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EXHIBIT 99.(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
UTILX Corporation
AT
$6.125 Net Per Share
BY
InfrastruX Acquisition, Inc.,
A WHOLLY OWNED SUBSIDIARY OF
InfrastruX Group, Inc.,
A WHOLLY OWNED SUBSIDIARY OF
Puget Sound Energy, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JULY 28, 2000, UNLESS THE OFFER IS EXTENDED. THE BOARD OF
DIRECTORS OF UTILX CORPORATION, ACTING THROUGH A SPECIAL COMMITTEE OF
DISINTERESTED DIRECTORS, HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
REFERRED TO HEREIN AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF UTILX
CORPORATION AND RECOMMENDS THAT THE SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER
THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION
OF THE OFFER AT LEAST THAT NUMBER OF SHARES OF COMMON STOCK THAT SHALL
CONSTITUTE NOT LESS THAN SIXTY-SEVEN PERCENT (67%) OF THE THEN OUTSTANDING
SHARES ON A FULLY DILUTED BASIS.
----------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of UTILX Corporation common stock (the "Shares") should either (1)
complete and sign the accompanying Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it, together with the certificate(s) evidencing tendered
Shares, and any other required documents, to the Depositary listed in the
Letter of Transmittal or tender such Shares pursuant to the procedure for
book-entry transfer set forth in Section 3 or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder whose Shares are registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee must contact such broker, dealer, commercial bank, trust company or
other nominee if such stockholder desires to tender such Shares. A stockholder
who desires to tender Shares and whose certificates evidencing such Shares are
not immediately available, or who cannot comply with the procedure for book-
entry transfer on a timely basis, may tender such Shares by following the
procedure for guaranteed delivery set forth in Section 3. Questions or
requests for assistance may be directed to the Information Agent or Dealer
Manager at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent or from brokers, dealers,
commercial banks or trust companies.
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SUMMARY TERM SHEET
InfrastruX Acquisition, Inc., which is a subsidiary of InfrastruX Group,
Inc., which is wholly owned by Puget Sound Energy, Inc., is offering to
purchase all the outstanding shares of common stock of UTILX Corporation for
$6.125 net per share, in cash. The following are some of the questions you, as
a stockholder of UTILX Corporation, may have and answers to those questions.
We urge you to read carefully the remainder of this Offer to Purchase because
the information in this summary is not complete. Additional important
information is contained in the remainder of this Offer to Purchase.
Who Is Offering to Buy My Shares? InfrastruX Acquisition, Inc. is a Delaware
corporation formed for the purpose of making a tender offer for all the
outstanding shares of common stock of UTILX Corporation. We are a wholly owned
direct subsidiary of InfrastruX Group, Inc., a Washington corporation, which
is a subsidiary of Puget Sound Energy, Inc., a Washington corporation. See
"Introduction" and Section 9 ("Certain Information Concerning the Purchaser,
InfrastruX Group, Inc. and Puget Sound Energy, Inc.") of this Offer to
Purchase.
What Shares Are Being Sought in the Offer? We are seeking to purchase all
the outstanding common stock of UTILX Corporation. See "Introduction" and
Section 1 ("Terms of the Offer") of this Offer to Purchase.
How Much Are You Offering to Pay, What Is the Form of Payment and Will I
Have to Pay Any Fees or Commissions? We are offering to pay $6.125 per share,
net to you, in cash. If you are the record owner of your shares and you tender
your shares to us in the offer, you will not have to pay brokerage fees or
similar expenses. If you own your shares through a broker or other nominee,
and your broker tenders your shares on your behalf, your broker or nominee may
charge you a fee for doing so. You should consult with your broker or nominee
to determine whether any charges will apply. See "Introduction" and Section 1
("Terms of the Offer") of this Offer to Purchase.
Do You Have the Financial Resources to Make Payment? We plan to obtain all
funds needed for the acquisition through intercompany loans of available cash
from Puget Sound Energy, Inc. and its subsidiaries. The offer is not
conditioned upon any financing arrangements. See Section 9 ("Certain
Information Concerning the Purchaser, InfrastruX Group, Inc. and Puget Sound
Energy, Inc.") and Section 10 ("Financing of the Offer") of this Offer to
Purchase.
What Does the Board of Directors of UTILX Corporation Think of the Offer? We
are making the offer pursuant to a merger agreement among us, InfrastruX
Group, Inc. and UTILX Corporation. The board of directors of InfrastruX Group,
Inc. adopted the merger agreement and approved our tender offer and our
proposed merger with UTILX Corporation. The board of directors of UTILX
Corporation, through its special committee of disinterested directors, has
determined that the offer and the merger are fair to, and in the best
interests of, you, as a stockholder of UTILX Corporation, and unanimously
recommends that you accept the offer and tender your shares. See
"Introduction" to this Offer to Purchase.
How Long Do I Have to Decide Whether to Tender in the Offer? You will have
until 12:00 midnight, New York City time, on Friday, July 28, 2000, to tender
your shares in the offer. Further, if you cannot deliver everything that is
required in order to make a valid tender by that time, you may be able to gain
a little extra time by using a guaranteed delivery procedure, which is
described later in this Offer to Purchase. See Section 1 ("Terms of the
Offer"), Section 2 ("Acceptance for Payment and Payment of Shares") and
Section 3 ("Procedures for Accepting the Offer and Tendering Shares") of this
Offer to Purchase.
Can the Offer Be Extended and Under What Circumstances? We may effect any
extension of the offer by giving oral or written notice of such extension to
the Depositary. If we decide to extend the offer, we may do so by announcing
the extension by issuing a press release by no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date. See Section 1 ("Terms of the Offer; Expiration Date").
What Are the Most Significant Conditions to the Offer? There is no financing
condition to the offer; however, we are not obligated to purchase any tendered
shares unless: (1) the number of shares validly tendered
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and not withdrawn before the expiration date of the offer represents at least
sixty-seven percent (67%) of the
shares of common stock of UTILX Corporation outstanding on a fully diluted
basis; and (2) the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 has not expired or been terminated. The
offer is also subject to a number of other conditions. See Section 15
("Conditions of the Offer") of this Offer to Purchase.
How Do I Tender My Shares? To tender shares, you must deliver the
certificates representing your shares, together with a completed letter of
transmittal and any other documents required, to ChaseMellon Shareholder
Services, LLC, the depositary for the offer, not later than the time the
tender offer expires. If your shares are held in "street" name, the shares can
be tendered by your nominee through The Depository Trust Company. If you
cannot deliver an item that is required to be delivered to the depositary by
the expiration of the tender offer, you may get a little extra time to do so
by having a broker, a bank or other fiduciary that is a member of the
Securities Transfer Agents Medallion Program or other eligible institution
guarantee that the missing item will be received by the depositary within
three Nasdaq trading days. For the tender to be valid, however, the depositary
must receive the missing item within that three trading day period. See
Section 3 ("Procedures for Accepting the Offer and Tendering Shares") of this
Offer to Purchase.
Until What Time Can I Withdraw Previously Tendered Shares? You can withdraw
shares at any time until the offer has expired and, if we have not by Friday,
July 28, 2000, agreed to accept your shares for payment, you can withdraw them
at any time after such time until we accept shares for payment. See Section 1
("Terms of the Offer") and Section 4 ("Withdrawal Rights") of this Offer to
Purchase.
How Do I Withdraw Previously Tendered Shares? To withdraw shares, you must
deliver a written notice of withdrawal, or a facsimile of one, with the
required information to the depositary while you still have the right to
withdraw the shares. See Section 1 ("Terms of the Offer") and Section 4
("Withdrawal Rights") of this Offer to Purchase.
What Will Happen to Shares that Are Not Tendered in the Offer? If we accept
for payment and pay for at least sixty-seven percent (67%) of the outstanding
shares on a fully diluted basis of UTILX Corporation, following approval by
the stockholders of UTILX Corporation, we will be merged with and into UTILX
Corporation. If that merger takes place, InfrastruX Group, Inc. will directly
own all the shares of UTILX Corporation, and all other stockholders of UTILX
Corporation will receive $6.125 per share in cash. There are no appraisal
rights available in connection with the offer. However, if the merger takes
place, stockholders who have not sold their shares in the offer may have
appraisal rights under the Delaware General Corporation Law. See Section 12
("Background of the Offer; the Merger Agreement") of this Offer to Purchase.
What Is the Market Value of My Shares as of a Recent Date? On June 28, 2000,
the last trading day before UTILX Corporation and InfrastruX Group, Inc.
announced that they had signed the merger agreement, the last sale price of
the common stock of UTILX Corporation as reported on the Nasdaq National
Market was $4.375 per share. We advise you to obtain a recent quotation for
common stock of UTILX Corporation in deciding whether to tender your shares.
See Section 6 ("Price Range of Shares; Dividends") of this Offer to Purchase.
Have You Had Any Prior Dealings With UTILX Corporation? John D. Durbin, a
director of UTILX Corporation, is also President and Chief Executive Officer
of InfrastruX Group, Inc. and a director of Puget Sound Energy, Inc. John W.
Ellis, a director of UTILX Corporation, is a director of Puget Sound Energy,
Inc. In addition, Puget Sound Energy, Inc. purchases services from UTILX
Corporation in the ordinary course of business See Section 9 ("Certain
Information Concerning Purchaser, InfrastruX Group, Inc. and Puget Sound
Energy, Inc.; Transactions with the Company") and Section 12 ("Background of
the Offer").
To Whom Can I Talk if I Have Questions About the Tender Offer? You can call
MacKenzie Partners, Inc. at (800) 322-3885 (toll free). MacKenzie Partners,
Inc. is acting as the information agent for our tender offer. See the back
cover of this Offer to Purchase.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION............................................................... 1
THE TENDER OFFER........................................................... 3
1. TERMS OF THE OFFER; EXPIRATION DATE.................................. 3
2. ACCEPTANCE FOR PAYMENT AND PAYMENT OF SHARES......................... 4
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.............. 5
4. WITHDRAWAL RIGHTS.................................................... 8
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES......................... 9
6. PRICE RANGE OF SHARES; DIVIDENDS..................................... 10
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING
AND EXCHANGE ACT REGISTRATION....................................... 10
8. CERTAIN INFORMATION CONCERNING THE COMPANY IN GENERAL................ 11
9. CERTAIN INFORMATION CONCERNING PURCHASER, INFRASTRUX GROUP, INC. AND
PUGET SOUND ENERGY, INC.; TRANSACTIONS WITH THE COMPANY............. 14
10. FINANCING OF THE OFFER............................................... 16
11. MATERIAL CHANGES AND OTHER INFORMATION............................... 16
12. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT........................ 16
13. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER.......... 26
14. DIVIDENDS AND DISTRIBUTIONS.......................................... 29
15. CONDITIONS OF THE OFFER.............................................. 30
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. GENERAL.............. 31
17. FEES AND EXPENSES.................................................... 33
18. MISCELLANEOUS........................................................ 33
ANNEX A.................................................................... A-1
SCHEDULE I--DIRECTORS AND EXECUTIVE OFFICERS............................... I-1
</TABLE>
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TO THE HOLDERS OF COMMON STOCK OF UTILX CORPORATION:
INTRODUCTION
InfrastruX Acquisition, Inc., a Delaware corporation ("Purchaser"), which is
a wholly owned subsidiary of InfrastruX Group, Inc. ("Parent"), a Washington
corporation and a wholly owned subsidiary of Puget Sound Energy, Inc., a
Washington corporation ("Puget Sound Energy, Inc."), hereby offers to purchase
all outstanding shares of common stock (the "Shares") of UTILX Corporation, a
Delaware corporation (the "Company"), at a price of $6.125 per Share (the
"Offer Price"), net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, transfer taxes with respect to the purchase of Shares pursuant to
the Offer. Parent will pay all charges and expenses of ChaseMellon Shareholder
Services, LLC (the "Depositary") and MacKenzie Partners (the "Information
Agent") incurred in connection with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY, THROUGH ITS SPECIAL COMMITTEE OF
DISINTERESTED DIRECTORS (THE "BOARD"), HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER AND DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST INTERESTS
OF, THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT SHAREHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. SEE THE ACCOMPANYING
SCHEDULE 14D-9 (AS DEFINED BELOW).
Banc of America Securities LLC ("Banc of America"), the Company's financial
advisor, has delivered to the Board its written opinion to the effect that, as
of the date of such opinion, the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair from
a financial point of view. A copy of the opinion of Banc of America is
contained in the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES THAT SHALL CONSTITUTE NOT LESS THAN SIXTY-SEVEN PERCENT (67%)
OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION").
FOR PURPOSES HEREOF, SHARES ON A FULLY DILUTED BASIS MEANS ALL OUTSTANDING
SECURITIES ENTITLED GENERALLY TO VOTE IN THE ELECTION OF DIRECTORS OF THE
COMPANY, AFTER GIVING EFFECT TO THE CASH EXERCISE OF ALL OPTIONS EXERCISABLE
INTO SUCH SHARES. THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, JULY 28, 2000, UNLESS EXTENDED. SEE SECTIONS 1 AND 15.
The Company has advised the Purchaser that the authorized capital of the
Company consists of 25,000,000 shares of common stock and 2,000,000 shares of
preferred stock. As of June 2, 2000, (i) 7,475,944 shares of common stock and
no shares of preferred stock were issued and outstanding; and (ii) an
aggregate of 1,600,000 Shares were reserved for issuance upon the exercise of
stock options pursuant to the Company's 1984 Restated Nonqualified Stock
Option Plan, 1984 Restated Stock Option Plan, 1987 Restated Stock Option Plan
for Non-Employee Directors and the 1994 Option and Restricted Stock Plan for
Employees (collectively, the "Option Plans") pursuant to which options for the
purchase of an aggregate of 1,572,416 Shares were issued and outstanding.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 28, 2000 (the "Merger Agreement"), among Parent, Purchaser and the
Company pursuant to which, as soon as practicable following the consummation
of the Offer and the satisfaction or waiver of certain conditions of the
Agreement,
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the Purchaser will be merged with and into the Company (the "Merger"), with
the Company surviving the Merger as a wholly owned subsidiary of Parent, (the
"Surviving Corporation") and the separate corporate existence of Purchaser
shall cease. The Merger is subject to a number of conditions, including the
adoption of the Merger Agreement by stockholders of the Company, if required
by applicable law. In the event Purchaser acquires at least ninety percent
(90%) of the outstanding Shares pursuant to the Offer or otherwise, the
Purchaser may, and intends to, effect the Merger pursuant to the short-form
merger provisions of the Delaware General Corporation Law (the "DGCL"),
without a meeting of the Company's stockholders.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares satisfying the Minimum Condition, Parent shall be entitled to
designate a majority of the members of the Company's Board of Directors
subject to compliance with Section 14(f) of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"). The Merger Agreement also provides that
the Company has agreed to cause Parent's designees to be elected as directors
of the Company, including increasing the size of the Board or securing the
resignations of incumbent directors or both. The Merger Agreement is more
fully described in Section 12.
