-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RKCtGX4I9xtIslzLHMkmcywEZqloxGtiBODEu+RmGqB7g3r39smX4zUEZ9Mv+B5v JDRekhGs36q8w7ZBQgmvJw== 0000912057-97-008913.txt : 19970318 0000912057-97-008913.hdr.sgml : 19970318 ACCESSION NUMBER: 0000912057-97-008913 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19970317 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL & SOUTH WEST CORP CENTRAL INDEX KEY: 0000018540 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 510007707 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-08979 FILM NUMBER: 97557244 BUSINESS ADDRESS: STREET 1: 1616 WOODALL RODGERS FRWY CITY: DALLAS STATE: TX ZIP: 75202 BUSINESS PHONE: 2147541000 U-1/A 1 FORM U-1/A MTHM Draft 3/7/97 File No. 70-8979 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 3 To FORM U-1 APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ________________________ CENTRAL AND SOUTH WEST CORPORATION 1616 Woodall Rodgers Freeway Dallas, TX 75202 CENTRAL POWER AND LIGHT COMPANY 539 North Carancahua Street Corpus Christi, Texas 78401-2802 PUBLIC SERVICE COMPANY OF OKLAHOMA 212 East Sixth Street Tulsa, Oklahoma 74119-1212 SOUTHWESTERN ELECTRIC POWER COMPANY 428 Travis Street Shreveport, Louisiana 71156-0001 WEST TEXAS UTILITIES COMPANY 301 Cypress Street Abilene, Texas 79601-5820 (Names of companies filing this statement and addresses of principal executive offices) ________________________ CENTRAL AND SOUTH WEST CORPORATION (Name of top registered holding company parent) ________________________ Wendy G. Hargus, Treasurer Central and South West Corporation 1616 Woodall Rodgers Freeway Dallas, Texas 75202 Joris M. Hogan, Esq. Milbank, Tweed, Hadley & McCloy 1 Chase Manhattan Plaza New York, New York 10005-1413 (Names and addresses of agents for service) Central and South West Corporation ("CSW"), a Delaware corporation and a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act"), and its subsidiary companies Central Power and Light Company ("CPL"), Public Service Company of Oklahoma ("PSO"), Southwestern Electric Power Company ("SWEPCO"), and West Texas Utilities Company ("WTU"), each referred to as an "Operating Subsidiary" and collectively referred to as the "Operating Subsidiaries", hereby amends its Form U-1 Application-Declaration in File No. 70-8979 in the following respects. In all other respects, the Application-Declaration as previously filed will remain the same. ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTIONS. Item 1 will be amended from its first paragraph to, but not including, "C. Issuance of Tax Deductible Securities" to read as follows and Item 1.E. will be amended as described below: CSW and/or the Operating Subsidiaries propose to issue tax deductible preferred securities ("Preferred Securities") as part of a restructuring of the existing preferred stock component of the Operating Subsidiaries' capitalization (the "Preferred Restructuring") which consists of (i) eliminating provisions in the Operating Subsidiaries' articles restricting the amount of unsecured debt, and Preferred Securities which may be treated as unsecured debt, issuable by each Operating Subsidiary, (ii) acquiring or calling all or a portion of the Operating Subsidiaries' outstanding preferred stock, and (iii) issuing at the CSW and/or the Operating Subsidiary level Preferred Securities, all as described in the following introduction to Item 1 and in more detail in Item 1, Sections A through F, below. The Operating Subsidiaries propose to solicit proxies from the holders of their outstanding shares of preferred stock and common stock ("Proxy Solicitation") to approve a proposed amendment to CPL and WTU's Restated Articles of Incorporation and PSO and SWEPCO's Restated Certificates of Incorporation (collectively, the "Articles") that would eliminate a provision restricting the amount of unsecured debt issuable by each Operating Subsidiary (individually, a "Proposed Amendment" and collectively, the "Proposed Amendments"). Proxies would be voted at special meetings of the Operating Subsidiaries' respective stockholders to be held on April 7, 1997 for CPL and April 16, 1997 for PSO, SWEPCO and WTU (the "Special Meetings") for the purpose of voting on the Proposed Amendments. If the Proposed Amendments are adopted, the Operating Subsidiaries propose to make a special cash payment as specified below to each preferred stockholder who voted 2 in favor of the applicable Proposed Amendment; provided that any such shares were not tendered in a concurrent cash tender offer for such shares in the case of SWEPCO, PSO and WTU (described below). Concurrently with the Proxy Solicitation for SWEPCO, PSO and WTU, CSW proposes to make a cash tender offer for any and all shares of outstanding preferred stock of SWEPCO, PSO and WTU. CSW also proposes to make a cash tender offer for the 4.00% and 4.20% Series of CPL's cumulative preferred stock (together with the SWEPCO, WTU and PSO offers, the "Offers" and each an "Offer") concurrently with CPL's seperate proxy solicitation. The CPL Offer would coincide with the launch of the other Offers and with the CPL proxy solicitation. However, unlike the combined proxy solicitations and tender offers proposed by SWEPCO, PSO and WTU, the launch of and the documentation for the CPL Offer will be entirely separate from CPL's proxy solicitation materials. The CPL Offer will not be conditioned, in any way, upon the results of, or a vote cast in, the CPL proxy solicitation. Additionally, CPL proposes to call shares of its 8.72% and 7.12% Series of outstanding cumulative preferred stock at the applicable call price (the "Redemption"). The Offer for each series of preferred stock will be independent of the Offer for any other series. CSW plans to terminate the Offer for each series of preferred stock, including CPL, at 5 P.M. (Central Time) on the date of the applicable Special Meetings for SWEPCO, PSO and WTU ("Expiration Date") but may extend the Expiration Date or terminate the Offer early under certain circumstances. A condition to the Offers, other than the CPL Offer, will be that preferred stockholders who tender their shares pursuant to the Offers vote in favor of the applicable Proposed Amendment. Any shares not voted in favor of the Proposed Amendment will be deemed withdrawn and not validly tendered. Consummation of each Offer, other than the CPL Offer, will be contingent upon the Proposed Amendment being approved and adopted at the Special Meeting. CSW may, however, waive such condition as described below. CSW and the Operating Subsidiaries request that the Securities and Exchange Commission (the "Commission") issue a preliminary order authorizing the Proxy Solicitation (collectively, "Preliminary Order") by not later than March 17, 1997. CSW and the Operating Subsidiaries request that the Commission reserve jurisdiction over all other authorizations requested in this Form U-1 Application-Declaration in File No. 70-8979. CSW and the Operating Subsidiaries further request that as soon as practicable after issuance of the Preliminary Order, but not later than April 1, 1997, the Commission issue an order authorizing: (i) the Proposed Amendments and the proposed acquisition of the shares of the Operating Subsidiaries' preferred stock pursuant to the Offers; (ii) the reacquisition, retirement and cancellation by the Operating Subsidiaries of shares tendered to CSW pursuant to the Offers; and (iii) the use by CSW of its general funds and/or funds borrowed through its commercial paper program previously authorized by order dated 3 March 21, 1995 (HCAR No. 26254), on an interim basis, to finance its purchase of shares tendered, accepted for payment and paid for pursuant to the Offers, until such time as such shares are reacquired by the Operating Subsidiaries. CSW and the Operating Subsidiaries also request authorization to deviate from the preferred stock provisions of the Statement of Policy Regarding Preferred Stock Subject to the Public Utility Holding Company Act of 1935, HCAR No. 13106 (Feb. 16, 1956), to the extent applicable with respect to the Proposed Amendments. CSW and the Operating Subsidiaries also request that the order grant CSW and the Operating Subsidiaries authority to issue securities similar to the Preferred Securities currently in the marketplace (i.e., tax deductible preferred securities such as QUIPS, TOPRS, etc.) for the purpose of retiring or replacing outstanding first mortgage bonds and preferred stock at the Operating Subsidiaries, or any combination thereof, for the payment of outstanding short- term borrowings and for other general corporate purposes. In order to effectuate the issuance of the preferred securities, CSW and the Operating Subsidiaries propose to issue and sell from time to time in one or more series, directly, or indirectly through a special purpose financing subsidiary (as hereinafter defined) or affiliate of CSW or an Operating Subsidiary established for that purpose, Junior Subordinated Debentures (the "Debentures") and/or Preferred Securities. Each series of Debentures and/or Preferred Securities will mature in not more than 49 years. The Proxy Solicitation, Redemption, Proposed Amendments, Offer and issuance of Debentures and/or Preferred Securities are discussed in more detail below. In addition, CSW and the Operating Subsidiaries request authority to manage interest rate risk, as appropriate, through the use of hedging products, including interest rate swaps, forward swaps and caps and collars as described in Item I.D. below. CSW and the Operating Subsidiaries request authority to enter into the foregoing types of transactions from time to time in connection with the issuance of Debentures and/or Preferred Securities. 4 The preferred stock of each Operating Subsidiary, the number of shares outstanding, their par value and dollar amount outstanding as of December 31, 1996 are listed below. None of the shares are listed on the New York Stock Exchange ("NYSE") or any other exchange.
CPL Money Market Preferred 750,000 shares $100 Par Value $ 75,000,000 Auction Rate Pref. Series A 425,000 shares $100 Par Value $ 42,500,000 Auction Rate Pref. Series B 425,000 shares $100 Par Value $ 42,500,000 8.72% Series 500,000 shares $100 Par Value $ 50,000,000 7.12% Series 260,000 Shares $100 Par Value $ 26,000,000 4.20% Series 75,000 Shares $100 Par Value $ 7,500,000 4.00% Series 100,000 Shares $100 Par Value $ 10,000,000 ------------ Total $253,000,000 ------------ PSO 4.24% Series 100,000 Shares $100 Par Value $10,000,000 4.00% Series 97,900 Shares $100 Par Value $ 9,790,000 ----------- Total $19,790,000 ----------- SWEPCO 6.95% Series 340,000 Shares $100 Par Value $34,000,000 5.00% Series 75,000 Shares $100 Par Value $ 7,500,000 4.65% Series 25,000 Shares $100 Par Value $ 2,500,000 4.28% Series 60,000 Shares $100 Par Value $ 6,000,000 ----------- Total $50,000,000 ----------- WTU 4.40% Series 60,000 Shares $100 Par Value $ 6,000,000
All of the outstanding common stock of each Operating Subsidiary is owned by CSW. Each share of common stock and preferred stock of each series is entitled to one vote per share for purposes of the Proposed Amendments. Each Operating Subsidiary's outstanding common stock and preferred stock constitute its only 5 outstanding securities entitled to vote on the applicable Proposed Amendment. None of the Operating Subsidiaries has any other authorized class of equity securities. A. PROXY SOLICITATION AND PROPOSED AMENDMENTS 1. Terms of Proxy Solicitation and Proposed Amendments Each Operating Subsidiary's Articles currently provide that, without the consent of the holders of at least a majority of the total number of such Operating Subsidiary's shares of preferred stock of all series voting as one class, it may not issue or assume any unsecured notes, debentures or other securities representing unsecured indebtedness ("Unsecured Obligations"), for any purpose other than (a) refunding or renewing outstanding Unsecured Obligations resulting in later maturities or, (b) funding existing unsecured indebtedness (not represented by Unsecured Obligations), if immediately after such issue or assumption (1) the principal amount of all Unsecured Obligations issued or assumed by the Operating Subsidiary and then outstanding would exceed 20% of the aggregate of (i) the principal amount of all bonds or other securities representing secured indebtedness issued or assumed by the Operating Subsidiary and then outstanding and (ii) the total capital stock and surplus of the Operating Subsidiary as then recorded on its books (the "20% Provision"), or (2) the principal amount of all Unsecured Obligations maturing in less than ten years, issued or assumed by the Operating Subsidiary and then outstanding, computed as herein provided, would exceed 10% of such aggregate amount (the "10% Provision"). For purposes of subparagraph (2) of the previous sentence, the principal amount of any Unsecured Obligations which had an original single maturity of more than ten years from the date thereof, and the principal amount of the final maturity of any serially-maturing Unsecured Obligations which had one or more original maturities of more than ten years from the date thereof, may not be regarded as Unsecured Obligations maturing in less than ten years until such principal amount is due or required to be paid within three years. The Proposed Amendments would eliminate the 10% and 20% Provisions by deleting them in their entirety from the Articles of each Operating Subsidiary. Approval and adoption of the applicable Proposed Amendment by each Operating Subsidiary's shareholders requires the affirmative vote of the holders of not less than two-thirds of the outstanding shares of (1) the preferred stock of all series, voting together as one class, and (2) the common stock. CSW has advised the Operating Subsidiaries that it will vote its shares of common stock of each Operating Subsidiary in favor of 6 the Proposed Amendments. Abstentions and broker non-votes in respect of the Proposed Amendments will have the effect of voting against the Proposed Amendments. Duly appointed inspectors of election will definitively count and tabulate the votes and determine and announce the results. The Operating Subsidiaries have engaged D.F. King & Co. Inc. ("D.F. King") to act as information agent in connection with the Proxy Solicitation. D.F. King will be paid a fee totaling approximately $75,000 which includes reimbursement for its reasonable out-of-pocket expenses. If a Proposed Amendment is adopted, the applicable Operating Subsidiary proposes to make a special cash payment of $1.00 per share in the case of SWEPCO, PSO and WTU and $0.25 per share in the case of CPL out of its general funds (each, a "Cash Payment") for each share of preferred stock not tendered pursuant to the SWEPCO, PSO and WTU Offers that is properly voted in favor of the applicable Proposed Amendment. Holder of CPL's 4.00% and 4.20% Series cumulative preferred stock who vote in favor of the amendment will be entitled to receive the Cash Payment regardless of whether they tender their shares. The applicable Operating Subsidiary will disburse Cash Payments promptly after adoption of the applicable Proposed Amendment. 2. Benefits of the Proposed Amendments CSW and the Operating Subsidiaries believe that adoption of the Proposed Amendments is critical to maximizing their respective financial flexibility and minimizing their financing costs for the benefit of utility customers and, indirectly, the Operating Subsidiaries' investors. CSW estimates that the ongoing financing flexibility and cost savings to be gained through the elimination of the 10% and 20% Provisions outweigh the one-time cost of the special Cash Payments and the other costs of the Proxy Solicitation. CSW and the Operating Subsidiaries further believe that the terms of the Offers will be attractive to tendering preferred stockholders (given the proposed per share purchase price) and will also benefit CSW's investors and system utility customers by (1) contributing to the elimination of the onerous Articles provisions concerning unsecured indebtedness and (2) creating flexibility in planning and financing business activities and (3) resulting in the acquisition and subsequent retirement of outstanding shares of the Operating Subsidiaries' preferred stock and their replacement with less expensive financing alternatives. 7 Although historically the Operating Subsidiaries' debt financing has been accomplished through the issuance of first mortgage bonds and short-term debt, CSW and the Operating Subsidiaries believe that unsecured debt will increase in importance over time as an option in financing construction programs, refinancing first mortgage bonds and providing funds for other general corporate purposes. The availability and flexibility of unsecured debt is necessary to take full advantage of changing conditions in the securities markets and the electric utility industry. For example, if the Operating Subsidiaries were ever unable to meet the earnings coverage test in their respective Articles, they would be unable to issue any additional preferred stock. Thus, it is possible that the Operating Subsidiaries could face a situation where they would be able to issue only first mortgage bonds (assuming that the applicable earnings coverage test could be met) or additional common stock. The Proposed Amendments will also allow the Operating Subsidiaries to take greater advantage of Preferred Securities on which periodic payments are tax deductible(which have a lower after-tax cost than traditional preferred stock), the retail unsecured debt market, the institutional unsecured debt market and the short-term unsecured debt market. Securities in each of these areas are currently treated as unsecured debt for purposes of the 10% and 20% Provisions. The Operating Subsidiaries believe that the 10% and 20% Provisions hamper their flexibility in planning and financing business activities and that eventually they may be at a competitive disadvantage if those restrictions are not removed. New competitors such as power marketers, independent power producers and owners of cogeneration facilities generally are not subject to similar financing restrictions. In recent years, a number of utilities encumbered with charter restrictions similar to the 10% and 20% Provisions have eliminated or relaxed such provisions through successful proxy solicitations. In short, many potential competitors of the Operating Subsidiaries are not constrained by unsecured debt restrictions. Reference is made to Exhibit 2 (forms of Offer to Purchase and Proxy Statement) and Exhibit 3 (form of Notice of Special Meeting) for more detailed information with respect to the Proxy Solicitation and Proposed Amendments. 8 B. THE OFFER TO PURCHASE 1. Terms of Offer Concurrently with the commencement of the Proxy Solicitation for SWEPCO, PSO, WTU and CPL and subject to the terms and conditions stated in the Offer to Purchase and Proxy Statement for SWEPCO, PSO and WTU and the Offer to Purchase for CPL (each, an "Offer to Purchase") and the accompanying Letters of Transmittal and Proxy for SWEPCO, PSO and WTU and the Letter of Transmittal for CPL (each, a "Letter of Transmittal") (see Exhibits 2(a)-(d) and 5(a)-(d)) (collectively, the "Offer Documents"), CSW proposes to make the Offer, pursuant to which it will offer to acquire from the holders of the preferred stock of all series of SWEPCO, PSO and WTU and the 4.00% and 4.20% series of CPL (each a "Series") any and all shares (the "Shares") of such Series at the following cash purchase prices: (i) SWEPCO - $___ per share, in the case of the 6.95% Series; $___ per share, in the case of the 5.00% Series; $___ per share, in the case of the 4.65% Series and $___ per share, in the case of the 4.28% Series (each, a "SWEPCO Purchase Price"). (ii) PSO - $___ per share, in the case of the 4.24% Series and $___ per share, in the case of the 4.00% Series (each, a "PSO Purchase Price"). (iii) WTU - $___ per share, in the case of the 4.40% Series (the "WTU Purchase Price"). (iv) CPL - $___ per share, in the case of the 4.20% Series and $___ per share, in the case of the 4.00% Series (each, a "CPL Purchase Price" and together with the SWEPCO Purchase Price, the PSO Purchase Price and the WTU Purchase Price, the "Purchase Price"). A portion of the Purchase Price, except for the CPL Purchase Price, will be treated as a Cash Payment for voting in favor of the Proposed Amendment. CSW anticipates that the Offer for each Series of preferred stock, including CPL, will be scheduled to expire at 5 P.M. (Central time) on the date of the applicable Special Meeting for SWEPCO, PSO and WTU. The Offers may be extended or terminated earlier under certain circumstances specified below. The Offer for any one Series is independent of the Offer for any other Series. The applicable Purchase Price and the other terms and conditions of the Offers apply equally to all preferred stockholders of a respective Series. The Offers are not conditioned upon any minimum number of Shares of the applicable Series 9 being tendered, but are conditioned, except for the CPL Offer, among other things, on the Proposed Amendments being approved and adopted by the requisite vote of the preferred stockholders. To tender shares in accordance with the terms of the Offer Documents, the tendering preferred stockholder must either (1) send to The Bank of New York, in its capacity as depositary for the Offers ("Depositary"), a properly completed and duly executed Letter of Transmittal or, if sent by an eligible institution, a facsimile thereof for that Series, together with any required signature guarantees and any other documents required by the Letter of Transmittal, and either (a) certificates for the Shares to be tendered must be received by the Depositary at one of its addresses specified in the Offer Documents, or (b) such Shares must be delivered pursuant to the procedures for book-entry transfer described in the Offer Documents (and a confirmation of such delivery must be received by the Depositary), in each case by the Expiration Date; or (2) comply with a guaranteed delivery procedure specified in the Notice of Guaranteed Delivery and Proxy for SWEPCO, PSO and WTU, or the Notice of Guaranteed Delivery for CPL. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders will be irrevocable, subject to certain conditions identified in the Offer Documents. CSW's obligation to proceed with the Offers and to accept for payment and to pay for any Shares tendered is subject to various conditions enumerated in the Offer Documents, which include the Commission issuing an order under the Act authorizing the proposed transactions, and which also include, among other conditions, except in the case of the CPL Offer, that the Proposed Amendments be adopted and that all tendering preferred stockholders vote in favor of the applicable Proposed Amendment. Any tendered shares as to which a vote in favor of the Proposed Amendment is not validly cast may be deemed withdrawn and not validly tendered. The CPL Offer is subject to certain conditions enumerated in the Offer Documents, but is not conditioned upon the Proposed Amendments being adopted or upon a tendering preferred stockholder voting in favor of the Proposed Amendment. At any time or from time to time, CSW may extend the Expiration Date applicable to any Series by giving notice of such extension to the Depositary, without extending the Expiration Date for any other Series. During any such extension, all Shares of the applicable Series previously tendered will remain subject to the Offer, and may be withdrawn at any time prior to the Expiration Date, as extended. Conversely, CSW may elect 10 in its sole discretion to terminate the Offer prior to the scheduled Expiration Date and not accept for payment and pay for any Shares tendered. In either case, CSW will comply with applicable provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules promulgated thereunder, which require CSW either to pay the consideration offered or to return the tendered Shares promptly after the termination or withdrawal of the Offer and after giving notice of such termination to the Depositary and making a public announcement thereof. Subject to compliance with applicable law, CSW further reserves the right in the Offer Documents, in its sole discretion, to amend the Offers in any respect by making a public announcement thereof. If CSW materially changes the terms of an Offer or the information concerning an Offer, or if it waives a material condition of an Offer (such as, if applicable, the condition that the Proposed Amendments be adopted), CSW will extend the Expiration Date to the extent required by the applicable provisions of the Exchange Act and the rules promulgated thereunder. Those provisions generally require that the minimum period during which an issuer tender offer must remain open following material changes in the terms of the offeror information concerning the offer (other than a change in price, or change in percentage of securities sought or change in the dealer's soliciting fee) will depend on the facts and circumstances, including the relative materiality of such terms or information. However, if CSW notifies Operating Subsidiary preferred stockholders that it will (a) increase or decrease the price it will pay for Shares, (b) increase or decrease the percentage of Shares it seeks or (c) increase or decrease the dealer's soliciting fee, then the Expiration Date will be extended, if necessary, so that the expiration of the Offer occurs at least ten business days after the announced change. Shares validly tendered to the Depositary pursuant to the Offers and not withdrawn in accordance with the procedures set forth in the Offer Documents will be held by CSW until the Expiration Date (or returned promptly in the event the Offer is terminated). Subject to the terms and conditions of the Offers, as promptly as practicable after the Expiration Date, CSW will accept for payment and pay for any and all Shares validly tendered and not withdrawn. CSW will pay for Shares that it has purchased pursuant to the Offers by depositing the applicable Purchase Price with the Depositary, which will act as agent for the tendering preferred stockholders for the purpose of receiving payment from CSW and transmitting payment to tendering preferred stockholders. CSW will pay all stock transfer taxes, if any, payable on account of its acquisition of shares 11 pursuant to the Offers, except in certain circumstances where special payment or delivery procedures are utilized in conformance with the applicable Letters of Transmittal. With respect to Shares validly tendered and accepted for payment by CSW, each tendering preferred stockholder of SWEPCO, PSO and WTU will be entitled to receive as consideration from CSW only the applicable Purchase Price. Any such tendering stockholder will not be entitled to receive any additional consideration in the form of a Cash Payment, although a portion of the applicable Purchase Price will be attributable to the amount of the Cash Payment. As stated above in Item 1.A.1., the latter payment will be payable by SWEPCO, PSO and WTU solely in respect of Shares properly voted by preferred stockholders in favor of the Proposed Amendments, provided that (a) such Shares have not been tendered pursuant to the Offer and (b) the Proposed Amendments are adopted. Tendering preferred stockholders of CPL will be entitled to the CPL Purchase Price. Further, assuming a preferred stockholder of CPL votes for the Proposed Amendment pursuant to the separate CPL Proxy Solicitation and the Proposed Amendment is approved and adopted at the Special Meeting, the preferred stockholder of CPL will be entitled to a Cash Payment. As noted immediately above, subject to the terms and conditions of the Offers, Shares validly tendered and not withdrawn will be accepted for payment and paid for by CSW as promptly as practicable after the Expiration Date. If the Proposed Amendments are adopted, the Operating Subsidiaries propose to reacquire all shares acquired by CSW pursuant to the Offers after the consummation of the Offers at the Purchase Price. Upon such reacquisition the Operating Subsidiaries will retire and cancel such Shares. The Operating Subsidiaries hereby request authorization for such reacquisition. The Offers for SWEPCO, PSO and WTU are conditioned upon the Proposed Amendments being adopted at the Special Meetings, however, CSW may elect to waive such condition. In that case, as promptly as practicable after CSW's purchase of any Shares validly tendered pursuant to the Offers, each of SWEPCO, PSO and WTU may call another special meeting or commence a consent solicitation of its common and preferred stockholders and solicit proxies or consents for the purpose of securing the requisite two-thirds affirmative vote of stockholders to amend the Articles to eliminate the 10% and 20% Provisions and CSW may make open market purchases of the Shares in connection therewith. Further, if CPL's Proposed Amendment is not approved and adopted pursuant to CPL's separate Proxy Solicitation, CPL may also call another Special Meeting for the 12 purpose of securing the requisite vote to amend the Articles and CSW may make open market purchases of the Shares in connection therewith. In any event, CSW has advised the Operating Subsidiaries that it intends to vote any Shares acquired by it pursuant to the Offers or otherwise (as well as all of its shares of common stock) in favor of the Proposed Amendments to eliminate the 10% and 20% Provisions. If the Proposed Amendments are approved and adopted, and in any event within one year from the Expiration Date (including any extensions thereof), the Operating Subsidiaries will reacquire all shares from CSW at the Purchase Price after such meetings or at the expiration of such one-year period, as applicable, and the Operating Subsidiaries will thereupon retire and cancel such Shares. CSW requests authority to use its general funds and/or funds borrowed through its commercial paper program previously authorized by order dated March 21, 1995 (HCAR No. 26254), on an interim basis, to finance its purchase of any Shares tendered, accepted for payment and paid for pursuant to the Offers, until such time as such shares are reacquired by the Operating Subsidiaries. CSW has selected Goldman, Sachs & Co. and Smith Barney Inc. to act as dealer managers in connection with the Offers (the "Dealer Managers"). The Dealer Managers will be paid a combined fee of $0.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offers. Each Dealer Manager will also be reimbursed by CSW for its reasonable out-of-pocket expenses, including attorney's fees, and will be indemnified against certain liabilities, including certain liabilities under the federal securities laws, in connection with the Offers. In addition, CSW will pay soliciting brokers and dealers a separate fee of $1.50 per Share for Shares tendered, that are accepted for payment and paid for pursuant to the Offer (except that for transactions equal to or exceeding 2,500 Shares, CSW will pay a solicitation fee of $1.00 per Share; provided that any fee payable pursuant to this parenthetical shall be paid 80% to the Dealer Managers and 20% to any designated soliciting broker or dealer (which may be a Dealer Manager)). As set forth in Item 2, CSW proposes to pay the Depositary a fee of approximately $75,000. 2. Benefits of Offer; Utilization of CSW rather than the Operating Subsidiaries as Offeror The proposed acquisition by CSW of Shares pursuant to the Offers will benefit CSW's utility system customers and shareholders and the Operating Subsidiaries' preferred stockholders. The Offers allow preferred stockholders who may not favor the elimination of the 10% and 20% Provisions an option to tender 13 their shares at a premium to the market price and without the usual transaction costs associated with such a sale. System utility customers and CSW shareholders will benefit from the Operating Subsidiaries' increased flexibility and reduced financing costs in issuing Preferred Securities and unsecured debt. Specifically, assuming that 50% of all the Shares are purchased in the Offers, the estimated savings to the Operating Subsidiaries are expected to approximate $2.5 million each year (based on a dollar-for-dollar replacement of the Shares subject to the Offers with Preferred Securities at prevailing rates on the date hereof), after taxes. Further, assuming (x) 50% of the Shares are tendered in the Offers, (and that holders of 100% of CPL's Money Market Preferred Series, Auction Rate Preferred Series A and Auction Rate Preferred Series B and 30% of the outstanding preferred stock of all other series of the Operating Subsidiaries vote in favor of the Proposed Amendment resulting in approval of and adoption of such amendment), (y) refinancing of Shares acquired and paid for pursuant to the Offers with tax deductible Preferred Securities (and assuming such rates do not change throughout the period), and (z) a discount rate equal to the Operating Subsidiaries' after-tax weighted average cost of capital, CSW anticipates that the proposed transactions may yield total after-tax, present value cash savings of approximately $22 million over the next 30 years, net of cash expenditures incurred in respect of the Offers and Proxy Solicitation. A higher success rate for the Offers potentially could generate even greater cash savings. The preceding assumptions also assume CPL's 8.72% Series and 7.12% Series Preferred Securities will no longer be outstanding at the time of the CPL Proxy Solicitation. As stated above in Item 1.B.1, if the Offer and Proxy Solicitation do not result in the Proposed Amendments being adopted, as promptly as practicable after completion of the Proxy Solicitation, each Operating Subsidiary may call another special meeting of its common and preferred stockholders and solicit proxies to obtain the requisite two-thirds affirmative vote of preferred stock to approve and adopt the Proposed Amendments and CSW may make open market purchases of the Shares in connection therewith. CSW has advised the Operating Subsidiaries that it would vote any Shares previously acquired by it pursuant to the Offers or otherwise (together with all of its shares of common stock) in favor of the Proposed Amendments. By contrast, if the Operating Subsidiaries, rather than CSW, had acquired Shares pursuant to the Offers, upon acquisition thereof by the Operating Subsidiaries any such Shares would be deemed treasury shares under 14 Delaware, Oklahoma and Texas law and, as such, the Operating Subsidiaries would be precluded from voting those Shares under any circumstances. E. REPURCHASE OF OLD SECURITIES Item 1.E will be amended and restated to read as follows: The Operating Subsidiaries may also acquire any or all of one or more series of the Old Securities from time to time through December 31, 2001 in open market and negotiated transactions. Any such acquisitions will be made with internally generated funds or short-term borrowings. Acquisitions would only be made if the Operating Subsidiary determined that it would be in the best interest of the Operating Subsidiary to do so based on, among other things, the interest rate or dividends payable on the securities, the Operating Subsidiary's financing plans and capital structure and the Operating Subsidiary's then current cash position. The Operating Subsidiary may make purchases of Old Securities in light of opportunities which arise to make such purchases at a time when the respective Operating Subsidiary is not engaged in a refinancing or to purchase Old Securities which are not redeemable pursuant to terms of an indenture. CPL requests authority to effect the Redemption. ITEM 5. PROCEDURE. The first paragraph of Item 5 will be amended to read as follows: As stated in Item 1, CSW and the Operating Subsidiaries respectfully request that the Commission issue a Preliminary Order by not later than March 17, 1997. CSW and the Operating Subsidiaries request that the Commission reserve jurisdiction over all other authorizations requested in this Form U-1 Application-Declaration in File No. 70-8979. CSW and the Operating Subsidiaries further request that as soon as practicable after issuance of the Preliminary Order, but not later than April 1, 1997, the Commission issue an order granting and permitting this Application-Declaration to become effective. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS. Item 6 is amended to read as follows: Exhibit 1(a) - Restated Articles of Incorporation, as amended, of CPL (incorporated herein by reference to Exhibit 4(a) to CPL's Registration Statement No. 33-4897, Exhibits 5 and 7 to Form U-1, File No. 70-7171, Exhibits 5, 8.1, 8.2 and 19 to Form U-1, File No. 70-7472 and CPL's Form 10-Q for the quarterly period ended September 30, 1992, ITEM 6, Exhibit 1). Exhibit 1(b) - Restated Certificate of Incorporation of PSO (incorporated herein by reference to Exhibit 3 to PSO's 1987 Form 10-K, File No. 0-343). 15 Exhibit 1(c) - Restated Certificate of Incorporation, as amended, of SWEPCO (incorporated herein by reference to Exhibit 3 to SWEPCO's 1980 Form 10-K, File No. 1-3146, Exhibit 2 to Form U-1, File No. 70-6819, Exhibit 3 to Form U-1, File No. 70-6924 and Exhibit 4 to Form U-1, File No. 70-7360). Exhibit 1(d) - Restated Articles of Incorporation, as amended, of WTU (incorporated herein by reference to Exhibit 3(e) 1 to WTU's 1994 Form 10-K, File No. 0-340). Exhibit 2(a) - Form of Offer to Purchase and Proxy Statement for SWEPCO. Exhibit 2(b) - Form of Offer to Purchase and Proxy Statement for PSO. Exhibit 2(c) - Form of Offer to Purchase and Proxy Statement for WTU. Exhibit 2(d) - Form of Offer to Purchase for CPL Exhibit 3 - Form of Notice of Special Meeting (attached as part of Exhibit 2(a) (SWEPCO), 2(b) (PSO), 2(c) (WTU) and 4 (CPL)). Exhibit 4 - Form of proxy solicitation materials for CPL. Exhibit 5(a) - Form of Letter of Transmittal and Proxy for SWEPCO. Exhibit 5(b) - Form of Letter of Transmittal and Proxy for PSO. Exhibit 5(c) - Form of Letter of Transmittal and Proxy for WTU. Exhibit 5(d) - Form of Letter of Transmittal for CPL. Exhibit 6(a) - Form of Limited Partnership Agreement of Special Purpose Subsidiary (to be filed by amendment). Exhibit 6(b) - Form of Trust Agreement of Special Purpose Subsidiary (Incorporated by reference from Registration Statement No. 333-21149, Exhibit 4(g)). Exhibit 6(c) - Form of Limited Liability Company Agreement of Special Purpose Subsidiary (to be filed by amendment). Exhibit 7 - Form of Action of General Partner (to be filed by amendment). Exhibit 8 - Form of Indenture (incorporated by reference from Registration Statement No. 333-21149, Exhibit 4(a)). Exhibit 9 - Form of Supplemental Indenture including Form of Debenture (incorporated by reference from Registration Statement No. 333-21149, Exhibit 4(b) and Exhibit 4(c)). Exhibit 10 - Form of Guarantee (incorporated by reference from Registration Statement No. 333-21149, Exhibit 4(i)). Exhibit 11 - Form of Underwriting Agreement (incorporated by reference from Registration Statement No. 333-21149, Exhibit 1(a) and Exhibit 1(b)). 16 Exhibit 12(a) - Registration Statement filed by CSW under the Securities Act of 1933, as amended, relating to the various securities which are the subject hereof (to be filed by amendment). Exhibit 12(b) - Registration Statement filed by CPL under the Securities Act of 1933, as amended, relating to the various securities which are the subject hereof (incorporated by reference to Registration Statement No. 333-21149). Exhibit 12(c) - Registration Statement filed by PSO under the Securities Act of 1933, as amended, relating to the various securities which are the subject hereof (incorporated by reference to Registration Statement No. 333-21153). Exhibit 12(d) - Registration Statement filed by SWEPCO under the Securities Act of 1933, as amended, relating to the various securities which are the subject hereof (incorporated by reference to Registration Statement No. 333-21155). Exhibit 12(e) - Registration Statement filed by WTU under the Securities Act of 1933, as amended, relating to the various securities which are the subject hereof (to be filed by amendment). Exhibit 13 - Preliminary Opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Operating Subsidiaries (to be filed by amendment). Exhibit 14 - Proposed Notice of Proceeding (previously filed). Exhibit 15 - Financial Statements per books and pro forma as of ___________ of CSW and Operating Subsidiaries (to be filed by amendment). Exhibit 16 - Final or "past tense" opinion of Milbank, Tweed, Hadley & McCloy, Counsel to the Operating Subsidiaries (to be filed with Certificate of Notification). Exhibit 17 - Application to the Corporation Commission of the State of Oklahoma for authority to issue and sell the debentures (to be filed by amendment). Exhibit 18 - Orders of State Commissions referred to in Exhibit 17 (to be filed by amendment). 17 S I G N A T U R E - - - - - - - - - Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned company has duly caused this document to be signed on its behalf by the undersigned thereunto duly authorized. Dated: March 14, 1997 CENTRAL AND SOUTH WEST CORPORATION By:/s/ Wendy G. Hargus ------------------- Wendy G. Hargus Treasurer CENTRAL POWER AND LIGHT COMPANY By: /s/ Wendy G. Hargus ------------------- Wendy G. Hargus Treasurer PUBLIC SERVICE COMPANY OF OKLAHOMA By: /s/ Wendy G. Hargus ------------------- Wendy G. Hargus Treasurer SOUTHWESTERN ELECTRIC POWER COMPANY By: /s/ Wendy G. Hargus ------------------- Wendy G. Hargus Treasurer WEST TEXAS UTILITIES COMPANY By: /s/ Wendy G. Hargus ------------------- Wendy G. Hargus Treasurer 18 INDEX OF EXHIBITS The Index of Exhibits is amended as follows: EXHIBIT TRANSMISSION NUMBER EXHIBITS METHOD 1(a) Restated Articles of Incorporation, as amended, Incorporated By of CPL (incorporated herein by reference to Reference Exhibit 4(a) to CPL's Registration Statement No. 33-4897, Exhibits 5 and 7 to Form U-1, File No. 70-7171, Exhibits 5, 8.1, 8.2 and 19 to Form U-1, File No. 70-7472 and CPL's Form 10-Q for the quarterly period ended September 30, 1992, ITEM 6, Exhibit 1). 1(b) Restated Certificate of Incorporation of PSO Incorporated By (incorporated herein by reference to Exhibit 3 to Reference PSO's 1987 Form 10-K, File No.0-343) 1(c) Restated Certificate of Incorporation, as amended, Incorporated By of SWEPCO (incorporated herein by reference to Reference Exhibit 3 to SWEPCO's 1980 Form 10-K, File No. 1-3146, Exhibit 2 to Form U-1, File No. 70-6819, Exhibit 3 to Form U-1, File No. 70-6924 and Exhibit 4 to Form U-1, File No. 70-73660). 1(d) Restated Articles of Incorporation, as amended, of Incorporated By WTU (incorporated herein by reference to Exhibit 3(e) Reference 1 to WTU's 1994 Form 10-K, File No. 0-340). 2(a) Form of Offer to Purchase and Proxy Statement for Electronic SWEPCO. 2(b) Form of Offer to Purchase and Proxy Statement for Electronic PSO. 2(c) Form of Offer to Purchase and Proxy Statement for Electronic WTU. 2(d) Form of Offer to Purchase for CPL Electronic 3 Form of Notice of Special Meeting (attached as Electronic part of Exhibit 2(a) (SWEPCO), 2(b)(PSO), 2(c)(WTU) and 4 (CPL)). 4 Form of proxy solicitation material for CPL. Electronic 5(a) Form of Letter of Transmittal and Proxy for SWEPCO. Electronic 5(b) Form of Letter of Transmittal and Proxy for PSO. Electronic 5(c) Form of Letter of Transmittal and Proxy for WTU. Electronic 5(d) Form Letter of Transmittal for CPL. Electronic 6(a) Form of Limited Partnership Agreement of Special Purpose Subsidiary (to be filed by amendment). _____ 6(b) Form of Trust Agreement of Special Purpose Subsidiary Incorporated By (Incorporated by reference from Registration Reference Statement No. 333-21149, Exhibit 4(g)). 6(c) Form of Limited Liability Company Agreement of Special Purpose Subsidiary (to be filed by amendment). _____ 19 EXHIBIT TRANSMISSION NUMBER EXHIBITS METHOD 7 Form of Action of General Partner (to be filed by amendment). _____ 8 Form of Indenture (incorporated by reference Incorporated By from Registration Statement No. 333-21149, Reference Exhibit 4(a)). 9 Form of Supplemental Indenture including Form of Incorporated By Debenture (incorporated by reference from Reference Registration Statement No. 333-21149, Exhibit 4(b) and Exhibit 4(c)). 10 Form of Guarantee (incorporated by reference Incorporated By from Registration Statement No. 333-21149, Reference Exhibit 4(i)). 11 Form of Underwriting Agreement (incorporated by Incorporated By reference from Registration Statement No. 333-21149, Reference Exhibit 1(a) and Exhibit 1(b)). 12(a) Registration Statement filed by CSW under the _____ Securities Act of 1933, as amended, relating to the various securities which are the subject hereof (to be filed by amendment). 12(b) Registration Statement filed by CPL under the Incorporated by Securities Act of 1933, as amended, relating to the Reference various securities which are the subject hereof (incorporated by reference to Registration Statement No. 333-21149). 12(c) Registration Statement filed by PSO under the Incorporated by Securities Act of 1933, as amended, relating to the Reference various securities which are the subject hereof (incorporated by reference to Registration Statement No. 333-21153). 12(d) Registration Statement filed by SWEPCO under the Incorporated by Securities Act of 1933, as amended, relating to the Reference various securities which are the subject hereof (incorporated by reference to Registration Statement No. 333-21155). 12(e) Registration Statement filed by WTU under the _____ Securities Act of 1933, as amended, relating to the various securities which are the subject hereof (to be filed by amendment). 13 Preliminary Opinion of Milbank, Tweed, Hadley & _____ McCloy, counsel to the Operating Subsidiaries (to be filed by amendment). 14 Proposed Notice of Proceeding (previously filed). _____ 15 Financial Statements per books and pro forma as _____ of ____________ of CSW and Operating Subsidiaries (to be filed by amendment). 16 Final or "past tense" opinion of Milbank, Tweed, _____ Hadley & McCloy, Counsel to the Operating Subsidiaries (to be filed with Certificate of Notification). 17 Application to the Corporation Commission of the _____ State of Oklahoma for authority to issue and sell the debentures (to be filed by amendment). 18 Orders of State Commissions referred to in _____ Exhibit 17 (to be filed by amendment). 20 EX-2.(A) 2 OFFER TO PURCHASE SWEPCO OFFER TO PURCHASE AND PROXY STATEMENT CENTRAL AND SOUTH WEST CORPORATION OFFER TO PURCHASE FOR CASH ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF CUMULATIVE PREFERRED STOCK OF SOUTHWESTERN ELECTRIC POWER COMPANY 60,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.28% SERIES AT A PURCHASE PRICE OF $ PER SHARE 25,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.65% SERIES AT A PURCHASE PRICE OF $ PER SHARE 75,000 SHARES, CUMULATIVE PREFERRED STOCK, 5.00% SERIES AT A PURCHASE PRICE OF $ PER SHARE 340,000 SHARES, CUMULATIVE PREFERRED STOCK, 6.95% SERIES AT A PURCHASE PRICE OF $ PER SHARE ------------------------------ SOUTHWESTERN ELECTRIC POWER COMPANY PROXY STATEMENT WITH RESPECT TO ITS COMMON STOCK AND CUMULATIVE PREFERRED STOCK ------------------------------ THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , 1997, UNLESS THE OFFER IS EXTENDED. Central and South West Corporation, a Delaware corporation ("CSW"), invites the holders of each series of cumulative preferred stock listed above (each a "Series of Preferred," and the holder thereof a "Preferred Shareholder") of Southwestern Electric Power Company, a Delaware corporation and wholly-owned utility subsidiary of CSW ("SWEPCO"), to tender any and all of their shares of a Series of Preferred ("Shares") for purchase at the purchase price per Share listed above for the Shares tendered, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and Proxy Statement and in the accompanying Letter of Transmittal and Proxy (the "Proxy") (which together constitute the "Offer"). CSW will purchase all Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period; Termination; Amendments." THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE (AS HEREINAFTER DEFINED)) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED BELOW. THE OFFER IS ALSO CONDITIONED UPON THE APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED (THE "1935 ACT"). THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE (AS HEREINAFTER DEFINED) MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES OF PREFERRED WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER. SEE "TERMS OF THE OFFER-PROCEDURE FOR TENDERING SHARES." FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT (AS HEREINAFTER DEFINED) OR THE DEALER MANAGERS (AS HEREINAFTER DEFINED) OR CONSULT YOUR BROKER FOR ASSISTANCE. Concurrently with the Offer, the Board of Directors of SWEPCO is soliciting proxies for use at the Special Meeting of Shareholders of SWEPCO to be held at its principal office, 428 Travis Street, Shreveport, Louisiana 71156-0001, on , 1997, or any adjournment or postponement of such meeting (the "Special Meeting"). The Special Meeting is being held to consider an amendment (the "Proposed Amendment") to SWEPCO's Restated Certificate of Incorporation (the "Articles") which would remove a provision of the Articles that limits SWEPCO's ability to issue unsecured debt. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, SWEPCO WILL MAKE A SPECIAL CASH PAYMENT IN THE AMOUNT OF $1.00 PER SHARE (THE "CASH PAYMENT") TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT BUT WHO DID NOT TENDER HIS OR HER SHARES. THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ABOVE BUT NOT THE CASH PAYMENT. IMPORTANT Any Preferred Shareholder desiring to accept the Offer and tender all or any portion of his or her Shares should, in addition to voting in favor of the Proposed Amendment either by executing and returning the enclosed Proxy or by voting in person by ballot at the Special Meeting, either (i) if not the record holder, request his or her broker, dealer, commercial bank, trust company or nominee to effect the transaction for him or her, or (ii) if the record holder, complete and sign the Letter of Transmittal and Proxy or facsimile thereof, in accordance with the instructions in the Letter of Transmittal and Proxy, mail or deliver it and any other required documents to The Bank of New York (the "Depositary"), and deliver the certificates for such Shares to the Depositary, along with the Letter of Transmittal and Proxy, or tender such Shares pursuant to the procedure for book-entry transfer set forth below under "Terms of the Offer--Procedure for Tendering Shares," prior to the Expiration Date (as defined below). A Preferred Shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or nominee must contact such broker, dealer, commercial bank, trust company or nominee if he or she desires to tender such Shares. Any Preferred Shareholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply in a timely manner with the procedure for book-entry transfer, should tender such Shares by following the procedures for guaranteed delivery set forth below under "Terms of the Offer--Procedure for Tendering Shares." EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY FOR SUCH SERIES OF PREFERRED OR A NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE USED TO TENDER SHARES OF SUCH SERIES OF PREFERRED. A LETTER OF TRANSMITTAL AND PROXY MAY BE USED TO VOTE IN FAVOR OF THE PROPOSED AMENDMENT EVEN IF NO SHARES ARE BEING TENDERED. ------------------------------ THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------------------------ NEITHER CSW, SWEPCO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. ------------------------------ This Offer to Purchase and Proxy Statement and the accompanying proxy are first being mailed to Preferred Shareholders on or about March , 1997 to Preferred Shareholders of record on March , 1997. ------------------------------ Each Series of Preferred is traded in the over-the-counter market (the "OTC") and is not listed on any national securities exchange. On , 1997, the last reported sale prices and dates of sale as reported by the National Quotation Bureau, Inc. were $ for the 4.28% Series of Preferred (on , 1997), $ for the 4.65% Series of Preferred (on, 1997), $ for the 5.00% Series of Preferred (on 1997) and $ for the 6.95% Series of Preferred (on , 1997). Preferred Shareholders are urged to obtain a current market quotation, if available, for the Shares. On , 1997, there were issued and outstanding 60,000 Shares of the 4.28% Series of Preferred, 25,000 Shares of the 4.65% Series of Preferred, 75,000 Shares of the 5.00% Series of Preferred and 340,000 Shares of the 6.95% Series of Preferred. ------------------------------ Questions or requests for assistance or for additional copies of this Offer to Purchase and Proxy Statement, the Letter of Transmittal and Proxy for a Series of Preferred, or other tender offer or proxy solicitation materials may be directed to D.F. King & Co., Inc. (the "Information Agent") or Goldman, Sachs & Co. and Smith Barney Inc. (the "Dealer Managers") at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase and Proxy Statement. ------------------------------ THE DEALER MANAGERS FOR THE OFFER ARE: GOLDMAN, SACHS & CO. SMITH BARNEY INC. ------------------ The date of this Offer to Purchase and Proxy Statement is , 1997. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR SWEPCO AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CSW, SWEPCO OR BY THE DEALER MANAGERS. TABLE OF CONTENTS
PAGE ----- SUMMARY.................................................................................................... 1 TERMS OF THE OFFER......................................................................................... 4 Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 4 Procedure for Tendering Shares........................................................................... 5 Withdrawal Rights........................................................................................ 7 Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 8 Certain Conditions of the Offer.......................................................................... 9 Extension of Tender Period; Termination; Amendments...................................................... 10 PROPOSED AMENDMENT AND PROXY SOLICITATION.................................................................. 12 Introduction............................................................................................. 12 Voting Securities, Rights And Procedures................................................................. 12 Proxies.................................................................................................. 12 Cash Payments............................................................................................ 13 Security Ownership of Certain Beneficial Owners and Management........................................... 14 Business to Come Before the Special Meeting.............................................................. 14 Explanation of the Proposed Amendment.................................................................... 15 Reasons for the Proposed Amendment....................................................................... 15 Financial and Other Information Relating to SWEPCO....................................................... 17 Relationship with Independent Public Accountants......................................................... 17 PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 18 PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 19 CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 21 SOURCE AND AMOUNT OF FUNDS................................................................................. 22 TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 22 FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 22 CERTAIN INFORMATION REGARDING CSW AND SWEPCO............................................................... 23 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 23 ADDITIONAL INFORMATION REGARDING CSW....................................................................... 24 MISCELLANEOUS.............................................................................................. 25
i SUMMARY THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN THIS OFFER TO PURCHASE AND PROXY STATEMENT. The Companies................ CSW is a Dallas-based public utility holding company registered under the 1935 Act. Through its four electric operating subsidiaries, SWEPCO, Central Power and Light Company, Public Service Company of Oklahoma and West Texas Utilities Company (collectively, the "Electric Operating Companies"), CSW serves approximately 152,000 square miles in portions of Texas, Oklahoma, Louisiana and Arkansas. CSW owns SEEBOARD plc, a regional electricity company in the southeast of the United Kingdom. CSW also engages through other subsidiaries in the following energy-related busi- nesses: (i) CSW Energy, Inc. develops, owns and operates non-utility power projects in the United States; (ii) CSW International, Inc. participates in power generation, transmission and distribution projects outside the United States; (iii) CSW Communications, Inc. provides communications services, including enhancement of services through fiber optic and other telecommunications technolo- gies, to CSW and its subsidiaries and to third parties; (iv) CSW Credit, Inc. purchases, without recourse, the accounts receivables of the Electric Operating Companies and non-affiliated utilities; and (v) EnerShop Inc. was recently formed to provide commercial, industrial, institutional and governmental customers with energy management services designed to control costs, enhance productivity and improve convenience, safety and comfort. The Shares................... SWEPCO 4.28% Cumulative Preferred Stock ($100 par value) SWEPCO 4.65% Cumulative Preferred Stock ($100 par value) SWEPCO 5.00% Cumulative Preferred Stock ($100 par value) SWEPCO 6.95% Cumulative Preferred Stock ($100 par value) The Offer.................... Offer to purchase any or all shares of each Series of Preferred at the price per Share set forth below. Purchase Price............... $ per 4.28% Share $ per 4.65% Share $ per 5.00% Share $ per 6.95% Share Independent Offer............ The Offer for one Series of Preferred is independent of the Offer for any other series of Preferred. The Offer is not conditioned upon any minimum number of Shares of the applicable Series of Preferred being tendered, but is conditioned upon the Proposed Amendment being approved and adopted at the Special Meeting. The Offer is subject to certain other conditions described herein. SEC Approval................. The Offer is conditioned, among other things, upon the approval of the SEC under the 1935 Act.
