Utilx Corp – ‘DEFM14C’ on 8/25/00

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Definitive Proxy Information Statement — Merger or Acquisition   —   Schedule 14C
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Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14C     Definitive Information Statement                      82    470K 

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------  

SCHEDULE 14C
(Rule 14c-101)

INFORMATION REQUIRED IN INFORMATION STATEMENT 
SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) 
of the Securities Exchange Act of 1934 Check the appropriate box: 

Check the appropriate box:                                                      

[_]Preliminary Information Statement                                            

[_]Confidential, for Use of the Commission Only (as permitted by rule 14c-      
5(d)(2)                                                                   

[X]Definitive Information Statement                                             

UTILX CORPORATION 
-------------------------------------------------------------------     
(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):                              

[_]No fee required.                                                             

[X]Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.        

                                                                [Download Table]
                                                                             
   (1) Title of each class of securities to which transaction applies: Common
       Stock                                                                 

   (2) Aggregate number of securities to which transaction applies: 2,463,675

   (3) Per unit price or other underlying value of transaction computed      
       pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the 
       filing fee is calculated and state how it was determined): $6.125     

   (4) Proposed maximum aggregate value of transaction: $15,090,010          

   (5) Total fee paid: $3,018*                                               

[_]Fee paid previously with preliminary materials                            

[X]Check box if any part of the fee is offset as provided by                 
   Exchange Act Rule 0-11(a)(2) and identify the filing for which            
   the offsetting fee was paid previously. Identify the previous             
   filing by registration statement number, or the Form or                   
   Schedule and the date of its filing.                                      

   (1) Amount Previously Paid: $11,084                                       

   (2) Form, Schedule or Registration Statement No.: Schedule TO             

   (3) Filing Party: InfrastruX Acquisition, Inc., InfrastruX Group, Inc. and
       Puget Sound Energy, Inc.                                              

   (4) Date Filed: June 30, 2000                                             

--------                                                                        
*  This amount is completely offset by the $11,084 fee previously paid in       
connection with the filing of the Schedule TO by InfrastruX Acquisition,  
 Inc., InfrastruX Group, Inc. and Puget Sound Energy, Inc. on June 30, 2000,
in connection with the first step of the transactions of which the merger 
that is the subject of this information statement is a part.              

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[LOGO OF UTILX CORPORATION] 

22820 RUSSELL ROAD
P.O. BOX 97009
KENT, WASHINGTON 98064-9709 

----------------  

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 
TO BE HELD SEPTEMBER 15, 2000 

----------------  

                                                       August 24, 2000

TO THE STOCKHOLDERS OF UTILX CORPORATION:                                       

 We will hold a special meeting of our stockholders on September 15, 2000 at
10 a.m., local time, at the offices of Perkins Coie LLP, 1201 Third Avenue,     
48th Floor, Seattle, Washington 98101.                                          

 As described in the enclosed information statement, at the special meeting,
you will:                                                                       

1. Consider and vote upon a proposal to approve and adopt a merger    
agreement dated as of June 28, 2000, by and among UTILX Corporation         
("UTILX"), InfrastruX Group, Inc. ("InfrastruX Group"), and a wholly-owned  
subsidiary of InfrastruX Group, providing for, among other things, the      
merger of InfrastruX Group's subsidiary with and into UTILX. Following the  
merger, UTILX will continue as the surviving corporation and will become a  
wholly-owned subsidiary of InfrastruX Group; and                            

 2. Transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.                                 

  UTILX's board of directors has approved the merger agreement and the merger.

The merger will constitute the second and final step of the acquisition of
UTILX by InfrastruX Group. The first step was a tender offer commenced by       
InfrastruX Group through InfrastruX Group's subsidiary on June 30, 2000 for all 
of the outstanding shares of common stock of UTILX at a purchase price of       
$6.125 per share, net to the seller in cash. The offer expired on July 28,      
2000, and InfrastruX Group's subsidiary purchased approximately 6,584,685       
shares (representing approximately 88% of the shares outstanding on such date). 

Upon the completion of the merger, all shares (other than shares owned by 
InfrastruX Group or any of its affiliates, shares held by UTILX as treasury     
stock, or shares held by any stockholders of UTILX who have properly exercised  
appraisal rights), will be converted into the right to receive $6.125 per share 
in cash, without interest thereon. InfrastruX Group currently anticipates that  
the merger will be completed in September 2000, or as promptly as practicable   
thereafter.                                                                     

Holders of record of UTILX common stock at the close of business on August
9, 2000 will be entitled to vote at the special meeting or any adjournment or   
postponement. As of the record date, InfrastruX Group and its affiliates own an 
aggregate of 6,584,685 shares, representing approximately 88% of all shares     
outstanding on that date. The approval of the holders of a majority of all      
outstanding shares is sufficient to approve and adopt the merger agreement and  
the merger. Therefore, InfrastruX Group can cause the merger to occur without   
the affirmative vote of any other stockholder. InfrastruX Group is obligated to 
vote all shares it owns in favor of approving and adopting the merger           
agreement.                                                                      

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If the merger is completed, holders of shares who do not vote in favor of 
approval and adoption of the merger agreement and who otherwise comply with the 
requirements of Section 262 of the General Corporation Law of the State of      
Delaware (a copy of which can be found in Annex B of the attached information   
statement) will be entitled to receive such consideration as may be determined  
to be due under such provisions.                                                

 Please read the attached information statement carefully. WE ARE NOT ASKING
YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.                      

  Please do not send in your share certificates at this time. If the merger is
consummated, you will be sent a letter of transmittal for that purpose as soon  
as reasonably practicable thereafter.                                           

                           By Order of UTILX Board

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UTILX CORPORATION 
22820 Russell Road
P.O. Box 97009
Kent, Washington 98064-9709 
(253) 395-0200

INFORMATION STATEMENT 

----------------  

SPECIAL MEETING OF STOCKHOLDERS 
TO BE HELD SEPTEMBER 15, 2000 

----------------  

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED 
NOT TO SEND US A PROXY

  This information statement is being furnished to the holders of common stock
of UTILX Corporation, a Delaware corporation ("UTILX"), in connection with the  
special meeting of stockholders of UTILX to be held on September 15, 2000 at 10 
a.m., local time, at the offices of Perkins Coie LLP, 1201 Third Avenue,        
48th Floor, Seattle, Washington 98101, for the following purposes:              

 1. To consider and vote upon a proposal to approve and adopt the merger
agreement, dated June 28, 20000, among UTILX, InfrastruX Group, Inc.        
("InfrastruX Group") and a subsidiary of InfrastruX Group, and the merger,  
as described in this information statement; and                             

2. To transact such other business as may properly come before the    
meeting or any adjournment or postponement.                                 

 The merger is the second step of InfrastruX Group's two-part acquisition of
UTILX. The first step was a tender offer commenced by a subsidiary of           
InfrastruX Group on June 30, 2000 for all of the outstanding shares of UTILX at 
a purchase price of $6.125 per share, net to the seller in cash. Pursuant to    
the offer, which expired on July 28, 2000, InfrastruX Group's subsidiary        
purchased 6,584,685 shares (representing approximately 88% of the shares        
outstanding on such date).                                                      

Holders of record of UTILX common stock at the close of business on August
9, 2000 will be entitled to vote at the special meeting or any adjournment or   
postponement.                                                                   

 InfrastruX Group can cause the merger to occur without the affirmative vote
of any other holder of shares. InfrastruX Group has agreed pursuant to the      
merger agreement to vote all shares it beneficially owns in favor of approval   
and adoption of the merger agreement.                                           

  Please do not send any certificates for your stock at this time. Please read
this information statement carefully.                                           

 THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS   
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION        
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.     

 Information Statement dated August 24, 2000, and first mailed to stockholders
on August 25, 2000.                                                             

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CONTENTS

                                                                [Download Table]
                                                                              
SUMMARY TERM SHEET........................................................   1
THE SPECIAL MEETING.......................................................   4
  Time, Place, Date.......................................................   4
  Purpose of the Special Meeting..........................................   4
  Record Date; Quorum; Outstanding Shares Entitled to Vote................   4
  Vote Required...........................................................   4
  Surrender of Certificates and Payment Procedures........................   4
THE MERGER................................................................   6
  Background of the Offer and the Merger..................................   6
  Recommendation and Reasons of UTILX Special Committee...................   7
  Opinion of Financial Advisor to the UTILX Special Committee.............  10
  Purpose and Structure of the Merger; Reasons of InfrastruX Group for the    
   Merger.................................................................  15
  Plans for UTILX after the Merger........................................  15
  Merger Agreement........................................................  16
  Delisting of UTILX Shares Following the Merger..........................  21
  Regulatory Approvals....................................................  21
  Financing of the Merger.................................................  22
INTERESTS OF CERTAIN PERSONS IN THE MERGER................................  22
TRANSACTIONS BETWEEN INFRASTRUX GROUP AND UTILX...........................  23
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.....................  24
APPRAISAL RIGHTS..........................................................  25
CERTAIN INFORMATION CONCERNING UTILX AND THE SHARES GENERALLY.............  28
CERTAIN INFORMATION CONCERNING INFRASTRUX GROUP AND INFRASTRUX GROUP'S        
 SUBSIDIARY...............................................................  29
OWNERSHIP OF SHARES.......................................................  29
ADDITIONAL AND AVAILABLE INFORMATION......................................  30
OTHER MATTERS.............................................................  30
ANNEX A--Opinion of Banc of America Securities, LLC dated June 28, 2000... A-1
ANNEX B--Section 262 of the General Corporation Law of the State of           
 Delaware Relating to Appraisal Rights.................................... B-1
ANNEX C--The Merger Agreement............................................. C-1

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SUMMARY TERM SHEET

The merger of InfrastruX Acquisition, Inc. ("Purchaser"), a wholly-owned  
subsidiary of InfrastruX Group, Inc. ("InfrastruX Group") with and into UTILX   
Corporation ("UTILX") will constitute the second and final step of the          
acquisition of UTILX by InfrastruX Group. The first step was a tender offer     
commenced by InfrastruX Group through its subsidiary on June 30, 2000, for all  
of the outstanding shares of UTILX for $6.125 per share, net to the seller in   
cash. Pursuant to the offer, which expired on July 28, 2000, InfrastruX Group's 
subsidiary purchased 6,584,685 shares representing approximately 88% of the     
shares outstanding on the record date. The following are some questions you, as 
a stockholder of UTILX, may have and the answers to those questions. We urge    
you to carefully read the remainder of this information statement because the   
information provided in this summary is not complete and additional important   
information is contained in the remainder of this information statement.        
Stockholders are urged to read this information statement and the annexes in    
their entirety.                                                                 

When and Where is the Special Meeting?                                          

 UTILX will hold a special meeting of stockholders on September 15, 2000, at
10 a.m., local time, at the offices of Perkins Coie LLP, 1201 Third Avenue,     
48th Floor, Seattle, Washington 98101. See "The Special Meeting."               

Is My Vote Required to Approve the Merger?                                      

No. The affirmative vote of a majority of the votes entitled to be cast by
the holders of all outstanding shares as of the record date will be required to 
approve and adopt the merger agreement. InfrastruX Group has agreed to vote all 
of the shares it owns in favor of the approval and adoption of the merger       
agreement. Because InfrastruX Group and its affiliates own approximately 88% of 
the outstanding shares on the record date, APPROVAL AND ADOPTION OF THE MERGER  
AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER. YOU ARE NOT     
BEING ASKED FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND ONE. If you wish to   
vote your shares, you may do so only by attending the special meeting. See "The 
Special Meeting."                                                               

Who Are the Parties to the Transaction?                                         

InfrastruX Group is a Washington corporation with its principal offices   
located at 411--108th Avenue N.E., Bellevue, Washington 98004. InfrastruX Group 
is a wholly owned subsidiary of Puget Sound Energy, Inc. ("Puget"). InfrastruX  
Group was formed in June, 2000 by Puget to acquire network infrastructure       
services companies serving the utility and telecommunications industries.       
InfrastruX Group currently has no business or operations. Puget 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.               

InfrastruX Group's wholly-owned subsidiary is a Delaware corporation      
incorporated in June, 2000. It has not carried on any activities other than     
those incident to its formation, the execution and delivery of the merger       
agreement and the commencement of, and purchase of shares pursuant to, the      
offer. Its principal offices are located at 411--108th Avenue N.E., Bellevue,   
Washington 98004.                                                               

 UTILX is a Delaware corporation with its principal offices located at 22820
Russell Road, P.O. Box 97009, Kent, Washington 98064. UTILX 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.    

What Will I Receive in Exchange for My Shares of UTILX?                         

Upon consummation of the merger, all shares (other than shares owned by   
InfrastruX Group or any of its affiliates, shares held by UTILX as treasury     
stock, or shares held by any stockholders of UTILX who have                     

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properly exercised appraisal rights) will be converted into the right to        
receive $6.125 per share, net to the seller in cash, without interest thereon.  
See "The Merger--Merger Agreement."                                             

Is There an Agreement Governing the Merger?                                     

Yes. InfrastruX Group, its subsidiary and UTILX entered into a merger     
agreement dated as of June 28, 2000. The merger agreement provides, among other 
things, for the terms and conditions of the offer and the merger of InfrastruX  
Group's subsidiary into UTILX following the offer. See "The Merger--Purpose and 
Structure of the Merger; Reasons of InfrastruX Group for the Merger".           

What Does UTILX Board of Directors Think of the Merger?                         

UTILX board, acting through a special committee consisting solely of      
disinterested directors, recommends that its stockholders approve and adopt the 
merger agreement and the merger. See "The Merger--Recommendation and Reasons of 
UTILX Special Committee."                                                       

In reaching its decision to approve and adopt the merger agreement and to 
recommend that UTILX stockholders approve and adopt the merger agreement, UTILX 
Special Committee considered a number of factors. See "The Merger--             
Recommendation and Reasons of UTILX Special Committee."                         

Did UTILX Receive an Opinion from its Financial Advisor?                        

  Yes. Banc of America Securities, LLC ("Banc of America Securities"), UTILX's
financial advisor, delivered to UTILX's board its written opinion dated as of   
June 28, 2000, that, as of the date of such opinion, the cash consideration to  
be received by the holders of UTILX shares in the offer and the merger is fair  
from a financial point of view to UTILX stockholders (other than InfrastruX     
Group and its affiliates). A copy of the full text of the written opinion of    
Banc of America Securities, which sets forth, among other things, the opinion   
expressed, assumptions made, procedures followed, matters considered, and       
limitations of review undertaken in connection with the opinion, is attached to 
this information statement as Annex A and should be read in its entirety. See   
"The Merger--Opinion of Financial Advisor to UTILX Special Committee" and Annex 
A.                                                                              

When Do the Companies Expect to Complete the Merger?                            

InfrastruX Group expects to complete the merger in September 2000, or as  
promptly as practicable thereafter. The merger will become effective at such    
time as the merger is approved by the stockholders of UTILX as of the record    
date and the Certificate of Merger is duly filed with the Secretary of State of 
the State of Delaware. See "The Merger."                                        

Can the Merger Agreement Be Terminated?                                         

The merger agreement may be terminated by either InfrastruX Group or UTILX
under certain circumstances. See "The Merger--Merger Agreement."                

Is Infrastrux Group's Financial Condition Relevant?                             

  We do not believe InfrastruX Group's financial condition is relevant because
the form of payment consists solely of cash and InfrastruX Group has advised us 
that funding will be readily obtainable.                                        

What Will Happen to UTILX After the Merger Is Consummated?                      

After consummation of the merger, UTILX will become a wholly-owned        
subsidiary of InfrastruX Group and the former holders of UTILX shares will no   
longer possess any interest in UTILX. Promptly upon consummation of the merger, 
UTILX will terminate the registration of the shares under Section 12 of the     
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition,  
upon termination of the                                                         

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registration of the shares under the Exchange Act, the shares will no longer be 
eligible for inclusion in the Nasdaq National Market System. See "The Merger--  
Delisting of UTILX Shares Following the Merger."                                

Do Any Existing or Former Members of UTILX's Management or Board of Directors   
Have Interests in the Merger Other than as Stockholders of UTILX?               

  Yes. Certain existing and former members of UTILX's management and board (as
well as employees of UTILX) have interests in the merger other than as          
stockholders relating to, among other things, (i) the exchange of outstanding   
options for a cash payment and (ii) the terms of employment agreements between  
UTILX and William Weisfield, the President and Chief Executive Officer of       
UTILX, providing for cash payments and other benefits upon termination of       
employment. See "Interests of Certain Persons in the Merger."                   

Should I Send in My Stock Certificates Now?                                     

No. A letter of transmittal for use in surrendering share certificates and
obtaining payment for surrendered UTILX shares will be mailed to stockholders   
promptly following the effective time of the merger. See "The Merger."          
CERTIFICATES REPRESENTING UTILX SHARES SHOULD NOT BE SENT IN UNTIL YOU RECEIVE  
THE LETTER OF TRANSMITTAL AND ACCOMPANYING INSTRUCTIONS, AND THEN SHOULD BE     
SURRENDERED ONLY IN ACCORDANCE WITH SUCH INSTRUCTIONS.                          

Will I Have to Pay Taxes on the Consideration I Receive for My Shares in the    
Merger?                                                                         

 The receipt of cash by a UTILX stockholder pursuant to the merger will be a
taxable transaction for United States federal income tax purposes and may also  
be taxable under applicable state, local and foreign tax laws. See "Certain     
United States Federal Income Tax Consequences." ALL STOCKHOLDERS ARE URGED TO   
CONSULT THEIR OWN TAX ADVISORS.                                                 

Are Any Regulatory Approvals Required?                                          

 InfrastruX Group filed the required Premerger Notification and Report Forms
with respect to the offer and the merger with the Antitrust Division of the     
Department of Justice and the Federal Trade Commission on April 27, 2000. The   
applicable waiting period expired on July 15, 2000. See "The Merger--Regulatory 
Approvals."                                                                     

UTILX and InfrastruX Group believe that there are no other material       
regulatory or governmental approvals required in order for the merger to be     
consummated.                                                                    

Can I Exercise Appraisal Rights?                                                

 Stockholders of UTILX are entitled to appraisal rights under Section 262 of
the General Corporation Law of the State of Delaware as to shares owned by      
them. A summary description of Section 262 is set forth in "Appraisal Rights"   
and Section 262 is reprinted in its entirety as Annex B to this information     
statement. All references in "Appraisal Rights" and Section 262 to a            
"stockholder" are to the record holder of the shares as to which appraisal      
rights are asserted. A person having a beneficial interest in shares that are   
held of record in the name of another person, such as a broker or nominee, must 
act promptly to cause the record holder to follow the steps set forth in        
Section 262 properly and in a timely manner to perfect whatever appraisal       
rights the beneficial owner may have.                                           

  For more information regarding appraisal rights, see Annex B. Annex B should
be reviewed carefully by any stockholder who wishes to exercise statutory       
appraisal rights or who wishes to preserve the right to do so because failure   
to comply strictly with the procedures set forth in Annex B may result in the   
loss of appraisal rights.                                                       

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THE SPECIAL MEETING 

Time, Place, Date                                                               

 This information statement is being furnished to the holders of outstanding
shares of UTILX in connection with the special meeting to be held on September  
15, 2000, at 10 a.m., local time, at the offices of Perkins Coie LLP, 1201      
Third Avenue, 48th Floor, Seattle, Washington 98101, including any adjournments 
or postponements thereof.                                                       

Purpose of the Special Meeting                                                  

 At the special meeting, stockholders of UTILX will consider and vote upon a
proposal to approve and adopt the merger agreement, dated as of June 28, 2000,  
among UTILX, InfrastruX Group and InfrastruX Acquisition, Inc., a wholly-owned  
subsidiary of InfrastruX Group, pursuant to which InfrastruX Group's subsidiary 
will be merged with and into UTILX with UTILX as the surviving corporation at   
and after the effective time of the merger. The merger agreement is attached as 
Annex C to this information statement. Stockholders will also consider such     
other business as may properly come before the meeting.                         

Record Date; Quorum; Outstanding Shares Entitled to Vote                        

The record date for the special meeting has been fixed as the close of    
business on August 9, 2000. Only holders of record of shares on the record date 
are entitled to vote at the special meeting. Holders of shares on the record    
date are entitled to one vote on matters properly presented at the special      
meeting for each share held.                                                    

  On the record date, there were 7,475,944 shares outstanding. The outstanding
shares were held of record by approximately 342 registered holders. The         
presence in person of holders of a majority of the shares entitled to vote will 
constitute a quorum for the transaction of business at the special meeting.     
Because the shares owned by InfrastruX Group and its affiliates will be         
represented at the special meeting, a quorum will be present, even if no other  
stockholders are present.                                                       

Vote Required                                                                   

 Pursuant to the Certificate of Incorporation of UTILX, the merger agreement
must be approved and adopted by the affirmative vote of the holders of two-     
thirds of the total number of outstanding shares. Abstentions of shares that    
are present at the special meeting and broker non-votes will each have the same 
effect as a vote against approval and adoption of the merger agreement.         
Pursuant to the merger agreement, InfrastruX Group and its affiliates are       
required to vote their shares for approval and adoption of the merger           
agreement. As of the record date, InfrastruX Group and its affiliates           
beneficially own 6,584,685 shares (approximately 88% of all outstanding         
shares). Because the approval of the holders of a majority of all outstanding   
shares is sufficient to approve and adopt the merger agreement, InfrastruX      
Group can cause the merger to occur without the affirmative vote of any other   
stockholder. You are not being asked for a proxy and you are requested not to   
send one. If you wish to vote your shares, you may do so only by attending the  
special meeting in person.                                                      

A stockholder who wishes to exercise appraisal rights under Delaware law  
must not vote his or her shares in favor of the approval and adoption of the    
merger agreement. An abstention or broker non-vote will not constitute a waiver 
of a stockholder's appraisal rights or the written notice of intent to exercise 
appraisal rights required under Section 262 of Delaware law. See "Appraisal     
Rights" and Annex B.                                                            

Surrender of Certificates and Payment Procedures                                

As soon as practicable after the effective time, ChaseMellon Shareholder  
Services, LLC, the paying agent, will mail to each record holder of a           
certificate representing an outstanding share a letter of transmittal and       
instructions for effecting the surrender of such certificate. Upon surrender to 
the paying agent of a certificate                                               

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representing a share, together with a duly executed letter of transmittal and   
such other documents as may reasonably be required by the paying agent, the     
holder of such certificate shall be entitled to receive $6.125 per share in     
cash, without interest thereon. Until surrendered in accordance with the        
foregoing instructions, each certificate representing a share will represent    
for all purposes only the right to receive $6.125 per share in cash, without    
interest thereon.                                                               

You should not send your share certificates to the paying agent now. Share
certificates should be sent to the paying agent only pursuant to instructions   
set forth in the letter of transmittal, which will be mailed to you as soon as  
practicable after the effective time. In all cases, the merger consideration    
will be provided only in accordance with the procedures set forth in this       
information statement, the merger agreement and the letter of transmittal.      

Any merger consideration made available to the paying agent that remains  
unclaimed by stockholders for six months after the effective time will be       
delivered to UTILX and any stockholders who have not surrendered their          
certificates prior to that time must look to UTILX for payment of their claim   
for merger consideration.                                                       

Any questions concerning payment procedures and requests for letters of   
transmittal may be addressed to the paying agent at 1-800-777-3674 (toll free). 

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THE MERGER  

Background of the Offer and the Merger                                          

Certain contacts and negotiations between InfrastruX Group and UTILX      
relating to the offer and merger.                                               

On May 21, 2000, John Durbin, a director of Puget and Chief Executive     
Officer of InfrastruX Group, met informally with William Weisfield, Chairman    
and Chief Executive Officer of UTILX, to discuss a potential business           
combination between UTILX and InfrastruX Group, a newly formed subsidiary of    
Puget. Mr. Durbin knew of UTILX and Mr. Weisfield through his membership on     
the board of directors of UTILX.                                                

On May 24, 2000, Mr. Durbin, Mr. Weisfield and Michael Lennon, a Managing 
Director at Emerge Corporation, financial advisor to InfrastruX Group,          
discussed UTILX's business at the offices of UTILX and engaged in preliminary   
discussions about a possible fit between UTILX and InfrastruX Group.            

On May 24, 2000, InfrastruX Group entered into the Confidentiality        
Agreement with UTILX.                                                           

On May 26, 2000, Mr. Durbin, Mr. Lennon and Mr. Weisfield met at the      
offices of Emerge Corporation. At the meeting, InfrastruX Group presented       
UTILX with a proposal to purchase all of the outstanding stock of UTILX in a    
cash tender offer. InfrastruX Group also described its preliminary valuation    
of UTILX.                                                                       

On May 27, 2000, Mr. Weisfield and Darla Norris, UTILX's Senior Vice      
President and Chief Financial Officer, met with UTILX's counsel to discuss and  
review the terms of the proposal.                                               

On May 31, 2000, UTILX's board of directors met to discuss the proposal of
InfrastruX Group. Due to potential conflicts of interest (as described in Item  
3), Messrs. Durbin and Ellis were absent, having recused themselves. Mr.        
Weisfield reviewed with the Board his meetings and discussions with             
representatives of InfrastruX Group. Management also discussed its initial      
contact with potential financial advisers. Following extensive discussion, the  
Board formed the Special Committee of disinterested non-employee directors      
(the "Special Committee") to consider the sale of UTILX, including the          
proposal of InfrastruX Group. The Board also discussed the receipt of an        
unsolicited inquiry from a third party and a planned meeting with such third    
party. Mr. Weisfield and Ms. Norris reported on their identification of and     
contact with three potential investment bankers.                                

