget under these
provisions and the aggregate amount that could by payable by WECo or Puget upon
a required purchase of the options granted pursuant to the Stock Option
Agreements (as defined below) may not exceed $20 million in the aggregate
(including reimbursement for fees and expenses payable pursuant to these
provisions). (See Article IX of the Merger Agreement.)
Concurrently with entering into the Merger Agreement, WECo and Puget
entered into reciprocal stock option agreements each granting the other, for no
additional consideration, an irrevocable option to purchase under certain
circumstances up to that number of shares of common stock of the other company
which equals 19.9% of the number of shares of common stock of the other company
outstanding on October 18, 1995 (the "Stock Option Agreements"). Specifically,
under the Washington Energy Company Stock Option Agreement (the "WECo Stock
Option Agreement"), WECo granted Puget an irrevocable option to purchase (the
"Option") up to 4,789,960 shares (subject to adjustment for changes in
capitalization) of Company Common Stock at an exercise price of $20.00 per share
under certain circumstances if the Merger Agreement becomes terminable by Puget
as a result of WECo's breach or as a result of WECo's becoming the subject of a
third-party proposal for a business combination. The exercise price is payable,
at Puget's election, in cash or shares of Puget Common Stock. If the Option
becomes exercisable, Puget may request the Company to repurchase from Puget all
or any portion of the Option (or, if the Option is exercised, to repurchase from
Puget all or any portion of the acquired shares of Company Common Stock) at the
price specified in the WECo Stock Option Agreement.
Each party to the Stock Option Agreements agreed to vote, prior to
October 18, 2000, any shares of the capital stock of the other party acquired
pursuant to the Stock Option Agreements or otherwise beneficially owned by such
party on each matter submitted to a vote of shareholders of such other party for
and against such matter in the same proportion as the vote of all other
shareholders of such other party is voted for and against such matter.
The Stock Option Agreements provide that, prior to October 18, 2000,
neither party may sell, assign, pledge or otherwise dispose of or transfer the
shares it acquires pursuant to the Stock Option Agreements (collectively, the
"Restricted Shares") except as specifically provided for in the Stock Option
Agreements. In addition to the repurchase
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rights mentioned above, subsequent to the termination of the Merger Agreement,
the parties have the right to have the Restricted Shares of the other party
registered under the Securities Act of 1933, as amended, for sale in a public
offering, unless the issuer of the Restricted Shares elects to repurchase them
at their then market value. The Stock Option Agreements also provide that,
following the termination of the Merger Agreement, either party may sell any
Restricted Shares pursuant to a tender or exchange offer approved or
recommended, or otherwise determined to be fair and in the best interests of
such other party's shareholders, by a majority of the Board of Directors of such
other party.
The Stock Option Agreements are incorporated herein by reference to
Exhibits 2.2 and 2.3 of the Puget 8-K. The description of the Stock Option
Agreements set forth herein does not purport to be complete and is qualified in
its entirety by the provisions of the Stock Option Agreements.
Pursuant to a Letter Agreement dated August 1, 1995 between Puget and
the Company (the "Confidentiality Agreement"), for a period commencing on August
1, 1995 and ending August 1, 1997, the parties have agreed (other than as
contemplated in the Merger Agreement or Stock Option Agreements) not to (i)
acquire, offer to acquire or agree to acquire any voting securities or rights to
acquire voting securities of the other party or any subsidiary thereof or any
substantial portion of the other party's assets; (ii) make or participate in a
solicitation of proxies for the other party; (iii) form, join or participate in
a "group" with respect to the vesting securities of the other party; (iv) seek
or propose to influence or control the management or policies of the other
party; or (v) advise, assist or encourage any third party with respect to any of
the foregoing. Such restrictions will terminate if any third party (i) acquires
or proposes to acquire more than 15% of the voting securities of either party,
(ii) makes or publicly announces a solicitation of proxies for either party, or
(iii) publicly announces any other arrangement with respect to a business
combination with either party. The Confidentiality Agreement is filed as
Exhibit 2.4 to this Schedule 13D and is incorporated herein by reference. The
description of the Confidentiality Agreement set forth herein does not purport
to be complete and is qualified in its entirety by the provisions of the
Confidentiality Agreement.
