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Agreement & Plan of Merger

This is an actual contract between American Electric Power and West.

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Sectors: Services
Governing Law: Delaware, View Delaware State Laws
Effective Date: December 21, 1997
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ANNEX I


AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN ELECTRIC POWER COMPANY, INC.,
AUGUSTA ACQUISITION CORPORATION
AND
CENTRAL AND SOUTH WEST CORPORATION
TABLE OF CONTENTS


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ARTICLE I DEFINITIONS................................................................................................ 2 SECTION 1.1 Definitions.................................................................................... 2 SECTION 1.2 Rules of Construction.......................................................................... 2


ARTICLE II


TERMS OF MERGER............................................................................................ 2 SECTION 2.1 Statutory Merger............................................................................... 2 SECTION 2.2 Effective Time................................................................................. 2 SECTION 2.3 Effect of the Merger........................................................................... 2 SECTION 2.4 Certificate of Incorporation; Bylaws........................................................... 2 SECTION 2.5 Directors and Officers......................................................................... 3


ARTICLE III


CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES......................................................... 3 SECTION 3.1 Merger Consideration; Conversion and Cancellation of Securities................................ 3 SECTION 3.2 Exchange of Certificates....................................................................... 4 SECTION 3.3 Closing........................................................................................ 6 SECTION 3.4 Stock Transfer Books........................................................................... 6


ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................................. 6 SECTION 4.1 Organization and Qualification; Subsidiaries................................................... 6 SECTION 4.2 Certificate of Incorporation and Bylaws........................................................ 7 SECTION 4.3 Capitalization................................................................................. 7 SECTION 4.4 Authorization of Agreement..................................................................... 8 SECTION 4.5 Regulation and Approvals....................................................................... 8 SECTION 4.6 No Violation................................................................................... 9 SECTION 4.7 Reports........................................................................................ 9 SECTION 4.8 No Material Adverse Effect; Conduct............................................................ 10 SECTION 4.9 Permits; Compliance............................................................................ 11 SECTION 4.10 Litigation; Compliance with Laws.............................................................. 12 SECTION 4.11 Ownership of AEP Common Stock................................................................. 12 SECTION 4.12 Employee Benefit Plans........................................................................ 12 SECTION 4.13 Taxes......................................................................................... 15 SECTION 4.14 Environmental Matters......................................................................... 16 SECTION 4.15 Insurance..................................................................................... 16 SECTION 4.16 Pooling; Tax Matters.......................................................................... 16 SECTION 4.17 Affiliates.................................................................................... 16 SECTION 4.18 Opinion of Financial Advisor.................................................................. 17 SECTION 4.19 Brokers....................................................................................... 17 SECTION 4.20 Vote Required................................................................................. 17


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ARTICLE V


REPRESENTATIONS AND WARRANTIES OF THE AEP COMPANIES........................................................ 17 SECTION 5.1 Organization and Qualification; Subsidiaries................................................... 17 SECTION 5.2 Certificate of Incorporation and Bylaws........................................................ 18 SECTION 5.3 Capitalization................................................................................. 18 SECTION 5.4 Authorization of Agreement..................................................................... 19 SECTION 5.5 Regulation and Approvals....................................................................... 19 SECTION 5.6 No Violation................................................................................... 20 SECTION 5.7 Reports........................................................................................ 20 SECTION 5.8 No Material Adverse Effect; Conduct............................................................ 21 SECTION 5.9 Permits; Compliance............................................................................ 21 SECTION 5.10 Litigation; Compliance with Laws.............................................................. 22 SECTION 5.11 Ownership of Company Common Stock............................................................. 23 SECTION 5.12 Employee Benefit Plans........................................................................ 23 SECTION 5.13 Taxes......................................................................................... 25 SECTION 5.14 Environmental Matters......................................................................... 26 SECTION 5.15 Insurance..................................................................................... 26 SECTION 5.16 Pooling; Tax Matters.......................................................................... 27 SECTION 5.17 Affiliates.................................................................................... 27 SECTION 5.18 Opinion of Financial Advisor.................................................................. 27 SECTION 5.19 Brokers....................................................................................... 27 SECTION 5.20 Vote Required................................................................................. 27 SECTION 5.21 No Business Activities........................................................................ 27