On June 6, 2000, Mr. Durbin, Mr. Lennon, Mr. Weisfield and Ms. Norris met 
at the offices of Emerge Corporation to discuss InfrastruX Group's operating    
plan and strategy, change of control provisions in UTILX's contracts, and the   
structure of the tender offer and valuation.                                    

On June 7, 2000, the Special Committee met to discuss the status of the   
proposal from InfrastruX Group. UTILX's management reported on its meetings     
with potential financial advisors and provided its recommendations to the       
Special Committee. Based on such recommendations, the Special Committee         
approved the engagement of Banc of America Securities.                          

On June 7, 2000, Mr. Durbin, Mr. Lennon, and representatives of Perkins   
Coie LLP, counsel to InfrastruX Group, met with Mr. Weisfield and Ms. Norris    
and representatives of Graham & Dunn PC, counsel to UTILX, at the offices of    
Graham & Dunn to discuss issues relating to timing and expenses, a non-         
solicitation agreement presented by InfrastruX Group, and the duties of         
UTILX's board of directors.                                                     

 On June 9, 2000, the Special Committee met to further consider the proposal
of InfrastruX Group. Mr. Weisfield reported on his meeting with InfrastruX      
Group and its counsel and reviewed the status of the proposal. With input from  
management and representatives of Banc of America Securities, the Special       
Committee discussed the factors that would be considered in analyzing UTILX's   
value, reviewed stock trading history, certain Company financial information    
and UTILX's strategic plan. Following such discussions, the Special Committee   
authorized Mr. Weisfield and Darla Norris, to pursue negotiations with          
InfrastruX Group of a definitive agreement to acquire UTILX, subject to the     
Special Committee's further review and approval and                             

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the condition that such negotiations preserve the ability of UTILX to consider  
and pursue any potentially superior offer and to obtain reimbursement of        
expenses.                                                                       

 On June 12, 2000, the Special Committee met to further discuss the proposal
of InfrastruX Group, including a proposed non-solicitation agreement, and the   
engagement of Banc of America Securities. The Special Committee received        
information from management and its corporate and securities counsel regarding  
the proposed transaction, including a review of filings necessary under         
applicable antitrust laws and securities matters related to the proposed        
transaction.                                                                    

  On June 14, 2000, UTILX and InfrastruX Group entered into a non-solicitation
agreement.                                                                      

 On June 14, 2000, UTILX engaged Banc of America Securities as its financial
advisor.                                                                        

 On June 20, 2000, members of UTILX's management, Mr. Durbin, Mr. Weisfield,
and representatives of Banc of America Securities, Graham & Dunn PC, Emerge     
Corporation and PricewaterhouseCoopers, InfrastruX Group's accountants, held    
meetings at the offices of Graham & Dunn PC to discuss due diligence matters.   

On June 20, 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, representatives of Graham & Dunn PC, Mr. 
Durbin, representatives of Emerge Corporation and representatives of Perkins    
Coie LLP met to negotiate the terms of the merger agreement.                    

From June 22 through June 28, 2000, UTILX, InfrastruX Group and their     
respective counsel continued to negotiate the merger agreement and began        
preparation of the offering materials and exhibits.                             

  On June 26, 2000, the Special Committee met with management, representatives
of Banc of America Securities and Graham & Dunn PC for an update of the status  
of the proposal and to conduct a preliminary review of the terms of the         
proposed merger agreement.                                                      

On June 28, 2000, the Special Committee reviewed the proposed transactions
with management and representatives of Graham & Dunn PC and Banc of America     
Securities, and approved the merger agreement and transactions contemplated     
thereby.                                                                        

  On June 28, 2000, the parties concluded negotiations and executed the merger
agreement.                                                                      

  InfrastruX Group's subsidiary commenced the offer on June 30, 2000. Pursuant
to the offer, which expired on July 28, 2000, InfrastruX Group's subsidiary     
purchased 6,584,685 shares (representing approximately 88% of the shares        
outstanding on such date).                                                      

Recommendation and Reasons of UTILX Special Committee                           

Recommendation of UTILX Special Committee                                     

UTILX's board, acting through its Special Committee, has (i) unanimously  
determined that each of the merger agreement, the offer and the merger is fair  
to, and in the best interests of, the stockholders of UTILX, (ii) duly approved 
the merger agreement and the transactions contemplated thereby, including the   
offer and the merger, and (iii) subject to the terms and conditions of the      
merger agreement, resolved to recommend that the stockholders of UTILX accept   
the offer and tender their shares pursuant to the offer, and approve and adopt  
the merger agreement and the merger.                                            

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Reasons for the Recommendation of UTILX Special Committee                     

In approving the merger, the tender offer and the merger agreement, and   
recommending that all shareholders tender their shares, the Special Committee   
considered a number of factors, including:                                      

  1. The Special Committee considered the current and historical financial
condition and results of operation of UTILX, as well as the prospects and   
strategic objectives of UTILX, including the risks involved in achieving    
those prospects and objectives, and the current and expected conditions in  
the industries in which UTILX operates its business. The Special Committee  
discussed its belief that UTILX's common stock has historically been        
undervalued and the challenges of a relatively small market capitalization  
in the marketplace.                                                         

 2. The Special Committee considered the relationship of the offer price
and the merger consideration to the historical market price of the common   
stock. The $6.125 offer price and the merger consideration exceed the       
average closing price of the common stock during the one month and one year 
periods preceding the announcement of the offer ($4.125 and $4.445,         
respectively) and represent a 40% premium over the $4.375 Nasdaq National   
Market closing price of the shares on June 28, 2000 (the last trading day   
prior to the announcement of the offer). The Special Committee also         
considered the form of consideration to be paid to holders of shares of the 
common stock in the offer and the merger, and the certainty of cash         
consideration as opposed to stock consideration. The Special Committee was  
aware that the consideration to be received by holders of the shares in the 
offer and the merger would be taxable to holders for federal income tax     
purposes.                                                                   

3. The Special Committee participated in presentations from Banc of   
America Securities and reviewed the opinion of Banc of America Securities,  
dated June 28, 2000, that, based upon and subject to certain considerations 
and assumptions, the consideration to be received by UTILX's stockholders   
in the offer and the merger is fair, from a financial point of view, to     
UTILX's stockholders. A copy of the opinion delivered by Banc of America    
Securities to the Special Committee, setting forth the procedures followed, 
the matters considered and the assumptions made by Banc of America          
Securities in arriving at its opinion, is attached hereto as Annex A and    
incorporated herein by reference. Stockholders are urged to read this       
opinion in its entirety.                                                    

4. The Special Committee recognized that the obligation of InfrastruX 
Group to consummate the offer and the merger is subject to a relatively     
limited number of conditions, and is not subject to any financing           
conditions on the part of InfrastruX Group. The Special Committee also      
considered the likelihood of obtaining required regulatory approvals, and   
the terms of the merger agreement regarding the obligation of both          
companies to pursue such regulatory approvals.                              

5. The Special Committee considered that under the terms of the non-  
solicitation agreement (discussed in the Section entitled "Transactions     
between InfrastruX Group and UTILX"), while UTILX was prohibited from       
soliciting acquisition proposals from third parties, UTILX was permitted to 
respond to, and under certain circumstances engage in discussions with,     
another party who made an unsolicited inquiry or acquisition proposal. The  
provisions of the merger agreement that supercede the non-solicitation      
agreement provide that UTILX may respond to, and engage in discussions with 
and furnish information to, third parties having made an unsolicited, bona  
fide acquisition proposal that the Special Committee in good faith          
determines, upon advice of its independent financial advisors, would result 
in a transaction more favorable, from a financial point of view, than the   
transactions contemplated by the merger agreement and for which there would 
not be a financing condition; if the Special Committee determines to accept 
and recommend such acquisition proposal, the merger agreement will be       
terminated and UTILX will be obligated to pay InfrastruX Group $2,000,000   
as liquidated damages. The Special Committee has considered the possible    
effect of these provisions on third parties who might be interested in      
exploring a business combination with UTILX. In this regard, the Special    
Committee recognized that the provisions of the non-solicitation agreement  
and the superceding provisions of the merger agreement were insisted upon   
by InfrastruX Group as a condition to entering into the merger agreement    
and would be a factor in negotiating the offer price and the merger         
consideration.                                                              

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6. The Special Committee considered the fact that pursuant to the non-
solicitation agreement, InfrastruX Group advanced $50,000, and upon the     
execution of the merger agreement advanced an additional $225,000, to       
defray expenses to be incurred in connection with the offer and the merger. 
Pursuant to the merger agreement, such advances are required to be repaid   
to InfrastruX Group only if the merger agreement is terminated due to the   
fact that UTILX is in material breach of any of its covenants or            
obligations under the merger agreement, or if there is any material         
inaccuracy in the representations and warranties of UTILX contained in the  
merger agreement.                                                           

7. The Special Committee considered the complementary nature of       
InfrastruX Group's business and UTILX's business, and InfrastruX Group's    
intent to maintain UTILX's business strategy and employees.                 

In view of the many factors considered, the Special Committee did not find
it practical to, and did not, quantify or otherwise assign relative weights to  
the specific factors considered. After weighing all of these considerations,    
the Special Committee determined that the merger, and the transactions          
contemplated by the merger, represented the best available transactions to      
UTILX and unanimously approved the merger agreement and resolved to recommend   
that holders of shares of common stock tender their shares in the offer.        

Provisions for Unaffiliated Security Holders                                    

Neither UTILX nor InfrastruX Group has made any provisions in connection  
with the Offer or the Merger to grant unaffiliated shareholders of UTILX access 
to UTILX's corporate records, or to obtain counsel or appraisal services at the 
expense of either UTILX or InfrastruX Group.                                    

Certain Projections for UTILX                                                   

In connection with InfrastruX Group's review of UTILX and in the course of
the negotiations between UTILX and InfrastruX Group, UTILX provided InfrastruX  
Group with certain business and financial information about UTILX which         
InfrastruX Group and Purchaser believe is not publicly available. This          
information included forecasts of potential financial performance of UTILX      
(without regard to the impact on UTILX of a transaction with InfrastruX Group)  
which had previously been provided to UTILX's board of directors by UTILX       
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, UTILX 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 UTILX's 
ongoing research and development efforts. Such future financial forecasts and   
new product developments are, according to UTILX management, highly speculative 
and should in no way be regarded as a likely outcome.                           

The forecasts provided by UTILX to InfrastruX Group were as follows:      

(i)    UTILX'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)   UTILX'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)  UTILX'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)  UTILX'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);                                 

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(v)   UTILX'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 UTILX'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 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 INFRASTRUX GROUP BY UTILX.  
NONE OF INFRASTRUX GROUP, PURCHASER, UTILX, ANY OF THEIR RESPECTIVE AFFILIATES  
OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF   
THE FOREGOING PROJECTIONS.                                                      

Opinion of Financial Advisor to the UTILX Special Committee                     

On June 14, 2000, UTILX board retained Banc of America Securities, LLC    
("Banc of America Securities") to act as its financial advisor in connection    
with the possible sale of UTILX and, if requested, to render an opinion to      
UTILX's board as to the fairness, from a financial point of view, of the merger 
consideration.                                                                  

On June 28, 2000, at a meeting of the Special Committee of the UTILX board
held to evaluate the proposed merger, representatives from Banc of America      
Securities rendered to UTILX board an oral opinion, subsequently confirmed by   
delivery of a written opinion dated June 28, 2000, to the effect that, as of    
such date and based on and subject to the assumptions made, matters considered  
and limitations set forth in such opinion and summarized below, the merger      
consideration was fair, from a financial point of view, to the stockholders of  
UTILX (other than InfrastruX Group and its affiliates).                         

 THE FULL TEXT OF BANC OF AMERICA SECURITIES' WRITTEN OPINION DATED JUNE 28,
2000, WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, MATTERS       
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY BANC OF AMERICA          
SECURITIES IN CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX A TO THIS       
INFORMATION STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. BANC OF AMERICA  
SECURITIES' OPINION IS DIRECTED TO UTILX CORPORATION BOARD, ADDRESSES ONLY THE  
FAIRNESS OF THE MERGER CONSIDERATION, FROM A FINANCIAL POINT OF VIEW, TO THE    
STOCKHOLDERS OF UTILX CORPORATION (OTHER THAN INFRASTRUX GROUP AND ITS          
AFFILIATES), AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER TO     
APPROVE THE MERGER. STOCKHOLDERS OF UTILX CORPORATION ARE URGED TO READ THE     
OPINION CAREFULLY AND IN ITS ENTIRETY. THE SUMMARY OF THE OPINION OF BANC OF    
AMERICA SECURITIES IN THIS INFORMATION STATEMENT IS QUALIFIED IN ITS ENTIRETY   
BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.                                  

 In connection with Banc of America Securities' role as financial advisor to
UTILX, and in arriving at its opinion, Banc of America Securities:              

.  reviewed certain publicly available financial information and other      
information concerning UTILX and InfrastruX Group and certain internal
analyses and other information furnished to it by UTILX;              

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.  held discussions with members of the senior management of UTILX          
regarding the business and prospects of UTILX;                        

.  reviewed the reported prices and trading activity for UTILX common       
stock;                                                                

.  compared certain financial and stock market information for UTILX with   
similar information for certain other companies whose securities are  
publicly traded;                                                      

.  reviewed the financial terms of certain recent business combinations     
which it deemed comparable in whole or in part;                       

.  reviewed the terms of the merger agreement and certain related           
documents; and                                                        

.  performed such other studies and analyses and considered such other      
factors as it deemed appropriate.                                     

In preparing its opinion, Banc of America Securities did not assume       
responsibility for independent verification of, and did not independently       
verify, any information, whether publicly available or furnished to it,         
concerning UTILX or InfrastruX Group, including, but not limited to, any        
financial information considered in connection with the rendering of its        
opinion. Accordingly, for purposes of its opinion, Banc of America Securities   
assumed and relied on the accuracy and completeness of all such information and 
did not conduct a physical inspection of any of the properties or assets of     
UTILX or InfrastruX Group, and did not prepare or obtain any independent        
evaluation or appraisal of any of the assets or liabilities of UTILX or         
InfrastruX Group.                                                               

With respect to the financial forecasts and projections made available to 
Banc of America Securities by UTILX management and used in its analyses, Banc   
of America Securities assumed that such financial forecasts and projections had 
been reasonably prepared on bases reflecting the best currently available       
estimates and judgments of the management of UTILX, as to the matters covered   
thereby. In rendering its opinion, Banc of America Securities expressed no view 
as to the reasonableness of such current fiscal year forecasts and projections  
or the assumptions on which they are based.                                     

Banc of America Securities' opinion was necessarily based on economic,    
market and other conditions as in effect on, and the information made available 
to it as of, the date of the opinion. Although subsequent developments may      
affect its opinion, Banc of America Securities expressly disclaimed any         
obligation to update, revise or reaffirm its opinion.                           

For purposes of rendering its opinion and based on the consent of UTILX's 
board of directors, Banc of America Securities assumed that, in all respects    
material to its analysis:                                                       

.  the representations and warranties of UTILX, InfrastruX Group and        
InfrastruX Group's subsidiary contained in the merger agreement were  
true and correct;                                                     

.  UTILX, InfrastruX Group and InfrastruX Group's subsidiary would each     
 perform all of the covenants and agreements to be performed by it under
the merger agreement and all conditions to the obligations of each of 
 UTILX, InfrastruX Group and InfrastruX Group's subsidiary to consummate
 the offer and merger would be satisfied without any waiver thereof; and

.  all material governmental, regulatory or other approvals and consents    
required in connection with the consummation of the merger would be   
obtained and that in connection with obtaining any necessary          
governmental, regulatory or other approvals and consents, or any      
amendments, modifications or waivers to any agreements, instruments or
 orders to which InfrastruX Group was a party or was subject or by which
it was bound, no limitations, restrictions or conditions would be     
imposed or amendments, modifications or waivers made that would have a
material adverse effect on InfrastruX Group or would materially reduce
the contemplated benefits of the merger to UTILX.                     

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SET FORTH BELOW IS A BRIEF SUMMARY OF THE MATERIAL FACTORS CONSIDERED, AND
FINANCIAL ANALYSES PERFORMED, BY BANC OF AMERICA SECURITIES IN CONNECTION WITH  
ITS OPINION, WHICH WAS RENDERED ORALLY TO UTILX CORPORATION BOARD AT ITS        
MEETING ON JUNE 28, 2000:                                                       

Discounted Cash Flow Analysis. Banc of America Securities used financial  
cash flow forecasts for UTILX for March 31 years 2001 through 2005, as          
estimated by the management of UTILX, to perform a discounted cash flow         
analysis. In conducting this analysis, Banc of America Securities first         
calculated the present values of the forecasted cash flows. Second, Banc of     
America Securities estimated the terminal value of UTILX at the end of 2005 by  
applying multiples to UTILX's estimated 2005 EBITDA (earnings before interest,  
taxes, depreciation and amortization) which multiples ranged from 6x to 8x.     
Banc of America Securities then discounted the cash flows and terminal values   
to present values using discount rates ranging from 15% to 17%. Banc of America 
Securities selected the range of discount rates to reflect the estimated        
weighted average cost of capital for UTILX. The weighted average cost of        
capital weights the cost of debt and equity by the proportion of each type of   
capital employed by the company. Banc of America Securities used the June 26,   
2000 10-year treasury note for a risk free rate, Ibboson Associates equity risk 
premium, the average of the comparable companies predicted betas derived from   
Barra's equity model, and the Company's target capital structure to calculate   
the Company's cost of capital.                                                  

This analysis indicated a range of aggregate value for UTILX, expressed as
multiples of fiscal year 2000 EBITDA, as follows:                               

Multiple of Aggregate Value to EBITDA 
------------------------------------------------------------------------    

                                                                [Download Table]

Discount  Terminal Multiple of 6x Terminal Multiple of 7x Terminal Multiple of 8x
  Rate    Fiscal Year 2000 EBITDA Fiscal Year 2000 EBITDA Fiscal Year 2000 EBITDA
--------  ----------------------- ----------------------- -----------------------
                                                                                 
  15%              7.5x                    8.4x                    9.4x          
  16%              7.2x                    8.1x                    9.0x          
  17%              6.9x                    7.8x                    8.6x          

Banc of America Securities noted that the aggregate value of the          
consideration to be received by the stockholders of UTILX in connection with    
the merger represented implied multiples of (a) .5x latest twelve months        
revenues, (b) 21.5 latest twelve months EBIT and (c) 8.2x latest twelve months  
EBITDA for UTILX.                                                               

Analysis of Certain Publicly Traded Companies. Based on public and other  
available information, Banc of America Securities calculated the multiples of   
aggregate value to each of (a) revenues, (b) earnings before interest and taxes 
("EBIT") and (c) earnings before interest, taxes, depreciation and amortization 
("EBITDA"), each for the latest twelve months, for four companies in the        
network infrastructure services industry that Banc of America Securities deemed 
to be comparable to UTILX.                                                      

Banc of America Securities defined aggregate value to mean:               

.  equity value, defined as the product of the number of option adjusted    
  shares of common stock outstanding for a company multiplied by its stock
price; plus                                                           

.  outstanding funded debt; less                                            

.  cash and cash equivalents.                                               

The following table sets forth multiples indicated by this analysis for   
these four companies:                                                           

                                                                [Download Table]

                                 Range of                  
    Aggregate Value to:         Multiples     Median  Mean 
----------------------------  --------------  ------  -----
                                                           
Latest twelve months revenue   1.1x to 1.5x    1.3x   1.3x 
Latest twelve months EBIT     11.2x to 12.2x  12.3x   11.7x
Latest twelve months EBITDA    7.3x to 8.3x    8.4x   7.8x 

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 The comparable company analysis compared UTILX to the four companies in the
network infrastructure services industry on the basis that the companies        
selected were the most relevant. Consequently, Banc of America Securities did   
not include every company that could be deemed to be a participant in the same  
industry.                                                                       

Banc of America Securities noted that the aggregate value of the          
consideration to be received by the stockholders of UTILX in connection with    
the merger represented implied multiples of (a) .5x latest twelve months        
revenues, (b) 21.5 latest twelve months EBIT and (c) 8.2x latest twelve months  
EBITDA for UTILX.                                                               

Analysis of Selected Precedent Transactions. Based on public and other    
available information, Banc of America Securities calculated the multiples of   
aggregate value to each of (a) latest twelve months revenues, (b) EBIT and (c)  
net income for the acquired company implied in eight acquisitions of network    
infrastructure services companies that have been announced since 1997.          

 The following table sets forth the multiples indicated by this analysis for
these eight acquisitions:                                                       

                                                                [Download Table]

    Aggregate Value to:           Range of Multiples         Median         Mean
----------------------------      ------------------         ------         ----
                                                                                
Latest twelve months revenue         .3x to 1.3x              .7x           .8x 
Latest twelve months EBIT            8.5x to 9.5x             6.4x          9.0x
Latest twelve months EBITDA          5.6x to 6.6x             4.8x          6.1x

The comparable transactions analysis compared the merger to the eight     
acquisitions of network infrastructure services companies on the basis that the 
transactions selected were the most relevant given the factors considered       
above. Consequently, Banc of America Securities did not include every           
transaction that could be deemed to have occurred in the relevant industries.   

Banc of America Securities noted that the aggregate value of the          
consideration to be received by the stockholders of UTILX in connection with    
the merger represented implied multiples of (a) .5x latest twelve months        
revenues, (b) 21.5 latest twelve months EBIT and (c) 8.2x latest twelve months  
EBITDA for UTILX.                                                               

No company or transaction used in the comparable company or comparable    
transactions analyses is identical to UTILX or to the merger. Accordingly, an   
analysis of the foregoing results involves complex considerations and judgments 
concerning differences in financial and operating characteristics of the        
companies and other factors that could affect the public trading value of the   
companies to which UTILX and the merger are being compared.                     

Premiums Paid Analysis. Banc of America Securities reviewed the           
consideration paid or offered in 30 merger and acquisition transactions         
announced in 1999 and 2000 involving U.S. industrial or industrial services     
companies with pre-offer market capitalizations of between $25 and $100         
million. Banc of America Securities calculated the premiums paid or offered     
relative to the stock prices of the acquired companies one day and four weeks   
before the announcement of the acquisition offer.                               

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This analysis indicated the following median and mean premiums:           

                                                                [Download Table]

                                      Premium One Day   Premium Four Weeks 
                                    Before Announcement Before Announcement
                                    ------------------- -------------------
                                                                           
Median.............................        18.6%               37.2%       
Mean...............................        27.4%               43.6%       

Banc of America Securities noted that the per share value of the cash     
consideration to be received by UTILX stockholders in connection with the       
merger implied a premium of 32.3% over UTILX's closing stock price on June 23,  
2000. The premium implied by the merger over UTILX's closing stock price four   
weeks before that date was 53.8%.                                               

  The summary set forth above does not purport to be a complete description of
the opinion of Banc of America Securities to UTILX board or the financial       
analyses performed and factors considered by Banc of America Securities in      
connection with its opinion. The preparation of a fairness opinion is a complex 
analytic process involving the application of subjective business judgment in   
various determinations as to the most appropriate and relevant methods of       
financial analyses and the application of those methods to the particular       
circumstances and, therefore, such an opinion is not readily susceptible to     
summary description. Banc of America Securities believes that its analyses and  
the summary set forth above must be considered as a whole and that selecting    
portions of its analyses, without considering all analyses, or selecting        
portions of the above summary, without considering all factors and analyses,    
could create a misleading or incomplete view of the processes underlying such   
analyses and opinion. In arriving at its fairness determination, Banc of        
America Securities did not assign specific weights to any particular analyses.  

In performing its analyses and arriving at its opinion, Banc of America   
Securities utilized a variety of generally accepted valuation methods. The      
analyses were prepared solely for the purpose of enabling Banc of America       
Securities to provide its opinion to UTILX board as to the fairness, from a     
financial point of view, of the merger consideration to the stockholders of     
UTILX and do not purport to be appraisals or necessarily reflect the prices at  
which businesses or securities actually may be sold, which are inherently       
subject to uncertainty. In connection with its analyses, Banc of America        
Securities made, and was provided by UTILX with, numerous assumptions with      
respect to industry performance, general business, economic, market and         
financial conditions and other matters, many of which are beyond the control of 
UTILX. The assumptions and estimates contained in such analyses, and the ranges 
of valuations resulting from any particular analysis, are not necessarily       
indicative of actual historical values or future results, which may be          
significantly more or less favorable than those suggested by such analyses.     
Because such analyses are inherently subject to uncertainty, being based upon   
numerous factors or events beyond the control of UTILX, future results or       
actual values may differ materially from these forecasts or assumptions.        