1 Expiration Date of the Offer...................... The Offer expires at 5:00 p.m., central time, , 1997, unless extended (the "Expiration Date"). How to Tender Shares......... Preferred Shareholders (including Preferred Shareholders who acquire Shares subsequent to the Record Date) who wish to tender their Shares must vote in favor of the Proposed Amendment. Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender their Shares must arrange with their seller to receive an assignment of proxy from the holder of record on the Record Date. In order to facilitate receipt of Proxies, Shares shall, during the period which commenced March , 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired Shares in the Proxy Solicitation. Settlement of all trades during the period described above should include an assignment of proxy from the seller. See "Terms of the Offer--Procedure for Tendering Shares." For further information, call the Information Agent or the Dealer Managers or consult your broker for assistance. Withdrawal Rights............ Tendered Shares of any Series of Preferred may be withdrawn at any time until the Expiration Date with respect to such Series of Preferred and, unless theretofore accepted for payment, may also be withdrawn after , 1997. See "Terms of the Offer--Withdrawal Rights". The proxy accompanying any tendered Shares that are withdrawn will not be considered revoked unless the Preferred Shareholder specifically revokes such proxy as described herein. See "Proposed Amendment and Proxy Solicitation--Proxies." Purpose of the Offer......... CSW is making the Offer because it believes that the purchase of Shares is attractive to CSW, its shareholders and SWEPCO. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium over the market price and without the usual transaction costs associated with a market sale. See "Purpose of the Offer; Certain Effects of the Offer." Dividends.................... A regular quarterly dividend has been declared on each Series of Preferred, payable on April 1, 1997 to the owners of record on March 14, 1997 (the "April 1997 Dividend"). A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on Shares held of record on March 14, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). Brokerage Commissions........ Not payable by Preferred Shareholders. Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares,
2 provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. Proposed Amendment........... Concurrently with the Offer, the Board of Directors of SWEPCO is soliciting proxies for use at the Special Meeting of Shareholders of SWEPCO. The Special Meeting is being held to consider an amendment to SWEPCO's Articles which would remove a provision that limits SWEPCO's ability to issue unsecured debt. Record Date.................. March , 1997 Special Cash Payment......... Preferred Shareholders have the right to vote for the Proposed Amendment regardless of whether they tender their Shares. If the Proposed Amendment is approved and adopted by SWEPCO's shareholders, SWEPCO will make a special cash payment of $1.00 per Share to each Preferred Shareholder who voted in favor of the Proposed Amendment, provided that such Shares have not been tendered pursuant to the Offer. Preferred Shareholders who validly tender their Shares will be entitled only to the purchase price per share listed on the front cover of this Offer to Purchase and Proxy Statement and not any Cash Payment. Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. See Instruction 6 of the applicable Letter of Transmittal and Proxy. See "Terms of the Offer--Acceptance of Shares for Payment of Purchase Price and Dividends." Payment Date................. Promptly after the Expiration Date. Further Information.......... Additional copies of this Offer to Purchase and Proxy Statement and the applicable Letter of Transmittal and Proxy may be obtained by D.F. King & Co., Inc., 77 Water Street, New York, New York 10005, telephone (800) 755-3107 (toll-free) and (212) 269-5550 (brokers and dealers). Questions about the Offer should be directed to Goldman, Sachs & Co. (800) 828-3182 or Smith Barney Inc. at (800) 655-4811.
3 TERMS OF THE OFFER NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS Upon the terms and subject to the conditions described herein and in the applicable Letter of Transmittal and Proxy, CSW will purchase any and all Shares that are validly tendered on or prior to the applicable Expiration Date (and not properly withdrawn in accordance with "Terms of the Offer-- Withdrawal Rights") at the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement for the Shares tendered, net to the seller in cash. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period; Termination." THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS CONDITIONED ON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED HEREIN. THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." The Offer is being sent to all persons in whose names Shares are registered on the books of SWEPCO on the Record Date. Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender in the Offer must arrange with their seller to receive a Proxy from the holder of record on the Record Date. In order to facilitate receipt of Proxies, Shares shall, during the period which commenced [ ], 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date, trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired Shares in the proxy solicitation. No record date is fixed for determining which persons are permitted to tender Shares. However, only the holders of record, or holders who acquire an assignment of proxy from such holders, are permitted to vote for the Proposed Amendment and thereby validly tender Shares pursuant to the Offer. As such, any person who is the beneficial owner but not the record holder of the Shares must (i) arrange for the record transfer of Shares prior to tendering or (ii) direct such record holder to tender the Shares and vote in favor of the Proposed Amendment on behalf of such beneficial owner. With respect to each Series of Preferred, the Expiration Date is the later of 5:00 p.m., central time, on , , 1997 or the latest time and date to which the Offer with respect to such Series of Preferred is extended. CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer for any Series of Preferred is open, by giving oral or written notice of such extension to the Depositary, without extending the period of time during which the Offer for any other Series of Preferred is open. There is no assurance whatsoever that CSW will exercise its right to extend the Offer for any Series of Preferred. If CSW decides, in its sole discretion, to decrease the number of Shares of any Series of Preferred being sought or to increase or decrease the consideration offered in the Offer to holders of any Series of Preferred and, at the time that notice of such increase or decrease is first published, sent or given to holders of such Series of Preferred in the manner specified herein, the Offer for such Series of Preferred is scheduled to expire at any time earlier than the tenth business day from the date that such notice is first so published, sent or given, such Offer will be extended until the expiration of such ten-business-day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, eastern standard time. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED AND NO TENDERS WILL BE ACCEPTED IN RESPECT OF SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT HAS NOT BEEN CAST AT THE SPECIAL MEETING. SUCH VOTE MAY 4 BE CAST BY PROPERLY COMPLETING THE FORM OF PROXY THAT IS A PART OF THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON BY BALLOT AT THE SPECIAL MEETING. The April 1997 Dividend has been declared on each Series of Preferred, payable April 1, 1997 to owners of record on March 14, 1997. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on shares held of record on March 14, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). PROCEDURE FOR TENDERING SHARES IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES OF PREFERRED WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER. The Shares are trading, during the period which began two days prior to the Record Date and which will end at the close of business on the Expiration Date, in the over-the-counter market under the symbol " ", indicating that such shares are trading "with proxy." A Preferred Shareholder who acquires Shares during this period must obtain, or have its authorized representative obtain, an assignment of proxy (which is included in the applicable Letter of Transmittal) at settlement from the seller. The National Association of Securities Dealers, Inc. (the "NASD") and The Depository Trust Company have issued notices informing their members and participants that the Shares are trading "with proxy" and that settlement of all trades during the period described above should include an assignment of proxy from the seller. FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT OR THE DEALER MANAGERS OR CONSULT YOUR BROKER FOR ASSISTANCE. Further, to tender Shares pursuant to the Offer, the tendering owner of Shares must either: (a) send to the Depositary (at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement) a properly completed and duly executed Letter of Transmittal and Proxy or facsimile thereof (which will either deliver such owner's proxy or indicate such owner's intention to vote at the Special Meeting in person by ballot), together with any required signature guarantees and any other documents required by the Letter of Transmittal and Proxy and either (i) certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer described herein (and a confirmation of such delivery must be received by the Depositary), in each case by the Expiration Date; or (b) comply with the guaranteed delivery procedure described under "Guaranteed Delivery Procedure" below. The Depositary will establish an account with respect to the Shares at DTC and the Philadelphia Depository Trust Company (collectively referred to as the "Book-Entry Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase and Proxy Statement and any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make 5 delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of such Book-Entry Transfer Facility. Although delivery of Shares may be effected through book-entry transfer, such delivery must be accompanied by either (i) a properly completed and duly executed Letter of Transmittal and Proxy or facsimile thereof, together with any required signature guarantees and any other required documents or (ii) an Agent's Message (as hereinafter defined) and, in any case, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement at or prior to 5:00 p.m., central time, on the Expiration Date. The term "Agent's Message" means a message, transmitted by one of the Book-Entry Transfer Facilities, received by the Depositary and forming a part of the book-entry transfer when a tender is initiated, which states that the Book-Entry Transfer Facility has received an express acknowledgment from a participant tendering Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that CSW may enforce such agreement against such participant. Except as otherwise provided below, all signatures on a Letter of Transmittal and Proxy must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States that is a participant in an approved Signature Guarantee Medallion Program (each of the foregoing being referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is signed by the holder of record of the shares tendered therewith and such owner has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy, (b) such Shares are tendered for the account of an Eligible Institution or (c) such Letter of Transmittal and Proxy is being used solely for the purpose of voting Shares which are not being tendered pursuant to the Offer. See Instructions 1 and 5 of the Letter of Transmittal and Proxy. GUARANTEED DELIVERY PROCEDURE. If a Preferred Shareholder desires to tender Shares pursuant to the Offer and such Preferred Shareholder's certificates are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are complied with: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery and Proxy, substantially in the form provided by CSW and SWEPCO herewith, is received (with any required signature guarantees) by the Depositary as provided below at or prior to 5:00 p.m., central time, on the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer or a Book-Entry Confirmation with respect to all tendered Shares, together with a properly completed and duly executed Letter of Transmittal and Proxy (or a manually signed facsimile thereof) and any other documents required by the Letter of Transmittal and Proxy, are received by the Depositary no later than 5:00 p.m., central time, within three business days after the date of execution of such Notice of Guaranteed Delivery and Proxy. THE NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE DELIVERED BY HAND OR TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF GUARANTEED DELIVERY AND PROXY. In all cases, Shares shall not be deemed validly tendered unless a properly completed and duly executed Letter of Transmittal and Proxy (or a manually signed facsimile thereof) is received by the Depositary within the applicable time limits and a vote in favor of the Proposed Amendment in respect of such Shares has been cast at the Special Meeting either in person or by completion and execution of the 6 proxy (which proxy must be the form of proxy that is a part of the applicable Letter of Transmittal and Proxy). Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer in all cases will be made only after timely receipt by the Depositary of certificates for (or an Agent's Message with respect to) such Shares, a Letter of Transmittal and Proxy or a manually signed facsimile thereof, properly completed and duly executed, with any required signature guarantees and all other documents required by the Letter of Transmittal and Proxy. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE ALLOWED FOR DELIVERY. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER OR, ALTERNATIVELY, THE CASH PAYMENT, EACH TENDERING UNITED STATES PREFERRED SHAREHOLDER OR A NON-TENDERING UNITED STATES PREFERRED SHAREHOLDER WHO VOTES FOR THE PROPOSED AMENDMENT MUST NOTIFY THE DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND PROXY. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES." EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER. All questions as to the form of documents and the validity, eligibility (including the time of receipt) and acceptance for payment of any tender of Shares will be determined by CSW, in its sole discretion, and its determination will be final and binding. CSW reserves the absolute right to reject any or all tenders of Shares that (i) it determines are not in proper form or (ii) the acceptance for payment of or payment for which may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any defect or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notice of any defect or irregularity in tenders, nor shall any of them incur any liability for failure to give any such notice. WITHDRAWAL RIGHTS ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after , 1997, unless theretofore accepted for payment as provided in this Offer to Purchase and Proxy Statement. If, with respect to any Series of Preferred, CSW extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares of that Series of Preferred or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to CSW's rights under the Offer, the Depositary may, on behalf of CSW, retain all Shares of that Series of Preferred tendered, and such Shares may not be withdrawn except as otherwise provided in this "Terms of the Offer--Withdrawal Rights," subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that an issuer making a tender offer shall either pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the tender offer. 7 The proxy accompanying any tendered Shares that are withdrawn will not be considered revoked unless the Preferred Shareholder specifically revokes such proxy as described herein. See "Proposed Amendment and Proxy Solicitation--Proxies." To be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary, at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement, and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with signatures guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered owner (if different from that of the tendering Preferred Shareholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book-Entry Transfer Facilities to be credited with the withdrawn Shares and the name of the registered holder (if different from the name of such account). Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in "Terms of the Offer--Procedure for Tendering Shares" at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by CSW, in its sole discretion, and its determination will be final and binding. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or will incur any liability for failure to give any such notification. ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS Upon the terms and subject to the conditions of the Offer, and as promptly as practicable after the Special Meeting, CSW will accept for payment (and thereby purchase) and pay for Shares validly tendered and not withdrawn as permitted in "Terms of the Offer--Withdrawal Rights." In all cases, payment for Shares accepted for payment pursuant to the Offer will be made promptly but only after timely receipt by the Depositary of certificates for such Shares (or of an Agent's Message), a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other required documents. For purposes of the Offer, CSW will be deemed to have accepted for payment (and thereby purchased) Shares that are validly tendered and not withdrawn as, if and when it gives oral or written notice to the Depositary of its acceptance for payment of such Shares. CSW will pay for Shares that it has purchased pursuant to the Offer by depositing the purchase price therefor with the Depositary, which will act as agent for tendering Preferred Shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering Preferred Shareholders. Under no circumstances will interest be paid on amounts to be paid to tendering Preferred Shareholders, regardless of any delay in making such payment. Certificates for all Shares not validly tendered will be returned or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained with a Book-Entry Transfer Facility, as promptly as practicable, without expense to the tendering Preferred Shareholder. Payment for shares may be delayed in the event of difficulty in determing the number of Shares properly tendered. In addition, if certain events occur (including the Proposed Amendment not being approved and adopted at the Special Meeting), CSW may not be obligated to purchase Shares pursuant to the Offer. See "Terms of the Offer--Certain Conditions of the Offer." 8 CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to any person other than the registered owner, or if tendered Shares are registered in the name of any person other than the person signing the Letter of Transmittal and Proxy, the amount of any stock transfer taxes (whether imposed on the registered owner, such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See Instruction 6 of the applicable Letter of Transmittal and Proxy. CERTAIN CONDITIONS OF THE OFFER CSW WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL MEETING. IN ORDER TO TENDER THEIR SHARES, PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER. PREFERRED SHAREHOLDERS WHO TENDER THEIR SHARES WILL ONLY BE ENTITLED TO THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. Notwithstanding any other provision of the Offer, CSW will not be required to accept for payment or pay for any Shares tendered, and may terminate or amend the Offer or may postpone (subject to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of Shares) the acceptance for payment of, or payment for, Shares tendered, if at any time after , 1997, and at or before acceptance for payment of or payment for any Shares, any of the following shall have occurred: (a) there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic or foreign, or before any court, authority, agency or tribunal that (i) challenges the acquisition of Shares pursuant to the Offer or otherwise in any manner relates to or affects the Offer or (ii) in the sole judgment of CSW, could materially and adversely affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of SWEPCO individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries or materially impair the Offer's contemplated benefits to CSW; (b) there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or CSW or any of its subsidiaries, by any legislative body, court, authority, agency or tribunal that, in CSW's sole judgment, would or might directly or indirectly (i) make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer, (ii) delay or restrict the ability of CSW, or render CSW unable, to accept for payment or pay for some or all of the Shares, (iii) materially impair the contemplated benefits of the Offer to CSW or 9 (iv) materially affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of SWEPCO individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries; (c) there shall have occurred (i) any significant decrease in the market price of the Shares or any change in the general political, market, economic or financial conditions in the United States or abroad that could have a material adverse effect on CSW's business, operations, prospects or ability to obtain financing generally or the trading in the other equity securities of CSW, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation on, or any event that, in CSW's sole judgment, might affect the extension of credit by lending institutions in the United States, (iii) the commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (v) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof or (vi) any decline in either the Dow Jones Industrial Average or the Standard and Poor's Composite 500 Stock Index by an amount in excess of 15% measured from the close of business on , 1997; (d) any tender or exchange offer with respect to some or all of the Shares (other than the Offer), or a merger, acquisition or other business combination proposal for CSW, shall have been proposed, announced or made by any person or entity; (e) there shall have occurred any event or events that have resulted, or may in the sole judgment of CSW result, in an actual or threatened change in the business, condition (financial or otherwise), income, operations, stock ownership or prospects of CSW and its subsidiaries; or (f) the SEC shall have withheld approval, under the 1935 Act, of the acquisition of the Shares by CSW pursuant to the Offer or the approval and adoption of the Proposed Amendment at the Special Meeting; and, in the sole judgment of CSW, such event or events make it undesirable or inadvisable to proceed with the Offer or with such acceptance for payment or payment. With respect to the approval of the SEC referenced in clause (f) above, the SEC must find, among other things, that the acquisition of the Shares by CSW is not detrimental to the public interest or the interest of the investors or consumers, and that the consideration paid in connection with the acquisition and the adoption of the Proposed Amendment, including fees, commissions and other remuneration, is reasonable. The foregoing conditions (including the condition that the Proposed Amendment be approved and adopted at the Special Meeting) are for the sole benefit of CSW and may be asserted by CSW regardless of the circumstances (including any action or inaction by CSW) giving rise to any such condition, and any such condition (including the condition related to the requirement that Preferred Shareholders tendering their Shares vote in favor of the Proposed Amendment at the Special Meeting) may be waived by CSW, in whole or in part, at any time and from time to time in its sole discretion. The failure by CSW at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by CSW concerning the events described above will be final and binding on all parties. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer for any Series of Preferred is open by giving oral or 10 written notice of such extension to the Depositary and making a public announcement thereof, without extending the period of time during which the Offer for any other Series of Preferred is open. There can be no assurance, however, that CSW will exercise its right to extend the Offer for any Series of Preferred. During any such extension, all Shares of the subject Series of Preferred previously tendered will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in "Terms of the Offer--Withdrawal Rights." CSW also expressly reserves the right, in its sole discretion, to terminate the Offer and not accept for payment or pay for any Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act which requires CSW either to pay the consideration offered or to return the Shares tendered promptly after the termination or withdrawal of the Offer, upon the occurrence of any of the conditions specified in "Terms of the Offer--Certain Conditions of the Offer" by giving oral or written notice of such termination to the Depositary, and making a public announcement thereof. Subject to compliance with applicable law, CSW further reserves the right, in its sole discretion, to amend the Offer in any respect. Amendments to the Offer may be made at any time and/or from time to time effected by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., central time, on the next business day after the previously scheduled Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to Preferred Shareholders affected thereby in a manner reasonably designed to inform such Preferred Shareholders of such change. Without limiting the manner in which CSW may choose to make a public announcement, except as required by applicable law, CSW shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If CSW materially changes the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, CSW will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. The SEC has stated that, in its view, an offer should remain open for a minimum of five business days from the date that a notice of such a material change is first published, sent or given. If the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that CSW publishes, sends or gives to Preferred Shareholders a notice that it will (a) increase or decrease the price it will pay for Shares or (b) decrease the percentage of Shares it seeks, the Offer will be extended until the expiration of such period of ten business days. THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. IF CSW EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO ONE SERIES OF PREFERRED FOR ANY REASON, CSW WILL HAVE NO OBLIGATION TO EXTEND THE OFFER FOR ANY OTHER SERIES OF PREFERRED. 11 PROPOSED AMENDMENT AND PROXY SOLICITATION INTRODUCTION This Offer to Purchase and Proxy Statement is first being mailed on or about , 1997 to the shareholders of SWEPCO in connection with the solicitation of proxies by the Board of Directors (the "Board") of SWEPCO for use at the Special Meeting. At the Special Meeting, the shareholders of SWEPCO will vote upon the Proposed Amendment to the Articles. Preferred Shareholders who wish to tender their Shares pursuant to the Offer must vote in favor of the Proposed Amendment in person by ballot or by proxy at the Special Meeting. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. The Offer is conditional upon the Proposed Amendment being approved and adopted at the Special Meeting. If the Proposed Amendment is approved and adopted by SWEPCO's shareholders, SWEPCO will make a special cash payment in the amount of $1.00 per Share to each Preferred Shareholder who voted in favor of the Proposed Amendment, provided that such Shares have not been tendered pursuant to the Offer. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT (REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED). Those Preferred Shareholders who validly tender their Shares will be entitled only to the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement but not the Cash Payment. VOTING SECURITIES, RIGHTS AND PROCEDURES Only holders of record of SWEPCO's voting securities at the close of business on the Record Date or persons obtaining a proxy from the holders of record on the Record Date will be entitled to vote in person or by proxy at the Special Meeting. The outstanding voting securities of SWEPCO for purposes of voting on the Proposed Amendment are divided into two classes: common stock and cumulative preferred stock. The class of cumulative preferred stock has been issued in four Series of Preferred with the record holders of all Shares of the cumulative preferred stock voting together as one class. The shares outstanding on the date of the Special Meeting, and the vote to which each share is entitled in consideration of the Proposed Amendment, are as follows:
CLASS SHARES OUTSTANDING VOTES PER SHARE - -------------------------------------------------------------------------- ------------------- ----------------- Common Stock (Par Value $18 per share).................................... 7,536,640 1 vote Cumulative Preferred Stock (Par Value $100 per Share)..................... 500,000 1 vote
The affirmative vote of the holders of two-thirds of the outstanding shares of each of SWEPCO's (i) common stock and (ii) cumulative preferred stock, all series of the cumulative preferred stock voting together as one class, is required to approve the Proposed Amendment to be presented at the Special Meeting. Abstentions and broker non-votes will have the effect of votes against the Proposed Amendment. CSW HAS ADVISED SWEPCO THAT IT INTENDS TO VOTE ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF SWEPCO IN FAVOR OF THE PROPOSED AMENDMENT. Votes at the Special Meeting will be tabulated preliminarily by Central and South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of Election, duly appointed by the presiding officer of the Special Meeting, will definitively count and tabulate the votes and determine and announce the results at the meeting. SWEPCO has no established procedure for confidential voting. There are no rights of appraisal in connection with the Proposed Amendment. PROXIES THE ENCLOSED PROXY, WHICH IS CONTAINED WITHIN THE LETTER OF TRANSMITTAL AND PROXY (AND THE NOTICE OF GUARANTEED DELIVERY AND PROXY), IS SOLICITED BY SWEPCO'S BOARD, WHICH RECOMMENDS 12 VOTING FOR THE PROPOSED AMENDMENT. ALL SHARES OF SWEPCO'S COMMON STOCK WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF SWEPCO'S BOARD. Preferred Shareholders tendering their Shares pursuant to the Offer and voting at the Special Meeting by proxy must use the proxy that is a part of the applicable Letter of Transmittal and Proxy. Shares of SWEPCO's cumulative preferred stock represented by properly executed proxies received at or prior to the Special Meeting will be voted in accordance with the instructions thereon. If no instructions are indicated, duly executed proxies will be voted in accordance with the recommendation of the Board. It is not anticipated that any other matters will be brought before the Special Meeting. However, the proxy that is a part of each Letter of Transmittal and Proxy gives discretionary authority to the proxy holders named therein should any other matters be presented at the Special Meeting, and it is the intention of the proxy holders to act on any other matters in accordance with their best judgment. Execution of a proxy will not prevent a Preferred Shareholder from attending the Special Meeting and voting in person. Any Preferred Shareholder giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of SWEPCO written notice of revocation bearing a later date than the proxy, by delivering a duly executed proxy bearing a later date, or by voting in person by ballot at the Special Meeting. SWEPCO will bear the cost of the solicitation of proxies by the Board. SWEPCO has engaged D.F. King & Co., Inc. to act as Information Agent in connection with the solicitation of proxies for a fee of $10,000 plus reimbursement of reasonable out-of-pocket expenses. Proxies will be solicited by mail or by telephone. In addition, officers and employees of SWEPCO may also solicit proxies personally or by telephone; such persons will receive no additional compensation for these services. The Information Agent has not been retained to make, and will not make, solicitations or recommendations in connection with the Proposed Amendment. SWEPCO has requested that brokerage houses and other custodians, nominees and fiduciaries forward solicitation materials to the beneficial owners of shares of SWEPCO's cumulative preferred stock held of record by such persons and will reimburse such brokers and other fiduciaries for their reasonable out-of-pocket expenses incurred in connection therewith. An application has been filed with the SEC under the 1935 Act requesting approval of the Proposed Amendment and the acquisition of the Shares by CSW pursuant to the Offer. As such, the adoption of the Proposed Amendment and the purchase of the Shares pursuant to the Offer are subject to the receipt of such approval from the SEC. SWEPCO has received a preliminary order, permitting the solicitation of proxies, from the SEC under the 1935 Act. CASH PAYMENTS Subject to the terms and conditions set forth in this Offer to Purchase and Proxy Statement, if (but only if) the Proposed Amendment is approved and adopted by the shareholders of SWEPCO, SWEPCO will make a Cash Payment to each Preferred Shareholder whose Shares are properly voted in favor of the Proposed Amendment, in person by ballot or by proxy, at the Special Meeting in the amount of $1.00 for each Share held by such Preferred Shareholder which is so voted, provided that such Shares have not been tendered pursuant to the Offer. The Company has been advised that there is uncertainty under state law, due to the lack of controlling precedent, as to the permissibility of making the Cash Payment. While the Company cannot predict how a court would rule on the issue, the Company believes that the Offer is fair to Preferred Shareholders and has determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED SHAREHOLDERS IN RESPECT OF EACH SHARE WHICH IS SO VOTED ONLY IF SUCH SHARES ARE VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT; PROVIDED, HOWEVER, THAT THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. If the Proposed Amendment is approved and adopted, Cash Payments will be paid out of 13 SWEPCO's general funds, promptly after the Proposed Amendment shall have become effective. However, no accrued interest will be paid on the Cash Payment regardless of any delay in making such payment. Only Preferred Shareholders as of the Record Date (or their legal representatives or attorneys-in-fact) are entitled to vote at the Special Meeting and to receive Cash Payments from SWEPCO. Any beneficial holder of Shares who is not the registered holder of such Shares as of the Record Date (as would be the case for any beneficial owner whose Shares are registered in the name of such holder's broker, dealer, commercial bank, trust company or other nominee) must arrange with the record Preferred Shareholder to execute and deliver a Proxy on such beneficial owner's behalf. If a beneficial holder of Shares intends to attend the Special Meeting and vote in person, such beneficial holder must obtain a legal proxy form from his or her broker, dealer, commercial bank, trust company or other nominee. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As noted above, CSW owns all the outstanding common stock of SWEPCO. Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a security is any person who directly or indirectly has or shares voting or investment power over such security. No person or group is known by management of SWEPCO to be the beneficial owner of more than 5% of SWEPCO's class of cumulative preferred stock as of the Record Date. SWEPCO's directors and executive officers do not beneficially own any Shares as of the Record Date. The beneficial ownership of CSW's common stock held by each director, as well as directors and executive officers as a group, as of December 31, 1996, is set forth in the following table. Share amounts shown include options exercisable within 60 days after year-end, restricted stock, shares of CSW common stock credited to CSW Thrift Plus accounts and all other shares of CSW common stock beneficially owned by the listed persons.
AMOUNT AND NATURE NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2) - ------------------------------------------------------- ------------------------------------- E.R. Brooks............................................ 113,690.32 Glenn Files............................................ 33,722.76 Maxine P. Sarpy........................................ 100.00 All directors and executive officers as a group........ 170,615.19 (representing .05% of the class)
- ------------------------ (1) No individual listed beneficially owned more than .03% of the outstanding shares of common stock of CSW. (2) Includes shares of restricted stock in the following amounts: E.R. Brooks--17,074 and Glenn Files--6,333; and all directors and officers as a group--29,744. Includes shares which there is a right to acquire within 60 days pursuant to the exercise of stock options in the following amounts: E.R. Brooks--54,315 and Glenn Files--19,067; and all directors and executive officers as a group-- 100,062. BUSINESS TO COME BEFORE THE SPECIAL MEETING The following Proposed Amendment to SWEPCO's Articles is the only item of business expected to be presented at the Special Meeting: To remove in its entirety subparagraph (c) of paragraph 5 of Article Fourth, limiting SWEPCO's ability to issue unsecured indebtedness. 14 EXPLANATION OF THE PROPOSED AMENDMENT Without the consent of the majority of the holders of SWEPCO's cumulative preferred stock, the Articles currently prohibit the issuance or assumption of any unsecured notes, debentures or other securities representing unsecured indebtedness (other than for the purpose of refunding outstanding unsecured indebtedness resulting in later maturities or for the redemption or retirement of all outstanding shares of preferred stock) if, immediately after such issuance or assumption, (a) the total outstanding principal amount of all securities representing unsecured debt would exceed 20% of the aggregate of (1) the total principal amount of all outstanding secured debt of SWEPCO and (2) the capital and surplus of SWEPCO or (b) the total outstanding principal amount of all securities representing unsecured debt maturing in less than ten years would exceed 10% of such aggregate. The Proposed Amendment, if adopted, would eliminate in its entirety subparagraph (c) of paragraph 5 of Article Fourth, as set forth below, from the Articles. * * * "(c) issue or assume any unsecured notes, debentures or other securities representing unsecured indebtedness (herein referred to as "unsecured obligations"), for any purpose other than refunding or renewing outstanding unsecured obligations resulting in later maturities or redeeming or otherwise retiring all outstanding shares of the Preferred Stock, if immediately after such issue or assumption (1) the principal amount of all unsecured obligations issued or assumed by the corporation and then outstanding would exceed 20% of the aggregate of (i) the principal amount of all bonds or other securities representing secured indebtedness issued or assumed by the corporation and then outstanding and (ii) the total capital stock and surplus of the corporation as then recorded on its books, or (2) the principal amount of all unsecured obligations maturing in less than ten years, issued or assumed by the corporation and then outstanding computed as herein provided, would exceed 10% of such aggregate. For the purposes of this subparagraph (c), the principal amount of any unsecured obligations which had an original single maturity of more than ten years from the date thereof, and the principal amount of the final maturity of any serially-maturing unsecured obligations which had one or more original maturities of more than ten years from the date thereof, shall not be regarded as unsecured obligations maturing in less than ten years until such principal amount shall be due or required to be paid within three years." REASONS FOR THE PROPOSED AMENDMENT SWEPCO believes that regulatory, legislative and market developments are leading to a more competitive environment in the electric utility industry. As competition intensifies, flexibility and cost structure will be even more crucial to success in the future. Given that the electric and gas industry is extremely capital intensive, controlling and minimizing financing costs are essential ingredients to operating effectively in the new competitive environment. It is, therefore, for those two reasons, flexibility and cost structure, that you are being asked to vote in favor of the Proposed Amendment. SWEPCO believes that adoption of the Proposed Amendment is key to meeting the objectives of flexibility and cost structure. If adopted, the amendment would eliminate the current provision of SWEPCO's Articles that limits the total amount of SWEPCO's unsecured indebtedness to 20% of the total amount of SWEPCO's secured indebtedness, plus capital and surplus, and the amount of short-term unsecured debt to 10% of such total amount. Historically, SWEPCO's debt financing generally has been accomplished through the issuance of long-term first mortgage bonds and a modest amount of unsecured short-term debt. First mortgage bonds represent secured indebtedness because they place a first priority lien on substantially all of SWEPCO's assets. The Indenture dated February 1, 1940, as amended, between SWEPCO and Continental Bank, National Association and M.J. Kruger, as Trustees (the "First Mortgage Bond Indenture"), contains certain restrictive covenants with respect to, among 15 other things, the disposition of assets and the ability to issue additional first mortgage bonds. Short-term debt, usually the lowest cost debt available to SWEPCO, represents one type of unsecured indebtedness. The Proposed Amendment will not only allow SWEPCO to issue a greater amount of unsecured debt, it will also allow SWEPCO to issue a greater amount of total debt. SWEPCO will consider changing the mix of debt securities toward more issuances on a short-term and unsecured basis. Additionally, SWEPCO may issue certain tax-deductible trust preferred securities which would be classified as unsecured debt under SWEPCO's current Articles. SWEPCO has filed a Registration Statement on Form S-3 with the SEC for the issuance of tax-deductible trust preferred securities. Inasmuch as the 10% and 20% provisions contained in the Articles limit SWEPCO's flexibility in planning and financing its business activities, SWEPCO believes it ultimately will be at a competitive disadvantage if the provision is not eliminated. The industry's new competitors (for example, power marketers, independent power producers and cogenerating facilities) generally are not subject to the type of financing restrictions the Articles impose on SWEPCO. Recently, several other utilities with the same or similar charter restrictions have successfully eliminated such provisions by soliciting their shareholders for the same or similar amendments. Therefore, many potential utility competitors have no comparable provision restricting the use of unsecured debt. While SWEPCO's current low-cost structure has been instrumental in reducing the ability of other competitors to attract SWEPCO's large bulk power customers, SWEPCO must continue to explore new ways of reducing costs and enhancing flexibility. SWEPCO believes that the adoption of the Proposed Amendment will be in the best long-term competitive interests of shareholders by enhancing its ability to meet the two objectives described below. FINANCIAL FLEXIBILITY SWEPCO believes that in the long run, various types of unsecured debt alternatives will increase in importance as an option in financing its construction program and refinancing high-cost mortgage bonds. The availability and flexibility of unsecured debt is necessary to take full advantage of changing conditions in securities markets. SWEPCO presently intends to continue to rely on unsecured debt up to the 10% or 20% maximum amounts currently allowable under the Articles. SWEPCO's earnings currently are sufficient to meet the earnings coverage test contained in its First Mortgage Bond Indenture that must be satisfied in certain instances before issuing additional first mortgage bonds. However, there could be periods, when, because of an inability to meet the Articles test, SWEPCO would be unable to issue any additional preferred stock. An inability to issue preferred stock in the future, combined with the inability to issue additional unsecured debt, would limit SWEPCO's financing options to either additional first mortgage bonds or additional common stock. COST STRUCTURE SWEPCO's use of unsecured short-term debt is subject to the 10% and 20% provisions contained in the Articles. SWEPCO believes that the prudent use of such debt in excess of this provision is vital to effective financial management of the business. Not only is unsecured short-term debt generally the least expensive form of capital, it also provides flexibility in meeting seasonal fluctuations in cash requirements, acts as a bridge between issues of permanent capital and can be used when unfavorable conditions prevail in the market for long-term capital. For purposes of the 10% and 20% provisions, tax-deductible trust preferred securities are considered to be unsecured debt, thus the use of tax-deductible trust preferred securities is limited by the 10% and 20% provisions. Tax deductible trust preferred securities have a much lower after-tax cost than traditional perpetual preferred stock. FOR THE ABOVE REASONS, SWEPCO'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS OF SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE ADOPTION OF THE PROPOSED AMENDMENT. 16 FINANCIAL AND OTHER INFORMATION RELATING TO SWEPCO The financial statements of SWEPCO and related information included in its Annual Report on Form 10-K for the year ended December 31, 1996 as filed with the SEC, is hereby incorporated by reference. SWEPCO will provide without charge, upon the written or oral request of any person (including any beneficial owner) to whom this Offer to Purchase and Proxy Statement is delivered, a copy of such information (excluding certain exhibits). Such requests for information should be directed to Stephen D. Wise, Director, Finance, Central and South West Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for SWEPCO, telephone (214) 777-1000. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS Upon recommendation of the Audit Committee of CSW's board of directors, such board employed on April 18, 1996 Arthur Andersen LLP as independent public accountants for CSW and its subsidiaries, including SWEPCO, for the year 1996. Representatives of Arthur Andersen LLP are expected to be present at the Special Meeting with the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. 17 PRICE RANGE OF SHARES; DIVIDENDS SWEPCO's Cumulative Preferred Stock 4.28% Series, 4.65% Series, 5.00% Series and 6.95% Series are traded in the OTC under the symbols " ", " ", " " and " ", respectively. The last reported sale price in the OTC, as of the close of business on , 1997, for each of the Series of Preferred is shown on the front cover of this Offer to Purchase and Proxy Statement. However, Preferred Shareholders should be aware that there is no established trading market for the Shares and that the Shares of each Series of Preferred only trade sporadically and on a limited basis and, therefore, the last reported sales prices may not necessarily reflect the current market value of the Shares. PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF AVAILABLE, FOR THE SHARES. The following table sets forth the high and low sales prices of each Series of Preferred in the OTC as reported by the National Quotation Bureau, Inc. and the cash dividends paid thereon for the fiscal quarters indicated. DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK BY QUARTERS (1996 AND 1995)
1996--QUARTERS 1995--QUARTERS ------------------------------------------ ------------------------------------------ 1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH --------- --------- --------- --------- --------- --------- --------- --------- CUMULATIVE PREFERRED STOCK ($100 Par Value) 4.28% SERIES Dividends Paid Per Share................. $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07 Market Price--$ Per Share (OTC) Ask--High/Low.......................... Bid--High.............................. --Low............................... 4.65% SERIES Dividends Paid Per Share................. $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162 Market Price--$ Per Share (OTC) Ask--High.............................. --Low............................... Bid--High.............................. --Low............................... 5.00% SERIES Dividends Paid Per Share................. $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25 Market Price--$ Per Share (OTC) Ask--High.............................. --Low............................... Bid--High.............................. --Low................................ 6.95% SERIES Dividends Paid Per Share................. $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737 Market Price--$ Per Share (OTC) Ask--High.............................. --Low............................... Bid--High.............................. --Low................................
