May 3, 2005 Dear Stockholders:
May 3, 2005
Dear Stockholders:
I am pleased to inform you that PEC Solutions, Inc.
(“PEC”) entered into an Agreement and Plan of Merger,
dated April 25, 2005, with Nortel Networks Inc.
(“Nortel”) and PS Merger Sub (“Purchaser”),
a wholly owned subsidiary of Nortel, pursuant to which Purchaser
has commenced a tender offer to purchase all of the outstanding
shares of PEC common stock for $15.50 per share, net to the
seller in cash.
There are several conditions to the completion of the tender
offer, including that at least a majority of shares of PEC
common stock on a fully-diluted basis be tendered and not
withdrawn prior to the expiration of the offer. There are also
certain regulatory approvals and other customary conditions to
the tender offer that must be satisfied.
Xxxxxx and Purchaser have entered into stockholder agreements
with myself and the other founders of PEC: Xxxx X. Xxxx,
President and Xxxx X. Xxxxxxxxx, Chief Operating Officer. Our
collective beneficial holdings represent approximately 53% of
the issued and outstanding shares of PEC common stock on a
fully-diluted basis. The three of us have agreed, among other
things, to irrevocably tender our shares (subject to the terms
of the applicable stockholder agreement) to Purchaser in the
tender offer and vote in favor of the Merger as explained in the
Offer to Purchase described in PEC’s Schedule 14D-9. We
have also granted Nortel and Purchaser an option exercisable
under certain circumstances to purchase a number of our shares
representing 35% of PEC’s outstanding shares of common
stock.
If the tender offer is completed and certain other customary
conditions are satisfied, Purchaser will be merged with and into
PEC, and any shares of PEC common stock not purchased in the
tender offer will, by virtue of the merger and without any
action by the holders of such shares, be converted into the
right to receive an amount in cash equal to $15.50 per
share (or any higher per share price that Nortel determines in
its sole discretion to pay in the tender offer).
The Executive Committee of your Board of Directors, comprised
solely of disinterested and independent directors, unanimously
(1) determined that the merger agreement, the tender offer
and the merger are advisable, fair to, and in the best interests
of PEC’s stockholders, and (2) recommended that
stockholders accept the offer and tender their shares of common
stock pursuant to the tender offer.
Your Board of Directors, following the unanimous recommendation
of the Executive Committee, unanimously (1) determined that
the merger agreement, the tender offer and the merger are
advisable, fair to, and in the best interests of PEC’s
stockholders, (2) approved the merger agreement and the
transactions contemplated thereby, including the tender offer
and the merger, and (3) recommended that stockholders
accept the offer and tender their shares of common stock
pursuant to the tender offer.
In arriving at its recommendation, your Board of Directors gave
careful consideration to a number of factors, including the
material factors set forth in PEC’s Solicitation/
Recommendation Statement on Schedule 14D-9. As noted in the
Schedule 14D-9, the financial advisors retained by your
Board of Directors — XX Xxxxxx Securities
Inc. — have delivered a written opinion to the Board
of Directors stating that the consideration to be received by
the PEC stockholders in the offer and the merger is fair, from a
financial point of view, to the PEC stockholders (other than the
principal stockholders, regarding whom they rendered no
opinion). A copy of the written opinion, describing the
assumptions made, matters considered and review undertaken by XX
Xxxxxx is attached to PEC’s Schedule 14D-9 as
Xxxxx XX.
Accompanying PEC’s Schedule 14D-9 are Nortel Network
Inc.’s offer to purchase, dated May 3, 2005, a letter
of transmittal for use in tendering your shares of PEC common
stock and other related documents. These documents set forth the
terms and conditions of the tender offer. We urge you to read
the enclosed information and consider it carefully before
deciding whether to tender your shares of PEC common stock.
Your Board of Directors and the management and employees of PEC
thank you for your continued support.
Sincerely, | |
Xx. Xxxxx X. Xxxxxxxxx | |
Chairman of the Board of Directors and Chief Executive Officer |