Except as set forth in this Item 4, the Merger Agreement or the WECo
Stock Option Agreement, neither Puget nor, to the best of Puget's knowledge, any
of the individuals named in Schedule I hereto has any plans or proposals which
relate to or which would result in any of the actions specified in clauses (a)
through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) By reason of its execution of the WECo Stock Option
Agreement, pursuant to Rule 13d-3(d)(1)(i) promulgated under the Securities
Exchange Act of 1934, as amended, Puget may be deemed to have sole voting and
dispositive power with respect to the Company Common Stock subject to the Option
and, accordingly, may be deemed to beneficially own 4,789,960 shares of Company
Common Stock, or approximately 16.6%
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of the Company Common Stock outstanding on October 18, 1995, assuming exercise
of the Option. However, Puget expressly disclaims any beneficial ownership of
the 4,789,960 shares of Company Common Stock obtainable by Puget upon exercise
of the Option, because the Option is exercisable only in the circumstances set
forth in Item 4, none of which has occurred as of the date hereof. Furthermore,
even if events did occur which rendered the Option exercisable, Puget believes
it would be a practical impossibility to obtain the regulatory approvals
necessary to acquire shares of Company Common Stock pursuant to the Option
within 60 days.
Except as set forth above, neither Puget nor, to the best of Puget's
knowledge, any of the individuals named in Schedule I hereto owns any Company
Common Stock.
(c) Except as set forth above, neither Puget nor, to the best of
Puget's knowledge, any of the individuals named in Schedule I hereto has
effected any transaction in the Company Common Stock during the past 60 days.
(d) So long as Puget has not purchased the Company Common Stock
subject to the Option, Puget does not have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, any of
the Company Common Stock.
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
The Merger Agreement contains customary restrictions on the conduct of
the Company's business pending the Merger, including certain customary
restrictions relating to the Company Common Stock. Except as provided in the
Merger Agreement, the Stock Option Agreements or the Confidentiality
Agreement, or as set forth herein, neither Puget nor, to the best of Puget's
knowledge, any of the individuals named in Schedule I hereto has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Company, including, but not limited
to, transfer or voting of any securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are incorporated by reference to the Puget 8-K:
2.1 Agreement and Plan of Merger, dated as of October 18, 1995, by
and among Puget Sound Power & Light Company, Washington Energy Company and
Washington Natural Gas. (Exhibit 2.1 to the Puget 8-K.)
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2.2 Puget Stock Option Agreement, dated as of October 18, 1995,
between Puget Sound Power & Light Company and Washington Energy Company.
(Exhibit 2.2 to the Puget 8-K.)
2.3 WECo Stock Option Agreement, dated as of October 18, 1995,
between Washington Energy Company and Puget Sound Power & Light Company.
(Exhibit 2.3 to the Puget 8-K.)
99.1 Press Release, dated October 18, 1995, of Puget Sound Power &
Light Company and Washington Energy Company. (Exhibit 99.1 to the Puget 8-K.)
The following exhibit is filed herewith:
2.4 Letter Agreement, dated August 1, 1995, between Puget Sound
Power & Light Company and Washington Energy Company.
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SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: October 27, 1995
PUGET SOUND POWER & LIGHT COMPANY
By: /s/ William S. Weaver
-----------------------------
Its Executive Vice President
and Chief Financial Officer
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PUGET SOUND POWER & LIGHT COMPANY
The name, business or residence address and present principal
occupation or employment, and the name, principal business and address of any
corporation or other organization in which such employment is conducted, of each
of the directors and executive officers of Puget Sound Power & Light Company, a
Washington corporation ("Puget"), is set forth below. If no business address is
given, the director's or officer's address is Puget Sound Power & Light Company,
411 - 108th Avenue N.E., Bellevue, Washington 98004-5515. Unless otherwise
indicated, each occupation set forth opposite an executive officer's name refers
to employment with Puget.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME OR EMPLOYMENT AND ADDRESS
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<S> <C>
Directors:
Douglas P. Beighle Senior Vice President
The Boeing Company
P.O. Box 3707, M/S 10-22
Seattle, WA 98124
Charles W. Bingham Retired Executive Vice President
The Weyerhaeuser Company
733 Chinook Drive
Fox Island, WA 98333
Phyllis J. Campbell President and Chief Executive Officer
U.S. Bank of Washington
1420 - 5th Avenue, 21st Floor
Seattle, WA 98101
John D. Durbin Former President and Chief Executive Officer
Hostar International Inc.