18 Dividends for a Series of Preferred are payable when, as and if declared by SWEPCO's Board of Directors at the rate per annum included in such title of the Series of Preferred listed on the front cover of this Offer to Purchase and Proxy Statement. The April 1997 Dividend has been declared on each Series of Preferred, payable April 1, 1997 to owners of record on March 14, 1997. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on shares held of record on March 14, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER CSW believes that the purchase of the Shares at this time represents an attractive opportunity that will benefit CSW, its shareholders, and SWEPCO. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium to the market price on the date of the announcement of the Offer and without the usual transaction costs associated with a sale. After the consummation of the Offer, CSW may determine to purchase additional Shares on the open market, in privately negotiated transactions, through one or more tender offers or otherwise. Any such purchases may be on the same terms as, or on terms which are more or less favorable to holders of Shares than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act prohibits CSW and its affiliates (including SWEPCO) from purchasing any Shares of a Series of Preferred, other than pursuant to the Offer until at least ten business days after the Expiration Date with respect to the Series of Preferred. Any future purchases of Shares by CSW would depend on many factors, including the market price of the Shares, CSW's business and financial position, restrictions on CSW's ability to purchase Shares imposed by law and general economic and market conditions. Preferred Shareholders are not under any obligation to tender Shares pursuant to the Offer. The Offer does not constitute notice of redemption of any Series of Preferred pursuant to SWEPCO's Articles, nor does CSW or SWEPCO intend to effect any such redemption by making the Offer. The Offer does not constitute a waiver by SWEPCO of any right it has to redeem Shares. The 6.95% Series of Preferred is subject to a cumulative mandatory redemption in an amount sufficient to retire, within the twelve-month period beginning each April 1, 12,000 Shares, at a price of $100 per Share, plus accrued dividends, and SWEPCO has the noncumulative option to redeem up to 12,000 additional Shares in each such twelve-month period. SWEPCO is required to redeem 12,000 Shares within the twelve-month period beginning April 1, 1997. At the time of such redemption, SWEPCO may exercise its option to redeem an additional 12,000 Shares. The 6.95% Series of Preferred is currently redeemable, upon call at a price of $104.64 per Share, plus accrued dividends and will be redeemable on April 1, 1997 upon call at a price of $102.34 per Share, plus accrued dividends. The 5.00% Series of Preferred is redeemable, upon call at a price of $109 per Share, plus accrued dividends. The 4.65% Series of Preferred is redeemable, upon call at a price of $102.75 per Share, plus accrued dividends. The 4.28% Series of Preferred is redeemable, upon call at a price of $103.904 per Share, plus accrued dividends. The Shares of each Series of Preferred have no preemptive or conversion rights. Upon liquidation or dissolution of SWEPCO, owners of the Shares would be entitled to receive an amount equal to the liquidation preference per share ($100) plus all accrued and unpaid dividends (whether or not earned or declared) thereon to the date of payment, prior to the payment of any amounts to the holders of SWEPCO's common stock. Shares validly tendered to the Depositary pursuant to the Offer and not withdrawn in accordance with the procedures set forth herein shall be held until the Expiration Date (or returned to the extent the Offer is terminated in accordance herewith). To the extent that the Proposed Amendment is approved and Shares tendered are accepted for payment and paid for in accordance with the terms hereof, CSW intends to sell at the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement, or if such purchase prices are increased or decreased by CSW, at such increased or 19 decreased purchase prices, its Shares purchased pursuant to the Offer to SWEPCO and, at that time, it is expected that SWEPCO will retire and cancel the Shares. SWEPCO may obtain all or a portion of the purchase price for such Shares from the proceeds of the sale of tax-deductible trust preferred securities which qualify as unsecured debt for purposes of the 10% and 20% provisions contained in the Articles. However, in the event the Proposed Amendment is not adopted at the Special Meeting, CSW may elect, but is not obligated, to waive, subject to applicable law, the condition to the Offer that the Proposed Amendment be adopted at the Special Meeting, and purchase the Shares tendered pursuant to the Offer. In that case, subsequent to CSW's waiver and purchase of the Shares, SWEPCO anticipates, as promptly as practicable thereafter, that it would call another special meeting of its shareholders and solicit proxies therefrom for an amendment substantially similar to the Proposed Amendment. At that meeting, CSW would vote any Shares acquired by it pursuant to the Offer or otherwise (together with its shares of common stock) in favor of such amendment, thereby maximizing the prospects for the adoption of the amendment. Therefore, it is likely that the Offer will reduce the number of Shares of each of the Series of Preferred that might otherwise trade publicly or become available for purchase and/or sale and likely will reduce the number of owners of Shares of each of the Series of Preferred, which could adversely affect the liquidity and sale value of the Shares not purchased in the Offer. The extent of the public market for such Shares and the availability of price quotations would typically depend upon such factors as the number of stockholders remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms and other factors. As of December 31, 1996, there were 51 registered holders of the 4.28% Series, 30 registered holders of the 4.65% Series, 659 registered holders of the 5.00% Series and 4 registered holders of the 6.95% Series. In addition, the Series of Preferred are currently registered under Section 12(g) of the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon the application by SWEPCO to the SEC if the Shares are neither listed on a national securities exchange nor held by more than 300 holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished to Preferred Shareholders and could make certain provisions of the Exchange Act no longer applicable to SWEPCO. Further, if the Proposed Amendment becomes effective, Preferred Shareholders of Shares that are not tendered and purchased pursuant to the Offer will no longer be entitled to the benefits of the Articles provision limiting the amount of unsecured debt SWEPCO may issue, which will have been deleted by the Proposed Amendment. As discussed above, such provision places restrictions on SWEPCO's ability to issue or assume unsecured indebtedness. Although SWEPCO's debt instruments may contain certain restrictions on SWEPCO's ability to issue or assume debt, any such restrictions may be waived and the increased flexibility afforded SWEPCO by the deletion of the Articles provision may permit SWEPCO to take certain actions that may increase the credit risks with respect to SWEPCO, adversely affecting the market price and credit rating of the remaining Shares or otherwise be materially adverse to the interests of the remaining Preferred Shareholders. In addition, to the extent that SWEPCO elects to fund its purchase of the Shares, in whole or in part, by issuing additional unsecured debt, including tax-deductible trust preferred securities, the remaining Preferred Shareholders' relative position in SWEPCO's capital structure could be perceived to decline, which in turn could adversely affect the market price and credit rating of the remaining Shares. Except as disclosed in this Offer to Purchase and Proxy Statement, CSW and SWEPCO have no plans or proposals that relate to or would result in: (a) the acquisition by any person of additional securities of SWEPCO or the disposition of securities of SWEPCO; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving SWEPCO or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of SWEPCO or any of its subsidiaries; (d) any change in the present Board or management of SWEPCO; (e) any material change in the present dividend rate or policy, or indebtedness or capitalization of SWEPCO; (f) any other material change in SWEPCO's corporate structure or business; (g) any change in SWEPCO's Articles or bylaws or any actions that may impede the acquisition of control of SWEPCO by any person; (h) a class of equity securities of SWEPCO becoming eligible for termination of registration pursuant to Section 12(g)(4) of 20 the Exchange Act; or (i) the suspension of SWEPCO's obligation to file reports pursuant to Section 15(d) of the Exchange Act. NEITHER CSW, SWEPCO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of the principal United States federal income tax consequences of the sale of Shares pursuant to the Offer, the receipt of Cash Payments, and the adoption of the Proposed Amendment. This summary is addressed only to Preferred Shareholders who are "United States Holders" (as defined below) and who hold their Shares as capital assets within the meaning of the Internal Revenue Code of 1986, as amended ("the Code"). This summary does not address all aspects of federal income taxation that may be relevant to a particular Preferred Shareholder in light of such Preferred Shareholder's individual circumstances or to Preferred Shareholders subject to special treatment under the federal income tax laws, such as Preferred Shareholders who are not United States Holders, banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, dealers in securities and currencies, Preferred Shareholders who received their Shares as part of a compensation arrangement with SWEPCO, and Preferred Shareholders holding Shares as part of a position in a "straddle" or as part of a "hedging," "conversion" or other integrated investment transaction for federal income tax purposes. The statements of law or legal conclusion set forth in this summary constitute the opinion of Christy & Viener, special tax counsel to CSW and SWEPCO. This summary is based upon the Code, Treasury Regulations, Internal Revenue Service rulings and pronouncements, and judicial decisions now in effect, all of which are subject to change at any time. Such a change could adversely affect the tax consequences described herein, possibly on a retroactive basis. In addition, the authorities on which this summary is based are subject to various interpretations and it is therefore possible that the United States federal income tax treatment of the payments made pursuant to the Offer, the Cash Payments, and the approval and adoption of the Proposed Amendment may differ from the treatment described below. Preferred Shareholders should consult their own tax advisors in light of their particular circumstances as to the application of United States federal income tax laws, as well as the effect of any state, local, or foreign tax laws. As used herein, the term "United States Holder" means a Preferred Shareholder that is (i) for United States federal income tax purposes, a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state thereof or the District of Columbia, or (iii) an estate or trust specified as being a "United States Person" in the Code. SALE OF SHARES A United States Holder will recognize gain or loss equal to the difference between the tax basis of such holder's Shares and the amount of cash received in exchange therefor. For federal income tax purposes, an amount equal to $1.00 per Share will be treated by CSW and SWEPCO as payment for voting in favor of the Proposed Amendment, rather than cash paid in exchange for Shares, and will constitute ordinary income to recipient United States Holders, as described below under "--Cash Payments/Modification." A United States Holder's gain or loss will be long-term capital gain or loss if the holding period for the Shares is more than one year as of the date of the sale of such Shares. The excess of net long-term capital gains over net short-term capital losses is taxed at a lower rate than ordinary income for certain non-corporate taxpayers. The distinction between capital gain or loss and ordinary 21 income or loss is also relevant for purposes of, among other things, limitations on the deductibility of capital losses. CASH PAYMENTS/MODIFICATION United States Holders, whether or not they receive Cash Payments, will not recognize any taxable income or loss with respect to their Shares as a result of the modification of the Articles by the Proposed Amendment. The federal income tax treatment of the Cash Payments is not entirely clear. SWEPCO will treat the Cash Payments as ordinary non-dividend income to recipient United States Holders. BACKUP WITHHOLDING AND INFORMATION REPORTING The amount of the Cash Payment paid to a United States Holder or the amount of payment made to a United States Holder pursuant to the Offer will be reported to such holder and to the Internal Revenue Service except in the case of corporations and other holders exempt from information reporting and backup withholding. Backup withholding at a rate of 31% will apply to any such payments made to non-exempt United States Holders unless the holder provides its taxpayer identification number and the certifications required to establish that it is not subject to backup withholding. In order to prevent backup withholding, each tendering United States Holder and each United States Holder voting in favor of the Proposed Amendment must provide such holder's taxpayer identification number and certify that such holder is not subject to backup withholding by completing the substitute Form W-9 included herewith. The amount of any backup withholding from a payment to a United States Holder will be allowed as a credit against such holder's United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. SOURCE AND AMOUNT OF FUNDS Assuming that CSW purchases all outstanding Shares pursuant to the Offer, the total amount required by CSW to purchase such Shares will be approximately $[ ] million, exclusive of the accrued and unpaid dividends payments, but including fees and other expenses. CSW intends to fund the Offer through the use of its general funds (which, in the ordinary course, include funds from SWEPCO) and funds borrowed pursuant to CSW's commercial paper program. CSW sells commercial paper directly to commercial paper dealers who reoffer the commercial paper to investors. At December 31, 1996, CSW had two credit facilities in place aggregating $1.2 billion to back up the commercial paper program. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES Each of CSW and SWEPCO has been advised by its directors and executive officers that no directors or executive officers of the respective companies own any Shares. Based upon the companies' records and upon information provided to each company by its directors and executive officers, neither company nor, to the knowledge of either company, any of their subsidiaries, directors, or executive officers has engaged in any transactions involving Shares during the 40 business days preceding the date hereof. Neither company nor, to the knowledge of either company, any of its directors or executive officers is a party to any contract, arrangement, understanding or relationship relating directly or indirectly to the Offer with any other person with respect to any securities of SWEPCO. FEES AND EXPENSES ASSOCIATED WITH THE OFFER DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the Dealer Managers a combined fee of $0.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer. Each Dealer Manager will also be reimbursed by CSW for its reasonable out-of pocket expenses, including attorneys' fees, and will be indemnified against certain liabilities, including certain liabilities under the 22 federal securities laws, in connection with the Offer. Each Dealer Manager has rendered, is currently rendering and is expected to continue to render various investment banking services to CSW and SWEPCO. Each Dealer Manager has received, and will continue to receive, customary compensation from the companies for such services. CSW has retained The Bank of New York as Depositary and D.F. King & Co., Inc. as Information Agent in connection with the Offer. The Depositary and Information Agent will receive reasonable and customary compensation for their services and will also be reimbursed for certain out-of-pocket expenses. CSW has agreed to indemnify the Depositary and Information Agent against certain liabilities, including certain liabilities under the federal securities law, in connection with the Offer. Neither the Depositary nor the Information Agent has been retained to make solicitations or recommendations in connection with the Offer. SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered and accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of Transmittal and Proxy which designates, as having solicited and obtained the tender, the name of (i) any broker or dealer in securities, including the Dealer Managers in their capacity as a broker or dealer, who is a member of any national securities exchange or of the NASD, (ii) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be payable to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealers' own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be an agent of CSW, the Depositary, the Information Agent or the Dealer Managers for the purposes of the Offer. STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any, payable on account of the acquisition of Shares by CSW pursuant to the Offer, except in certain circumstances where special payment or delivery procedures are utilized pursuant to Instruction 6 of the accompanying Letter of Transmittal and Proxy. CERTAIN INFORMATION REGARDING CSW AND SWEPCO SWEPCO is an operating utility primarily engaged in the generation, purchase, transmission, distribution and sale of electric power to approximately 414,000 retail customers in portions of northeastern Texas, northwestern Louisiana and western Arkansas. All of the common stock of SWEPCO is owned, directly or indirectly, by CSW, a registered holding company under the 1935 Act. SWEPCO, and SWEPCO Capital I and SWEPCO Capital II, each a statutory business trust formed under the laws of the State of Delaware, have filed a registration statement on Form S-3 (the "Registration Statement") with the SEC with respect to the proposed offering from time to time of up to $110,000,000 aggregate liquidation preference of Trust Preferred Securities, guaranteed by SWEPCO to the extent set forth in the Registration Statement (the "Trust Preferred Securities"). Following the announcement of the Offer, and subject to market and other conditions, SWEPCO intends that such trusts will effect one or more public offerings of Trust Preferred Securities. Any such offering would be made only by means of a prospectus which is included in the Registration Statement. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION Set forth below is certain consolidated historical financial information of SWEPCO. The historical financial information (other than the ratios of earnings to fixed charges) was derived from the audited consolidated financial statements included in SWEPCO's Annual Report on Form 10-K for the year 23 ended December 31, 1996, which statements are hereby incorporated by reference. More comprehensive financial information is included in such reports and the financial information which follows is qualified in its entirety by reference to such reports and all of the financial statements and related notes contained therein, copies of which may be obtained as set forth herein. CONDENSED INCOME STATEMENT DATA:
YEAR ENDED DECEMBER 31, ------------------------------------- 1996 1995 1994 ----------- ----------- ----------- (THOUSANDS, EXCEPT RATIOS) Operating Revenues....................................................... $ 920,786 $ 836,705 $ 825,296 Operating Income......................................................... 138,083 162,776 145,922 Allowance for Equity Funds Used During Construction...................... 325 4,290 3,579 Net Income............................................................... 66,556 117,114 105,712 Preferred Dividend Requirement........................................... 3,053 3,244 3,361 Net Income Applicable to Common Stock.................................... 63,503 113,870 102,351 Ratio of Earnings to Fixed Charges....................................... 2.81 3.80 3.70
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
DECEMBER 31, ------------------------------------------- 1996 1995 1994 ------------- ------------- ------------- (THOUSANDS, EXCEPT RATIOS) ASSETS: Net Utility Plant................................................... $ 1,851,958 $ 1,879,656 $ 1,856,558 Cash and Temporary Cash Investments................................. 1,879 1,702 1,296 Other Current Assets................................................ 175,799 176,746 163,817 Other Assets........................................................ 69,520 58,615 57,536 ------------- ------------- ------------- $ 2,099,156 $ 2,116,719 $ 2,079,207 ------------- ------------- ------------- ------------- ------------- ------------- LIABILITIES: Common Equity....................................................... $ 702,461 $ 682,994 $ 678,122 Cumulative Preferred Stock.......................................... 48,496 49,660 50,860 Long-term Debt...................................................... 597,151 598,951 595,833 Current Liabilities................................................. 260,920 287,155 251,457 Other Liabilities................................................... 490,128 497,959 502,935 ------------- ------------- ------------- $ 2,099,156 $ 2,116,719 $ 2,079,207 ------------- ------------- ------------- ------------- ------------- -------------
ADDITIONAL INFORMATION REGARDING CSW CSW is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the SEC. CSW is required to disclose in such proxy statements certain information, as of particular dates, concerning its directors and officers, their remuneration, stock options granted to them, the principal holders of its securities and any material interest of such persons in transactions with CSW. In connection with the Offer, CSW has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes certain additional information relating to the Offer. Such material can be inspected and copied at the public reference facilities of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a Web site at 24 http://www.sec.gov containing reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including CSW and SWEPCO. CSW's Schedule 13E-4 will not be available at the SEC's regional offices. MISCELLANEOUS The Offer is not being made to, nor will CSW accept tenders from, owners of Shares in any jurisdiction in which the Offer or its acceptance would not be in compliance with the laws of such jurisdiction. CSW is not aware of any jurisdiction where the making of the Offer or the tender of Shares would not be in compliance with applicable law. If CSW becomes aware of any jurisdiction where the making of the Offer or the tender of Shares is not in compliance with any applicable law, CSW will make a good faith effort to comply with such law. If, after such good faith effort, CSW cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the owners of Shares residing in such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. CENTRAL AND SOUTH WEST CORPORATION SOUTHWESTERN ELECTRIC POWER COMPANY 25 Facsimile copies of the Letter of Transmittal and Proxy will only be accepted from Eligible Institutions. The Letter of Transmittal and Proxy and, if applicable, certificates for Shares should be sent or delivered by each tendering or voting Preferred Shareholder of SWEPCO or his or her broker, dealer, bank or trust company to the Depositary at one of its addresses set forth below. The Depositary is: THE BANK OF NEW YORK FACSIMILE TRANSMISSION: (FOR ELIGIBLE INSTITUTIONS BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department (212) 815-6213 Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286 FOR INFORMATION, TELEPHONE: (800) 507-9357
Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and addresses listed below. Requests for additional copies of this Offer to Purchase and Proxy Statement, the Letter of Transmittal and Proxy or other tender offer or proxy materials may be directed to the Information Agent or the Dealer Managers, and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) The Dealer Managers: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Paul S. Galant
26 EX-2.(B) 3 OFFER TO PURCHASE PSO OFFER TO PURCHASE AND PROXY STATEMENT CENTRAL AND SOUTH WEST CORPORATION OFFER TO PURCHASE FOR CASH ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF CUMULATIVE PREFERRED STOCK OF PUBLIC SERVICE COMPANY OF OKLAHOMA 100,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.24% SERIES AT A PURCHASE PRICE OF $ PER SHARE 97,900 SHARES, CUMULATIVE PREFERRED STOCK, 4.00% SERIES AT A PURCHASE PRICE OF $ PER SHARE ------------------------------ PUBLIC SERVICE COMPANY OF OKLAHOMA PROXY STATEMENT WITH RESPECT TO ITS COMMON STOCK AND CUMULATIVE PREFERRED STOCK ------------------------------ THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , 1997, UNLESS THE OFFER IS EXTENDED. Central and South West Corporation, a Delaware corporation ("CSW"), invites the holders of each series of cumulative preferred stock listed above (each a "Series of Preferred," and the holder thereof a "Preferred Shareholder") of Public Service Company of Oklahoma, an Oklahoma corporation and wholly-owned utility subsidiary of CSW ("PSO"), to tender any and all of their shares of a Series of Preferred ("Shares") for purchase at the purchase price per Share listed above for the Shares tendered, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and Proxy Statement and in the accompanying Letter of Transmittal and Proxy (the "Proxy") (which together constitute the "Offer"). CSW will purchase all Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period; Termination; Amendments." THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE (AS HEREINAFTER DEFINED)) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED BELOW. THE OFFER IS ALSO CONDITIONED UPON THE APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED (THE "1935 ACT"). THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE (AS HEREINAFTER DEFINED) MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES OF PREFERRED WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER. SEE "TERMS OF THE OFFER--PROCEDURE FOR TENDERING SHARES." FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT (AS HEREINAFTER DEFINED) OR THE DEALER MANAGERS (AS HEREINAFTER DEFINED) OR CONSULT YOUR BROKER FOR ASSISTANCE. Concurrently with the Offer, the Board of Directors of PSO is soliciting proxies for use at the Special Meeting of Shareholders of PSO to be held at PSO's principal office, 212 East Sixth Street, Tulsa, Okahoma 74119-1212 on , 1997, or any adjournment or postponement of such meeting (the "Special Meeting"). The Special Meeting is being held to consider an amendment (the "Proposed Amendment") to PSO's Restated Certificate of Incorporation (the "Articles") which would remove a provision of the Articles that limits PSO's ability to issue unsecured debt. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, PSO WILL MAKE A SPECIAL CASH PAYMENT IN THE AMOUNT OF $1.00 PER SHARE (THE "CASH PAYMENT") TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT BUT WHO DID NOT TENDER HIS OR HER SHARES. THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ABOVE BUT NOT THE CASH PAYMENT. IMPORTANT Any Preferred Shareholder desiring to accept the Offer and tender all or any portion of his or her Shares should, in addition to voting in favor of the Proposed Amendment either by executing and returning the enclosed Proxy or by voting in person by ballot at the Special Meeting, either (i) if not the record holder, request his or her broker, dealer, commercial bank, trust company or nominee to effect the transaction for him or her, or (ii) if the record holder, complete and sign the Letter of Transmittal and Proxy or facsimile thereof, in accordance with the instructions in the Letter of Transmittal and Proxy, mail or deliver it and any other required documents to The Bank of New York (the "Depositary"), and deliver the certificates for such Shares to the Depositary, along with the Letter of Transmittal and Proxy, or tender such Shares pursuant to the procedure for book-entry transfer set forth below under "Terms of the Offer--Procedure for Tendering Shares," prior to the Expiration Date (as defined below). A Preferred Shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or nominee must contact such broker, dealer, commercial bank, trust company or nominee if he or she desires to tender such Shares. Any Preferred Shareholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply in a timely manner with the procedure for book-entry transfer, should tender such Shares by following the procedures for guaranteed delivery set forth below under "Terms of the Offer--Procedure for Tendering Shares." EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY FOR SUCH SERIES OF PREFERRED OR A NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE USED TO TENDER SHARES OF SUCH SERIES OF PREFERRED A LETTER OF TRANSMITTAL AND PROXY MAY BE USED TO VOTE IN FAVOR OF THE PROPOSED AMENDMENT EVEN IF NO SHARES ARE BEING TENDERED. ------------------------------ THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------------------------ NEITHER CSW, PSO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. ------------------------------ This Offer to Purchase and Proxy Statement and the accompanying proxy are first being mailed to Preferred Shareholders on or about March , 1997 to Preferred Shareholders of record on March , 1997. ------------------------------ Each Series of Preferred is traded in the over-the-counter market (the "OTC") and is not listed on any national securities exchange. On , 1997, the last reported sale prices and dates of sale as reported by the National Quotation Bureau, Inc. were $ for the 4.24% Series of Preferred (on , 1997) and $ for the 4.00% Series of Preferred (on , 1997). Preferred Shareholders are urged to obtain a current market quotation, if available, for the Shares. On , 1997, there were issued and outstanding 100,000 Shares of the 4.24% Series of Preferred and 97,900 Shares of the 4.00% Series of Preferred. ------------------------------ Questions or requests for assistance or for additional copies of this Offer to Purchase and Proxy Statement, the Letter of Transmittal and Proxy for a Series of Preferred, or other tender offer or proxy solicitation materials may be directed to D.F. King & Co., Inc. (the "Information Agent") or Goldman, Sachs & Co. and Smith Barney Inc. (the "Dealer Managers") at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase and Proxy Statement. ------------------------------ THE DEALER MANAGERS FOR THE OFFER ARE: GOLDMAN, SACHS & CO. SMITH BARNEY INC. ------------------ The date of this Offer to Purchase and Proxy Statement is , 1997. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR PSO AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CSW, PSO OR BY THE DEALER MANAGERS. TABLE OF CONTENTS
PAGE ----- SUMMARY.................................................................................................... 1 TERMS OF THE OFFER......................................................................................... 4 Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 4 Procedure for Tendering Shares........................................................................... 5 Withdrawal Rights........................................................................................ 7 Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 8 Certain Conditions of the Offer.......................................................................... 9 Extension of Tender Period; Termination; Amendments...................................................... 11 PROPOSED AMENDMENT AND PROXY SOLICITATION.................................................................. 11 Introduction............................................................................................. 11 Voting Securities, Rights And Procedures................................................................. 12 Proxies.................................................................................................. 13 Cash Payments............................................................................................ 14 Security Ownership of Certain Beneficial Owners and Management........................................... 14 Business to Come Before the Special Meeting.............................................................. 14 Explanation of the Proposed Amendment.................................................................... 15 Reasons for the Proposed Amendment....................................................................... 15 Financial and Other Information Relating to PSO.......................................................... 17 Relationship with Independent Public Accountants......................................................... 17 PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 17 PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 18 CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 20 SOURCE AND AMOUNT OF FUNDS................................................................................. 21 TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 21 FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 22 CERTAIN INFORMATION REGARDING CSW AND PSO.................................................................. 22 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 23 ADDITIONAL INFORMATION REGARDING CSW....................................................................... 24 MISCELLANEOUS.............................................................................................. 24
i SUMMARY THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN THIS OFFER TO PURCHASE AND PROXY STATEMENT. The Companies................ CSW is a Dallas-based public utility holding company registered under the 1935 Act. Through its four electric operating subsidiaries, PSO, Central Power and Light Company, Southwestern Electric Power Company and West Texas Utilities Company (collectively, the "Electric Operating Companies"), CSW serves approximately 152,000 square miles in portions of Texas, Oklahoma, Louisiana and Arkansas. CSW owns SEEBOARD plc, a regional electricity company in the southeast of the United Kingdom. CSW also engages through other subsidiaries in the following energy-related busi- nesses: (i) CSW Energy, Inc. develops, owns and operates non-utility power projects in the United States; (ii) CSW International, Inc. participates in power generation, transmission and distribution projects outside the United States; (iii) CSW Communications, Inc. provides communications services, including enhancement of services through fiber optic and other telecommunications technolo- gies, to CSW and its subsidiaries and to third parties; (iv) CSW Credit, Inc. purchases, without recourse, the accounts receivables of the Electric Operating Companies and non-affiliated utilities; and (v) EnerShop Inc. was recently formed to provide commercial, industrial, institutional and governmental customers with energy management services designed to control costs, enhance productivity and improve convenience, safety and comfort. The Shares................... PSO 4.24% Cumulative Preferred Stock ($100 par value) PSO 4.00% Cumulative Preferred Stock ($100 par value) The Offer.................... Offer to purchase any or all shares of each Series of Preferred at the price per Share set forth below. Purchase Price............... $ per 4.24% Share $ per 4.00% Share Independent Offer............ The Offer for one Series of Preferred is independent of the Offer for any other series of Preferred. The Offer is not conditioned upon any minimum number of Shares of the applicable Series of Preferred being tendered, but is conditioned upon the Proposed Amendment being approved and adopted at the Special Meeting. The Offer is subject to certain other conditions described herein. SEC Approval................. The Offer is conditioned, among other things, upon the approval of the SEC under the 1935 Act. Expiration Date of the Offer...................... The Offer expires at 5:00 p.m., central time, , 1997, unless extended (the "Expiration Date").
1 How to Tender Shares......... Preferred Shareholders (including Preferred Shareholders who acquire Shares subsequent to the Record Date) who wish to tender their Shares must vote in favor of the Proposed Amendment. Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender their Shares must arrange with their seller to receive an assignment of proxy from the holder of record on the Record Date. In order to facilitate receipt of Proxies, Shares shall, during the period which commenced March , 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired Shares in the Proxy Solicitation. Settlement of all trades during the period described above should include an assignment of proxy from the seller. See "Terms of the Offer--Procedure for Tendering Shares." For further information, call the Information Agent or the Dealer Managers or consult your broker for assistance. Withdrawal Rights............ Tendered Shares of any Series of Preferred may be withdrawn at any time until the Expiration Date with respect to such Series of Preferred and, unless theretofore accepted for payment, may also be withdrawn after , 1997. See "Terms of the Offer--Withdrawal Rights". The proxy accompanying any tendered Shares that are withdrawn will not be considered revoked unless the Preferred Shareholder specifically revokes such proxy as described herein. See "Proposed Amendment and Proxy Solicitation--Proxies." Purpose of the Offer......... CSW is making the Offer because it believes that the purchase of Shares is attractive to CSW, its shareholders and PSO. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium over the market price and without the usual transaction costs associated with a market sale. See "Purpose of the Offer; Certain Effects of the Offer." Dividends.................... A regular quarterly dividend has been declared on each Series of Preferred, payable on April 1, 1997 to the owners of record on March 15, 1997 (the "April 1997 Dividend"). A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on Shares held of record on March 15, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). Brokerage Commissions........ Not payable by Preferred Shareholders. Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to
2 any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. Proposed Amendment........... Concurrently with the Offer, the Board of Directors of PSO is soliciting proxies for use at the Special Meeting of Shareholders of PSO. The Special Meeting is being held to consider an amendment to PSO's Articles which would remove a provision that limits PSO's ability to issue unsecured debt. Record Date.................. March , 1997 Special Cash Payment......... Preferred Shareholders have the right to vote for the Proposed Amendment regardless of whether they tender their Shares. If the Proposed Amendment is approved and adopted by PSO's shareholders, PSO will make a special cash payment of $1.00 per Share to each Preferred Shareholder who voted in favor of the Proposed Amendment, provided that such Shares have not been tendered pursuant to the Offer. Preferred Shareholders who validly tender their Shares will be entitled only to the purchase price per share listed on the front cover of this Offer to Purchase and Proxy Statement and not any Cash Payment. Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. See Instruction 6 of the applicable Letter of Transmittal and Proxy. See "Terms of the Offer--Acceptance of Shares for Payment of Purchase Price and Dividends." Payment Date................. Promptly after the Expiration Date. Further Information.......... Additional copies of this Offer to Purchase and Proxy Statement and the applicable Letter of Transmittal and Proxy may be obtained by D.F. King & Co., Inc., 77 Water Street, New York, New York 10005, telephone (800) 755-3107 (toll-free) and (212) 269-5550 (brokers and dealers). Questions about the Offer should be directed to Goldman, Sachs & Co. (800) 828-3182 or Smith Barney Inc. at (800) 655-4811.
3 TERMS OF THE OFFER NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS Upon the terms and subject to the conditions described herein and in the applicable Letter of Transmittal and Proxy, CSW will purchase any and all Shares that are validly tendered on or prior to the applicable Expiration Date (and not properly withdrawn in accordance with "Terms of the Offer-- Withdrawal Rights") at the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement for the Shares tendered, net to the seller in cash. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period; Termination." THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS CONDITIONED ON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED HEREIN. THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." The Offer is being sent to all persons in whose names Shares are registered on the books of PSO on the Record Date. Preferred purchase or whose purchase is registered after the Record Date and who wish to tender in the Offer must arrange with their seller to receive a Proxy from the holder of record on the Record Date. In order to facilitate receipt of Proxies, Shares shall, during the period which commenced [ ], 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date, trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired Shares in the proxy solicitation. No record date is fixed for determining which persons are permitted to tender Shares. However, only the holders of record, or holders who acquire an assignment of proxy from such holders, are permitted to vote for the Proposed Amendment and thereby validly tender Shares pursuant to the Offer. As such, any person who is the beneficial owner but not the record holder of the Shares must (i) arrange for the record transfer of Shares prior to tendering or (ii) direct such record holder to tender the Shares and vote in favor of the Proposed Amendment on behalf of such beneficial owner. With respect to each Series of Preferred, the Expiration Date is the later of 5:00 p.m., central time, on , , 1997 or the latest time and date to which the Offer with respect to such Series of Preferred is extended. CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer for any Series of Preferred is open, by giving oral or written notice of such extension to the Depositary, without extending the period of time during which the Offer for any other Series of Preferred is open. There is no assurance whatsoever that CSW will exercise its right to extend the Offer for any Series of Preferred. If CSW decides, in its sole discretion, to decrease the number of Shares of any Series of Preferred being sought or to increase or decrease the consideration offered in the Offer to holders of any Series of Preferred and, at the time that notice of such increase or decrease is first published, sent or given to holders of such Series of Preferred in the manner specified herein, the Offer for such Series of Preferred is scheduled to expire at any time earlier than the tenth business day from the date that such notice is first so published, sent or given, such Offer will be extended until the expiration of such ten-business-day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, eastern standard time. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED AND NO TENDERS WILL BE ACCEPTED IN RESPECT OF SHARES FOR WHICH A VOTE IN FAVOR OF THE 4 PROPOSED AMENDMENT HAS NOT BEEN CAST AT THE SPECIAL MEETING. SUCH VOTE MAY BE CAST BY PROPERLY COMPLETING THE FORM OF PROXY THAT IS A PART OF THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON BY BALLOT AT THE SPECIAL MEETING. The April 1997 Dividend has been declared on each Series of Preferred, payable April 1, 1997 to owners of record on March 15, 1997. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on shares held of record on March 15, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). PROCEDURE FOR TENDERING SHARES IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES OF PREFERRED WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER. The Shares are trading, during the period which began two days prior to the Record Date and which will end at the close of business on the Expiration Date, in the over-the-counter market under the symbol " ", indicating that such shares are trading "with proxy." A Preferred Shareholder who acquires Shares during this period must obtain, or have its authorized representative obtain, an assignment of proxy (which is included in the applicable Letter of Transmittal) at settlement from the seller. The National Association of Securities Dealers, Inc. (the "NASD") and The Depository Trust Company have issued notices informing their members and participants that the Shares are trading "with proxy" and that settlement of all trades during the period described above should include an assignment of proxy from the seller. FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT OR THE DEALER MANAGERS OR CONSULT YOUR BROKER FOR ASSISTANCE. Further, to tender Shares pursuant to the Offer, the tendering owner of Shares must either: (a) send to the Depositary (at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement) a properly completed and duly executed Letter of Transmittal and Proxy or facsimile thereof which will either deliver such owner's proxy or indicate such owner's intention to vote at the Special Meeting in person by ballot), together with any required signature guarantees and any other documents required by the Letter of Transmittal and Proxy and either (i) certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer described herein (and a confirmation of such delivery must be received by the Depositary), in each case by the Expiration Date; or (b) comply with the guaranteed delivery procedure described under "Guaranteed Delivery Procedure" below. The Depositary will establish an account with respect to the Shares at DTC and the Philadelphia Depository Trust Company (collectively referred to as the "Book-Entry Transfer Facilities") for purposes 5 of the Offer within two business days after the date of this Offer to Purchase and Proxy Statement and any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of such Book-Entry Transfer Facility. Although delivery of Shares may be effected through book-entry transfer, such delivery must be accompanied by either (i) a properly completed and duly executed Letter of Transmittal and Proxy or facsimile thereof, together with any required signature guarantees and any other required documents or (ii) an Agent's Message (as hereinafter defined) and, in any case, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement at or prior to 5:00 p.m., central time, on the Expiration Date. The term "Agent's Message" means a message, transmitted by one of the Book-Entry Transfer Facilities, received by the Depositary and forming a part of the book-entry transfer when a tender is initiated, which states that the Book-Entry Transfer Facility has received an express acknowledgment from a participant tendering Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that CSW may enforce such agreement against such participant. Except as otherwise provided below, all signatures on a Letter of Transmittal and Proxy must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States that is a participant in an approved Signature Guarantee Medallion Program (each of the foregoing being referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is signed by the holder of record of the shares tendered therewith and such owner has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy, (b) such Shares are tendered for the account of an Eligible Institution or (c) such Letter of Transmittal and Proxy is being used solely for the purpose of voting Shares which are not being tendered pursuant to the Offer. See Instructions 1 and 5 of the Letter of Transmittal and Proxy. GUARANTEED DELIVERY PROCEDURE. If a Preferred Shareholder desires to tender Shares pursuant to the Offer and such Preferred Shareholder's certificates are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are complied with: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery and Proxy, substantially in the form provided by CSW and PSO herewith, is received (with any required signature guarantees) by the Depositary as provided below at or prior to 5:00 p.m., central time, on the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer or a Book-Entry Confirmation with respect to all tendered Shares, together with a properly completed and duly executed Letter of Transmittal and Proxy (or a manually signed facsimile thereof) and any other documents required by the Letter of Transmittal and Proxy, are received by the Depositary no later than 5:00 p.m., central time, within three business days after the date of execution of such Notice of Guaranteed Delivery and Proxy. THE NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE DELIVERED BY HAND OR TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF GUARANTEED DELIVERY AND PROXY. 6 In all cases, Shares shall not be deemed validly tendered unless a properly completed and duly executed Letter of Transmittal and Proxy (or a manually signed facsimile thereof) is received by the Depositary within the applicable time limits and a vote in favor of the Proposed Amendment in respect of such Shares has been cast at the Special Meeting either in person or by completion and execution of the proxy (which proxy must be the form of proxy that is a part of the applicable Letter of Transmittal and Proxy). Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer in all cases will be made only after timely receipt by the Depositary of certificates for (or an Agent's Message with respect to) such Shares, a Letter of Transmittal and Proxy or a manually signed facsimile thereof, properly completed and duly executed, with any required signature guarantees and all other documents required by the Letter of Transmittal and Proxy. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE ALLOWED FOR DELIVERY. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER OR, ALTERNATIVELY, THE CASH PAYMENTS, EACH TENDERING UNITED STATES PREFERRED SHAREHOLDER OR A NON-TENDERING UNITED STATES PREFERRED SHAREHOLDER WHO VOTES FOR THE PROPOSED AMENDMENT MUST NOTIFY THE DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND PROXY. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES." EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER. All questions as to the form of documents and the validity, eligibility (including the time of receipt) and acceptance for payment of any tender of Shares will be determined by CSW, in its sole discretion, and its determination will be final and binding. CSW reserves the absolute right to reject any or all tenders of Shares that (i) it determines are not in proper form or (ii) the acceptance for payment of or payment for which may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any defect or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notice of any defect or irregularity in tenders, nor shall any of them incur any liability for failure to give any such notice. WITHDRAWAL RIGHTS ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after , 1997, unless theretofore accepted for payment as provided in this Offer to Purchase and Proxy Statement. If, with respect to any Series of Preferred, CSW extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares of that Series of Preferred or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to 7 CSW's rights under the Offer, the Depositary may, on behalf of CSW, retain all Shares of that Series of Preferred tendered, and such Shares may not be withdrawn except as otherwise provided in this "Terms of the Offer--Withdrawal Rights," subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that an issuer making a tender offer shall either pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the tender offer. The proxy accompanying any tendered Shares that are withdrawn will not be considered revoked unless the Preferred Shareholder specifically revokes such proxy as described herein. See "Proposed Amendment and Proxy Solicitation-Proxies." To be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary, at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement, and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with signatures guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered owner (if different from that of the tendering Preferred Shareholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book-Entry Transfer Facilities to be credited with the withdrawn Shares and the name of the registered holder (if different from the name of such account). Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in "Terms of the Offer--Procedure for Tendering Shares" at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by CSW, in its sole discretion, and its determination will be final and binding. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or will incur any liability for failure to give any such notification. ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS Upon the terms and subject to the conditions of the Offer, and as promptly as practicable after the Special Meeting, CSW will accept for payment (and thereby purchase) and pay for Shares validly tendered and not withdrawn as permitted in "Terms of the Offer--Withdrawal Rights." In all cases, payment for Shares accepted for payment pursuant to the Offer will be made promptly but only after timely receipt by the Depositary of certificates for such Shares (or of an Agent's Message), a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other required documents. For purposes of the Offer, CSW will be deemed to have accepted for payment (and thereby purchased) Shares that are validly tendered and not withdrawn as, if and when it gives oral or written notice to the Depositary of its acceptance for payment of such Shares. CSW will pay for Shares that it has purchased pursuant to the Offer by depositing the purchase price therefor with the Depositary, which will act as agent for tendering Preferred Shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering Preferred Shareholders. Under no circumstances will interest be paid on amounts to be paid to tendering Preferred Shareholders, regardless of any delay in making such payment. 8 Certificates for all Shares not validly tendered will be returned or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained with a Book-Entry Transfer Facility, as promptly as practicable, without expense to the tendering Preferred Shareholder. Payment for shares may be delayed in the event of difficulty in determining the number of shares properly tendered. In addition, if certain events occur (including the Proposed Amendment not being approved and adopted at the Special Meeting), CSW may not be obligated to purchase Shares pursuant to the Offer. See "Terms of the Offer--Certain Conditions of the Offer." CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to any person other than the registered owner, or if tendered Shares are registered in the name of any person other than the person signing the Letter of Transmittal and Proxy, the amount of any stock transfer taxes (whether imposed on the registered owner, such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See Instruction 6 of the applicable Letter of Transmittal and Proxy. CERTAIN CONDITIONS OF THE OFFER CSW WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL MEETING. IN ORDER TO TENDER THEIR SHARES, PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER. PREFERRED SHAREHOLDERS WHO TENDER THEIR SHARES WILL ONLY BE ENTITLED TO THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. Notwithstanding any other provision of the Offer, CSW will not be required to accept for payment or pay for any Shares tendered, and may terminate or amend the Offer or may postpone (subject to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of Shares) the acceptance for payment of, or payment for, Shares tendered, if at any time after , 1997, and at or before acceptance for payment of or payment for any Shares, any of the following shall have occurred: (a) there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic or foreign, or before any court, authority, agency or tribunal that (i) challenges the acquisition of Shares pursuant to the Offer or otherwise in any manner relates to or affects the Offer or (ii) in the sole judgment of CSW, could materially and adversely affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of PSO individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries or materially impair the Offer's contemplated benefits to CSW; 9 (b) there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or CSW or any of its subsidiaries, by any legislative body, court, authority, agency or tribunal that, in CSW's sole judgment, would or might directly or indirectly (i) make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer, (ii) delay or restrict the ability of CSW, or render CSW unable, to accept for payment or pay for some or all of the Shares, (iii) materially impair the contemplated benefits of the Offer to CSW or (iv) materially affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of PSO individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries; (c) there shall have occurred (i) any significant decrease in the market price of the Shares or any change in the general political, market, economic or financial conditions in the United States or abroad that could have a material adverse effect on CSW's business, operations, prospects or ability to obtain financing generally or the trading in the other equity securities of CSW, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation on, or any event that, in CSW's sole judgment, might affect the extension of credit by lending institutions in the United States, (iii) the commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (v) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof or (vi) any decline in either the Dow Jones Industrial Average or the Standard and Poor's Composite 500 Stock Index by an amount in excess of 15% measured from the close of business on , 1997; (d) any tender or exchange offer with respect to some or all of the Shares (other than the Offer), or a merger, acquisition or other business combination proposal for CSW, shall have been proposed, announced or made by any person or entity; (e) there shall have occurred any event or events that have resulted, or may in the sole judgment of CSW result, in an actual or threatened change in the business, condition (financial or otherwise), income, operations, stock ownership or prospects of CSW and its subsidiaries; or (f) the SEC shall have withheld approval, under the 1935 Act, of the acquisition of the Shares by CSW pursuant to the Offer or the approval and adoption of the Proposed Amendment at the Special Meeting; and, in the sole judgment of CSW, such event or events make it undesirable or inadvisable to proceed with the Offer or with such acceptance for payment or payment. With respect to the approval of the SEC referenced in clause (f) above, the SEC must find, among other things, that the acquisition of the Shares by CSW is not detrimental to the public interest or the interest of the investors or consumers, and that the consideration paid in connection with the acquisition and the adoption of the Proposed Amendment, including fees, commissions and other remuneration, is reasonable. The foregoing conditions (including the condition that the Proposed Amendment be approved and adopted at the Special Meeting) are for the sole benefit of CSW and may be asserted by CSW regardless of the circumstances (including any action or inaction by CSW) giving rise to any such condition, and any such condition (including the condition related to the requirement that Preferred Shareholders tendering their Shares vote in favor of the Proposed Amendment at the Special Meeting) may be waived by CSW, in whole or in part, at any time and from time to time in its sole discretion. The failure by CSW at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. 10 Any determination by CSW concerning the events described above will be final and binding on all parties. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer for any Series of Preferred is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof, without extending the period of time during which the Offer for any other Series of Preferred is open. There can be no assurance, however, that CSW will exercise its right to extend the Offer for any Series of Preferred. During any such extension, all Shares of the subject Series of Preferred previously tendered will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in "Terms of the Offer--Withdrawal Rights." CSW also expressly reserves the right, in its sole discretion, to terminate the Offer and not accept for payment or pay for any Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act which requires CSW either to pay the consideration offered or to return the Shares tendered promptly after the termination or withdrawal of the Offer, upon the occurrence of any of the conditions specified in "Terms of the Offer--Certain Conditions of the Offer" by giving oral or written notice of such termination to the Depositary, and making a public announcement thereof. Subject to compliance with applicable law, CSW further reserves the right, in its sole discretion, to amend the Offer in any respect. Amendments to the Offer may be made at any time and/or from time to time effected by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., central time, on the next business day after the previously scheduled Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to Preferred Shareholders affected thereby in a manner reasonably designed to inform such Preferred Shareholders of such change. Without limiting the manner in which CSW may choose to make a public announcement, except as required by applicable law, CSW shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If CSW materially changes the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, CSW will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. The SEC has stated that, in its view, an offer should remain open for a minimum of five business days from the date that a notice of such a material change is first published, sent or given. If the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that CSW publishes, sends or gives to Preferred Shareholders a notice that it will (a) increase or decrease the price it will pay for Shares or (b) decrease the percentage of Shares it seeks, the Offer will be extended until the expiration of such period of ten business days. THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. IF CSW EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO ONE SERIES OF PREFERRED FOR ANY REASON, CSW WILL HAVE NO OBLIGATION TO EXTEND THE OFFER FOR ANY OTHER SERIES OF PREFERRED. PROPOSED AMENDMENT AND PROXY SOLICITATION INTRODUCTION This Offer to Purchase and Proxy Statement is first being mailed on or about , 1997 to the shareholders of PSO in connection with the solicitation of proxies by the Board of Directors (the 11 "Board") of PSO for use at the Special Meeting. At the Special Meeting, the shareholders of PSO will vote upon the Proposed Amendment to the Articles. Preferred Shareholders who wish to tender their Shares pursuant to the Offer must vote in favor of the Proposed Amendment in person by ballot or by proxy at the Special Meeting. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. The Offer is conditional upon the Proposed Amendment being approved and adopted at the Special Meeting. If the Proposed Amendment is approved and adopted by PSO's shareholders, PSO will make a special cash payment in the amount of $1.00 per Share to each Preferred Shareholder who voted in favor of the Proposed Amendment, provided that such Shares have not been tendered pursuant to the Offer. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT (REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED). Those Preferred Shareholders who validly tender their Shares will be entitled only to the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement but not the Cash Payment. VOTING SECURITIES, RIGHTS AND PROCEDURES Only holders of record of PSO's voting securities at the close of business on the Record Date or persons obtaining a proxy from the holders of record on the Record Date will be entitled to vote in person or by proxy at the Special Meeting. The outstanding voting securities of PSO for purposes of voting on the Proposed Amendment are divided into two classes: common stock and cumulative preferred stock. The class of cumulative preferred stock has been issued in two Series of Preferred with the record holders of all Shares of the cumulative preferred stock voting together as one class. The shares outstanding on the date of the Special Meeting, and the vote to which each share is entitled in consideration of the Proposed Amendment, are as follows:
CLASS SHARES OUTSTANDING VOTES PER SHARE - -------------------------------------------------------------------------- ------------------- ----------------- Common Stock (Par Value $15 per share).................................... 9,013,000 1 vote Cumulative Preferred Stock (Par Value $100 per Share)..................... 197,900 1 vote
The affirmative vote of the holders of two-thirds of the outstanding shares of each of PSO's (i) common stock and (ii) cumulative preferred stock, all series of the cumulative preferred stock voting together as one class, is required to approve the Proposed Amendment to be presented at the Special Meeting. Abstentions and broker non-votes will have the effect of votes against the Proposed Amendment. CSW HAS ADVISED PSO THAT IT INTENDS TO VOTE ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF PSO IN FAVOR OF THE PROPOSED AMENDMENT. Votes at the Special Meeting will be tabulated preliminarily by Central and South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of Election, duly appointed by the presiding officer of the Special Meeting, will definitively count and tabulate the votes and determine and announce the results at the meeting. PSO has no established procedure for confidential voting. There are no rights of appraisal in connection with the Proposed Amendment. PROXIES THE ENCLOSED PROXY, WHICH IS CONTAINED WITHIN THE LETTER OF TRANSMITTAL AND PROXY (AND THE NOTICE OF GUARANTEED DELIVERY AND PROXY), IS SOLICITED BY PSO'S BOARD, WHICH RECOMMENDS VOTING FOR THE PROPOSED AMENDMENT. ALL SHARES OF PSO'S COMMON STOCK WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF PSO'S BOARD. Preferred Shareholders tendering their Shares pursuant to the Offer and voting at the Special Meeting by proxy must use the proxy that is a part of the applicable Letter of Transmittal and Proxy. Shares of PSO's cumulative preferred stock represented by properly executed proxies received at or prior to the Special Meeting will be voted in accordance with the 12 instructions thereon. If no instructions are indicated, duly executed proxies will be voted in accordance with the recommendation of the Board. It is not anticipated that any other matters will be brought before the Special Meeting. However, the proxy that is a part of each Letter of Transmittal and Proxy gives discretionary authority to the proxy holders named therein should any other matters be presented at the Special Meeting, and it is the intention of the proxy holders to act on any other matters in accordance with their best judgment. Execution of a proxy will not prevent a Preferred Shareholder from attending the Special Meeting and voting in person. Any Preferred Shareholder giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of PSO written notice of revocation bearing a later date than the proxy, by delivering a duly executed proxy bearing a later date, or by voting in person by ballot at the Special Meeting. PSO will bear the cost of the solicitation of proxies by the Board. PSO has engaged D.F. King & Co., Inc. to act as Information Agent in connection with the solicitation of proxies for a fee of $10,000 plus reimbursement of reasonable out-of-pocket expenses. Proxies will be solicited by mail or by telephone. In addition, officers and employees of PSO may also solicit proxies personally or by telephone; such persons will receive no additional compensation for these services. The Information Agent has not been retained to make, and will not make, solicitations or recommendations in connection with the Proposed Amendment. PSO has requested that brokerage houses and other custodians, nominees and fiduciaries forward solicitation materials to the beneficial owners of shares of PSO's cumulative preferred stock held of record by such persons and will reimburse such brokers and other fiduciaries for their reasonable out-of-pocket expenses incurred in connection therewith. An application has been filed with the SEC under the 1935 Act requesting approval of the Proposed Amendment and the acquisition of the Shares by CSW pursuant to the Offer. As such, the adoption of the Proposed Amendment and the purchase of the Shares pursuant to the Offer are subject to the receipt of such approval from the SEC. PSO has received a preliminary order, permitting the solicitation of proxies, from the SEC under the 1935 Act. CASH PAYMENTS Subject to the terms and conditions set forth in this Offer to Purchase and Proxy Statement, if (but only if) the Proposed Amendment is approved and adopted by the shareholders of PSO, PSO will make a Cash Payment to each Preferred Shareholder whose Shares are properly voted in favor of the Proposed Amendment, in person by ballot or by proxy, at the Special Meeting in the amount of $1.00 for each Share held by such Preferred Shareholder which is so voted, provided that such Shares have not been tendered pursuant to the Offer. The Company has been advised that there is uncertainty under state law, due to the lack of controlling precedent, as to the permissibility of making the Cash Payment. While the Company cannot predict how a court would rule on the issue, the Company believes that the Offer is fair to Preferred Shareholders and has determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED SHAREHOLDERS IN RESPECT OF EACH SHARE WHICH IS SO VOTED ONLY IF SUCH SHARES ARE VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT; PROVIDED, HOWEVER, THAT THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. If the Proposed Amendment is approved and adopted, Cash Payments will be paid out of PSO's general funds, promptly after the Proposed Amendment shall have become effective. However, no accrued interest will be paid on the Cash Payment regardless of any delay in making such payment. Only Preferred Shareholders as of the Record Date (or their legal representatives or attorneys-in-fact) are entitled to vote at the Special Meeting and to receive Cash Payments from PSO. Any beneficial holder of Shares who is not the registered holder of such Shares as of the Record Date (as would be the 13 case for any beneficial owner whose Shares are registered in the name of such holder's broker, dealer, commercial bank, trust company or other nominee) must arrange with the record Preferred Shareholder to execute and deliver a Proxy on such beneficial owner's behalf. If a beneficial holder of Shares intends to attend the Special Meeting and vote in person, such beneficial holder must obtain a legal proxy form from his or her broker, dealer, commercial bank, trust company or other nominee. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As noted above, CSW owns all the outstanding common stock of PSO. Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a security is any person who directly or indirectly has or shares voting or investment power over such security. No person or group is known by management of PSO to be the beneficial owner of more than 5% of PSO's class of cumulative preferred stock as of the Record Date. PSO's directors and executive officers do not beneficially own any Shares as of the Record Date. The beneficial ownership of CSW's common stock held by each director, as well as directors and executive officers as a group, as of December 31, 1996, is set forth in the following table. Share amounts shown include options exercisable within 60 days after year-end, restricted stock, shares of CSW common stock credited to CSW Thrift Plus accounts and all other shares of CSW common stock beneficially owned by the listed persons.