ARTICLE VI COVENANTS.................................................................................................. 28 SECTION 6.1 Affirmative Covenants.......................................................................... 28 SECTION 6.2 Negative Covenants............................................................................. 28 SECTION 6.3 Access and Information......................................................................... 36


ARTICLE VII


ADDITIONAL AGREEMENTS...................................................................................... 36 SECTION 7.1 Meeting of AEP Stockholders.................................................................... 36 SECTION 7.2 Meeting of Company Stockholders................................................................ 36 SECTION 7.3 Registration Statement; Joint Proxy Statement/Prospectus....................................... 36 SECTION 7.4 Appropriate Action; Consents; Filings.......................................................... 38 SECTION 7.5 Affiliates; Pooling; Tax Treatment............................................................. 39 SECTION 7.6 Public Announcements........................................................................... 40 SECTION 7.7 NYSE Listing................................................................................... 40 SECTION 7.8 Company Rights Agreement....................................................................... 40 SECTION 7.9 Comfort Letters................................................................................ 40 SECTION 7.10 Stock Options; Employee Benefit Plans......................................................... 40 SECTION 7.11 Indemnification of Directors and Officers..................................................... 43 SECTION 7.12 Newco......................................................................................... 45 SECTION 7.13 Event Notices................................................................................. 45 SECTION 7.14 Board of Directors............................................................................ 45 SECTION 7.15 Headquarters.................................................................................. 45 SECTION 7.16 Rate Matters.................................................................................. 45 SECTION 7.17 Coordination of Dividends..................................................................... 46 SECTION 7.18 Transition Management......................................................................... 46 SECTION 7.19 Acquisition Proposals......................................................................... 46 SECTION 7.20 Workforce Matters............................................................................. 47


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ARTICLE VIII


CLOSING CONDITIONS......................................................................................... 48 SECTION 8.1 Conditions to Obligations of Each Party........................................................ 48 SECTION 8.2 Additional Conditions to Obligations of the AEP Companies...................................... 49 SECTION 8.3 Additional Conditions to Obligations of the Company............................................ 50


ARTICLE IX


TERMINATION, AMENDMENT AND WAIVER.......................................................................... 51 SECTION 9.1 Termination.................................................................................... 51 SECTION 9.2 Effect of Termination.......................................................................... 54 SECTION 9.3 Amendment...................................................................................... 54 SECTION 9.4 Waiver......................................................................................... 54 SECTION 9.5 Fees, Expenses and Other Payments.............................................................. 54 SECTION 9.6 Certain Damages, Payments and Expenses......................................................... 54


ARTICLE X


GENERAL PROVISIONS......................................................................................... 56 SECTION 10.1 Effectiveness of Representations, Warranties and Agreements................................... 56 SECTION 10.2 Notices....................................................................................... 56 SECTION 10.3 Headings...................................................................................... 57 SECTION 10.4 Severability.................................................................................. 57 SECTION 10.5 Entire Agreement.............................................................................. 57 SECTION 10.6 Assignment.................................................................................... 58 SECTION 10.7 Parties in Interest........................................................................... 58 SECTION 10.8 Failure or Indulgence Not Waiver; Remedies Cumulative......................................... 58 SECTION 10.9 Governing Law................................................................................. 58 SECTION 10.10 Counterparts................................................................................. 58


ANNEXES


Annex A Schedule of Defined Terms Annex B Affiliate's Agreement (Company Affiliates) Annex C Affiliate's Agreement (AEP Affiliates)


iii
AGREEMENT AND PLAN OF MERGER


THIS AGREEMENT AND PLAN OF MERGER, dated as of December 21, 1997, is by and among American Electric Power Company, Inc., a New York corporation ("AEP"), Augusta Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of AEP ("Newco"), and Central and South West Corporation, a Delaware corporation (the "Company"). AEP and Newco are sometimes collectively referred to herein as the "AEP Companies."


RECITALS:


The Board of Directors of the Company has determined that the business combination to be effected by means of the Merger is consistent with and in furtherance of the long-term business strategy of the Company and is fair to, and in the best interests of, the Company and its stockholders and has approved and adopted this Agreement and recommended approval and adoption of this Agreement by the stockholders of the Company.


The Board of Directors of AEP has determined that the business combination to be effected by means of the Merger is consistent with and in furtherance of the long-term business strategy of AEP and is fair to, and in the best interests of, AEP and its stockholders and has approved this Agreement, the Charter Amendment and the Share Issuance and recommended approval and adoption of the Charter Amendment and the Share Issuance by the stockholders of AEP.