4204 Hunts Point Road
Bellevue, WA 98004
John W. Ellis Chairman and Chief Executive Officer
The Baseball Club of Seattle
P.O. Box 4100
Seattle, WA 98104
Daniel J. Evans Daniel J. Evans Associates
1111 Third Avenue, Suite 3400
Seattle, WA 98101
</TABLE>
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<TABLE>
<S> <C>
Nancy L. Jacob Chairman and Chief Executive Officer
CTC Consulting, Inc.
4380 S.W. Macadam Avenue
Suite 450 - River Forum
Portland, OR 97201
Richard R. Sonstelie President and Chief Executive Officer
William S. Weaver Executive Vice President and Chief Financial
Officer
R. Kirk Wilson President and Chief Executive Officer
Thrifty Foods, Inc.
P.O. Box 265
Burlington, WA 98233
Non-Director Executive
Officers:
Gary B. Swofford Senior Vice President Customer Operations
Sheila M. Vortman Senior Vice President Corporate and Regulatory
Relations
Ronald G. Bailey Vice President Power Systems
James W. Eldredge Corporate Secretary and Controller
Gerald N. Ferencz Vice President Divisions
Donald E. Gaines Treasurer
Jerry L. Henry Vice President Engineering and Operation
Services
Richard Lauckhart Vice President Power Planning
</TABLE>
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PUGET SOUND POWER & LIGHT COMPANY
SCHEDULE 13D
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT PAGE
- ------- ------- ----
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of October 18, 1995, by and
among Puget Sound Power & Light Company, Washington Energy Company
and Washington Natural Gas (Incorporated by reference to Exhibit 2.1
to the Puget 8-K.).......................................................
2.2 Puget Stock Option Agreement, dated as of October 18, 1995, between
Puget Sound Power & Light Company and Washington Energy Company.
(Incorporated by reference to Exhibit 2.2 to the Puget 8-K.).............
2.3 WECo Stock Option Agreement, dated as of October 18, 1995, between
Washington Energy Company and Puget Sound Power & Light Company.
(Incorporated by reference to Exhibit 2.3 to the Puget 8-K.).............
2.4 Letter Agreement, dated August 1, 1995, between Puget Sound Power &
Light Company and Washington Energy Company. (Filed herewith.)..........
99.1 Press Release, dated October 18, 1995, of Puget Sound Power & Light
Company and Washington Energy Company. (Incorporated by reference
to Exhibit 99.1 to the Puget 8-K.).......................................
</TABLE>
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Exhibit 2.4
Washington Energy Company
815 Mercer Street
Seattle, WA 98109
August 1, 1995
Confidential
Puget Sound Power & Light Company
411-108th Avenue N.E.
Bellevue, WA 98004-5515
Ladies and Gentlemen:
In connection with the evaluation by Washington Energy Company and
Puget Sound Power & Light Co. of a possible strategic alliance, business
combination or similar transaction between the two companies (the
"Transaction"), each party (as the context requires, the "receiving party")
would like to examine certain Confidential Information (as hereinafter defined)
relating to the businesses of the other party and such other party's
subsidiaries and other affiliates, as such term is defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (collectively referred to herein as "affiliates"), which Confidential
Information may be furnished to the receiving party or its affiliates or
Representatives (as hereinafter defined) by the other party (the "disclosing
party") or the disclosing party's affiliates or Representatives. As used
herein, "Confidential Information" means all data, reports, interpretations,
forecasts and records (whether in written form, electronically stored or
otherwise) containing or otherwise reflecting information concerning the
disclosing party or its affiliates which is not available to the general public
and which the disclosing party or any of its affiliates or any of their
respective directors, officers, employees, agents or advisors, including without
limitation legal counsel, financial advisors and accountants (all such persons
being referred to herein as "Representatives") provides or has previously
provided to the receiving party or to the receiving party's affiliates or
Representatives at any time in connection with a possible Transaction, together
with summaries, analyses, extracts, compilations, studies, personal notes or
other documents or records, whether prepared by the receiving party or others,
which contain or otherwise reflect such information.
Notwithstanding the foregoing, the following information will not
constitute "Confidential Information": (i) information that is or becomes
generally available to the public other than as a result of a disclosure by the
receiving party or any affiliate or Representative of the receiving party, (ii)
information that was previously known or
<PAGE> 2
available to the receiving party or its affiliates or Representatives on a
nonconfidential basis prior to its disclosure to the receiving party, its
affiliates or Representatives by the disclosing party, its affiliates or
Representatives, (iii) information that prior to its disclosure to the receiving
party or its affiliates or Representatives by the disclosing party, its
affiliates or Representatives became or becomes available to the receiving party
on a nonconfidential basis from a source not known by the receiving party, its
affiliates or its Representatives to be subject to any confidentiality agreement
or other legal restriction on disclosing such information, or (iv) information
that has been independently acquired or developed by the receiving party or its
affiliates or Representatives without violating any of its obligations under
this agreement. The term "person" as used in this agreement will be interpreted
broadly to include any corporation, company, entity, partnership, group or
individual.