AMOUNT AND NATURE NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2) - ---------------------------------------------- ---------------------------------------------- E.R. Brooks................................... 113,690.32 T.D. Churchwell............................... 10,672.35 Glenn Files................................... 33,722.76 All directors and executive officers as a shares group....................................... 188,105.06 (representing .05% of the class)
- ------------------------ (1) No individual listed beneficially owned more than .03% of the outstanding shares of common stock of CSW. (2) Includes shares of restricted stock in the following amounts: E.R. Brooks--17,074, T.D. Churchwell--1,608 and Glenn Files--6,333; and all directors and officers as a group--26,515. Includes shares which there is a right to acquire within 60 days pursuant to the exercise of stock options in the following amounts: E.R. Brooks--54,315; T.D. Churchwell--7,223 and Glen Files-- 19,067; and all directors and executive officers as a group--87,813. BUSINESS TO COME BEFORE THE SPECIAL MEETING The following Proposed Amendment to PSO's Articles is the only item of business expected to be presented at the Special Meeting: To remove in its entirety subparagraph (c) of paragraph 5 of Article VI, limiting PSO's ability to issue unsecured indebtedness. 14 EXPLANATION OF THE PROPOSED AMENDMENT Without the consent of the majority of the holders of PSO's cumulative preferred stock, the Articles currently prohibit the issuance or assumption of any unsecured notes, debentures or other securities representing unsecured indebtedness (other than for the purpose of refunding outstanding unsecured indebtedness resulting in later maturities or for the redemption or retirement of all outstanding shares of preferred stock) if, immediately after such issuance or assumption, (a) the total outstanding principal amount of all securities representing unsecured debt would exceed 20% of the aggregate of (1) the total principal amount of all outstanding secured debt of PSO and (2) the capital and surplus of PSO or (b) the total outstanding principal amount of all securities representing unsecured debt maturing in less than ten years would exceed 10% of such aggregate. The Proposed Amendment, if adopted, would eliminate in its entirety subparagraph (c) of paragraph 5 of Article VI, as set forth below, from the Articles. * * * "(c) issue or assume any unsecured notes, debentures or other securities representing unsecured indebtedness (herein referred to as "unsecured obligations"), for any purpose other than refunding or renewing outstanding unsecured obligations resulting in later maturities or redeeming or otherwise retiring all outstanding shares of the Preferred Stock, if (1) immediately after such issue or assumption the total principal amount of all unsecured obligations issued or assumed by the corporation and then outstanding would exceed 20% of the aggregate of (i) the principal amount of all bonds or other securities representing secured obligations issued or assumed by the corporation and then outstanding and (ii) the total capital stock and surplus of the corporation as then recorded on its books, or (2) immediately after June 30, 1985, the principal amount of all unsecured obligations maturing in less than ten years from that date, other than short-term debt maturing prior to July 1, 1986, issued or assumed by the corporation and then outstanding, computed as herein provided, would exceed 10% of such aggregate. For the purposes of this subparagraph (c), the principal amount of any unsecured obligations which had an original single maturity of more than ten years from the date thereof, and the principal amount of the final maturity of any serially-maturing unsecured obligations which had one or more original maturities of more than ten years from the date thereof, shall not be regarded as unsecured obligations maturing in less than ten years until such principal amount shall be due or required to be paid within three years." REASONS FOR THE PROPOSED AMENDMENT PSO believes that regulatory, legislative and market developments are leading to a more competitive environment in the electric utility industry. As competition intensifies, flexibility and cost structure will be even more crucial to success in the future. Given that the electric and gas industry is extremely capital intensive, controlling and minimizing financing costs are essential ingredients to operating effectively in the new competitive environment. It is, therefore, for those two reasons, flexibility and cost structure, that you are being asked to vote in favor of the Proposed Amendment. PSO believes that adoption of the Proposed Amendment is key to meeting the objectives of flexibility and cost structure. If adopted, the amendment would eliminate the current provision of PSO's Articles that limits the total amount of PSO's unsecured indebtedness to 20% of the total amount of PSO's secured indebtedness, plus capital and surplus, and the amount of short-term unsecured debt to 10% of such total amount. Historically, PSO's debt financing generally has been accomplished through the issuance of long-term first mortgage bonds and a modest amount of unsecured short-term debt. First mortgage bonds represent secured indebtedness because they place a first priority lien on substantially all of PSO's assets. The Indenture dated July 1, 1945, as amended, between SWEPCO and Liberty Bank and Trust Company of Tulsa, National Association, as Trustee, (the "First Mortgage Bond Indenture") contains certain restrictive covenants with respect to, among other things, the disposition of assets and the ability to issue additional first mortgage bonds. Short-term debt, usually the lowest cost 15 debt available to PSO, represents one type of unsecured indebtedness. The Proposed Amendment will not only allow PSO to issue a greater amount of unsecured debt, it will also allow PSO to issue a greater amount of total debt. PSO will consider changing the mix of debt securities toward more issuances on a short-term and unsecured basis. Additionally, PSO may issue certain tax-deductible trust preferred securities which would be classified as unsecured debt under PSO's current Articles. PSO has filed a Registration Statement on Form S-3 with the SEC for the issuance of tax-deductible trust preferred securities. Inasmuch as the 10% and 20% provisions contained in the Articles limit PSO's flexibility in planning and financing its business activities, PSO believes it ultimately will be at a competitive disadvantage if the provision is not eliminated. The industry's new competitors (for example, power marketers, independent power producers and cogenerating facilities) generally are not subject to the type of financing restrictions the Articles impose on PSO. Recently, several other utilities with the same or similar charter restrictions have successfully eliminated such provisions by soliciting their shareholders for the same or similar amendments. Therefore, many potential utility competitors have no comparable provision restricting the use of unsecured debt. While PSO's current low-cost structure has been instrumental in reducing the ability of other competitors to attract PSO's large bulk power customers, PSO must continue to explore new ways of reducing costs and enhancing flexibility. PSO believes that the adoption of the Proposed Amendment will be in the best long-term competitive interests of shareholders by enhancing its ability to meet the two objectives described below. FINANCIAL FLEXIBILITY PSO believes that in the long run, various types of unsecured debt alternatives will increase in importance as an option in financing its construction program and refinancing high-cost mortgage bonds. The availability and flexibility of unsecured debt is necessary to take full advantage of changing conditions in securities markets. PSO presently intends to continue to rely on unsecured debt up to the 10% or 20% maximum amounts currently allowable under the Articles. PSO's earnings currently are sufficient to meet the earnings coverage test contained in its First Mortgage Bond Indenture that must be satisfied in certain instances before issuing additional first mortgage bonds. However, there could be periods, when, because of an inability to meet the Articles test, PSO would be unable to issue any additional preferred stock. An inability to issue preferred stock in the future, combined with the inability to issue additional unsecured debt, would limit PSO's financing options to either additional first mortgage bonds or additional common stock. COST STRUCTURE PSO's use of unsecured short-term debt is subject to the 10% and 20% provisions contained in the Articles. PSO believes that the prudent use of such debt in excess of this provision is vital to effective financial management of the business. Not only is unsecured short-term debt generally the least expensive form of capital, it also provides flexibility in meeting seasonal fluctuations in cash requirements, acts as a bridge between issues of permanent capital and can be used when unfavorable conditions prevail in the market for long-term capital. For purposes of the 10% and 20% provisions, tax-deductible trust preferred securities are considered to be unsecured debt, thus the use of tax-deductible trust preferred securities is limited by the 10% and 20% provisions. Tax deductible trust preferred securities have a much lower after-tax cost than traditional perpetual preferred stock. FOR THE ABOVE REASONS, PSO'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS OF SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE ADOPTION OF THE PROPOSED AMENDMENT. 16 FINANCIAL AND OTHER INFORMATION RELATING TO PSO The financial statements of PSO and related information included in its Annual Report on Form 10-K for the year ended December 31, 1996, as filed with the SEC, is hereby incorporated by reference. PSO will provide without charge, upon the written or oral request of any person (including any beneficial owner) to whom this Offer to Purchase and Proxy Statement is delivered, a copy of such information (excluding certain exhibits). Such requests for information should be directed to Stephen D. Wise, Director, Finance, Central and South West Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for PSO, telephone (214) 777-1000. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS Upon recommendation of the Audit Committee of CSW's board of directors, such board appointed on April 18, 1996, Arthur Andersen LLP as independent public accountants for CSW and its subsidiaries, including PSO, for the year 1996. Representatives of Arthur Andersen LLP are expected to be present at the Special Meeting with the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. PRICE RANGE OF SHARES; DIVIDENDS PSO's Cumulative Preferred Stock 4.24% Series and 4.00% Series are traded in the OTC under the symbols " " and " ", respectively. The last reported sale price in the OTC, as of the close of business on , 1997, for each of the Series of Preferred is shown on the front cover of this Offer to Purchase and Proxy Statement. However, Preferred Shareholders should be aware that there is no established trading market for the Shares and that the Shares of each Series of Preferred only trade sporadically and on a limited basis and, therefore, the last reported sales prices may not necessarily reflect the current market value of the Shares. PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF AVAILABLE, FOR THE SHARES. The following table sets forth the high and low sales prices of each Series of Preferred in the OTC as reported by the National Quotation Bureau, Inc. and the cash dividends paid thereon for the fiscal quarters indicated. 17 DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK BY QUARTERS (1996 AND 1995)
1996--QUARTERS 1995--QUARTERS ------------------------------------------ ------------------------------- 1ST 2ND 3RD 4TH 1ST 2ND 3RD --------- --------- --------- --------- --------- --------- --------- CUMULATIVE PREFERRED STOCK ($100 Par Value) 4.24% SERIES Dividends Paid Per Share.......................... $ 1.06 $ 1.06 $ 1.06 $ 1.06 $ 1.06 $ 1.06 $ 1.06 Market Price--$ Per Share (OTC) Ask--High......................................... --Low.......................................... Bid--High......................................... --Low........................................... 4.00% SERIES Dividends Paid Per Share............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Market Price--$ Per Share (OTC) Ask--High......................................... --Low.......................................... Bid--High......................................... --Low........................................... 4TH --------- CUMULATIVE PREFERRED STOCK ($100 Par Value) 4.24% SERIES Dividends Paid Per Share.......................... $ 1.06 Market Price--$ Per Share (OTC) Ask--High......................................... --Low.......................................... Bid--High......................................... --Low........................................... 4.00% SERIES Dividends Paid Per Share............................ $ 1.00 Market Price--$ Per Share (OTC) Ask--High......................................... --Low.......................................... Bid--High......................................... --Low...........................................
Dividends for a Series of Preferred are payable when, as and if declared by PSO's Board of Directors at the rate per annum included in such title of the Series of Preferred listed on the front cover of this Offer to Purchase and Proxy Statement. The April 1997 Dividend has been declared on each Series of Preferred, payable April 1, 1997 to owners of record on March 15, 1997. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on shares held of record on March 15, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER CSW believes that the purchase of the Shares at this time represents an attractive opportunity that will benefit CSW, its shareholders, and PSO. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium to the market price on the date of the announcement of the Offer and without the usual transaction costs associated with a sale. After the consummation of the Offer, CSW may determine to purchase additional Shares on the open market, in privately negotiated transactions, through one or more tender offers or otherwise. Any such purchases may be on the same terms as, or on terms which are more or less favorable to holders of Shares than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act prohibits CSW and its affiliates (including PSO) from purchasing any Shares of a Series of Preferred, other than pursuant to the Offer until at least ten business days after the Expiration Date with respect to the Series of Preferred. Any future purchases of Shares by CSW would depend on many factors, including the market price of the Shares, CSW's business and financial position, restrictions on CSW's ability to purchase Shares imposed by law and general economic and market conditions. Preferred Shareholders are not under any obligation to tender Shares pursuant to the Offer. The Offer does not constitute notice of redemption of any Series of Preferred pursuant to PSO's Articles, nor does CSW or PSO intend to effect any such redemption by making the Offer. The Offer does not constitute a waiver by PSO of any right it has to redeem Shares. The 4.24% Series of Preferred is currently redeemable, upon call at a price of $103.19 per Share, plus accrued dividends. The 4.00% Series of Preferred is currently redeemable, upon call at a price of $105.75 per Share, plus accrued dividends. The Shares of each Series of Preferred have no preemptive or conversion rights. 18 Upon liquidation or dissolution of PSO, owners of the Shares would be entitled to receive an amount equal to the liquidation preference per share ($100) plus all accrued and unpaid dividends (whether or not earned or declared) thereon to the date of payment, prior to the payment of any amounts to the holders of PSO's common stock. Shares validly tendered to the Depositary pursuant to the Offer and not withdrawn in accordance with the procedures set forth herein shall be held until the Expiration Date (or returned to the extent the Offer is terminated in accordance herewith). To the extent that the Proposed Amendment is approved and Shares tendered are accepted for payment and paid for in accordance with the terms hereof, CSW intends to sell at the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement, or if such purchase prices are increased or decreased by CSW, at such increased or decreased purchase prices, its Shares purchased pursuant to the Offer to PSO and, at that time, it is expected that PSO will retire and cancel the Shares. PSO may obtain all or a portion of the purchase price for such shares from the proceeds of the sale of tax-deductible trust preferred securities which qualify as unsecured debt for purposes of the 10% and 20% provisions contained in the Articles. However, in the event the Proposed Amendment is not adopted at the Special Meeting, CSW may elect, but is not obligated, to waive, subject to applicable law, the condition to the Offer that the Proposed Amendment be adopted at the Special Meeting, and purchase the shares tendered pursuant to the Offer. In that case, subsequent to CSW's waiver and purchase of the Shares, PSO anticipates, as promptly as practicable thereafter, that it would call another special meeting of its shareholders and solicit proxies therefrom for an amendment substantially similar to the Proposed Amendment. At that meeting, CSW would vote any Shares acquired by it pursuant to the Offer or otherwise (together with its shares of common stock) in favor of such amendment, thereby maximizing the prospects for the adoption of the amendment. Therefore, it is likely that the Offer will reduce the number of Shares of each of the Series of Preferred that might otherwise trade publicly or become available for purchase and/or sale and likely will reduce the number of owners of Shares of each of the Series of Preferred, which could adversely affect the liquidity and sale value of the Shares not purchased in the Offer. The extent of the public market for such Shares and the availability of price quotations would, typically, depend upon such factors as the number of stockholders remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms and other factors. As of December 31, 1996, there were 43 registered holders of the 4.24% Series and 376 registered holders of the 4.00% Series. In addition, the Series of Preferred are currently registered under Section 12(g) of the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon the application by PSO to the SEC if the Shares are neither listed on a national securities exchange nor held by more than 300 holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished to Preferred Shareholders and could make certain provisions of the Exchange Act no longer applicable to PSO. Further, if the Proposed Amendment becomes effective, Preferred Shareholders of Shares that are not tendered and purchased pursuant to the Offer will no longer be entitled to the benefits of the Articles provision limiting the amount of unsecured debt PSO may issue, which will have been deleted by the Proposed Amendment. As discussed above, such provision places restrictions on PSO's ability to issue or assume unsecured indebtedness. Although PSO's debt instruments may contain certain restrictions on PSO's ability to issue or assume debt, any such restrictions may be waived and the increased flexibility afforded PSO by the deletion of the Articles provision may permit PSO to take certain actions that may increase the credit risks with respect to PSO, adversely affecting the market price and credit rating of the remaining Shares or otherwise be materially adverse to the interests of the remaining Preferred Shareholders. In addition, to the extent that PSO elects to fund its purchase of the Shares, in whole or in part, by issuing additional unsecured debt, including tax-deductible trust preferred securities, the remaining Preferred Shareholders' relative position in PSO's capital structure could be perceived to decline, which in turn could adversely affect the market price and credit rating of the remaining Shares. 19 Except as disclosed in this Offer to Purchase and Proxy Statement, CSW and PSO have no plans or proposals that relate to or would result in: (a) the acquisition by any person of additional securities of PSO or the disposition of securities of PSO; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving PSO or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of PSO or any of its subsidiaries; (d) any change in the present Board or management of PSO; (e) any material change in the present dividend rate or policy, or indebtedness or capitalization of PSO; (f) any other material change in PSO's corporate structure or business; (g) any change in PSO's Articles or bylaws or any actions that may impede the acquisition of control of PSO by any person; (h) a class of equity securities of PSO becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (i) the suspension of PSO's obligation to file reports pursuant to Section 15(d) of the Exchange Act. NEITHER CSW, PSO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of the principal United States federal income tax consequences of the sale of Shares pursuant to the Offer, the receipt of Cash Payments, and the adoption of the Proposed Amendment. This summary is addressed only to Preferred Shareholders who are "United States Holders" (as defined below) and who hold their Shares as capital assets within the meaning of the Internal Revenue Code of 1986, as amended ("the Code"). This summary does not address all aspects of federal income taxation that may be relevant to a particular Preferred Shareholder in light of such Preferred Shareholder's individual circumstances or to Preferred Shareholders subject to special treatment under the federal income tax laws, such as Preferred Shareholders who are not United States Holders, banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, dealers in securities and currencies, Preferred Shareholders who received their Shares as part of a compensation arrangement with PSO, and Preferred Shareholders holding Shares as part of a position in a "straddle" or as part of a "hedging," "conversion" or other integrated investment transaction for federal income tax purposes. The statements of law or legal conclusion set forth in this summary constitute the opinion of Christy & Viener, special tax counsel to CSW and PSO. This summary is based upon the Code, Treasury Regulations, Internal Revenue Service rulings and pronouncements, and judicial decisions now in effect, all of which are subject to change at any time. Such a change could adversely affect the tax consequences described herein, possibly on a retroactive basis. In addition, the authorities on which this summary is based are subject to various interpretations and it is therefore possible that the United States federal income tax treatment of the payments made pursuant to the Offer, the Cash Payments, and the approval and adoption of the Proposed Amendment may differ from the treatment described below. Preferred Shareholders should consult their own tax advisors in light of their particular circumstances as to the application of United States federal income tax laws, as well as the effect of any state, local, or foreign tax laws. As used herein, the term "United States Holder" means a Preferred Shareholder that is (i) for United States federal income tax purposes, a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state thereof or the District of Columbia, or (iii) an estate or trust specified as being a "United States Person" in the Code. 20 SALE OF SHARES A United States Holder will recognize gain or loss equal to the difference between the tax basis of such holder's Shares and the amount of cash received in exchange therefor. For federal income tax purposes, an amount equal to $1.00 per Share will be treated by CSW and PSO as payment for voting in favor of the Proposed Amendment, rather than cash paid in exchange for Shares, and will constitute ordinary income to recipient United States Holders, as described below under "--Cash Payments/ Modification." A United States Holder's gain or loss will be long-term capital gain or loss if the holding period for the Shares is more than one year as of the date of the sale of such Shares. The excess of net long-term capital gains over net short-term capital losses is taxed at a lower rate than ordinary income for certain non-corporate taxpayers. The distinction between capital gain or loss and ordinary income or loss is also relevant for purposes of, among other things, limitations on the deductibility of capital losses. CASH PAYMENTS/MODIFICATION United States Holders, whether or not they receive Cash Payments, will not recognize any taxable income or loss with respect to their Shares as a result of the modification of the Articles by the Proposed Amendment. The federal income tax treatment of the Cash Payments is not entirely clear. PSO will treat the Cash Payments as ordinary non-dividend income to recipient United States Holders. BACKUP WITHHOLDING AND INFORMATION REPORTING The amount of the Cash Payment paid to a United States Holder or the amount of payment made to a United States Holder pursuant to the Offer will be reported to such holder and to the Internal Revenue Service except in the case of corporations and other holders exempt from information reporting and backup withholding. Backup withholding at a rate of 31% will apply to any such payments made to non-exempt United States Holders unless the holder provides its taxpayer identification number and the certifications required to establish that it is not subject to backup withholding. In order to prevent backup withholding, each tendering United States Holder and each United States Holder voting in favor of the Proposed Amendment must provide such holder's taxpayer identification number and certify that such holder is not subject to backup withholding by completing the substitute Form W-9 included herewith. The amount of any backup withholding from a payment to a United States Holder will be allowed as a credit against such holder's United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. SOURCE AND AMOUNT OF FUNDS Assuming that CSW purchases all outstanding Shares pursuant to the Offer, the total amount required by CSW to purchase such Shares will be approximately $[ ] million, exclusive of the accrued and unpaid dividends payments, but including fees and other expenses. CSW intends to fund the Offer through the use of its general funds (which, in the ordinary course, include funds from PSO) and funds borrowed pursuant to CSW's commercial paper program. CSW sells commercial paper directly to commercial paper dealers who reoffer the commercial paper to investors. At December 31, 1996, CSW had two credit facilities in place aggregating $1.2 billion to back up the commercial paper program. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES Each of CSW and PSO has been advised by its directors and executive officers that no directors or executive officers of the respective companies own any Shares. Based upon the companies' records and upon information provided to each company by its directors and executive officers, neither company nor, to the knowledge of either company, any of their subsidiaries, directors, or executive officers 21 has engaged in any transactions involving Shares during the 40 business days preceding the date hereof. Neither company nor, to the knowledge of either company, any of its directors or executive officers is a party to any contract, arrangement, understanding or relationship relating directly or indirectly to the Offer with any other person with respect to any securities of PSO. FEES AND EXPENSES ASSOCIATED WITH THE OFFER DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the Dealer Managers a combined fee of $0.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer. Each Dealer Manager will also be reimbursed by CSW for its reasonable out-of pocket expenses, including attorneys' fees, and will be indemnified against certain liabilities, including certain liabilities under the federal securities laws, in connection with the Offer. Each Dealer Manager has rendered, is currently rendering and is expected to continue to render various investment banking services to CSW and PSO. Each Dealer Manager has received, and will continue to receive, customary compensation from the companies for such services. CSW has retained The Bank of New York as Depositary and D.F. King & Co., Inc. as Information Agent in connection with the Offer. The Depositary and Information Agent will receive reasonable and customary compensation for their services and will also be reimbursed for certain out-of-pocket expenses. CSW has agreed to indemnify the Depositary and Information Agent against certain liabilities, including certain liabilities under the federal securities law, in connection with the Offer. Neither the Depositary nor the Information Agent has been retained to make solicitations or recommendations in connection with the Offer. SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered and accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of Transmittal and Proxy which designates, as having solicited and obtained the tender, the name of (i) any broker or dealer in securities, including the Dealer Managers in their capacity as a broker or dealer, who is a member of any national securities exchange or of the NASD, (ii) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be payable to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealers' own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be an agent of CSW, the Depositary, the Information Agent or the Dealer Managers for the purposes of the Offer. STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any, payable on account of the acquisition of Shares by CSW pursuant to the Offer, except in certain circumstances where special payment or delivery procedures are utilized pursuant to Instruction 6 of the accompanying Letter of Transmittal and Proxy. CERTAIN INFORMATION REGARDING CSW AND PSO PSO is an operating utility primarily engaged in the generation, purchase, transmission, distribution and sale of electric power to approximately 479,000 retail customers in Oklahoma. All of the common stock of PSO is owned, directly or indirectly, by CSW, a registered holding company under the 1935 Act. PSO, and PSO Capital I and PSO Capital II, each a statutory business trust formed under the laws of the 22 State of Delaware, have filed a registration statement on Form S-3 (the "Registration Statement") with the SEC with respect to the proposed offering from time to time of up to $75,000,000 aggregate liquidation preference of Trust Originated Preferred Securities, guaranteed by PSO to the extent set forth in the Registration Statement (the "Trust Originated Preferred Securities"). Following the announcement of the Offer, and subject to market and other conditions, PSO intends that such trusts will effect one or more public offerings of Trust Originated Preferred Securities. Any such offering would be made only by means of a prospectus which is included in the Registration Statement. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION Set forth below is certain consolidated historical financial information of PSO. The historical financial information (other than the ratios of earnings to fixed charges) was derived from the audited consolidated financial statements included in PSO's Annual Report on Form 10-K for the year ended December 31, 1996, which statements are hereby incorporated by reference. More comprehensive financial information is included in such reports and the financial information which follows is qualified in its entirety by reference to such reports and all of the financial statements and related notes contained therein, copies of which may be obtained as set forth herein. CONDENSED INCOME STATEMENT DATA:
YEAR ENDED DECEMBER 31, ------------------------------------- 1996 1995 1994 ----------- ----------- ----------- (THOUSANDS, EXCEPT RATIOS) Operating Revenues......................................................... 735,266 $ 690,823 $ 740,496 Operating Income........................................................... 101,737 111,769 98,258 Allowance for Equity Funds Used During Construction........................ 292 1,270 1,094 Net Income................................................................. 31,478 81,828 68,266 Preferred Dividend Requirement............................................. 816 816 816 Net Income Applicable to Common Stock...................................... 30,662 81,012 67,450 Ratio of Earnings to Fixed Charges......................................... 2.45 4.32 4.03
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
DECEMBER 31, ------------------------------------------- 1996 1995 1994 ------------- ------------- ------------- (THOUSANDS, EXCEPT RATIOS) ASSETS: Net Utility Plant................................................... 1,302,843 $ 1,330,376 $ 1,304,518 Cash and Temporary Cash Investments................................. 1,474 744 5,453 Other Current Assets................................................ 65,221 87,740 93,798 Other Assets........................................................ 62,004 61,956 61,345 ------------- ------------- ------------- 1,431,597 $ 1,480,816 $ 1,465,114 ------------- ------------- ------------- ------------- ------------- ------------- LIABILITIES: Common Equity....................................................... 483,173 $ 487,511 $ 461,499 Cumulative Preferred Stock.......................................... 19,826 19,826 19,826 Long-term Debt...................................................... 420,301 379,250 402,752 Current Liabilities................................................. 161,145 236,212 223,461 Other Liabilities................................................... 347,152 358,017 357,576 ------------- ------------- ------------- 1,431,597 $ 1,480,816 $ 1,465,114 ------------- ------------- ------------- ------------- ------------- -------------
23 ADDITIONAL INFORMATION REGARDING CSW CSW is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the SEC. CSW is required to disclose in such proxy statements certain information, as of particular dates, concerning its directors and officers, their remuneration, stock options granted to them, the principal holders of its securities and any material interest of such persons in transactions with CSW. In connection with the Offer, CSW has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes certain additional information relating to the Offer. Such material can be inspected and copied at the public reference facilities of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a Web site at http://www.sec.gov containing reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including CSW and PSO. CSW's Schedule 13E-4 will not be available at the SEC's regional offices. MISCELLANEOUS The Offer is not being made to, nor will CSW accept tenders from, owners of Shares in any jurisdiction in which the Offer or its acceptance would not be in compliance with the laws of such jurisdiction. CSW is not aware of any jurisdiction where the making of the Offer or the tender of Shares would not be in compliance with applicable law. If CSW becomes aware of any jurisdiction where the making of the Offer or the tender of Shares is not in compliance with any applicable law, CSW will make a good faith effort to comply with such law. If, after such good faith effort, CSW cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the owners of Shares residing in such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. CENTRAL AND SOUTH WEST CORPORATION PUBLIC SERVICE COMPANY OF OKLAHOMA 24 Facsimile copies of the Letter of Transmittal and Proxy will only be accepted from Eligible Institutions. The Letter of Transmittal and Proxy and, if applicable, certificates for Shares should be sent or delivered by each tendering or voting Preferred Shareholder of PSO or his or her broker, dealer, bank or trust company to the Depositary at one of its addresses set forth below. The Depositary is: THE BANK OF NEW YORK FACSIMILE TRANSMISSION: (FOR ELIGIBLE INSTITUTIONS BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department (212) 815-6213 Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286 FOR INFORMATION, TELEPHONE: (800) 507-9357
Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and addresses listed below. Requests for additional copies of this Offer to Purchase and Proxy Statement, the Letter of Transmittal and Proxy or other tender offer or proxy materials may be directed to the Information Agent or the Dealer Managers, and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) The Dealer Managers: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Paul S. Galant
25 EX-2.(C) 4 OFFER TO PURCHASE WTU OFFER TO PURCHASE AND PROXY STATEMENT CENTRAL AND SOUTH WEST CORPORATION OFFER TO PURCHASE FOR CASH ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF CUMULATIVE PREFERRED STOCK OF WEST TEXAS UTILITIES COMPANY 60,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.40% SERIES AT A PURCHASE PRICE OF $ PER SHARE ------------------------------ WEST TEXAS UTILITIES COMPANY PROXY STATEMENT WITH RESPECT TO ITS COMMON STOCK AND CUMULATIVE PREFERRED STOCK ------------------------------ THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , 1997, UNLESS THE OFFER IS EXTENDED. Central and South West Corporation, a Delaware corporation ("CSW"), invites the holders of the series of cumulative preferred stock listed above (the holder thereof a "Preferred Shareholder") of West Texas Utilities Company, a Texas corporation and wholly-owned utility subsidiary of CSW ("WTU"), to tender any and all of their shares ("Shares") for purchase at the purchase price per Share listed above for the Shares tendered, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and Proxy Statement and in the accompanying Letter of Transmittal and Proxy (the "Proxy") (which together constitute the "Offer"). CSW will purchase all Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period; Termination; Amendments." THE OFFER FOR THE SHARES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE (AS HEREINAFTER DEFINED)) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED BELOW. THE OFFER IS ALSO CONDITIONED UPON THE APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED (THE "1935 ACT"). THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE (AS HEREINAFTER DEFINED) MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER. SEE "TERMS OF THE OFFER-PROCEDURE FOR TENDERING SHARES." FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT (AS HEREINAFTER DEFINED) OR THE DEALER MANAGERS (AS HEREINAFTER DEFINED) OR CONSULT YOUR BROKER FOR ASSISTANCE. Concurrently with the Offer, the Board of Directors of WTU is soliciting proxies for use at the Special Meeting of Shareholders of WTU to be held at WTU's principal office, 301 Cypress Street, Abilene, Texas 79601-5820 on , 1997, or any adjournment or postponement of such meeting (the "Special Meeting"). The Special Meeting is being held to consider an amendment (the "Proposed Amendment") to WTU's Restated Articles of Incorporation (the "Articles") which would remove a provision of the Articles that limits WTU's ability to issue unsecured debt. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, WTU WILL MAKE A SPECIAL CASH PAYMENT IN THE AMOUNT OF $1.00 PER SHARE (THE "CASH PAYMENT") TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT BUT WHO DID NOT TENDER HIS OR HER SHARES. THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ABOVE BUT NOT THE CASH PAYMENT. IMPORTANT Any Preferred Shareholder desiring to accept the Offer and tender all or any portion of his or her Shares should, in addition to voting in favor of the Proposed Amendment either by executing and returning the enclosed Proxy or by voting in person by ballot at the Special Meeting, either (i) if not the record holder, request his or her broker, dealer, commercial bank, trust company or nominee to effect the transaction for him or her, or (ii) if the record holder, complete and sign the Letter of Transmittal and Proxy or facsimile thereof, in accordance with the instructions in the Letter of Transmittal and Proxy, mail or deliver it and any other required documents to The Bank of New York (the "Depositary"), and deliver the certificates for such Shares to the Depositary, along with the Letter of Transmittal and Proxy, or tender such Shares pursuant to the procedure for book-entry transfer set forth below under "Terms of the Offer--Procedure for Tendering Shares," prior to the Expiration Date (as defined below). A Preferred Shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or nominee must contact such broker, dealer, commercial bank, trust company or nominee if he or she desires to tender such Shares. Any Preferred Shareholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply in a timely manner with the procedure for book-entry transfer, should tender such Shares by following the procedures for guaranteed delivery set forth below under "Terms of the Offer--Procedure for Tendering Shares." ONLY THE LETTER OF TRANSMITTAL AND PROXY OR A NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE USED TO TENDER SHARES. A LETTER OF TRANSMITTAL AND PROXY MAY BE USED TO VOTE IN FAVOR OF THE PROPOSED AMENDMENT EVEN IF NO SHARES ARE BEING TENDERED. ------------------------------ THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------------------------ NEITHER CSW, WTU, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. ------------------------------ This Offer to Purchase and Proxy Statement and the accompanying proxy are first being mailed to Preferred Shareholders on or about March , 1997 to Preferred Shareholders of record on March , 1997. ------------------------------ The Shares are traded in the over-the-counter market (the "OTC") and are not listed on any national securities exchange. On , 1997, the last reported sale price and date of sale as reported by the National Quotation Bureau, Inc. was $ . Preferred Shareholders are urged to obtain a current market quotation, if available, for the Shares. On , 1997, there were issued and outstanding 60,000 Shares. ------------------------------ Questions or requests for assistance or for additional copies of this Offer to Purchase and Proxy Statement, the Letter of Transmittal and Proxy or other tender offer or proxy solicitation materials may be directed to D.F. King & Co., Inc. (the "Information Agent") or Goldman, Sachs & Co. and Smith Barney Inc. (the "Dealer Managers") at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase and Proxy Statement. ------------------------------ THE DEALER MANAGERS FOR THE OFFER ARE: GOLDMAN, SACHS & CO. SMITH BARNEY INC. ------------------ The date of this Offer to Purchase and Proxy Statement is , 1997. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR WTU AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CSW, WTU OR BY THE DEALER MANAGERS. TABLE OF CONTENTS
PAGE ----- SUMMARY.................................................................................................... 1 TERMS OF THE OFFER......................................................................................... 4 Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 4 Procedure for Tendering Shares........................................................................... 5 Withdrawal Rights........................................................................................ 7 Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 8 Certain Conditions of the Offer.......................................................................... 9 Extension of Tender Period; Termination; Amendments...................................................... 10 PROPOSED AMENDMENT AND PROXY SOLICITATION.................................................................. 12 Introduction............................................................................................. 12 Voting Securities, Rights And Procedures................................................................. 12 Proxies.................................................................................................. 12 Cash Payments............................................................................................ 13 Security Ownership of Certain Beneficial Owners and Management........................................... 14 Business to Come Before the Special Meeting.............................................................. 14 Explanation of the Proposed Amendment.................................................................... 14 Reasons for the Proposed Amendment....................................................................... 15 Financial and Other Information Relating to WTU.......................................................... 17 Relationship with Independent Public Accountants......................................................... 17 PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 17 PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 18 CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 20 SOURCE AND AMOUNT OF FUNDS................................................................................. 21 TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 21 FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 21 CERTAIN INFORMATION REGARDING CSW AND WTU.................................................................. 22 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 22 ADDITIONAL INFORMATION REGARDING CSW....................................................................... 23 MISCELLANEOUS.............................................................................................. 24
i SUMMARY THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN THIS OFFER TO PURCHASE AND PROXY STATEMENT. The Companies................ CSW is a Dallas-based public utility holding company registered under the 1935 Act. Through its four electric operating subsidiaries, WTU, Central Power and Light Company, Southwestern Electric Power Company and Public Service Company of Oklahoma (collectively, the "Electric Operating Companies"), CSW serves approximately 152,000 square miles in portions of Texas, Oklahoma, Louisiana and Arkansas. CSW owns SEEBOARD plc, a regional electricity company in the southeast of the United Kingdom. CSW also engages through other subsidiaries in the following energy-related businesses: (i) CSW Energy, Inc. develops, owns and operates non-utility power projects in the United States; (ii) CSW International, Inc. participates in power generation, transmission and distribution projects outside the United States; (iii) CSW Communications, Inc. provides communications services, including enhancement of services through fiber optic and other telecommunications technolo- gies, to CSW and its subsidiaries and to third parties; (iv) CSW Credit, Inc. purchases, without recourse, the accounts receivables of the Electric Operating Companies and non-affiliated utilities; and (v) EnerShop Inc. was recently formed to provide commercial, industrial, institutional and governmental customers with energy management services designed to control costs, enhance productivity and improve convenience, safety and comfort. The Shares................... WTU 4.40% Cumulative Preferred Stock ($100 par value) The Offer.................... Offer to purchase any or all Shares at the price per Share set forth below. Purchase Price............... $ per Share Conditions of the Offer...... The Offer is not conditioned upon any minimum number of Shares being tendered, but is conditioned upon the Proposed Amendment being approved and adopted at the Special Meeting. The Offer is subject to certain other conditions described herein. SEC Approval................. The Offer is conditioned, among other things, upon the approval of the SEC under the 1935 Act. Expiration Date of the Offer...................... The Offer expires at 5:00 p.m., central time, , 1997, unless extended (the "Expiration Date"). How to Tender Shares......... Preferred Shareholders (including Preferred Shareholders who acquire Shares subsequent to the Record Date) who wish to tender their Shares must vote in favor of the Proposed Amendment. Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender their Shares must
1 arrange with their seller to receive an assignment of proxy from the holder of record on the Record Date. In order to facilitate receipt of Proxies, Shares shall, during the period which commenced March , 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date trade in the over- the-counter market with a proxy providing the transferee with the right to vote such acquired Shares in the Proxy Solicitation. Settlement of all trades during the period described above should include an assignment of proxy from the seller. See "Terms of the Offer-- Procedure for Tendering Shares." For further information, call the Information Agent or the Dealer Managers or consult your broker for assistance. Withdrawal Rights............ Tendered Shares may be withdrawn at any time until the Expiration Date and, unless theretofore accepted for payment, may also be withdrawn after , 1997. See "Terms of the Offer-- Withdrawal Rights". The proxy accompanying any tendered Shares that are withdrawn will not be considered revoked unless the Preferred Shareholder specifically revokes such proxy as described herein. See "Proposed Amendment and Proxy Solicitation--Proxies." Purpose of the Offer......... CSW is making the Offer because it believes that the purchase of Shares is attractive to CSW, its shareholders and WTU. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium over the market price and without the usual transaction costs associated with a market sale. See "Purpose of the Offer; Certain Effects of the Offer." Dividends.................... A regular quarterly dividend has been declared on the Shares, payable on April 1, 1997 to the owners of record on March 14, 1997 (the "April 1997 Dividend"). A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on Shares held of record on March 14, 1997, regardless of when such tender is made. Tendering Pre- ferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). Brokerage Commissions........ Not payable by Preferred Shareholders. Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. Proposed Amendment........... Concurrently with the Offer, the Board of Directors of WTU is soliciting proxies for use at the Special Meeting of Shareholders of WTU. The Special Meeting is being held to consider an amendment to
2 WTU's Articles which would remove a provision that limits WTU's ability to issue unsecured debt. Record Date.................. March ,1997 Special Cash Payment......... Preferred Shareholders have the right to vote for the Proposed Amendment regardless of whether they tender their Shares. If the Proposed Amendment is approved and adopted by WTU's shareholders, WTU will make a special cash payment of $1.00 per Share to each Preferred Shareholder who voted in favor of the Proposed Amendment, provided that such Shares have not been tendered pursuant to the Offer. Preferred Shareholders who validly tender their Shares will be entitled only to the purchase price per share listed on the front cover of this Offer to Purchase and Proxy Statement and not any Cash Payment. Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. See Instruction 6 of the applicable Letter of Transmittal and Proxy. See "Terms of the Offer--Acceptance of Shares for Payment of Purchase Price and Dividends." Payment Date................. Promptly after the Expiration Date. Further Information.......... Additional copies of this Offer to Purchase and Proxy Statement and the applicable Letter of Transmittal and Proxy may be obtained by D.F. King & Co., Inc., 77 Water Street, New York, New York 10005, telephone (800) 755-3107 (toll-free) and (212) 269-5550 (brokers and dealers). Questions about the Offer should be directed to Goldman, Sachs & Co. (800) 828-3182 or Smith Barney Inc. at (800) 655-4811.