The type and amount of consideration payable in the offer and merger were 
determined through negotiations between UTILX and InfrastruX Group and were     
approved by UTILX board, acting through its Special Committee. The decision to  
enter into the merger agreement was solely that of UTILX board, acting through  
its Special Committee. Banc of America Securities' opinion and financial        
analyses were only one of a number of factors taken into consideration by UTILX 
board in its evaluation of the proposed offer and merger and should not be      
viewed as determinative of the views of UTILX board with respect to the merger  
consideration or the merger.                                                    

 Pursuant to the terms of Banc of America Securities' engagement, UTILX paid
$200,000 to Banc of America Securities for rendering its opinion and Banc of    
America Securities will receive an additional $550,000 upon consummation of the 
transaction. In addition, UTILX has agreed to reimburse Banc of America         
Securities for its reasonable travel and other out-of-pocket expenses,          
including reasonable fees and disbursements of counsel, and to indemnify Banc   
of America Securities and certain related parties against                       

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certain liabilities, including certain liabilities under the federal securities 
laws, relating to, or arising out of, its engagement.                           

In the past two years, Banc of America Securities provided commercial     
banking services to UTILX for which UTILX paid approximately $15,000 to Banc of 
America Securities. This relationship terminated prior to UTILX's engagement of 
Banc of America Securities as its financial advisor for this transaction.       

UTILX selected Banc of America Securities as its financial advisor in     
connection with the offer and merger based on Banc of America Securities's      
reputation, expertise and familiarity with UTILX and its business. Banc of      
America Securities is an internationally recognized investment banking firm     
and, as a customary part of its investment banking business, is engaged in the  
valuation of businesses and their securities in connection with mergers and     
acquisitions, negotiated underwritings, private placements and valuations for   
estate, corporate and other purposes.                                           

Purpose and Structure of the Merger; Reasons of InfrastruX Group for the Merger 

The purpose of the merger is for InfrastruX Group to increase InfrastruX  
Group's ownership of UTILX from approximately 88% to 100%. Upon consummation of 
the merger, UTILX will become a wholly-owned subsidiary of InfrastruX Group.    
The acquisition of the shares was structured as a cash tender offer followed by 
a cash merger so as to effect a prompt and orderly transfer of ownership of     
UTILX from UTILX's public stockholders to InfrastruX Group and InfrastruX       
Group's subsidiary, and so as to provide such stockholders with cash for all of 
their shares.                                                                   

Under the Certificate of Incorporation of UTILX, the approval of UTILX's  
board and the affirmative vote of a majority of the votes entitled to be cast   
by the holders of all the outstanding shares as of the record date are required 
to approve and adopt the merger agreement. UTILX's board has approved and       
adopted the merger agreement and the transactions contemplated thereby, and the 
only remaining required corporate action of UTILX is the approval and adoption  
of the merger agreement by a majority vote of UTILX stockholders. InfrastruX    
Group has agreed to vote all shares it beneficially owns in favor of the        
approval and adoption of the merger agreement. Because InfrastruX Group and its 
affiliates own approximately 88% of the outstanding shares as of the record     
date, the approval and adoption of the merger agreement is assured without the  
vote of any other stockholder.                                                  

Plans for UTILX after the Merger                                                

Except as set forth in this information statement, it is expected that    
initially following the merger, the business and operations of UTILX will       
continue substantially as they are currently being conducted.                   

InfrastruX Group intends to conduct a detailed review of UTILX 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 UTILX's business, corporate structure, capitalization,       
management or dividend policy.                                                  

  InfrastruX Group intends to name three additional directors to UTILX's board
prior to the effective time of the merger, pursuant to its right to do so under 
the merger agreement.                                                           

Except as described above and for the transactions contemplated by the    
merger agreement, InfrastruX Group has no current plans or proposals which      
relate to or would result in: (a) an extraordinary corporate transaction, such  
as a merger, reorganization or liquidation involving UTILX; (b) a sale or       
transfer of a material amount of assets of UTILX or any of it subsidiaries; (c) 
any change in the board or management of UTILX; (d) any material change in      
UTILX's capitalization prior to the consummation of the merger; or (e) any      
other material change in UTILX's corporate structure or business.               

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Merger Agreement                                                                

The following is a summary of the material provisions of the merger       
agreement which relate to the merger. This summary does not purport to be       
complete and is qualified in its entirety by reference to the merger agreement, 
which is attached hereto as Annex C and is incorporated herein by reference.    
Stockholders are urged to read the merger agreement in its entirety and to      
consider it carefully.                                                          

Recommendation. UTILX's board, acting through a special committee of      
disinterested directors, has (i) unanimously determined that each of the merger 
agreement, the offer and the merger is fair to, and in the best interests of,   
the stockholders of UTILX, (ii) duly approved the merger agreement and the      
transactions contemplated thereby, including the offer and the merger and (iii) 
subject to the terms and conditions of the merger agreement, resolved to        
recommend that the stockholders of UTILX accept the offer and tender their      
shares thereunder to InfrastruX Group's subsidiary and approve and adopt the    
merger agreement and the merger.                                                

Appointment of UTILX Directors by InfrastruX Group. The merger agreement  
provides that, promptly upon the purchase by InfrastruX Acquisition, Inc. of    
shares tendered in the offer, InfrastruX Group shall be entitled to designate a 
majority of the members of UTILX's board of directors, subject to compliance    
with Section 14(f) of the Exchange Act. UTILX has agreed to cause InfrastruX    
Group's designees to be elected as directors of UTILX, including increasing the 
size of the board of directors to the extent permitted by its Restated          
Certificate of Incorporation and/or secure the resignations of such number of   
directors as is necessary to cause InfrastruX Group's designees to be elected   
as directors of UTILX.                                                          

 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 UTILX or any extension  
by UTILX of the time for the performance of any of the obligations or other     
acts of InfrastruX Group or Purchaser or waiver of any of UTILX's rights        
thereunder, will require the concurrence of a majority of those directors of    
UTILX then in office who were not designated by InfrastruX Group.               

The Merger. The merger agreement provides that as promptly as practicable 
after all conditions to the merger set forth therein have been satisfied or, to 
the extent permitted thereunder, waived, InfrastruX Group's subsidiary will be  
merged with and into UTILX in accordance with Delaware law. As a result of the  
merger, the separate existence of InfrastruX Group's subsidiary will cease and  
UTILX will continue as the surviving corporation.                               

  Effective Time. The merger shall become effective at such time as the merger
agreement is approved by UTILX stockholders and the Certificate of Merger is    
duly filed with the Secretary of State of the State of Delaware.                

  Merger Consideration. At the effective time, each outstanding share of stock
of UTILX (other than shares held in the treasury of UTILX, shares owned by      
InfrastruX Group and its affiliates or shares as to which appraisal rights have 
been properly exercised) will be converted, by virtue of the merger and without 
any action on the part of UTILX stockholders, into the right to receive $6.125  
per share in cash, without interest thereon.                                    

Each holder of outstanding options under any employee stock option or     
compensation plan or arrangement and each holder of outstanding warrants to     
purchase shares of common stock will receive, for each share subject to such    
option or warrant an amount (net of applicable withholding tax) in cash equal   
to the difference between $6.125 and the per share exercise price of such       
option or warrant, to the extent $6.125 is greater than the per share exercise  
price of such option or warrant.                                                

Surrender of Certificates and Payment Procedures. As soon as practicable  
after the effective time, the paying agent will mail to each record holder of   
an outstanding certificate representing a share immediately prior to the        
effective time, a letter of transmittal and instructions for use in effecting   
the surrender of such certificate in exchange for $6.125 in cash per share.     
Upon surrender to the paying agent of a certificate representing a              

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share, together with the letter of transmittal, duly executed, and such other   
documents as may reasonably be required by the paying agent, the holder of such 
certificate shall be entitled to receive the merger consideration. Until        
surrendered in accordance with the foregoing instructions, each certificate     
representing a share will represent for all purposes only the right to receive  
$6.125 in cash per share. Any merger consideration made available to the paying 
agent that remains unclaimed by stockholders for six months after the effective 
time will be delivered to UTILX and any UTILX stockholders who have not         
theretofore made an exchange must thereafter look to UTILX for payment of their 
claim for merger consideration.                                                 

  Transfer of Shares. No transfer of shares will be made on the share transfer
books of UTILX after the effective time. If, at or after the effective time,    
certificates of shares are presented, they will be canceled and exchanged for   
the right to receive $6.125 in cash per share as provided in "-- Surrender of   
Certificates and Payment Procedures."                                           

 Covenants. The merger agreement contains various customary covenants of the
parties thereto. A description of certain of these covenants follows:           

Pursuant to the merger agreement, UTILX 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 InfrastruX Group shall otherwise consent in writing, to carry on   
the businesses of UTILX and its subsidiaries 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, UTILX will promptly notify InfrastruX Group 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 UTILX nor any Subsidiary will do any of the following, without the      
prior written consent of InfrastruX Group: (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 UTILX'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 UTILX 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 exercise of stock options therefor outstanding as of            

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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 UTILX, 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 UTILX, 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 UTILX 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 generally accepted accounting principals, 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 balance sheet of     
UTILX dated March 31, 2000; or (xix) agree in writing or otherwise to take any  
of the actions described in (i) through (xviii) above.                          

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 InfrastruX Group and UTILX (the "Confidentiality Agreement"), from 
the date of the merger agreement to the effective time, UTILX shall, and shall  
cause its subsidiaries, officers, directors, employees and agents to, afford    
the officers, employees and agents of InfrastruX Group, Purchaser and their     
affiliates and the attorneys, accountants, banks, other financial institutions  
and investment banks working with InfrastruX Group 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 InfrastruX Group, Purchaser and their affiliates   
and the attorneys, banks, other financial institutions and investment banks     
working with InfrastruX Group or Purchaser, all financial, operating and other  
data and information as they reasonably request. Subject to the requirements of 
law, InfrastruX Group 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.                                                  

 The No Shop Provision. The merger agreement provides that until the earlier
of effective time or termination of the merger agreement, UTILX 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 InfrastruX Group and its   
affiliates, agents and representatives), or (ii) participate in any discussions 
or negotiations with, or disclose any non-public information concerning UTILX   
or any of its subsidiaries to, or                                               

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afford any access to the properties, books or records of UTILX 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 InfrastruX Group 
and its affiliates, agents and representatives), in connection with any         
Acquisition Proposal with respect to UTILX. Under the merger agreement, an      
"Acquisition Proposal" with respect to an entity means any proposal 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. UTILX 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, UTILX will (i)       
notify InfrastruX Group 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 InfrastruX Group 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, UTILX 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 InfrastruX Group).     

  Public Announcements. Pursuant to the merger agreement, InfrastruX Group and
Purchaser on the one hand and UTILX 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.                                                                

  Actions by UTILX. Pursuant to the merger agreement, subject to the terms and
conditions therein, UTILX shall, and shall cause its Subsidiaries to, cooperate 
with InfrastruX Group and Purchaser and take all such actions as may be         
reasonably requested by InfrastruX Group and Purchaser to accomplish the        
merger.                                                                         

  Options; Employee Benefit Plans. The merger agreement provides that, as soon
as reasonably practicable, UTILX 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 tender 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   
tender 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 UTILX adopt resolutions that terminate or
amend 401(k) plans or other employee benefit plans in accordance with any       
directions given by InfrastruX Group prior to the effective time.               

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Indemnification; Litigation. Pursuant to the merger agreement, from and   
after the effective time, InfrastruX Group will cause the surviving corporation 
to fulfill and honor in all respects the obligations of UTILX pursuant to any   
indemnification agreements between UTILX and its directors and officers as of   
the effective time (the "Indemnified Parties"). The Restated Certificate 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 UTILX 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 UTILX, unless such             
modification is required by law. For a period of six years after the effective  
time, InfrastruX Group 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 UTILX's directors' and officers' liability insurance policy on terms 
comparable to those applicable to the current directors and officers of UTILX;  
provided, however, that in no event will InfrastruX Group or the surviving      
corporation be required to expend in excess of 150% of the annual premium       
currently paid by UTILX for such coverage (or such coverage as is available for 
such 150% of such annual premium).                                              

The merger agreement provides that UTILX shall give InfrastruX Group the  
opportunity to participate in the defense or settlement of any stockholder      
litigation against UTILX and its directors relating to any of the transactions  
contemplated by the merger agreement until the purchase of the shares pursuant  
to the tender offer, and thereafter, shall give InfrastruX Group the            
opportunity to direct the defense of such litigation and, if InfrastruX Group   
so chooses to direct such litigation, InfrastruX Group shall give UTILX and its 
directors an opportunity to participate in such litigation; provided, however,  
that no settlement of such litigation shall be agreed to without InfrastruX     
Group's consent; and provided further that no settlement requiring a payment by 
a director shall be agreed to without such director's consent.                  

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 tender 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 tender offer or the transactions  
contemplated by the merger agreement, UTILX and the board of directors of UTILX 
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.                                                           

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Representations and Warranties. The merger agreement contains various     
customary representations and warranties of the parties thereto including, but  
not limited to, representations by UTILX and each of its Subsidiaries as to the 
absence of certain changes or events concerning UTILX's business since March    
31, 2000, compliance with law, litigation, employee benefit plans, real         
property and leases, trademarks, intellectual property, environmental matters,  
and material agreements, contracts and commitments.                             

  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 UTILX:                                                          

(i)   by mutual written agreement of the Boards of Directors of InfrastruX  
Group and UTILX;                                                

(ii)  by ether InfrastruX Group or UTILX if 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 tender
offer and such order, decree, ruling or other action shall have 
become final and nonappealable;                                 

The merger agreement provides that, upon signing of merger agreement,     
InfrastruX Group shall advance to UTILX $225,000 to fund expenses to be         
incurred by UTILX in connection with the transactions contemplated by the       
merger agreement. UTILX shall repay to InfrastruX Group these advances plus the 
$50,000 advanced to UTILX by InfrastruX Group under the non-solicitation        
agreement, in the event InfrastruX Group or Purchaser terminates the merger     
agreement as a result of UTILX 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 UTILX contained in 
the merger agreement.                                                           

The merger agreement provides that UTILX shall pay to InfrastruX Group, 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  
UTILX or any committee thereof shall have approved, or recommended that         
stockholders of UTILX 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  
UTILX or any committee thereof shall have withdrawn or modified its approval    
of, or recommendation that the stockholders of UTILX accept or approve (as the  
case may be), the tender offer or shall have resolved to do any of the          
foregoing; or (iii) UTILX shall have failed to include in Schedule 14D-9 the    
recommendation of the board of directors of UTILX that the stockholders of      
UTILX accept the tender offer.                                                  

Pursuant to the merger agreement the Break-up Fee shall be deemed to be   
liquidated damages.                                                             

Delisting of UTILX Shares Following the Merger                                  

  Following the merger, the holders of shares (other than InfrastruX Group and
its affiliates) will cease to participate in future earnings or growth, if any, 
of UTILX or benefit from any increases, if any, in the value of UTILX, and they 
no longer will bear the risk of any decreases in the value of UTILX. Because    
the shares will be canceled as a result of the merger, the shares will be       
delisted from the Nasdaq National Market System.                                

 The shares are currently registered under the Exchange Act. Registration of
the shares under the Exchange Act will be terminated and UTILX will be relieved 
of the obligation to comply with the public reporting requirements of the       
Exchange Act, including the obligation to comply with the proxy rules of        
Regulation 14A and 14C under the Exchange Act.                                  

Regulatory Approvals                                                            

InfrastruX Group filed the required Premerger Notification and Report Form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,     
with respect to the offer and the merger with the Antitrust                     

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Division of the Department of Justice and the Federal Trade Commission on June  
30, 2000. The applicable waiting period expired on July 15, 2000.               

We believe that there are no other material regulatory or governmental    
approvals required in order for the merger to be consummated.                   

 The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as InfrastruX Group's acquisition of    
UTILX. At any time before or after the merger, the FTC or the Antitrust         
Division could take such action under the antitrust laws as it deems necessary  
or desirable in the public interest, including seeking to enjoin the            
consummation of the merger or seeking the divestiture of shares purchased by    
InfrastruX Group's subsidiary or the divestiture of substantial assets of       
InfrastruX Group, UTILX or their respective subsidiaries. Private parties and   
state attorneys general may also bring legal action under federal or state      
antitrust laws under certain circumstances. There can be no assurance that a    
challenge to the merger on antitrust grounds will not be made or, if such a     
challenge is made, of the result thereof.                                       

Financing of the Merger                                                         

The total amount of funds required by InfrastruX Group and InfrastruX     
Group's subsidiary to consummate the merger and to pay related fees and         
expenses is estimated to be approximately $5 million. The merger is not         
conditioned on InfrastruX Group obtaining financing. InfrastruX Group expects   
to fund the merger and to pay related fees and expenses from internally         
generated funds. No alternate financing plan currently exists.                  

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain members of UTILX's management and UTILX's board (as well as other 
employees of UTILX) have certain interests in the merger that are described     
below that are in addition to their interests as stockholders generally. UTILX  
board took these interests into account in approving and adopting the merger    
agreement and the transactions contemplated thereby.                            

Pursuant to the terms of the merger agreement, immediately prior to the   
effective date of the merger, each option to purchase shares outstanding under  
any stock option or compensation plan or arrangement of UTILX shall be          
cancelled and that UTILX shall pay to the holder of each such option an amount  
in cash determined by multiplying (i) the excess, if any, of the amount of the  
merger consideration over the applicable per share exercise price of such       
option or warrant by (ii) the number of shares to which such option or warrant  
related.                                                                        

Pursuant to the merger agreement, UTILX and InfrastruX Group have entered 
into an employment agreement with William Weisfield, President and Chief        
Executive Officer of UTILX, which will be effective on the closing of the       
merger. Mr. Weisfield will serve as the President of UTILX following the        
merger. The agreement may be terminated by either Mr. Weisfield or UTILX 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 UTILX's   
Board. Mr. Weisfield will also be granted stock options, following InfrastruX   
Group's adoption of a stock option plan, to purchase a number of shares of      
InfrastruX Group common stock equal to 1% of InfrastruX Group's outstanding     
stock, subject to standard vesting provisions and at an exercise price equal to 
the fair market value of the InfrastruX Group 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.                              

  Indemnification of UTILX directors and officers InfrastruX Group, InfrastruX
Group's subsidiary and UTILX have each agreed that for six years after the      
effective time, InfrastruX Group will cause UTILX to indemnify and hold         
harmless the present and former officers and directors of UTILX in respect of   
acts or omissions occurring at or prior to the effective time to the fullest    
extent provided by Delaware law or any other                                    

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applicable laws or as provided under UTILX's certificate of incorporation and   
bylaws in effect on the date of the merger agreement, subject to any limitation 
imposed from time to time under applicable law.                                 

For a period of six years after the effective time, InfrastruX Group 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 UTILX's directors' and      
officers' liability insurance policy on terms comparable to those applicable to 
the current directors and officers of UTILX; provided, however, that in no      
event will InfrastruX Group or the surviving corporation be required to expend  
in excess of 150% of the annual premium currently paid by UTILX for such        
coverage (or such coverage as is available for such 150% of such annual         
premium).                                                                       

TRANSACTIONS BETWEEN INFRASTRUX GROUP AND UTILX 

John D. Durbin, a director of UTILX, is also President and Chief Executive
Officer of InfrastruX Group and a director of Puget John W. Ellis, a director   
of UTILX, is also a director of Puget 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 UTILX'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 UTILX's compensation      
committee, and Mr. Durbin is also a member of UTILX's audit committee.          

 UTILX provides services to Puget in the ordinary course of business. In the
past fiscal year ended March 31, 2000, Puget made payments to UTILX in exchange 
for such services totaling approximately $480,000.                              

Effective as of May 24, 2000, UTILX and InfrastruX Group entered into the 
Confidentiality Agreement pursuant to which the parties agreed to provide,      
among other things, for the confidential treatment of their discussions         
regarding the tender 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     
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, UTILX and InfrastruX Group entered into a  
non-solicitation and expense reimbursement 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, UTILX 
would cease all discussions with any parties other than InfrastruX Group 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. UTILX 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 UTILX. UTILX was       
required to immediately notify InfrastruX Group of any unsolicited inquiries or 
proposals, and if an unsolicited proposal was received by UTILX, InfrastruX     
Group was relieved of its "standstill" obligations, as described above, under   
the Confidentiality Agreement.                                                  

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The non-solicitation agreement also provided that, in order to facilitate 
negotiations, InfrastruX Group would reimburse UTILX for its actual reasonable  
expenses incurred with respect to professional fees in connection with the      
tender offer and the merger, up to a maximum amount of $150,000, and in         
accordance with such agreement on June 14, 2000 InfrastruX Group advanced to    
UTILX $50,000.                                                                  

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES 

U.S. Shareholders. The receipt of cash for shares by a U.S. shareholder in
the merger (including by reason of exercise of appraisal 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 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 appraisal 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). 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.                                                                      

  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 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.                                                   

U.S. Shareholders. In order to avoid "backup withholding" on payments of  
cash pursuant to the merger (including any cash paid pursuant to the exercise   
of appraisal rights), a U.S. shareholder surrendering shares in the merger      
must, unless an exemption applies, provide the paying agent 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 may impose a   
penalty on such stockholder and payment of cash to such stockholder pursuant to 
the merger may be subject to backup withholding of 31%. All U.S. Shareholders   
surrendering shares pursuant to the merger should complete and sign the         
Substitute Form W-9 included as part of the letter of transmittal which will be 
sent by the paying agent following the effective date of the merger 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 paying agent the Substitute Form W-8 included as                            

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part of the letter of transmittal which will be sent by the paying agent after  
the effective date of the merger. Foreign corporations should follow the        
instructions above with respect to the completion of Substitute Form W-9.       

  For purposes of this information statement, "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 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 merger.                  

THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN SHAREHOLDERS,   
DEPENDING ON THEIR CIRCUMSTANCES, INCLUDING SHAREHOLDERS WHO ACQUIRED SHARES    
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.   

APPRAISAL RIGHTS

 Stockholders of UTILX are entitled to appraisal rights under Section 262 of
the General Corporation Law of the State of Delaware as to shares owned by      
them. Set forth below is a summary description of Section 262. Section 262 is   
reprinted in its entirety as Annex B to this information statement. All         
references in Section 262 and in this summary to a "stockholder" are to the     
record holder of the shares as to which appraisal rights are asserted. A person 
having a beneficial interest in shares that are held of record in the name of   
another person, such as a broker or nominee, must act promptly to cause the     
record holder to follow the steps summarized below properly and in a timely     
manner to perfect whatever appraisal rights the beneficial owner may have.      

FOR MORE DETAIL REGARDING APPRAISAL RIGHTS, SEE ANNEX B. THIS SUMMARY AND 
ANNEX B SHOULD BE REVIEWED CAREFULLY BY ANY HOLDER WHO WISHES TO EXERCISE       
STATUTORY APPRAISAL RIGHTS OR WHO WISHES TO PRESERVE THE RIGHT TO DO SO BECAUSE 
FAILURE TO COMPLY STRICTLY WITH THE PROCEDURES SET FORTH HEREIN AND THEREIN     
WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS.                                    

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 In accordance with Section 262, any stockholder may, before the vote at the
special meeting upon the proposal to approve and adopt the merger agreement,    
demand in writing from UTILX the appraisal of the fair value of such            
stockholder's shares. Such demand must be made within 20 days after the day of  
mailing of this information statement and must reasonably inform UTILX of the   
identity of the stockholder and that the stockholder intends thereby to demand  
the appraisal of such stockholder's shares. In order to be entitled to          
appraisal rights with respect to any shares, a stockholder must be the record   
holder of such shares on the date of such demand, must continuously hold such   
shares through the effective time, must properly demand an appraisal as         
described in this paragraph and the following paragraphs, and must not vote in  
favor of the proposal to approve and adopt the merger agreement. Any            
stockholder (other than a record owner who is acting as a nominee holder for    
different beneficial owners) seeking to exercise appraisal rights for a         
portion, but not all, of such stockholder's shares should consult with legal    
counsel before taking any such action. UTILX believes that Delaware law has not 
clearly addressed the ability of such a stockholder to exercise appraisal       
rights with respect to a portion, but not all, of such stockholder's shares.    
Should a stockholder (other than a record owner who is acting as a nominee      
holder for different beneficial owners) seek to exercise appraisal rights with  
respect to a portion, but not all, of such stockholder's shares, UTILX          
presently intends to assert that by doing so such stockholder has waived such   
stockholder's appraisal rights. Stockholders should be aware that a Delaware    
court may find that such stockholder has so waived such stockholder's appraisal 
rights. A stockholder who elects to exercise appraisal rights must mail or      
deliver such stockholder's written demand to the president of UTILX at 22820    
Russell Road, P.O. Box 97009, Kent, Washington 98064-9709. A vote against the   
merger or a failure to vote for the merger would not by itself constitute       
sufficient notice of a stockholder's election to exercise appraisal rights.     