Except as otherwise provided herein, each party agrees that it and its
affiliates and Representatives will utilize the other party's Confidential
Information only in connection with the evaluation of a possible Transaction and
not for any other purpose, and will hold such Confidential Information in
strictest confidence. Each party hereto agrees that it will disclose such
information only to such of its affiliates and Representatives as are assisting
it in evaluating a possible Transaction and have a need to know such information
in order to perform their duties in connection therewith. Each party will
instruct each such affiliate or Representative of the confidential nature of
such information and the exclusive purposes for which such information may be
used. Each party agrees to be fully responsible for any breach of this
agreement by any of its affiliates or Representatives.
Except as herein provided, each party agrees that, without the prior
written consent of the other party unless such party is advised by counsel that
such party is legally required to make the disclosure referred to below in this
paragraph (including pursuant to any regulation of or agreement with the New
York Stock Exchange) and after using reasonable efforts to consult with the
other party, such party and its Representatives and affiliates will not disclose
to any person (i) that any investigation, discussions or negotiations are taking
or have taken place concerning a possible Transaction, or (ii) that either party
has requested or received Confidential Information, or any terms or other facts
regarding the possible Transaction, including the status thereof.
Except as herein provided, in the event that either party or its
affiliates or Representatives are requested or required in the context of a
litigation, governmental, judicial or regulatory investigation or other similar
proceedings (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demands or similar process) to
disclose any Confidential Information (or to disclose
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<PAGE> 3
that any investigation, discussions or negotiations are taking or have taken
place concerning the Transaction or that either party has requested or received
Confidential Information concerning the other party), the party or its affiliate
or its Representative so requested or required to make such disclosure will, to
the extent legally permitted, provide the other party with prompt notice of each
such request or requirement so that the other party may seek an appropriate
protective order or other remedy or waive compliance with the provisions of this
agreement. If, in the absence of a protective order or the receipt of a waiver
hereunder, the party or affiliate or Representative so requested or required to
make such disclosure is, in the written opinion of its counsel, legally required
to make such disclosure, such party or affiliate or Representative may disclose
without liability to the other party hereto only that portion of the
Confidential Information (or information relating to the Transaction) which it
is advised in writing by such counsel it is legally required to so disclose, and
will use its best efforts to obtain assurance that confidential treatment will
be accorded the information so disclosed.
At the request of either party at any time, all Confidential
Information provided by a disclosing party or its affiliates or Representatives
will be returned to the disclosing party promptly by the receiving party and its
affiliates and Representatives, without retention of any copies thereof, except
that any portion of the Confidential Information that consists of summaries,
analyses, extracts, compilations, studies, personal notes or other documents or
records prepared by the receiving party or any of its affiliates or
Representatives shall be destroyed upon the disclosing party's request (such
destruction to be confirmed in writing), without retaining any copies thereof.
Each party acknowledges that the other party makes no warranty or
representation in relation to the information supplied by it or on its behalf,
and shall have no liability to the other party resulting from the use thereof,
except as may be provided in any definitive agreement relating to the
Transaction and subject to such conditions and limitations as may be set forth
therein. The parties agree that unless and until a definitive agreement between
them with respect to a Transaction has been executed and delivered, neither
party will be under any legal obligation of any kind whatsoever with respect to
such a Transaction by virtue of this or any written or oral expression with
respect to such a Transaction by it or any of its Representatives except, in the
case of this letter, for the matters specifically agreed to herein.
