THE WASHINGTON WATER POWER CO., Mr. FRANK MCLAUGHLIN, President, Puget Sound Power & Light Co., Seattle, Wash. DEAR MR. MCLAUGHLIN: In accordance with the action of the board of directors of the Washington Water Power Co. at a meeting held January 19, 1953, I am submitting to you herewith a certified copy of a resolution adopted by the Washington board at that meeting. This resolution contains the terms and conditions under which Washington proposes to effect a merger between the Puget Sound Power & Light Co. and itself. The proposal which was submitted to you on October 9, 1952, we understand was not acceptable because it failed to provide that those stockholders of Puget who desired to receive cash for all of their stock could not do so. The present proposal, as you will see from the resolution, obviates this difficulty and is intended to overcome that objection. The Washington company has assurances from leading eastern banks and financial institutions that they will supply all the money necessary to complete the merger even though all of the Puget Sound stockholders elect to take cash for their shares. Firm arrangements can be made with these institutions if within a reasonable time the merger negotiations have reached a point where the proposal can be submitted to the stockholders of both companies and the requisite regulatory bodies for approval. We sincerely hope that you will give this matter your very early consideration as we believe it is advantageous to all concerned. The management of Washington holds itself ready to work out with you promptly a mutually satisfactory merger agreement. Very truly yours, K. M. ROBINSON, President. Whereupon, on motion duly made and seconded, the following resolution was unanimously adopted: Whereas the board, of directors of the company at a meeting held October 8, 1952, adopted a resolution proposing to Puget Sound Power & Light Co. that that company and the Washington Water Power Co. negotiate a merger agreement to merge the two companies, which merger agreement was to provide; (a) that the Washington Water Power Co. should be the surviving company and its name retained; (b) that the stock of the company presently outstanding should remain unchanged and that each holder of the presently outstanding common stock of Puget Sound Power & Light Co. should receive for each 2 shares of the common stock of Puget Sound Power & Light Co. held by him, at his election either (1) 2 shares of the common stock of the surviving the Washington Water Power Co., or, (2) 1 share of the common stock of the surviving the Washington Water Power Co. for 1 share of the common stock of Puget Sound Power & Light Co., and $27.50 in cash for the other of such shares, and Whereas the directors felt that such proposal was the most advantageous for the stockholders of both companies and particularly the Puget Sound Power & Light Co., in that it assured, if accepted, a statutory merger in which at least 50 percent of Puget's stockholders would receive stock and that those who did would receive it on a tax-free basis, and Whereas Puget Sound Power & Light Co. has stated that said proposal is not satisfactory to them and will not be considered by them because it does not provide that their stockholders can, if they so desire, receive cash equivalent to the cash which they might ultimately expect to receive from the present agreement which Puget Sound Power & Light Co. has with five public utility districts of Washington, and Whereas Puget Sound Power & Light Co. has also stated that it has a contract with the said five public utility districts for the purchase of certain of its assets which said contract is binding upon the Puget Sound Power & Light Co. if the public utility districts pay the money provided therefore on or before the 27th of February 1953; but, nevertheless, Puget Sound Power & Light Co. has further indicated that it will consider any reasonable offers that may be made to it which do not involve a breach of its contract with the public utility districts: Now, therefore, be it Resolved, That it is the judgment of the board of directors of the Washington Water Power Co. that a merger of this company and the Puget Sound Power & Light Co. would be advantageous to the stockholders, the employees, and the customers of both companies, and would be in the public interest generally, and that if the contract now existing between the Puget Sound Power & Light Co. and the public utility districts is not consummated and concluded by February 27, 1953, that such merger should be consummated as soon thereafter as possible. Resolved further, That in order to effect such a merger at as early a date as possible, the officers of the Washington Water Power Co. are hereby authorized and directed in its name and behalf to submit a proposal to the Puget Sound Power & Light Co. to work out a merger of said company into this company, if said contract between Puget Sound Power & Light Co. and the public utility districts is not consummated by February 27, 1953, the agreement for the said merger to provide among other things; (a) that the Washington Water Power Co. shall be the surviving company and its name retained; (b) that the stock of this company presently outstanding shall remain unchanged except as to the number of shares issued and outstanding and that each holder of the presently outstanding stock of the Puget Sound Power & Light Co. shall receive for each share of the common stock of the Pudget Sound Power & Light Co. held by him, at his election either (1) one share of the common stock of the surviving the Washington Water Power Co., out of presently authorized but unissued shares, or (2) $27 in cash; (c) that upon the merger of said companies a retirement plan for employees