  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 certificate or   
certificates representing such stockholder's shares. If the 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 the 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,    
such person 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 such person 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.                                                                         

Within 120 days after the effective time, either the surviving corporation
or any stockholder who has complied with the required conditions of Section 262 
may file a petition in the Delaware Court of Chancery demanding a determination 
of the fair value of the shares of the dissenting stockholders. UTILX is under  
no obligation to and has no present intention to file such a petition.          
Accordingly it is the obligation of the former stockholders to initiate all     
necessary action to perfect their appraisal rights in respect of such shares    
within the time prescribed in Section 262.                                      

 Within 120 days after the Effective Time, any former holder of Common Stock
who has complied with the requirements for exercise of appraisal rights will be 
entitled, upon written request, to receive from UTILX a statement setting forth 
the aggregate number of shares not voted in favor of the adoption of the merger 
agreement and with respect to which demands for appraisal have been received    
and the aggregate number of former holders of such shares. Such statement must  
be mailed within ten days after the expiration of the period for delivery of    
demands for appraisal, whichever is later.                                      

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If a petition for an appraisal is timely filed, after a hearing on such   
petition, the Delaware Chancery Court will determine which stockholders are     
entitled to appraisal rights and will appraise the shares formerly 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, if any, to be paid upon the amount       
determined to be the fair value. In determining such fair value, the Delaware   
Chancery Court is to take into account all relevant factors. The Delaware       
Supreme Court has stated that "proof of value by any techniques or methods      
which are generally considered acceptable in the financial community and        
otherwise admissible in court" should be considered in the appraisal            
proceedings. In addition, Delaware courts have decided that the statutory       
appraisal remedy, depending on factual circumstances, may or may not be a       
dissenter's exclusive remedy. The Court will also determine the amount of       
interest, if any, to be paid upon the amounts to be received by persons whose   
shares have been appraised.                                                     

  Stockholders considering seeking appraisal should note that the "fair value"
of their shares determined under Section 262 could be more than, the same as or 
less than $6.125 per share, and that opinions of investment banking firms as to 
fairness, from a financial point of view, are not opinions as to fair value     
under Section 262. The cost of the appraisal proceeding may be determined by    
the Delaware Chancery Court and taxed against the parties as the Delaware       
Chancery Court deems equitable in the circumstances. Upon application of a      
dissenting stockholder, the Delaware Chancery Court 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.                          

From and after the effective time, no stockholder who has duly demanded   
appraisal in compliance with Section 262 will 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 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 stockholder shall
have the right to withdraw such stockholder's demand for appraisal and to       
accept the terms offered in the merger agreement; after this period, a          
stockholder may withdraw such stockholder's demand for appraisal only with the  
consent of the surviving corporation. If no petition for appraisal is filed     
with the Delaware Chancery Court within 120 days after the effective time,      
stockholders' rights to appraisal shall cease, and all stockholders who had     
previously demanded appraisal shall thereafter be entitled to receive $6.125    
per share, in cash, without interest thereon, upon valid surrender of the       
certificates that formerly represented their shares. Inasmuch as UTILX has no   
obligation to file such a petition, and has no present intention to do so, any  
stockholder who desires such a petition to be filed is advised to file it on a  
timely basis. However, no petition timely filed in the Delaware Chancery Court  
demanding appraisal shall be dismissed as to any stockholder without the        
approval of the Delaware Chancery Court, and such approval may be conditioned   
upon such terms as the Delaware Chancery Court deems just.                      

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CERTAIN INFORMATION CONCERNING UTILX AND THE SHARES GENERALLY 

  UTILX is a Delaware corporation with its principal executive offices located
at 22820 Russell Road, P.O. Box 97009, Kent, Washington 98064. UTILX 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.                                                                         

Price Range of Shares; Dividends                                                

 The shares are authorized for quotation on the Nasdaq National Market under
the symbol "UTLX."                                                              

                                                                [Download Table]

                                                    High    Low   Volume(1)
                                                   ------ ------- ---------
                                                                           
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..................................... 6 1/4  3 3/4   4,253,384
Second Quarter (through August 23, 2000).......... 6 1/8  5 7/8   2,857,015

--------                                                                        
(1)  Aggregate trading volume per period.                                       

UTILX 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 InfrastruX Group's intention to        
commence the Offer, the closing price per share as reported on the Nasdaq was   
$4.375. On August 23, 2000, the closing price per share as reported on the      
Nasdaq was $6.0313.                                                             

 SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.

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CERTAIN INFORMATION CONCERNING INFRASTRUX GROUP 
AND INFRASTRUX GROUP'S SUBSIDIARY 

Purchaser is a newly formed Delaware corporation organized in connection  
with the tender offer and the merger and has not carried on any activities      
other than in connection with the tender offer and the merger. The principal    
offices of Purchaser are located at 411- 108th Avenue N.E., Bellevue,           
Washington 98004 and its business telephone number is (425) 462-3162. Purchaser 
is a wholly owned subsidiary of InfrastruX Group.                               

InfrastruX Group is a Washington corporation and a wholly owned subsidiary
of Puget InfrastruX Group was formed in June, 2000 by Puget to acquire network  
infrastructure services companies serving the utility and telecommunication     
industries. The principal offices of InfrastruX Group are located at 411--108th 
Avenue N.E., Bellevue, Washington 98004 and its business telephone number is    
(425) 462-3162. InfrastruX Group currently has no business or operations.       

Puget 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 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.                            

OWNERSHIP OF SHARES 

  As of August 4, 2000, there were 7,475,944 shares outstanding. The following
table sets forth the beneficial ownership of shares as of August 4, 2000 by     
each person known by UTILX to own more than 5% of the outstanding shares. None  
of the directors and executive officers of UTILX as at such date own any        
shares. Each of the stockholders named below has sole voting and investment     
power with respect to the shares beneficially owned:                            

                                                                [Download Table]

                         Number of Shares of                            
  Name and Address of    UTILX Common Stock    Percent of UTILX Common  
   Beneficial Owner      Beneficially Owned  Stock Beneficially Owned(1)
-----------------------  ------------------- ---------------------------
                                                                        
InfrastruX Acquisition,                                                 
 Inc.                         6,584,685                  88%            
411--108th Avenue N.E.                                                  
Bellevue, Washington                                                    
 98004                                                                  

--------                                                                        
(1)  Applicable percentage ownership for the stockholder is based on 7,475,944  
shares outstanding as of August 4, 2000.                              

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ADDITIONAL AND AVAILABLE INFORMATION

  Puget and UTILX are each subject to the informational filing requirements of
the Exchange Act and, in accordance therewith, are each required to file        
periodic reports, proxy statements and other information with the SEC relating  
to their respective business, financial condition and other matters. Such       
reports, proxy statements and other information can be inspected and copied at  
the public reference facilities maintained by the SEC at 450 Fifth Street,      
N.W., Room 1024, Washington, D.C. 20549, and at the SEC'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.  
Information regarding the public reference facilities may be obtained from the  
SEC by telephoning 1-800-SEC-0330. InfrastruX Group's and UTILX's filings are   
also available to the public on the SEC's internet site (http://www.sec.gov).   
Copies of such materials may also be obtained by mail from the Public Reference 
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at         
prescribed rates. Certain reports and other information concerning Puget Sound  
Energy, Inc. may also be inspected at the offices of the New York Stock         
Exchange, Inc., 20 Broad Street, New York, New York 10005.                      

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY      
REPRESENTATION ON BEHALF OF UTILX, INFRASTRUX GROUP OR INFRASTRUX GROUP'S       
SUBSIDIARY NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN   
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING   
BEEN AUTHORIZED.                                                                

OTHER MATTERS 

We do not intend to hold a 2001 annual meeting prior to the scheduled     
consummation of the merger. If the merger is not consummated and we do hold a   
2001 annual meeting, we will notify you of such meeting, including the date by  
which stockholder proposals must be received at UTILX's executive offices in    
order to be considered for inclusion in the proxy materials relating to such    
meeting.                                                                        

 We do not intend to bring any other matters before the special meeting, and
are not aware of any other matters that are expected to be brought properly     
before the special meeting.                                                     

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                                                                       ANNEX A

[LETTERHEAD OF BANK OF AMERICA] 

June 28, 2000 

Special Committee of the                                                        
Board of Directors                                                              
UTILX Corporation                                                               
22820 Russell Road                                                              
P.O. Box 97009                                                                  
Kent, Washington 98064                                                          

Members of the Special Committee of the Board of Directors:                     

 You have requested our opinion as to the fairness from a financial point of
view to the stockholders of UTILX Corporation (the "Company") of the            
consideration proposed to be received by such stockholders in the proposed      
tender offer (the "Offer") by InfrastruX Acquisition, Inc. (the "Purchaser"),   
a wholly owned subsidiary of InfrastruX Group, Inc. (the "Parent"), a wholly    
owned subsidiary of Puget Sound Energy, Inc. for all of the outstanding shares  
of Common Stock, no par value, of the Company (the "Company Common Stock") and  
the proposed subsequent merger (the "Merger" and together with the Offer, the   
"Transactions") of the Purchaser with and into the Company. Pursuant to the     
terms of the Agreement and Plan of Merger, to be dated as of June 28, 2000      
(the "Agreement"), among the Company, the Parent and the Purchaser, the         
Purchaser will commence the Offer at an offer price of $6.125 per share in      
cash, and subsequently engage in the Merger pursuant to which the Company will  
become a wholly owned subsidiary of the Parent and stockholders of the Company  
will receive for each share of Company Common Stock held by them, other than    
shares held in treasury or held by the Purchaser or any affiliate of the        
Purchaser or as to which dissenters' or appraisal rights have been perfected,   
consideration equal to $6.125 per share. The terms and conditions of the        
Transactions are more fully set out in the Agreement.                           

For purposes of the opinion set forth herein, we have:                    

(i)    reviewed certain publicly available financial statements and other   
business and financial information of the Company;            

(ii)   reviewed certain internal financial statements and other financial   
and operating data concerning the Company;                    

(iii)  analyzed certain financial forecasts prepared by the management of   
the Company;                                                  

(iv)   discussed the past and current operations, financial condition and   
 prospects of the Company with senior executives of the Company;

(v)    reviewed the reported prices and trading activity for the Company    
Common Stock;                                                 

(vi)   compared the financial performance of the Company and the prices and 
   trading activity of the Company Common Stock with that of certain
other publicly traded companies we deemed relevant;           

(vii)  compared certain financial terms of the Transactions to financial    
    terms, to the extent publicly available, of certain other business
combination transactions we deemed relevant;                  

(viii) reviewed the June 27, 2000 draft of the Agreement and certain        
related documents;                                            

(ix)   performed such other analyses and considered such other factors as   
we have deemed appropriate.                                   

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Special Committee of the                                                        
Board of Directors                                                              
UTILX Corporation                                                               
June 28, 2000                                                                   
Page 2                                                                          

We have assumed and relied upon, without independent verification, the    
accuracy and completeness of the financial and other information reviewed by us 
for the purposes of this opinion. With respect to the financial forecasts, we   
have assumed that they have been reasonably prepared on bases reflecting the    
best currently available estimates and good faith judgments of the future       
financial performance of the Company. We have not made any independent          
valuation or appraisal of the assets or liabilities of the Company, nor have we 
been furnished with any such appraisals.                                        

 We were requested not to and did not contact any other parties with respect
to the sale of all or any part of the Company or any other alternative          
transaction other than those parties that could be contacted under the          
Company's Non-Solicitation and Expense Reimbursement Agreement dated June 14,   
2000. We were not requested to and did not directly participate in negotiations 
with respect to the terms of the Transactions. Consequently, we have assumed    
that such terms are the most beneficial terms from the Company's perspective    
that could under the circumstances be negotiated among the parties to the       
Transactions, and no opinion is expressed as to whether any alternative         
transaction might produce consideration for the Company's stockholders in an    
amount in excess of that contemplated in the Transactions.                      

We have acted as sole financial advisor to the Special Committee of the   
Board of Directors of the Company in connection with the Transactions and will  
receive a fee for our services, including a fee, which is contingent upon the   
consummation of the Merger. In the past, Banc of America Securities LLC or its  
affiliates have provided financial advisory and financing services for the      
Company and have received fees for the rendering of these services. In the      
ordinary course of our businesses, we and our affiliates may actively trade the 
debt and equity securities of the Company and Puget Sound Energy, Inc. for our  
own account or for the accounts of customers and, accordingly, we or our        
affiliates may at any time hold long or short positions in such securities.     

 It is understood that this letter is for the benefit and use of the Special
Committee of the Board of Directors of the Company in connection with and for   
purposes of its evaluation of the Merger. This opinion may not be disclosed,    
referred to, or communicated (in whole or in part) to any third party for any   
purpose whatsoever except with our prior written consent in each instance.      
However, this opinion may be included in its entirety in any filing made by the 
Company in respect of the Transactions with the Securities and Exchange         
Commission, so long as this opinion is reproduced in such filing in full and    
any description of or reference to us or summary of this opinion and the        
related analysis in such filing is in a form acceptable to us and our counsel.  
Our opinion is necessarily based on economic, market and other conditions as in 
effect on, and the information made available to us as of, the date hereof. It  
should be understood that subsequent developments may affect this opinion and   
we do not have any obligation to update, revise, or reaffirm this opinion. In   
addition, BAS expresses no opinion or recommendation as to how the stockholders 
of the Company should vote at the stockholders' meeting held in connection with 
the Merger or whether stockholders of the Company should or should not tender   
their shares of Company Common Stock to the Purchaser pursuant to the Offer.    

Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, we are of the opinion on the date hereof that 
the consideration to be received by the Company's stockholders in the proposed  
Transactions is fair from a financial point of view to the Company's            
stockholders.                                                                   

                     Very truly yours,

                                       [LOGO OF BANC OF AMERICA SECURITIES
        LLC]

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                                                                         ANNEX B

 (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     

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of 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.                                                                

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  (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 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                                                              

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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.                     

(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.)                                                              

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                                                                         ANNEX C
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

AGREEMENT AND PLAN OF MERGER

By and Among

INFRASTRUX GROUP, INC.

INFRASTRUX ACQUISITION, INC.

and 

UTILX CORPORATION 

Dated as of June 28, 2000 

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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CONTENTS

                                                                [Download Table]

                                                                           Page
                                                                           ----

                                                                               
ARTICLE I THE TENDER OFFER................................................  C-1

   1.1  The Offer.........................................................  C-1

   1.2  Company Action....................................................  C-2

   1.3  Directors.........................................................  C-3

ARTICLE II THE MERGER.....................................................  C-4

   2.1  The Merger........................................................  C-4

   2.2  Effective Time....................................................  C-4

   2.3  Effects of the Merger.............................................  C-4

   2.4  Restated Certificate of Incorporation.............................  C-4

   2.5  Bylaws............................................................  C-4

   2.6  Directors.........................................................  C-4

   2.7  Officers..........................................................  C-4

   2.8  Conversion of Shares..............................................  C-5

   2.9  Payment for Shares................................................  C-5

   2.10 No Further Rights or Transfers....................................  C-6

   2.11 Supplementary Action..............................................  C-6

   2.12 Closing...........................................................  C-7

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................  C-7

   3.1  Organization of the Company.......................................  C-7

   3.2  Company Capital Structure.........................................  C-7

   3.3  Obligations With Respect to Capital Stock.........................  C-8

   3.4  Authority.........................................................  C-8

   3.5  SEC Filings; the Company Financial Statements.....................  C-9

   3.6  Absence of Certain Changes or Events.............................. C-10

   3.7  Taxes............................................................. C-10

   3.8  Title to Properties; Absence of Liens and Encumbrances............ C-12

   3.9  Intellectual Property............................................. C-12

        3.9.1 General....................................................  C-12

        3.9.2 Company Technology.........................................  C-12

        3.9.3 Third Party Technology.....................................  C-12

        3.9.4 Trademarks.................................................  C-13

        3.9.5 Intellectual Property Rights...............................  C-13

        3.9.6 Maintenance of Rights......................................  C-13

        3.9.7 Third Party Claims.........................................  C-14

        3.9.8 Infringement by the Company................................  C-14

        3.9.9 Restrictions on Intellectual Property......................  C-14

   3.10 Compliance; Permits; Restrictions................................. C-14

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                                                                          ----

                                                                              
   3.11 Litigation....................................................... C-15

   3.12 Brokers' and Finders' Fees....................................... C-15

   3.13 Employee Benefit Plans........................................... C-15

        3.13.1  Employee Benefit Plan Listing...........................  C-15

        3.13.2  Documents Provided......................................  C-15

        3.13.3  Compliance..............................................  C-16

        3.13.4  Qualification...........................................  C-16

        3.13.5  Contributions and Premium Payments......................  C-16

        3.13.6  Multiemployer, Defined Benefit and Money Purchase             
                Pension Plans and Multiple Employer Welfare                   
                Arrangements............................................  C-17

        3.13.7  Post-Termination Benefits...............................  C-17

        3.13.8  Suits, Claims and Investigations........................  C-17

        3.13.9  Payments Resulting From Transactions....................  C-17

        3.13.10 Insured Benefits........................................  C-17

        3.13.11 Definitions.............................................  C-18

   3.14 Employees; Labor Matters......................................... C-18

   3.15 Environmental Matters............................................ C-18

   3.16 Agreements, Contracts and Commitments............................ C-19

   3.17 Change of Control Payments....................................... C-20

   3.18 Board Approval................................................... C-20

   3.19 Fairness Opinion................................................. C-20

   3.20 State Anti-Takeover Statutes Not Applicable; Company Rights           
        Plan............................................................. C-20

   3.21 Offer Documents; Proxy Statement................................. C-21

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........ C-21

   4.1  Organization and Qualification................................... C-21

   4.2  Corporate Power, Authorization and Enforceability................ C-21

   4.3  No Conflict; Required Filings and Consents....................... C-22

   4.4  Schedule TO...................................................... C-22

   4.5  Available Funds.................................................. C-22

ARTICLE V COVENANTS...................................................... C-23

   5.1  Conduct of Business by the Company............................... C-23

   5.2  Access to Information; Confidentiality........................... C-24

   5.3  Proxy Material; Stockholders' Meeting............................ C-25

   5.4  No Solicitation; Break-up Fee.................................... C-26

   5.5  Public Announcements............................................. C-27

   5.6  Notification of Certain Matters.................................. C-27

   5.7  Actions by Company............................................... C-27

   5.8  Officers' and Directors' Indemnification......................... C-27

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   5.9   Employment Agreements........................................  C-28

   5.10  Additional Agreements........................................  C-28

   5.11  Other Actions by the Company.................................  C-28

   5.12  Company Options..............................................  C-28

   5.13  Stock Option Plans...........................................  C-29

   5.14  Employee Benefit Plans.......................................  C-29

   5.15  Stockholder Litigation.......................................  C-29

ARTICLE VI CONDITIONS OF MERGER.......................................  C-29

   6.1  Conditions to the Obligations of Each Party to Effect               
        the Merger....................................................  C-29

ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.........................  C-30

   7.1  Termination...................................................  C-30

   7.2  Procedure and Effect of Termination...........................  C-31

   7.3  Fees and Expenses.............................................  C-31

   7.4  Amendment.....................................................  C-32

   7.5  Waiver........................................................  C-32

ARTICLE VIII MISCELLANEOUS............................................  C-32

   8.1  Severability..................................................  C-32

   8.2  Notices.......................................................  C-32

   8.3  Entire Agreement; No Third Party Beneficiaries;                     
        No Assignment.................................................  C-33

   8.4  Interpretation; Knowledge.....................................  C-33

   8.5  Counterparts..................................................  C-34

   8.6  Other Remedies; Specific Performance..........................  C-34

   8.7  Governing Law.................................................  C-34

   8.8  Rules of Construction.........................................  C-34

   8.9  Waiver of Jury Trial..........................................  C-34

EXHIBIT A   Employment Agreements                                           

EXHIBIT B   Required Third Party Consents                                   

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered  
into as of June 28, 2000, by and among InfrastruX Group, Inc., a Washington     
corporation ("Parent"), InfrastruX Acquisition, Inc., a Delaware corporation    
and a wholly owned subsidiary of Parent ("Purchaser"), and UTILX Corporation, a 
Delaware corporation (the "Company").                                           

RECITALS

A. The Boards of Directors of Parent and Purchaser and the Board of       
Directors of the Company, through its special committee of disinterested        
directors (referred to herein as the "Board of Directors of the Company") have  
each unanimously approved the terms and conditions of a merger of Purchaser     
with and into the Company (the "Merger") upon the terms and subject to          
conditions set forth herein, the Board of Directors of the Company having       
determined that the Merger represents the best available transaction for the    
Company.                                                                        

B. Pursuant to the Merger, Purchaser will acquire each issued and         
outstanding share of Common Stock of the Company at a price of $6.125 net per   
Share to the seller in cash and without interest thereon (the "Offer Price").   
In order to accomplish the Merger, Purchaser shall first commence a tender      
offer (the "Offer") by Purchaser under Section 14(d)(1) of the Securities and   
Exchange Act of 1934, as amended (the "Exchange Act"), to purchase all          
outstanding shares of the Common Stock, no par value, of the Company (shares of 
the Common Stock of the Company are referred to herein as the "Shares").        

C. The Board of Directors of the Company has unanimously resolved to      
recommend, subject to applicable law and the provisions of this Agreement, the  
acceptance of the Offer and approval of the Merger to the holders of Shares and 
determined that the consideration to be paid for each Share in the Offer and    
the Merger is fair to the holders of such Shares and that the Offer and the     
Merger are in the best interests of the holders of such Shares.                 

NOW, THEREFORE, intending to be legally bound hereby, the parties agree as
follows:                                                                        

ARTICLE I 

THE TENDER OFFER

1.1 The Offer                                                                   

 (a) Provided that this Agreement shall not have been terminated pursuant to
Section 7.1 and none of the events set forth in clause (iii) of Annex I shall   
have occurred or be existing, Purchaser shall, and Parent shall cause Purchaser 
to, promptly (but no later than five (5) business days) following the public    
announcement of the execution of this Agreement commence (within the meaning of 
Rule 14d-2 under the Exchange Act) the Offer at the Offer Price.                

(b) The obligations of Purchaser to consummate the Offer and to accept for
payment and pay for any of the Shares tendered shall be subject to the          
conditions set forth on Annex I, including that a minimum of sixty-seven        
percent (67%) of the Shares outstanding on a fully diluted basis (including for 
purposes of such calculation all Shares issuable upon the cash exercise of all  
vested and unvested stock options, warrants and conversion of convertible       
securities or other rights to purchase or acquire Shares) being validly         
tendered and not withdrawn prior to the expiration of the Offer (the "Minimum   
Condition"). The per Share amount shall be net to the seller in cash, upon the  
terms and subject to the conditions of the Offer and subject to reduction for   
any applicable federal back-up or other applicable withholding or stock         
transfer taxes. The Offer shall                                                 

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remain open until 12:00 Midnight, New York City time, on the date that is       
twenty (20) business days following the commencement of the Offer; which shall  
be the "Expiration Date," unless Purchaser extends the Offer as permitted by    
this Agreement, in which case the "Expiration Date" means the latest time and   
date to which the Offer is extended.                                            

(c) Purchaser expressly reserves the right in its sole discretion to waive
any conditions to the Offer (other than the condition set forth in clause (i)   
unless agreed to by the Company or (iii)(E) of Annex I), to increase the price  
per Share payable in the Offer, to extend the duration of the Offer, or to make 
any other changes in the terms and conditions of the Offer, provided, however,  
that no such change 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 Annex I or    
amends any other material terms of the Offer in a manner materially adverse to  
the Company's shareholders, and provided, further, that the Offer may not,      
without the Company's prior written consent, be extended beyond the Expiration  
Date. Notwithstanding the foregoing, Purchaser may, without the consent of the  
Company but upon notification of the Company, (i) extend the offer for any      
period required by any rule, regulation, interpretation or position of the      
Securities and Exchange Commission (the "SEC") or the staff thereof applicable  
to the Offer and (ii) make available a subsequent offering period (within the   
meaning of Rule 14d-11 under the Exchange Act) which shall not exceed ten (10)  
business days.                                                                  

 (d) The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement and the conditions  
set forth in Annex I. Concurrently with the commencement of the Offer, Parent   
and Purchaser shall file with the SEC a tender offer statement on Schedule TO   
reflecting the Offer (together with all exhibits, amendments and supplements    
thereto, the "Schedule TO"). 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), Purchaser will purchase by      
accepting for payment and will pay for Shares validly tendered and not properly 
withdrawn, as promptly as practicable after the Expiration Date. The Schedule   
TO will contain or will incorporate by reference the Offer to Purchase (or      
portions thereof) and forms of the related letter of transmittal and summary    
advertisements (which Schedule TO, Offer to Purchase and other documents,       
together with any supplements or amendments thereto, are referred to herein     
collectively as the "Offer Documents"). Parent, Purchaser and the Company agree 
promptly to correct any information provided by any of them for use in the      
Offer Documents that shall have become false or misleading, and Parent and      
Purchaser further agree to take all steps necessary to cause the Schedule TO as 
so corrected to be filed with the SEC and the other Offer Documents as so       
corrected to be disseminated to the holders of Shares, in each case as and to   
the extent required by applicable federal securities laws. The Offer Documents  
will, on the date filed, comply in all material respects with all provisions of 
applicable federal securities laws.                                             

1.2 Company Action                                                              

 (a) The Company hereby approves of and consents to the Offer and represents
and warrants that (i) its Board of Directors has unanimously (A) determined     
that this Agreement and the transactions contemplated hereby, including each of 
the Offer and the Merger, are fair to and in the best interests of the holders  
of the Shares, (B) approved and adopted this Agreement and the transactions     
contemplated hereby and (C) resolved to recommend, subject to applicable law    
and the provisions of this Agreement, that the shareholders of the Company      
accept the Offer and approve and adopt this Agreement and the transactions      
contemplated hereby and thereby (provided, however, that subject to the         
provisions of Section 5.4 such recommendation may be withdrawn, modified or     
amended in connection with a Superior Proposal (as defined in Section 5.4)) and 
(ii) Banc of America Securities LLC ("Banker") has rendered to the Board of     
Directors of the Company its written opinion (which opinion is permitted to be  
included in writing in the Schedule 14D-9 (as defined in Section 1.2(b)), to    
the effect that the consideration to be received by the holders of Shares       
pursuant to each of the Offer and the Merger is fair to the holders of Shares   
from a financial point of view. The Company hereby consents to the inclusion in 
the Offer Documents of the recommendation of the Company's Board of Directors   

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described in the first sentence of this Section 1.2(a), and has obtained the    
consent of Banker to the inclusion in the Schedule 14D-9 of a copy of the       
written opinion referred to in clause (ii) above.                               