The Board of Directors of Newco has determined that the business combination to be effected by means of the Merger is in the best interests of Newco and its stockholder and has approved and adopted this Agreement and recommended approval and adoption of this Agreement by AEP.


To give effect to the transactions contemplated hereby, upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware Law, Newco will merge with and into the Company.


For Federal income tax purposes, it is intended that the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Code.


The Merger is intended to be treated as a "pooling of interests" for accounting purposes.


NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, the parties hereto agree as follows:


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ARTICLE I
DEFINITIONS


SECTION 1.1 DEFINITIONS. Certain capitalized and other terms used in this Agreement are defined in Annex A hereto and are used herein with the meanings ascribed to them therein.


SECTION 1.2 RULES OF CONSTRUCTION. Unless the context otherwise requires, as used in this Agreement: (a) a term has the meaning ascribed to it; (b) an accounting term not otherwise defined has the meaning ascribed to it in accordance with GAAP; (c) "or" is not exclusive; (d) "including" shall mean "including, without limitation;" (e) words in the singular include the plural; (f) words in the plural include the singular; (g) words applicable to one gender shall be construed to apply to each gender; (h) the terms "hereof," "herein," "hereby," "hereto" and derivative or similar words refer to this entire Agreement; and (i) the terms "Article" or "SECTION" shall refer to the specified Article or SECTION of this Agreement.


ARTICLE II
TERMS OF MERGER


SECTION 2.1 STATUTORY MERGER. Subject to the terms and conditions and in reliance upon the representations, warranties, covenants and agreements contained herein, Newco shall merge (the "Merger") with and into the Company at the Effective Time. The terms and conditions of the Merger and the mode of carrying the same into effect shall be as set forth in this Agreement. As a result of the Merger, the separate corporate existence of Newco shall cease and the Company shall continue as the Surviving Corporation.


SECTION 2.2 EFFECTIVE TIME. As soon as practicable after the satisfaction or, if permissible, waiver of the conditions set forth in Article VIII, the parties hereto shall cause the Merger to be consummated by filing a Certificate of Merger (the "Certificate of Merger") with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with the relevant provisions of, the Delaware Law.


SECTION 2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise provided herein, all the property, rights, privileges, powers and franchises of Newco and the Company shall vest in the Surviving Corporation, and all debts, liabilities and duties of Newco and the Company shall become the debts, liabilities and duties of the Surviving Corporation.


SECTION 2.4 CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective Time, the certificate of incorporation and the bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation and the bylaws of the Surviving Corporation.


SECTION 2.5 DIRECTORS AND OFFICERS. The directors of Newco immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.


ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES


SECTION 3.1 MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES. On the date on which the Effective Time occurs, by virtue of the Merger and without any action on the part of the AEP Companies, the Company or any securityholder thereof:


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(a) Subject to the other provisions of this Article III, each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (exclusive of any shares to be cancelled pursuant to SECTION
3.1(c)) shall be converted into that number of shares of AEP Common Stock
equal to the Common Stock Exchange Ratio. If between the date of this
Agreement and the Effective Time the outstanding shares of Company Common
Stock or AEP Common Stock shall have been changed into a different number of
shares or a different class, by reason of any dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares
or other transaction, the Common Stock Exchange Ratio shall be
correspondingly adjusted to reflect such dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares
or other transaction.


(b) All shares of Company Common Stock shall, upon conversion into
shares of AEP Common Stock at the Effective Time, cease to be outstanding
and shall automatically be cancelled and retired, and each certificate
previously evidencing shares of Company Common Stock outstanding immediately
prior to the Effective Time (exclusive of any shares to be cancelled
pursuant to SECTION 3.1(c)) shall thereafter be deemed, for all purposes
other than the payment of dividends or distributions, to represent that
number of shares of AEP Common Stock into which such shares of Company
Common Stock were converted pursuant to SECTION 3.1(a) and, if applicable,
the right to receive cash pursuant to SECTION 3.2(e). The holders of
certificates previously evidencing Company Common Stock shall cease to have
any rights with respect to such Company Common Stock except as otherwise
provided herein or by law.