substantially the same as the present plan of the Washington Water Power Co. shall be made applicable to all employees of the company. Resolved further, That said proposal is made with the understanding that Puget has stated it has a binding contract with the public utility districts and that said merger would not become effective in the event said contract is performed by the public utility districts; and that neither of the companies will take any action which will materially adversely change or affect its property, assets or financial condition and that the merger agreement shall become effective upon approval by the boards of the 2 companies with the requisite vote of the stockholders of the 2 companies and when all requisite regulatory approvals, consents, or authorizations have been received; and Resolved further that said proposal is based upon the assumption that the Washington Water Power Co. will proceed with utmost diligence to place itself in a position to consummate the merger and to deliver cash or stock (at the Puget stockholders' election) at the earliest possible date after February 27, 1953, and upon the understanding that all actions taken by the companies prior to the final date for performance of the public utility district contract will be subject to Puget's stated intention to live up to its agreement with the public utility districts. In the meantime it is contemplated that Puget will place itself in a position to and will cooperate with the Washington Water Power Co. in taking such preliminary formal action as may be necessary in order to place the parties in a position to consummate the merger promptly after February 27, 1953. However, it is understood that it is essential to this proposal that a definite termination date for performance of the public utility district contract be known to the Washington Water Power Co. promptly and that if the termination date is to be extended beyond February 27, 1953, the Washington Water Power Co. may be forced to discontinue negotiations with respect to the merger. Resolved further that the officers of the company are hereby authorized and directed, in its name and behalf, to do and perform any and all such acts and things as in their judgment may be necessary or appropriate to carry out the purposes of the foregoing resolutions. This is to certify that the foregoing is a true and correct copy of the resolution passed by the board of directors of the Washington Water Power Co. at its meeting held at 10 o'clock in the forenoon on January 19, 1953. [SEAL] (Dated Jan. 28, 1953) E. B. TALKINGTON, To the Stockholders of Puget Sound Power & Light Co.: On January 26, 1953, the Washington Water Power Co. announced that its board of directors had approved an offer of merger with Puget Sound Power & Light Co. under which the holders of each share of Puget common stock would receive 1 share of Washington common stock or $27 cash. Our committee believes this offer is attractive to the Puget stockholders and that immediate steps should be taken toward the consummation of the merger. A copy of the Washington offer is available upon request. We invite your inquiries. WILLIAM J. COLLINS, Portland, Oreg. CHANDLER HOVEY, Jr., DEAR MR. ROBINSON: This has reference to your letter of January 21, 1953, and to our acknowledgment of January 23, on the subject of your proposal of a merger with Puget. It is noted that the resolution adopted by your Board of Directors on January 19, 1953, contains the following sentence: "However, it is understood that it is essential to this proposal that a definite termination date for performance of the public utility district contract be known to the Washington Water Power Co. promptly and that if the termination date is to be extended beyond February 27, 1953, the Washington Water Power Co. may be forced to discontinue negotiations with respect to the merger.' Please be advised that Puget at this time is unwilling to commit itself not to extend the closing date of the PUD purchase agreement beyond February 27, 1953, the date presently fixed. Whether the purchase agreement will be extended and if so, for how long, are questions which we feel Puget must remain free to decide in the light of all the circumstances. As stated in our letter of January 23, 1953, full consideration will be given to your latest merger proposal. However, because of the risks involved and the complexity of the company's situation, before Puget can intelligently act with respect to a merger it must, among other things, receive and study the independent merger report which is now being prepared, together with other requested information and data, so as to determine if a merger possesses the basic merit essential to its becoming a reality from the standpoint of stockholders, employees, and the public. Very truly yours, FRANK MCLAUGHLIN, President. BURNS, CURRIE, RICH & RICE, Mr. FRANK MCLAUGHLIN, President, Puget Sound Power & Light Co., Seattle, Wash.: In view of new revised offer to Puget stockholders by Washington Water Power Co. we would appreciate advice from you as to what steps you plan to take to cooperate in effecting the merger and making available to Puget's stockholders the benefits of the alternative cash or stock offer. We favor immediate action recommending acceptance by your shareholders and we hope for a prompt reply indicating that you shall so recommend. STOCKHOLDERS COMMITTEE FOR PUGET SOUND POWER & LIGHT CO. By FRANCIS CURRIE, Secretary. BURNS, CUBRIE, RICH & RICE, January 29, 1953. KINSEY M. ROBINSON, Esq. Spokane, Wash.: Meeting of Puget Sound Stockholders Committee arranged New York City Friday, February 6 at 10 a. m. Would appreciate your attendance to explain and answer inquiries about your company's latest merger offer. Please