3 TERMS OF THE OFFER NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS Upon the terms and subject to the conditions described herein and in the applicable Letter of Transmittal and Proxy, CSW will purchase any and all Shares that are validly tendered on or prior to the applicable Expiration Date (and not properly withdrawn in accordance with "Terms of the Offer-- Withdrawal Rights") at the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement for the Shares tendered, net to the seller in cash. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer -Extension of Tender Period; Termination." THE OFFER FOR THE SHARES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS CONDITIONED ON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED HEREIN. THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." The Offer is being sent to all persons in whose names Shares are registered on the books of WTU on the Record Date. Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender in the Offer must arrange with their seller to receive a Proxy from the holder of record on the Record Date. In order to facilitate receipt of Proxies, Shares shall, during the period which commenced [ ], 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date, trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired Shares in the proxy solicitation. No record date is fixed for determining which persons are permitted to tender Shares. However, only the holders of record, or holders who acquire an assignment of proxy from such holders, are permitted to vote for the Proposed Amendment and thereby validly tender Shares pursuant to the Offer. As such, any person who is the beneficial owner but not the record holder of the Shares must (i) arrange for the record transfer of Shares prior to tendering or (ii) direct such record holder to tender the Shares and vote in favor of the Proposed Amendment on behalf of such beneficial owner. The Expiration Date is the later of 5:00 p.m., central time, on , , 1997 or the latest time and date to which the Offer is extended. CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer is open, by giving oral or written notice of such extension to the Depositary. There is no assurance whatsoever that CSW will exercise its right to extend the Offer. If CSW decides, in its sole discretion, to decrease the number of Shares being sought or to increase or decrease the consideration offered in the Offer to holders of the Shares and, at the time that notice of such increase or decrease is first published, sent or given to holders of such Shares in the manner specified herein, the Offer for such Shares is scheduled to expire at any time earlier than the tenth business day from the date that such notice is first so published, sent or given, such Offer will be extended until the expiration of such ten-business-day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, eastern standard time. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED AND NO TENDERS WILL BE ACCEPTED IN RESPECT OF SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT HAS NOT BEEN CAST AT THE SPECIAL MEETING. SUCH VOTE MAY BE CAST BY PROPERLY COMPLETING THE FORM OF PROXY THAT IS A PART OF THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON BY BALLOT AT THE SPECIAL MEETING. 4 The April 1997 Dividend has been declared on the Shares, payable April 1, 1997 to owners of record on March 14, 1997. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on shares held of record on March 14, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). PROCEDURE FOR TENDERING SHARES IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF WILL TRADE "WITH PROXY" IN THE OVER- THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER. The Shares are trading, during the period which began two days prior to the Record Date and which will end at the close of business on the Expiration Date, in the over-the-counter market under the symbol " ", indicating that such shares are trading "with proxy." A Preferred Shareholder who acquires Shares during this period must obtain, or have its authorized representative obtain, an assignment of proxy (which is included in the applicable Letter of Transmittal) at settlement from the seller. The National Association of Securities Dealers, Inc. (the "NASD") and The Depository Trust Company have issued notices informing their members and participants that the Shares are trading "with proxy" and that settlement of all trades during the period described above should include an assignment of proxy from the seller. FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT OR THE DEALER MANAGERS OR CONSULT YOUR BROKER FOR ASSISTANCE. Further, to tender Shares pursuant to the Offer, the tendering owner of Shares must either: (a) send to the Depositary (at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement) a properly completed and duly executed Letter of Transmittal and Proxy or facsimile thereof (which will either deliver such owner's proxy or indicate such owner's intention to vote at the Special Meeting in person by ballot), together with any required signature guarantees and any other documents required by the Letter of Transmittal and Proxy and either (i) certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer described herein (and a confirmation of such delivery must be received by the Depositary), in each case by the Expiration Date; or (b) comply with the guaranteed delivery procedure described under "Guaranteed Delivery Procedure" below. The Depositary will establish an account with respect to the Shares at DTC and the Philadelphia Depository Trust Company (collectively referred to as the "Book-Entry Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase and Proxy Statement and any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of such Book-Entry Transfer Facility. Although delivery of Shares may be effected through book-entry transfer, such delivery must be accompanied by either (i) a properly completed and duly executed Letter of Transmittal and Proxy or facsimile thereof, together with any required signature guarantees and any other required documents or (ii) an Agent's Message 5 (as hereinafter defined) and, in any case, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy Statement at or prior to 5:00 p.m., central time, on the Expiration Date. The term "Agent's Message" means a message, transmitted by one of the Book-Entry Transfer Facilities, received by the Depositary and forming a part of the book-entry transfer when a tender is initiated, which states that the Book-Entry Transfer Facility has received an express acknowledgment from a participant tendering Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that CSW may enforce such agreement against such participant. Except as otherwise provided below, all signatures on a Letter of Transmittal and Proxy must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States that is a participant in an approved Signature Guarantee Medallion Program (each of the foregoing being referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is signed by the holder of record of the shares tendered therewith and such owner has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy, (b) such Shares are tendered for the account of an Eligible Institution or (c) such Letter of Transmittal and Proxy is being used solely for the purpose of voting Shares which are not being tendered pursuant to the Offer. See Instructions 1 and 5 of the Letter of Transmittal and Proxy. Guaranteed Delivery Procedure. If a Preferred Shareholder desires to tender Shares pursuant to the Offer and such Preferred Shareholder's certificates are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are complied with: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery and Proxy, substantially in the form provided by CSW and WTU herewith, is received (with any required signature guarantees) by the Depositary as provided below at or prior to 5:00 p.m., central time, on the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer or a Book-Entry Confirmation with respect to all tendered Shares, together with a properly completed and duly executed Letter of Transmittal and Proxy (or a manually signed facsimile thereof) and any other documents required by the Letter of Transmittal and Proxy, are received by the Depositary no later than 5:00 p.m., central time, within three business days after the date of execution of such Notice of Guaranteed Delivery and Proxy. THE NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE DELIVERED BY HAND OR TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF GUARANTEED DELIVERY AND PROXY. In all cases, Shares shall not be deemed validly tendered unless a properly completed and duly executed Letter of Transmittal and Proxy (or a manually signed facsimile thereof) is received by the Depositary within the applicable time limits and a vote in favor of the Proposed Amendment in respect of such Shares has been cast at the Special Meeting either in person or by completion and execution of the proxy (which proxy must be the form of proxy that is a part of the Letter of Transmittal and Proxy). Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer in all cases will be made only after timely receipt by the Depositary of certificates for (or an Agent's Message with respect to) such Shares, a Letter of Transmittal and Proxy or a manually signed 6 facsimile thereof, properly completed and duly executed, with any required signature guarantees and all other documents required by the Letter of Transmittal and Proxy. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE ALLOWED FOR DELIVERY. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER OR, ALTERNATIVELY, THE CASH PAYMENT, EACH TENDERING UNITED STATES PREFERRED SHAREHOLDER OR A NON-TENDERING UNITED STATES PREFERRED SHAREHOLDER WHO VOTES FOR THE PROPOSED AMENDMENT MUST NOTIFY THE DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND PROXY. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES." EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER. All questions as to the form of documents and the validity, eligibility (including the time of receipt) and acceptance for payment of any tender of Shares will be determined by CSW, in its sole discretion, and its determination will be final and binding. CSW reserves the absolute right to reject any or all tenders of Shares that (i) it determines are not in proper form or (ii) the acceptance for payment of or payment for which may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any defect or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notice of any defect or irregularity in tenders, nor shall any of them incur any liability for failure to give any such notice. WITHDRAWAL RIGHTS ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after , 1997, unless theretofore accepted for payment as provided in this Offer to Purchase and Proxy Statement. If, with respect to any Shares, CSW extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to CSW's rights under the Offer, the Depositary may, on behalf of CSW, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in this "Terms of the Offer--Withdrawal Rights," subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that an issuer making a tender offer shall either pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the tender offer. The proxy accompanying any tendered Shares that are withdrawn will not be considered revoked unless the Preferred Shareholder specifically revokes such proxy as described herein, See "Proposed Amendment and Proxy Solicitation--Proxies." To be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary, at one of its addresses set forth on the back cover of this Offer to Purchase and Proxy 7 Statement, and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with signatures guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered owner (if different from that of the tendering Preferred Shareholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book-Entry Transfer Facilities to be credited with the withdrawn Shares and the name of the registered holder (if different from the name of such account). Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in "Terms of the Offer--Procedure for Tendering Shares" at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by CSW, in its sole discretion, and its determination will be final and binding. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or will incur any liability for failure to give any such notification. ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS Upon the terms and subject to the conditions of the Offer, and as promptly as practicable after the Special Meeting, CSW will accept for payment (and thereby purchase) and pay for Shares validly tendered and not withdrawn as permitted in "Terms of the Offer--Withdrawal Rights." In all cases, payment for Shares accepted for payment pursuant to the Offer will be made promptly but only after timely receipt by the Depositary of certificates for such Shares (or of an Agent's Message), a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other required documents. For purposes of the Offer, CSW will be deemed to have accepted for payment (and thereby purchased) Shares that are validly tendered and not withdrawn as, if and when it gives oral or written notice to the Depositary of its acceptance for payment of such Shares. CSW will pay for Shares that it has purchased pursuant to the Offer by depositing the purchase price therefor with the Depositary, which will act as agent for tendering Preferred Shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering Preferred Shareholders. Under no circumstances will interest be paid on amounts to be paid to tendering Preferred Shareholders, regardless of any delay in making such payment. Certificates for all Shares not validly tendered will be returned or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained with a Book-Entry Transfer Facility, as promptly as practicable, without expense to the tendering Preferred Shareholder. Payment for shares may be delayed in the event of difficulty in determining the number of Shares properly tendered. In addition, if certain events occur (including the Proposed Amendment not being approved and adopted at the Special Meeting), CSW may not be obligated to purchase Shares pursuant to the Offer. See "Terms of the Offer--Certain Conditions of the Offer." CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to any person other than the registered owner, or if tendered Shares are registered in the name of any person other than the person signing the Letter of Transmittal and Proxy, the amount of any stock transfer taxes (whether imposed on the registered owner, such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory 8 evidence of the payment of such taxes, or exemption therefrom, is submitted. See Instruction 6 of the Letter of Transmittal and Proxy. CERTAIN CONDITIONS OF THE OFFER CSW WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL MEETING. IN ORDER TO TENDER THEIR SHARES, PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) MUST SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER. PREFERRED SHAREHOLDERS WHO TENDER THEIR SHARES WILL ONLY BE ENTITLED TO THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. Notwithstanding any other provision of the Offer, CSW will not be required to accept for payment or pay for any Shares tendered, and may terminate or amend the Offer or may postpone (subject to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of Shares) the acceptance for payment of, or payment for, Shares tendered, if at any time after , 1997, and at or before acceptance for payment of or payment for any Shares, any of the following shall have occurred: (a) there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic or foreign, or before any court, authority, agency or tribunal that (i) challenges the acquisition of Shares pursuant to the Offer or otherwise in any manner relates to or affects the Offer or (ii) in the sole judgment of CSW, could materially and adversely affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of WTU individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries or materially impair the Offer's contemplated benefits to CSW; (b) there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or CSW or any of its subsidiaries, by any legislative body, court, authority, agency or tribunal that, in CSW's sole judgment, would or might directly or indirectly (i) make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer, (ii) delay or restrict the ability of CSW, or render CSW unable, to accept for payment or pay for some or all of the Shares, (iii) materially impair the contemplated benefits of the Offer to CSW or (iv) materially affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of WTU individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries; (c) there shall have occurred (i) any significant decrease in the market price of the Shares or any change in the general political, market, economic or financial conditions in the United States or abroad that could have a material adverse effect on CSW's business, operations, prospects or 9 ability to obtain financing generally or the trading in the other equity securities of CSW, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation on, or any event that, in CSW's sole judgment, might affect the extension of credit by lending institutions in the United States, (iii) the commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (v) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof or (vi) any decline in either the Dow Jones Industrial Average or the Standard and Poor's Composite 500 Stock Index by an amount in excess of 15% measured from the close of business on , 1997; (d) any tender or exchange offer with respect to some or all of the Shares (other than the Offer), or a merger, acquisition or other business combination proposal for CSW, shall have been proposed, announced or made by any person or entity; (e) there shall have occurred any event or events that have resulted, or may in the sole judgment of CSW result, in an actual or threatened change in the business, condition (financial or otherwise), income, operations, stock ownership or prospects of CSW and its subsidiaries; or (f) the SEC shall have withheld approval, under the 1935 Act, of the acquisition of the Shares by CSW pursuant to the Offer or the approval and adoption of the Proposed Amendment at the Special Meeting; and, in the sole judgment of CSW, such event or events make it undesirable or inadvisable to proceed with the Offer or with such acceptance for payment or payment. With respect to the approval of the SEC referenced in clause (f) above, the SEC must find, among other things, that the acquisition of the Shares by CSW is not detrimental to the public interest or the interest of the investors or consumers, and that the consideration paid in connection with the acquisition and the adoption of the Proposed Amendment, including fees, commissions and other remuneration, is reasonable. The foregoing conditions (including the condition that the Proposed Amendment be approved and adopted at the Special Meeting) are for the sole benefit of CSW and may be asserted by CSW regardless of the circumstances (including any action or inaction by CSW) giving rise to any such condition, and any such condition (including the condition related to the requirement that Preferred Shareholders tendering their Shares vote in favor of the Proposed Amendment at the Special Meeting) may be waived by CSW, in whole or in part, at any time and from time to time in its sole discretion. The failure by CSW at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by CSW concerning the events described above will be final and binding on all parties. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. There can be no assurance, however, that CSW will exercise its right to extend the Offer. During any such extension, all Shares previously tendered will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in "Terms of the Offer - Withdrawal Rights." CSW also expressly reserves the right, in its sole discretion, to terminate the Offer and not accept for payment or pay for any Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act which requires CSW either to pay the consideration offered or to return the Shares tendered promptly after the termination or withdrawal of the Offer upon the occurrence of any of the conditions specified in "Terms of the Offer--Certain Conditions of the Offer" by 10 giving oral or written notice of such termination to the Depositary, and making a public announcement thereof. Subject to compliance with applicable law, CSW further reserves the right, in its sole discretion, to amend the Offer in any respect. Amendments to the Offer may be made at any time and/or from time to time effected by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., central time, on the next business day after the previously scheduled Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to Preferred Shareholders affected thereby in a manner reasonably designed to inform such Preferred Shareholders of such change. Without limiting the manner in which CSW may choose to make a public announcement, except as required by applicable law, CSW shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If CSW materially changes the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, CSW will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. The SEC has stated that, in its view, an offer should remain open for a minimum of five business days from the date that a notice of such a material change is first published, sent or given. If the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that CSW publishes, sends or gives to Preferred Shareholders a notice that it will (a) increase or decrease the price it will pay for Shares or (b) decrease the percentage of Shares it seeks, the Offer will be extended until the expiration of such period of ten business days. 11 PROPOSED AMENDMENT AND PROXY SOLICITATION INTRODUCTION This Offer to Purchase and Proxy Statement is first being mailed on or about , 1997 to the shareholders of WTU in connection with the solicitation of proxies by the Board of Directors (the "Board") of WTU for use at the Special Meeting. At the Special Meeting, the shareholders of WTU will vote upon the Proposed Amendment to the Articles. Preferred Shareholders who wish to tender their Shares pursuant to the Offer must vote in favor of the Proposed Amendment in person by ballot or by proxy at the Special Meeting. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. The Offer is conditional upon the Proposed Amendment being approved and adopted at the Special Meeting. If the Proposed Amendment is approved and adopted by WTU's shareholders, WTU will make a special cash payment in the amount of $1.00 per Share to each Preferred Shareholder who voted in favor of the Proposed Amendment, provided that such Shares have not been tendered pursuant to the Offer. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT (REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED). Those Preferred Shareholders who validly tender their Shares will be entitled only to the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement but not the Cash Payment. VOTING SECURITIES, RIGHTS AND PROCEDURES Only holders of record of WTU's voting securities at the close of business on the Record Date or persons obtaining a proxy from the holders of record on the Record Date will be entitled to vote in person or by proxy at the Special Meeting. The outstanding voting securities of WTU for purposes of voting on the Proposed Amendment are divided into two classes: common stock and cumulative preferred stock. The class of cumulative preferred stock has been issued in one series of Preferred Stock with the record holders of all Shares of the cumulative preferred stock voting together as one class. The shares outstanding on the date of the Special Meeting, and the vote to which each share is entitled in consideration of the Proposed Amendment, are as follows:
CLASS SHARES OUTSTANDING VOTES PER SHARE - -------------------------------------------------------------------------- ------------------- ----------------- Common Stock (Par Value $25 per share).................................... 5,488,560 1 vote Cumulative Preferred Stock (Par Value $100 per Share)..................... 60,000 1 vote
The affirmative vote of the holders of two-thirds of the outstanding shares of each of WTU's (i) common stock and (ii) cumulative preferred stock is required to approve the Proposed Amendment to be presented at the Special Meeting. Abstentions and broker non-votes will have the effect of votes against the Proposed Amendment. CSW HAS ADVISED WTU THAT IT INTENDS TO VOTE ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF WTU IN FAVOR OF THE PROPOSED AMENDMENT. Votes at the Special Meeting will be tabulated preliminarily by Central and South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of Election, duly appointed by the presiding officer of the Special Meeting, will definitively count and tabulate the votes and determine and announce the results at the meeting. WTU has no established procedure for confidential voting. There are no rights of appraisal in connection with the Proposed Amendment. PROXIES THE ENCLOSED PROXY, WHICH IS CONTAINED WITHIN THE LETTER OF TRANSMITTAL AND PROXY (AND THE NOTICE OF GUARANTEED DELIVERY AND PROXY), IS SOLICITED BY WTU'S BOARD, WHICH RECOMMENDS VOTING FOR THE PROPOSED AMENDMENT. ALL SHARES OF WTU'S COMMON STOCK WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF WTU'S BOARD. Preferred Shareholders tendering their Shares pursuant to the Offer and voting at the Special Meeting by proxy must use the proxy that is a part of the Letter of Transmittal and Proxy. Shares of WTU's cumulative preferred stock represented by properly executed 12 proxies received at or prior to the Special Meeting will be voted in accordance with the instructions thereon. If no instructions are indicated, duly executed proxies will be voted in accordance with the recommendation of the Board. It is not anticipated that any other matters will be brought before the Special Meeting. However, the proxy that is a part of the Letter of Transmittal and Proxy gives discretionary authority to the proxy holders named therein should any other matters be presented at the Special Meeting, and it is the intention of the proxy holders to act on any other matters in accordance with their best judgment. Execution of a proxy will not prevent a Preferred Shareholder from attending the Special Meeting and voting in person. Any Preferred Shareholder giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of WTU written notice of revocation bearing a later date than the proxy, by delivering a duly executed proxy bearing a later date, or by voting in person by ballot at the Special Meeting. WTU will bear the cost of the solicitation of proxies by the Board. WTU has engaged D.F. King & Co., Inc. to act as Information Agent in connection with the solicitation of proxies for a fee of $10,000 plus reimbursement of reasonable out-of-pocket expenses. Proxies will be solicited by mail or by telephone. In addition, officers and employees of WTU may also solicit proxies personally or by telephone; such persons will receive no additional compensation for these services. The Information Agent has not been retained to make, and will not make, solicitations or recommendations in connection with the Proposed Amendment. WTU has requested that brokerage houses and other custodians, nominees and fiduciaries forward solicitation materials to the beneficial owners of shares of WTU's cumulative preferred stock held of record by such persons and will reimburse such brokers and other fiduciaries for their reasonable out-of pocket-expenses incurred in connection therewith. An application has been filed with the SEC under the 1935 Act requesting approval of the Proposed Amendment and the acquisition of the Shares by CSW pursuant to the Offer. As such, the adoption of the Proposed Amendment and the purchase of the Shares pursuant to the Offer are subject to the receipt of such approval from the SEC. WTU has received a preliminary order, permitting the solicitation of proxies, from the SEC under the 1935 Act. CASH PAYMENTS Subject to the terms and conditions set forth in this Offer to Purchase and Proxy Statement, if (but only if) the Proposed Amendment is approved and adopted by the shareholders of WTU, WTU will make a Cash Payment to each Preferred Shareholder whose Shares are properly voted in favor of the Proposed Amendment, in person by ballot or by proxy, at the Special Meeting in the amount of $1.00 for each Share held by such Preferred Shareholder which is so voted, provided that such Shares have not been tendered pursuant to the Offer. The Company has been advised that there is uncertainty under state law, due to the lack of controlling precedent, as to the permissibility of making the Cash Payment. While the Company cannot predict how a court would rule on the issue, the Company believes that the Offer is fair to Preferred Shareholders and has determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED SHAREHOLDERS IN RESPECT OF EACH SHARE WHICH IS SO VOTED ONLY IF SUCH SHARES ARE VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT; PROVIDED, HOWEVER, THAT THOSE PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. If the Proposed Amendment is approved and adopted, Cash Payments will be paid out of WTU's general funds, promptly after the Proposed Amendment shall have become effective. However, no accrued interest will be paid on the Cash Payment regardless of any delay in making such payment. Only Preferred Shareholders as of the Record Date (or their legal representatives or attorneys-in-fact) are entitled to vote at the Special Meeting and to receive Cash Payments from WTU. Any beneficial holder of Shares who is not the registered holder of such Shares as of the Record Date (as would be the case for any beneficial owner whose Shares are registered in the name of such holder's broker, dealer, 13 commercial bank, trust company or other nominee) must arrange with the record Preferred Shareholder to execute and deliver a Proxy on such beneficial owner's behalf. If a beneficial holder of Shares intends to attend the Special Meeting and vote in person, such beneficial holder must obtain a legal proxy form from his or her broker, dealer, commercial bank, trust company or other nominee. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As noted above, CSW owns all the outstanding common stock of WTU. Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a security is any person who directly or indirectly has or shares voting or investment power over such security. No person or group is known by management of WTU to be the beneficial owner of more than 5% of WTU's class of cumulative preferred stock as of the Record Date. WTU's directors and executive officers do not beneficially own any Shares as of the Record Date. The beneficial ownership of CSW's common stock held by each director, as well as directors and executive officers as a group, as of December 31, 1996, is set forth in the following table. Share amounts shown include options exercisable within 60 days after year-end, restricted stock, shares of CSW common stock credited to CSW Thrift Plus accounts and all other shares of CSW common stock beneficially owned by the listed persons.
AMOUNT AND NATURE NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2) - -------------------------------------------------------- -------------------------------------------------------- Richard F. Bacon........................................ 2,568.31 E.R. Brooks............................................. 113,690.32 Glenn Files............................................. 33,722.76 Thomas Morris........................................... 2,000.00 Dian G. Owen............................................ 100.00 James M. Parker......................................... 5,000.00 F.L. Stephens........................................... 2,800.00 All directors and executive officers as a group......... 189,216.44shares (representing .05% of the class)
- ------------------------ (1) No individual listed beneficially owned more than .03% of the outstanding shares of common stock of CSW. (2) Includes shares of restricted stock in the following amounts: E.R. Brooks--17,074 and Glen Files-- 6,333; and all directors and officers as a group--28,018. Includes shares which there is a right to acquire within 60 days pursuant to the exercise of stock options in the following amounts: E.R. Brooks--54,315 and Glenn Files--19,067; and all directors and executive officers as a group-- 90,351. BUSINESS TO COME BEFORE THE SPECIAL MEETING The following Proposed Amendment to WTU's Articles is the only item of business expected to be presented at the Special Meeting: To remove in its entirety subparagraph (B) of paragraph 5 of Article VI, limiting WTU's ability to issue unsecured indebtedness. EXPLANATION OF THE PROPOSED AMENDMENT Without the consent of the majority of the holders of WTU's cumulative preferred stock, the Articles currently prohibit the issuance or assumption of any unsecured notes, debentures or other securities representing unsecured indebtedness (other than for the purpose of refunding outstanding unsecured indebtedness resulting in later maturities or for the redemption or retirement of all outstanding shares of preferred stock) if, immediately after such issuance or assumption, (a) the total outstanding principal 14 amount of all securities representing unsecured debt would exceed 20% of the aggregate of (1) the total principal amount of all outstanding secured debt of WTU and (2) the capital and surplus of WTU or (b) the total outstanding principal amount of all securities representing unsecured debt maturing in less than ten years would exceed 10% of such aggregate. The Proposed Amendment, if adopted, would eliminate in its entirety subparagraph (B) of paragraph 5 of Article VI, as set forth below, from the Articles. * * * (B) issue or assume any unsecured notes, debentures or other securities representing unsecured indebtedness (herein referred to as "unsecured obligations"), for any purpose other than (i) the refunding of outstanding unsecured indebtedness or unsecured obligations theretofore incurred, issued or assumed by the corporation, or (ii) the reacquisition, redemption or other retirement of any indebtedness, if such transaction has been ordered, approved or permitted by the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 or by any successor commission or other regulatory authority of the United States of America then having jurisdiction in the premises, or (iii) the reacquisition, redemption or other retirement of all outstanding shares of the Preferred Stock or of stock ranking prior to or on a parity with the Preferred Stock, if: (1) immediately after such issue or assumption, the total principal amount of all unsecured obligations issued or assumed by the corporation and then outstanding would exceed (a) 25% of the sum of the total principal amount of all bonds or other securities representing secured indebtedness issued or assumed by the corporation and then outstanding and the aggregate amount of the capital and surplus of the corporation as then stated on the books of account of the corporation (such sum being hereinafter referred to as "total secured debt and capital"), or (b) the principal amount of all unsecured obligations maturing in less than ten years (herein referred to as "short-term indebtedness"), issued or assumed by the corporation and then outstanding, computed as herein provided, would exceed 20% of the total secured debt and capital; or (2) immediately after such issue or assumption, the total principal amount of unsecured obligations would exceed 20% of total secured debt and capital and either (a) the total secured debt and capital of the corporation would exceed $750,000,000, or (b) the sum of the capital and surplus of the corporation as then stated on the books of account of the corporation would be less than 40% of the sum of the corporation's total secured debt and capital and short-term indebtedness; or (3) with respect to the period commencing on the earlier of (a) the date one year after the first day of commercial operation of the Company's Oklaunion generating station or (b) January 1, 1989 (the earlier of such dates being hereinafter referred to as the "Termination Date"), immediately after such issue or assumption, the principal amount of all unsecured obligations of the corporation then outstanding would exceed 20% of total secured debt and capital or the principal amount of all short-term indebtedness of the corporation then outstanding would exceed 10% of total secured debt and capital. For purposes of this subparagraph (B), (i) with respect to any unsecured obligation originally having a single maturity of more than ten years, the principal amount of such obligation shall not be regarded as short-term indebtedness until such principal amount shall be due or required to be paid within three years and (ii) with respect to unsecured obligations having serial maturities or having sinking, purchase or similar periodic debt retirement provisions, the principal amount of the final maturity, any serial maturity or any periodic debt retirement maturity which originally was more than ten years shall not be regarded as short-term debt until such principal amount shall be due or required to be paid within three years. REASONS FOR THE PROPOSED AMENDMENT WTU believes that regulatory, legislative and market developments are leading to a more competitive environment in the electric utility industry. As competition intensifies, flexibility and cost structure will be even more crucial to success in the future. Given that the electric and gas industry is extremely capital 15 intensive, controlling and minimizing financing costs are essential ingredients to operating effectively in the new competitive environment. It is, therefore, for those two reasons, flexibility and cost structure, that you are being asked to vote in favor of the Proposed Amendment. WTU believes that adoption of the Proposed Amendment is key to meeting the objectives of flexibility and cost structure. If adopted, the amendment would eliminate the current provision of WTU's Articles that limits the total amount of WTU's unsecured indebtedness to 20% of the total amount of WTU's secured indebtedness, plus capital and surplus, and the amount of short-term unsecured debt to 10% of such total amount. Historically, WTU's debt financing generally has been accomplished through the issuance of long-term first mortgage bonds and a modest amount of unsecured short-term debt. First mortgage bonds represent secured indebtedness because they place a first priority lien on substantially all of WTU's assets. The Indenture dated August 1, 1943, as amended, between SWEPCO and Harris Trust and Savings Bank and J. Bartolini, as Trustees (the "First Mortgage Bond Indenture"), contains certain restrictive covenants with respect to, among other things, the disposition of assets and the ability to issue additional first mortgage bonds. Short-term debt, usually the lowest cost debt available to WTU, represents one type of unsecured indebtedness. The Proposed Amendment will not only allow WTU to issue a greater amount of unsecured debt, it will also allow WTU to issue a greater amount of total debt. WTU will consider changing the mix of debt securities toward more issuances on a short-term and unsecured basis. Additionally, WTU may issue certain tax-deductible trust preferred securities which would be classified as unsecured debt under WTU's current Articles. Inasmuch as the 10% and 20% provisions contained in the Articles limit WTU's flexibility in planning and financing its business activities, WTU believes it ultimately will be at a competitive disadvantage if the provision is not eliminated. The industry's new competitors (for example, power marketers, independent power producers and cogenerating facilities) generally are not subject to the type of financing restrictions the Articles impose on WTU. Recently, several other utilities with the same or similar charter restrictions have successfully eliminated such provisions by soliciting their shareholders for the same or similar amendments. Therefore, many potential utility competitors have no comparable provision restricting the use of unsecured debt. While WTU's current low-cost structure has been instrumental in reducing the ability of other competitors to attract WTU's large bulk power customers, WTU must continue to explore new ways of reducing costs and enhancing flexibility. WTU believes that the adoption of the Proposed Amendment will be in the best long-term competitive interests of shareholders by enhancing its ability to meet the two objectives described below. FINANCIAL FLEXIBILITY WTU believes that in the long run, various types of unsecured debt alternatives will increase in importance as an option in financing its construction program and refinancing high-cost mortgage bonds. The availability and flexibility of unsecured debt is necessary to take full advantage of changing conditions in securities markets. WTU presently intends to continue to rely on unsecured debt up to the 10% or 20% maximum amounts currently allowable under the Articles. WTU's earnings currently are sufficient to meet the earnings coverage test contained in its First Mortgage Bond Indenture that must be satisfied in certain instances before issuing additional first mortgage bonds. However, there could be periods, when, because of an inability to meet the Articles test, WTU would be unable to issue any additional preferred stock. An inability to issue preferred stock in the future, combined with the inability to issue additional unsecured debt, would limit WTU's financing options to either additional first mortgage bonds or additional common stock. COST STRUCTURE WTU's use of unsecured short-term debt is subject to the 10% and 20% provisions contained in the Articles. WTU believes that the prudent use of such debt in excess of this provision is vital to effective financial management of the business. Not only is unsecured short-term debt generally the least expensive form of capital, it also provides flexibility in meeting seasonal fluctuations in cash requirements, acts as a bridge between issues of permanent capital and can be used when unfavorable conditions prevail in the market for long-term capital. 16 For purposes of the 10% and 20% provisions, tax-deductible trust preferred securities are considered to be unsecured debt, thus the use of tax-deductible trust preferred securities is limited by the 10% and 20% provisions. Tax deductible trust preferred securities have a much lower after-tax cost than traditional perpetual preferred stock. FOR THE ABOVE REASONS, WTU'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS OF SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE ADOPTION OF THE PROPOSED AMENDMENT. FINANCIAL AND OTHER INFORMATION RELATING TO WTU The financial statements of WTU and related information included in its Annual Report on Form 10-K for the year ended December 31, 1996 as filed with the SEC, is hereby incorporated by reference. WTU will provide without charge, upon the written or oral request of any person (including any beneficial owner) to whom this Offer to Purchase and Proxy Statement is delivered, a copy of such information (excluding certain exhibits). Such requests for information should be directed to Stephen D. Wise, Director, Finance, Central and South West Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for WTU, telephone (214) 777-1000. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS Upon recommendation of the Audit Committee of CSW's board of directors, such board employed on April 18, 1996 Arthur Andersen LLP as independent public accountants for CSW and its subsidiaries, including WTU, for the year 1996. Representatives of Arthur Andersen LLP are expected to be present at the Special Meeting with the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. PRICE RANGE OF SHARES; DIVIDENDS WTU's Cumulative Preferred Stock is traded in the OTC under the symbol " ". The last reported sale price in the OTC, as of the close of business on , 1997, for the Shares is shown on the front cover of this Offer to Purchase and Proxy Statement. However, Preferred Shareholders should be aware that there is no established trading market for the Shares and that the Shares only trade sporadically and on a limited basis and, therefore, the last reported sales prices may not necessarily reflect the current market value of the Shares. PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF AVAILABLE, FOR THE SHARES. The following table sets forth the high and low sales prices of the Shares in the OTC as reported by the National Quotation Bureau, Inc. and the cash dividends paid thereon for the fiscal quarters indicated. DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK BY QUARTERS (1996 AND 1995)
1996--QUARTERS 1995--QUARTERS ------------------------------------------ ------------------------------- 1ST 2ND 3RD 4TH 1ST 2ND 3RD --------- --------- --------- --------- --------- --------- --------- CUMULATIVE PREFERRED STOCK ($100 Par Value) 4.40% SERIES Dividends Paid Per Share.......................... $ 1.10 $ 1.10 $ 1.10 $ 1.10 $ 1.10 $ 1.10 $ 1.10 Market Price--$ Per Share (OTC) Ask--High......................................... --Low.......................................... Bid --Low......................................... --Low.......................................... 4TH --------- CUMULATIVE PREFERRED STOCK ($100 Par Value) 4.40% SERIES Dividends Paid Per Share.......................... $ 1.10 Market Price--$ Per Share (OTC) Ask--High......................................... --Low.......................................... Bid --Low......................................... --Low..........................................