No appraisal rights are available in connection with the Offer. However,
stockholders will have appraisal rights in connection with the Merger
regardless of whether the Merger is consummated with or without a vote of the
Company's stockholders. See Section 13.
Certain United States federal income tax consequences of the sale of Shares
pursuant to the Offer are described in Section 5.
The Securities and Exchange Commission (the "Commission") has adopted Rule
13e-3 under the Exchange Act, which is applicable to certain "going private"
transactions. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction. Purchaser believes that
Rule 13e-3 will not be applicable to the Offer or the Merger. However, no
assurances can be given that the Commission will not take the position that
Rule 13e-3 is applicable to the Offer or the Merger.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN ITS ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser hereby offers to purchase all of the Shares at a price
of $6.125 per Share, net to the seller in cash, and will pay for all Shares
validly tendered prior to the Expiration Date (as hereinafter defined) and not
withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00
midnight, New York City time, on July 28, 2000, unless and until Purchaser, in
its sole discretion, shall have extended the period during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, shall expire.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from
time to time, to extend for any reason the period of time during which the
Offer is open, including the occurrence of any of the conditions specified in
Section 15, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a
tendering stockholder to withdraw his, her or its Shares. See Section 4.
Subject to applicable securities laws and the terms and conditions of the
Merger Agreement, Purchaser also expressly reserves the right (i) to increase
the price per Share payable in the Offer, (ii) to terminate the Offer and not
accept for payment any Shares if the conditions to the Offer shall not be
satisfied, and (iii) to waive any condition or otherwise amend the Offer in
any respect (subject to the limitations described below), by giving oral or
written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. However, the Merger
Agreement provides that Purchaser will not (i) decrease the price per Share
payable pursuant to the Offer, (ii) reduce the maximum number of Shares to be
purchased in the Offer, (iii) impose conditions to the Offer in addition to
those set forth in Section 15, or (iv) amend any other material terms of the
Offer in a manner materially adverse to the Company's stockholders. Purchaser
acknowledges that (i) Rule 14e-1(c) under the Exchange Act requires Purchaser
to pay the consideration offered or return the Shares tendered promptly after
the termination or withdrawal of the Offer and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as specified in Section 15),
any Shares upon the occurrence of any of the conditions specified in Section
15 without extending the period of time during which the Offer is open.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable
to the Offer; or (ii) make available a subsequent offering period (within the
meaning of Rule 14d-11 under the Exchange Act) for not more than ten (10)
business days.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the Commission, Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or
not any of the events or facts set forth in Section 15 hereof shall have
occurred, to (a) extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (b)
except as set forth above, amend the Offer in any other respect by giving oral
or written notice of such amendment to the Depositary. The Purchaser has no
intention to make available a "subsequent offering period" (within the meaning
of Rule 14d-11 under the Exchange Act), but has the right (but not the
obligation) to do so under Rule 14d-11 and the Merger agreement for up to ten
business days. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
If by 12:00 midnight, New York City time, on July 28, 2000 (or any date or
time then set as the Expiration Date), any of or all the conditions to the
Offer have not been satisfied or waived, Purchaser reserves the right (but
shall not be obligated), subject to the terms and conditions contained in the
Merger Agreement and to the
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applicable rules and regulations of the Commission, to (a) terminate the Offer
and not accept for payment or pay for any Shares and return all tendered
Shares to tendering stockholders, (b) except as set forth above, waive all the
unsatisfied conditions and accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn, (c)
extend the Offer and, subject to the right of stockholders to withdraw shares
until the Expiration Date, retain the Shares that have been tendered during
the period or periods for which the Offer is extended, or (d) amend the Offer.
There can be no assurance that Purchaser will exercise its right to extend
the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Exchange Act requires that the announcement be issued
no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
announcement), Purchaser will not have any obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If Purchaser extends the Offer or if Purchaser is delayed in its acceptance
for payment of or payment for Shares (whether before or after its acceptance
for payment of Shares) or its is unable to accept for payment or pay for
Shares pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer (but subject to compliance with Rule 14e-
1(c) under the Exchange Act, which requires that a tender offer or pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may nevertheless, on behalf of Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 4.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities
sought, a minimum period of 10 business days is generally required to allow
for adequate dissemination to stockholders.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer and other relevant materials will be mailed by
Purchaser to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to
beneficial owners of Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT OF SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), promptly after the Expiration Date, Purchaser will accept for
payment, and will pay for, all Shares validly tendered prior to the Expiration
Date and not properly withdrawn. Subject to applicable rules of the
Commission, Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares pending receipt of any regulatory approvals
specified in Section 16 or in order to comply in whole or in part with any
other applicable law.
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In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
the certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer,
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
Stockholders who cannot comply on a timely basis with the foregoing
procedures for acceptance of the Offer may deposit Share Certificates pursuant
to the procedures set forth below for guaranteed delivery.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if and when Purchaser gives written notice to the Depositary of
Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser
and transmitting such payments to tendering stockholders whose Shares have
been accepted for payment. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON
THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if the Share Certificates are
submitted evidencing more Shares than are tendered, the Share Certificates
evidencing unpurchased Shares will be returned, without expense to the
tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3, such Shares will be credited
to an account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
Holders of Options. Holders of options to acquire Shares may participate in
this Offer by exercising such options in accordance with and subject to their
terms and, after such exercises, deposit the Shares received as provided for
in this Offer. Reference should be made to the terms of the Merger Agreement
dealing with the options and Option Plans as described in Section 12 of the
Offer to Purchase.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
In order for a holder of Shares to validly tender Shares pursuant to the
Offer, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry delivery of Shares, and any
other documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase and either (i) the Share Certificates evidencing tendered Shares
must be received by the Depositary at such address or such Shares must be
tendered pursuant to the procedure for book-entry transfer
5
<PAGE>
described below and a Book-Entry Confirmation must be received by the
Depositary, in each case prior to the Expiration Date, or (ii) the tendering
stockholder must comply with the guaranteed delivery procedures described
below. Purchaser reserves the right to permit the Offer to be accepted in any
manner other than that set out herein.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer,
and any other required documents, must, in any case, be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date, or the tendering stockholder must
comply with the guaranteed delivery procedure described below. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder (which term, for purposes of this Section 3, includes any participant
in any of the Book-Entry Transfer Facility's systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm which is a member of a national securities exchange
in the United States or the National Association of Securities Dealers, Inc.
(an "Eligible Institution"). In all other cases, all signatures on the Letter
of Transmittal must be medallion guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the Share Certificates
are registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or Share Certificates not tendered or
not accepted for payment are to be returned to a person other than the
registered holder of the Share Certificates surrendered, the tendered Share
Certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders
appear on the Share Certificates, with the signatures on the Share
Certificates or stock powers guaranteed in the manner described above. See
Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered, provided that all the following conditions are
satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received prior
to the Expiration Date by the Depositary as provided below; and
6
<PAGE>
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal are
received by the Depositary within three trading days of The Nasdaq
Stock Market's National Market System (the "Nasdaq") after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a signature medallion guaranteed by an Eligible Institution in
the form set forth in the form of Notice of Guaranteed Delivery made available
by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal. UNDER NO
CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of the Shares will be determined by Purchaser in its sole discretion,
which determination shall be final and binding on all parties. Purchaser
reserves the absolute right to reject any or all tenders determined by it not
to be in proper form or when the acceptance of payment may, in the opinion of
its counsel, be unlawful. Purchaser also reserves the absolute right to waive
any condition of the Offer or any defect or irregularity in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities relating thereto have been cured or waived. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Other Requirements. The execution of the Letter of Transmittal by a
tendering stockholder irrevocably appoints each of the Depositary, any officer
of Purchaser and any other person designated by Purchaser in writing as the
true and lawful agent, attorney and attorney-in-fact and proxy of that
stockholder with respect to Shares tendered by such stockholders and accepted
for payment by Purchaser (the "Purchased Securities") and with respect to any
and all dividends, distributions, payments, securities, rights, warrants,
assets or other interests (collectively, "Other Securities") accrued,
declared, paid, issued, transferred, made or distributed on or in respect of
the Purchased Securities on or after the date of the Offer to Purchase,
effective from the date that Purchaser accepts the Purchased Securities for
payment (the "Effective Date"), with full power of substitution, in the name
of and on behalf of such stockholder (such power of attorney being deemed to
be an irrevocable power coupled with an interest), to: (a) register or record,
transfer and enter the transfer of the Purchased Securities and any Other
Securities on the appropriate register of holders maintained by the Company;
(b) vote, execute and deliver any and all instruments of proxy, authorizations
or consents in respect of any and all such Purchased Securities and Other
Securities, revoke any such instruments, authorizations or consents given
prior to or after the Effective Date and designate in any such instruments of
proxy any person or persons as the proxy or the proxy nominee of the
stockholder in respect of such Purchased Securities and Other Securities
including, without limiting the generality of the foregoing, in connection
with any meeting (whether annual, special or otherwise) of holders of
securities of the Company (or any adjournments thereof); (c) execute, endorse
and negotiate, for and in the name of and on behalf of the registered
stockholder of the Purchased Securities and Other Securities, any and all
checks or other instruments representing any distribution payable to or to the
order of such registered stockholder; and (d) exercise any and all rights of
the stockholder in respect of such Purchased Securities and Other Securities;
all as set forth in the Letter of Transmittal.
7
<PAGE>
The acceptance for payment by Purchaser of the Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Backup Withholding. Stockholders may be subject to "backup withholding" at a
rate of 31% under United States tax law when they receive payments of cash
pursuant to the Offer or the Merger. Backup withholding is not an additional
tax but merely an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons generally are entitled to
exemption from backup withholding, including corporations and financial
institutions. Certain penalties apply for failure to furnish correct
information and for failure to include the reportable payments in income. Each
stockholder should consult with his own tax advisor as to his qualification
for exemption from withholding and the procedure for obtaining such exemption.
To avoid the imposition of backup withholding, U.S. Shareholders and Non-U.S.
Shareholders should follow the instructions set forth below. For purposes of
this Offer to Purchase, the Letter of Transmittal, and other documents
included in this tender offer package, "U.S. Shareholder" and "Non-U.S.
Shareholder" have the following meanings:
"U.S. Shareholder" means one of (1) a citizen or resident of the United
States, including an alien individual (such as a citizen of another country)
who is a lawful permanent resident of the United States or meets the
"substantial presence test" under Section 7701(b) of the Code (for example,
because the alien individual is present in the United States for 183 days or
more in the current calendar year), (2) a corporation or partnership created
or organized in the United States or under the laws of the United States or
any political subdivision, or (3) an estate or trust which is not a foreign
estate or trust under Section 7701(a)(31) of the Code.
"Non-U.S. Shareholder" means any stockholder that is not a U.S. Shareholder,
except for Non-U.S. Shareholders, if any, who are subject to United States
federal income tax on payments received pursuant to the Offer or the Merger
because such payments are effectively connected with their conduct of a U.S.
trade or business. Any such stockholder receiving payments that are
effectively connected with the conduct of a U.S. trade or business should
contact an independent tax advisor with respect to the backup withholding and
other U.S. tax consequences of receiving payments pursuant to the Offer or the
Merger.
U.S. Shareholders. In order to avoid "backup withholding" on payments of
cash pursuant to the Offer or the Merger (including any cash paid pursuant to
the exercise of dissenters' rights), a U.S. Shareholder surrendering Shares in
the Offer or the Merger must, unless an exemption applies, provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a U.S. Shareholder does not provide such stockholder's correct
TIN or fails to provide the certifications described above, the Internal
Revenue Service (the "IRS") may impose a penalty on such stockholder and
payment of cash to such stockholder pursuant to the Offer or the Merger may be
subject to backup withholding of 31%. All U.S. Shareholders surrendering
Shares pursuant to the Offer should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding.
Non-U.S. Shareholders. In order to avoid 31% backup withholding, Non-U.S.
Shareholders other than corporations should properly complete and provide to
the Depositary the enclosed Substitute Form W-8 included as part of the Letter
of Transmittal. Foreign corporations should follow the instructions above with
respect to the completion of Substitute Form W-9.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable except that
tendered Shares may be withdrawn by or on behalf of the tendering stockholder
at any time prior to the Expiration Date and, unless theretofore accepted for
payment by Purchaser pursuant to the Offer, may also be withdrawn by such
stockholder at any time after August 28, 2000. If Purchaser extends the Offer,
is delayed in the acceptance for payment of the Shares
8
<PAGE>
or is unable to accept the Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to
Purchase and must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of such Shares, if different from that of the person who tendered such
Shares. If Share Certificates have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the first sentence of
this paragraph. Any Shares properly withdrawn will thereafter be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn
Shares may be re-tendered at any time prior to the Expiration Date by
following one of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent, Dealer Manager or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
U.S. Shareholders. The receipt of cash for Shares by a U.S. Shareholder
pursuant to the Offer or in the Merger (including by reason of exercise of
dissenters' rights) will be a taxable transaction for U.S. federal income tax
purposes and may also be a taxable transaction under applicable state, local
or foreign tax laws. In general, a U.S. Shareholder will recognize gain or
loss for U.S. federal income tax purposes equal to the difference between the
amount received in exchange for the Shares sold and such stockholder's
adjusted tax basis in such Shares. Assuming the Shares constitute capital
assets in the hands of the stockholder, such gain or loss will be capital gain
or loss. If, at the time of the Offer or the Merger, the Shares then exchanged
have been held for more than one year by such stockholder, such gain or loss
will be long-term capital gain or loss (other than, with respect to the
exercise of dissenters' rights, amounts, if any, which are or are deemed to be
interest for federal income tax purposes, which amounts will be taxed as
ordinary income). Gain or loss will be calculated separately for each block of
Shares (i.e., a group of shares with the same tax basis and holding period)
tendered pursuant to the Offer. Under current law, long-term capital gains of
individuals are generally taxed at lower rates than items of ordinary income
and short-term capital gains. Capital losses are only deductible to the extent
of capital gains plus, in the case of taxpayers other than corporations,
$3,000 of ordinary income. Capital losses that are not currently deductible
may be carried forward to other years, subject to certain limitations.