(c) Notwithstanding any provision of this Agreement to the contrary,
each share of Company Common Stock held in the treasury of the Company and
each share of Company Common Stock, if any, owned by AEP or any direct or
indirect wholly owned subsidiary of AEP or of the Company immediately prior
to the Effective Time shall be cancelled and extinguished without conversion
thereof.


(d) Each share of common stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, par value $3.50 per share, of the
Surviving Corporation.


SECTION 3.2 EXCHANGE OF CERTIFICATES. (a) EXCHANGE FUND. On or prior to the day of the Effective Time, AEP shall deposit, or cause to be deposited, with the Exchange Agent, for the benefit of the holders of Company Common Stock, for exchange in accordance with this Article III, through the Exchange Agent, certificates evidencing a number of shares of AEP Common Stock into which the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time was converted pursuant to SECTION 3.1(a). The Exchange Agent shall, pursuant to irrevocable instructions from AEP, deliver AEP Common Stock, together with any cash to be paid in lieu of fractional interests in shares of AEP Common Stock pursuant to SECTION 3.2(e) and any dividends or distributions related thereto, in exchange for certificates theretofore evidencing Company Common Stock surrendered to the Exchange Agent pursuant to SECTION 3.2(c). Except as contemplated by SECTION 3.2(f), the Exchange Fund shall not be used for any other purpose.


(b) LETTER OF TRANSMITTAL. Promptly after the Effective Time, AEP will cause the Exchange Agent to send to each record holder of Company Common Stock immediately prior to the Effective Time a letter of transmittal and other appropriate materials for use in surrendering to the Exchange Agent certificates that prior to the Effective Time evidenced shares of Company Common Stock.


(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, the Exchange Agent shall distribute to each former holder of Company Common Stock, upon surrender to the Exchange Agent for cancellation of one or more certificates that theretofore evidenced shares of Company Common Stock, certificates evidencing the appropriate number of shares of AEP Common Stock into which such shares of Company Common Stock were converted pursuant to the Merger, together with any cash to be paid in lieu of


I-3 fractional interests in shares of AEP Common Stock pursuant to SECTION 3.2(e) and any dividends or distributions related thereto. If shares of AEP Common Stock are to be issued to a Person other than the Person in whose name the surrendered certificate or certificates are registered, it shall be a condition of issuance of AEP Common Stock that the surrendered certificate or certificates shall be properly endorsed, with signatures guaranteed, or otherwise in proper form for transfer and that the Person requesting such payment shall pay any transfer or other taxes required by reason of the issuance of AEP Common Stock to a Person other than the registered holder of the surrendered certificate or certificates or such Person shall establish to the satisfaction of AEP that such tax has been paid or is not applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto shall be liable to any former holder of Company Common Stock for any AEP Common Stock, cash in lieu of fractional interests or dividends or distributions thereon delivered to a public official pursuant to any applicable escheat Law.


(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF COMPANY COMMON STOCK. No dividends or other distributions declared or made with respect to AEP Common Stock with a record date after the Effective Time shall be paid to the holder of any certificate that theretofore evidenced shares of Company Common Stock until the holder of such certificate shall surrender such certificate. Subject to the effect of any applicable escheat Laws, following surrender of any such certificate, there shall be paid (i) to the holder of the certificates evidencing whole shares of AEP Common Stock issued in exchange therefor, without interest, (A) promptly, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of AEP Common Stock, and (B) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of AEP Common Stock and (ii) to the holder of any certificate that theretofore evidenced shares of Company Common Stock, without interest, promptly the amount of any cash payable with respect to a fractional interest in a share of AEP Common Stock to which such holder is entitled pursuant to SECTION 3.2(e).


(e) NO FRACTIONAL SHARES. Notwithstanding anything herein to the contrary, no certificates or scrip evidencing fractional interests in shares of AEP Common Stock shall be issued in connection with the Merger, and any such fractional interests to which a holder of record of Company Common Stock at the Effective Time would otherwise be entitled will not entitle such holder to vote or to any rights of a stockholder of AEP. In lieu of any such fractional shares, each holder of record of Company Common Stock at the Effective Time who but for the provisions of this SECTION 3.2(e) would be entitled to receive a fractional interest of a share of AEP Common Stock pursuant to the Merger shall be paid cash, without any interest thereon, as hereinafter provided. AEP shall instruct the Exchange Agent to determine the number of whole shares and fractional shares of AEP Common Stock allocable to each holder of record of Company Common Stock at the Effective Time, to aggreg
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