17 Dividends for the Shares are payable when, as and if declared by WTU's Board of Directors at the rate per annum included listed on the front cover of this Offer to Purchase and Proxy Statement. The April 1997 Dividend has been declared on the Shares, payable April 1, 1997 to owners of record on March 14, 1997. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the April 1997 Dividend on shares held of record on March 14, 1997, regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof). PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER CSW believes that the purchase of the Shares at this time represents an attractive opportunity that will benefit CSW, its shareholders, and WTU. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium to the market price on the date of the announcement of the Offer and without the usual transaction costs associated with a sale. After the consummation of the Offer, CSW may determine to purchase additional Shares on the open market, in privately negotiated transactions, through one or more tender offers or otherwise. Any such purchases may be on the same terms as, or on terms which are more or less favorable to holders of Shares than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act prohibits CSW and its affiliates (including WTU) from purchasing any Shares, other than pursuant to the Offer until at least ten business days after the Expiration Date. Any future purchases of Shares by CSW would depend on many factors, including the market price of the Shares, CSW's business and financial position, restrictions on CSW's ability to purchase Shares imposed by law and general economic and market conditions. Preferred Shareholders are not under any obligation to tender Shares pursuant to the Offer. The Offer does not constitute notice of redemption of any Shares pursuant to WTU's Articles, nor does CSW or WTU intend to effect any such redemption by making the Offer. The Offer does not constitute a waiver by WTU of any right it has to redeem Shares. The Shares are currently redeemable, upon call at a price of $107 per Share, plus accrued dividends. The Shares have no preemptive or conversion rights. Upon liquidation or dissolution of WTU, owners of the Shares would be entitled to receive an amount equal to the liquidation preference per share ($100) plus all accrued and unpaid dividends (whether or not earned or declared) thereon to the date of payment, prior to the payment of any amounts to the holders of WTU's common stock. Shares validly tendered to the Depositary pursuant to the Offer and not withdrawn in accordance with the procedures set forth herein shall be held until the Expiration Date (or returned to the extent the Offer is terminated in accordance herewith). To the extent that the Proposed Amendment is approved and Shares tendered are accepted for payment and paid for in accordance with the terms hereof, CSW intends to sell at the purchase price per Share listed on the front cover of this Offer to Purchase and Proxy Statement, or if such purchase price is increased or decreased by CSW, at such increased or decreased purchase price, its Shares purchased pursuant to the Offer to WTU and, at that time, it is expected that WTU will retire and cancel the Shares. WTU may replace such Shares with tax deductible trust preferred securities which qualify as unsecured debt for purposes of the 10% and 20% provisions contained in the Articles. However, in the event the Proposed Amendment is not adopted at the Special Meeting, CSW may elect, but is not obligated, to waive, subject to applicable law, the condition to the Offer that the Proposed Amendment be adopted at the Special Meeting, and purchase the Shares tendered pursuant to the Offer. In that case, subsequent to CSW's waiver and purchase of the Shares, WTU anticipates, as promptly as practicable thereafter, that it would call another special meeting of its shareholders and solicit proxies therefrom for an amendment substantially similar to the Proposed Amendment. At that meeting, CSW would vote any Shares acquired by it pursuant to the Offer or otherwise (together with its shares of common stock) in favor of such amendment, thereby maximizing the prospects for the adoption of the amendment. Therefore, it is likely that the Offer will reduce the number of Shares that might otherwise trade publicly or become available for purchase and/or sale and 18 likely will reduce the number of owners of Shares, which could adversely affect the liquidity and sale value of the Shares not purchased in the Offer. The extent of the public market for such Shares and the availability of price quotations would typically depend upon such factors as the number of stockholders remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms and other factors. As of December 31, 1996, there were 384 registered holders of the 4.40% Series. In addition, Shares are currently registered under Section 12(g) of the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon the application by WTU to the SEC if the Shares are neither listed on a national securities exchange nor held by more than 300 holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished to Preferred Shareholders and could make certain provisions of the Exchange Act no longer applicable to WTU. Further, if the Proposed Amendment becomes effective, Preferred Shareholders of Shares that are not tendered and purchased pursuant to the Offer will no longer be entitled to the benefits of the Articles provision limiting the amount of unsecured debt WTU may issue, which will have been deleted by the Proposed Amendment. As discussed above, such provision places restrictions on WTU's ability to issue or assume unsecured indebtedness. Although WTU's debt instruments may contain certain restrictions on WTU's ability to issue or assume debt, any such restrictions may be waived and the increased flexibility afforded WTU by the deletion of the Articles provision may permit WTU to take certain actions that may increase the credit risks with respect to WTU, adversely affecting the market price and credit rating of the remaining Shares or otherwise be materially adverse to the interests of the remaining Preferred Shareholders. In addition, to the extent that WTU elects to fund its purchase of the Shares, in whole or in part, by issuing additional unsecured debt, including tax-deductible trust preferred securities, the remaining Preferred Shareholders' relative position in WTU's capital structure could be perceived to decline, which in turn could adversely affect the market price and credit rating of the remaining Shares. Except as disclosed in this Offer to Purchase and Proxy Statement, CSW and WTU have no plans or proposals that relate to or would result in: (a) the acquisition by any person of additional securities of WTU or the disposition of securities of WTU; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving WTU or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of WTU or any of its subsidiaries; (d) any change in the present Board or management of WTU; (e) any material change in the present dividend rate or policy, or indebtedness or capitalization of WTU; (f) any other material change in WTU's corporate structure or business; (g) any change in WTU's Articles or bylaws or any actions that may impede the acquisition of control of WTU by any person; (h) a class of equity securities of WTU becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (i) the suspension of WTU's obligation to file reports pursuant to Section 15(d) of the Exchange Act. NEITHER CSW, WTU, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. 19 CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of the principal United States federal income tax consequences of the sale of Shares pursuant to the Offer, the receipt of Cash Payments, and the adoption of the Proposed Amendment. This summary is addressed only to Preferred Shareholders who are "United States Holders" (as defined below) and who hold their Shares as capital assets within the meaning of the Internal Revenue Code of 1986, as amended ("the Code"). This summary does not address all aspects of federal income taxation that may be relevant to a particular Preferred Shareholder in light of such Preferred Shareholder's individual circumstances or to Preferred Shareholders subject to special treatment under the federal income tax laws, such as Preferred Shareholders who are not United States Holders, banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, dealers in securities and currencies, Preferred Shareholders who received their Shares as part of a compensation arrangement with WTU, and Preferred Shareholders holding Shares as part of a position in a "straddle" or as part of a "hedging," "conversion" or other integrated investment transaction for federal income tax purposes. The statements of law or legal conclusion set forth in this summary constitute the opinion of Christy & Viener, special tax counsel to CSW and WTU. This summary is based upon the Code, Treasury Regulations, Internal Revenue Service rulings and pronouncements, and judicial decisions now in effect, all of which are subject to change at any time. Such a change could adversely affect the tax consequences described herein, possibly on a retroactive basis. In addition, the authorities on which this summary is based are subject to various interpretations and it is therefore possible that the United States federal income tax treatment of the payments made pursuant to the Offer, the Cash Payments, and the approval and adoption of the Proposed Amendment may differ from the treatment described below. Preferred Shareholders should consult their own tax advisors in light of their particular circumstances as to the application of United States federal income tax laws, as well as the effect of any state, local, or foreign tax laws. As used herein, the term "United States Holder" means a Preferred Shareholder that is (i) for United States federal income tax purposes, a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state thereof or the District of Columbia, or (iii) an estate or trust specified as being a "United States Person" in the Code. SALE OF SHARES A United States Holder will recognize gain or loss equal to the difference between the tax basis of such holder's Shares and the amount of cash received in exchange therefor. For federal income tax purposes, an amount equal to $1.00 per Share will be treated by CSW and WTU as payment for voting in favor of the Proposed Amendment, rather than cash paid in exchange for Shares, and will constitute ordinary income to recipient United States Holders, as described below under "--Cash Payments/ Modification." A United States Holder's gain or loss will be long-term capital gain or loss if the holding period for the Shares is more than one year as of the date of the sale of such Shares. The excess of net long-term capital gains over net short-term capital losses is taxed at a lower rate than ordinary income for certain non-corporate taxpayers. The distinction between capital gain or loss and ordinary income or loss is also relevant for purposes of, among other things, limitations on the deductibility of capital losses. CASH PAYMENTS/MODIFICATION United States Holders, whether or not they receive Cash Payments, will not recognize any taxable income or loss with respect to their Shares as a result of the modification of the Articles by the Proposed Amendment. The federal income tax treatment of the Cash Payments is not entirely clear. WTU will treat the Cash Payments as ordinary non-dividend income to recipient United States Holders. 20 BACKUP WITHHOLDING AND INFORMATION REPORTING The amount of the Cash Payment paid to a United States Holder or the amount of payment made to a United States Holder pursuant to the Offer will be reported to such holder and to the Internal Revenue Service except in the case of corporations and other holders exempt from information reporting and backup withholding. Backup withholding at a rate of 31% will apply to any such payments made to non-exempt United States Holders unless the holder provides its taxpayer identification number and the certifications required to establish that it is not subject to backup withholding. In order to prevent backup withholding, each tendering United States Holder and each United States Holder voting in favor of the Proposed Amendment must provide such holder's taxpayer identification number and certify that such holder is not subject to backup withholding by completing the substitute Form W-9 included herewith. The amount of any backup withholding from a payment to a United States Holder will be allowed as a credit against such holder's United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. SOURCE AND AMOUNT OF FUNDS Assuming that CSW purchases all outstanding Shares pursuant to the Offer, the total amount required by CSW to purchase such Shares will be approximately $[ ] million, exclusive of the accrued and unpaid dividends payments, but including fees and other expenses. CSW intends to fund the Offer through the use of its general funds (which, in the ordinary course, include funds from WTU) and funds borrowed pursuant to CSW's commercial paper program. CSW sells commercial paper directly to commercial paper dealers who reoffer the commercial paper to investors. At December 31, 1996, CSW had two credit facilities in place aggregating $1.2 billion to back up the commercial paper program. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES Each of CSW and WTU has been advised by its directors and executive officers that no directors or executive officers of the respective companies own any Shares. Based upon the companies' records and upon information provided to each company by its directors and executive officers, neither company nor, to the knowledge of either company, any of their subsidiaries, directors, or executive officers has engaged in any transactions involving Shares during the 40 business days preceding the date hereof. Neither company nor, to the knowledge of either company, any of its directors or executive officers is a party to any contract, arrangement, understanding or relationship relating directly or indirectly to the Offer with any other person with respect to any securities of WTU. FEES AND EXPENSES ASSOCIATED WITH THE OFFER DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the Dealer Managers a combined fee of $0.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer. Each Dealer Manager will also be reimbursed by CSW for its reasonable out-of pocket expenses, including attorneys' fees, and will be indemnified against certain liabilities, including certain liabilities under the federal securities laws, in connection with the Offer. Each Dealer Manager has rendered, is currently rendering and is expected to continue to render various investment banking services to CSW and WTU. Each Dealer Manager has received, and will continue to receive, customary compensation from the companies for such services. CSW has retained The Bank of New York as Depositary and D.F. King & Co., Inc. as Information Agent in connection with the Offer. The Depositary and Information Agent will receive reasonable and customary compensation for their services and will also be reimbursed for certain out-of-pocket expenses. CSW has agreed to indemnify the Depositary and Information Agent 21 against certain liabilities, including certain liabilities under the federal securities law, in connection with the Offer. Neither the Depositary nor the Information Agent has been retained to make solicitations or recommendations in connection with the Offer. SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered and accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of Transmittal and Proxy which designates, as having solicited and obtained the tender, the name of (i) any broker or dealer in securities, including the Dealer Managers in their capacity as a broker or dealer, who is a member of any national securities exchange or of the NASD, (ii) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be payable to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealers' own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be an agent of CSW, the Depositary, the Information Agent or the Dealer Managers for the purposes of the Offer. STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any, payable on account of the acquisition of Shares by CSW pursuant to the Offer, except in certain circumstances where special payment or delivery procedures are utilized pursuant to Instruction 6 of the accompanying Letter of Transmittal and Proxy. CERTAIN INFORMATION REGARDING CSW AND WTU WTU is an operating utility primarily engaged in the generation, purchase, transmission, distribution and sale of electric power to approximately 186,000 retail customers in central west Texas. All of the common stock of WTU is owned, directly or indirectly, by CSW, a registered holding company under the 1935 Act. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION Set forth below is certain consolidated historical financial information of WTU. The historical financial information (other than the ratios of earnings to fixed charges) was derived from the audited consolidated financial statements included in WTU's Annual Report on Form 10-K for the year ended December 31, 1996, which statements are hereby incorporated by reference. More comprehensive financial information is included in such reports and the financial information which follows is qualified in its entirety by reference to such reports and all of the financial statements and related notes contained therein, copies of which may be obtained as set forth herein. 22 CONDENSED INCOME STATEMENT DATA:
YEAR ENDED DECEMBER 31, ------------------------------------- 1996 1995 1994 ----------- ----------- ----------- (UNAUDITED) (THOUSANDS, EXCEPT RATIOS) Operating Revenues......................................................... $ 377,057 $ 319,835 $ 342,991 Operating Income........................................................... 51,734 59,486 54,763 Allowance for Equity Funds Used During Construction...................................................... 423 378 150 Net Income................................................................. 16,571 34,530 37,366 Preferred Dividend Requirement............................................. 264 264 452 Net Income Applicable to Common Stock...................................... 16,307 34,266 36,914 Ratio of Earnings to Fixed Charges......................................... 2.05 2.63 3.37
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
DECEMBER 31, ------------------------------------- 1996 1995 1994 ----------- ----------- ----------- (UNAUDITED) (THOUSANDS, EXCEPT RATIOS) ASSETS: Net Utility Plant.......................................................... $ 673,364 $ 680,572 $ 663,855 Cash and Temporary Cash Investments........................................ 664 717 2,501 Other Current Assets....................................................... 68,134 65,779 59,514 Other Assets............................................................... 68,217 68,546 46,107 ----------- ----------- ----------- $ 810,379 $ 815,614 $ 771,977 ----------- ----------- ----------- ----------- ----------- ----------- LIABILITIES: Common Equity.............................................................. $ 262,527 $ 265,220 $ 271,954 Cumulative Preferred Stock................................................. 6,291 6,291 6,291 Long-term Debt............................................................. 275,070 273,245 210,047 Current Liabilities........................................................ 71,070 76,931 91,629 Other Liabilities.......................................................... 195,421 193,927 192,056 ----------- ----------- ----------- $ 810,379 $ 815,614 $ 771,977 ----------- ----------- ----------- ----------- ----------- -----------
ADDITIONAL INFORMATION REGARDING CSW CSW is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the SEC. CSW is required to disclose in such proxy statements certain information, as of particular dates, concerning its directors and officers, their remuneration, stock options granted to them, the principal holders of its securities and any material interest of such persons in transactions with CSW. In connection with the Offer, CSW has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes certain additional information relating to the Offer. Such material can be inspected and copied at the public reference facilities of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a Web site at 23 http://www.sec.gov containing reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including CSW and WTU. CSW's Schedule 13E-4 will not be available at the SEC's regional offices. MISCELLANEOUS The Offer is not being made to, nor will CSW accept tenders from, owners of Shares in any jurisdiction in which the Offer or its acceptance would not be in compliance with the laws of such jurisdiction. CSW is not aware of any jurisdiction where the making of the Offer or the tender of Shares would not be in compliance with applicable law. If CSW becomes aware of any jurisdiction where the making of the Offer or the tender of Shares is not in compliance with any applicable law, CSW will make a good faith effort to comply with such law. If, after such good faith effort, CSW cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the owners of Shares residing in such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. CENTRAL AND SOUTH WEST CORPORATION WEST TEXAS UTILITIES COMPANY 24 Facsimile copies of the Letter of Transmittal and Proxy will only be accepted from Eligible Institutions. The Letter of Transmittal and Proxy and, if applicable, certificates for Shares should be sent or delivered by each tendering or voting Preferred Shareholder of WTU or his or her broker, dealer, bank or trust company to the Depositary at one of its addresses set forth below. The Depositary is: THE BANK OF NEW YORK FACSIMILE TRANSMISSION: (FOR ELIGIBLE INSTITUTIONS BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department (212) 815-6213 Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286 FOR INFORMATION, TELEPHONE: (800) 507-9357
Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and addresses listed below. Requests for additional copies of this Offer to Purchase and Proxy Statement, the Letter of Transmittal and Proxy or other tender offer or proxy materials may be directed to the Information Agent or the Dealer Managers, and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) The Dealer Managers: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Paul S. Galant
25 EX-2.(D) 5 OFFER TO PURCHASE CPL OFFER TO PURCHASE CENTRAL AND SOUTH WEST CORPORATION OFFER TO PURCHASE FOR CASH ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF CUMULATIVE PREFERRED STOCK OF CENTRAL POWER AND LIGHT COMPANY 75,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.20% SERIES AT A PURCHASE PRICE OF $ PER SHARE 100,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.00% SERIES AT A PURCHASE PRICE OF $ PER SHARE ------------------------------ THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , 1997, UNLESS THE OFFER IS EXTENDED. ------------------------------ Central and South West Corporation, a Delaware corporation ("CSW"), invites the holders of each series of cumulative preferred stock listed above (each a "Series of Preferred," and the holder thereof a "Preferred Shareholder") of Central Power and Light Company, a Texas corporation with its principal office at 539 North Carancahua Street, Corpus Christi, Texas 78401-2802, and wholly-owned utility subsidiary of CSW ("CPL"), to tender any and all of their shares of a Series of Preferred ("Shares") for purchase at the purchase price per Share listed above for the Shares tendered, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the accompanying Letter of Transmittal (the "Letter of Transmittal") (which together constitute the "Offer"). CSW will purchase all Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period; Termination; Amendments." THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS ALSO CONDITIONED UPON THE APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED (THE "1935 ACT"). THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." The Board of Directors of CPL is currently contemplating soliciting proxies to amend a provision of CPL's Restated Articles of Incorporation (the "Articles") which limits the amount of unsecured debt CPL may issue. If proxies are solicited, and such amendment is approved and adopted, CPL may make a special cash payment to shareholders who voted in favor of such amendment. Preferred Shareholders of record who vote for such amendment would be entitled to such cash payment regardless of whether they had tendered Shares pursuant to the Offer. IMPORTANT Any Preferred Shareholder desiring to accept the Offer and tender all or any portion of his or her Shares should either (i) if not the record holder, request his or her broker, dealer, commercial bank, trust company or nominee to effect the transaction for him or her, or (ii) if the record holder, complete and sign the Letter of Transmittal or facsimile thereof, in accordance with the instructions in the Letter of Transmittal, mail or deliver it and any other required documents to The Bank of New York (the "Depositary"), and deliver the certificates for such Shares to the Depositary, along with the Letter of Transmittal, or tender such Shares pursuant to the procedure for book-entry transfer set forth below under "Terms of the Offer--Procedure for Tendering Shares," prior to the Expiration Date (as defined below). A Preferred Shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or nominee must contact such broker, dealer, commercial bank, trust company or nominee if he or she desires to tender such Shares. Any Preferred Shareholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply in a timely manner with the procedure for book-entry transfer, should tender such Shares by following the procedures for guaranteed delivery set forth below under "Terms of the Offer--Procedure for Tendering Shares." EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL, AND ONLY THE APPLICABLE LETTER OF TRANSMITTAL FOR SUCH SERIES OF PREFERRED OR A NOTICE OF GUARANTEED DELIVERY MAY BE USED TO TENDER SHARES OF SUCH SERIES OF PREFERRED. ------------------------------ THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------------------------ NEITHER CSW, CPL, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. ------------------------------ This Offer to Purchase is first being mailed to Preferred Shareholders on or about March , 1997 to Preferred Shareholders of record on , 1997. ------------------------------ Each Series of Preferred is traded in the over-the-counter market (the "OTC") and is not listed on any national securities exchange. On , 1997, the last reported sale prices and dates of sale as reported by the National Quotation Bureau, Inc. were $ for the 4.20% Series of Preferred (on , 1997) and $ for the 4.00% Series of Preferred (on , 1997). Preferred Shareholders are urged to obtain a current market quotation, if available, for the Shares. On , 1997, there were issued and outstanding 75,000 Shares of the 4.20% Series of Preferred and 100,000 Shares of the 4.00% Series of Preferred. ------------------------------ Questions or requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal for a Series of Preferred, or other tender offer materials may be directed to D.F. King & Co., Inc. (the "Information Agent") or Goldman, Sachs & Co. and Smith Barney Inc. (the "Dealer Managers") at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. ------------------------------ The Dealer Managers for the Offer are: GOLDMAN, SACHS & CO. SMITH BARNEY INC. ---------------- The date of this Offer to Purchase is , 1997. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR CPL AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CSW, CPL OR BY THE DEALER MANAGERS. TABLE OF CONTENTS
PAGE ----- SUMMARY.................................................................................................... 1 TERMS OF THE OFFER......................................................................................... 3 Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 3 Procedure for Tendering Shares........................................................................... 3 Withdrawal Rights........................................................................................ 5 Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 6 Certain Conditions of the Offer.......................................................................... 7 Extension of Tender Period; Termination; Amendments...................................................... 8 Financial and Other Information Relating to CPL.......................................................... 9 PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 10 PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 10 CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 12 SOURCE AND AMOUNT OF FUNDS................................................................................. 13 TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 13 FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 13 CERTAIN INFORMATION REGARDING CSW AND CPL.................................................................. 14 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 15 ADDITIONAL INFORMATION REGARDING CSW....................................................................... 16 MISCELLANEOUS.............................................................................................. 16
i SUMMARY THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN THIS OFFER TO PURCHASE. The Companies................ CSW is a Dallas-based public utility holding company registered under the 1935 Act. Through its four electric operating subsidiaries, CPL, Southwestern Electric Power Company, Public Service Company of Oklahoma and West Texas Utilities Company (collectively, the "Electric Operating Companies"), CSW serves approximately 152,000 square miles in portions of Texas, Oklahoma, Louisiana and Arkansas. CSW owns SEEBOARD plc, a regional electricity company in the southeast of the United Kingdom. CSW also engages through other subsidiaries in the following energy- related businesses: (i) CSW Energy, Inc. develops, owns and operates non-utility power projects in the United States; (ii) CSW International, Inc. participates in power generation, transmission and distribution projects outside the United States; (iii) CSW Communications, Inc. provides communications services, including enhancement of services through fiber optic and other telecommunications technologies, to CSW and its subsidiaries and to third parties; (iv) CSW Credit, Inc. purchases, without recourse, the accounts receivables of the Electric Operating Companies and non-affiliated utilities; and (v) EnerShop Inc. was recently formed to provide commercial, industrial, institutional and governmental customers with energy management services designed to control costs, enhance productivity and improve convenience, safety and comfort. The Shares................... CPL 4.20% Cumulative Preferred Stock ($100 par value) CPL 4.00% Cumulative Preferred Stock ($100 par value) The Offer.................... Offer to purchase any or all shares of each Series of Preferred at the price per Share set forth below. Purchase Price............... $ per 4.20% Share $ per 4.00% Share Independent Offer............ The Offer for one Series of Preferred is independent of the Offer for any other series of Preferred. The Offer is not conditioned upon any minimum number of Shares of the applicable Series of Preferred being tendered. The Offer is subject to certain other conditions described herein. SEC Approval................. The Offer is conditioned, among other things, upon the approval of the SEC under the 1935 Act. Expiration Date of the Offer...................... The Offer expires at 5:00 p.m., central time, , 1997, unless extended (the "Expiration Date"). How to Tender Shares......... See "Terms of the Offer--Procedure for Tendering Shares." For further information, call the Information Agent or the Dealer Managers or consult your broker for assistance. Withdrawal Rights............ Tendered Shares of any Series of Preferred may be withdrawn at any time until the Expiration Date with respect to such Series of Preferred
1 and, unless theretofore accepted for payment, may also be withdrawn after , 1997. See "Terms of the Offer-- Withdrawal Rights". Purpose of the Offer......... CSW is making the Offer because it believes that the purchase of Shares is attractive to CSW, its shareholders and CPL. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium over the market price and without the usual transaction costs associated with a market sale. See "Purpose of the Offer; Certain Effects of the Offer." Potential Proxy Solicitation............... The Board of Directors of CPL is currently contemplating soliciting proxies to amend a provision of CPL's Articles which limits the amount of unsecured debt CPL may issue. If proxies are solicited, and such amendment is approved and adopted, CPL may make a special cash payment to shareholders who voted in favor of such amendment. Preferred Shareholders of record who vote for such amendment would be entitled to such cash payment regardless of whether they had tendered Shares pursuant to the Offer. Dividends.................... [A regular quarterly dividend has been declared on each Series of Preferred, payable on May 1, 1997 to the owners of record on [ ] (the "May 1997 Dividend"). A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the May 1997 Dividend on Shares held of record on [ ], regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof).] Brokerage Commissions........ Not payable by Preferred Shareholders. Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. See Instruction 5 of the applicable Letter of Transmittal. See "Terms of the Offer--Acceptance of Shares for Payment of Purchase Price and Dividends." Payment Date................. Promptly after the Expiration Date. Further Information.......... Additional copies of this Offer to Purchase and the applicable Letter of Transmittal may be obtained by D.F. King & Co., Inc., 77 Water Street, New York, New York 10005, telephone (800) 755-3107 (toll-free) and (212) 269-5550 (brokers and dealers). Questions about the Offer should be directed to Goldman, Sachs & Co. (800) 828-3182 or Smith Barney Inc. at (800) 655-4811.
2 TERMS OF THE OFFER NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS Upon the terms and subject to the conditions described herein and in the applicable Letter of Transmittal, CSW will purchase any and all Shares that are validly tendered on or prior to the applicable Expiration Date (and not properly withdrawn in accordance with "Terms of the Offer--Withdrawal Rights") at the purchase price per Share listed on the front cover of this Offer to Purchase for the Shares tendered, net to the seller in cash. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period; Termination." THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER." The Offer is being sent to all persons in whose names Shares are registered on the books of CPL on , 1997. With respect to each Series of Preferred, the Expiration Date is the later of 5:00 p.m., central time, on , , 1997 or the latest time and date to which the Offer with respect to such Series of Preferred is extended. CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer for any Series of Preferred is open, by giving oral or written notice of such extension to the Depositary, without extending the period of time during which the Offer for any other Series of Preferred is open. There is no assurance whatsoever that CSW will exercise its right to extend the Offer for any Series of Preferred. If CSW decides, in its sole discretion, to decrease the number of Shares of any Series of Preferred being sought or to increase or decrease the consideration offered in the Offer to holders of any Series of Preferred and, at the time that notice of such increase or decrease is first published, sent or given to holders of such Series of Preferred in the manner specified herein, the Offer for such Series of Preferred is scheduled to expire at any time earlier than the tenth business day from the date that such notice is first so published, sent or given, such Offer will be extended until the expiration of such ten-business-day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, eastern standard time. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED. [The May 1997 Dividend has been declared on each Series of Preferred, payable May 1, 1997 to owners of record on [ ]. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the May 1997 Dividend on shares held of record on [ ], regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof).] PROCEDURE FOR TENDERING SHARES To tender Shares pursuant to the Offer, the tendering owner of Shares must either: (a) send to the Depositary (at one of its addresses set forth on the back cover of this Offer to Purchase) a properly completed and duly executed Letter of Transmittal or facsimile thereof, together with any required signature guarantees and any other documents required by the Letter of Transmittal and either (i) certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer described herein (and a confirmation of such delivery must be received by the Depositary), in each case by the Expiration Date; or 3 (b) comply with the guaranteed delivery procedure described under "Guaranteed Delivery Procedure" below. The Depositary will establish an account with respect to the Shares at The Depository Trust Company and Philadelphia Depository Trust Company (collectively referred to as the "Book-Entry Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase and any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of such Book-Entry Transfer Facility. Although delivery of Shares may be effected through book-entry transfer, such delivery must be accompanied by either (i) a properly completed and duly executed Letter of Transmittal or facsimile thereof, together with any required signature guarantees and any other required documents or (ii) an Agent's Message (as hereinafter defined) and, in any case, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase at or prior to 5:00 p.m., central time, on the Expiration Date. The term "Agent's Message" means a message, transmitted by one of the Book-Entry Transfer Facilities, received by the Depositary and forming a part of the book-entry transfer when a tender is initiated, which states that the Book-Entry Transfer Facility has received an express acknowledgment from a participant tendering Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that CSW may enforce such agreement against such participant. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States that is a participant in an approved Signature Guarantee Medallion Program (each of the foregoing being referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed if (a) the Letter of Transmittal is signed by the holder of record of the shares tendered therewith and such owner has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (b) such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 4 of the Letter of Transmittal. GUARANTEED DELIVERY PROCEDURE. If a Preferred Shareholder desires to tender Shares pursuant to the Offer and such Preferred Shareholder's certificates are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are complied with: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by CSW and CPL herewith, is received (with any required signature guarantees) by the Depositary as provided below at or prior to 5:00 p.m., central time, on the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer or a Book-Entry Confirmation with respect to all tendered Shares, together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) and any other documents required by the Letter of Transmittal, are received by the Depositary no later than 5:00 p.m., central time, within three business days after the date of execution of such Notice of Guaranteed Delivery. THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF GUARANTEED DELIVERY. 4 In all cases, Shares shall not be deemed validly tendered unless a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) is received by the Depositary within the applicable time limits. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer in all cases will be made only after timely receipt by the Depositary of certificates for (or an Agent's Message with respect to) such Shares, a Letter of Transmittal or a manually signed facsimile thereof, properly completed and duly executed, with any required signature guarantees and all other documents required by the Letter of Transmittal. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHARE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE ALLOWED FOR DELIVERY. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING UNITED STATES PREFERRED SHAREHOLDER MUST NOTIFY THE DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES." EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER. All questions as to the form of documents and the validity, eligibility (including the time of receipt) and acceptance for payment of any tender of Shares will be determined by CSW, in its sole discretion, and its determination will be final and binding. CSW reserves the absolute right to reject any or all tenders of Shares that (i) it determines are not in proper form or (ii) the acceptance for payment of or payment for which may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any defect or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notice of any defect or irregularity in tenders, nor shall any of them incur any liability for failure to give any such notice. WITHDRAWAL RIGHTS Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after , 1997, unless theretofore accepted for payment as provided in this Offer to Purchase. If, with respect to any Series of Preferred, CSW extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares of that Series of Preferred or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to CSW's rights under the Offer, the Depositary may, on behalf of CSW, retain all Shares of that Series of Preferred tendered, and such Shares may not be withdrawn except as otherwise provided in this "Terms of the Offer-Withdrawal Rights", subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that an issuer making a tender offer shall either pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the tender offer. To be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary, at one of its addresses set forth on the back cover of this Offer to Purchase, and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of 5 withdrawal with signatures guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered owner (if different from that of the tendering Preferred Shareholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book-Entry Transfer Facilities to be credited with the withdrawn Shares and the name of the registered holder (if different from the name of such account). Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in "Terms of the Offer-- Procedure for Tendering Shares" at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by CSW, in its sole discretion, and its determination will be final and binding. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or will incur any liability for failure to give any such notification. ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS Upon the terms and subject to the conditions of the Offer, and as promptly as practicable after the Expiration Date, CSW will accept for payment (and thereby purchase) and pay for Shares validly tendered and not withdrawn as permitted in "Terms of the Offer-- Withdrawal Rights." In all cases, payment for Shares accepted for payment pursuant to the Offer will be made promptly but only after timely receipt by the Depositary of certificates for such Shares (or of an Agent's Message), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents. For purposes of the Offer, CSW will be deemed to have accepted for payment (and thereby purchased) Shares that are validly tendered and not withdrawn as, if and when it gives oral or written notice to the Depositary of its acceptance for payment of such Shares. CSW will pay for Shares that it has purchased pursuant to the Offer by depositing the purchase price therefor with the Depositary, which will act as agent for tendering Preferred Shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering Preferred Shareholders. Under no circumstances will interest be paid on amounts to be paid to tendering Preferred Shareholders, regardless of any delay in making such payment. Certificates for all Shares not validly tendered will be returned or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained with a Book-Entry Transfer Facility, as promptly as practicable, without expense to the tendering Preferred Shareholder. Payment for shares may be delayed in the event of difficulty in determining the number of Shares properly tendered. In addition, if certain events occur, CSW may not be obligated to purchase Shares pursuant to the Offer. See "Terms of the Offer--Certain Conditions of the Offer." CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to any person other than the registered owner, or if tendered Shares are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered owner, such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See Instruction 5 of the applicable Letter of Transmittal. 6 CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, CSW will not be required to accept for payment or pay for any Shares tendered, and may terminate or amend the Offer or may postpone (subject to the requirements of the Securities Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of Shares) the acceptance for payment of, or payment for, Shares tendered, if at any time after , 1997, and at or before acceptance for payment of or payment for any Shares, any of the following shall have occurred: (a) there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic or foreign, or before any court, authority, agency or tribunal that (i) challenges the acquisition of Shares pursuant to the Offer or otherwise in any manner relates to or affects the Offer or (ii) in the sole judgment of CSW, could materially and adversely affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of CPL individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries or materially impair the Offer's contemplated benefits to CSW; (b) there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or CSW or any of its subsidiaries, by any legislative body, court, authority, agency or tribunal that, in CSW's sole judgment, would or might directly or indirectly (i) make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer, (ii) delay or restrict the ability of CSW, or render CSW unable, to accept for payment or pay for some or all of the Shares, (iii) materially impair the contemplated benefits of the Offer to CSW or (iv) materially affect the business, condition (financial or otherwise), income, operations or prospects of CSW and its subsidiaries taken as a whole or of CPL individually, or otherwise materially impair in any way the contemplated future conduct of the business of CSW or any of its subsidiaries; (c) there shall have occurred (i) any significant decrease in the market price of the Shares or any change in the general political, market, economic or financial conditions in the United States or abroad that could have a material adverse effect on CSW's business, operations, prospects or ability to obtain financing generally or the trading in the other equity securities of CSW, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation on, or any event that, in CSW's sole judgment, might affect the extension of credit by lending institutions in the United States, (iii) the commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (v) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof or (vi) any decline in either the Dow Jones Industrial Average or the Standard and Poor's Composite 500 Stock Index by an amount in excess of 15% measured from the close of business on , 1997; (d) any tender or exchange offer with respect to some or all of the Shares (other than the Offer), or a merger, acquisition or other business combination proposal for CSW, shall have been proposed, announced or made by any person or entity; (e) there shall have occurred any event or events that have resulted, or may in the sole judgment of CSW result, in an actual or threatened change in the business, condition (financial or otherwise), income, operations, stock ownership or prospects of CSW and its subsidiaries; or 7 (f) the SEC shall have withheld approval, under the 1935 Act, of the acquisition of the Shares by CSW pursuant to the Offer; and, in the sole judgment of CSW, such event or events make it undesirable or inadvisable to proceed with the Offer or with such acceptance for payment or payment. With respect to the approval of the SEC referenced in clause (f) above, the SEC must find, among other things, that the acquisition of the Shares by CSW is not detrimental to the public interest or the interest of the investors or consumers, and that the consideration paid in connection with the acquisition, including fees, commissions and other remuneration, is reasonable. The foregoing conditions are for the sole benefit of CSW and may be asserted by CSW regardless of the circumstances (including any action or inaction by CSW) giving rise to any such condition, and any such condition may be waived by CSW, in whole or in part, at any time and from time to time in its sole discretion. The failure by CSW at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by CSW concerning the events described above will be final and binding on all parties. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS CSW expressly reserves the right, in its sole discretion, and at any time and/or from time to time, to extend the period of time during which the Offer for any Series of Preferred is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof, without extending the period of time during which the Offer for any other Series of Preferred is open. There can be no assurance, however, that CSW will exercise its right to extend the Offer for any Series of Preferred. During any such extension, all Shares of the subject Series of Preferred previously tendered will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in "Terms of the Offer--Withdrawal Rights." CSW also expressly reserves the right, in its sole discretion, to terminate the Offer and not accept for payment or pay for any Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act which requires CSW either to pay the consideration offered or to return the Shares tendered promptly after the termination or withdrawal of the Offer, upon the occurrence of any of the conditions specified in "Terms of the Offer--Certain Conditions of the Offer" by giving oral or written notice of such termination to the Depositary, and making a public announcement thereof. Subject to compliance with applicable law, CSW further reserves the right, in its sole discretion, to amend the Offer in any respect. Amendments to the Offer may be made at any time and/or from time to time effected by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., central time, on the next business day after the previously scheduled Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to Preferred Shareholders affected thereby in a manner reasonably designed to inform such Preferred Shareholders of such change. Without limiting the manner in which CSW may choose to make a public announcement, except as required by applicable law, CSW shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If CSW materially changes the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, CSW will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. The SEC has stated that, in its view, an offer should remain open for a minimum of five business days from the date that a notice of such a material change is first published, sent or given. If the Offer is 8 scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that CSW publishes, sends or gives to Preferred Shareholders a notice that it will (a) increase or decrease the price it will pay for Shares or (b) decrease the percentage of Shares it seeks, the Offer will be extended until the expiration of such period of ten business days. THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. IF CSW EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO ONE SERIES OF PREFERRED FOR ANY REASON, CSW WILL HAVE NO OBLIGATION TO EXTEND THE OFFER FOR ANY OTHER SERIES OF PREFERRED. FINANCIAL AND OTHER INFORMATION RELATING TO CPL The financial statements of CPL and related information included in its Annual Report on Form 10-K for the year ended December 31, 1996 as filed with the SEC, is hereby incorporated by reference. CPL will provide without charge, upon the written or oral request of any person (including any beneficial owner) to whom this Offer to Purchase is delivered, a copy of such information (excluding certain exhibits). Such requests for information should be directed to Stephen D. Wise, Director, Finance, Central and South West Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for CPL, telephone (214) 777-1000. 9 PRICE RANGE OF SHARES; DIVIDENDS CPL's Cumulative Preferred Stock 4.20% Series and 4.00% Series are traded in the OTC under the symbols " " and " ", respectively. The last reported sale price in the OTC, as of the close of business on , 1997, for each of the Series of Preferred is shown on the front cover of this Offer to Purchase. However, Preferred Shareholders should be aware that there is no established trading market for the Shares and that the Shares of each Series of Preferred only trade sporadically and on a limited basis and, therefore, the last reported sales prices may not necessarily reflect the current market value of the Shares. PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF AVAILABLE, FOR THE SHARES. The following table sets forth the high and low sales prices of each Series of Preferred in the OTC as reported by the National Quotation Bureau, Inc. and the cash dividends paid thereon for the fiscal quarters indicated. DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK BY QUARTERS (1996 AND 1995)
1996--QUARTERS 1995--QUARTERS ------------------------------------------ ------------------------------- 1ST 2ND 3RD 4TH 1ST 2ND 3RD --------- --------- --------- --------- --------- --------- --------- CUMULATIVE PREFERRED STOCK ($100 Par Value) 4.20% SERIES Dividends Paid Per Share.......................... $ 1.05 $ 1.05 $ 1.05 $ 1.05 $ 1.05 $ 1.05 $ 1.05 Market Price--$ Per Share (OTC) Ask--High....................................... --Low........................................ Bid--High....................................... --Low......................................... 4.00% SERIES Dividends Paid Per Share.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Market Price--$ Per Share (OTC) Ask--High....................................... --Low........................................ Bid--High....................................... --Low......................................... 4TH --------- CUMULATIVE PREFERRED STOCK ($100 Par Value) 4.20% SERIES Dividends Paid Per Share.......................... $ 1.05 Market Price--$ Per Share (OTC) Ask--High....................................... --Low........................................ Bid--High....................................... --Low......................................... 4.00% SERIES Dividends Paid Per Share.......................... $ 1.00 Market Price--$ Per Share (OTC) Ask--High....................................... --Low........................................ Bid--High....................................... --Low.........................................
Dividends for a Series of Preferred are payable when, as and if declared by CPL's Board of Directors at the rate per annum included in such title of the Series of Preferred listed on the front cover of this Offer to Purchase. [The May 1997 Dividend has been declared on each Series of Preferred, payable May 1, 1997 to owners of record on [ ]. A tender and purchase of Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or her right to receive the May 1997 Dividend on shares held of record on [ ], regardless of when such tender is made. Tendering Preferred Shareholders will not be entitled to any dividends in respect of any later dividend periods (or any portion thereof).] PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER CSW believes that the purchase of the Shares at this time represents an attractive opportunity that will benefit CSW, its shareholders, and CPL. In addition, the Offer gives Preferred Shareholders the opportunity to sell their Shares at a premium to the market price on the date of the announcement of the Offer and without the usual transaction costs associated with a sale. 10 After the consummation of the Offer, CSW may determine to purchase additional Shares on the open market, in privately negotiated transactions, through one or more tender offers or otherwise. Any such purchases may be on the same terms as, or on terms which are more or less favorable to holders of Shares than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act prohibits CSW and its affiliates (including CPL) from purchasing any Shares of a Series of Preferred, other than pursuant to the Offer until at least ten business days after the Expiration Date with respect to the Series of Preferred. Any future purchases of Shares by CSW would depend on many factors, including the market price of the Shares, CSW's business and financial position, restrictions on CSW's ability to purchase Shares imposed by law and general economic and market conditions. Preferred Shareholders are not under any obligation to tender Shares pursuant to the Offer. The Offer does not constitute notice of redemption of any Series of Preferred pursuant to CPL's Articles, nor does CSW or CPL intend to effect any such redemption by making the Offer. The Offer does not constitute a waiver by CPL of any right it has to redeem Shares. The 4.20% Series of Preferred is currently redeemable, upon call at a price of $103.75 per Share, plus accrued dividends. The 4.00% Series of Preferred is currently redeemable, upon call at a price of $105.75 per Share, plus accrued dividends. The Shares of each Series of Preferred have no preemptive or conversion rights. Upon liquidation or dissolution of CPL, owners of the Shares would be entitled to receive an amount equal to the liquidation preference per share ($100) plus all accrued and unpaid dividends (whether or not earned or declared) thereon to the date of payment, prior to the payment of any amounts to the holders of CPL's common stock. Shares validly tendered to the Depositary pursuant to the Offer and not withdrawn in accordance with the procedures set forth herein shall be held until the Expiration Date (or returned to the extent the Offer is terminated in accordance herewith). To the extent that Shares tendered are accepted for payment and paid for in accordance with the terms hereof, CSW intends to sell at the purchase price per Share listed on the front cover of this Offer to Purchase, or if such purchase prices are increased or decreased by CSW, at such increased or decreased purchase prices, its Shares to CPL and, at that time, it is expected that CPL will retire and cancel the Shares. CPL may obtain all or a portion of the purchase price for such Shares from the proceeds of the sale of tax-deductible trust preferred securities which qualify as unsecured debt for purposes of the 10% and 20% provisions contained in the Articles. A provision in CPL's Articles (as defined herein) restricts the amount of unsecured debt that CPL may issue. CPL's Board of Directors is currently contemplating soliciting proxies to amend such provision. If proxies are solicited, and if such amendment is approved and adopted, a cash payment may be made to shareholders who voted in favor of such amendment. A Preferred Shareholder of record who votes for such amendment would be entitled to such cash payment regardless of whether they had tendered Shares pursuant to the Offer. It is likely that the Offer will reduce the number of Shares of each of the Series of Preferred that might otherwise trade publicly or become available for purchase and/or sale and likely will reduce the number of owners of Shares of each of the Series of Preferred, which could adversely affect the liquidity and sale value of the Shares not purchased in the Offer. The extent of the public market for such Shares and the availability of price quotations would typically depend upon such factors as the number of shareholders remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms and other factors. As of December 31, 1996, there were 32 registered holders of the 4.20% Series and 628 registered holders of the 4.00% Series. In addition, the Series of Preferred are currently registered under Section 12(g) of the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon the application by CPL to the SEC if the Shares are neither listed on a national securities exchange nor held by more than 300 holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished to Preferred Shareholders and could make certain provisions of the Exchange Act no longer applicable to CPL. In addition, to the extent that CPL elects to fund its purchase of the Shares, in whole or in part, by issuing additional unsecured debt, including tax-deductible trust 11 preferred securities, the remaining Preferred Shareholders' relative position in CPL's capital structure could be perceived to decline, which in turn could adversely affect the market price and credit rating of the remaining Shares. Except as disclosed in this Offer to Purchase, CSW and CPL have no plans or proposals that relate to or would result in: (a) the acquisition by any person of additional securities of CPL or the disposition of securities of CPL; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving CPL or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of CPL or any of its subsidiaries; (d) any change in the present Board or management of CPL; (e) any material change in the present dividend rate or policy, or indebtedness or capitalization of CPL; (f) any other material change in CPL's corporate structure or business; (g) any change in CPL's Articles or bylaws or any actions that may impede the acquisition of control of CPL by any person; (h) a class of equity securities of CPL becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (i) the suspension of CPL's obligation to file reports pursuant to Section 15(d) of the Exchange Act. NEITHER CSW, CPL, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of the principal United States federal income tax consequences of the sale of Shares pursuant to the Offer. This summary is addressed only to Preferred Shareholders who are "United States Holders" (as defined below) and who hold their Shares as capital assets within the meaning of the Internal Revenue Code of 1986, as amended ("the Code"). This summary does not address all aspects of federal income taxation that may be relevant to a particular Preferred Shareholder in light of such Preferred Shareholder's individual circumstances or to Preferred Shareholders subject to special treatment under the federal income tax laws, such as Preferred Shareholders who are not United States Holders, banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, dealers in securities and currencies, Preferred Shareholders who received their Shares as part of a compensation arrangement with CPL, and Preferred Shareholders holding Shares as part of a position in a "straddle" or as part of a "hedging," "conversion" or other integrated investment transaction for federal income tax purposes. The statements of law or legal conclusion set forth in this summary constitute the opinion of Christy & Viener, special tax counsel to CSW and CPL. This summary is based upon the Code, Treasury Regulations, Internal Revenue Service rulings and pronouncements, and judicial decisions now in effect, all of which are subject to change at any time. Such a change could adversely affect the tax consequences described herein, possibly on a retroactive basis. In addition, the authorities on which this summary is based are subject to various interpretations and it is therefore possible that the United States federal income tax treatment of the payments made pursuant to the Offer may differ from the treatment described below. Preferred Shareholders should consult their own tax advisors in light of their particular circumstances as to the application of United States federal income tax laws, as well as the effect of any state, local, or foreign tax laws. As used herein, the term "United States Holder" means a Preferred Shareholder that is (i) for United States federal income tax purposes, a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state thereof or the District of Columbia, or (iii) an estate or trust specified as being a "United States Person" in the Code. 12 SALE OF SHARES A United States Holder will recognize gain or loss equal to the difference between the tax basis of such holder's Shares and the amount of cash received in exchange therefor. A United States Holder's gain or loss will be long-term capital gain or loss if the holding period for the Shares is more than one year as of the date of the sale of such Shares. The excess of net long-term capital gains over net short-term capital losses is taxed at a lower rate than ordinary income for certain non-corporate taxpayers. The distinction between capital gain or loss and ordinary income or loss is also relevant for purposes of, among other things, limitations on the deductibility of capital losses. BACKUP WITHHOLDING AND INFORMATION REPORTING The amount of payment made to a United States Holder pursuant to the Offer will be reported to such holder and to the Internal Revenue Service except in the case of corporations and other holders exempt from information reporting and backup withholding. Backup withholding at a rate of 31% will apply to any such payments made to non-exempt United States Holders unless the holder provides its taxpayer identification number and the certifications required to establish that it is not subject to backup withholding. In order to prevent backup withholding, each tendering United States Holder must provide such holder's taxpayer identification number and certify that such holder is not subject to backup withholding by completing the substitute Form W-9 included herewith. The amount of any backup withholding from a payment to a United States Holder will be allowed as a credit against such holder's United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. SOURCE AND AMOUNT OF FUNDS Assuming that CSW purchases all outstanding Shares pursuant to the Offer, the total amount required by CSW to purchase such Shares will be approximately $[ ] million, exclusive of the accrued and unpaid dividends payments, but including fees and other expenses. CSW intends to fund the Offer through the use of its general funds (which, in the ordinary course, include funds from CPL) and funds borrowed pursuant to CSW's commercial paper program. CSW sells commercial paper directly to commercial paper dealers who reoffer the commercial paper to investors. At December 31, 1996, CSW had two credit facilities in place aggregating $1.2 billion to back up the commercial paper program. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES Each of CSW and CPL has been advised by its directors and executive officers that no directors or executive officers of the respective companies own any Shares. Based upon the companies' records and upon information provided to each company by its directors and executive officers, neither company nor, to the knowledge of either company, any of their subsidiaries, directors, or executive officers has engaged in any transactions involving Shares during the 40 business days preceding the date hereof. Neither company nor, to the knowledge of either company, any of its directors or executive officers is a party to any contract, arrangement, understanding or relationship relating directly or indirectly to the Offer with any other person with respect to any securities of CPL. FEES AND EXPENSES ASSOCIATED WITH THE OFFER DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the Dealer Managers a combined fee of $0.50 per Share for any Shares tendered, accepted for payment and paid for pursuant to the Offer. Each Dealer Manager will also be reimbursed by CSW for its reasonable out-of pocket expenses, including 13 attorneys' fees, and will be indemnified against certain liabilities, including certain liabilities under the federal securities laws, in connection with the Offer. Each Dealer Manager has rendered, is currently rendering and is expected to continue to render various investment banking services to CSW and CPL. Each Dealer Manager has received, and will continue to receive, customary compensation from the companies for such services. CSW has retained The Bank of New York as Depositary and D.F. King & Co., Inc. as Information Agent in connection with the Offer. The Depositary and Information Agent will receive reasonable and customary compensation for their services and will also be reimbursed for certain out-of-pocket expenses. CSW has agreed to indemnify the Depositary and Information Agent against certain liabilities, including certain liabilities under the federal securities law, in connection with the Offer. Neither the Depositary nor the Information Agent has been retained to make solicitations or recommendations in connection with the Offer. SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered and accepted for payment and paid for pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of Transmittal which designates, as having solicited and obtained the tender, the name of (i) any broker or dealer in securities, including the Dealer Managers in their capacity as a broker or dealer, who is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be payable to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealers' own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be an agent of CSW, the Depositary, the Information Agent or the Dealer Managers for the purposes of the Offer. STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any, payable on account of the acquisition of Shares by CSW pursuant to the Offer, except in certain circumstances where special payment or delivery procedures are utilized pursuant to Instruction 5 of the accompanying Letter of Transmittal. CERTAIN INFORMATION REGARDING CSW AND CPL CPL is an operating utility primarily engaged in the generation, purchase, transmission, distribution and sale of electric power to approximately 625,000 retail customers in the South Texas area. All of the common stock of CPL is owned, directly or indirectly, by CSW, a registered holding company under the 1935 Act. CPL, and CPL Capital I and CPL Capital II, each a statutory business trust formed under the laws of the State of Delaware, have filed a registration statement on Form S-3 (the "Registration Statement") with the SEC with respect to the proposed offering from time to time of up to $150,000,000 aggregate liquidation preference of Quarterly Income Preferred Securities, guaranteed by CPL to the extent set forth in the Registration Statement (the "Quarterly Income Preferred Securities"). Following the announcement of the Offer, and subject to market and other conditions, CPL intends that such trusts will effect one or more public offerings of Quarterly Income Preferred Securities. Any such offering would be made only by means of a prospectus which is included in the Registration Statement. The Board of Directors of CPL is currently contemplating soliciting proxies from the holders of its common and preferred stock for use at a special meeting to consider an amendment to CPL's Articles. 14 The amendment would remove a provision of the Articles that limits CPL's ability to issue unsecured debt. If proxies are solicited, and such amendment is approved and adopted, a special cash payment may be made to shareholders who voted in favor of such amendment. Preferred Shareholders of record who vote for such amendment would be entitled to such cash payment regardless of whether they had tendered Shares pursuant to the Offer. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION Set forth below is certain consolidated historical financial information of CPL. The historical financial information (other than the ratios of earnings to fixed charges) was derived from the audited consolidated financial statements included in CPL's Annual Report on Form 10-K for the year ended December 31, 1996 which statements are hereby incorporated by reference. More comprehensive financial information is included in such reports and the financial information which follows is qualified in its entirety by reference to such reports and all of the financial statements and related notes contained therein, copies of which may be obtained as set forth herein. CONDENSED INCOME STATEMENT DATA:
YEAR ENDED DECEMBER 31, ------------------------------------------- 1996 1995 1994 ------------- ------------- ------------- (THOUSANDS, EXCEPT RATIOS) Operating Revenues.................................................. $ 1,300,688 $ 1,073,469 $ 1,217,979 Operating Income.................................................... 285,647 282,184 256,251 Allowance for Equity Funds Used During Construction................. 427 442 1,215 Net Income.......................................................... 147,051 206,447 205,439 Preferred Dividend Requirement...................................... 13,563 14,469 13,804 Net Income Applicable to Common Stock............................... 133,488 191,978 191,635 Ratio of Earnings to Fixed Charges.................................. 2.86 2.63 3.24
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
DECEMBER 31, ------------------------------------------- 1996 1995 1994 ------------- ------------- ------------- (THOUSANDS, EXCEPT RATIOS) ASSETS: Net Utility Plant................................................... $ 3,419,018 $ 3,469,945 $ 3,469,826 Cash and Temporary Cash Investments................................. 3,299 2,883 642 Other Current Assets................................................ 175,013 167,477 176,100 Other Assets........................................................ 1,230,933 1,240,831 176,742 ------------- ------------- ------------- 4,828,263 $ 4,881,136 $ 4,822,699 ------------- ------------- ------------- ------------- ------------- ------------- LIABILITIES: Common Equity....................................................... $ 1,442,820 $ 1,437,332 $ 1,431,354 Cumulative Preferred Stock.......................................... 250,351 250,351 250,351 Long-term Debt...................................................... 1,323,054 1,517,347 1,466,393 Current Liabilities................................................. 487,863 357,772 376,006 Other Liabilities................................................... 1,324,175 1,318,334 1,298,595 ------------- ------------- ------------- $ 4,828,263 $ 4,881,136 $ 4,822,699 ------------- ------------- ------------- ------------- ------------- -------------
15 ADDITIONAL INFORMATION REGARDING CSW CSW is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the SEC. In connection with the Offer, CSW has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes certain additional information relating to the Offer. Such material can be inspected and copied at the public reference facilities of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a Web site at http://www.sec.gov containing reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including CSW and CPL. CSW's Schedule 13E-4 will not be available at the SEC's regional offices. MISCELLANEOUS The Offer is not being made to, nor will CSW accept tenders from, owners of Shares in any jurisdiction in which the Offer or its acceptance would not be in compliance with the laws of such jurisdiction. CSW is not aware of any jurisdiction where the making of the Offer or the tender of Shares would not be in compliance with applicable law. If CSW becomes aware of any jurisdiction where the making of the Offer or the tender of Shares is not in compliance with any applicable law, CSW will make a good faith effort to comply with such law. If, after such good faith effort, CSW cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the owners of Shares residing in such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. CENTRAL AND SOUTH WEST CORPORATION 16 Facsimile copies of the Letter of Transmittal will only be accepted from Eligible Institutions. The Letter of Transmittal and, if applicable, certificates for Shares should be sent or delivered by each tendering Preferred Shareholder of CPL or his or her broker, dealer, bank or trust company to the Depositary at one of its addresses set forth below. The Depositary is: THE BANK OF NEW YORK FACSIMILE TRANSMISSION: (FOR ELIGIBLE INSTITUTIONS BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department (212)815-6213 Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286 FOR INFORMATION, TELEPHONE: (800) 507-9357
Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and addresses listed below. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal, or other tender offer materials may be directed to the Information Agent or the Dealer Managers, and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) The Dealer Managers: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Paul S. Galant
17 EX-4 6 NOTICE OF SPECIAL MEETING & PROXY CARD [LOGO] Central Power and Light Company 539 North Carancahua Street Corpus Christi, Texas 78401-2802 March , 1997 Dear Shareholder: Please find enclosed important information pertaining to a proposed amendment to the Restated Articles of Incorporation (the "Articles") of Central Power and Light Company ("CPL") which will be considered at a Special Meeting of its Shareholders. We would greatly appreciate your giving prompt attention to the enclosed material which you are urged to read in its entirety. The Articles presently limit CPL's ability to issue securities representing (i) unsecured indebtedness to no more than 20% of the aggregate of its capital, surplus and secured debt and (ii) unsecured indebtedness maturing in less than ten years to 10% of such aggregate. These 20% and 10% restrictions limit CPL's flexibility in planning and financing its business activities. With flexibility and cost structure being crucial factors to success in a competitive utility environment, CPL ultimately may be placed at a competitive disadvantage if these restrictions are not removed from the Articles. The proposed amendment, as set forth and explained in the enclosed Proxy Statement, would remove the 20% and 10% restrictions. If you vote in favor of the proposed amendment and it passes, you will be entitled to receive a special cash payment in the amount of $.50 per share for each share that you vote in favor of the proposed amendment. Information pertaining to the special cash payment is included with the enclosed material. Central and South West Corporation ("CSW") is currently making an offer to purchase all shares of CPL's 4.20% and 4.00% cumulative preferred stock. Shareholders of the 4.20% and 4.00% series are entitled to vote for the proposed amendment, and to receive the special cash payment, regardless of whether they tender shares pursuant to CSW's offer. It is important to your interests that all shareholders, regardless of the number of shares owned, vote at the Special Meeting. Even if you plan to attend the Special Meeting, WE URGE YOU TO MARK, SIGN AND DATE THE ENCLOSED PROXY, WHICH IS INCLUDED WITHIN, AND RETURN IT, BY MAIL OR FACSIMILE, PRIOR TO THE DATE OF THE SPECIAL MEETING TO CENTRAL AND SOUTH WEST SERVICES, INC., GOLDMAN, SACHS & CO., OR SMITH BARNEY INC. AT THE ADDRESS OR FACSIMILE NUMBER LISTED IN THE ENCLOSED PROXY STATEMENT. By signing and returning your proxy promptly, you are assuring that your shares will be voted. You are cordially invited to attend the Special Meeting which will be held at CPL's principal office, 539 North Carancahua Street, Corpus Christi, Texas, on , , 1997 at 4:45 p.m., central time. If you have any questions regarding the proposed amendment or the Special Meeting, please call [ ] of CPL at [ ], D.F. King & Co., Inc., the Information Agent, at (800) 755-3107, Goldman, Sachs & Co., at (800) 828-3182, Smith Barney Inc. at (800) 655-4811, Lehman Brothers at [ ] or your Broker-Dealer. Thank you for your continued interest in CPL. Sincerely yours, [/S/] [/S/] M. Bruce Evans Glenn Files Director and President Director Goldman, Sachs & Co. Smith Barney Inc.