Non-U.S. Shareholders. Non-U.S. Shareholders generally will not be subject
to U.S. federal income tax on the receipt of cash for Shares pursuant to the
Offer or in the Merger, unless such Non-U.S. Shareholder's gain is effectively
connected with a U.S. trade or business; or, in the case of gain recognized by
an individual Non-U.S. Shareholder, such individual is present in the U.S. for
183 days or more during the taxable year and certain other conditions are
satisfied.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN SHAREHOLDERS,
DEPENDING ON THEIR CIRCUMSTANCES, INCLUDING SHAREHOLDERS WHO ACQUIRED SHARES
9
<PAGE>
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION. SHAREHOLDERS WHO ARE IN SPECIAL TAX SITUATIONS (SUCH AS
FINANCIAL INSTITUTIONS, INSURANCE COMPANIES, OR TAX-EXEMPT ORGANIZATIONS), OR
TO PERSONS HOLDING SHARES AS PART OF A "STRADDLE," "HEDGE" OR "CONVERSION
TRANSACTION."
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX
LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are listed and principally traded on the Nasdaq under the symbol
"UTLX". The following table sets forth, for the periods indicated, the
aggregate volume and the high and low sales prices per Share on the Nasdaq.
<TABLE>
<CAPTION>
High Low Volume(1)
---- --- ---------
<S> <C> <C> <C>
Fiscal Year Ending March 31, 1998:
First Quarter................................. 4 7/8 3 13/16 738,617
Second Quarter................................ 5 3/8 4 837,668
Third Quarter................................. 6 7/8 4 3/8 1,240,320
Fourth Quarter................................ 7 7/8 4 7/8 1,488,111
Fiscal Year Ending March 31, 1999...............
First Quarter................................. 5 3/4 4 1/8 1,025,477
Second Quarter................................ 5 3 1/4 630,553
Third Quarter................................. 3 7/16 1 7/16 2,521,877
Fourth Quarter................................ 3 1/2 1 1/2 1,305,170
Fiscal Year Ending March 31, 2000:
First Quarter................................. 3 1/2 1 1/2 3,342,936
Second Quarter................................ 4 3/4 2 7/16 1,956,995
Third Quarter................................. 4 3/4 2 9/16 1,430,574
Fourth Quarter................................ 8 7/16 3 8,977,565
Fiscal Year Ending March 31, 2001:
First Quarter (through June 27, 2000)......... 4 11/16 3 3/4 442,900
</TABLE>
--------
(1) Aggregate trading volume per period.
The Purchaser has been advised by the Company that the Company historically
has not declared dividends.
On June 28, 2000, the last full trading day prior to the announcement of the
execution of the Merger Agreement and of Purchaser's intention to commence the
Offer, the closing price per Share as reported on the Nasdaq was $4.375.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
10
<PAGE>
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the National
Association of Securities Dealers (the "NASD") for continued inclusion in the
Nasdaq. The Shares might nevertheless continue to be included in the Nasdaq
with quotations published in the Nasdaq "additional list" or in one of the
"local lists," but if the number of holders of the Shares were to fall below
300, or if the number of publicly held Shares were to fall below 100,000 or
there were not at least two registered and active market makers for the
Shares, the NASD's rules provide that the shares would no longer be
"qualified" for the Nasdaq reporting and the Nasdaq would cease to provide any
quotations. Shares held directly or indirectly by directors, officers or
beneficial owners of more than 10% of the Shares are not considered as being
publicly held for this purpose. If, as a result of the purchase of Shares
pursuant to the Offer or otherwise, the Shares no longer meet the requirements
of the NASD for continued inclusion in the Nasdaq or in any other tier of the
Nasdaq and the Shares are no longer included in the Nasdaq or in any other
tier of the Nasdaq, as the case may be, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq, it is possible that the shares
would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Shares and the availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interest in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange, quoted on an automated inter-
dealer quotation system or held by 300 or more holders of record. Termination
of registration of the Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), may be impaired or eliminated.
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange act as soon after the completion
of the Offer and the Merger as the requirements for such termination are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefor could no longer be used
as collateral for loans made by brokers. In any event, the Shares will cease
to be "margin securities" if registration of the Shares under the Exchange Act
is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY IN GENERAL
The Company is a Delaware corporation with its principal executive offices
located at 22820 Russell Road, P.O. Box 97009, Kent, Washington 98064. The
Company provides specialty services and products to electric,
telecommunications, natural gas, water, sewer, and other utilities in the
United States and around the world, and drilling equipment to contractors and
other users outside the United States.
11
<PAGE>
Capitalization of the Company. The Company has advised the Purchaser that
the authorized capital of the Company consists of 25,000,000 shares of Common
Stock and 2,000,000 shares of preferred stock. As of June 2, 2000, (i)
7,475,944 shares of common stock and no shares of preferred stock were issued
and outstanding; and (ii) an aggregate of 1,600,000 Shares were reserved for
issuance upon the exercise of stock options pursuant to the Company's Option
Plans pursuant to which options for the purchase of an aggregate of 1,572,416
Shares were issued and outstanding.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial Statements contained in
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2000 (the "Form 10-K"). More comprehensive financial information is included
in the Form 10-K and other documents filed by the Company with the Commission.
The financial information that follows is qualified in its entirety by
reference to such reports and other documents, including the financial
statements and related notes contained therein. Such reports and other
documents may be examined and copies may be obtained from the offices of the
Commission in the manner set forth at the end of this Section 8.
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------------
2000 1999 1998 1997 1996
-------- ------- ------- ------- -------
(In thousands except earnings per share)
<S> <C> <C> <C> <C> <C>
Consolidated statement of
operations data
Revenues.......................... $105,091 $78,866 $82,464 $64,875 $48,993
Gross profit...................... 12,844 3,646 7,346 10,352 6,408
Operating income (loss)........... 2,613 (6,123) (1,568) 2,058 (2,680)
Income (loss) before income
taxes............................ 1,900 (6,678) (2,117) 2,022 (2,589)
Net income (loss)................. 1,885 (6,678) (2,118) 2,968 (4,489)
Earnings (loss) per share
Basic............................. 0.25 (0.90) (0.29) 0.41 (0.62)
Diluted........................... 0.24 (0.90) (0.29) 0.41 (0.62)
Weighted average shares
outstanding
Basic............................. 7,446 7,420 7,214 7,180 7,185
Diluted........................... 7,790 7,420 7,214 7,303 7,185
Balance sheet data
Working capital................... $ 10,985 $ 8,262 $14,252 $16,560 $13,349
Total assets...................... 42,456 38,575 43,479 35,912 30,624
Capital lease obligations, net of
current portion.................. 1,747 2,210 2,224 0 0
Common stockholders' equity....... 20,085 18,109 24,831 26,741 23,456
</TABLE>
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the Commission relating
to its business, financial condition and other matters. Information as of
particular dates concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in proxy statements distributed
to the Company's stockholders and filed with the Commission. Such reports and
other information should be available for inspection at the public reference
facilities maintained by the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, and also should be available for inspection at the Commission's
regional offices located at Seven World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may also be obtained (i) by
mail, upon payment of the Commission's customary fees, by writing to its
principal
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office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material should also be available for inspection at the offices of the
Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006, or (ii) at the
Commission's world wide web site at http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information
or for any failure by the Company to disclose events that may have occurred
and may affect the significance or accuracy of any such information.
Other Financial Information. In connection with Purchaser's and Parent's
review of the Company and in the course of the negotiations between the
Company and Purchaser and Parent, the Company provided those parties with
certain business and financial information about the Company which Parent and
Purchaser believe is not publicly available. This information included
forecasts of potential financial performance of the Company (without regard to
the impact on the Company of a transaction with Parent) which had previously
been provided to the Company's Board of Directors by Company management on
April 28, 2000. These forecasts included two alternative scenarios: "Scenario
A", representing, for information relating to the fiscal year ending March 31,
2001, Company management's business plan, and, for all other years, financial
projections in which management assumes that ongoing research and development
efforts will not result in significant additional profits and revenues, and
"Scenario B" representing a "best case" scenario under which increased revenue
and profits could potentially be achieved in the case that new products were
developed and commercialized as a result of the Company's ongoing research and
development efforts. Such future financial forecasts and new product
developments are, according to Company management, highly speculative and
should in no way be regarded as a likely outcome.
The forecasts provided by the Company to Parent were as follows:
(i) Company's estimated annual revenues and net income for the year ended
March 31, 2001 under Scenario A could be approximately $108,000,000 and
$3,250,000, respectively; (and, under Scenario B, $108,000,000 and
$3,250,000, respectively);
(ii) Company's estimated annual revenues and net income for the year ended
March 31, 2002 under Scenario A could be approximately $126,000,000 and
$5,000,000, respectively; (and, under Scenario B, $132,000,000 and
$7,600,000, respectively);
(iii) Company's estimated annual revenues and net income for the year ended
March 31, 2003 under Scenario A could be approximately $142,000,000
and $7,500,000, respectively; (and, under Scenario B, $155,000,000
and $13,000,000, respectively);
(iv) Company's estimated annual revenues and net income for the year ended
March 31, 2004 under Scenario A could be approximately $148,000,000 and
$8,100,000, respectively; (and, under Scenario B, $171,000,000 and
$17,700,000, respectively);
(v) Company's estimated annual revenues and net income for the year ended
March 31, 2005 under Scenario A could be approximately $158,000,000 and
$9,700,000, respectively; (and, under Scenario B, $200,000,000 and
$27,600,000, respectively);
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND
MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS
WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
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OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE
GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER
TO PURCHASE ONLY BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO THE PURCHASER
AND PARENT BY THE COMPANY. NONE OF PARENT, PURCHASER, THE COMPANY, ANY OF
THEIR RESPECTIVE AFFILIATES OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR
THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS.
9. CERTAIN INFORMATION CONCERNING PURCHASER, INFRASTRUX GROUP, INC. AND PUGET
SOUND ENERGY, INC.; TRANSACTIONS WITH THE COMPANY
Purchaser is a newly formed Delaware corporation organized in connection
with the Offer and has not carried on any activities other than in connection
with the Offer. The principal offices of Purchaser are located at One Bellevue
Center - 15th Floor, 411 - 19th Avenue NE, Bellevue, Washington 98004-5515.
Purchaser is a wholly owned subsidiary of Parent.
Parent is a Washington corporation and a wholly owned subsidiary of Puget
Sound Energy, Inc. Parent was formed in June, 2000 by Puget Sound Energy, Inc.
to acquire network infrastructure services companies serving the utility and
telecommunication industries. Parent currently has no business or operations.
Puget Sound Energy, Inc. is an investor-owned public utility incorporated in
the State of Washington furnishing electric and gas service to a territory
covering approximately 6,000 square miles, principally in the Puget Sound
region of Washington State. Puget Sound Energy, Inc. is subject to the
informational filing requirements of the Exchange Act and, in accordance
therewith, is required to file periodic reports, proxy statements and other
information with the commission related to its business, financial condition
and other matters. Such reports and other information should be available for
inspection at the Commission and copies thereof should be obtainable from the
Commission in the same manner as is set forth with respect to the Company in
Section 8.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer. Because Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Purchaser is
available.
The name, citizenship, business address, principal occupation or employment,
and five-year employment history for each of the directors and executive
officers of Purchaser and Parent and certain other information are set forth
in Schedule I hereto.
John D. Durbin, a director of the Company, is also President and Chief
Executive Officer of Parent and a director of Puget Sound Energy, Inc. John W.
Ellis, a director of the Company, is also a director of Puget Sound Energy,
Inc. As of June 2, 2000 Mr. Durbin beneficially owned 36,000 Shares (including
shares subject to options exercisable within 60 days of June 2, 2000) and Mr.
Ellis beneficially owned 60,000 Shares (including shares subject to options
exercisable within 60 days of June 2, 2000). In connection with their services
as directors, in the Company's fiscal year ended March 31, 2000, Mr. Ellis
received compensation of approximately $12,950 and options to purchase 5,000
Shares, and Mr. Durbin received compensation of approximately $12,250 and
options to purchase 5,000 Shares. Mr. Durbin and Mr. Ellis are members of the
Company's compensation committee, and Mr. Durbin is also a member of the
Company's audit committee.
The Company provides services to Puget Sound Energy, Inc. in the ordinary
course of business. In the past fiscal year ended March 31, 2000, Puget Sound
Energy, Inc. made payments to the Company in exchange for such services
totaling approximately $480,000.
Effective as of May 24, 2000, the Company and Parent entered into a
Confidentiality Agreement (the "Confidentiality Agreement") pursuant to which
the parties agreed to provide, among other things, for the confidential
treatment of their discussions regarding the Offer and the Merger and the
exchange of confidential information.
The Confidentiality Agreement also provides that for a period of two years
from the date of such agreement, each party agrees that unless specifically
invited in writing by the other party, neither party nor any affiliate will
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directly or indirectly effect or seek, offer or propose to effect, or assist
any other person to effect or seek, offer or propose, any (i) acquisition of
the securities or assets of the other party; (ii) tender or exchange offer,
merger or other business combination involving the other party; (iii) any
recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the other party; or (iv) any
solicitation of proxies or consents to vote any voting securities of the other
party, or otherwise act, alone or in concert with others, to seek to control
or influence the other party.