The parties agree that, for a period of two years from the date of this
agreement, neither party nor any of its affiliates will, without the prior
written consent of the other party: (i) acquire, offer to acquire or agree to
acquire, directly or indirectly, by merger, tender offer, open market purchases
or otherwise, any voting securities or direct or indirect rights to acquire any
voting securities of the other party
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<PAGE> 4
or any subsidiary thereof, or of any successor to or person in control of the
other party, or any substantial portion of the assets of the other party or any
subsidiary or division thereof or of any such successor or controlling person
(other than purchases of assets in the ordinary course of the parties'
respective businesses consistent with past practice); (ii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" (as such
terms are defined by the rules of the Securities and Exchange Commission) with
respect to voting securities of the other party, or seek to advise or influence
any person with respect to the voting of such voting securities; (iii) form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) with respect to any
voting securities of the other party; (iv) make, or in any way participate in,
directly or indirectly, any other effort to seek or influence control over the
Board of Directors, or management or policies, of the other party or seek to
advise or influence any person or entity with respect thereto; (v) make any
public announcement or disclose any plan, intention, proposal or arrangement
inconsistent with the foregoing; (vi) take any action which might require such
other party to make a public announcement regarding the possibility of a
business combination; (vii) advise, assist or encourage any other person in
connection with the foregoing; or (viii) request that the other party amend or
waive any provision of this paragraph. Notwithstanding the foregoing, in the
event any person or entity (other than a party or an affiliate) (a) acquires, or
publicly announces a proposal to acquire, by tender offer, open market
purchases, merger or otherwise, fifteen percent (15%) or more of the outstanding
voting securities of a party, or (b) makes, or publicly announces a proposal to
make, a solicitation of proxies with respect to election of directors of a
party, or (c) publicly announces any other plan, intention, proposal or
arrangement with respect to a business combination with a party, then the
restrictions set forth in this paragraph shall no longer apply to the other
party hereto.
In addition, each party agrees that for a period of eighteen months
from the date of this agreement, neither it nor any of its affiliates or
Representatives will, directly or indirectly, unless and until authorized to do
so in writing by the other party, solicit the employment of or hire any
employees of the other party or its affiliates with whom the hiring party had
contact or who became known to such party during the investigation of the
Transaction, other than pursuant to any general advertisement for or
solicitation of employees by either party or its affiliates.
Each party also agrees that until the 60th calendar day after the date
of this letter agreement, it will not, directly or indirectly, (i) make any
proposal to, or solicit proposals from, or initiate discussions with, any person
(other than the other party hereto) or its affiliates or Representatives
regarding a possible business combination involving such party and such other
person, or the purchase of voting securities of
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<PAGE> 5
such party or its affiliates, or (ii) participate in discussions initiated by
any other person regarding a possible business combination involving such party
and any person other than the other party hereto, or the purchase of voting
securities of such party or its affiliates, or furnish any such person or its
affiliates or Representatives with nonpublic information concerning such party
in order to enable it to evaluate a possible business combination involving, or
the purchase of voting securities of, such party or its affiliates, unless in
any such case such party has been advised by outside counsel that its board of
directors has a fiduciary obligation under applicable law to take such action
(in which case it will promptly advise the other party of, and keep the other
party informed as to, the action it proposes to take, the material details
thereof and the identity of the parties involved therewith). The provisions of
this paragraph shall not restrict a party from engaging in financing
transactions in the ordinary course of business in connection with its business
operations.
It is understood and agreed that the disclosing party would be
irreparably injured by a breach of this agreement by the receiving party or its
affiliates or Representatives, that money damages would not be a sufficient
remedy for any such breach and that the disclosing party shall be entitled to
equitable relief, including injunctive relief and specific performance, as a
remedy for any such breach (which shall not be the exclusive remedy for breach
of this agreement).
This agreement shall inure to the benefit of and be binding upon each
of the parties and their respective successors and assigns. It is further
understood and agreed that no failure or delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
This agreement shall constitute the entire agreement between the
parties with regard to the subject matter hereof. No modification, amendment or
waiver shall be binding unless set forth in a written amendment or waiver signed
by each of the parties hereto.
This agreement shall be for a term of two years (except for those
provisions hereof that by their terms expire at an earlier date), and shall be
governed by and construed in accordance with the laws of the State of
Washington, without regard to the choice of law or conflict of laws principles
thereof.
This agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which shall constitute the same agreement.
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<PAGE> 6
Please confirm your agreement with respect to the foregoing matters by
signing and returning to us the enclosed copy of this letter, whereupon this
letter will constitute a binding agreement between us with respect to the
subject matter hereof.
Very truly yours,
WASHINGTON ENERGY COMPANY
By: /s/ Robert J. Tomlinson
-----------------------------------
Name: Robert J. Tomlinson
Title: Senior Vice President-Legal
and General Counsel
Confirmed and agreed
as of the date first written above:
PUGET SOUND POWER & LIGHT CO.
By: /s/ Donald E. Gaines
--------------------------------
Name: Donald E. Gaines
Title: Treasurer
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