(b) The Company shall file with the SEC, concurrently with the filing by  
Parent and Purchaser of the Schedule TO, a Solicitation/Recommendation          
Statement on Schedule 14D-9 under the Exchange Act relating to the Offer        
(together with all exhibits, amendments and supplements thereto as well as the  
Information Statement required pursuant to Section 14(f) under the Exchange     
Act, collectively the "Schedule 14D-9"), which shall contain the recommendation 
of the Company's Board of Directors described in Section 1.2(a), and shall      
disseminate the Schedule 14D-9 as required by Rule 14D-9 promulgated under the  
Exchange Act. The Schedule 14D-9, and each amendment thereto, will, on the date 
filed, comply in all material respects with the provisions of applicable        
federal securities laws. The Company, Parent and Purchaser agree promptly to    
correct any information provided by any of them for use in the Schedule 14D-9   
that shall have become false or misleading, and the Company further agrees to   
take all steps necessary to cause the Schedule 14D-9 as so corrected to be      
filed with the SEC and the Schedule 14D-9 as so corrected to be disseminated to 
holders of Shares, in each case as and to the extent required by applicable     
federal securities laws. Parent and its counsel shall be given the opportunity  
to review and shall be reasonably satisfied with the Schedule 14D-9 in the form 
in which such document is originally filed with the SEC, and all amendments and 
supplements thereto, prior to the time at which such documents and all          
documents related thereto are filed with the SEC. The Company shall provide     
Purchaser and its counsel with any comments the Company or its counsel may      
receive from the SEC with respect to the Schedule 14D-9 promptly after receipt  
of such comments.                                                               

(c) The Company has been advised by each of the members of the Special    
Committee and by its Chief Executive Officer and Chief Financial Officer, as of 
the date of this Agreement, that such person intends to tender all outstanding  
Shares beneficially owned and not disclaimed by such person to Purchaser        
pursuant to the Offer unless to do so would subject such person to liability    
under Section 16(b) of the Exchange Act.                                        

(d) The Company shall promptly furnish Purchaser with mailing labels      
containing the names and addresses of all record holders of Shares and security 
position listings of Shares held in stock depositories, each of a recent date,  
and shall promptly furnish Purchaser with such additional information,          
including updated lists of shareholders, mailing labels and security position   
listings, and such other assistance as Parent, Purchaser or their agents may    
reasonably request in connection with communicating the Offer and any           
amendments or supplements thereto to the Company's shareholders. Subject to the 
requirements of applicable laws and except for such steps as are necessary to   
disseminate the Offer Documents and any other documents necessary to consummate 
the Merger, Parent and Purchaser shall hold in confidence the information       
contained in any of such labels and lists.                                      

1.3 Directors                                                                   

Promptly upon the acquisition by Purchaser pursuant to the Offer of such  
number of Shares which satisfies the Minimum Condition and from time to time    
thereafter, 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 Company shall, upon request by Parent, promptly increase  
the size of the Board of Directors to the extent permitted by its Restated      
Certificate of Incorporation and/or secure the resignations of such number of   
directors as is necessary to enable Parent's designees to be elected to the     
Board of Directors and shall cause Parent's designees to be so elected. The     
Company shall take, at its expense, all action necessary to effect any such     
election, including mailing to its shareholders the information required by     
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in form 
and substance reasonably satisfactory to Parent and its counsel. Following the  
election or appointment of Parent's designees pursuant to this Section 1.3 and  
prior to the Effective Time (as defined in Section 2.2), any amendment or       
termination of this Agreement, extension for the performance or waiver of the   
obligations or other acts of Parent or Purchaser or waiver of the Company's     
rights hereunder, shall require the concurrence of a majority of the Company's  
directors (or the concurrence of the director, if there is only one remaining)  
then in office who are directors on the date hereof, or are directors           

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(other than directors designated by Parent in accordance with this Section 1.3) 
designated by such persons to fill any vacancy (the "Continuing Directors").    

ARTICLE II

THE MERGER

2.1 The Merger                                                                  

Upon the terms and subject to the conditions hereof and in accordance with
the Delaware General Corporation Law (the "DGCL"), Purchaser shall be merged    
with and into the Company as soon as practicable following the satisfaction or  
waiver, if permissible, of the conditions set forth in Article VI of this       
Agreement. Following the Merger, the Company shall continue as the surviving    
corporation (the "Surviving Corporation") and the separate corporate existence  
of Purchaser shall cease. At the election of Parent or Purchaser, any direct or 
indirect wholly owned subsidiary of Parent incorporated under the laws of       
Delaware may be substituted for Purchaser as a constituent corporation in the   
Merger. As used herein, the term "Purchaser" shall, upon such substitution      
refer to any such substituted corporation.                                      

2.2 Effective Time                                                              

 The Merger shall be consummated by and shall be effective at the time there
has been filed as provided by Section 2.12 with the Secretary of State of the   
State of Delaware the articles of merger in such form as is required by, and    
executed in accordance with, the relevant provisions of the DGCL, and such      
other documents as may be required by the provisions of the DGCL. The time of   
such filing is referred to as the "Effective Time."                             

2.3 Effects of the Merger                                                       

The Merger shall have the effects set forth in applicable sections of the 
DGCL. As of the Effective Time, the Company shall be a wholly owned subsidiary  
of Parent.                                                                      

2.4 Restated Certificate of Incorporation                                       

  The Restated Certificate of Incorporation of the Surviving Corporation shall
be amended to contain the substantive provisions of the Certificate of          
Incorporation of the Purchaser as in effect at the Effective Time, except that  
Article I thereof shall read as follows: "The name of this corporation is UTILX 
Corporation."                                                                   

2.5 Bylaws                                                                      

The Bylaws of Purchaser, as in effect immediately prior to the Effective  
Time, shall be the Bylaws of the Surviving Corporation, until thereafter duly   
amended in accordance with applicable law.                                      

2.6 Directors                                                                   

 The directors of Purchaser immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation and will hold office from    
the Effective Time until their respective successors are duly elected or        
appointed and qualified in the manner provided in the Certificate of            
Incorporation and Bylaws of the Surviving Corporation, as such instruments may  
be amended from time to time, or as otherwise provided by law.                  

2.7 Officers                                                                    

 The officers of the Purchaser immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation. Such officers of the      
Surviving Corporation will hold office from the Effective Time                  

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until their respective successors are duly elected or appointed and qualified   
in the manner provided in the Certificate of Incorporation and Bylaws of the    
Surviving Corporation, as such instruments may be amended from time to time, or 
as otherwise provided by law.                                                   

2.8 Conversion of Shares                                                        

  (a) At the Effective Time, by virtue of the Merger and without any action on
the part of Parent, Purchaser, the Company or the holders of the Shares:        

  (i) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held, directly or indirectly, by Parent, Purchaser, 
the Company or any of their majority-owned subsidiaries and any Dissenting  
Shares (as defined below)) shall automatically be canceled and extinguished 
and be converted into the right to receive $6.125, or such higher amount    
per Share as is paid pursuant to the Offer (the "Merger Consideration"), in 
cash, without interest thereon.                                             

(ii) Each Share issued and outstanding immediately prior to the       
Effective Time which is owned or held, directly or indirectly, by Parent,   
Purchaser, the Company or any of their majority-owned subsidiaries shall be 
canceled and extinguished and cease to exist, without any conversion        
thereof, and no payment shall be made with respect thereto.                 

  (iii) Each holder (other than holders referred to in Section 2.8(a)(ii))
of a certificate representing any Shares shall after the Effective Time     
cease to have any rights with respect to such Shares, except either to      
receive the Merger Consideration upon surrender of such certificate, or to  
exercise such holder's appraisal rights as provided in Section 2.9 and the  
DGCL.                                                                       

(iv) Each share of Common Stock of Purchaser issued and outstanding   
immediately prior to the Effective Time shall, by virtue of the Merger and  
without any action on the part of the holder thereof, be converted into and 
thereafter represent one validly issued, fully paid and nonassessable share 
of Common Stock of the Surviving Corporation.                               

 (v) Each Company Option (as defined in Section 3.2) shall be treated in
accordance with Section 5.12.                                               

  (b) Notwithstanding anything in this Agreement to the contrary, Shares which
are outstanding immediately prior to the Effective Time and which are held by a 
holder who dissents from the Merger in the manner provided under the DGCL and   
becomes entitled to obtain payment for the fair value of such Shares pursuant   
to the applicable provisions of the DGCL ("Dissenting Shares") shall not be     
converted into a right to receive the Merger Consideration pursuant to this     
Section 2.8, but the holders of Dissenting Shares shall instead be entitled to  
receive such consideration as shall be determined pursuant to the DGCL;         
provided, however, that this Section 2.8 shall apply to Shares held by a        
dissenting shareholder who subsequently withdraws his or her demand for payment 
in the manner provided under the DGCL, fails to comply fully with the           
requirements of applicable provisions of the DGCL, or otherwise fails to        
establish the fair value of such holder's Shares under the DGCL, in which event 
such Shares shall be deemed to be converted into the right to receive the       
Merger Consideration pursuant to Section 2.8. The Company shall give Parent and 
Purchaser prompt notice of any written objection to the Merger and demand for   
payment of the fair value of Shares. Prior to the Effective Time, the Company   
shall not, except with the prior written consent of Purchaser, make any payment 
with respect to, or settle or offer to settle, any such demand for payment of   
the fair value of Shares. Each holder of Dissenting Shares shall have only such 
rights and remedies as are granted to such holder under the DGCL.               

2.9 Payment for Shares                                                          

(a) Prior to the Effective Time, Purchaser shall select and appoint a bank
to act as agent for the holders of Shares (the "Paying Agent") to receive and   
disburse the Merger Consideration to which holders of Shares shall become       
entitled pursuant to Section 2.8. At the Effective Time, Purchaser or Parent    
shall provide the                                                               

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Paying Agent with sufficient cash to allow the Merger Consideration to be paid  
by the Paying Agent for each Share then entitled to receive the Merger          
Consideration.                                                                  

(b) As soon as practicable after the Effective Time, Purchaser or Parent  
shall cause the Paying Agent to mail to each record holder a certificate or     
certificates representing Shares which as of the Effective Time represents the  
right to receive the Merger Consideration (the "Certificates"), a form of       
letter of transmittal (which shall specify that delivery shall be effected, and 
risk of loss and title to the Certificates shall pass, only upon proper         
delivery of the Certificates to the Paying Agent) and instructions for use in   
effecting the surrender of the Certificates for payment therefor. Upon          
surrender to the Paying Agent of a Certificate, together with such letter of    
transmittal duly executed and completed in accordance with the instructions     
thereto, and such other documents as may be requested, the holder of such       
Certificate shall be entitled to receive in exchange therefor the Merger        
Consideration and such Certificate shall forthwith be canceled. No interest     
shall be paid or accrued on the Merger Consideration upon the surrender of the  
Certificates. Until surrendered in accordance with the provisions of this       
Section, each Certificate shall be deemed for all purposes to evidence only the 
right to receive the Merger Consideration (without interest thereon), and shall 
have no other right.                                                            

 (c) If the Merger Consideration (or any portion thereof) is to be delivered
to a person other than the person in whose name the Certificates surrendered in 
exchange thereof are registered, it shall be a condition to the payment that    
the Certificates so surrendered shall be properly endorsed or otherwise be in   
proper form for transfer and that the person requesting such payment or         
delivery shall pay any transfer or other taxes payable by reason of the         
foregoing or establish to the satisfaction of the Surviving Corporation that    
such tax has been paid or is not applicable. Notwithstanding the foregoing,     
neither the Paying Agent nor any party hereto shall be liable to a holder of    
Shares for any Merger Consideration delivered to a public official pursuant to  
applicable abandoned property, escheat and similar laws.                        

  (d) Promptly following the date that is six months after the Effective Date,
the Paying Agent shall return to the Surviving Corporation all Merger           
Consideration and other cash, property and instruments in its possession        
relating to the transactions described in this Agreement, and the Paying        
Agent's duties shall terminate. Thereafter, each holder of a Certificate        
formerly representing a Share may surrender such Certificate to the Surviving   
Corporation and (subject to applicable abandoned property, escheat and similar  
laws) receive in exchange therefor the Merger Consideration (without interest   
thereon). Notwithstanding the foregoing, the Surviving Corporation shall be     
entitled to receive from time to time all interest or other amounts earned with 
respect to any cash deposited with the Paying Agent as such amounts accrue or   
become available.                                                               

2.10 No Further Rights or Transfers                                             

 At and after the Effective Time the holders of Certificates to be exchanged
for the Merger Consideration pursuant to this Agreement shall cease to have any 
rights as to shareholders of the Company except for the right to surrender such 
holder's Certificates in exchange for payment of the Merger Consideration, and  
after the Effective Time there shall be no transfers on the stock transfer      
books of the Surviving Corporation of the Shares which were outstanding         
immediately prior to the Effective Time. Any Certificates formerly representing 
Shares presented to the Surviving Corporation or Paying Agent shall be canceled 
and exchanged for the Merger Consideration, as provided in this Article II,     
subject to applicable law in the case of Dissenting Shares.                     

2.11 Supplementary Action                                                       

If at any time after the Effective Time, any further assignments or       
assurances in law or any other things are necessary or desirable to vest or to  
perfect or confirm of record in the Surviving Corporation the title to any      
property or rights of either the Company or Purchaser, or otherwise to carry    
out the provisions of this Agreement, the officers and directors of the         
Surviving Corporation are hereby authorized and empowered, in the name of and   
on behalf of the Company and Purchaser, to execute and deliver any and all      
things necessary or proper to vest or to perfect or confirm title to such       
property or rights in the Surviving Corporation, and otherwise to carry out the 
purposes and provisions of this Agreement.                                      

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2.12 Closing                                                                    

Upon the terms and subject to the conditions of this Agreement, as soon as
practicable after all the conditions to the obligations of the parties hereto   
to effect the Merger under Article VI of this Agreement shall have been         
satisfied or waived, the Company and Purchaser shall (i) file with the Delaware 
Secretary of State a certificate or agreement of merger or a certificate of     
ownership and merger in such form as may be required by, and executed in        
accordance with, the relevant provisions of the DGCL and (ii) take all such     
other and further actions as may be required by law to make the Merger          
effective. Contemporaneous with the filing referred to in this Section, a       
closing (the "Closing") will be held at the offices of Perkins Coie LLP, 1201   
Third Avenue, Suite 4800, Seattle, Washington or at such other location as the  
parties may establish for the purpose of confirming all the foregoing. The date 
and the time of such Closing are referred to as the "Closing Date."             

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

The Company (which for purposes of this Article III shall include the     
Company and each of its subsidiaries unless the context otherwise requires)     
represents and warrants to Parent and Purchaser, subject to the exceptions      
specifically disclosed in writing in the disclosure letter supplied by the      
Company to Parent and Purchaser dated as of the date hereof and certified by a  
duly authorized officer of the Company (the "Company Schedules"), as follows:   

3.1 Organization of the Company                                                 

(a) The Company and each of its subsidiaries is a corporation duly        
organized, validly existing and in good standing under the laws of the          
jurisdiction of its incorporation; has the corporate power and authority to     
own, lease and operate its assets and property and to carry on its business as  
now being conducted and as proposed to be conducted; and is duly qualified or   
licensed to do business and is in good standing in each jurisdiction where the  
character of the properties owned, leased or operated by it or the nature of    
its activities makes such qualification or licensing necessary, except where    
the failure to be so qualified would not have a Material Adverse Effect (as     
defined below).                                                                 

(b) The Company has delivered to Parent a true and complete list of all of
the Company's subsidiaries, indicating the jurisdiction of incorporation or     
formation of each subsidiary, the jurisdictions in which such subsidiary is     
qualified or licensed to do business, and the Company's and any other person's  
equity interest therein. Except for qualifying directors' shares, no person     
other than the Company owns any equity interest in any such subsidiary.         

  (c) The Company has delivered or made available to Parent a true and correct
copy of the Restated Certificate of Incorporation and Bylaws of the Company and 
similar governing instruments of each of its subsidiaries, each as amended to   
date, and each such instrument is in full force and effect. Neither the Company 
nor, to the knowledge of the Company, any of its subsidiaries is in violation   
of any of the provisions of its Restated Certificate of Incorporation or Bylaws 
or equivalent governing instruments.                                            

(d) When used in connection with the Company, the term "Material Adverse  
Effect" means, for purposes of this Agreement, any change, event or effect that 
is materially adverse to the business, assets (including intangible assets),    
financial condition or results of operations of Company and its subsidiaries    
taken as a whole.                                                               

3.2 Company Capital Structure                                                   

  The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock, no par value, of which 7,475,944 shares were issued and           
outstanding as of June 2, 2000, and 2,000,000 shares of                         

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Preferred Stock, no par value, of which no shares are issued or outstanding. No 
shares of capital stock have been issued since June 2, 2000 except pursuant to  
option exercises. All outstanding shares of the Company Common Stock are duly   
authorized, validly issued, fully paid and nonassessable and are not subject to 
preemptive rights created by statute, the Restated Certificate of Incorporation 
or Bylaws of the Company or any agreement or document to which the Company is a 
party or by which it is bound. As of the date of this Agreement, the Company    
had reserved an aggregate of 1,600,000 shares of the Company Common Stock, net  
of exercises, for issuance to employees, consultants and non-employee directors 
pursuant to the 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 (the "Option        
Plans"). (Stock options granted by the Company pursuant to the Option Plans or  
otherwise are referred to in this Agreement as "Company Options.") As of June   
2, 2000, there were Company Options outstanding to purchase an aggregate of     
1,572,416 shares of Common Stock, issued to employees, consultants and          
non-employee directors pursuant to the Option Plans. Except for 10,000 shares   
subject to options granted to Bob Gannon upon his election as a new director on 
June 9, 2000, no Company Options have been granted since June 2, 2000 and,      
except pursuant to the exercise of Company Options, no shares of capital stock  
of the Company have been issued by the Company since June 2, 2000. All shares   
of the Company Common Stock subject to issuance as aforesaid, upon issuance on  
the terms and conditions specified in the instruments pursuant to which they    
are issuable, would be duly authorized, validly issued, fully paid and          
nonassessable. The Company has provided the Purchaser a complete and accurate   
list as of June 26, 2000 of each person who held restricted stock or options,   
the name of the holder of such shares or option, the exercise price of such     
option, and the term of such shares or option.                                  

3.3 Obligations With Respect to Capital Stock                                   

Except as set forth in Section 3.2, there are no equity securities,       
partnership interests or similar ownership interests of any class of the        
Company, or any securities exchangeable or convertible into or exercisable for  
such equity securities, partnership interests or similar ownership interests,   
issued, reserved for issuance or outstanding. Except for securities the Company 
owns, directly or indirectly through one or more subsidiaries, there are no     
equity securities, partnership interests or similar ownership interests of any  
class of any subsidiary of the Company, or any security exchangeable or         
convertible into or exercisable for such equity securities, partnership         
interests or similar ownership interests, issued, reserved for issuance or      
outstanding. Except as set forth in Section 3.2, there are no options,          
warrants, equity securities, partnership interests or similar ownership         
interests, calls, rights (including preemptive rights), commitments or          
agreements of any character to which the Company or any of its subsidiaries is  
a party or by which it is bound obligating the Company or any of its            
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or     
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,      
redemption or acquisition, of any shares of capital stock, partnership          
interests or similar ownership interests of the Company or any of its           
subsidiaries or obligating the Company or any of its subsidiaries to grant,     
extend, accelerate the vesting of or enter into any such option, warrant,       
equity security, call, right, commitment or agreement. There are no             
registration rights and, to the knowledge of the Company, as of the date of     
this Agreement, there are no voting trusts, proxies or other agreements or      
understandings with respect to any equity security of any class of the Company  
or with respect to any equity security, partnership interest or similar         
ownership interest of any class of any of its subsidiaries.                     

3.4 Authority                                                                   

(a) The Company has all requisite corporate power and authority to enter  
into this Agreement and to consummate the transactions contemplated hereby. The 
execution and delivery of this Agreement and the consummation of the            
transactions contemplated hereby have been duly authorized by all necessary     
corporate action on the part of the Company, subject only to the approval and   
adoption of this Agreement and the approval of the Merger by the Company's      
shareholders and the filing and recordation of the Restated Articles of Merger  
pursuant to the DGCL. A vote of the holders of two-thirds of the outstanding    
Shares is required for the Company's shareholders to approve and adopt this     
Agreement and approve the Merger. This Agreement has                            

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been duly executed and delivered by the Company and constitutes valid and       
binding obligations of the Company, enforceable in accordance with its terms,   
except as enforceability may be limited by bankruptcy and other similar laws    
and general principles of equity. The execution and delivery of this Agreement  
by the Company do not, and the performance of this Agreement by the Company     
will not, (i) conflict with or violate the Restated Certificate of              
Incorporation or Bylaws of the Company or the equivalent organizational         
documents of any of its subsidiaries, (ii) subject to obtaining the approval    
and adoption of this Agreement and the approval of the Merger by the Company's  
shareholders, conflict with or violate any law, rule, regulation, order,        
judgment or decree applicable to the Company or any of its subsidiaries or by   
which its or any of their respective properties is bound or affected and which  
will have a Material Adverse Effect, or (iii) result in any breach of or        
constitute a default (or an event that with notice or lapse of time or both     
would become a default) under, or impair the Company's rights or alter the      
rights or obligations of any third party under, or give to others any rights of 
termination, amendment, acceleration or cancellation of, or result in the       
creation of a lien or encumbrance on any of the properties or assets of the     
Company or any of its subsidiaries pursuant to, any material note, bond,        
mortgage, indenture, contract, agreement, lease, license, permit, franchise or  
other instrument or obligation to which the Company or any of its subsidiaries  
is a party or by which the Company or any of its subsidiaries or its or any of  
their respective properties are bound or affected. The Company Schedules list   
all consents, waivers and approvals under any of the Company's or any of its    
subsidiaries' material agreements, contracts, licenses or leases required to be 
obtained in connection with the consummation of the transactions contemplated   
hereby.                                                                         

(b) No consent, approval, order or authorization of, or registration,     
declaration or filing with any court, administrative agency or commission or    
other governmental authority or instrumentality, foreign or domestic            
("Governmental Entity"), is required by or with respect to the Company in       
connection with the execution and delivery of this Agreement or the             
consummation of the Merger, except for (i) the filing of the Certificate of     
Merger with the Delaware Secretary of State, (ii) such consents, approvals,     
orders, authorizations, registrations, declarations and filings as may be       
required under applicable federal and state securities laws and the Hart-Scott- 
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the  
securities or antitrust laws of any foreign country, and (iii) such other       
consents, authorizations, filings, approvals and registrations which if not     
obtained or made would not have a Material Adverse Effect or have a material    
adverse effect on the ability of the parties to consummate the Offer or the     
Merger.                                                                         

3.5 SEC Filings; the Company Financial Statements                               

(a) The Company has filed in a timely manner all forms, reports and       
documents required to be filed with the SEC since it became subject to the      
reporting requirements of the Exchange Act, and has made available to Parent    
all such forms, reports and documents. All such required forms, reports and     
documents (including those that the Company may file subsequent to the date     
hereof) are referred to herein as the "Company SEC Reports." As of their        
respective dates, the Company SEC Reports and all currently effective           
registration statements of the Company filed with the SEC (i) were prepared in  
accordance with the requirements of the Securities Act of 1933, as amended (the 
"Securities Act"), or the Exchange Act, as the case may be, and the rules and   
regulations of the SEC thereunder applicable to such the Company SEC Reports,   
and (ii) did not at the time they were filed (or if amended or superseded by a  
filing prior to the date of this Agreement, then on the date of such filing)    
contain any untrue statement of a material fact or omit to state a material     
fact required to be stated therein or necessary in order to make the statements 
therein, in the light of the circumstances under which they were made, not      
misleading. None of the Company's subsidiaries is required to file any forms,   
reports or other documents with the SEC.                                        

 (b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports (the "Company   
Financials") including any of the Company SEC Reports filed after the date      
hereof until the Closing, (x) complied as to form in all material respects with 
the published rules and regulations of the SEC with respect thereto, (y) was    
prepared in accordance with generally accepted accounting principles ("GAAP")   
applied on a consistent basis throughout the periods involved                   

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(except as may be indicated in the notes thereto or, in the case of unaudited   
interim financial statements, as may be permitted by the SEC on Form 10-Q, 8-K  
or any successor form under the Exchange Act) and (z) fairly presented the      
consolidated financial position of the Company and its subsidiaries as at the   
respective dates thereof and the consolidated results of the Company's          
operations and cash flows for the periods indicated. The balance sheet of the   
Company contained in the Company SEC Reports as of March 31, 2000 is            
hereinafter referred to as the "Company Balance Sheet." Except as disclosed in  
the Company Financials or the Company Schedules, since the date of the Company  
Balance Sheet neither the Company nor any of its subsidiaries has any           
liabilities (absolute, accrued, contingent or otherwise) of a nature required   
to be disclosed on a balance sheet or in the related notes to the consolidated  
financial statements prepared in accordance with GAAP which are, individually   
or in the aggregate, material to the business, results of operations or         
financial condition of the Company and its subsidiaries taken as a whole,       
except liabilities (i) provided for in the Company Balance Sheet, or (ii)       
incurred since the date of the Company Balance Sheet in the ordinary course of  
business consistent with past practices and immaterial in the aggregate and     
liabilities incurred in connection with this Agreement.                         