Effective as of June 14, 2000, the Company and Parent entered into a Non-
Solicitation and Expense Reimbursement Agreement (the "Non-Solicitation
Agreement"). The provisions of the Non-Solicitation Agreement have
subsequently been superceded by provisions of the Merger Agreement. The Non-
Solicitation Agreement provided that until the earlier of June 30, 2000 or the
signing of a definitive Merger Agreement, the Company would cease all
discussions with any parties other than Parent with respect to any proposed
merger, acquisition or similar transaction, and would not initiate, solicit or
encourage inquiries, negotiations or proposals with respect to any such
transactions. The Company was not prevented, however, from responding to, or
engaging in discussions with another party who made an unsolicited inquiry or
proposal to merge with or acquire the Company. The Company was required to
immediately notify Parent of any unsolicited inquiries or proposals, and if an
unsolicited proposal was received by the Company, Parent was relieved of its
"standstill" obligations, as described above, under the Confidentiality
Agreement. On June 14, 2000, the Company received an unsolicited inquiry from
a third party, and pursuant to the agreement advised Purchaser of such inquiry
and its intention to respond to such inquiry. The Company has notified Parent
that it subsequently received additional inquiries from such third party, and
responded to such inquiries, together with Banc of America Securities LLC, its
financial adviser, and that to the date of this Offer to Purchase no proposal
has been submitted by such third party.
The Non-Solicitation Agreement also provided that, in order to facilitate
negotiations, Parent would reimburse the Company for its actual reasonable
expenses incurred with respect to professional fees in connection with the
Offer and the Merger, up to a maximum amount of $150,000, and in accordance
with such agreement on June 14, 2000 Parent advanced to the Company $50,000.
Pursuant to the Merger Agreement, the Company and Parent have entered into
an employment agreement with Mr. Weisfield, which will be effective on the
closing of the Merger. Mr. Weisfield will serve as the President of the
Company following the Merger. The agreement may be terminated by either Mr.
Weisfield or the Company at any time, with or without reason. The agreement
provides for an annual base salary of $325,000, subject to increase in future
years in the discretion of the Company's Board. Mr. Weisfield will also be
granted stock options, following Parent's adoption of a stock option plan, to
purchase a number of shares of Parent common stock equal to 1% of Parent's
outstanding stock, subject to standard vesting provisions and at an exercise
price equal to the fair market value of the Parent common stock on the date of
grant. If Mr. Weisfield's employment is terminated without cause (as defined
in the employment agreement) or Mr. Weisfield terminates his employment for
good reason (as defined in the employment agreement), he will be entitled to
receive termination payments equal to eight months salary.
Except as otherwise disclosed herein, neither Parent, Purchaser, Puget Sound
Energy, Inc. nor, to the best knowledge of Purchaser, Parent and Puget Sound
Energy, Inc. any of the persons listed in Schedule I to this Offer to Purchase
or any associate or majority-owned subsidiary of Purchaser, Parent or Puget
Sound Energy, Inc. or any of the persons so listed beneficially owns,
exercises control or direction over or has any right to acquire, directly or
indirectly, any Shares and neither Parent, Purchaser or Puget Sound Energy,
Inc. nor, to the best knowledge of Purchaser, Parent or Puget Sound Energy,
Inc. any of the persons or entities referred to above nor any director,
executive officer or subsidiary of Parent, Purchaser or Puget Sound Energy,
Inc. has effected any transaction in the Shares during the past 60 days. To
the knowledge of the Purchaser, after reasonable inquiry, there is no person
or company who beneficially owns, directly or indirectly, more than 10% of any
class of equity securities of the Company or any person or company acting
jointly or in concert with the Purchaser that owns any securities of the
Company.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, to the best of their knowledge, none of Parent,
Purchaser, Puget Sound Energy, Inc. or any of their respective
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<PAGE>
subsidiaries or any of the persons listed in Schedule I to this Offer to
Purchase, or any associate of the persons so listed on Schedule I hereto, has
any contract, arrangement, commitment, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship
concerning the transfer or voting of such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, guarantees of profits, division of profits or loss or
the giving or withholding of proxies. To the best of their knowledge and
except as set forth in this Offer to Purchase, none of Purchaser, Parent,
Puget Sound Energy, Inc. nor any of the persons listed on Schedule I hereto,
has had any business relationship or transaction with the Company or any of
its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Set forth below in Section 12 of this Offer to Purchase, "Background of
the Offer; the Merger Agreement", and elsewhere herein is a summary
description of the mutual contacts, negotiations and transactions between any
of Purchaser, Parent, Puget Sound Energy, Inc. or any of their respective
subsidiaries or any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
Except as disclosed in this Offer to Purchase, there are no contracts,
arrangements or agreements made or proposed to be made between the Purchaser
and any of the directors or officers of the Company, and no payments or other
benefits have been proposed to be made or given by way of compensation for
loss of office or as to their remaining in or retiring from office if the
Offer is successful.
Purchaser will not acquire Shares while the Offer is outstanding, other than
as described in this Offer to Purchase.
10. FINANCING OF THE OFFER
Purchaser estimates that the amount of funds required to purchase all
outstanding Shares on a fully diluted basis pursuant to the Offer and to pay
fees and expenses related to the Offer will be approximately $50 million.
Purchaser will obtain all of such funds from Parent, Puget Sound Energy, Inc.
or one of its affiliates. Puget Sound Energy, Inc. and its affiliates will
provide such funds from working capital.
11. MATERIAL CHANGES AND OTHER INFORMATION
Purchaser is not aware of any information which indicates that a material
change has occurred in the affairs of the Company since the date of the last
published financial statements of the Company other than as has been publicly
disclosed by the Company. The Purchaser has no knowledge of any other matter
that has not previously been generally disclosed but which would reasonably be
expected to affect the decision of stockholders to accept or reject the Offer.
12. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT
BACKGROUND OF THE OFFER
On May 21, 2000, John Durbin, a director of Puget Sound Energy, Inc. and
Chief Executive Officer of Parent, met informally with William Weisfield, the
Company's Chairman and Chief Executive Officer, to discuss a potential
business combination between the Company and Parent, a newly formed subsidiary
of Puget Sound Energy, Inc. Mr. Durbin knew of the Company and Mr. Weisfield
through his membership on the Board of Directors of the Company.
On May 24, 2000, Parent entered into the Confidentiality Agreement with the
Company.
On May 24, 2000, Mr. Durbin, Mr. Weisfield, and Michael Lennon, a Managing
Director at Emerge Corporation, financial advisor to Parent, discussed the
Company's business at the offices of the Company and engaged in preliminary
discussions about a possible fit between Parent and the Company.
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<PAGE>
On May 26, 2000, Mr. Durbin, Mr. Lennon and Mr. Weisfield met at the offices
of Emerge Corporation. At the meeting, Parent presented the Company with a
proposal to purchase all the outstanding capital stock of the Company in a
cash tender offer. Parent also described its preliminary valuation of the
Company.
On June 6, 2000, Mr. Durbin, Mr. Lennon, Mr. Weisfield and Darla Vivit
Norris, the Company's Chief Financial Officer, met at the offices of Emerge
Corporation to discuss Parent's operating plan and strategy, change of control
provisions in the Company's contracts, the structure of the tender offer and
valuation.
On June 7, 2000, Mr. Durbin, Mr. Lennon and representatives of Perkins Coie
LLP, counsel to Parent, met with Mr. Weisfield and Ms. Norris and
representatives of Graham & Dunn PC, counsel to the Company, at the offices of
Graham & Dunn to discuss issues relating to timing and expenses, the terms of
a nonsolicitation agreement presented by Parent and the duties of the
Company's Board of Directors.
On June 14, 2000, the Company and Parent entered into the Nonsolicitation
Agreement.
On June 14, 2000, the Company engaged Banc of America Securities LLC as its
financial advisor.
On June 20, 2000 members of the Company's management, Mr. Durbin, Mr.
Weisfield and representatives from Banc of America Securities, Graham & Dunn,
Emerge Corporation and PricewaterhouseCoopers, Parent's accountants, held
meetings at the offices of Graham & Dunn and Emerge to discuss due diligence
matters.
On June 21, 2000, Mr. Weisfield met with Mr. Durbin and Mr. Lennon to
discuss due diligence matters and the status of the proposed transaction.
On June 22, 2000, Mr. Weisfield, Mr. Durbin, Mr. Lennon, representatives of
Perkins Coie and representatives of Graham & Dunn met at Emerge Corporation to
negotiate the Merger Agreement. Valuation of the Company was also discussed.
From June 22 through June 28, the Company, Parent and their respective
counsel continued to negotiate the Merger Agreement and began preparation of
the offering materials and exhibits.
On June 23, 2000, the board of directors of Puget Sound Energy, Inc. held a
meeting in which the terms of the proposed acquisition and the valuation range
were discussed. The board appointed a special committee to approve the Merger
and authorized management of Parent to complete the Merger Agreement.
On June 27, 2000, the board of directors of Parent and the Puget Sound
Energy, Inc. special committee approved the Merger Agreement and the
transactions contemplated thereby, including the making of the Offer.
On June 28, 2000, the Board of Directors of the Company, acting through its
Special Committee, approved the Merger Agreement and the transactions
contemplated thereby and the parties concluded negotiations and executed the
Merger Agreement.
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THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an exhibit to the Tender Offer Statement on Schedule TO (the "Schedule TO")
filed by Purchaser and Parent with the Commission in connection with the
Offer. Such summary is qualified in its entirety by reference to the Merger
Agreement. Capitalized terms not otherwise defined in the following
description of the Merger Agreement have the respective meanings ascribed to
them in the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
promptly, but no later than five (5) business days, after the initial public
announcement of Purchaser's intention to commence the Offer. The obligation of
Purchaser to accept for payment Shares tendered pursuant to the Offer is
subject to the satisfaction of the Minimum Condition and certain other
conditions that are described in Section 15 hereof. Purchaser and Parent have
agreed that no change in the Offer may be made which decreases the price per
Share payable in the Offer, reduces the maximum number of Shares to be
purchased in the Offer, imposes conditions to the Offer in addition to those
set forth in Section 15 hereof or amends any other material terms of the Offer
in a manner materially adverse to the Company's stockholders.
Company Covenants. Pursuant to the Merger Agreement, the Company has
covenanted and agreed, between the date of the Merger Agreement and continuing
until the earlier of the termination of the Merger Agreement pursuant to its
terms and the Effective Time, unless Parent shall otherwise consent in
writing, to carry on the businesses of the Company and its subsidiaries (the
"Subsidiaries" and, individually, a "Subsidiary") diligently and in accordance
with good commercial practice and in the usual, regular and ordinary course,
in substantially the same manner as heretofore conducted and in compliance
with all applicable laws and regulations, to pay its debts and taxes when due
subject to good faith disputes over such debts or taxes, to pay or perform
other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, keep available the services of its present
officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others with which it has
business dealings. In addition, the Company will promptly notify Parent of any
material event involving its business or operations. The Merger Agreement
provides that, except as permitted by the terms of the Merger Agreement,
neither the Company nor any Subsidiary will do any of the following, without
the prior written consent of Parent: (i) waive any stock repurchase rights,
accelerate, amend or change the period of exercisability of options or
restricted stock, or reprice options granted under any employee, consultant or
director stock plans or authorize cash payments in exchange for any options
granted under any of such plans; (ii) grant any severance or termination pay
to any officer or employee except payments in amounts consistent with policies
and past practices or pursuant to written agreements outstanding, or policies
existing, on the date of the Merger Agreement and as previously disclosed in
writing to the other, or adopt any new severance plan; (iii) subject to
certain exceptions, transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company's
intellectual property or other proprietary rights, or enter into grants to
future patent rights, other than in the ordinary course of business,
consistent with past practice; (iv) buy any Intellectual Property of a third
party or enter into any license agreement with respect to the Intellectual
Property of any third party for an acquisition or license, the price for which
exceeds $50,000 individually (or in the aggregate for a single third party)
other than "shrink wrap," "click wrap," and similar widely available
commercial end-user licenses; (v) declare or pay any dividends on or make any
other distributions (whether in cash, stock or property) in respect of any
capital stock or split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock; (vi) repurchase or otherwise acquire,
directly or indirectly, any shares of capital stock except pursuant to rights
of repurchase of any such shares under any employee, consultant or director
stock plan existing on the date of the Merger Agreement (which repurchase
rights the Company shall be obligated to exercise if the repurchase price is
less than the Merger Consideration); (vii) issue, deliver, sell, authorize or
propose the issuance, delivery or sale of, any shares of capital stock or any
securities convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, other than the issuance of Shares, pursuant to the
18
<PAGE>
exercise of stock options therefor outstanding as of the date of the Merger
Agreement, and Shares issuable pursuant to the Option Plans; (viii) cause,
permit or propose any amendments to any charter document or Bylaw (or similar
governing instruments of any subsidiaries); (ix) acquire or agree to acquire
by merging or consolidating with, or by purchasing any equity interest in or a
material portion of the assets of, or by any other manner, any business or any
corporation, partnership interest, association or other business organization
or division thereof, or otherwise acquire or agree to acquire any assets which
are material, individually or in the aggregate, to the business of the
Company, or enter into any joint ventures, strategic partnerships or
alliances; (x) sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except in the ordinary course of business
consistent with past practice; (xi) incur any indebtedness for borrowed money
(other than ordinary course trade payables or pursuant to existing credit
facilities in the ordinary course of business) or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire debt securities, or guarantee any debt securities of others; (xii)
adopt or amend any employee benefit or employee stock purchase or employee
option plan (other than is necessary to comply with law), or enter into any
employment contract, pay any special bonus or special remuneration to any
director or employee, or increase the salaries or wage rates of its officers
or employees other than in the ordinary course of business, consistent with
past practice, or change in any material respect any management policies or
procedures; (xiii) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business; (xiv) make any grant of exclusive rights to any third
party; (xv) except in the ordinary course of business, modify, amend or
terminate any material contract or agreement involving payments of $50,000 or
more to which the Company or any subsidiary thereof is a party or waive,
release or assign any material rights or claims thereunder; (xvi) materially
revalue any of its assets or, except as required by GAAP, make any change in
accounting methods, principles or practices; (xvii) make or change any
material election in respect of Taxes, adopt or change any accounting method
in respect of Taxes, enter into any closing agreement, settle any claim or
assessment in respect of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes in
an amount in excess of $50,000 in the aggregate; (xviii) commence any
litigation or settle any litigation for an amount in excess of the greater of
$100,000 in the aggregate or the amount reserved in respect thereof in the
Company Balance Sheet; or (xix) agree in writing or otherwise to take any of
the actions described in (i) through (xviii) above.