NOTICE AND PROXY STATEMENT SPECIAL MEETING OF SHAREHOLDERS TO BE HELD , 1997 ------------------------ CENTRAL POWER AND LIGHT COMPANY 539 NORTH CARANCAHUA STREET CORPUS CHRISTI, TEXAS 78401-2802 [LOGO] 3 CENTRAL POWER AND LIGHT COMPANY 539 NORTH CARANCAHUA STREET CORPUS CHRISTI, TEXAS 78401-2802 ------------------------ NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , 1997 ------------------------ TO THE SHAREHOLDERS OF CENTRAL POWER AND LIGHT COMPANY: NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Central Power and Light Company ("CPL") will be held at CPL's principal office, 539 North Carancahua Street, Corpus Christi, Texas 78401-2802, on , , 1997 at 4:45 p.m., central time, for purposes of considering the removal from the Restated Articles of Incorporation subparagraph (c) of paragraph 6 of Article VI, which limits CPL's ability to issue unsecured indebtedness and transacting such other business as may legally come before the meeting. Only shareholders of record at the close of business on , , 1997, will be entitled to vote at the meeting and at any adjournment thereof. Holders of cumulative preferred stock ("Preferred Shareholders"), whether or not they now expect to be present at the meeting, are requested to mark, date and sign the enclosed proxy, and return it prior to the date of the Special Meeting. An addressed envelope, on which no postage stamp is necessary if mailed in the United States, is enclosed for use in returning the proxy. Preferred Shareholders who execute and deliver the enclosed proxy have the power to revoke such proxy at any time before the authority granted by the proxy is exercised. CENTRAL POWER AND LIGHT COMPANY BY [ ], SECRETARY Dated: March , 1997 CENTRAL POWER AND LIGHT COMPANY PROXY STATEMENT With respect to its Common Stock and Cumulative Preferred Stock INTRODUCTION This Proxy Statement is first being mailed on or about , 1997 to the shareholders of Central Power and Light Company, a Texas corporation ("CPL"), in connection with the solicitation of proxies by the Board of Directors (the "Board") of CPL for use at the Special Meeting of shareholders to be held on , 1997, or any adjournment or postponement of such meeting (the "Special Meeting"). At the Special Meeting, the shareholders of CPL will vote upon a proposed amendment to CPL's Restated Articles of Incorporation ("Articles"). If the proposed amendment is approved and adopted by CPL's shareholders, CPL will make a special cash payment in the amount of $.50 per share (the "Cash Payment") to each preferred shareholder who voted in favor of the proposed amendment. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT (REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED). CENTRAL AND SOUTH WEST CORPORATION ("CSW") IS CURRENTLY MAKING AN OFFER TO PURCHASE ALL SHARES OF CPL'S 4.20% (THE "4.20% SERIES") AND 4.00% (THE "4.00% SERIES") CUMULATIVE PREFERRED STOCK (THE "OFFER"). SHAREHOLDERS OF THE 4.20% AND 4.00% SERIES ARE ENTITLED TO VOTE FOR THE PROPOSED AMENDMENT, AND TO RECEIVE THE CASH PAYMENT, REGARDLESS OF WHETHER THEY TENDER SHARES PURSUANT TO THE OFFER. VOTING SECURITIES, RIGHTS AND PROCEDURES Only holders of record of CPL's voting securities at the close of business on , 1997 (the "Record Date") will be entitled to vote in person or by proxy at the Special Meeting. The outstanding voting securities of CPL for purposes of voting on the proposed amendment are divided into two classes: common stock and cumulative preferred stock. The class of cumulative preferred stock has been issued in five series of preferred with the record holders of all shares of the cumulative preferred stock voting together as one class. The shares outstanding on the date of the Special Meeting, and the vote to which each share is entitled in consideration of the proposed amendment, are as follows:
CLASS SHARES OUTSTANDING VOTES PER SHARE - ------------------------------------------------------ ------------------- ----------------- Common Stock (Par Value $25 per share)................ 6,755,535 1 vote Cumulative Preferred Stock (Par Value $100 per Share).............................................. 1,775,000 1 vote
The affirmative vote of the holders of two-thirds of the outstanding shares of each of CPL's (i) common stock and (ii) cumulative preferred stock, all series of the cumulative preferred stock voting together as one class, is required to approve the proposed amendment to be presented at the Special Meeting. Abstentions and broker non-votes will have the effect of votes against the proposed amendment. CSW, which owns all of the outstanding common stock of CPL, has advised CPL that it intends to vote all of the outstanding shares of common stock of CPL in favor of the proposed amendment. Votes at the Special Meeting will be tabulated preliminarily by Central and South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of Election, duly appointed by the presiding officer of the Special Meeting, will definitively count and tabulate the votes and determine and announce the results at the meeting. CPL has no established procedure for confidential voting. There are no rights of appraisal in connection with the proposed amendment. PROXIES THE ENCLOSED PROXY IS SOLICITED BY CPL'S BOARD, WHICH RECOMMENDS VOTING FOR THE PROPOSED AMENDMENT. ALL SHARES OF CPL'S COMMON STOCK WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF CPL'S BOARD. Shares of CPL's cumulative preferred stock represented by properly executed proxies received, by mail or facsimile, at or prior to the Special Meeting will be voted in accordance with the instructions thereon. If no instructions are indicated, duly executed proxies will be voted in accordance with the recommendation of the Board. It is not anticipated that any other matters will be brought before the Special Meeting. However, the enclosed proxy gives discretionary authority to the proxy holders named therein should any other matters be presented at the Special Meeting, and it is the intention of the proxy holders to act on any other matters in accordance with their best judgment. Execution of a proxy will not prevent a shareholder from attending the Special Meeting and voting in person. Any shareholder giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of CPL written notice of revocation bearing a later date than the proxy, by delivering a duly executed proxy bearing a later date, or by voting in person by ballot at the Special Meeting. CPL will bear the cost of the solicitation of proxies by the Board. CPL has engaged D.F. King, Inc. to assist in the solicitation of proxies for an estimated fee of $10,000 plus reimbursement of reasonable out-of-pocket expenses. Proxies will be solicited by mail or by telephone. In addition, officers and employees of CPL may also solicit proxies personally or by telephone; such persons will receive no additional compensation for these services. CPL has requested that brokerage houses and other custodians, nominees and fiduciaries forward solicitation materials to the beneficial owners of shares of CPL's cumulative preferred stock held of record by such persons and will reimburse such brokers and other fiduciaries for their reasonable out-of-pocket expenses incurred in connection therewith. An application has been filed with the Securities and Exchange Commission ("SEC") under the Public Utility Holding Company Act of 1935, as amended ("Holding Company Act") requesting approval of the proposed amendment. CPL has received a preliminary order, permitting the solicitation of proxies, from the SEC under the Holding Company Act. CASH PAYMENTS Subject to the terms and conditions set forth in this Proxy Statement, if (but only if) the proposed amendment is approved and adopted by the shareholders of CPL, CPL will make a Cash Payment to each preferred shareholder whose shares are properly voted in favor of the proposed amendment, in person by ballot or by proxy, at the Special Meeting in the amount of $.50 for each share held by such preferred shareholder on the Record Date which is so voted. The Company has been advised that there is uncertainty under state law, due to the lack of controlling precedent, as to the permissibility of making the Cash Payment. While the Company cannot predict how a court would rule on the issue, the Company believes that the Offer is fair to Preferred Shareholders and has determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED SHAREHOLDERS AS OF THE RECORD DATE IN RESPECT OF EACH SHARE WHICH IS SO VOTED ONLY IF SUCH SHARES ARE VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT. If the Proposed Amendment is approved and adopted, Cash Payments will be paid out of CPL's general funds, promptly after the proposed amendment shall have become effective. However, no accrued interest will be paid on the Cash Payments regardless of any delay in making payments. Only preferred shareholders on the Record Date (or their legal representatives or attorneys-in-fact) are entitled to vote at the Special Meeting and to receive Cash Payments from CPL. Any beneficial holder of shares who is not the registered holder of such shares as of the Record Date (as would be the case for 2 any beneficial owner whose shares are registered in the name of such holder's broker, dealer, commercial bank, trust company or other nominee) must arrange with the record preferred shareholder to execute and deliver a proxy form on such beneficial owner's behalf. If a beneficial holder of shares intends to attend the Special Meeting and vote in person, such beneficial holder must obtain a legal proxy form from his or her broker, dealer, commercial bank, trust company or other nominee. CPL will make Cash Payments only to record preferred shareholders. Any beneficial holder of shares who is not the registered holder of such shares as of the Record Date must arrange with the record preferred shareholder to receive his proportionate interest in the Cash Payments made to such record preferred shareholder. CPL will have no responsibility or liability for any aspect of the records relating to or payments made on account of any beneficial holder's interest in the Cash Payments made to a record preferred shareholder. PREFERRED SHAREHOLDERS OF THE 4.20% SERIES AND THE 4.00% SERIES ARE ENTITLED TO VOTE FOR THE PROPOSED AMENDMENT, AND TO RECEIVE THE CASH PAYMENT, REGARDLESS OF WHETHER THEY TENDER SHARES PURSUANT TO THE OFFER. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As noted above, CSW owns all the outstanding common stock of CPL. Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a security is any person who directly or indirectly has or shares voting or investment power over such security. No person or group is known by management of CPL to be the beneficial owner of more than 5% of CPL's class of cumulative preferred stock as of the Record Date. CPL's directors and executive officers do not beneficially own any shares of any series of CPL's cumulative preferred stock as of the Record Date. The beneficial ownership of CSW's common stock held by each director, as well as directors and executive officers as a group, as of December 31, 1996, is set forth in the following table. Share amounts shown include options exercisable within 60 days after year-end, restricted stock, shares of CSW common stock credited to CSW Thrift Plus accounts and all other shares of CSW common stock beneficially owned by the listed persons.
AMOUNT AND NATURE NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2) - ------------------------------------------------------- ------------------------------------- John F. Brimberry...................................... 359.77 E.R. Brooks............................................ 113,690.32 M. Bruce Evans......................................... 13,223.00 Glenn Files............................................ 33,722.76 Robert A. McAllen...................................... 1,500.00 Loyd S. Neal, Jr....................................... 1,197.00 H. Lee Richards........................................ 1,400.00 J. Gonzalo Sandoval.................................... 14,011.00 Gerald E. Vaughn....................................... 3,162.37 All directors and executive officers as a group........ 188,809.89shares (representing .05% of the class)
- ------------------------ (1) No individual listed beneficially owned more than .03% of the outstanding shares of common stock of CSW. (2) Includes shares of restricted stock in the following amounts: E.R. Brooks--17,074, M. Bruce Evans--3,574, Glenn Files--6,333, Gonzalo Sandoval--1,605 and Gerald E. Vaughn--1,500; and all directors and officers as a group--31,586. Includes shares which there is a right to acquire within 3 60 days pursuant to the exercise of stock options in the following amounts: E.R. Brooks--54,315; M. Bruce Evans--8,928; Glenn Files--19,067; Gonzalo Sandoval--5,592; and all directors and executive officers as a group--95,110. BUSINESS TO COME BEFORE THE SPECIAL MEETING The following proposed amendment to CPL's Articles is the only item of business expected to be presented at the Special Meeting: To remove in its entirety subparagraph (c) of paragraph 6 of Article VI, limiting CPL's ability to issue unsecured indebtedness. EXPLANATION OF THE PROPOSED AMENDMENT Without the consent of the majority of the holders of CPL's cumulative preferred stock, the Articles currently prohibit the issuance or assumption of any unsecured notes, debentures or other securities representing unsecured indebtedness (other than for the purpose of refunding outstanding unsecured indebtedness resulting in later maturities or for funding existing unsecured indebtedness (not represented by unsecured obligations)) if, immediately after such issuance or assumption, (a) the total outstanding principal amount of all securities representing unsecured debt would exceed 20% of the aggregate of (1) the total principal amount of all outstanding secured debt of CPL and (2) the capital and surplus of CPL or (b) the total outstanding principal amount of all securities representing unsecured debt maturing in less than ten years would exceed 10% of such aggregate. The proposed amendment, if adopted, would eliminate in its entirety subparagraph (c) of paragraph 6 of Article VI, as set forth below, from the Articles. * * * "(c) issue or assume any unsecured notes, debentures or other securities representing unsecured indebtedness (herein referred to as "unsecured obligations"), for any purpose other than refunding or renewing outstanding unsecured obligations resulting in later maturities or funding existing unsecured indebtedness (not represented by unsecured obligations), if immediately after such issue or assumption (1) the principal amount of all unsecured obligations issued or assumed by the corporation and then outstanding would exceed 20% of the aggregate of (i) the principal amount of all bonds or other securities representing secured indebtedness issued or assumed by the corporation and then outstanding and (ii) the total capital stock and surplus of the corporation as then recorded on its books, or (2) the principal amount of all unsecured obligations maturing in less than ten years, issued or assumed by the corporation and then outstanding, computed as herein provided, would exceed 10% of such aggregate. For the purposes of this subparagraph (c), the principal amount of any unsecured obligations which had an original single maturity of more than ten years from the date thereof, and the principal amount of the final maturity of any serially- maturing unsecured obligations which had one or more original maturities of more than ten years from the date thereof, shall not be regarded as unsecured obligations maturing in less than ten years until such principal amount shall be due or required to be paid within three years." REASONS FOR THE PROPOSED AMENDMENT CPL believes that regulatory, legislative and market developments are leading to a more competitive environment in the electric utility industry. As competition intensifies, flexibility and cost structure will be even more crucial to success in the future. Given that the electric industry is extremely capital intensive, controlling and minimizing financing costs are essential ingredients to operating effectively in the new competitive environment. It is, therefore, for those two reasons, flexibility and cost structure, that you are being asked to vote in favor of the proposed amendment. 4 CPL believes that adoption of the proposed amendment is key to meeting the objectives of flexibility and cost structure. If adopted, the amendment would eliminate the current provision of CPL's Articles that limits the total amount of CPL's unsecured indebtedness to 20% of the total amount of CPL's secured indebtedness, plus capital and surplus, and the amount of short-term unsecured debt to 10% of such total amount. Historically, CPL's debt financing generally has been accomplished through the issuance of long-term first mortgage bonds and a modest amount of unsecured short-term debt. First mortgage bonds represent secured indebtedness because they place a first priority lien on substantially all of CPL's assets. The Indenture dated January 1, 1943, as amended, between CPL and The First National Bank of Chicago and R.D. Manella, as Trustees, (the "First Mortgage Bond Indenture") contains certain restrictive covenants with respect to, among other things, the disposition of assets and the ability to issue additional first mortgage bonds. Short-term debt, usually the lowest cost debt available to CPL, represents one type of unsecured indebtedness. The proposed amendment will not only allow CPL to issue a greater amount of unsecured debt, it will also allow CPL to issue a greater amount of total debt. CPL will consider changing the mix of debt securities toward more issuances on a short-term and unsecured basis. Additionally, CPL may issue certain tax deductible trust preferred securities which would be classified as unsecured debt under CPL's current Articles. CPL has filed a Registration Statement on Form S-3 with the SEC for the issuance of tax-deductible trust preferred securities. Inasmuch as the 10% and 20% provisions contained in the Articles limit CPL's flexibility in planning and financing its business activities, CPL believes it ultimately will be at a competitive disadvantage if the provision is not eliminated. The industry's new competitors (for example, power marketers, independent power producers and cogenerating facilities) generally are not subject to the type of financing restrictions the Articles impose on CPL. Recently, several other utilities with the same or similar charter restrictions have successfully eliminated such provisions by soliciting their shareholders for the same or similar amendments. Therefore, many potential utility competitors have no comparable provision restricting the use of unsecured debt. While CPL's current low-cost structure has been instrumental in reducing the ability of other competitors to attract CPL's large bulk power customers, CPL must continue to explore new ways of reducing costs and enhancing flexibility. CPL believes that the adoption of the proposed amendment will be in the best long-term competitive interests of shareholders by enhancing its ability to meet the two objectives described below. FINANCIAL FLEXIBILITY CPL believes that in the long run, various types of unsecured debt alternatives will increase in importance as an option in financing its construction program and refinancing high-cost mortgage bonds. The availability and flexibility of unsecured debt is necessary to take full advantage of changing conditions in securities markets. CPL presently intends to continue to rely on unsecured debt up to the 10% or 20% maximum amounts currently allowable under the Articles. In addition, although CPL's earnings currently are sufficient to meet the earnings coverage tests contained in its First Mortgage Bond Indenture that must be satisfied in certain instances before issuing additional first mortgage bonds, there could be periods, when, because of an inability to meet the Articles test, CPL would be unable to issue any additional preferred stock. An inability to issue preferred stock in the future, combined with the inability to issue additional unsecured debt, would limit CPL's financing options to either additional first mortgage bonds (assuming that the earnings coverage test could be met) or additional common stock. COST STRUCTURE CPL's use of unsecured short-term debt is subject to the 10% and 20% provisions contained in the Articles. CPL believes that the prudent use of such debt in excess of this provision is vital to effective financial management of the business. Not only is unsecured short-term debt generally the least 5 expensive form of capital, it also provides flexibility in meeting seasonal fluctuations in cash requirements, acts as a bridge between issues of permanent capital and can be used when unfavorable conditions prevail in the market for long-term capital. For purposes of the 10% and 20% provisions, tax-deductible trust preferred securities are considered to be unsecured debt, and accordingly the use of tax-deductible trust preferred securities is limited by the 10% and 20% provisions. Tax-deductible trust preferred securities generally have a lower after-tax cost than traditional perpetual preferred stock. FOR THE ABOVE REASONS, CPL'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS OF SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE ADOPTION OF THE PROPOSED AMENDMENT. CERTAIN EFFECTS OF THE PROPOSED AMENDMENT If the proposed amendment becomes effective, preferred shareholders will no longer be entitled to the benefits of the Articles provision limiting the amount of unsecured debt CPL may issue, which will have been deleted by the proposed amendment. As discussed above, such provision places restrictions on CPL's ability to issue or assume unsecured indebtedness. Although CPL's debt instruments may contain certain restrictions on CPL's ability to issue or assume debt, any such restrictions may be waived and the increased flexibility afforded CPL by the deletion of the Articles provision may permit CPL to take certain actions that may increase the credit risks with respect to CPL, adversely affecting the market price and credit rating of the shares of preferred stock or otherwise be materially adverse to the interests of the preferred shareholders. In addition, to the extent that CPL elects to issue additional unsecured debt, including trust preferred securities, the preferred shareholders' relative position in CPL's capital structure could be perceived to decline, which in turn could adversely affect the market price and credit rating of the shares of preferred stock. RATING AGENCIES Moody's Investors Service, Inc., Duff & Phelps Credit Rating Co. and Standard & Poor's Rating Services (the "Rating Agencies") have been advised of the proposed amendment. The Rating Agencies have advised CPL that the adoption of the proposed amendment will not result in a reduction of the preferred stock's current ratings. Ratings are not recommendations to purchase, hold or sell shares of the preferred stock inasmuch as the ratings do not comment as to market price or suitability for a particular investor. The ratings are based on current information furnished to the Rating Agencies by CPL and obtained from other sources. The ratings may be changed, suspended or withdrawn as a result of changes in, or the unavailability of, such information. FINANCIAL AND OTHER INFORMATION RELATING TO CPL The financial statements of CPL and related information included in its Annual Report on Form 10-K for the year ended December 31, 1996, as filed with the SEC, is hereby incorporated by reference. CPL will provide without charge, upon the written or oral request of any person (including any beneficial owner) to whom this Proxy Statement is delivered, a copy of such information (excluding certain exhibits). Such requests for information should be directed to Stephen D. Wise, Director, Finance, Central and South West Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for CPL, telephone (214) 777-1000. 6 RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS Upon recommendation of the Audit Committee of CSW's board of directors, such board employed on April 18, 1996 Arthur Andersen LLP as independent public accountants for CSW and its subsidiaries, including CPL, for the year 1996. Representatives of Arthur Andersen LLP are expected to be present at the Special Meeting with the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of the principal United States federal income tax consequences of the receipt of Cash Payments and the adoption of the proposed amendment. This summary is addressed only to preferred shareholders who are "United States Holders" as defined below. This summary does not address all aspects of federal income taxation that may be relevant to a particular preferred shareholder in light of such preferred shareholder's individual circumstances or to preferred shareholders subject to special treatment under the federal income tax laws, such as preferred shareholders who are not United States Holders, banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, dealers in securities and currencies, preferred shareholders who received their shares as part of a compensation arrangement with CPL, preferred shareholders who do not hold their shares as capital assets and preferred shareholders holding shares as part of a position in a "straddle" or as part of a "hedging," "conversion" or other integrated investment transaction for federal income tax purposes. The statements of law or legal conclusion set forth in this summary constitute the opinion of Christy & Viener, special tax counsel to CSW and CPL. This summary is based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue Service rulings and pronouncements, and judicial decisions now in effect, all of which are subject to change at any time. Such a change could adversely affect the tax consequences described herein, possibly on a retroactive basis. In addition, the authorities on which this summary is based are subject to various interpretations and it is therefore possible that the United States federal income tax treatment of the Cash Payments and the adoption of the proposed amendment may differ from the treatment described below. Preferred shareholders should consult their own tax advisors in light of their particular circumstances as to the application of United States federal income tax laws, as well as the effect of any state, local, or foreign tax laws. As used herein, the term "United States Holder" means a preferred shareholder that is (i) for United States federal income tax purposes, a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state thereof or the District of Columbia, or (iii) an estate or trust specified as being a "United States Person" in the Code. CASH PAYMENTS/MODIFICATION United States Holders, whether or not they receive Cash Payments, will not recognize any taxable income or loss with respect to their shares as a result of the modification of the Articles by the proposed amendment. The federal income tax treatment of the Cash Payments is not entirely clear. CPL will treat the Cash Payment as ordinary non-dividend income to recipient United States Holders. BACKUP WITHHOLDING AND INFORMATION REPORTING The amount of the Cash Payment paid to a United States Holder will be reported to such holder and to the Internal Revenue Service except in the case of corporations and other holders exempt from information reporting and backup withholding. Backup withholding at a rate of 31% will apply to any such payments made to non-exempt United States Holders unless the holder provides its taxpayer 7 identification number and the certifications required to establish that it is not subject to backup withholding. In order to prevent backup withholding, each United States Holder voting in favor of the proposed amendment must provide such holder's taxpayer identification number and certify that such holder is not subject to backup withholding by completing the substitute Form W-9 included herewith. The amount of any backup withholding from a payment to a United States Holder will be allowed as a credit against such holder's United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8 To avoid backup withholding on Cash Payments, the preferred shareholder is required to notify CPL of his or her correct TIN by completing the Substitute Form W-9 attached to the proxy certifying that the TIN provided on Substitute Form W-9 is correct and that (a) the preferred shareholder has not been notified by the Internal Revenue Service that he or she is subject to federal income tax backup withholding as a result of failure to report all interest or dividends or (b) the Internal Revenue Service has notified the preferred shareholder that he or she is no longer subject to federal income tax backup withholding. Foreign preferred shareholders must submit a properly completed Form W-8 in order to avoid the applicable backup withholding; provided, however, that backup withholding will not apply to foreign preferred shareholders subject to 30% (or lower treaty rate) withholding on the Cash Payments. WHAT NUMBER TO GIVE TO CPL The preferred shareholder is required to give CPL the social security number or employer identification number of the registered owner of the shares. If the shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. DELIVERY OF PROXIES Properly executed proxies must be received, by mail or facsimile, at or prior to the Special Meeting which will be held on , , 1997. Such proxies may be mailed to Central and South West Services, Inc., at 1616 Woodall Rodgers Freeway, Dallas, Texas 75202 or sent by facsimile to (214) 777-[ ]. Properly executed proxies may also be delivered to Goldman, Sachs & Co., at 85 Broad Street, New York, New York 10004 or by facsimile to (212) 902-3000 or to Smith Barney Inc. at 390 Greenwich Street, New York, New York 10013 or by facsimile to (212) 723-8798. By Order of the Board of Directors Secretary Dated: March , 1997 8 PROXY PROXY CENTRAL POWER AND LIGHT COMPANY The undersigned hereby appoints [ ], [ ], and [ ], or any of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote as designated hereunder and in their discretion with respect to any other business properly brought before the Special Meeting, all the shares of cumulative preferred stock of Central Power and Light Company ("CPL") which the undersigned is entitled to vote at the Special Meeting of Shareholders to be held on , 1997, or any adjournment(s) or postponement(s) thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CPL. This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s). If no direction is made, the proxy will be voted FOR Item 1. Indicate your vote by an (X). The Board of Directors recommends voting FOR Item 1. ITEM 1. To remove from the Restated Articles of Incorporation subparagraph (c) of paragraph 6 of Article VI in its entirety, which limits CPL's ability to issue unsecured indebtedness. / / FOR / / AGAINST / / ABSTAIN SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING. ALTHOUGH HOLDERS OF CPL'S AUCTION RATE AND MONEY MARKET PREFERRED STOCK MAY ONLY PURCHASE AND TRANSFER THEIR SHARES IN BLOCKS OF 1,000 SHARES, SUCH SHAREHOLDERS MAY VOTE ANY NUMBER OF SHARES TO WHICH THEY ARE THE RECORD HOLDER. SHAREHOLDERS OF ALL SERIES OF CPL'S PREFERRED STOCK SHOULD INDICATE BELOW THE NUMBER OF SHARES THEY ARE VOTING. Number of Shares Voted: ______ Please check box if you plan to attend the Special Meeting. / / EX-5.(A) 7 LETTER OF TRANSMITTAL SWEPCO LETTER OF TRANSMITTAL AND PROXY TO ACCOMPANY SHARES OF % SERIES CUMULATIVE PREFERRED STOCK CUSIP NUMBER OF SOUTHWESTERN ELECTRIC POWER COMPANY TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH BY CENTRAL AND SOUTH WEST CORPORATION, DATED , 1997, FOR PURCHASE AT A PURCHASE PRICE OF $ PER SHARE AND/OR VOTED PURSUANT TO THE PROXY STATEMENT OF SOUTHWESTERN ELECTRIC POWER COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , , 1997, UNLESS THE OFFER IS EXTENDED. THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , 1997, OR ON SUCH DATE TO WHICH THE MEETING IS ADJOURNED OR POSTPONED. TO: THE BANK OF NEW YORK, DEPOSITARY BY MAIL: BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver window New York, New York 10286-1248 New York, New York 10286
BY FACSIMILE TRANSMISSION: (for Eligible Institutions only) (212) 815-6213 INFORMATION AND CONFIRM BY TELEPHONE: (800) 507-9357 NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN EXACTLY AS NAME(S) AND ADDRESS(ES) APPEAR(S) ON CERTIFICATE(S)) PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE TO VALIDLY TENDER THEIR SHARES UNLESS THEY HAVE SUBMITTED A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. CENTRAL AND SOUTH WEST CORPORATION WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY CASTING THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, SOUTHWESTERN ELECTRIC POWER COMPANY WILL MAKE A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED PURSUANT TO THE OFFER. HOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED AFTER THE CLOSE OF BUSINESS ON , 1997 (THE "RECORD DATE") AND WHO WISH TO TENDER IN THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY COMPLETED, VALID AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF AN IRREVOCABLE ASSIGNMENT OF PROXY AS SET FORTH IN THIS LETTER OF TRANSMITTAL AND PROXY) FROM THE HOLDER OF RECORD ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO FACILITATE RECEIPT OF PROXIES, SHARES SHALL, DURING THE PERIOD WHICH COMMENCED , 1997 (TWO BUSINESS DAYS PRIOR TO THE RECORD DATE) AND WHICH WILL END AT THE CLOSE OF BUSINESS ON THE EXPIRATION DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A PROXY PROVIDING THE TRANSFEREE WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN THE PROXY SOLICITATION. NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. The undersigned hereby appoints [ ], [ ], and [ ], or any of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote as designated hereunder and in their discretion with respect to any other business properly brought before the Special Meeting, all the shares of cumulative preferred stock of Southwestern Electric Power Company ("SWEPCO") which the undersigned is entitled to vote at the Special Meeting of Shareholders to be held on , 1997, or any adjournment(s) or postponement(s) thereof. NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY. THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SWEPCO. The proxy contained herein, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s). If no direction is made, the proxy will be voted FOR Item 1. Indicate your vote by an (X). The Board of Directors recommends voting FOR Item 1. 2 ITEM 1. HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE FOR THE PROPOSED AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL MEETING. To remove from the Restated Certificate of Incorporation subparagraph (c) of paragraph 5 of Article Fourth in its entirety, which limits SWEPCO's ability to issue unsecured indebtedness. / / FOR / / AGAINST / / ABSTAIN SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING. Any holder of Shares held of record on the Record Date in the name of another holder must establish to the satisfaction of SWEPCO its entitlement to exercise or transfer this Proxy. This will ordinarily require an assignment by such record holders in blank, or if not in blank, to and from each successive transferee, including the holder, with each signature guaranteed by an Eligible Institution. A form of irrevocable assignment of proxy has been provided herein. Please check box if you plan to attend the Special Meeting. / / SIGNATURE(S) OF OWNER(S) X - -------------------------------------------------------------------------------- X - -------------------------------------------------------------------------------- Dated: - --------------------------------------, 1997 Name(s): - ------------------------------------------------------------- ..................................................... (PLEASE PRINT) Capacity (full title): - --------------------------------------------------- Address: - ------------------------------------------------------------- ..................................................... (INCLUDE ZIP CODE) DAYTIME Area Code and Telephone No.: - ------------------------------------ (Must be signed by the registered holder(s) exactly as name(s) appear(s) on the stock certificates or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) 3
DESCRIPTION OF SHARES (IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION APPEARS ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) TOTAL NUMBER OF NUMBER OF SHARES NOT SHARES REPRESENTED BY NUMBER OF TENDERED BUT AS TO CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** WHICH PROXIES GIVEN ONLY
* Need not be completed by shareholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4. You must vote for the Proposed Amendment with respect to any Shares tendered. If any of your certificate(s) for Shares have been lost, stolen or destroyed, please call the Depositary at 1-800-507-9357. In addition, you should advise the Depositary of any certificate(s) you have in your possession. You will need to complete an Affidavit of Loss with respect to the lost certificate(s) (which will be provided by the Depositary) and pay an indemnity bond premium fee. GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature: - ---------------------------- Name: - ---------------------------- Name of Firm: - ---------------------------- Address of Firm: - ---------------------------- Area Code and Telephone No.: - ---------------------------- Dated: - ----------------------------, 1997 4 IF SELLING SHARES SUBSEQUENT TO , 1997, A RECORD HOLDER MUST COMPLETE THE FOLLOWING IRREVOCABLE PROXY PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK PROXY TO A SUBSEQUENT HOLDER OF PREFERRED STOCK WHO WAS NOT A HOLDER OF RECORD ON , 1997 IRREVOCABLE PROXY with respect to shares of the % Series Cumulative Preferred Stock of SOUTHWESTERN ELECTRIC POWER COMPANY ("SWEPCO") the undersigned hereby irrevocably appoints ______________________________ Type or Print Name of Transferee as attorney and proxy, with full power of substitution, to vote and otherwise act for and in the name(s) of the undersigned with respect to the Shares indicated below which were held of record by the undersigned on , 1997, in the manner in which the undersigned would be entitled to vote and otherwise act in respect of such shares on any and all matters. This proxy shall be effective whether or not the shares indicated below are tendered in the Offer. This instrument supersedes and revokes any and all previous appointments of proxies heretofore made by the undersigned with respect to the shares indicated below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH AN INTEREST. All authority conferred or agreed to be conferred herein shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, legal and personal representatives, successors in interest and assigns of the undersigned. The undersigned understands that tenders of Shares pursuant to any of the procedures described in the Offer to Purchase and Proxy Statement and in this Letter of Transmittal and Proxy will constitute a binding agreement between the undersigned and SWEPCO upon the terms and subject to the conditions of the Offer.
DESCRIPTION OF PREFERRED STOCK CERTIFICATE NUMBER(S) (ATTACH AGGREGATE NUMBER LIST IF NECESSARY) OF SHARES TOTAL: Signature of Record or Signature of Record or Authorized Signatory Authorized Signatory Type of Print Name Type or Print Name Dated: , 19 Dated: , 19 Tax Identification or Social Security No(s).
5 Must be signed by holder(s) exactly as name(s) appear(s) on the Record Date on certificate(s) for the Shares or on a security position listing or by person(s) authorized to become holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5. Name Address Please Print Include Zip Code Area Code and Tel. No.