advise. FRANCIS CURRIE, Secretary. FRANCIS CURRIE, SPOKANE, WASH., January 29, 1953. Secretary, Puget Sound Stockholders Committee, Care Burns, Currie, Walker & Rich: Re your wire January 29, I expect to be in New York on Friday, February 6, and will be able to attend your meeting at 10 a. m. Please let me know where the meeting will be held. Appreciate your willingness to attend Puget Sound Stockholders Committee meeting India House, Hanover Square, New York City, February 6, 10 a. m. Mr. FRANCIS CURRIE, New York, N. Y. FRANCIS CURRIE, Secretary. PUGET SOUND POWER & LIGHT CO., DEAR SIR: I am greatly surprised at your telegram of January 28 because it indicates you apparently are not informed of current developments which are a matter of public knowledge. Since the first of the year there have been discussions between representatives of Puget and WWP on the subject of a possible merger and the revised merger proposal is presently being given full and careful consideration. You should know, however, that before Puget can act intelligently with respect to a merger, it must, among other things, receive and study the independent merger report which is now being prepared, together with other requested information and data not yet available. A merger is not a unilateral proposition and we have the definite responsibility to advance and protect the welfare of Puget stockholders. Puget has a binding purchase agreement with five districts which presently has a closing date of February 27, 1953, and it is not proposed by overt act to breach this contract. Inasmuch as it is believed that your "committee" represents WWP interests rather than Puget, we respectfully request that you furnish us the following information: 1. List showing name, address, occupation, and business connections of each member of committee. 2. Number of shares of Puget common stock held by each member of committee. 3. Number and description of shares of WWP stock held by each member of committee. 4. Number of shares of Puget common for which committee has authorizations from the holders thereof, including name, address, and number of shares of each such holder. 5. Names of the persons, firms, or corporations by whom the expenses of your committee will be borne, directly or indirectly. Very truly yours, 67272-56-pt. 9- -3 FRANK MCLAUGHLIN, President. JANUARY 31, 1953. Mr. FRANK MCLAUGHLIN, President, Puget Sound Power & Light Co., Seattle, Wash. DEAR MR. MCLAUGHLIN: This will acknowledge receipt of your letters of January 23 and January 27, 1953, relative to the proposed offer to work out a merger agreement between the Puget and Washington companies, submitted in my letter of January 21, 1953. As you pointed out in your letter of January 27, the resolution of the board of directors of the Washington company contained the following sentence: "However, it is understood that it is essential to this proposal that a definite termination date for performance of the public utility district contract be known to the Washington Water Power Co. promptly and that if the termination date is to be extended beyond February 27, 1953, the Washington Water Power Co. may be forced to discontinue negotiations with respect to the merger." Since you advise in your letter of January 27 that Puget is unwilling to commit itself to this important condition of the Washington offer, we have to consider that offer in abeyance until such time as the matter can be brought before the Washington board for further consideration. This will be done at the earliest possible date. Very truly yours, THE WASHINGTON WATER POWER CO., By K. M. R., President. BURNS, BLAKE & RICH, Boston, Mass., February 2, 1953. STONE & WEBSTER SERVICE CORP., Boston, Mass. GENTLEMEN: In connection with the merger offer of Washington Water Power Co. now under consideration by the board of directors of Puget Sound Power & Light Co., it is essential that the undersigned have a list of the stoockholders of Puget Sound Power & Light Co. with whom they desire to communicate. Demand is therefore made upon you as transfer agent of the corporation in accordance with General Laws, Chapter 155, Section 22 to furnish us, at our expense, a copy of the current stockholder list. JOHN S. TILNEY, WILLIAM J. COLLINS, MICHAEL AUGEN STERN; Shareholders, Stockholders Committee for Puget Sound Power & Light Co. By their attorneys: STOCKHOLDERS COMMITTEE FOR PUGET SOUND POWER & LIGHT Co., To Stockholders of Puget Sound Power & Light Co.: The meeting of stockholders called by the committee on February 6, 1953, was attended by over 50 persons, who were the owners or representatives of more than 600,000 shares of Puget Sound stock. Approximately 35 other persons, the extent of whose holdings are unknown, were unable to attend the meeting but wrote in expressing their support of the objectives of the committee. Mr. Robinson, president of Washington Water Power Co., described his company's merger proposal of January 19, 1953, under which stockholders of Puget would be entitled to receive, in the event of a merger, either one share of WWP common or $27 in cash for each share of Puget common. He stated that he had received assurances from banks that funds would be available to finance this proposal, but that in order to firm up such assurances WWP must enter into an agreement and become obligated for a commitment fee in the near future. This circumstance, and other decisions facing WWP, make it imperative that a definite conclusion on the merger be reached without delay. This would be impossible if Puget should extend without some qualification its contract with the public utility districts, which now expires on February 27, 1953. Since the present management of Puget is unwilling to bind itself not to extend this expiration |