Board of Directors. The Merger Agreement provides that, promptly upon the
purchase by Purchaser of Shares satisfying the Minimum Condition, Parent shall
be entitled to designate a majority of the members of the Company's Board of
Directors, subject to compliance with Section 14(f) of the Exchange Act. The
Merger Agreement also provides that the Company has agreed to cause Parent's
designees to be elected as directors of the Company, including increasing the
size of the Board of Directors to the extent permitted by its Restated
Articles of Incorporation and/or secure the resignations of such number of
directors as is necessary to cause Parent's designees to be elected as
directors of the Company.
The Merger Agreement provides that following the election or appointment of
Purchaser's designees in accordance with the immediately preceding paragraph,
any amendment or termination of the Merger Agreement by the Company or any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser or waiver of any of the
Company's rights thereunder, will require the concurrence of a majority of
those directors of the Company then in office who were not designated by
Parent.
Confidentiality. The Merger Agreement provides that subject to and in
accordance with the terms and conditions of that certain letter dated May 24,
2000 between Parent and the Company (the "Confidentiality Agreement"), from
the date of the Merger Agreement to the Effective Time, the Company shall, and
shall cause its subsidiaries, officers, directors, employees and agents to,
afford the officers, employees and agents of Parent, Purchaser and their
affiliates and the attorneys, accountants, banks, other financial institutions
and investment banks working with Parent or Purchaser, and their respective
officers, employees and agents, reasonable access at all reasonable times to
its officers, employees, agents, properties, books, records and contracts, and
shall furnish Parent, Purchaser and their affiliates and the attorneys, banks,
other financial institutions and investment
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banks working with Parent or Purchaser, all financial, operating and other
data and information as they reasonably request. Subject to the requirements
of law, Parent and Purchaser shall, and shall use their reasonable efforts to
cause their officers, employees and agents, and the attorneys, banks, other
financial institutions and investment banks who obtain such information to,
hold all information obtained pursuant to the Merger Agreement or the
Confidentiality Agreement in accordance with the terms and conditions of the
Confidentiality Agreement.
Proxy Materials; Shareholder Meeting. The Merger Agreement provides that the
Company and each of Parent and Purchaser shall prepare and file, or shall
cause to be prepared and filed, with the Commission those documents, schedules
and amendments and supplements thereto required to be filed with respect to
the transactions contemplated by the Merger Agreement. The Company, acting
through its Board of Directors, shall, if necessary, cause the Company
Shareholders' Meeting to be duly called (including establishing the record
date, if requested, to be a date immediately after the date the Purchaser
first purchases any Shares pursuant to the Offer) and shall give notice of,
convene and hold the Company Shareholders' Meeting as soon as practicable, and
at such time and place designated by Parent or Purchaser, for the purpose of
approving the Merger, the Merger Agreement and any other actions contemplated
hereby which require the approval of the Company's stockholders. The Company
shall recommend to its stockholders approval of the Merger and take all
reasonable actions necessary to solicit such approval. The Company shall use
its best efforts to obtain and furnish the information required to be included
by it in the Proxy Statement and, after consultation with Parent and
Purchaser, shall respond promptly to any comments of the Commission relating
to any preliminary proxy statement regarding the Merger and the other
transactions contemplated by the Merger Agreement and to cause the Proxy
Statement to be mailed to its stockholders, all at the earliest practicable
time. Whenever any event occurs which should be set forth in an amendment or
supplement to the Proxy Statement or any other filing required to be made with
the Commission with respect to the Proxy Statement or the Company
Shareholders' Meeting, each party shall promptly inform the other of such
occurrence and cooperate in filing with the Commission and/or mailing to the
Company's stockholders such amendment or supplement. The Proxy Statement and
all amendments and supplements thereto shall comply with applicable law and be
in form and substance satisfactory to each of Parent and Purchaser and the
Company. The Company, acting through its Board of Directors, shall include in
the Proxy Statement the recommendation of its Board of Directors that
stockholders of the Company vote in favor of the approval and adoption of the
Merger Agreement and the Merger and shall disclose, to the extent possible,
that each of the Company's directors and executive officers intend to tender
all outstanding shares beneficially owned by such persons to Purchaser
pursuant to the Offer unless to do so would subject such person to liability
under Section 16(b) of the Exchange Act. The Company shall solicit from
stockholders of the Company proxies in respect of such approval and adoption
and shall, subject to applicable law, take all other actions necessary or, in
the reasonable judgment of Parent and Purchaser, advisable to secure the vote
or consent of the Company's stockholders required by the DGCL to effect the
Merger. Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the outstanding Shares, the parties thereto agree, at
the request of Purchaser, subject to any conditions to the obligations of each
party to effect the Merger, to take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting and without a vote of the Company's
stockholders, in accordance with the DGCL.
The No Shop Provision. The Merger Agreement provides that until the earlier
of Effective Time or termination of the Merger Agreement, the Company and its
subsidiaries will not, and will instruct their respective directors, officers,
employees, representatives, investment bankers, agents and affiliates not to,
directly or indirectly, (i) solicit or encourage submission of, any proposals
or offers by any person, entity or group (other than Parent and its
affiliates, agents and representatives), or (ii) participate in any
discussions or negotiations with, or disclose any non-public information
concerning the Company or any of its subsidiaries to, or afford any access to
the properties, books or records of the Company or any of its subsidiaries to,
or otherwise assist or facilitate, or enter into any agreement or
understanding with, any person, entity or group (other than Parent and its
affiliates, agents and representatives), in connection with any Acquisition
Proposal with respect to the Company. Under the Merger Agreement, an
"Acquisition Proposal" with respect to an entity means any proposal
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or offer relating to (i) any merger, consolidation, sale of substantial
assets, reorganization, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transactions involving the entity or any
subsidiaries of the entity (other than sales of assets or inventory in the
ordinary course of business or as permitted under the terms of the Merger
Agreement), (ii) sale of outstanding shares of capital stock of the entity
(including without limitation by way of a tender offer or an exchange offer),
(iii) the Acquisition by any person of beneficial ownership or a right to
acquire beneficial ownership of, or the formation of any "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital stock of
the entity (except for acquisitions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Schedule 13G
with respect thereto); or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Company will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Pursuant to the Merger Agreement, the Company will
(i) notify Parent as promptly as practicable if any inquiry or proposal is
made or any information or access is requested in connection with an
Acquisition Proposal or potential Acquisition Proposal and (ii) as promptly as
practicable notify Parent of the terms and conditions of any such Acquisition
Proposal. In addition, subject to other provisions of this paragraph, from and
after the date of the Merger Agreement until the earlier of the Effective Time
and termination of the Merger Agreement pursuant to its terms, the Company and
its subsidiaries will not, and will instruct their respective directors,
officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any Acquisition
Proposal made by any person, entity or group (other than Parent).
Notwithstanding the foregoing, the Merger Agreement provides that, prior to
consummation of the Offer, the Company may participate in discussions or
negotiations with, and furnish information to any person, entity or group
after such person, entity or group has delivered to the Company in writing, an
unsolicited bona fide Acquisition Proposal which the Board of Directors of the
Company in its good faith reasonable judgment determines, after consultation
with its independent financial advisors, would result in a transaction more
favorable than the Offer and the Merger to the stockholders of the Company
from a financial point of view and for which there would not be a financing
condition or contingency (a "Superior Proposal"). In the event the Company
receives a Superior Proposal, nothing contained in the Merger Agreement (but
subject to the terms thereof) will prevent the Board of Directors of the
Company from recommending such Superior Proposal to the Company's
stockholders, provided that (i) the Board determines in good faith that such
action is required by its fiduciary duties under applicable law; (ii) the
Company shall not recommend to its stockholders a Superior Proposal until at
least two business days after Parent's receipt of a copy of such Superior
Proposal (or a description of the terms and conditions thereof, if not in
writing); and (iii) the Company shall not recommend to its stockholders a
Superior Proposal unless the Company shall have terminated the Merger
Agreement and paid the Break-up Fee as required in the Merger Agreement.
Notwithstanding anything to the contrary in the Merger Agreement, the Company
will not provide any non-public information to a third party unless the
Company provides such nonpublic information pursuant to a nondisclosure
agreement with terms regarding the protection of confidential information at
least as restrictive as such terms in the Confidentiality Agreement and such
non-public information has been previously delivered to Parent. Nothing
contained in this paragraph shall prohibit the Company from at any time taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a) or
(b) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Company's Board
of Directors, after consultation with outside counsel, failure so to disclose
would constitute a breach of its fiduciary duties to the Company's
stockholders under applicable law; provided, however, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as
permitted by this paragraph, withdraw or modify, or propose to withdraw or
modify, its position with respect to the Merger or the Merger Agreement or
approve or recommend, or propose to approve or recommend, an Acquisition
Proposal; provided, further, that the taking of a position by the Company
pursuant to Rule 14e-2(a)(2) or (3) of the Exchange Act in respect of an
Acquisition Proposal shall not be deemed a withdrawal, a modification or a
proposal to withdraw or modify its position with respect to the Acquisition
for purposes of the Merger Agreement.
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<PAGE>
Public Announcements. Pursuant to the Merger Agreement, Parent and Purchaser
on the one hand and the Company on the other hand will consult with each other
before issuing any press release or otherwise making any public statements
with respect to the Merger Agreement or the Merger or the other transactions
contemplated thereby, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law.
Failures to Comply. Pursuant to the Merger Agreement, the Company shall give
prompt notice in writing to Parent, and Parent and Purchaser shall give prompt
notice in writing to the Company, of (i) the occurrence, or failure to occur,
of any event which occurrence or failure would be likely to cause any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate in any material respect at any time from the date of the Merger
Agreement through the Effective Time and (ii) any failure of the Company,
Parent or Purchaser, as the case may be, or of any officer, director, employee
or agent thereof, to comply with or satisfy in all material respects any
covenant, condition or agreement to be complied with or satisfied by it under
the Merger Agreement; provided, however, no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties thereunder. The Merger Agreement provides that the
Company shall give prompt notice in writing to Parent of (i) any act, omission
to act, event or occurrence which, with the passage of time or otherwise,
would likely have a Material Adverse Effect on the Company and (ii) any
material contingent liability of the Company or any of its subsidiaries for
which such party reasonably believes it will, with the passage of time or
otherwise, become liable; provided, however, that no such notification shall
affect the representations or warranties of the parties or the conditions to
the obligations of the parties thereunder.
Actions by the Company. Pursuant to the Merger Agreement, subject to the
terms and conditions therein, the Company shall, and shall cause its
Subsidiaries to, cooperate with Parent and Purchaser and take all such actions
as may be reasonably requested by Parent and Purchaser to accomplish the
Merger.
Options; Employee Benefit Plans. The Merger Agreement provides that, as soon
as reasonably practicable, the Company shall adopt resolutions or take such
other actions as may be required to effect the following: (i) adjust the terms
of all outstanding options to purchase Shares, whether vested or unvested, as
necessary to provide that each option outstanding immediately prior to the
acceptance for payment of the Shares pursuant to the Offer, including all
vested and unvested Company Stock Options, shall be canceled effective
immediately prior to the acceptance for payment of the Shares pursuant to the
Offer, with the holder thereof becoming entitled to receive an amount in cash
equal to (A) the excess, if any, of (1) $6.125 over (2) the exercise price per
share of the Common Stock subject to such Company Option, multiplied by (B)
the number of shares of the Common Stock for which such option shall not
theretofore have been exercised.
The Merger Agreement provides that the Company adopt resolutions that
terminate or amend 401(k) plans or other employee benefit plans in accordance
with any directions given by Parent prior to the Effective Time.
Indemnification; Litigation. Pursuant to the Merger Agreement, from and
after the Effective Time, Parent will cause the Surviving Corporation to
fulfill and honor in all respects the obligations of the Company pursuant to
any indemnification agreements between the Company and its directors and
officers as of the Effective Time (the "Indemnified Parties"). The Restated
Articles of Incorporation and Bylaws of the Surviving Corporation will contain
provisions with respect to exculpation and indemnification that are at least
as favorable to the Indemnified Parties as those contained in the Restated
Articles of Incorporation and Bylaws of the Company as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who, immediately prior
to the Effective Time, were directors, officers, employees or agents of the
Company, unless such modification is required by law. For a period of six
years after the Effective Time, Parent will cause the Surviving Corporation to
use its commercially reasonable efforts to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability
insurance policy on terms comparable to those applicable to the current
directors and officers of the Company; provided, however, that in no event
will Parent or the Surviving Corporation be
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<PAGE>
required to expend in excess of 150% of the annual premium currently paid by
the Company for such coverage (or such coverage as is available for such 150%
of such annual premium).
The Merger Agreement provides that the Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any of the
transactions contemplated by the Merger Agreement until the purchase of the
Shares pursuant to the Offer, and thereafter, shall give Parent the
opportunity to direct the defense of such litigation and, if Parent so chooses
to direct such litigation, Parent shall give the Company and its directors an
opportunity to participate in such litigation; provided, however, that no
settlement of such litigation shall be agreed to without Parent's consent; and
provided further that no settlement requiring a payment by a director shall be
agreed to without such director's consent.
Employment Agreement. The Merger Agreement provides that, prior to
commencement of the Offer, the Company shall offer to enter into an employment
agreement (the "Employment Agreement") with William Weisfield, which
Employment Agreement shall be substantially in the form annexed to the Merger
Agreement as Exhibit A or such other terms as may be accepted in writing by
Parent.