(c) The Company has heretofore furnished to Parent a complete and correct 
copy of any amendments or modifications, which have not yet been filed with the 
SEC but which are required to be filed, to agreements, documents or other       
instruments which previously had been filed by the Company with the SEC         
pursuant to the Securities Act or the Exchange Act.                             

3.6 Absence of Certain Changes or Events                                        

Since the date of the Company Balance Sheet there has not been: (i) any   
Material Adverse Effect, (ii) any material change by the Company in its         
accounting methods, principles or practices, except as required by concurrent   
changes in GAAP, or (iii) any material revaluation by the Company of any of its 
assets, including, without limitation, writing down the value of capitalized    
inventory or writing off notes or accounts receivable other than in the         
ordinary course of business.                                                    

3.7 Taxes                                                                       

(a) To the Company's knowledge, (i) All Tax Returns (as defined below)    
required to be filed by or on behalf of the Company and each of its             
subsidiaries have been filed on a timely basis with the appropriate             
governmental authority in all jurisdictions in which such Tax Returns are       
required to be filed, and all such Tax Returns are true, correct and complete   
in all material respects; (ii) all Taxes (as defined below) of the Company and  
each of its subsidiaries (whether or not reflected on any Tax Return) have been 
fully and timely paid, withheld and remitted to the applicable Taxing           
authority; (iii) no waivers of statutes of limitation have been given or        
requested with respect to the Company or any of its subsidiaries in connection  
with any Tax Returns covering the Company or any of its subsidiaries with       
respect to any Taxes payable thereby; (iv) no taxing authority in a             
jurisdiction where none of the Company or any of its subsidiaries files Tax     
Returns has made a claim, assertion or threat to the Company or any of its      
subsidiaries that the Company or any of its subsidiaries is or may be subject   
to taxation by such jurisdiction; (v) there are no liens with respect to Taxes  
on any of the Company's or any of its subsidiaries' property or assets other    
than liens for current Taxes not yet payable; (vii) there are no audits or      
other administrative proceedings presently in progress, pending or threatened   
with respect to Taxes or any Tax Return of the Company or any of its            
subsidiaries; and (viii) no Tax deficiencies or assessments have been proposed, 
asserted or threatened against the Company or any of its subsidiaries.          

(b) Neither the Company nor, to the Company's knowledge, any of its       
subsidiaries nor any other Person on behalf thereof (i) has executed or entered 
into a closing agreement pursuant to Section 7121 of the Internal Revenue Code  
of 1986, as amended (the "Code") or any predecessor provision thereof or any    
similar provision of state, local or foreign law; or (ii) has agreed to or is   
required to make any adjustments pursuant to Section 481(a) of the Code or any  
similar provision of state, local or foreign law by reason of a change in       
accounting method initiated by the Company or has notice that a governmental    
authority has proposed any such adjustment or change in accounting method.      

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  (c) To the knowledge of the Company, there is no dispute or claim concerning
any Tax liability of the Company or any of its subsidiaries either (i) claimed  
or raised by any authority in writing or (ii) as to which any of the directors  
and officers (and employees responsible for Tax matters) of the Company or its  
subsidiaries have knowledge based on contact or correspondence with any agent   
of such authority. Schedule 3.7 (c) to the Company Schedules lists all U.S.     
federal Tax Returns filed with respect to the Company and its subsidiaries for  
taxable periods ended on or after March 31, 1995 that have been audited. The    
Company has made available to Parent through the Company's accountants correct  
and complete copies of all income, excise and franchise Tax Returns,            
examination reports and statements of deficiencies assessed against or agreed   
to by the Company related thereto for all taxable periods ended on or after     
March 31, 1995.                                                                 

(d) Neither the Company, nor any of its subsidiaries, nor any ERISA       
Affiliate (as defined in Section 3.13.11) has made any payments, is obligated   
to make any payments or is a party to (or a participating employer in) any      
agreement or Employee Benefit Plan (as defined in Section 3.13.11) that could   
obligate it to make any payments that would constitute "excess parachute        
payments" within the meaning of Section 280G of the Code (or any similar        
provision of state, local or foreign law) or that would otherwise not be        
deductible under Section 162(a)(1), 162(m) or 404 of the Code.                  

(e) The Company has not been a United States real property holding        
corporation within the meaning of Section 897(c)(2) of the Code during the      
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.            

(f) Neither the Company nor any of its subsidiaries is a party to any Tax 
allocation, sharing, indemnity or similar agreement. Neither the Company nor    
any of its subsidiaries (i) has been a member of a Tax Group (as defined below) 
filing a consolidated income Tax Return under Section 1501 of the Code (or any  
similar provision of state, local or foreign law) (other than the Tax Group,    
the common parent of which is the Company) and (ii) does not have any liability 
for Taxes of any Person (other than the Company and any of its subsidiaries)    
under Treasury Regulations Section 1.1502-6 (or any similar provision of state, 
local or foreign law) as a transferee or successor by contract or otherwise.    

 (g) The unpaid Taxes of the Company and its subsidiaries (i) did not, as of
March 31, 2000, exceed the reserve for Tax liability set forth on the face      
(rather than any reserve for deferred Taxes established to reflect timing       
differences between book and Tax income) of the Company Balance Sheet and (ii)  
do not exceed that reserve as adjusted for the passage of time and operations   
in the ordinary course of business through the Closing Date.                    

As used in this Agreement, the following terms shall have the following   
meanings:                                                                       

"Taxes" means (A) all foreign, federal, state, county or local taxes,     
charges, fees, levies, imposts, duties and other assessments, including, but    
not limited to, any income, alternative minimum or add-on, estimated, gross     
income, gross receipts, sales, use, transfer, transactions, intangibles, ad     
valorem, value-added, franchise, registration, title, license, capital, paid-up 
capital, profits, withholding, payroll, employment, excise, severance, stamp,   
occupation, premium, real property, recording, personal property, federal       
highway use, commercial rent, environmental (including, but not limited to,     
taxes under Section 59A of the Code) or windfall profit tax, custom, duty or    
other tax, governmental fee or other like assessment or charge of any kind      
whatsoever, together with any interest, penalties or additions to tax, (B) any  
liability for payment of amounts described in clause (A) whether as a result of 
transferee liability, or being a member of a Tax Group for any period, or       
otherwise through operation of law, and (C) any liability for the payment of    
amounts described in clauses (A) or (B) as a result of any tax sharing, tax     
indemnity or tax allocation agreement or any other express or implied agreement 
to indemnify any other person; and "Tax" means any of the foregoing Taxes.      

"Tax Group" means any federal, state, local or foreign consolidated,      
affiliated, combined, unitary or other similar group of which the Company is    
now or was formerly a member.                                                   

"Tax Returns" means any return, declaration, report, claim or refund,     
information return, statement or other similar document, including any schedule 
or attachment thereto, and including any amendment thereof required to be filed 
with respect to Taxes.                                                          

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3.8 Title to Properties; Absence of Liens and Encumbrances                      

(a) The Company Schedules list all jurisdictions in which real property is
owned or leased by the Company. The Company Schedules list all real property    
leases to which the Company is a party and each amendment thereto with lease    
payments of more than an aggregate of $100,000 per year. All such current       
leases are in full force and effect, are valid and effective in accordance with 
the respective terms, and there is not, under any of such leases, any existing  
default or event of default (or event which with notice or lapse of time, or    
both, would constitute a default) that would give rise to a claim in an amount  
greater than $100,000.                                                          

(b) The Company has good and valid title to, or, in the case of leased    
properties and assets, valid leasehold interests in, all of its tangible        
properties and assets, real, personal and mixed, used or held for use in its    
business, free and clear of any liens, pledges, charges, claims, security       
interests or other encumbrances of any sort ("Liens"), except as reflected in   
the Company Financials or in the Company Schedules and except for liens for     
taxes not yet due and payable and such imperfections of title and encumbrances, 
if any, which are not material in character, amount or extent, and which do not 
materially detract from the value, or materially interfere with the present     
use, of the property subject thereto or affected thereby.                       

3.9 Intellectual Property                                                       

3.9.1 General                                                               

The Company owns, co-owns or is licensed and has all rights in and to all 
intellectual property and other proprietary rights required to conduct its      
business as now conducted and as proposed to be conducted, including, without   
limitation, all trade names, trademarks, service marks, logos, brand names and  
other identifiers, trade secrets, maskworks, copyrights and domestic and        
foreign letters patent, and the registrations, applications, renewals,          
extensions, reissues, reexaminations, divisionals and continuations (in whole   
or in part) thereof, all goodwill associated therewith and all rights and       
causes of action for infringement, misappropriation, misuse, dilution or unfair 
trade practices associated therewith.                                           

3.9.2 Company Technology                                                    

(a) Schedule 3.9.2 to the Company Schedules sets forth a list of all      
products and tools developed, produced, used, marketed or sold by the Company   
during the two years prior to the date of this Agreement and that are           
essential, proprietary, and required to conduct its business as now conducted   
and as proposed to be conducted , together with all prior versions,             
predecessors or precursors to such products or tools (collectively, the         
"Products"). Except for the Third Party Technologies (as defined in Section     
3.9.3), the Company owns all right, title and interest in and to the following  
(collectively, the "Technology"), free and clear of all Liens: all inventions,  
discoveries, processes, designs, works of authorship, data compilations         
(whether in electronic form or not) trade secrets, know-how and other           
confidential or proprietary information related to the Products. The            
Technology, excluding the Third Party Technologies (as defined below), is       
sometimes referred to herein as the "Company Technology."                       

 (b) The Company owns certain proprietary Company Technology relating to the
CableCure treatment process and injection technology, separate and apart from   
its rights under the CableCure license agreement with Dow Corning Corporation,  
which would provide the Company with a significant competitive advantage, both  
in terms of cost and product/service effectiveness, relative to any other third 
parties in the event that the exclusivity provisions of the CableCure license   
agreement with Dow Corning Corporation were terminated in connection with the   
Dow Corning Corporation bankruptcy proceedings.                                 

3.9.3 Third Party Technology                                                

 Schedule 3.9.3 to the Company Schedules sets forth a list of all Technology
used in the Company's business for which the Company does not own all right,    
title and interest (collectively, the "Third Party Technologies"), and all      
material license agreements or other contracts pursuant to which the Company    
has the                                                                         

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right to use (in the manner used by the Company, or intended or necessary for   
use with the Company Technology) the Third Party Technologies (the "Third Party 
Licenses"), indicating, with respect to each of the Third Party Technologies    
listed therein, the owner thereof and the Third Party License applicable        
thereto. The Company has the lawful right to use (free of any material          
restriction not expressly set forth in the Third Party Licenses) (a) all Third  
Party Technology that is incorporated in or used in the development or          
production of the Company Technology and (b) all other Third Party Technology   
material to and necessary for the conduct of the Company's business as now      
conducted and as proposed to be conducted. All Third Party Licenses are valid,  
binding and in full force and effect, the Company and, to the Company's         
knowledge, each other party thereto have performed in all material respects     
their obligations thereunder, and neither the Company nor, to the Company's     
knowledge, any other party thereto is in default thereunder, nor to the         
Company's knowledge has there occurred any event or circumstance that with      
notice or lapse of time or both would constitute a default or event of default  
on the part of the Company or, to the Company's knowledge, any other party      
thereto or give to any other party thereto the right to terminate or modify any 
Third Party License. The Company has not received notice that any party to any  
Third Party License intends to cancel, terminate or refuse to renew (if         
renewable) such Third Party License or to exercise or decline to exercise any   
option or right thereunder. To the knowledge of the Company, no action has been 
taken to reject the CableCure License in connection with the Dow Corning        
bankruptcy proceedings.                                                         

3.9.4 Trademarks                                                            

  Schedule 3.9.4 to the Company Schedules sets forth a list of all trademarks,
trade names, brand names, service marks, logos or other identifiers for the     
Products or otherwise used by the Company in its business (the "Marks"). The    
Company has full legal and beneficial ownership, free and clear of any Liens,   
of all rights conferred by use of the Marks in connection with the Products or  
otherwise in the Company's business and, as to those Marks that have been       
registered in the United States Patent and Trademark Office, by federal         
registration of the Marks.                                                      

3.9.5 Intellectual Property Rights                                          

Schedules 3.9.4 and 3.9.5 to the Company Schedules sets forth all patents,
patent applications, copyright registrations (and applications therefor),       
maskwork registrations (and applications therefor) and trademark registrations  
(and applications therefor) (collectively, the "IP Registrations") associated   
with the Company Technology and the Marks. Except as set forth in Schedule      
3.9.3 and 3.9.5 to the Company Schedules, the Company owns all right, title and 
interest, free and clear of any Liens, in and to the IP Registrations, together 
with any other rights in or to any copyrights (registered or unregistered),     
rights in the Marks (registered or unregistered), trade secret rights and other 
intellectual property rights (including, without limitation, rights of          
enforcement) contained or embodied in the Company Technology and the Marks      
(collectively, the "IP Rights").                                                

3.9.6 Maintenance of Rights                                                 

The Company has not conducted its business, and has not used or enforced  
(or, to its knowledge, failed to use or enforce) the IP Rights, in a manner     
that would result in the abandonment, cancellation, lapse or unenforceability   
of any item of the IP Rights or the IP Registrations or any inventions, and the 
Company has not taken (or, to its knowledge, failed to take) any action that    
would result in the forfeiture or relinquishment of any IP Rights, IP           
Registrations or inventions, in each case where such abandonment, cancellation, 
unenforceability, forfeiture or relinquishment would have a Material Adverse    
Effect. Except as set forth in Schedules 3.9.6 to the Company Schedules, the    
Company has not granted to any third party any rights or permissions to use any 
of the Technology or the IP Rights, except for any such grant that would not be 
reasonably expected (as far as can be foreseen at the time) to have a Material  
Adverse Effect. To the best of the Company's knowledge, except pursuant to      
reasonably prudent safeguards, (a) no third party has received any confidential 
information relating to the Technology or the IP Rights and the Company has at  
all times                                                                       

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maintained and diligently enforced commercially reasonable procedures to        
protect all confidential information relating to the Technology, and (b) the    
Company is not under any contractual or other obligation to disclose to any     
third party any Company Technology.                                             

3.9.7 Third Party Claims                                                    

Except as disclosed in Schedules 3.9.7(a), (b) and (c) to the Company     
Schedules, (a) the Company has not received any notice or claim (whether        
written, oral or otherwise) challenging the Company's ownership of or rights in 
the Company Technology or the IP Rights or claiming that any other person or    
entity has any legal or beneficial ownership with respect thereto; (b) all the  
IP Rights are legally valid and enforceable without any material qualification, 
limitation or restriction on their use, and the Company has not received any    
notice or claim (whether written, oral or otherwise) challenging the validity   
or enforceability of any of the IP Rights; and (c) to the Company's knowledge,  
no other person or entity is infringing or misappropriating any part of the IP  
Rights or otherwise making any unauthorized use of the Company Technology.      

3.9.8 Infringement by the Company                                           

Except as disclosed in Schedule 3.9.8 to the Company Schedules, (a) the   
manufacture, use, sale, disclosure, execution, reproduction, modification,      
adaptation, distribution, performance or display of any of the Technology or    
any modifications or enhancements thereof, in the Company's business does not   
and will not infringe, violate or interfere with or constitute an appropriation 
of any right, title or interest (including, without limitation, any patent,     
maskwork, copyright or trade secret right) held by any other person or entity,  
and there have been no claims made with respect thereto; (b) the use of any of  
the Marks and other IP Rights in the Company's business will not infringe,      
violate or interfere with or constitute an appropriation of any right, title or 
interest (including, without limitation, any patent, copyright, trademark or    
trade secret right) held by any other person or entity, and there have been no  
claims made with respect thereto; and (c) the Company has not received any      
notice or claim (whether written, oral or otherwise) regarding any              
infringement, misappropriation, misuse, abuse or other interference with any    
third party intellectual property or proprietary rights (including, without     
limitation, infringement of any patent, copyright, trademark or trade secret    
right of any third party) by the Company, the Technology or the Marks or other  
IP Rights, or claiming that any other entity has any claim of infringement with 
respect thereto.                                                                

3.9.9 Restrictions on Intellectual Property                                 

 To the knowledge of the Company, none of the Company's officers, employees,
consultants, distributors, agents, representatives or advisors has entered into 
any agreement relating to the Company's business regarding know-how, trade      
secrets, assignment of rights in inventions, or prohibition or restriction of   
competition or solicitation of customers, or any other similar restrictive      
agreement or covenant, whether written or oral, with any Person other than the  
Company.                                                                        

3.10 Compliance; Permits; Restrictions                                          

  (a) Neither the Company nor any of its subsidiaries is, in conflict with, or
in default or violation of (i) any law, rule, regulation, order, judgment or    
decree applicable to the Company or any of its subsidiaries or by which the     
Company or any of its subsidiaries or any of their respective properties is     
bound or affected, or (ii) any material note, bond, mortgage, indenture,        
contract, agreement, lease, license, permit, franchise or other material        
instrument or obligation to which the Company or any of its subsidiaries is a   
party or by which the Company or any of its subsidiaries or its or any of their 
respective properties is bound or affected and, in either case, which default   
or violation would have a Material Adverse Effect. To the knowledge of the      
Company, no investigation or review by any Governmental Entity is pending or    
threatened against the Company or any of its subsidiaries, nor has any          
Governmental Entity indicated an intention to conduct the same. There is no     
agreement, judgment, injunction, order or decree binding upon the Company or    
any of its subsidiaries which                                                   

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has or could reasonably be expected to have the effect of prohibiting or        
materially impairing any business practice of the Company or any of its         
subsidiaries, any acquisition of material property by the Company or any of its 
subsidiaries or the conduct of business by the Company as currently conducted.  

 (b) The Company and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities that are         
material to the operation of the business of the Company (collectively, the     
"Company Permits"). The Company and its subsidiaries are in compliance in with  
the terms of the Company Permits, except where the failure to do so would not   
have a Material Adverse Effect.                                                 

3.11 Litigation                                                                 

There is no action, suit, proceeding, claim, arbitration or investigation 
pending, or as to which the Company or any of its subsidiaries has received any 
notice of assertion nor, to the knowledge of the Company, is there a threatened 
action, suit, proceeding, claim, arbitration or investigation against the       
Company or any of its subsidiaries which would be required to be disclosed      
pursuant to Item 103 of Regulation S-K under the Exchange Act which has not     
been disclosed in the Company's Exchange Act filings. To the knowledge of the   
Company, no Governmental Entity has at any time challenged or questioned in     
writing the legal right of the Company to manufacture, offer or sell any of its 
products in the present manner or style thereof.                                

3.12 Brokers' and Finders' Fees                                                 

Except for fees payable to Banker pursuant to an engagement letter dated  
June 14, 2000, as amended, a copy of which has been provided to Parent, the     
Company has not incurred, nor will it incur, directly or indirectly, any        
liability for brokerage or finders' fees or agents' commissions or any similar  
charges in connection with this Agreement or any transaction contemplated       
hereby.                                                                         

3.13 Employee Benefit Plans                                                     

3.13.1 Employee Benefit Plan Listing                                        

Schedule 3.13.1 to the Company Schedules contains a complete and accurate 
list of all material Employee Benefit Plans other than the Option Plans.        
Neither the Company nor any ERISA Affiliate has any agreement, arrangement,     
commitment or obligation, whether formal or informal, whether written or        
unwritten and whether legally binding or not, to create, enter into or          
contribute to any additional material Employee Benefit Plan, or to modify or    
amend any existing material Employee Benefit Plan. There has been no amendment, 
interpretation or other announcement (written or oral) by the Company, any      
ERISA Affiliate or any other person relating to any material Employee Benefit   
Plan that, either alone or together with other such items or events, could      
materially increase the expense of maintaining the Employee Benefit Plans above 
the level of expense incurred with respect thereto for the most recent fiscal   
year included in the Financial Statements. Except as disclosed in the Company   
Schedules, the terms of each material Employee Benefit Plan permit the Company  
or its ERISA Affiliates to amend or terminate such Employee Benefit Plan at any 
time and for any reason without material penalty or material liability. Except  
as disclosed in the Company Schedules, none of the rights of the Company or any 
ERISA Affiliate under any material Employee Benefit Plan will be impaired in    
any way by this Agreement or the consummation of the transactions contemplated  
in (or by) this Agreement.                                                      

3.13.2 Documents Provided                                                   

  The Company has delivered or will deliver to Parent within ten (10) business
days after the execution of this Agreement true, correct and complete copies    
(or, in the case of unwritten Employee Benefit Plans, descriptions) of all      
Employee Benefit Plans (and all amendments thereto), along with, to the extent  
applicable to the particular Employee Benefit Plan, copies of the following:    
(a) the last three annual reports (Form 5500 series) filed with respect to such 
Employee Benefit Plan; (b) all summary plan descriptions, summaries of material 
modifications and all employee manuals or communications filed or distributed   
with respect to such                                                            

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Employee Benefit Plan during the last three years; (c) all contracts and        
agreements (and any amendments thereto) relating to such Employee Benefit Plan, 
including, without limitation, trust agreements, investment management          
agreements, annuity contracts, insurance contracts, bonds, indemnification      
agreements and service provider agreements; (d) the most recent determination   
letter issued by the IRS with respect to such Employee Benefit Plan; (e) all    
written communications relating to the amendment, creation or termination of    
such Employee Benefit Plan, or an increase or decrease in benefits,             
acceleration of payments or vesting or other events that could result in        
liability to the Company since the date of the most recently completed and      
filed annual report; (f) all correspondence to or from any Governmental Entity  
relating to such Employee Benefit Plan; (g) samples of all administrative forms 
currently in use, including, without limitation, all COBRA and HIPAA forms and  
notices; (h) all coverage, nondiscrimination, top heavy and Code Section 415    
tests performed with respect to such Employee Benefit Plan for the last three   
years; and (i) the most recent registration statement, annual report (Form 11-  
K) and prospectus prepared in connection with such Employee Benefit Plan.       