Additional Agreements. The Merger Agreement provides that, subject to its
terms and conditions, each of the parties thereto agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by the
Merger Agreement (including consummation of the Offer and Merger) and to
cooperate with each other in connection with the foregoing. In addition the
Merger Agreement provides that, subject to its terms and conditions, each of
the parties to the Merger Agreement agrees to use (i) all reasonable efforts
to obtain all necessary waivers, consents and approvals from other parties to
loan agreements, leases, licenses and other contracts, and (ii) all reasonable
efforts to obtain all necessary consents, approvals and authorizations as
required to be obtained under any federal, state or foreign law or
regulations, including, but not limited to, those required under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
to defend all lawsuits or other legal proceedings challenging the Merger
Agreement or the consummation of the transactions contemplated thereby, to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated thereby, to effect all necessary registrations and filings,
including, but not limited to, filings under the HSR Act and submissions of
information requested by Governmental Entities, and to fulfill all conditions
to the Merger Agreement.
Anti-Takeover Provisions. Pursuant to the Merger Agreement, if any "fair
price," "moratorium," "control share acquisition," "stockholder protection" or
other form of anti-takeover statute, regulation or charter provision or
contract is or shall become applicable to the Offer or the transactions
contemplated by the Merger Agreement, the Company and the Board of Directors
of the Company shall grant such approvals and take such actions as are
necessary under such laws and provisions so that the transactions contemplated
by the Merger Agreement may be consummated as promptly as practicable on the
terms contemplated thereby and otherwise act to eliminate or minimize the
effects of such statute, regulation, provision or contract on the transactions
contemplated thereby.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations by the Company and each of its Subsidiaries as
to the absence of certain changes or events concerning the Company's business
since the date of the Company Balance Sheet, compliance with law, litigation,
employee benefit plans, real property and leases, trademarks, intellectual
property, environmental matters, and material agreements, contracts and
commitments.
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Termination; Fees and Expenses. The Merger Agreement provides that it may be
terminated and the transactions contemplated thereby may be abandoned at any
time prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(i) by mutual written agreement of the Boards of Directors of Parent and
the Company;
(ii) by either Parent or the Company if
(A) the Offer shall be terminated or expire without any Shares having
been purchased pursuant to the Offer; provided, however, that a party
shall not be entitled to terminate the Merger Agreement if it is in
material breach of its representations and warranties, covenants or
other obligations thereunder or
(B) any court of competent jurisdiction in the United States or any
United States governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Offer and such order, decree, ruling or other action
shall have become final and nonappealable;
(iii) by Parent or Purchaser if
(A) if the Board of Directors of the Company or any committee thereof
shall have approved, or recommended that stockholders of the Company
accept or approve, an Merger Proposal by a third party, or shall have
resolved to do any of the foregoing;
(B) if the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation
that the stockholders of the Company accept the Offer or shall have
resolved to do any of the foregoing;
(C) if the Company shall have failed to include in Schedule 14D-9 the
recommendation of the Board of Directors of the Company that the
stockholders of the Company accept the Offer;
(D) prior to the purchase of Shares pursuant to the Offer, in the
event that any of the conditions to the Offer set forth in the Merger
Agreement (see Section 15, "Conditions of the Offer") shall not be
satisfied; or at any time on or after the date of the Merger Agreement,
any of the following events shall have occurred:
(1) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, temporary restraining order,
preliminary or permanent injunction or other order, decree or ruling
proposed, sought, promulgated, enacted, entered, enforced or deemed
applicable to the Offer by any Governmental Entity or arbitration
panel that could reasonably be expected to, directly or indirectly,
(a) make the acceptance for payment or the payment for, or the
purchase of some or all of the Shares pursuant to the Offer illegal
or otherwise delay, restrict or prohibit consummation of the Offer,
(b) result in a delay in or restrict the ability of Purchaser, or
render Purchaser unable, to accept for payment, pay for or purchase
some or all of the Shares, (c) require the divestiture by Parent,
Purchaser, the Company or any of their respective subsidiaries or
affiliates of all or any portion of the business, assets or property
of any of them or any Shares or impose any material limitation on
the ability of any of them to conduct their business and own such
assets, properties or Shares, (d) impose any material limitation on
the ability of Parent, Purchaser or their affiliates to acquire or
hold or to exercise effectively all rights of ownership of the
Shares, including the right to vote any Shares purchased by any of
them on all matters properly presented to the stockholders of the
Company, (e) result in a material diminution in the benefits
expected to be derived by Parent or Purchaser as a result of the
transactions contemplated by the Offer or the Agreement, or (f)
impose any material condition to the Offer or the Agreement
unacceptable to Parent or Purchaser; or
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<PAGE>
(2) the Company shall have failed to obtain by the Expiration Date
all of the consents of third parties required to be obtained by the
Company by such date under the Merger Agreement; or
(3) the Company shall have breached, or failed to comply with, in
any material respect, any of its covenants or obligations under the
Merger Agreement or any representation or warranty of the Company in
the Merger Agreement shall have been incorrect, in any material
respect, when made or shall have since ceased to be true and correct
in any material respect; or
(4) the Board of Directors of the Company or any committee thereof
shall have (a) withdrawn or modified (including without limitation,
by amendment of the Schedule 14D-9) in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, (b) approved
or recommended any Merger Proposal by a third party other than the
Offer, (c) publicly resolved to do any of the foregoing, or (d) upon
a request to reaffirm the Company's approval or recommendation of
the Offer, the Board of Directors of the Company shall fail to do so
within two business days after such request is made; or
(5) the Merger Agreement shall have been terminated in accordance
with its terms, or the Offer shall have been terminated with the
consent of the Company; or
(6) there shall have occurred any Material Adverse Effect on the
Company, or any event, fact or change which could reasonably be
expected to result in a Material Adverse Effect on the Company, or
any event, fact or change which could reasonably be expected to
result in a Material Adverse Effect on the Company; or
(7) the Employment Agreement shall not have been executed and
delivered or the Employment Agreement is not in full force and
effect; or (E) if the Company is in material breach of any of its
covenants or obligations under the Merger Agreement, or any
representation or warranty of the Company contained in the Merger
Agreement shall have been incorrect, in any material respect, when
made or shall have since ceased to be true and correct in any
material respect; or
(iv) by the Company
(A) if the Offer shall not have been commenced in accordance with the
terms of the Merger Agreement, or Parent or Purchaser shall have failed
to purchase validly tendered Shares in violation of the terms of the
Offer within ten business days after expiration of the Offer; provided,
however, that the Company shall not be entitled to terminate the Merger
Agreement if it is in material breach of its representations and
warranties, covenants or other obligations under the Merger Agreement;
(B) if the Board of Directors of the Company has resolved to, and in
fact does, recommend to the Company's stockholders that they accept a
Superior Proposal, provided that all the provisions of the Merger
Agreement with respect to a Superior Proposal have been fully complied
with, and provided further that the Company shall have paid to Parent
the entire Break-up Fee as required in the Merger Agreement;
(C) prior to the purchase of Shares pursuant to the Offer, if Parent
or Purchaser is in material breach of any of its covenants or
obligations under the Merger Agreement, or any representation or
warranty of Parent or Purchaser contained in the Merger Agreement shall
have been incorrect, in any material respect, when made or shall have
since ceased to be true and correct in any material respect,
(D) any waiting period (and any extension thereof) under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall not
have expired or been terminated prior to the Expiration Date or
(E) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, temporary restraining order,
preliminary or permanent injunction or other order, decree or ruling
proposed, sought, promulgated, enacted, entered, enforced or deemed
applicable to the Offer by any Governmental Entity or arbitration panel
that could reasonably be expected to, directly or indirectly.
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<PAGE>
The Merger Agreement provides that, upon signing of Merger Agreement, Parent
shall advance to the Company $225,000 to fund expenses to be incurred by the
Company in connection with the transactions contemplated by the Merger
Agreement. The Company shall repay to Parent these advances plus the $50,000
advanced to the Company by Parent under the Non-Solicitation Agreement, in the
event Parent or the Purchaser terminates the Merger Agreement as a result of
the Company being in material breach of any of its covenants or obligations
under the Merger Agreement or if there shall have been any material inaccuracy
in the representations and warranties of the Company contained in the Merger
Agreement.
The Merger Agreement provides that the Company shall pay to Parent, in same
day funds, upon demand, a fee of U.S. $2 million (the "Break-up Fee") in the
event that any of the following shall occur: (i) the Board of Directors of the
Company or any committee thereof shall have approved, or recommended that
stockholders of the Company accept or approve, a Merger Proposal by a third
party, or shall have resolved to do any of the foregoing; (ii) the Board of
Directors of the Company or any committee thereof shall have withdrawn or
modified its approval of, or recommendation that the stockholders of the
Company accept or approve (as the case may be), the Offer or shall have
resolved to do any of the foregoing; or (iii) the Company shall have failed to
include in Schedule 14D-9 the recommendation of the Board of Directors of the
Company that the stockholders of the Company accept the Offer.
Pursuant to the Merger Agreement the Break-up Fee shall be deemed to be
liquidated damages.
13. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER
Purpose of the Offer. The purpose of the Offer is for Parent to acquire
control of, and the entire equity interest in, the Company.
The Offer is being made pursuant to the Merger Agreement among Parent,
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions of the Merger Agreement, the Purchaser will be merged with and into
the Company, with the Company, with the Company surviving the Merger as a
wholly-owned subsidiary of Parent (the "Surviving Corporation") and the
separate corporate existence of Purchaser shall cease.
Stock Options; Employee Benefit Plans. The Merger Agreement provides that,
as soon as reasonably practicable following the acceptance for payment of the
Shares pursuant to the Offer, the Company shall adopt resolutions or take such
other actions as may be required to effect the following: (i) adjust the terms
of all outstanding options to purchase Shares, whether vested or unvested, as
necessary to provide that each option outstanding, including all vested and
unvested Company Stock Options, shall be canceled effective immediately prior
to the Merger, with the holder thereof becoming entitled to receive an amount
in cash equal to (A) the excess, if any, of (1) $6.125 over (2) the exercise
price per share of the Common Stock subject to such Company Option, multiplied
by (B) the number of shares of the Common Stock for which such option shall
not theretofore have been exercised
The Merger Agreement provides that the Company adopt resolutions that
terminate or amend 401(k) plans or other employee benefit plans in accordance
with any directions given by Parent prior to the Effective Time.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, any holder of Shares at the
Effective Time (a "Remaining Stockholder") will have certain rights under the
DGCL to dissent and demand appraisal of their Shares. Under Section 262 of the
DGCL, a Remaining Stockholder who does not wish to accept the Merger
Consideration pursuant to the Merger has the right to seek an appraisal and be
paid the "fair value" of its Shares at the Effective Time (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
judicially determined and paid to it in cash provided that such holder
complies with the provisions of Section 262 of the DGCL.
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The following is a brief summary of the statutory procedures to be followed
by a Remaining Stockholder in order to dissent from the Merger and perfect
appraisal rights under Delaware law. This summary is not intended to be
complete and is qualified in its entirety by reference to Section 262 of the
DGCL, the text of which is set forth in Annex A hereto. Any Remaining
Stockholder considering demanding appraisal is advised to consult legal
counsel. Dissenters' rights will not be available unless and until the Merger
(or a similar business combination) is consummated. Remaining Stockholders of
record who desire to exercise their appraisal rights must fully satisfy all of
the following conditions. A written demand for appraisal of Shares must be
delivered to the Secretary of the Company (x) before the taking of the vote on
the adoption of the Merger Agreement if the Merger is not being effected as a
short-form merger but rather is being consummated following approval thereof
at a meeting of the Company's stockholders (a "long-form merger") or (y)
within 20 days after the date that the Surviving Corporation mails to the
Remaining Stockholders a notice (the "Notice of Merger") to the effect that
the Merger is effective and that appraisal rights are available (and includes
in such notice a copy of Section 262 of the DGCL and any other information
required thereby) if the Merger is being effected as a short-form merger
without a vote or meeting of the Company's stockholders. If the Merger is
effected as a long-form merger, the written demand for appraisal of Shares
must be in addition to and separate from any proxy or vote abstaining from or
voting against the adoption of the Merger Agreement, and neither voting
against, abstaining from voting, nor failing to vote on the Merger Agreement
will constitute a demand for appraisal within the meaning of Section 262 of
the DGCL. In the case of a long-form merger, any stockholder seeking appraisal
rights must hold the Shares for which appraisal is sought on the date of the
making of the demand, continuously hold such Shares through the Effective
Time, and otherwise comply with the provisions of Section 262 of the DGCL.
In the case of both a short-form merger and a long-form merger, a demand for
appraisal must be executed by or for the stockholder of record, fully and
correctly, as such stockholder's name appears on the stock certificates. If
Shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, such demand must be executed by the fiduciary. If
Shares are owned of record by more than one person, as in a joint tenancy or
tenancy in common, such demand must be executed by all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for appraisal for a stockholder of record; however, the agent must
identify the record owner and expressly disclose the fact that, in exercising
the demand, he is acting as agent for the record owner.
A record owner, such as a broker, who holds Shares as a nominee for others,
may exercise appraisal rights with respect to the Shares held for all or less
than all beneficial owners of Shares as to which the holder is the record
owner. In such case the written demand must set forth the number of Shares
covered by such demand. Where the number of Shares is not expressly stated,
the demand will be presumed to cover all Shares outstanding in the name of
such record owner. Beneficial owners who are not record owners and who intend
to exercise appraisal rights should instruct the record owner to comply
strictly with the statutory requirements with respect to the exercise of
appraisal rights before the date of any meeting of stockholders of the Company
called to approve the Merger in the case of a long-form merger and within 20
days following the mailing of the Notice of Merger in the case of a short-form
merger.