3.13.3 Compliance                                                           

With respect to each material Employee Benefit Plan: (a) such Employee    
Benefit Plan is, and at all times since inception has been, maintained,         
administered, operated and funded in all respects in accordance with its terms  
and in material compliance with all applicable requirements of all applicable   
laws, statutes, orders, rules and regulations, including, without limitation,   
ERISA, COBRA, HIPAA and the Code; (b) the Company, each ERISA Affiliate, each   
fiduciary of such Employee Benefit Plan and all other persons have, at all      
times, properly performed all material obligations, whether arising by          
operation of law or by contract, required to be performed by any of them in     
connection with such Employee Benefit Plan; (c) none of the Company, any ERISA  
Affiliate or any other fiduciary of such Employee Benefit Plan has engaged in   
any transaction or acted or failed to act in a manner that violates the         
fiduciary requirements of ERISA or any other applicable law in any material     
respect; (d) no transaction or event has occurred or is threatened or about to  
occur (including any of the transactions contemplated in or by this Agreement)  
that constitutes or could constitute a prohibited transaction under Section 406 
or 407 of ERISA or under Section 4975 of the Code for which an exemption is not 
available; and (e) neither the Company nor any ERISA Affiliate has incurred,    
and there exists no condition or set of circumstances in connection with which  
the Company, any ERISA Affiliate, Parent, Purchaser or the Surviving            
Corporation could incur, directly or indirectly, any material liability or      
expense (except for routine contributions and benefit payments) under ERISA,    
the Code or any other applicable law, statute, order, rule or regulation or     
pursuant to any indemnification or similar agreement with respect to such       
Employee Benefit Plan.                                                          

3.13.4 Qualification                                                        

Each Employee Benefit Plan that is intended to be qualified under Section 
401(a) of the Code is, and at all times since inception has been, so qualified  
and its related trust is, and at all times since inception has been, exempt     
from taxation under Section 501(a) of the Code. Each such Employee Benefit Plan 
either is the subject of an unrevoked favorable determination, opinion,         
notification or advisory letter from the IRS with respect to such Employee      
Benefit Plan's qualified status under the Code, as amended by the Tax Reform    
Act of 1986 and all subsequent legislation, or has remaining a period of time   
under the Code or applicable Treasury regulations or IRS pronouncements in      
which to apply to the IRS for such a letter and to make any amendments          
necessary to obtain such a letter from the IRS. No fact exists or is reasonably 
expected by the Company or any ERISA Affiliate to arise, that could adversely   
affect the qualification or exemption of any such Employee Benefit Plan or its  
related trust. No such Employee Benefit Plan is a "top-heavy plan," as defined  
in Section 416 of the Code.                                                     

3.13.5 Contributions and Premium Payments                                   

All contributions, premiums and other payments (including, without        
limitation, administrative costs, such as trustee and service provider fees)    
due or required to be paid to (or with respect to) each material Employee       

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Benefit Plan have been timely paid, or, if not yet due, have been accrued as a  
liability on the Company Balance Sheet.                                         

3.13.6  Multiemployer, Defined Benefit and Money Purchase Pension Plans and 
Multiple Employer Welfare Arrangements.                     

 Neither the Company nor any ERISA Affiliate maintains or contributes to, or
has ever maintained or contributed to (or been obligated to contribute to), any 
multiemployer plan as defined in Section 3(37) or Section 4001(a)(3) of ERISA   
or 414(f) of the Code, any multiple employer plan within the meaning of         
Section 4063 or 4064 of ERISA or Section 413(c) of the Code, any employee       
benefit plan, fund, program, contract or arrangement that is subject to Section 
412 of the Code, Section 302 of ERISA or Title IV of ERISA or any multiple      
employer welfare arrangement as defined in Section 3(40) of ERISA.              

3.13.7 Post-Termination Benefits                                            

  Except as disclosed in the Company Schedules, none of the Company, any ERISA
Affiliate or any material Employee Benefit Plan provides or has any obligation  
to provide (or contribute toward the cost of) post-employment or post-          
termination benefits of any kind, including, without limitation, death and      
medical benefits, with respect to any current or former officer, employee,      
agent, director or independent contractor of the Company or any ERISA           
Affiliate, other than (a) continuation coverage mandated by Sections 601        
through 608 of ERISA and Section 4980B(f) of the Code, (b) retirement benefits  
under any Employee Benefit Plan that is qualified under Section 401(a) of the   
Code, and (c) deferred compensation that is accrued as a current liability on   
the Company Balance Sheet.                                                      

3.13.8 Suits, Claims and Investigations                                     

  Except as disclosed in the Company Schedules, there are no actions, suits or
claims (other than routine claims for benefits) pending or, to the knowledge of 
the Company and each ERISA Affiliate, threatened with respect to (or against    
the assets of) any Employee Benefit Plan, nor, to the knowledge of the Company  
and each ERISA Affiliate, is there a basis for any such action, suit or claim.  
No Employee Benefit Plan is currently under investigation, audit or review,     
directly or indirectly, by the IRS, the DOL or any other Governmental Entity,   
and, to the knowledge of the Company or any ERISA Affiliate, no such action is  
contemplated or under consideration by the IRS, the DOL or any other            
Governmental Entity.                                                            

3.13.9 Payments Resulting From Transactions                                 

Except as disclosed in the Company Schedules, neither the execution and   
delivery of this Agreement nor the consummation of the transactions             
contemplated in (or by) this Agreement, will (a) entitle any individual to      
severance pay, unemployment compensation or any other payment from the Company, 
any ERISA Affiliate, Parent, Purchaser, the Surviving Corporation or any        
Employee Benefit Plan, (b) otherwise increase the amount of compensation due to 
any individual, (c) result in any benefit or right becoming established or      
increased, or accelerate the time of payment or vesting of any benefit, under   
any Employee Benefit Plan, or (d) require the Company, any ERISA Affiliate,     
Parent, Purchaser or the Surviving Corporation to transfer or set aside any     
assets to fund or otherwise provide for any benefits for any individual.        

3.13.10 Insured Benefits                                                    

  With respect to any Employee Benefit Plan that is funded wholly or partially
through a third party insurance policy, there will be no liability, as of the   
Effective Time, under any insurance policy or ancillary agreement with respect  
to such insurance policy in the nature of a retroactive rate adjustment, loss   
sharing arrangement or other actual or contingent liability arising wholly or   
partially out of events occurring prior to the Effective Time.                  

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3.13.11 Definitions                                                         

As used in this Agreement, the following terms shall have the following   
meanings:                                                                       

 (a) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (as set forth in Part 6 of Subtitle B of Title I of ERISA  
and Section 4980B of the Code).                                             

(b) "DOL" means the United States Department of Labor.                

(c) "Employee Benefit Plan" means any retirement, pension, profit     
sharing, deferred compensation, stock bonus, savings, bonus, incentive,     
cafeteria, medical, dental, vision, hospitalization, life insurance,        
accidental death and dismemberment, medical expense reimbursement,          
dependent care assistance, tuition reimbursement, disability, sick pay,     
holiday, vacation, severance, change of control, stock purchase, stock      
option, restricted stock, phantom stock, stock appreciation rights, fringe  
benefit (within the meaning of Section 132 of the Code) or other employee   
benefit plan, fund, policy, program, contract, arrangement or payroll       
practice (including any "employee benefit plan," as defined in Section 3(3) 
of ERISA) or any employment, consulting or personal services contract,      
whether written or oral, qualified or nonqualified, funded or unfunded, or  
domestic or foreign, (i) sponsored, maintained or contributed to by the     
Company or any ERISA Affiliate or to which the Company or any ERISA         
Affiliate is a party, (ii) covering or benefiting any current or former     
officer, employee, agent, director or independent contractor of the Company 
or any ERISA Affiliate (or any dependent or beneficiary of any such         
individual), or (iii) with respect to which the Company or any ERISA        
Affiliate has (or could have) any obligation or liability.                  

(d) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.                                                                 

(e) "ERISA Affiliate" means any corporation, partnership, limited     
liability company, sole proprietorship, trade, business or other            
organization, entity or person that, together with the Company, is treated  
as a single employer under Section 414(b), (c), (m) or (o) of the Code.     

(f) "HIPAA" means the Health Insurance Portability and Accountability 
Act of 1997, as amended.                                                    

(g) "IRS" means the United States Internal Revenue Service.           

3.14 Employees; Labor Matters                                                   

To the Company's knowledge, no employee of the Company (a) is in violation
of any term of any employment contract, patent disclosure agreement, non-       
competition agreement, or any restrictive covenant to a former employer         
relating to the right of any such employee to be employed by the Company        
because of the nature of the business conducted or presently proposed to be     
conducted by the Company or to the use of trade secrets or proprietary          
information of others and (b) has given notice to the Company, nor is the       
Company otherwise aware, that any employee intends to terminate his or her      
employment with the Company except for terminations of a nature and number      
that are consistent with the Company's prior experience. Company Schedule 3.14  
lists all collective bargaining agreements that are binding on the Company. To  
the Company's knowledge, there are no activities or proceedings of any labor    
union to organize any employees of the Company or any of its subsidiaries and   
there are no strikes, or material slowdowns, work stoppages or lockouts, or     
threats thereof by or with respect to any employees of the Company or any of    
its subsidiaries. To the Company's knowledge, the Company and its subsidiaries  
are and have been in compliance in all material respects with all applicable    
laws regarding employment practices, terms and conditions of employment, and    
wages and hours (including, without limitation, OSHA, ERISA, WARN or any        
similar state or local law).                                                    

3.15 Environmental Matters                                                      

(a) Hazardous Material. To the Company's knowledge, no underground storage
tanks and no amount of any substance that has been designated by any            
Governmental Entity or by applicable federal, state or local law to be          
radioactive, toxic, hazardous or otherwise a danger to health or the            
environment, including, without limitation, PCBs, asbestos, petroleum, urea-    
formaldehyde and all substances listed as hazardous substances                  

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pursuant to the Comprehensive Environmental Response, Compensation, and         
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to  
the United States Resource Conservation and Recovery Act of 1976, as amended,   
and the regulations promulgated pursuant to said laws (a "Hazardous Material"), 
but excluding office and janitorial supplies, are present in, on or under any   
property, including the land and the improvements, ground water and surface     
water thereof, that the Company or any of its subsidiaries has at any time      
owned, operated, occupied or leased.                                            

(b) Hazardous Materials Activities. Neither the Company nor any of its    
subsidiaries has transported, stored, used, manufactured, disposed of, released 
or exposed its employees or others to Hazardous Materials in violation of any   
law in effect on or before the Closing Date, nor has the Company or any of its  
subsidiaries disposed of, transported, sold, used, released, exposed its        
employees or others to or manufactured any product containing a Hazardous       
Material (collectively "Hazardous Materials Activities") in violation of any    
rule, regulation, treaty or statute promulgated by any Governmental Entity in   
effect prior to or as of the date hereof to prohibit, regulate or control       
Hazardous Materials or any Hazardous Material Activity, except where such       
violation would not have a Material Adverse Effect.                             

(c) Permits. The Company and its subsidiaries currently hold all          
environmental approvals, permits, licenses, clearances and consents (the        
"Company Environmental Permits") material and necessary for the conduct of the  
Company's and its subsidiaries' Hazardous Material Activities and other         
businesses of the Company and its subsidiaries as such activities and           
businesses are currently being conducted.                                       

(d) Environmental Liabilities. No material action, proceeding, revocation 
proceeding, amendment procedure, writ, injunction or claim is pending, or the   
Company's knowledge, threatened concerning any Company Environmental Permit,    
Hazardous Material or any Hazardous Materials Activity of the Company or any of 
its subsidiaries. The Company is not aware of any fact or circumstance which    
could involve the Company or any of its subsidiaries in any material            
environmental litigation or impose upon the Company any material environmental  
liability.                                                                      

 The Cablecure(R) and CableBlock(R) services provided to customers have been
conducted in compliance with all applicable environmental and safety laws, and  
have not resulted in any soil contamination or given rise to any claims of      
which the Company has notice, nor to the Company's knowledge, is there any      
basis for any such claims.                                                      

3.16 Agreements, Contracts and Commitments                                      

  Except as set forth in the Company Schedules, neither the Company nor any of
its subsidiaries is a party to or is bound by:                                  

 (a) any employment or consulting agreement, contract or commitment with any
officer or director level employee or member of the Company's Board of          
Directors, other than those that are terminable by the Company or any of its    
subsidiaries on no more than thirty days notice without liability or financial  
obligation, except to the extent general principles of wrongful termination law 
may limit the Company's or any of its subsidiaries' ability to terminate        
employees at will;                                                              

(b) any agreement or plan, including, without limitation, any stock option
plan, stock appreciation right plan, stock purchase plan or restricted stock    
purchase agreement, any of the benefits of which will be increased, or the      
vesting of benefits of which will be accelerated, by the occurrence of any of   
the transactions contemplated by this Agreement or the value of any of the      
benefits of which will be calculated on the basis of any of the transactions    
contemplated by this Agreement;                                                 

(c) any agreement of indemnification or guaranty not entered into in the  
ordinary course of business other than indemnification agreements between the   
Company or any of its subsidiaries and any of its officers or directors;        

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 (d) any agreement, contract or commitment currently in force containing any
covenant limiting the freedom of the Company or any of its subsidiaries to      
engage in any line of business or compete with any person or granting any       
exclusive distribution rights;                                                  

  (e) any agreement, contract or commitment currently in force relating to the
disposition or acquisition of assets not in the ordinary course of business or  
any ownership interest in any corporation, partnership, joint venture or other  
business enterprise; or                                                         

(f) any material joint marketing or development agreement.                

Neither the Company nor any of its subsidiaries, nor to the Company's     
knowledge any other party to a Company Contract (as defined below), has         
breached, violated or defaulted under, or received notice that it has breached  
violated or defaulted under, any of the material terms or conditions of any     
agreement, contract or commitment to which the Company or any of its            
subsidiaries is a party of the type described above or any other material       
agreement, contract or commitment (any such agreement, contract or commitment,  
as well as any agreement, contract or commitment that is an exhibit to any      
Company SEC Report, a "Company Contract") in such a manner as would permit any  
other party to cancel or terminate any such Company Contract, or would permit   
any other party to seek damages, which would be reasonably likely to be         
material to the Company.                                                        

3.17 Change of Control Payments                                                 

  The Company Schedules set forth each plan or agreement pursuant to which any
amounts may become payable (whether currently or in the future) to current or   
former officers and directors of the Company as a result of or in connection    
with the Offer and/or the Merger.                                               

3.18 Board Approval                                                             

 The Board of Directors of the Company has, as of the date of this Agreement
(a) determined that this Agreement and the transactions contemplated hereby,    
including each of the Offer and the Merger, are fair to and in the best         
interests of the holders of the Shares, (b) approved and adopted this Agreement 
and the transactions contemplated hereby and (c) resolved to recommend that the 
shareholders of the Company accept the Offer and approve and adopt this         
Agreement and the transactions contemplated hereby and thereby.                 

3.19 Fairness Opinion                                                           

 The Company's Board of Directors has received a written opinion from Banker
to the effect that the consideration to be received by the holders of Shares    
pursuant to each of the Offer and the Merger is fair to the holders of Shares   
from a financial point of view, and the Company has delivered to Parent a copy  
of such opinion.                                                                

3.20 State Anti-Takeover Statutes Not Applicable; Company Rights Plan           

 The Board of Directors of the Company has taken all actions so that (a) the
restrictions contained in Chapter 23B.19 of the Washington Business Corporation 
Act and Section 203 of the DGCL will not apply to the execution, delivery or    
performance of this Agreement or to the consummation of the Merger or the other 
transactions contemplated by this Agreement, (b) approval of shareholders       
holding sixty-seven percent (67%) of the outstanding shares will be sufficient  
under the DGCL to approve the Merger, and (c) the execution, delivery and       
performance of this Agreement and the consummation of the Merger will not cause 
any change, effect or result under the Rights Agreement, dated as of November   
6, 1998, between the Company and American Stock Transfer and Trust Company (the 
"Company Rights Plan") which is adverse to the interests of Purchaser or        
Parent. Without limiting the generality of the foregoing, if necessary to       
accomplish the foregoing, the Company Rights Plan has been (or will be within   
five business days of the date hereof) amended to (i) render the Company Rights 
Plan inapplicable to the Merger and the other transactions contemplated by this 
Agreement, (ii) ensure that (x) neither Parent nor Purchaser is an Acquiring    
Person (as defined in the                                                       

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Company Rights Plan) pursuant to the Company Rights Plan by virtue of the Offer 
or the Consummation of the Merger or the other transactions contemplated hereby 
and thereby and (y) a Distribution Date or Shares Acquisition Date (as such     
terms are defined in the Company Rights Plan) does not occur by reasons of the  
execution of this Agreement, the consummation of the Merger, or the             
consummation of the transactions contemplated hereby or thereby, and such       
amendment may not be further amended by Company without the prior consent of    
Parent in its sole discretion.                                                  

3.21 Offer Documents; Proxy Statement                                           

Neither the Schedule 14D-9, nor any of the information supplied by the    
Company for inclusion in the Offer Documents, shall, at the respective times    
that the Schedule 14D-9, the Offer Documents or any amendments or supplements   
thereto are filed with the SEC or are first published, sent or given to         
shareholders, as the case may be, contain any untrue statement of a material    
fact or omit to state any material fact required to be stated therein or        
necessary in order to make the statements therein, in the light of the          
circumstances under which they were made, not misleading. Neither the proxy     
statement to be sent to the shareholders of the Company in connection with the  
meeting of the Company's stockholders to consider the Merger (the "Company      
Stockholders' Meeting") or the information statement to be sent to such         
shareholders, as appropriate (such proxy statement or information statement, as 
amended or supplemented, is referred to as the "Proxy Statement"), shall, at    
the date the Proxy Statement (or any amendment thereof or supplement thereto)   
is first mailed to shareholders, at the time of the Company Stockholders'       
Meeting and at the Effective Time, contain any untrue statement of a material   
fact, or omit to state any material fact required to be stated therein or       
necessary in order to make the statements made therein, in the light of the     
circumstances under which they are made, not misleading or necessary to correct 
any statement in any earlier communication with respect to the solicitation of  
proxies for the Company Stockholders' Meeting which has become false or         
misleading. The Schedule 14D-9 and the Proxy Statement will comply in all       
material respects as to form and substance with the requirements of the         
Exchange Act and the rules and regulations thereunder. Notwithstanding the      
foregoing, the Company makes no representation or warranty with respect to any  
information supplied to the Company by Parent or Purchaser which is contained   
in the foregoing document.                                                      

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

Parent and Purchaser, jointly and severally, represent and warrant to the 
Company that:                                                                   

4.1 Organization and Qualification                                              

Each of Parent and Purchaser is a corporation duly organized validly      
existing and in good standing under the laws of the jurisdiction of its         
incorporation, and has all requisite corporate power and authority to own,      
operate and lease its properties and to carry on its business as it is now      
being conducted.                                                                

4.2 Corporate Power, Authorization and Enforceability                           

  Each of Parent and Purchaser has full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder and to consummate  
all the transactions contemplated hereby. The execution and delivery of this    
Agreement by Parent and Purchaser, the performances by each of Parent and       
Purchaser of their respective obligations hereunder and the consummation by     
Parent and Purchaser of the transactions contemplated hereby have been duly and 
validly authorized by the Board of Directors of each Parent and Purchaser and   
no other corporate action on the part of Parent or Purchaser are necessary to   
authorize this Agreement or to consummate the transactions contemplated hereby  
(other than the filing and recordation of appropriate merger documents as       
required by the DGCL). This Agreement has been duly executed and delivered by   
each of Parent and Purchaser and is a legal, valid and binding obligation of    
each of Parent and Purchaser, enforceable against Parent and Purchaser in       
accordance with its terms.                                                      

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4.3 No Conflict; Required Filings and Consents                                  

(a) Assuming satisfaction of all applicable requirements referred to in   
Section 4.3(b) below, the execution and delivery of this Agreement by Parent    
and Purchaser, the compliance by Parent and Purchaser with the provisions       
hereof and the consummation by Parent and Purchaser of the transactions         
contemplated hereby will not conflict with or violate (i) any statute, law,     
ordinance, rule, regulation, order, writ, judgment, award, injunction, decree   
or ruling applicable to Parent and Purchaser or any of their properties, other  
than such conflicts or violations which individually or in the aggregate do not 
and will not have a material adverse effect on the business, properties,        
assets, results of operations or financial condition of Parent and Purchaser,   
taken as a whole, or (ii) conflict with or violate the Articles of              
Incorporation or Bylaws of Parent and the Certificate of Incorporation or       
Bylaws of Purchaser.                                                            

(b) Other than in connection with or in compliance with the provisions of 
the DGCL, the Exchange Act, the "takeover" or "blue sky" laws of various states 
and the HSR Act, (i) neither Parent nor Purchaser is required to submit any     
notice, report, registration, declaration or other filing with any Governmental 
Entity in connection, with the execution or delivery of this Agreement by       
Parent and Purchaser or the performance by Parent and Purchaser of their        
obligations hereunder or the consummation by Parent and Purchaser of the        
transactions contemplated by this Agreement and (ii) no waiver, consent,        
approval, order or authorization of any Governmental Entity is required to be   
obtained by Parent and Purchaser in connection with the execution or delivery   
of this Agreement by Parent and Purchaser or the performance by Parent and      
Purchaser of their obligations hereunder or the consummation by Parent and      
Purchaser of the transactions contemplated by this Agreement. None of the       
information supplied by Parent and Purchaser for inclusion in the Proxy         
Statement shall, at the date the Proxy Statement (or any amendment thereof or   
supplement thereto) is first mailed to stockholders or at the time of the       
Company Stockholders' Meeting, contain any untrue statement of a material fact  
required to be stated therein or necessary in order to make the statements made 
therein in light of the circumstances under which they were made, not           
misleading.                                                                     

4.4 Schedule TO                                                                 

 Neither the Schedule TO nor the Offer Documents, nor any of the information
supplied by Parent and Purchaser for inclusion in the Schedule 14D-9, shall at  
the respective times the Schedule TO or the Offer Documents or any amendments   
or supplements thereto are filed with the SEC or are first published, sent or   
given to shareholders or upon the expiration of the Offer, as the case may be,  
contain any untrue statement of a material fact or omit to state any material   
fact required to be stated therein or necessary in order to make the statements 
therein in the light of the circumstances under which they were made not        
misleading (except for information supplied by the Company for inclusion in the 
Schedule TO and the Offer Documents, as to which Parent and Purchaser make no   
representation).                                                                

4.5 Available Funds                                                             

  Parent has or has available to it, and will make available to Purchaser, all
funds necessary to satisfy all of Parent's and Purchaser's obligations under    
this Agreement and in connection with the transaction contemplated hereby,      
including, without limitation, the obligation to purchase all outstanding       
Shares pursuant to the Offer and the Merger and to pay all related fees and     
expenses in connection with the Offer and the Merger.                           

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ARTICLE V 

COVENANTS 

5.1 Conduct of Business by the Company                                          

During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms and the      
Effective Time, the Company (which for the purposes of this Article V shall     
include the Company and each of its subsidiaries) agrees, except to the extent  
that Parent shall otherwise consent in writing, to carry on its business        
diligently and in accordance with good commercial practice and to carry on its  
business 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   
relationship 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.                                                                     

  In addition, except as permitted by the terms of this Agreement, without the
prior written consent of Parent, the Company shall not do any of the following, 
and shall not permit any of its subsidiaries to do any of the following:        

(a) 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;      

  (b) 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 hereof and as 
previously disclosed in writing to the other, or adopt any new severance plan;  

(c) Other than with respect to the proposed licensing and joint venture   
arrangement with Mr. T. Chen and affiliates (the "Chen Transaction"), 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;                 

  (d) 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;               

  (e) Declare or pay any dividends on or make any other distributions (whether
in cash, stock or property) in respect of any capital stock of the Company or   
split, combine or reclassify any capital stock of the Company or issue or       
authorize the issuance of any other securities in respect of, in lieu of or in  
substitution for any capital stock of the Company;                              

(f) Repurchase or otherwise acquire, directly or indirectly, any shares of
capital stock of the Company except pursuant to rights of repurchase of any     
such shares under any employee, consultant or director stock plan existing on   
the date hereof (which repurchase rights the Company shall be obligated to      
exercise if the repurchase price is less than the Merger Consideration);        

(g) Issue, deliver, sell, authorize or propose the issuance, delivery or  
sale of, any shares of capital stock of the Company or any securities           
convertible into shares of capital stock of the Company, or subscriptions,      
rights, warrants or options to acquire any shares of capital stock of the       
Company or any securities convertible into shares of capital stock of the       
Company, or enter into other agreements or commitments of any character         

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obligating it to issue any such shares or convertible securities, other than    
the issuance of Shares pursuant to the exercise of stock options therefor       
outstanding as of the date of this Agreement;                                   

(h) Cause, permit or propose any amendments to any charter document or    
Bylaw (or similar governing instruments of any subsidiaries);                   

(i) Other than with respect to the Chen Transaction, 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;                                                      

(j) Other than with respect to the Chen Transaction, 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;                  

(k) 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;                                                  

(l) 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;                                              

 (m) 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;          

(n) Other than with respect to the Chen Transaction, make any grant of    
exclusive rights to any third party;                                            

(o) 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;                                

(p) Materially revalue any of its assets or, except as required by GAAP,  
make any change in accounting methods, principles or practices;                 

(q) 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;                                                                      

(r) 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, as set forth in Section 5.1 of    
the Company Schedules; or                                                       

(s) Agree in writing or otherwise to take any of the actions described in 
(a) through (r) above.                                                          

With respect to the actions described in (a), (b) and (l) above, the      
Company further represents and warrants that it has not taken any such actions  
since March 31, 2000, other than the authorization of the annual bonuses in     
April 2000 and their payment in May 2000.                                       

5.2 Access to Information; Confidentiality                                      

(a) 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 this Agreement to the Effective  
Time, the Company shall, and shall cause its subsidiaries, officers,            
directors, employees and agents to,                                             

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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 banks working with Parent or        
Purchaser, all financial, operating and other data and information as they      
reasonably request.                                                             

(b) 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 
this Agreement or the Confidentiality Agreement in accordance with the terms    
and conditions of the Confidentiality Agreement.                                