Remaining Stockholders who elect to exercise appraisal rights must mail or
deliver their written demands to: Secretary, UTILX Corporation, 22820 Russell
Road, P.O. Box 97009, Kent, Washington 98064. The written demand for appraisal
should specify the stockholder's name and mailing address, the number of
Shares covered by the demand and that the stockholder is thereby demanding
appraisal of such Shares. In the case of a long-form merger, the Company must,
within ten days after the Effective Time, provide notice of the Effective Time
to all stockholders who have complied with Section 262 of the DGCL and have
not voted for approval and adoption of the Merger Agreement.
In the case of a long-form merger, Remaining Stockholders electing to
exercise their appraisal rights under Section 262 must not vote for the
adoption of the Merger Agreement or consent thereto in writing. Voting in
favor of the adoption of the Merger Agreement, or delivering a proxy in
connection with the stockholders meeting called to adopt the Merger Agreement
(unless the proxy votes against, or expressly abstains from the vote on, the
adoption of the Merger Agreement), will constitute a waiver of the
stockholder's right of appraisal and will nullify any written demand for
appraisal submitted by the stockholder.
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Regardless of whether the Merger is effected as a long-form merger or a
short-form merger, within 120 days after the Effective Time, either the
Company or any stockholder who has complied with the required conditions of
Section 262 and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Court of Chancery demanding a determination of the
fair value of the Shares of the dissenting stockholders. If a petition for an
appraisal is timely filed, after a hearing on such petition, the Delaware
Court of Chancery will determine which stockholders are entitled to appraisal
rights and thereafter will appraise the Shares owned by such stockholders,
determining the fair value of such Shares, exclusive of any element of value
arising from the accomplishment or expectation of the Merger, together with a
fair rate of interest to be paid, if any, upon the amount determined to be the
fair value. In determining fair value, the Delaware Court of Chancery is to
take into account all relevant factors. Remaining Stockholders who in the
future consider seeking appraisal should have in mind that the fair value of
their Shares determined under Section 262 could be more than, the same as, or
less than the Merger Consideration, if they do seek appraisal of their Shares,
and that opinions of investment banking firms as to fairness from a financial
point of view are not necessarily opinions as to fair value under Section 262
of the DGCL. Moreover, InfrastruX Group, Inc. intends to cause the Surviving
Corporation to argue in any appraisal proceeding that, for purposes thereof,
the "fair value" of the Shares is less than that paid in the Offer. The cost
of the appraisal proceeding may be determined by the Delaware Court of
Chancery and taxed upon the parties as the Delaware Court of Chancery deems
equitable in the circumstances. Upon application of a dissenting stockholder,
the Delaware Court of Chancery may order that all or a portion of the expenses
incurred by any dissenting stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all
Shares entitled to appraisal. In the absence of such a determination or
assessment, each party bears its own expenses.
Any Remaining Stockholder who has duly demanded appraisal in compliance with
Section 262 of the DGCL will not, after the Effective Time, be entitled to
vote for any purpose the Shares subject to such demand or to receive payment
of dividends or other distributions on such Shares, except for dividends or
other distributions payable to stockholders of record at a date prior to the
Effective Time.
At any time within 60 days after the Effective Time, any former holder of
Shares shall have the right to withdraw his or her demand for appraisal and to
accept the Merger Consideration. After this period, such holder may withdraw
his or her demand for appraisal only with the consent of the Company as the
Surviving Corporation. However, no petition timely filed in the Delaware Court
of Chancery demanding appraisal shall be dismissed as to any stockholder
without the approval of the Delaware Court of Chancery, and such approval may
be conditioned upon such terms as the Delaware Court of Chancery deems just.
If no petition for appraisal is filed with the Delaware Court of Chancery
within 120 days after the Effective Time, stockholder's rights to appraisal
shall cease and all stockholders shall be entitled to receive the Merger
Consideration or the Preferred Merger Consideration, as the case may be.
Inasmuch as the Company has no obligation to file such a petition, and
Purchaser and Parent have no present intention to cause or permit the
Surviving Corporation to do so, any stockholder who desires such a petition to
be filed is advised to file it on a timely basis.
Failure to take any required step in connection with the exercise of
appraisal rights may result in the termination or waiver of such rights.
APPRAISAL RIGHTS CANNOT BE EXERCISED AT THIS TIME. THE INFORMATION SET FORTH
ABOVE IS FOR INFORMATIONAL PURPOSES ONLY WITH RESPECT TO ALTERNATIVES
AVAILABLE TO STOCKHOLDERS IF THE MERGER IS CONSUMMATED. STOCKHOLDERS WHO WILL
BE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER WILL RECEIVE
ADDITIONAL INFORMATION CONCERNING APPRAISAL RIGHTS AND THE PROCEDURES TO BE
FOLLOWED IN CONNECTION THEREWITH BEFORE SUCH STOCKHOLDERS HAVE TO TAKE ANY
ACTION RELATING THERETO.
STOCKHOLDERS WHO SELL SHARES IN THE OFFER WILL NOT BE ENTITLED TO EXERCISE
APPRAISAL RIGHTS WITH RESPECT THERETO BUT, RATHER, WILL RECEIVE THE PRICE PAID
IN THE OFFER THEREFOR.
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Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the
Merger unless the Merger is consummated more than one year after the
termination of the Offer. If applicable, Rule 13e-3 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the Merger and the consideration
offered to minority stockholders be filed with the Commission and disclosed to
minority stockholders prior to consummation of the Merger.
Plans for the Company. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right
to take such actions or effect such changes as it deems desirable. Such
changes could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, neither Purchaser
nor Parent has any current plans or proposals that would relate to, or result
in, any extraordinary corporate transaction involving the Company or any of
its subsidiaries, such as a merger, reorganization or liquidation involving
the Company, a sale or transfer of a material amount of assets of the Company
or any of its subsidiaries, any change in the Company's capitalization or
dividend policy or any other material change in the Company's business,
corporate structure or personnel.
14. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that the Company will not, between the date of
the Merger Agreement and the Effective Time, without the prior written consent
of Parent, declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital stock or split,
combine or reclassify any capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for any
capital stock.
Shares acquired pursuant to the Offer shall be acquired by Purchaser free
and clear of all security interests, liens, charges, restrictions,
encumbrances, claims and equities and together with all rights and benefits
arising therefrom including the right to any and all cash and stock dividends,
distributions, payments, securities, rights, warrants, assets or other
interests which may be accrued, declared, paid, issued, distributed, made or
transferred on or in respect of such Shares and which are made payable or
distributable to stockholders of record on a date on or after the date of the
Offer. If the Company declares or pays any cash or stock dividend or declares,
makes or pays any other distribution or payment on, or declares, allots,
reserves or issues any securities, rights, warrants or other interests or
distributions in respect of the Shares which is or are payable or
distributable to the stockholders of record on a record date which is on or
after the date of this Offer, then such dividends, distributions, payments or
rights will be received and held by the depositing stockholder for the account
of Purchaser and (i) to the extent that cash dividends, distributions or
payments do not exceed the amount payable in cash to the depositing
stockholder by Purchaser pursuant to the Offer, the amount payable to the
depositing stockholder will be reduced by the amount of any such dividends,
distributions or payments; and (ii) the amount by which any cash dividends,
distributions or payments exceed the amount payable in cash and the whole of
any non-cash dividends, distributions, payments, or rights shall be remitted
promptly and transferred by the depositing stockholder to the Depositary, or
any other person designated by Purchaser, for the account of the Purchaser,
accompanied by appropriate documentation of transfer. Pending such remittance,
Purchaser shall be entitled to all rights and privileges as owner of any such
dividends, distributions, payments, rights or other interests and may withhold
the entire purchase price payable by Purchaser pursuant to the Offer or deduct
from the amount payable in cash by Purchaser pursuant to the Offer to the
depositing stockholder, the value thereof as determined by Purchaser in its
sole discretion.
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15. CONDITIONS OF THE OFFER
The Merger Agreement provides that, notwithstanding any other provision of
the Offer, and in addition to (and not in limitation of) Purchaser's rights to
extend and amend the Offer at any time in accordance with the terms of the
Merger Agreement, Purchaser shall not be required to accept for payment,
purchase or pay for and Purchaser may elect to terminate or amend the Offer
and to postpone the acceptance of, and payment for, subject to compliance with
Rule 14e-1(c) under the Exchange Act (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any
Shares tendered pursuant to the Offer if
(i) any waiting period (and any extension thereof) under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall not
have expired or been terminated prior to the Expiration Date;
(ii) the Minimum Condition is not satisfied; or
(iii) at any time on or after the date of the Merger Agreement, any of the
following events shall have occurred:
(a) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, temporary restraining order,
preliminary or permanent injunction or other order, decree or ruling
proposed, sought, promulgated, enacted, entered, enforced or deemed
applicable to the Offer by any Governmental Entity or arbitration panel
that could reasonably be expected to, directly or indirectly, (1) make
the acceptance for payment or the payment for, or the purchase of some
or all of the Shares pursuant to the Offer illegal or otherwise delay,
restrict or prohibit consummation of the Offer or the Merger or the
consummation of any transaction contemplated by the Merger, (2) result
in a delay in or restrict the ability of Purchaser, or render Purchaser
unable, to accept for payment, pay for or purchase some or all of the
Shares, (3) require the divestiture by Parent, Purchaser, the Company
or any of their respective subsidiaries or affiliates of all or any
portion of the business, assets or property of any of them or any
Shares or impose any material limitation on the ability of any of them
to conduct their business and own such assets, properties or Shares,
(4) impose any material limitation on the ability of Parent, Purchaser
or their affiliates to acquire or hold or to exercise effectively all
rights of ownership of the Shares, including the right to vote any
Shares purchased by any of them on all matters properly presented to
the stockholders of the Company, including, without limitation, the
adoption and approval of the Merger Agreement and the Merger, (5)
result in a material diminution in the benefits expected to be derived
by Parent or Purchaser as a result of the transactions contemplated by
the Offer or the Merger Agreement (other than legislation or rule-
making affecting the industry as a whole), or (6) impose any material
condition to the Offer, the Merger Agreement or the Merger unacceptable
to Parent or Purchaser; or
(b) the Company shall have failed to obtain all of the consents of
third parties as required pursuant to the terms of the Merger
Agreement; or
(c) the Company shall have breached, or failed to comply with, in any
material respect, any of its covenants or obligations under the Merger
Agreement or any representation or warranty of the Company in the
Merger Agreement shall have been incorrect, in any material respect,
when made or shall have since ceased to be true and correct in any
material respect; or
(d) the Board of Directors of the Company or any committee thereof
shall have (1) withdrawn or modified (including without limitation, by
amendment of the Schedule 14D-9) in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, (2) approved or
recommended any Merger Proposal by a third party other than the Offer,
(3) publicly resolved to do any of the foregoing, or (4) upon a request
to reaffirm the Company's approval or recommendation of the Offer, the
Board of Directors of the Company shall fail to do so within two
business days after such request is made; or
(e) the Merger Agreement shall have been terminated in accordance
with its terms; or
(f) there shall have occurred any Material Adverse Effect on the
Company, or any event, fact or change which could reasonably be
expected to result in a Material Adverse Effect on the Company.
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The Merger Agreement provides that the foregoing conditions are for the sole
benefit of Parent, Purchaser and their affiliates and may be asserted by
Parent or Purchaser regardless of the circumstances giving rise to such
condition, or may be waived by Parent or Purchaser in whole or in part at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise its rights with respect
to the foregoing conditions shall not be deemed a waiver of any such
condition, and each condition shall be deemed an ongoing condition with
respect to which Parent or Purchaser may assert its rights at any time and
from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company,
neither Purchaser nor Parent is aware of any license or other regulatory
permit that appears to be material to the business of the Company and the
subsidiaries, taken as a whole, which might be adversely affected by the
Merger of Shares by Purchaser pursuant to the Offer or, except as set forth
below, of any approval or other action by any domestic (federal or state) or
foreign governmental, administrative or regulatory authority or agency which
would be required prior to the purchase of Shares by Purchaser pursuant to the
Offer. Should any such approval or other action be required, it is Purchaser's
present intention to seek such approval or action. Purchaser does not
currently intend, however, to delay the purchase of Shares tendered pursuant
to the Offer pending the outcome of any such action or the receipt of any such
approval (subject to Purchaser's right to decline to purchase Shares if any of
the conditions in Section 15 shall have occurred). There can be no assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Purchaser or Parent or that certain parts of the
businesses of the Company, Purchaser or Parent might not have to be disposed
of or held separate or other substantial conditions complied with in order to
obtain such approval or other action or in the event that such approval was
not obtained or such other action was not taken. Purchaser's obligation under
the Offer to accept for payment and pay for Shares is subject to certain
conditions, including conditions relating to the legal matters discussed in
this Section. See Section 15.
State Takeover Laws. A number of states throughout the United States have
adopted laws and regulations applicable to attempts to acquire securities of
corporations which are incorporated, or have substantial assets, stockholders,
principal executive offices or principal places of business, or whose business
operations otherwise have substantial economic effects, in such states.
The Company is incorporated under the laws of the State of Delaware. In
general, Section 203 of the DGCL ("Section 203") prevents an "interested
stockholder" (including a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include mergers and certain other actions) with a
Delaware corporation for a period of three years following the date such
person became an interested stockholder unless, among other things, the
"business combination" is approved by the Board of Directors of such
corporation prior to such date.
The Washington Takeover Act (Chapter 19 of the Washington Business
Corporation Act (the "WBCA") provides that if a target corporation has an
"acquiring person" as a stockholder, the target corporation may not engage in
any of the "significant business transactions" for a period of five years
following the time of the acquiring person's share acquisition unless the
significant business transaction or the purchase of shares by the acquiring
person is approved prior to the acquiring person's share acquisition by a
majority of the members of the board of directors of the target corporation.
An "acquiring person" is a person who beneficially owns 10% or more of the
outstanding voting shares of the target corporation. After the Washington
Takeover Act's five-year moratorium, a "significant business transaction" may
proceed only if (i) it compiles with the "fair price" provisions of the
statute requiring that holders of common stock receive value per share at
least equal to the higher of two specified formulas, or (ii) such transaction
is approved at a stockholders meeting (by the majority
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of shares entitled to vote excluding those shares held by the acquiring
person) held at least five years after the acquiring person purchased its
shares. Therefore, unless the board of directors (as it was composed before
the acquiring person acquired its shares) approves of either the transaction
or the acquisition by the acquirer of its shares, the Washington Takeover Act
imposes a five-year moratorium prohibiting the corporation from effecting any
of the enumerated significant business transactions even if its current board
wants to do so.