(c) No investigation pursuant to this Section 5.2 shall affect any        
representations or warranties of the parties herein or the conditions to the    
obligations of the parties hereto.                                              

5.3 Proxy Material; Stockholders' Meeting                                       

 (a) The Company and each of Parent and Purchaser shall prepare and file, or
shall cause to be prepared and filed, with the SEC those documents, schedules   
and amendments and supplements thereto required to be filed with respect to the 
transactions contemplated by this Agreement. The Company, acting through its    
Board of Directors, shall, if necessary, cause the Company Stockholders'        
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 Stockholders' Meeting as soon as practicable, and at such  
time and place designated by Parent or Purchaser, for the purpose of approving  
the Merger, this 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 SEC relating to any preliminary proxy statement 
regarding the Merger and the other transactions contemplated by this 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 SEC with respect to the Proxy Statement or the     
Company Stockholders' Meeting, each party shall promptly inform the other of    
such occurrence and cooperate in filing with the SEC 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, to the extent possible, for the approval and  
adoption of this 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.                                                                         

  (b) Notwithstanding the foregoing, in the event that Purchaser shall acquire
at least ninety percent (90%) of the outstanding Shares, the parties hereto     
agree, at the request of Purchaser, subject to Article VI, 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.      

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5.4 No Solicitation; Break-up Fee                                               

(a) From and after the date of this Agreement until the earlier of the    
Effective Time or termination of this Agreement pursuant to its terms, the      
Company and its subsidiaries shall 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. For the purposes of this Agreement, an "Acquisition Proposal"   
with respect to an entity means any proposal or offer relating to (i) any       
merger, consolidation, sale of substantial assets 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 this 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, 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. 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 the other provisions of this Section 5.4, from and after   
the date of this Agreement until the earlier of the Effective Time and          
termination of this 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).                                            

(b) Notwithstanding the provisions of paragraph (a) above, prior to       
consummation of the Offer, the Company may participate in discussions or        
negotiations with, and, subject to the requirements of paragraph (c), below,    
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, upon advice of its independent financial  
advisors, would result in a transaction more favorable than the Offer and the   
Merger to the shareholders 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 this Agreement (but subject to the terms hereof) 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 (2) business days after Parent's receipt of a copy  
of such Superior Proposal (or a description of its terms and conditions, if not 
in writing); and (iii) the Company shall not recommend to its stockholders a    
Superior Proposal unless the Company shall have terminated this Agreement and   
paid the Break-up Fee pursuant to Section 7.3(c).                               

(c) Notwithstanding anything to the contrary herein, the Company will not 
provide any non-public information to a third party unless: (x) the Company     
provides such non-public 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 (y) such non-   
public information has been previously delivered to Parent.                     

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  (d) Nothing contained in this Section 5.4 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 Board, upon the advice of outside counsel, failure so to disclose would 
constitute a breach of its fiduciary duties to the Company's shareholders under 
applicable law; provided, however, that neither the Company nor its Board of    
Directors nor any committee thereof shall, except as permitted by Section       
5.4(b), withdraw or modify, or propose to withdraw or modify, its position with 
respect to the Merger or this Agreement or approve or recommend, or propose to  
approve or recommend, an Acquisition Proposal. 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 hereof.                                                                

5.5 Public Announcements                                                        

 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 this Agreement or the Merger or the other 
transactions contemplated hereby, 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. This Section 5.5 shall supersede any conflicting provisions in 
the Confidentiality Agreement.                                                  

5.6 Notification of Certain Matters                                             

(a) The Company shall give prompt notice (which notice shall state that it
is delivered pursuant to Section 5.6(a) of this Agreement) 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 this Agreement to be untrue or inaccurate in any material respect  
at any time from the date of this 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 this Agreement; provided, however, no such notification   
shall affect the representations or warranties of the parties or the conditions 
to the obligations of the parties hereunder.                                    

(b) The Company shall give prompt notice in writing (which notice shall   
state that it is delivered pursuant to Section 5.6(b) of this Agreement) 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 hereunder.                     

5.7 Actions by Company                                                          

Subject to the terms and conditions hereof, 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.                                                          

5.8 Officers' and Directors' Indemnification                                    

(a) 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 Certificate 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                                                 

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Certificate 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.                           

(b) 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 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).                                                                

5.9 Employment Agreements                                                       

Prior to commencement of the Offer, the Company shall offer to enter into 
employment agreement (the "Employment Agreement") with William Weisfield, which 
Employment Agreement shall be substantially in the form of Exhibit A hereto or  
such other terms as may be accepted in writing by Parent.                       

5.10 Additional Agreements                                                      

 (a) Subject to the terms and conditions hereof, each of the parties to this
Agreement 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 this Agreement (including consummation of the      
Offer and the Merger) and to cooperate with each other in connection with the   
foregoing.                                                                      

 (b) Subject to the terms and conditions hereof, each of the parties to this
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 HSR Act, to defend all lawsuits or other   
legal proceedings challenging this Agreement or the consummation of the         
transactions contemplated hereby, to lift or rescind any injunction or          
restraining order or other order adversely affecting the ability of the parties 
to consummate the transactions contemplated hereby, 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 this Agreement.                                       

5.11 Other Actions by the Company                                               

  If any "fair price," "moratorium," "control share acquisition," "shareholder
protection" or other form of anti-takeover statute, regulation or charter       
provision or contract is or shall become applicable to the Offer or the Merger  
or the transactions contemplated hereby, 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  
hereby may be consummated as promptly as practicable on the terms contemplated  
hereby and otherwise act to eliminate or minimize the effects of such statute,  
regulation, provision or contract on the transactions contemplated hereby.      

5.12 Company Options                                                            

 As soon as reasonably practicable following the date of this Agreement, the
board of directors of the Company (or, if appropriate, any committee            
administering the Option Plans) shall adopt resolutions or take                 

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such other actions as may be reasonably requested by Purchaser (which           
resolutions or other actions may be contingent on the Purchaser acquiring       
pursuant to the Offer such number of Shares which satisfies the Minimum         
Condition) as may be required to effect the following: (i) adjust the terms of  
all outstanding Company Options, whether vested or unvested, as necessary to    
provide that each Company Option outstanding, including all vested and unvested 
Company Stock Options, shall be canceled effective immediately prior to the     
Effective Time, 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 Company Option   
shall not theretofore have been exercised; provided, however, that all amounts  
payable pursuant to this Section 5.12 shall be subject to any required          
withholding of Taxes or proof of eligibility of exemption therefrom and to      
receipt of the written consent of the holder thereof and shall be paid at or as 
soon as practicable following the Effective Time, without interest; and (ii)    
make such other changes to the Company Plans as the Company and Parent may      
agree are appropriate to give effect to the Merger.                             

5.13 Stock Option Plans                                                         

  The Company agrees to take all necessary actions to ensure that all offering
periods outstanding under the Company's Stock Option Plans terminate            
immediately prior to the Effective Time, and to ensure that the Stock Option    
Plans terminate immediately prior to the Effective Time.                        

5.14 Employee Benefit Plans                                                     

The Company and its ERISA Affiliates each agree to adopt resolutions that 
terminate or amend their respective 401(k) plans or other Employee Benefit      
Plans in accordance with any directions given by Parent prior to the Effective  
Time (the form and substance of which resolutions shall be subject to review    
and approval by Parent), such terminations or amendments to be effective prior  
to the Effective Time (but which may be contingent on the Purchaser acquiring   
pursuant to the Offer such number of Shares which satisfies the Minimum         
Condition).                                                                     

5.15 Stockholder Litigation                                                     

 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 this Agreement    
until the purchase of Company Common Stock 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.                                                                        

ARTICLE VI

CONDITIONS OF MERGER

6.1 Conditions to the Obligations of Each Party to Effect the Merger            

The respective obligations of each party to effect the Merger shall be    
subject to the fulfillment at or prior to the Effective Time of each of the     
following conditions:                                                           

(a) If required by the DGCL, this Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Company.  

(b) Any waiting period (and any extension thereof) applicable to the      
consummation of the Merger under the HSR Act shall have expired or been         
terminated.                                                                     

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(c) Shares shall have been purchased pursuant to the Offer.               

(d) No temporary restraining order, preliminary or permanent injunction,  
judgment or other order, decree or ruling nor any statute, rule, regulation or  
order shall be in effect which would (i) make the acquisition or holding by     
Parent or its affiliates of Shares or shares of Common Stock of the Surviving   
Corporation illegal or otherwise prevent the consummation of the Merger, (ii)   
prohibit Parent's or Purchaser's ownership or operation of, or compel Parent or 
Purchaser to dispose of or hold separate, all or a material portion of the      
business or assets of Purchaser, the Company or any Significant Subsidiary      
thereof, (iii) compel Parent, Purchaser or the Company to dispose of or hold    
separate all or a material portion of the business or assets of Parent or any   
of its Subsidiaries or the Company or any of its Significant Subsidiaries, (iv) 
impose material limitations on the ability of Parent or Purchaser or their      
affiliates effectively to exercise full ownership and financial benefits of the 
Surviving Corporation, or (v) impose any material condition to the Offer, this  
Agreement or the Merger.                                                        

ARTICLE VII 

TERMINATION, AMENDMENT AND WAIVER 

7.1 Termination                                                                 

This Agreement may be terminated, at any time prior to the Effective Time,
whether before or after approval by the shareholders of the Company:            

  (a) by mutual written agreement of the Boards of Directors of Parent and the
Company;                                                                        

(b) by either Parent or the Company;                                      

  (i) if 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 this Agreement pursuant to this Section        
7.1(b)(i) if it is in material breach of its representations and            
warranties, covenants or other obligations under this Agreement; or         

(ii) if any court of competent jurisdiction in the United States or   
other United States governmental body shall have issued an order, decree or 
ruling or taken any other action restraining, enjoining or otherwise        
prohibiting the Offer or the Merger and such order, decree, ruling or other 
action shall have become final and nonappealable;                           

(c) by Parent or Purchaser:                                               

(i) if the Board of Directors of the Company or any committee thereof 
shall have approved, or recommended that shareholders of the Company accept 
or approve, an Acquisition Proposal by a third party, or shall have         
resolved to do any of the foregoing;                                        

(ii) if the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation that    
the shareholders of the Company accept or approve (as the case may be), the 
Offer, this Agreement and the Merger, or shall have resolved to do any of   
the foregoing;                                                              

 (iii) if the Company shall have failed to include in the Schedule 14D-9
the recommendation of the Board of Directors of the Company that the        
shareholders of the Company accept the Offer;                               

  (iv) prior to the purchase of Shares pursuant to the Offer, in the event
that the conditions to the Offer set forth in clause (i) or (ii) of Annex I 
shall not be satisfied or if any of the events set forth in clause          
(iii) thereof shall have occurred; or                                       

(v) if the Company is in material breach of any of its covenants or   
obligations under this Agreement, or if there shall have been or be any     
material inaccuracy in the representations and warranties of the Company    
contained in this Agreement, either as of the date of this Agreement or     
subsequently;                                                               

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(d) by the Company:                                                       

(i) if the Offer shall not have been commenced in accordance with     
Section 1.1, 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 the expiration of the Offer; provided, however, that the Company 
shall not be entitled to terminate this Agreement pursuant to this Section  
7.1(d)(i) if it is in material breach of its representations and            
warranties, covenants or other obligations under this Agreement;            

(ii) if the Board of Directors of the Company has resolved to, and in 
fact does, recommend to the Company's Shareholders that they accept a       
Superior Proposal, provided that all the provisions of Section 5.4 have     
been fully complied with, and provided further that the Company shall have  
paid to Parent the entire Break-up Fee as provided in Section 7.3(b);       

(iii) 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 this Agreement, or any representation or warranty of Parent or        
Purchaser contained in this 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) prior to the purchase of Shares pursuant to the Offer, in the event
that the conditions to the Offer set forth in clause (i) of Annex I shall   
not be satisfied or if any of the events set forth in clause (iii)(A)(1)    
thereof shall have occurred.                                                

7.2 Procedure and Effect of Termination                                         

In the event of the termination of this Agreement by the Company or Parent
or both of them pursuant to Section 7.1, the terminating party shall provide    
written notice of such termination to the other party and this Agreement shall  
forthwith become void and there shall be no liability on the part of Parent,    
Purchaser or the Company, except as set forth in Sections 5.4(b) and 7.3.       
Sections 5.4(b), 7.2, 7.3 and Article VIII shall survive the termination of     
this Agreement.                                                                 

7.3 Fees and Expenses                                                           

(a) Except as otherwise provided in this Agreement and whether or not the 
transactions contemplated by the Offer and this Agreement are consummated, all  
costs and expenses incurred in connection with the transactions contemplated by 
the Offer and this Agreement shall be paid by the party incurring such          
expenses.                                                                       

(b) Parent has advanced the Company $50,000 pursuant to a Non-Solicitation
and Expense Reimbursement Agreement dated June 14, 2000 between Parent and      
Company (the "Non-Solicitation and Expense Reimbursement Agreement") and shall, 
upon signing of this Agreement, advance to the Company $225,000 to fund         
additional expenses to be incurred by the Company in connection with the        
transactions contemplated by this Agreement. The Company shall repay to Parent  
these advances in the event Parent or the Purchaser terminates this Agreement   
pursuant to Section 7.1(c)(v). The parties acknowledge that the                 
Non-Solicitation and Expense Reimbursement Agreement is terminated as of the    
date hereof.                                                                    

(c) The Company shall pay to Parent, in same day funds, upon demand, (i) a
fee of U.S. $2 million (the "Break-up Fee"), if any of the following shall      
occur:                                                                          

(i) if the Board of Directors of the Company or any committee thereof 
shall have approved, or recommended that shareholders of the Company accept 
or approve, an Acquisition Proposal by a third party, or shall have         
resolved to do any of the foregoing;                                        

(ii) 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 or approve (as the case may be), the 
Offer, this Agreement and the Merger, or shall have resolved to do any of   
the foregoing; or                                                           

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 (iii) if the Company shall have failed to include in the Schedule 14D-9
the recommendation of the Board of Directors of the Company that the        
stockholders of the Company accept the Offer.                               

 (d) Parent, Purchaser and the Company agree that the agreement contained in
paragraph (c) above is an integral part of the transactions contemplated by     
this Agreement, and that without such agreement, Parent and Purchaser would not 
have entered into this Agreement. The parties acknowledge that the damages to   
Parent and Purchaser in the event this Agreement is breached by the Company     
would be extremely costly and impractical to calculated and that such amount    
constitutes reasonable liquidated damages and reasonable compensation to Parent 
and Purchaser for the loss likely to be sustained thereby and is not a penalty. 

  (e) Parent shall pay for filing fees related to compliance with requirements
of the HSR Act.                                                                 

7.4 Amendment                                                                   

This Agreement may be amended by each of the parties by action taken by or
on behalf of their respective Boards of Directors at any time prior to the      
Effective Time; provided, however, that (i) such amendment shall be in writing  
signed by all of the parties, (ii) any such waiver, amendment or supplement by  
the Company shall be effective as against the Company only if approved by a     
majority of the Continuing Directors and (iii) after adoption of this Agreement 
and the Merger by the shareholders of the Company, no amendment may be made     
without the further approval of the shareholders of the Company which reduces   
the Merger Consideration or changes the form thereof or changes any other terms 
and conditions of this Agreement if the changes, alone or in the aggregate,     
would materially adversely affect the shareholders of the Company.              

7.5 Waiver                                                                      

At any time prior to the Effective Time, whether before or after the      
Company's Shareholders Meeting, any party hereto, by action taken by its Board  
of Directors, may (i) extend the time for the performance of any of the         
obligations or other acts of any other party hereto or (ii) subject to the      
provisions of Section 7.4, waive compliance with any of the agreements of any   
other party or with any conditions to its own obligations. Any agreement on the 
part of a party hereto to any such extension or waiver shall be valid only if   
set forth in an instrument in writing signed on behalf of such party by a duly  
authorized officer of such party. Notwithstanding the above, any waiver given   
shall not apply to any subsequent failure of compliance with agreements of the  
other party or conditions to its own obligations.                               

ARTICLE VIII

MISCELLANEOUS 

8.1 Severability                                                                

If any term or other provision of this Agreement is invalid, illegal or   
incapable of being enforced by rule of law or public policy, all other          
conditions and provisions of this Agreement shall nevertheless remain in full   
force and effect so long as the economic or legal substance of the transactions 
contemplated hereby is not affected in any manner adverse to any party. Upon    
such determination that any term or other provision is invalid, illegal or      
incapable of being enforced, the parties hereto shall negotiate in good faith   
to modify this Agreement so as to effect the original intent of the parties as  
closely as possible in an acceptable manner to the end that transactions        
contemplated hereby are fulfilled to the extent possible.                       

8.2 Notices                                                                     

 All notices and other communications given or made pursuant hereto shall be
in writing and shall be deemed to have been duly given, or made as of the date  
delivered if sent via telecopier or delivered personally (including, without    
limitation, delivery by commercial carrier next-day delivery) to the parties at 
the following                                                                   

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addresses (or at such other address for a party as shall be specified by        
similar notice, except that notices of changes of address shall be effective    
upon receipt):                                                                  

(a) If to Parent or Purchaser:                                            

InfrastruX Group, Inc.                                                
411-108th Avenue NE                                                   
Bellevue, Washington 98004                                            
Attention: John Durbin                                                
Telecopier No.: (425) 462-3300                                        

With copies to:                                                           

Perkins Coie LLP                                                      
1201 Third Avenue, Suite 4800                                         
Seattle, WA 98101-3099                                                
Attention: Andrew Bor                                                 
Telecopier No.: (206) 583-8500                                        

(b) If to the Company:                                                    

UTILX Corporation                                                     
22820 Russell Road                                                    
P.O. Box 97009                                                        
Kent, Washington 98064-9709                                           
Attention: William Weisfield                                          
Telecopier No.: (253) 395-4636                                        

With copies to:                                                           

Graham & Dunn PC                                                      
1420 Fifth Avenue, 33rd Floor                                         
Seattle, WA 98101                                                     
Attention: Carmen L. Smith                                            
Telecopier No.: (206) 340-9599                                        

8.3 Entire Agreement; No Third Party Beneficiaries; No Assignment               

This Agreement, Annex I, the documents delivered pursuant hereto or in    
connection herewith, and the Confidentiality Agreement (i) constitute the       
entire agreement and supersede all other prior agreements and undertakings,     
both written and oral, among the parties, or any of them, with respect to the   
subject matter hereof (including the Non-Solicitation and Expense Reimbursement 
Agreement), (ii) are not intended to confer upon any person other than the      
parties hereto any rights or remedies hereunder, and (iii) may not be assigned, 
except that Parent or Purchaser may assign their rights hereunder in whole or   
in part to one or more direct or indirect subsidiaries or affiliates of Parent  
which, in written instruments reasonably satisfactory to the Company, shall     
agree to make all representations and warranties of Purchaser set forth herein  
and shall agree to assume all of such party's obligations hereunder and be      
bound by all of the terms and conditions of this Agreement; provided, however,  
that no such assignment shall relieve the assignor of its obligations           
hereunder.                                                                      

8.4 Interpretation; Knowledge                                                   

(i) When a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise indicated. The words  
"include," "includes" and "including" when used herein shall be deemed in each  
case to be followed by the words "without limitation." The table of contents    
and headings contained in this Agreement are for reference purposes only and    
shall not affect in any way the                                                 

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meaning or interpretation of this Agreement. When reference is made herein to   
"the business of" an entity, such reference shall be deemed to include the      
business of all direct and indirect subsidiaries of such entity. Reference to   
the subsidiaries of an entity shall be deemed to include all direct and         
indirect subsidiaries of such entity.                                           

(ii) For purposes of this Agreement, the term "knowledge" means, with     
respect to any matter in question, that any of the directors, Chief Executive   
Officer or Chief Financial Officer) of the parties, as the case may be, have    
knowledge of such matter and knowledge that could have been obtained by such    
persons with respect to those matters that would cause a reasonable person, in  
a similar position, to investigate the matter further and that could have been  
obtained from such investigation without undue effort.                          

8.5 Counterparts                                                                

This Agreement may be executed in one or more counterparts, all of which  
shall be considered one and the same agreement and shall become effective when  
one or more counterparts have been signed by each of the parties and delivered  
to the other party, it being understood that all parties need not sign the same 
counterpart.                                                                    

8.6 Other Remedies; Specific Performance                                        

Except as otherwise provided herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any  
other remedy conferred hereby, or by law or equity upon such party, and the     
exercise by a party of any one remedy will not preclude the exercise of any     
other remedy. The parties hereto agree that irreparable damage would occur in   
the event that any of the provisions of this Agreement were not performed in    
accordance with their specific terms or were otherwise breached. It is          
accordingly agreed that the parties shall be entitled to an injunction or       
injunctions to prevent breaches of this Agreement and to enforce specifically   
the terms and provisions hereof in any court of the United States or any state  
having jurisdiction, this being in addition to any other remedy to which they   
are entitled at law or in equity.                                               

8.7 Governing Law                                                               

This Agreement shall be governed by and construed in accordance with the  
laws of the State of Washington, regardless of the laws that might otherwise    
govern under applicable principles of conflicts of law thereof; provided that   
issues involving the corporate governance of any of the parties hereto shall be 
governed by their respective jurisdictions of incorporation. Each of the        
parties hereto irrevocably consents to the exclusive jurisdiction of any state  
or federal court within King County, Washington, in connection with any matter  
based upon or arising out of this Agreement or the matters contemplated herein, 
other than issues involving the corporate governance of any of the parties      
hereto, agrees that process may be served upon them in any manner authorized by 
the laws of the State of Washington for such persons and waives and covenants   
not to assert or plead any objection which they might otherwise have to such    
jurisdiction and such process.                                                  

8.8 Rules of Construction                                                       

The parties hereto agree that they have been represented by counsel during
the negotiation and execution of this Agreement and, therefore, waive the       
application of any law, regulation, holding or rule of construction providing   
that ambiguities in an agreement or other document will be construed against    
the party drafting such agreement or document.                                  

8.9 WAIVER OF JURY TRIAL                                                        

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT 
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF    
THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT     
HEREOF.                                                                         

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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this    
Agreement to be executed as of the date first written above by their respective 
officers thereunto duly authorized.                                             

                          INFRASTRUX GROUP, INC.

                              /s/ John D. Durbin
                                         By: _________________________________

                              John D. Durbin
                                         Name: _______________________________

                                               President and Chief Executive
                         Officer
                                         Title: ______________________________

                                INFRASTRUX ACQUISITION, INC.

                              /s/ John D. Durbin
                                         By: _________________________________

                              John D. Durbin
                                         Name: _______________________________

                                               President and Chief Executive
                         Officer
                                         Title: ______________________________

                     UTILX CORPORATION

                                    /s/ William M. Weisfield
                                         By: _________________________________

                                    William M. Weisfield
                                         Name: _______________________________

                           President
                                         Title: ______________________________

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ANNEX I 

CONDITIONS OF THE OFFER 

The term "Agreement" as used in this Annex I shall mean the Agreement and 
Plan of Merger to which this Annex I is attached, and all capitalized terms     
used in this Annex I and not defined in this Annex I shall have the respective  
meanings set forth in the Agreement.                                            

Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any   
time, Purchaser shall not be required to accept for payment, purchase or pay    
for, or may terminate or amend the Offer and may postpone the acceptance of,    
and payment for, subject to 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;                              

(iii) at any time on or after the date of the Agreement, any of the       
following events shall be determined by Parent or Purchaser to 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 or the Merger 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    
Agreement, (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, property 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 shareholders of the Company,       
including, without limitation, the adoption and approval of the 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 Agreement (other than         
legislation or rule-making affecting the industry as a whole), or (6)       
impose any material condition to the Offer, the 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 set forth in Exhibit B by the Expiration Date; or                   

(C) the Company shall have breached, or failed to comply with, in any 
material respect, any of its covenants or obligations under the Agreement   
or there shall have been or be any material inaccuracy in the               
representations and warranties of the Company contained in the Agreement,   
either as of the date of this Agreement or subsequently; 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 Company's Schedule 14D-9) in a manner adverse to Parent or Purchaser 
its approval or recommendation of the Offer, the Merger or the Agreement,   
(2) approved or recommended any Acquisition Proposal by a third party other 
than the Offer and the                                                      

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Merger, (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 Agreement or the Merger, the Board of Directors of the Company shall    
fail to do so within two business days after such request is made; or       

(E) the 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.                         

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. All the foregoing conditions 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.              

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEFM14C’ Filing		Date		First		Last			Other Filings
		3/31/05		15
		3/31/04		14
		3/31/03		14
		3/31/02		14
		3/31/01		14		33
		9/15/00		2		9			15-12G
Filed on:		8/25/00		4
		8/24/00		2		4
		8/23/00		33
		8/9/00		2		9			PREM14C
		8/4/00		34					SC 13D
		7/28/00		2		12			DEF 14A
		7/15/00		8		27
		6/30/00		1		28			10-Q,  SC 14D9,  SC TO-T
		6/28/00		2		46			8-K
		6/27/00		36
		6/26/00		12		53
		6/23/00		19
		6/22/00		12
		6/20/00		12
		6/14/00		12		76
		6/12/00		12
		6/9/00		11		53
		6/7/00		11
		6/6/00		11
		6/2/00		28		53
		5/31/00		11
		5/27/00		11
		5/26/00		11
		5/24/00		11		69
		5/21/00		11
		4/28/00		14
		4/27/00		8
		3/31/00		23		69			10-K
		3/31/99		33					10-K
		11/6/98		65
		3/31/98		33					10-K
		3/31/95		56
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