The "significant business transactions" covered by the Washington Takeover
Act include:
(i) a merger, share exchange or consolidation of the target corporation
with an acquiring person;
(ii) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition or encumbrance of the target's assets to or with an
acquiring person over a threshold aggregate market value;
(iii) the termination, as a result of the acquiring person's acquisition of
at least 10% of the shares of the target corporation, of at least 5%
of the target corporations' (or subsidiary's) employees employed in
Washington State over the five-year period following the share
acquisition time;
(iv) the issuance or transfer of shares, options, warrants or rights to
acquire its shares to, or the redemption from, an acquiring person by
the target corporation, except under limited circumstances;
(v) the liquidation or dissolution of the target proposed by or pursuant to
an agreement with an acquiring person;
(vi) the reclassification of securities of the target proposed by or
pursuant to an agreement with an acquiring person that increases the
proportionate share of the outstanding shares of a class or series of
voting shares or securities convertible into voting shares of a target
corporation that is directly or indirectly owned by an acquiring
person, except as the result of immaterial changes due to fractional
shares adjustments; or
(vii) receipt by an acquiring person of the direct or indirect benefit,
except proportionately as a stockholder of the target corporation, of
loans, advances, guarantees, pledges or other financial assistance or
tax credits or other tax advantages.
However, it is unlikely that Section 203 or the Washington Takeover Act
applies to the Offer or the Merger because the Board of Directors of the
Company has approved the Offer and is unanimously recommending acceptance of
the Offer and approval of the Merger by the holders of Shares.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. With the exception of the WBCA and the DGCL, purchaser does not know
whether any of these laws will, by their terms, apply to the Offer or to the
Merger and has not complied with any such laws. Should any person seek to
apply any state takeover law, Purchaser will take such action as then appears
desirable, which may include challenging the validity or applicability of any
such statute in appropriate court proceedings. In the event it is asserted
that one or more state takeover laws is applicable to the Offer or the Merger,
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer, Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities.
In addition, if enjoined, Purchaser might be unable to accept for payment any
Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer, and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 15.
Antitrust. Under the HSR Act applicable to the Offer and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. The Merger of Shares
by Purchaser pursuant to the Offer is not subject to such requirements.
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17. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
Parent has engaged MacKenzie Partners to serve as the Information Agent and
ChaseMellon Shareholder Services in connection with the Offer. Purchaser will
pay customary fees for the Information Agent's and Depositary's services, will
reimburse the Information Agent for reasonable out of pocket expenses and will
provide customary indemnity to the Information Agent.
Puget Sound Energy, Inc. and Parent have retained Emerge Corporation as a
financial advisor in connection with the transaction and Parent has agreed to
pay Emerge a monthly retainer and, upon the completion of the Merger, a
success fee.
18. MISCELLANEOUS
Prohibitions on The Offer. Purchaser is not aware of any jurisdiction where
the making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid statute. If Purchaser becomes aware of any valid statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with any such
statute. If, after such good faith effort, Purchaser cannot comply with any
such statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares in such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of Purchaser by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE ACCOMPANYING LETTER OF TRANSMITTAL, AND IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
TO, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule TO and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same
places and in the same manner as set forth in Section 8 (except that they will
not be available at the regional offices of the Commission).
InfrastruX Acquisition, Inc.
June 30, 2000
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ANNEX A
(S)262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S)228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of
a nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or
more shares, or fractions thereof, solely of stock of a corporation, which
stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S)251 (other than a merger effected pursuant to
(S)251(g) of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264 of
this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of
(S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms
of an agreement of merger or consolidation pursuant to (S)(S)251, 252, 254,
257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof), or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under (S)253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
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incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or (S)253
of this title, each constituent corporation, either before the effective date
of the merger or consolidation or within ten days thereafter, shall notify
each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of any class or
series of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each stockholder who
is entitled to appraisal rights and who has demanded appraisal of such
holder's shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the corporation
that is required to give either notice that such notice has been given shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.
For purposes of determining the stockholders entitled to receive either
notice, each constituent corporation may fix, in advance, a record date that
shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day
on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value
A-2
<PAGE>
of the stock of all such stockholders. Notwithstanding the foregoing, at any
time within 60 days after the effective date of the merger or consolidation,
any stockholder shall have the right to withdraw such stockholder's demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor of
the merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days after such
stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
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<PAGE>
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded such stockholder's appraisal rights as provided
in subsection (d) of this section shall be entitled to vote such stock for any
purpose or to receive payment of dividends or other distributions on the stock
(except dividends or other distributions payable to stockholders of record at
a date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 339, L.
'98, eff. 7-1-98.)
A-4
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PUGET SOUND ENERGY, INC., PARENT AND PURCHASER
1. Directors and Executive Officers of Puget Sound Energy, Inc. The following
table sets forth the name, current business address, citizenship and present
principal occupation or employment and material occupations, positions, offices
or employment and business addresses thereof for the past five years of each
director and executive officer of Puget Sound Energy, Inc. Unless otherwise
indicated, each such person (i) has held his principal occupation for the past
five years, (ii) is a citizen of the United States and (iii) has not been
convicted in a criminal proceeding and has not been party to a proceeding
related to state and federal securities law.
<TABLE>
<CAPTION>
Present Principal Occupation
or Employment and Five-Year
Name Employment History Business Address
---- ---------------------------- ----------------
<S> <C> <C>
J. W. Eldridge........ Chief Accounting Officer 411-108th Avenue N.E.
Bellevue, WA 98004
D. E. Gaines.......... Treasurer 411-108th Avenue N.E.
Bellevue, WA 98004
W. A. Gaines.......... Vice President Energy Supply 411-108th Avenue N.E.
(1997-present); Manager Power Bellevue, WA 98004
Management (1996-1997); Manager
Operations Planning (1986-1996)
D. A. Graham.......... Vice President Human Resources 411-108th Avenue N.E.
(1998-present); Director Human Bellevue, WA 98004
Resources (1989- 1998)
Richard L. Hawley..... Vice President and Chief 411-108th Avenue N.E.
Financial Officer (1998- Bellevue, WA 98004
present); Partner,
PricewaterhouseCoopers LLP (more
than 5 years prior to 1998)
T. J. Hogan........... Vice President Systems Operations 411-108th Avenue N.E.
(1997-present); Executive Vice Bellevue, WA 98004
President and Chief Operating
Officer, Washington Energy
Company (1995-1997)
Stephen A. McKeon..... Vice President and General 411-108th Avenue N.E.
Counsel (1997-present); Partner, Bellevue, WA 98004
Perkins Coie LLP (more than 5
years prior to 1997)
S. McLain............. Vice President Operations- 411-108th Avenue N.E.
Delivery (1999-present); Vice Bellevue, WA 98004
President Corporate Performance
(1997-1999); Director Planning
and Work Practices (1997);
various positions in Human
Resources, Operations, Customer
Service and Strategic Planning
(1988-1997)
G. B. Swofford........ Vice President and Chief 411-108th Avenue N.E.
Operating Officer-Delivery Bellevue, WA 98004
(1999-present); Vice President
Customer Operations (1997-1999);
Senior Vice President Customer
Operations (1994-1997)
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation
or Employment and Five-Year
Name Employment History Business Address
---- ---------------------------- ----------------
<S> <C> <C>
William S. Weaver..... President and Chief Executive 411-108th Avenue N.E.
Officer (1998-present); Bellevue, WA 98004
President (1997-1998); Vice
Chairman and Chairman of
unregulated subsidiaries (1997);
Executive Vice President and
Chief Financial Officer (1991-
1997)
Douglas P. Beighle.... Director (1981-present); Senior 411-108th Avenue N.E.
Vice President of The Boeing Bellevue, WA 98004
Company (1986-1997)
Charles W. Bingham.... Director (1978-present); 411-108th Avenue N.E.
Executive Vice President, Bellevue, WA 98004
Weyerhaeuser Company (1981-1995)
Phyllis J. Campbell... Director (1993-present);
President, U.S. Bank, Washington
Craig W. Cole......... Director (1999-present); 1331 Commercial
President and Chief Executive Street Bellingham,
Officer, Brown & Cole Stores WA
Donald J. Covey....... Director (1982-present) 411-108th Avenue N.E.
Bellevue, WA 98004
Robert L. Dryden...... Director (1991-present); 1301 Fifth Avenue,
President and Chief Executive Suite 1900
Officer, ConneXt, Inc. (1999- Seattle, WA 98101
present); Executive Vice
President, Airplane Production,
Boeing Commercial Airplane Group
(1990-1998)
John D. Durbin........ Director (1984-present); 411-108th Avenue N.E.
President and Chief Executive Bellevue, WA 98004
Officer of Parent (June, 2000-
present); President and Chief
Executive Officer of unregulated
subsidiaries of Puget Sound
Energy (February, 2000-present);
General Principal, John Durbin &
Associates; Executive Director,
Emerge Corporation (1999-2000);
Principal, Olympic Capital
Partners, LLC. (1996-1999);
President and Chief Executive
Officer, Hostar International,
Inc. (1988-1995)
John W. Ellis......... Director (1969-present); Chairman
Emeritus, The Baseball Club of
Seattle (1999-present); Chairman
and Chief Executive Officer, The
Baseball Club of Seattle (1992-
1999)
Tomio Moriguchi....... Director (1988-present); Chairman 519 6th Avenue South
and Chief Executive Officer, Seattle, WA 98104
Uwajimaya, Inc.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation
or Employment and Five-Year
Name Employment History Business Address
---- ---------------------------- ----------------
<S> <C> <C>
Sally G. Narodick..... Director (1989-present); Chief 110-110th Avenue N.E.
Executive Officer and President, Bellevue, WA 98004
Apex [Online] Learning, Inc.
(1998-present); Chairman and
Chief Executive Officer, Edmark
Corporation (1989-1996);
Consultant on Strategic Planning
for Educational Technology, IBM
Corporation (1989-1996)
</TABLE>
2. Directors and Executive Officers of Parent. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment and material occupations, positions, offices or
employment and business addresses thereof for the past five years of each
director and executive officer of Parent. Unless otherwise indicated, each
such person (i) has held his principal occupation for the past five years,
(ii) is a citizen of the United States and (iii) has has not been convicted in
a criminal proceeding and has not been party to a proceeding related to state
and federal securities law.
<TABLE>
<CAPTION>
Present Principal Occupation
or Employment and Five-Year
Name Employment History Business Address
---- ---------------------------- ----------------
<S> <C> <C>
John D. Durbin........ President and Chief Executive 411-108th Avenue N.E.
Officer (June, 2000-present); Bellevue, WA 98004
President and Chief Executive
Officer of unregulated
subsidiaries of Puget Sound
Energy, Inc. (February, 2000-
present); General Principal,
John Durbin & Associates;
Executive Director, Emerge
Corporation (1996-1999);
Principal, Olympic Capital
Partner, Inc. (1996-1999);
President and Chief Executive
Officer, Hostar International,
Inc. (1988-1995)
Stephen A. McKeon..... Secretary and Treasurer (June, 411-108th Avenue N.E.
2000-present); Vice President Bellevue, WA 98004
and General Counsel of Puget
Sound Energy, Inc. (1997-
present); Partner, Perkins Coie
LLP (more than 5 years prior to
1997)
Douglas P. Beighle.... Director (June, 2000-present); 411-108th Avenue N.E.
Director of Puget Sound Energy, Bellevue, WA 98004
Inc. (1981-present)
Richard L. Hawley..... Director (June, 2000-present); 411-108th Avenue N.E.
Vice President and Chief Bellevue, WA 98004
Financial Officer of Puget Sound
Energy, Inc. (1998-present);
Partner, PricewaterhouseCoopers
LLP (more than 5 years prior to
1998)
</TABLE>
I-3
<PAGE>
3. Directors and Executive Officers of Purchaser. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment and material occupations, positions, offices or
employment and business addresses thereof for the past five years of each
director and executive officer of Purchaser. Unless otherwise indicated, each
such person (i) has held his principal occupation for the past five years,
(ii) is a citizen of the United States and (iii) has not been convicted in a
criminal proceeding and has not been party to a proceeding related to state
and federal securities law.
<TABLE>
<CAPTION>
Present Principal Occupation
or Employment and Five-Year
Name Employment History Business Address
---- ---------------------------- ----------------
<S> <C> <C>
John D. Durbin........ Director, President and Chief 411-108th Avenue N.E.
Executive Officer; President and Bellevue, WA 98004
Chief Executive Officer of
Parent (June, 2000-present);
President and Chief Executive
Officer of unregulated
subsidiaries of Puget Sound
Energy, Inc. (February, 2000-
present); General Principal,
John Durbin & Associates;
Executive Director, Emerge
Corporation (1999-2000);
Principal, Olympic Capital
Partners, LLC. (1996-1999);
President and Chief Executive
Officer, Hostar International,
Inc. (1988-1995)
Stephen A. McKeon..... Director, Secretary and 411-108th Avenue N.E.
Treasurer; Secretary and Bellevue, WA 98004
Treasurer of Parent (June, 2000-
present); Vice President and
General Counsel of Puget Sound
Energy, Inc. (1997-present);
Partner, Perkins Coie LLP (more
than 5 years prior to 1997)
</TABLE>
I-4
<PAGE>
The Depositary for the Offer is:
[LOGO OF CHASEMELLON]
<TABLE>
<S> <C> <C>
By Mail: By Overnight Carrier: By Hand:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
P.O. Box 3301 85 Challenger Road--Mail Drop--Reorg 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Ridgefield Park, NJ 07660 New York, NY 10271
Attention: Reorganization Department Attention: Reorganization Department Attention: Reorganization Department
</TABLE>
Facsimile (for Eligible Institutions only): (201) 296-4293
To confirm by telephone: (201) 296-4860
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A stockholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
(800) 322-2885 (Call Toll Free)