Capacity (Full Title) __________________________________________________________ ________________________________________________________________________________ GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) Name of Firm: __________________________________________________________________ Authorized Signature: __________________________________________________________ Title: _________________________________________________________________________ Dated: _______________________________________________________________, 19______ NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN TO THE DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE SPACE THEREFOR PROVIDED ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING IN FAVOR OF THE PROPOSED AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX INFORMATION" BELOW. DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC., D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR SOUTHWESTERN ELECTRIC POWER COMPANY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED. 6 This Letter of Transmittal and Proxy is to be used (a) if Shares are to be voted but not tendered, or (b) if certificates for Shares are to be forwarded herewith or (c) if delivery of tendered Shares (as defined below) is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter collectively referred to as the "Book-Entry Transfer Facilities") pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement (as defined below). Preferred Shareholders who wish to tender Shares yet who cannot deliver their Shares and all other documents required hereby to the Depositary by the Expiration Date (as defined in the Offer to Purchase and Proxy Statement) must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. See Instruction 2. DELIVERY OF DOCUMENTS TO CENTRAL AND SOUTH WEST CORPORATION, SOUTHWESTERN ELECTRIC POWER COMPANY OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY. / / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH. A Holder tendering Shares pursuant to this Letter of Transmittal and Proxy must check one of the following boxes: / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment is included herein. / / A vote FOR the Proposed Amendment will be cast at the Special Meeting. (BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY) / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of tendering institution: ------------------------------------------------------------------------ / / DTC / / PDTC Account No: --------------------------------------------------------------------------- Transaction Code No: ------------------------------------------------------------------------------- / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of tendering shareholder(s) - ------------------------------------------------------------------- Date of execution of Notice of Guaranteed Delivery and Proxy - ----------------------------------------------- Name of institution that guaranteed delivery - ------------------------------------------------------------ If delivery is by book-entry transfer: Name of tendering institution - -------------------------------------------------------------------------- Account no. - ---------------------- at / / DTC / / PDTC Transaction Code No. - -------------------------------------------------------------------------------- A holder electing to tender Shares pursuant to a Notice of Guaranteed Delivery and Proxy must check one of the following boxes: / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment was included with the Notice of Guaranteed Delivery and Proxy previously sent to the Depositary. / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment is being delivered pursuant to a Notice of Guaranteed Delivery and Proxy previously sent to the Depositary. / / A valid vote FOR the Proposed Amendment will be cast at the Special Meeting. 7 NOTE: SIGNATURES MUST BE PROVIDED ABOVE. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The abovesigned hereby tenders to Central and South West Corporation, a Delaware corporation ("CSW"), the shares in the amount set forth in the box above labeled "Description of Shares Tendered" pursuant to CSW's offer to purchase any and all of the outstanding shares of the series of cumulative preferred stock of Southwestern Electric Power Company ("SWEPCO"), a Delaware corporation and direct utility subsidiary of CSW, shown on the first page hereof and to which this Letter of Transmittal and Proxy is applicable (the "Shares") at the purchase price per Share shown on the first page hereof, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and Proxy Statement, dated , 1997 (the "Offer to Purchase and Proxy Statement"), receipt of which is hereby acknowledged, and in this Letter of Transmittal and Proxy (which as to the Shares, together with the Offer to Purchase and Proxy Statement, constitutes the "Offer"). PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO SWEPCO'S RESTATED CERTIFICATE OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). See "Proposed Amendment and Proxy Solicitation", "Terms of the Offer--Extension of Tender Period; Termination; Amendments" and "Terms of the Offer--Certain Conditions of the Offer" in the Offer to Purchase and Proxy Statement. Subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith in accordance with 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), the abovesigned hereby sells, assigns and transfers to, or upon the order of, CSW all right, title and interest in and to all the Shares that are being tendered hereby and hereby constitutes and appoints The Bank of New York (the "Depositary") the true and lawful agent and attorney-in-fact of the abovesigned with respect to such Shares, with full power of substitution (such power of attorney being an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares, or transfer ownership of such Shares on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of CSW, (b) present such Shares for registration and transfer on the books of SWEPCO and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer. The Depositary will act as agent for tendering shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering shareholders. The abovesigned hereby represents and warrants that the abovesigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and that, when and to the extent the same are accepted for payment by CSW, CSW will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and the same will not be subject to any adverse claims. The abovesigned will, upon request, execute and deliver any additional documents deemed by the Depositary or CSW to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby. All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive the death or incapacity of the abovesigned, and any obligations of the abovesigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the abovesigned. Except as stated in the Offer, this tender is irrevocable. The abovesigned understands that tenders of Shares pursuant to any one of the procedures described under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement and in the instructions hereto will constitute the abovesigned's acceptance of the terms and conditions of the Offer. CSW's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the abovesigned and CSW upon the terms and subject to the conditions of the Offer. The abovesigned recognizes that, under certain circumstances set forth in the Offer to Purchase and Proxy Statement, CSW may terminate or amend the Offer or may not be required to purchase any of the Shares tendered hereby. In either event, the abovesigned understands that certificate(s) for any Shares not tendered or not purchased will be returned to the abovesigned. 8 Unless otherwise indicated in the box below under the heading "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and/or return any Shares not tendered or not purchased, in the name(s) of the abovesigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above). Unless otherwise indicated in the box below under the heading "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and/or any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the abovesigned at the address shown below the abovesigned signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and/or return any Shares not tendered or not purchased in the name(s) of, and mail said check and/or any certificates to, the person(s) so indicated. The abovesigned recognizes that CSW has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if CSW does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6 AND 7) (SEE INSTRUCTIONS 4, 6 AND 7) To be completed ONLY if the check for To be completed ONLY if the check for the purchase price of Shares purchased, the purchase price of Shares the certificates for Shares not tendered purchased, the certificates for Shares not or not purchased or the check for the Cash tendered or not purchased or the check for Payment are to be issued in the name of the Cash Payment are to be mailed to someone other than the abovesigned. someone other than the abovesigned or to Issue / / check and/or the abovesigned at an address other than / / certificate(s) to: that shown below the abovesigned's Name signature(s). (PLEASE PRINT) Mail / / check and/or Address / / certificate(s) to: (INCLUDE ZIP CODE) Name (TAXPAYER IDENTIFICATION OR (PLEASE PRINT) SOCIAL SECURITY NUMBER) Address (INCLUDE ZIP CODE) LOST CERTIFICATES BOX / / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 12.) Number of Shares represented by lost, destroyed or stolen certificates: ---------------
9 SOLICITED TENDERS (SEE INSTRUCTION 10) As provided in Instruction 10, CSW will pay to any Soliciting Dealer, as defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. The undersigned represents that the Soliciting Dealer which solicited and obtained this tender is: Name of Firm: __________________________________________________________________ (PLEASE PRINT) Name of Individual Broker or Financial Consultant: _______________________________________________________ Telephone Number of Broker or Financial Consultant: _______________________________________________________ Identification Number (if known): Address: _______________________________________________________________________ (INCLUDE ZIP CODE) The following is to be completed ONLY if customer's Shares held in nominee name are tendered. NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
The acceptance of compensation by such Soliciting Dealer will constitute a representation by it that (a) it has complied with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder, in connection with such solicitation; (b) it is entitled to such compensation for such solicitation under the terms and conditions of the Offer to Purchase; (c) in soliciting tenders of Shares, it has used no soliciting materials other than those furnished by CSW; and (d) if it is a foreign broker or dealer not eligible for membership in the National Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations. THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY. (IF SHARES ARE BEING TENDERED, PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE) SIGN HERE: _____________________________________________________________________ Signature of Owner(s) _______________________________________ Signature of Owner(s) 10 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States which is a participant in an approved Signature Guarantee Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal and Proxy need not be guaranteed (a) if this Letter of Transmittal and Proxy is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) has not completed the box above under the heading "Special Payment Instructions" or the box above under the heading "Special Delivery Instructions" on this Letter of Transmittal and Proxy, (b) if such Shares are tendered for the account of an Eligible Institution or (c) if this Letter of Transmittal and Proxy is being used solely for the purpose of voting Shares which are not being tendered pursuant to the Offer. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of Transmittal and Proxy is to be used if (a) certificates are to be forwarded herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement or (c) Shares are being voted in connection with the Offer. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other documents required by this Letter of Transmittal and Proxy, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal and Proxy on or prior to the Expiration Date (as defined in the Offer to Purchase and Proxy Statement) with respect to all Shares. Preferred Shareholders who wish to tender their Shares yet who cannot deliver their Shares and all other required documents to the Depositary on or prior to the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery and Proxy in the form provided by CSW (with any required signature guarantees) must be received by the Depositary on or prior to the applicable Expiration Date and (c) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other documents required by this Letter of Transmittal and Proxy must be received by the Depositary by 5:00 p.m. (central time) within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery and Proxy, all as provided under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. No alternative, conditional or contingent tenders will be accepted. See "Terms of the Offer--Number of Shares; Purchase Price; Expiration Date Dividends" in the Offer to Purchase and Proxy Statement. By executing this Letter of Transmittal and Proxy (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO SWEPCO'S RESTATED CERTIFICATE OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). In addition, Preferred Shareholders have the right to vote for the Proposed Amendment regardless of whether they tender their Shares by casting their vote and duly executing this 11 Letter of Transmittal and Proxy or by voting in person at the Special Meeting. By executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder is taken to have tendered the Shares described in such Notice of Guaranteed Delivery and Proxy and to have voted such Shares in accordance with the proxy contained therein. If no vote is indicated on an otherwise properly executed proxy contained within this Letter of Transmittal and Proxy (or within a Notice of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will be voted in favor of the Proposed Amendment. See "PROPOSED AMENDMENT AND PROXY SOLICITATION" in the Offer to Purchase and Proxy Statement. The Offer is being sent to all persons in whose names Shares are registered on the books of SWEPCO on the Record Date (as defined in the Offer to Purchase and Proxy Statement). Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender in the Offer must arrange with their seller to receive a proxy from the holder of record on the Record Date of such Shares. Any holder of Shares held of record on the Record Date in the name of another must establish to the satisfaction of SWEPCO his entitlement to exercise or transfer such Proxy. This will ordinarily require an assignment by such record holder in blank, or if not in blank, to and from each successive transferee, including the holder, with each signature guaranteed by an Eligible Institution. See Instruction 5. In order to facilitate receipt of proxies, Shares shall, during the period which commenced on , 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date, trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired shares in the Proxy Solicitation. No record date is fixed for determining which persons are permitted to tender Shares. However, only the holders of record, or holders who acquire an assignment of proxy from such holders, are permitted to vote for the Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any person who is the beneficial owner but not the record holder of Shares must arrange for the record transfer of such Shares prior to tendering or direct the record holder to tender on behalf of the beneficial owner. 4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares that are to be tendered in the box above under the heading "Description of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal and Proxy, unless otherwise provided in the box above under the heading "Special Payment Instructions" or "Special Delivery Instructions", as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND/OR NOTICE OF GUARANTEED DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together, the "Tender and Proxy Documents") is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered or voted under either Tender and Proxy Document is held of record by two or more persons, all such persons must sign such Tender and Proxy Document. If any of the Shares tendered or voted under either Tender and Proxy Document is registered in different names or different certificates, it will be necessary to complete, sign and submit as many separate applicable Tender and Proxy Documents as there are different registrations of certificates. If either Tender and Proxy Document is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal and Proxy is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If either Tender and Proxy Document or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to CSW of the authority of such person to act must be submitted. 12 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if tendered Shares are registered in the name of any person other than the person(s) signing this Letter of Transmittal and Proxy, the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See "Terms of the Offer--Acceptance of Shares for Payment and Payment of Purchase Price and Dividend" in the Offer to Purchase and Proxy Statement. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase price of any Shares purchased is to be issued in the name of, any Shares not tendered or not purchased are to be returned to or the check for the Cash Payment is to be issued in the name of, a person other than the person(s) signing this Letter of Transmittal and Proxy or if the check and/or any certificate for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal and Proxy or to an address other than that shown in the box above under the heading "Name(s) and Address(es) of Registered Holder(s)", then the "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal and Proxy should be completed. Preferred Shareholders tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such Preferred Shareholder at the Book-Entry Transfer Facility from which such transfer was made. 8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder or a Preferred Shareholder voting in favor of the Proposed Amendment is required to provide the Depositary with either a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, or a properly completed Form W-8. Failure to provide the information on either Substitute Form W-9 or Form W-8 may subject the Preferred Shareholder to 31% federal income tax backup withholding on the payment of the purchase price for the Shares or the Cash Payment. If the Preferred Shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the Preferred Shareholder may write "Applied For" in the space for the TIN in Part I of Substitute Form W-9. If the Preferred Shareholder writes "Applied For" in the space for the TIN in Substitute Form W-9 and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% on the payment of the purchase price for the Shares or the Cash Payment. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and addresses listed below. Requests for additional copies of the Offer to Purchase and Proxy Statement, this Letter of Transmittal and Proxy or other tender offer materials may be directed to the Information Agent or the Dealer Managers and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. 10. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal and Proxy which designates, under the heading "Solicited Tenders", as having solicited and obtained the tender, the name of (a) any broker or dealer in securities, including a Dealer Manager in its capacity as a dealer or broker, which is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (c) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by a holder unless the Letter of Transmittal and Proxy accompanying such tender designates such Soliciting Dealer. No such fee shall be payable to a Soliciting Dealer in respect of Shares registered in the name of such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as nominee and such Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal and Proxy or on the Notice of Solicited Tenders (included in 13 the materials provided to brokers and dealers). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. If tendered Shares are being delivered by book-entry transfer, the Soliciting Dealer must return a Notice of Solicited Tenders to the Depositary within three business days after expiration of the Offer to receive a solicitation fee. No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be paid to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealer's own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of CSW, the Depositary, the Information Agent or the Dealer Managers for purposes of the Offer. 11. IRREGULARITIES. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by CSW, in its sole discretion, and its determination shall be final and binding. CSW reserves the absolute right to reject any and all tenders of Shares that it determines are not in proper form or the acceptance for payment of or payment for Shares that may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any of the conditions to the Offer or any defect or irregularity in any tender of Shares and CSW's interpretation of the terms and conditions of the Offer (including these instructions) shall be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person shall be under any duty to give notice of any defect or irregularity in tenders nor shall any of them incur any liability for failure to give any such notice. Tenders will not be deemed to have been made until all defects and irregularities have been cured or waived. 12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares has been lost, destroyed or stolen, the Preferred Shareholder should promptly notify the Depositary by checking the Lost Certificates Box immediately following the Special Payment Instructions/Special Delivery Instructions and indicating the number of Shares lost, destroyed or stolen. The Preferred Shareholder will then be instructed as to the procedures that must be taken in order to replace the certificate. The tender of Shares pursuant to this Letter of Transmittal and Proxy will not be valid unless prior to the Expiration Date (as defined in the Offer to Purchase and Proxy Statement): (a) such procedures have been completed and a replacement certificate for the Shares has been delivered to the Depositary or (b) a Notice of Guaranteed Delivery and Proxy has been delivered to the Depositary. See Instruction 2. IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY HEREOF), DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY AND PROXY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). IMPORTANT TAX INFORMATION Under federal income tax law, a Preferred Shareholder whose tendered Shares are accepted for payment or who will receive a Cash Payment as a result of voting in favor of the Proposed Amendment is required to provide the Depositary (as payer) with either such Preferred Shareholder's correct TIN on Substitute Form W-9 below or a properly completed Form W-8. If such Preferred Shareholder is an individual, the TIN is his or her social security number. For businesses and other entities, the number is the federal employer identification number. If the Depositary is not provided with the correct TIN or properly completed Form W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Preferred Shareholder may be subject to backup withholding. The Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If federal income tax backup withholding applies, the Depositary is required to withhold 31% of any payments made to the Preferred Shareholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of the tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 14 PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8 To avoid backup withholding on a Cash Payment or payments that are made to a Preferred Shareholder with respect to Shares purchased pursuant to the Offer, the Preferred Shareholder is required to notify the Depositary of his or her correct TIN by completing the Substitute Form W-9 attached hereto certifying that the TIN provided on Substitute Form W-9 is correct and that (a) the Preferred Shareholder is exempt from federal income tax backup withholding or (b) the Preferred Shareholder has not been notified by the Internal Revenue Service that he or she is subject to federal income tax backup withholding as a result of failure to report all interest or dividends or (c) the Internal Revenue Service has notified the Preferred Shareholder that he or she is no longer subject to federal income tax backup withholding. Foreign Preferred Shareholders must submit a properly completed Form W-8 in order to avoid the applicable backup withholding; provided, however, that backup withholding will not apply to foreign Preferred Shareholders subject to 30% (or lower treaty rate) withholding on the Cash Payment or on gross payments received pursuant to the Offer. WHAT NUMBER TO GIVE THE DEPOSITARY The Preferred Shareholder is required to give the Depositary the social security number or employer identification number of the registered owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 15
PAYER'S NAME: THE BANK OF NEW YORK SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number SIGNING AND DATING BELOW. TIN ------------------------ Name (Please Print) PART 2-- Address For Payees Exempt from Backup City State Zip Code Withholding (See Guidelines) PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: (1) the number shown on this form is my correct taxpayer identification number (or a TIN has not been issued to me but I have applied for a TIN or intend to do so in the near future), and (2) I am not subject to backup withholding either because I am exempt from backup withholding or I have not been notified by the Internal Revenue PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a TAXPAYER IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has AND CERTIFICATION notified me that I am no longer subject to backup withholding. I understand that, if I have written "Applied For" in the space for the TIN in Part I, I must provide a TIN by the time of payment, or 31% of the Cash Payment or the payment of the purchase price of the Shares made to me will be withheld. SIGNATURE DATE, 1997 You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER OR PROXY SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE DEALER MANAGERS: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Paul S. Galant
THE INFORMATION AGENT: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) 16 EX-5.(B) 8 LETTER OF TRANSMITTAL PSO LETTER OF TRANSMITTAL AND PROXY TO ACCOMPANY SHARES OF % SERIES CUMULATIVE PREFERRED STOCK CUSIP NUMBER OF PUBLIC SERVICE COMPANY OF OKLAHOMA TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH BY CENTRAL AND SOUTH WEST CORPORATION, DATED , 1997, FOR PURCHASE AT A PURCHASE PRICE OF $ PER SHARE AND/OR VOTED PURSUANT TO THE PROXY STATEMENT OF PUBLIC SERVICE COMPANY OF OKLAHOMA THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , , 1997, UNLESS THE OFFER IS EXTENDED. THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , 1997, OR ON SUCH DATE TO WHICH THE MEETING IS ADJOURNED OR POSTPONED. TO: THE BANK OF NEW YORK, DEPOSITARY BY MAIL: BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver window New York, New York 10286-1248 New York, New York 10286
BY FACSIMILE TRANSMISSION: (for Eligible Institutions only) (212) 815-6213 INFORMATION AND CONFIRM BY TELEPHONE: (800) 507-9357 NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN EXACTLY AS NAME(S) AND ADDRESS(ES) APPEAR(S) ON CERTIFICATE(S)) PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE TO VALIDLY TENDER THEIR SHARES UNLESS THEY HAVE SUBMITTED A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. CENTRAL AND SOUTH WEST CORPORATION WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY CASTING THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, PUBLIC SERVICE COMPANY OF OKLAHOMA WILL MAKE A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED PURSUANT TO THE OFFER. HOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED AFTER THE CLOSE OF BUSINESS ON , 1997 (THE "RECORD DATE") AND WHO WISH TO TENDER IN THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY COMPLETED, VALID AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF AN IRREVOCABLE ASSIGNMENT OF PROXY AS SET FORTH IN THIS LETTER OF TRANSMITTAL AND PROXY) FROM THE HOLDER OF RECORD ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO FACILITATE RECEIPT OF PROXIES, SHARES SHALL, DURING THE PERIOD WHICH COMMENCED , 1997 (TWO BUSINESS DAYS PRIOR TO THE RECORD DATE) AND WHICH WILL END AT THE CLOSE OF BUSINESS ON THE EXPIRATION DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A PROXY PROVIDING THE TRANSFEREE WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN THE PROXY SOLICITATION. NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. The undersigned hereby appoints [ ], [ ], and [ ], or any of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote as designated hereunder and in their discretion with respect to any other business properly brought before the Special Meeting, all the shares of cumulative preferred stock of Public Service Company of Oklahoma ("PSO") which the undersigned is entitled to vote at the Special Meeting of Shareholders to be held on , 1997, or any adjournment(s) or postponement(s) thereof. NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY. THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PSO. The proxy contained herein, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s). If no direction is made, the proxy will be voted FOR Item 1. Indicate your vote by an (X). The Board of Directors recommends voting FOR Item 1. ITEM 1. HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE FOR THE PROPOSED AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL MEETING. To remove from the Restated Certificate of Incorporation subparagraph (c) of paragraph 5 of Article VI in its entirety, which limits PSO's ability to issue unsecured indebtedness. / / FOR / / AGAINST / / ABSTAIN SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING. 2 Any holder of Shares held of record on the Record Date in the name of another holder must establish to the satisfaction of PSO its entitlement to exercise or transfer this Proxy. This will ordinarily require an assignment by such record holders in blank, or if not in blank, to and from each successive transferee, including the holder, with each signature guaranteed by an Eligible Institution. A form of irrevocable assignment of proxy has been provided herein. Please check box if you plan to attend the Special Meeting. / / SIGNATURE(S) OF OWNER(S) X - -------------------------------------------------------------------------------- X - -------------------------------------------------------------------------------- Dated: - --------------------------------------, 1997 Name(s): - ------------------------------------------------- .............................................. (PLEASE PRINT) Capacity (full title): - --------------------------------------------------- Address: - ------------------------------------------------------------- .......................................... (INCLUDE ZIP CODE) DAYTIME Area Code and Telephone No.: - ------------------------------------ (Must be signed by the registered holder(s) exactly as name(s) appear(s) on the stock certificates or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) 3
DESCRIPTION OF SHARES (IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION APPEARS ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) TOTAL NUMBER OF NUMBER OF SHARES NOT SHARES REPRESENTED BY NUMBER OF TENDERED BUT AS TO CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** WHICH PROXIES GIVEN ONLY
* Need not be completed by shareholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4. You must vote for the Proposed Amendment with respect to any Shares tendered. If any of your certificate(s) for Shares have been lost, stolen or destroyed, please call the Depositary at 1-800-507-9357. In addition, you should advise the Depositary of any certificate(s) you have in your possession. You will need to complete an Affidavit of Loss with respect to the lost certificate(s) (which will be provided by the Depositary) and pay an indemnity bond premium fee. GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature: - ---------------------------- Name: - ---------------------------- Name of Firm: - ---------------------------- Address of Firm: - ---------------------------- Area Code and Telephone No.: - ---------------------------- Dated: - ----------------------------, 1997 4 IF SELLING SHARES SUBSEQUENT TO , 1997, A RECORD HOLDER MUST COMPLETE THE FOLLOWING IRREVOCABLE PROXY PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK PROXY TO A SUBSEQUENT HOLDER OF PREFERRED STOCK WHO WAS NOT A HOLDER OF RECORD ON , 1997 IRREVOCABLE PROXY with respect to shares of the % Series Cumulative Preferred Stock of PUBLIC SERVICE COMPANY OF OKLAHOMA ("PSO") the undersigned hereby irrevocably appoints ______________________________ Type or Print Name of Transferee as attorney and proxy, with full power of substitution, to vote and otherwise act for and in the name(s) of the undersigned with respect to the Shares indicated below which were held of record by the undersigned on , 1997, in the manner in which the undersigned would be entitled to vote and otherwise act in respect of such shares on any and all matters. This proxy shall be effective whether or not the shares indicated below are tendered in the Offer. This instrument supersedes and revokes any and all previous appointments of proxies heretofore made by the undersigned with respect to the shares indicated below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH AN INTEREST. All authority conferred or agreed to be conferred herein shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, legal and personal representatives, successors in interest and assigns of the undersigned. The undersigned understands that tenders of Shares pursuant to any of the procedures described in the Offer to Purchase and Proxy Statement and in this Letter of Transmittal and Proxy will constitute a binding agreement between the undersigned and PSO upon the terms and subject to the conditions of the Offer.
DESCRIPTION OF PREFERRED STOCK CERTIFICATE NUMBER(S) (ATTACH AGGREGATE NUMBER LIST IF NECESSARY) OF SHARES TOTAL: Signature of Record or Signature of Record or Authorized Signatory Authorized Signatory Type of Print Name Type or Print Name Dated: , 19 Dated: , 19 Tax Identification or Social Security No(s).
5 Must be signed by holder(s) exactly as name(s) appear(s) on the Record Date on certificate(s) for the Shares or on a security position listing or by person(s) authorized to become holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5. Name Address Please Print Include Zip Code Area Code and Tel. No.
Capacity (Full Title) __________________________________________________________ ________________________________________________________________________________ GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) Name of Firm: __________________________________________________________________ Authorized Signature: __________________________________________________________ Title: _________________________________________________________________________ Dated: _______________________________________________________________, 19______ NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN TO THE DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE SPACE THEREFOR PROVIDED ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING IN FAVOR OF THE PROPOSED AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX INFORMATION" BELOW. DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC., D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR PUBLIC SERVICE COMPANY OF OKLAHOMA. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED. 6 This Letter of Transmittal and Proxy is to be used (a) if Shares are to be voted but not tendered, or (b) if certificates for Shares are to be forwarded herewith or (c) if delivery of tendered Shares (as defined below) is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter collectively referred to as the "Book-Entry Transfer Facilities") pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement (as defined below). Preferred Shareholders who wish to tender Shares yet who cannot deliver their Shares and all other documents required hereby to the Depositary by the Expiration Date (as defined in the Offer to Purchase and Proxy Statement) must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. See Instruction 2. DELIVERY OF DOCUMENTS TO CENTRAL AND SOUTH WEST CORPORATION, PUBLIC SERVICE COMPANY OF OKLAHOMA OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY. / / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH. A Holder tendering Shares pursuant to this Letter of Transmittal and Proxy must check one of the following boxes: / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment is included herein. / / A vote FOR the Proposed Amendment will be cast at the Special Meeting. (BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY) / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of tendering institution: ------------------------------------------------------------------------ / / DTC / / PDTC Account No: --------------------------------------------------------------------------- Transaction Code No: ------------------------------------------------------------------------------- / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of tendering shareholder(s) - ------------------------------------------------------------------- Date of execution of Notice of Guaranteed Delivery and Proxy - ----------------------------------------------- Name of institution that guaranteed delivery - ------------------------------------------------------------ If delivery is by book-entry transfer: Name of tendering institution - -------------------------------------------------------------------------- Account no. - ---------------------- at / / DTC / / PDTC Transaction Code No. - -------------------------------------------------------------------------------- A holder electing to tender Shares pursuant to a Notice of Guaranteed Delivery and Proxy must check one of the following boxes: / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment was included with the Notice of Guaranteed Delivery and Proxy previously sent to the Depositary. / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment is being delivered pursuant to a Notice of Guaranteed Delivery and Proxy previously sent to the Depositary. / / A valid vote FOR the Proposed Amendment will be cast at the Special Meeting. 7 NOTE: SIGNATURES MUST BE PROVIDED ABOVE. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The abovesigned hereby tenders to Central and South West Corporation, a Delaware corporation ("CSW"), the shares in the amount set forth in the box above labeled "Description of Shares Tendered" pursuant to CSW's offer to purchase any and all of the outstanding shares of the series of cumulative preferred stock of Public Service Company of Oklahoma ("PSO"), an Oklahoma corporation and direct utility subsidiary of CSW, shown on the first page hereof and to which this Letter of Transmittal and Proxy is applicable (the "Shares") at the purchase price per Share shown on the first page hereof, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and Proxy Statement, dated , 1997 (the "Offer to Purchase and Proxy Statement"), receipt of which is hereby acknowledged, and in this Letter of Transmittal and Proxy (which as to the Shares, together with the Offer to Purchase and Proxy Statement, constitutes the "Offer"). PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO PSO'S RESTATED CERTIFICATE OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). See "Proposed Amendment and Proxy Solicitation", "Terms of the Offer--Extension of Tender Period; Termination; Amendments" and "Terms of the Offer--Certain Conditions of the Offer" in the Offer to Purchase and Proxy Statement. Subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith in accordance with 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), the abovesigned hereby sells, assigns and transfers to, or upon the order of, CSW all right, title and interest in and to all the Shares that are being tendered hereby and hereby constitutes and appoints The Bank of New York (the "Depositary") the true and lawful agent and attorney-in-fact of the abovesigned with respect to such Shares, with full power of substitution (such power of attorney being an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares, or transfer ownership of such Shares on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of CSW, (b) present such Shares for registration and transfer on the books of PSO and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer. The Depositary will act as agent for tendering shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering shareholders. The abovesigned hereby represents and warrants that the abovesigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and that, when and to the extent the same are accepted for payment by CSW, CSW will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and the same will not be subject to any adverse claims. The abovesigned will, upon request, execute and deliver any additional documents deemed by the Depositary or CSW to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby. All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive the death or incapacity of the abovesigned, and any obligations of the abovesigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the abovesigned. Except as stated in the Offer, this tender is irrevocable. The abovesigned understands that tenders of Shares pursuant to any one of the procedures described under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement and in the instructions hereto will constitute the abovesigned's acceptance of the terms and conditions of the Offer. CSW's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the abovesigned and CSW upon the terms and subject to the conditions of the Offer. The abovesigned recognizes that, under certain circumstances set forth in the Offer to Purchase and Proxy Statement, CSW may terminate or amend the Offer or may not be required to purchase any of the Shares tendered hereby. In either event, the abovesigned understands that certificate(s) for any Shares not tendered or not purchased will be returned to the abovesigned. 8 Unless otherwise indicated in the box below under the heading "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and/or return any Shares not tendered or not purchased, in the name(s) of the abovesigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above). Unless otherwise indicated in the box below under the heading "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and/or any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the abovesigned at the address shown below the abovesigned signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and/or return any Shares not tendered or not purchased in the name(s) of, and mail said check and/or any certificates to, the person(s) so indicated. The abovesigned recognizes that CSW has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if CSW does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6 AND 7) (SEE INSTRUCTIONS 4, 6 AND 7) To be completed ONLY if the check for To be completed ONLY if the check for the purchase price of Shares purchased, the purchase price of Shares the certificates for Shares not tendered purchased, the certificates for Shares not or not purchased or the check for the Cash tendered or not purchased or the check for Payment are to be issued in the name of the Cash Payment are to be mailed to someone other than the abovesigned. someone other than the abovesigned or to Issue / / check and/or the abovesigned at an address other than / / certificate(s) to: that shown below the abovesigned's Name signature(s). (PLEASE PRINT) Mail / / check and/or Address / / certificate(s) to: (INCLUDE ZIP CODE) Name (TAXPAYER IDENTIFICATION OR (PLEASE PRINT) SOCIAL SECURITY NUMBER) Address (INCLUDE ZIP CODE) LOST CERTIFICATES BOX / / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 12.) Number of Shares represented by lost, destroyed or stolen certificates: ---------------
9 SOLICITED TENDERS (SEE INSTRUCTION 10) As provided in Instruction 10, CSW will pay to any Soliciting Dealer, as defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. The undersigned represents that the Soliciting Dealer which solicited and obtained this tender is: Name of Firm: __________________________________________________________________ (PLEASE PRINT) Name of Individual Broker or Financial Consultant: _______________________________________________________ Telephone Number of Broker or Financial Consultant: _______________________________________________________ Identification Number (if known): ______________________________________________ Address: _______________________________________________________________________ (INCLUDE ZIP CODE) The following is to be completed ONLY if customer's Shares held in nominee name are tendered. NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
The acceptance of compensation by such Soliciting Dealer will constitute a representation by it that (a) it has complied with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder, in connection with such solicitation; (b) it is entitled to such compensation for such solicitation under the terms and conditions of the Offer to Purchase; (c) in soliciting tenders of Shares, it has used no soliciting materials other than those furnished by CSW; and (d) if it is a foreign broker or dealer not eligible for membership in the National Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations. THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY. (IF SHARES ARE BEING TENDERED, PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE) SIGN HERE: _____________________________________________________________________ Signature of Owner(s) _______________________________________ Signature of Owner(s) 10 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States which is a participant in an approved Signature Guarantee Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal and Proxy need not be guaranteed (a) if this Letter of Transmittal and Proxy is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) has not completed the box above under the heading "Special Payment Instructions" or the box above under the heading "Special Delivery Instructions" on this Letter of Transmittal and Proxy, (b) if such Shares are tendered for the account of an Eligible Institution or (c) if this Letter of Transmittal and Proxy is being used solely for the purpose of voting Shares which are not being tendered pursuant to the Offer. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of Transmittal and Proxy is to be used if (a) certificates are to be forwarded herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement or (c) Shares are being voted in connection with the Offer. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other documents required by this Letter of Transmittal and Proxy, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal and Proxy on or prior to the Expiration Date (as defined in the Offer to Purchase and Proxy Statement) with respect to all Shares. Preferred Shareholders who wish to tender their Shares yet who cannot deliver their Shares and all other required documents to the Depositary on or prior to the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery and Proxy in the form provided by CSW (with any required signature guarantees) must be received by the Depositary on or prior to the applicable Expiration Date and (c) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other documents required by this Letter of Transmittal and Proxy must be received by the Depositary by 5:00 p.m. (central time) within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery and Proxy, all as provided under the heading "Terms of the Offer --Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. No alternative, conditional or contingent tenders will be accepted. See "Terms of the Offer--Number of Shares; Purchase Price; Expiration Date Dividends" in the Offer to Purchase and Proxy Statement. By executing this Letter of Transmittal and Proxy (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO PSO'S RESTATED CERTIFICATE OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). In addition, Preferred Shareholders have the right to vote for the Proposed Amendment regardless of whether they tender their Shares by casting their vote and duly executing this 11 Letter of Transmittal and Proxy or by voting in person at the Special Meeting. By executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder is taken to have tendered the Shares described in such Notice of Guaranteed Delivery and Proxy and to have voted such Shares in accordance with the proxy contained therein. If no vote is indicated on an otherwise properly executed proxy contained within this Letter of Transmittal and Proxy (or within a Notice of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will be voted in favor of the Proposed Amendment. See "PROPOSED AMENDMENT AND PROXY SOLICITATION" in the Offer to Purchase and Proxy Statement. The Offer is being sent to all persons in whose names Shares are registered on the books of PSO on the Record Date (as defined in the Offer to Purchase and Proxy Statement). Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender in the Offer must arrange with their seller to receive a proxy from the holder of record on the Record Date of such Shares. Any holder of Shares held of record on the Record Date in the name of another must establish to the satisfaction of PSO his entitlement to exercise or transfer such Proxy. This will ordinarily require an assignment by such record holder in blank, or if not in blank, to and from each successive transferee, including the holder, with each signature guaranteed by an Eligible Institution. See Instruction 5. In order to facilitate receipt of proxies, Shares shall, during the period which commenced on , 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date, trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired shares in the Proxy Solicitation. No record date is fixed for determining which persons are permitted to tender Shares. However, only the holders of record, or holders who acquire an assignment of proxy from such holders, are permitted to vote for the Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any person who is the beneficial owner but not the record holder of Shares must arrange for the record transfer of such Shares prior to tendering or direct the record holder to tender on behalf of the beneficial owner. 4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares that are to be tendered in the box above under the heading "Description of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal and Proxy, unless otherwise provided in the box above under the heading "Special Payment Instructions" or "Special Delivery Instructions", as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND/OR NOTICE OF GUARANTEED DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together, the "Tender and Proxy Documents") is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered or voted under either Tender and Proxy Document is held of record by two or more persons, all such persons must sign such Tender and Proxy Document. If any of the Shares tendered or voted under either Tender and Proxy Document is registered in different names or different certificates, it will be necessary to complete, sign and submit as many separate applicable Tender and Proxy Documents as there are different registrations of certificates. If either Tender and Proxy Document is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal and Proxy is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If either Tender and Proxy Document or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to CSW of the authority of such person to act must be submitted. 12 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if tendered Shares are registered in the name of any person other than the person(s) signing this Letter of Transmittal and Proxy, the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See "Terms of the Offer--Acceptance of Shares for Payment and Payment of Purchase Price and Dividend" in the Offer to Purchase and Proxy Statement. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase price of any Shares purchased is to be issued in the name of, any Shares not tendered or not purchased are to be returned to or the check for the Cash Payment is to be issued in the name of, a person other than the person(s) signing this Letter of Transmittal and Proxy or if the check and/or any certificate for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal and Proxy or to an address other than that shown in the box above under the heading "Name(s) and Address(es) of Registered Holder(s)", then the "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal and Proxy should be completed. Preferred Shareholders tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such Preferred Shareholder at the Book-Entry Transfer Facility from which such transfer was made. 8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder or a Preferred Shareholder voting in favor of the Proposed Amendment is required to provide the Depositary with either a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, or a properly completed Form W-8. Failure to provide the information on either Substitute Form W-9 or Form W-8 may subject the Preferred Shareholder to 31% federal income tax backup withholding on the payment of the purchase price for the Shares or the Cash Payment. If the Preferred Shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the Preferred Shareholder may write "Applied For" in the space for the TIN in Part I of Substitute Form W-9. If the Preferred Shareholder writes "Applied For" in the space for the TIN in Substitute Form W-9 and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% on the payment of the purchase price for the Shares or the Cash Payment. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and addresses listed below. Requests for additional copies of the Offer to Purchase and Proxy Statement, this Letter of Transmittal and Proxy or other tender offer materials may be directed to the Information Agent or the Dealer Managers and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. 10. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal and Proxy which designates, under the heading "Solicited Tenders", as having solicited and obtained the tender, the name of (a) any broker or dealer in securities, including a Dealer Manager in its capacity as a dealer or broker, which is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (c) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by a holder unless the Letter of Transmittal and Proxy accompanying such tender designates such Soliciting Dealer. No such fee shall be payable to a Soliciting Dealer in respect of Shares registered in the name of such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as nominee and such Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal and Proxy or on the Notice of Solicited Tenders (included in 13 the materials provided to brokers and dealers). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. If tendered Shares are being delivered by book-entry transfer, the Soliciting Dealer must return a Notice of Solicited Tenders to the Depositary within three business days after expiration of the Offer to receive a solicitation fee. No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be paid to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealer's own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of CSW, the Depositary, the Information Agent or the Dealer Managers for purposes of the Offer. 11. IRREGULARITIES. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by CSW, in its sole discretion, and its determination shall be final and binding. CSW reserves the absolute right to reject any and all tenders of Shares that it determines are not in proper form or the acceptance for payment of or payment for Shares that may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any of the conditions to the Offer or any defect or irregularity in any tender of Shares and CSW's interpretation of the terms and conditions of the Offer (including these instructions) shall be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person shall be under any duty to give notice of any defect or irregularity in tenders nor shall any of them incur any liability for failure to give any such notice. Tenders will not be deemed to have been made until all defects and irregularities have been cured or waived. 12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares has been lost, destroyed or stolen, the Preferred Shareholder should promptly notify the Depositary by checking the Lost Certificates Box immediately following the Special Payment Instructions/Special Delivery Instructions and indicating the number of Shares lost, destroyed or stolen. The Preferred Shareholder will then be instructed as to the procedures that must be taken in order to replace the certificate. The tender of Shares pursuant to this Letter of Transmittal and Proxy will not be valid unless prior to the Expiration Date (as defined in the Offer to Purchase and Proxy Statement): (a) such procedures have been completed and a replacement certificate for the Shares has been delivered to the Depositary or (b) a Notice of Guaranteed Delivery and Proxy has been delivered to the Depositary. See Instruction 2. IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY HEREOF), DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY AND PROXY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). IMPORTANT TAX INFORMATION Under federal income tax law, a Preferred Shareholder whose tendered Shares are accepted for payment or who will receive a Cash Payment as a result of voting in favor of the Proposed Amendment is required to provide the Depositary (as payer) with either such Preferred Shareholder's correct TIN on Substitute Form W-9 below or a properly completed Form W-8. If such Preferred Shareholder is an individual, the TIN is his or her social security number. For businesses and other entities, the number is the federal employer identification number. If the Depositary is not provided with the correct TIN or properly completed Form W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Preferred Shareholder may be subject to backup withholding. The Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If federal income tax backup withholding applies, the Depositary is required to withhold 31% of any payments made to the Preferred Shareholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of the tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 14 PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8 To avoid backup withholding on a Cash Payment or payments that are made to a Preferred Shareholder with respect to Shares purchased pursuant to the Offer, the Preferred Shareholder is required to notify the Depositary of his or her correct TIN by completing the Substitute Form W-9 attached hereto certifying that the TIN provided on Substitute Form W-9 is correct and that (a) the Preferred Shareholder is exempt from federal income tax backup withholding or (b) the Preferred Shareholder has not been notified by the Internal Revenue Service that he or she is subject to federal income tax backup withholding as a result of failure to report all interest or dividends or (c) the Internal Revenue Service has notified the Preferred Shareholder that he or she is no longer subject to federal income tax backup withholding. Foreign Preferred Shareholders must submit a properly completed Form W-8 in order to avoid the applicable backup withholding; provided, however, that backup withholding will not apply to foreign Preferred Shareholders subject to 30% (or lower treaty rate) withholding on the Cash Payment or on gross payments received pursuant to the Offer. WHAT NUMBER TO GIVE THE DEPOSITARY The Preferred Shareholder is required to give the Depositary the social security number or employer identification number of the registered owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 15
PAYER'S NAME: THE BANK OF NEW YORK SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number SIGNING AND DATING BELOW. TIN ------------------------ Name (Please Print) PART 2-- Address For Payees Exempt from Backup City State Zip Code Withholding (See Guidelines) PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: (1) the number shown on this form is my correct taxpayer identification number (or a TIN has not been issued to me but I have applied for a TIN or intend to do so in the near future), and (2) I am not subject to backup withholding either because I am exempt from backup withholding or I have not been notified by the Internal Revenue PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a TAXPAYER IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has AND CERTIFICATION notified me that I am no longer subject to backup withholding. I understand that, if I have written "Applied For" in the space for TIN in Part I, I must provide a TIN by the time of payment, or 31% of the Cash Payment or the payment of the purchase price of shares made to me will be withheld. SIGNATURE DATE, 1997 You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER OR PROXY SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE DEALER MANAGERS: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Paul S. Galant
THE INFORMATION AGENT: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) 16 EX-5.(C) 9 LETTER OF TRANSMITTAL WTU LETTER OF TRANSMITTAL AND PROXY TO ACCOMPANY SHARES OF 4.40% SERIES CUMULATIVE PREFERRED STOCK CUSIP NUMBER 956279202 OF WEST TEXAS UTILITIES COMPANY TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH BY CENTRAL AND SOUTH WEST CORPORATION, DATED , 1997, FOR PURCHASE AT A PURCHASE PRICE OF $ PER SHARE AND/OR VOTED PURSUANT TO THE PROXY STATEMENT OF WEST TEXAS UTILITIES COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , , 1997, UNLESS THE OFFER IS EXTENDED. THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , 1997, OR ON SUCH DATE TO WHICH THE MEETING IS ADJOURNED OR POSTPONED. TO: THE BANK OF NEW YORK, DEPOSITARY BY MAIL: BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver window New York, New York 10286-1248 New York, New York 10286
BY FACSIMILE TRANSMISSION: (for Eligible Institutions only) (212) 815-6213 INFORMATION AND CONFIRM BY TELEPHONE: (800) 507-9357 NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (Please fill in exactly as name(s) and address(es) appear(s) on certificate(s)) PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE TO VALIDLY TENDER THEIR SHARES UNLESS THEY HAVE SUBMITTED A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. CENTRAL AND SOUTH WEST CORPORATION WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY CASTING THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, WEST TEXAS UTILITIES COMPANY WILL MAKE A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED PURSUANT TO THE OFFER. HOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED AFTER THE CLOSE OF BUSINESS ON , 1997 (THE "RECORD DATE") AND WHO WISH TO TENDER IN THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY COMPLETED, VALID AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF AN IRREVOCABLE ASSIGNMENT OF PROXY AS SET FORTH IN THIS LETTER OF TRANSMITTAL AND PROXY) FROM THE HOLDER OF RECORD ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO FACILITATE RECEIPT OF PROXIES, SHARES SHALL, DURING THE PERIOD WHICH COMMENCED , 1997 (TWO BUSINESS DAYS PRIOR TO THE RECORD DATE) AND WHICH WILL END AT THE CLOSE OF BUSINESS ON THE EXPIRATION DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A PROXY PROVIDING THE TRANSFEREE WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN THE PROXY SOLICITATION. NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. The undersigned hereby appoints [ ], [ ], and [ ], or any of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote as designated hereunder and in their discretion with respect to any other business properly brought before the Special Meeting, all the shares of cumulative preferred stock of West Texas Utilities Company ("WTU") which the undersigned is entitled to vote at the Special Meeting of Shareholders to be held on , 1997, or any adjournment(s) or postponement(s) thereof. NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY. THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WTU. The proxy contained herein, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s). If no direction is made, the proxy will be voted FOR Item 1. Indicate your vote by an (X). The Board of Directors recommends voting FOR Item 1. 2 ITEM 1. HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE FOR THE PROPOSED AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL MEETING. To remove from the Restated Articles of Incorporation subparagraph (B) of paragraph 5 of Article VI in its entirety, which limits WTU's ability to issue unsecured indebtedness. / / FOR / / AGAINST / / ABSTAIN SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING. Any holder of Shares held of record on the Record Date in the name of another holder must establish to the satisfaction of WTU its entitlement to exercise or transfer this Proxy. This will ordinarily require an assignment by such record holders in blank, or if not in blank, to and from each successive transferee, including the holder, with each signature guaranteed by an Eligible Institution. A form of irrevocable assignment of proxy has been provided herein. Please check box if you plan to attend the Special Meeting. / / SIGNATURE(S) OF OWNER(S) X - -------------------------------------------------------------------------------- X - -------------------------------------------------------------------------------- Dated: - --------------------------------------, 1997 Name(s): - ---------------------------------------------------------- .................................................. (PLEASE PRINT) Capacity (full title): - --------------------------------------------------- Address: - ------------------------------------------------------------- ..................................................... (INCLUDE ZIP CODE) DAYTIME Area Code and Telephone No.: - ------------------------------------ (Must be signed by the registered holder(s) exactly as name(s) appear(s) on the stock certificates or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) 3
DESCRIPTION OF SHARES (IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION APPEARS ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) NUMBER OF SHARES NOT TOTAL NUMBER OF TENDERED SHARES REPRESENTED BY NUMBER OF BUT AS TO CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** WHICH PROXIES GIVEN ONLY
* Need not be completed by shareholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4. You must vote for the Proposed Amendment with respect to any Shares tendered. If any of your certificate(s) for Shares have been lost, stolen or destroyed, please call the Depositary at 1-800-507-9357. In addition, you should advise the Depositary of any certificate(s) you have in your possession. You will need to complete an Affidavit of Loss with respect to the lost certificate(s) (which will be provided by the Depositary) and pay an indemnity bond premium fee. GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature: - ---------------------------- Name: - ---------------------------- Name of Firm: - ---------------------------- Address of Firm: - ---------------------------- Area Code and Telephone No.: - ---------------------------- Dated: - ----------------------------, 1997 4 IF SELLING SHARES SUBSEQUENT TO , 1997, A RECORD HOLDER MUST COMPLETE THE FOLLOWING IRREVOCABLE PROXY PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK PROXY TO A SUBSEQUENT HOLDER OF PREFERRED STOCK WHO WAS NOT A HOLDER OF RECORD ON , 1997 IRREVOCABLE PROXY with respect to shares of the 4.40% Series Cumulative Preferred Stock of WEST TEXAS UTILITIES COMPANY ("WTU") the undersigned hereby irrevocably appoints ______________________________ Type or Print Name of Transferee as attorney and proxy, with full power of substitution, to vote and otherwise act for and in the name(s) of the undersigned with respect to the Shares indicated below which were held of record by the undersigned on , 1997, in the manner in which the undersigned would be entitled to vote and otherwise act in respect of such shares on any and all matters. This proxy shall be effective whether or not the shares indicated below are tendered in the Offer. This instrument supersedes and revokes any and all previous appointments of proxies heretofore made by the undersigned with respect to the shares indicated below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH AN INTEREST. All authority conferred or agreed to be conferred herein shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, legal and personal representatives, successors in interest and assigns of the undersigned. The undersigned understands that tenders of Shares pursuant to any of the procedures described in the Offer to Purchase and Proxy Statement and in this Letter of Transmittal and Proxy will constitute a binding agreement between the undersigned and WTU upon the terms and subject to the conditions of the Offer.
DESCRIPTION OF PREFERRED STOCK CERTIFICATE NUMBER(S) (ATTACH AGGREGATE NUMBER LIST IF NECESSARY) OF SHARES TOTAL: Signature of Record or Signature of Record or Authorized Signatory Authorized Signatory Type of Print Name Type or Print Name Dated: , 19 Dated: , 19 Tax Identification or Social Security No(s).
5 Must be signed by holder(s) exactly as name(s) appear(s) on the Record Date on certificate(s) for the Shares or on a security position listing or by person(s) authorized to become holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5. Name Address Please Print Include Zip Code Area Code and Tel. No.
Capacity (Full Title) _________________________________________________________ ________________________________________________________________________________ GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) Name of Firm: __________________________________________________________________ Authorized Signature: __________________________________________________________ Title: _________________________________________________________________________ Dated: _______________________________________________________________, 19______ NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN TO THE DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE SPACE THEREFOR PROVIDED ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING IN FAVOR OF THE PROPOSED AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX INFORMATION" BELOW. DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC., D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR WEST TEXAS UTILITIES COMPANY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED. This Letter of Transmittal and Proxy is to be used (a) if Shares are to be voted but not tendered, or (b) if certificates for Shares are to be forwarded herewith or (c) if delivery of tendered Shares (as defined below) is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter collectively referred to as the "Book-Entry Transfer Facilities") pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement (as defined below). Preferred Shareholders who wish to tender Shares yet who cannot deliver their Shares and all other documents required hereby to the Depositary by the Expiration Date (as defined in the Offer to Purchase and Proxy Statement) must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. See Instruction 2. DELIVERY OF DOCUMENTS TO CENTRAL AND SOUTH WEST CORPORATION, WEST TEXAS UTILITIES COMPANY OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY. / / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH. 6 A Holder tendering Shares pursuant to this Letter of Transmittal and Proxy must check one of the following boxes: / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment is included herein. / / A vote FOR the Proposed Amendment will be cast at the Special Meeting. (BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY) / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of tendering institution: ------------------------------------------------------------------------ / / DTC / / PDTC Account No: --------------------------------------------------------------------------- Transaction Code No: ------------------------------------------------------------------------------- / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of tendering shareholder(s) - ------------------------------------------------------------------- Date of execution of Notice of Guaranteed Delivery and Proxy - ---------------------------------------------- Name of institution that guaranteed delivery - ------------------------------------------------------------ If delivery is by book-entry transfer: Name of tendering institution - -------------------------------------------------------------------------- Account no. - ---------------------- at / / DTC / / PDTC Transaction Code No. - -------------------------------------------------------------------------------- A holder electing to tender Shares pursuant to a Notice of Guaranteed Delivery and Proxy must check one of the following boxes: / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment was included with the Notice of Guaranteed Delivery and Proxy previously sent to the Depositary. / / A duly completed, valid and unrevoked proxy indicating a vote FOR the Proposed Amendment is being delivered pursuant to a Notice of Guaranteed Delivery and Proxy previously sent to the Depositary. / / A valid vote FOR the Proposed Amendment will be cast at the Special Meeting. NOTE: SIGNATURES MUST BE PROVIDED ABOVE. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The abovesigned hereby tenders to Central and South West Corporation, a Delaware corporation ("CSW"), the shares in the amount set forth in the box above labeled "Description of Shares Tendered" pursuant to CSW's offer to purchase any and all of the outstanding shares of the series of cumulative preferred stock of West Texas Utilities Company ("WTU"), a Texas corporation and direct utility subsidiary of CSW, shown on the first page hereof and to which this Letter of Transmittal and Proxy is applicable (the "Shares") at the purchase price per Share shown on the first page hereof, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and Proxy Statement, dated , 1997 (the "Offer to Purchase and Proxy Statement"), receipt of which is hereby acknowledged, and in this Letter of Transmittal and Proxy (which as to the Shares, together with the Offer to Purchase and Proxy Statement, constitutes the "Offer"). PREFERRED SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO WTU'S RESTATED ARTICLES OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING 7 (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). See "Proposed Amendment and Proxy Solicitation", "Terms of the Offer--Extension of Tender Period; Termination; Amendments" and "Terms of the Offer--Certain Conditions of the Offer" in the Offer to Purchase and Proxy Statement. Subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith in accordance with 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), the abovesigned hereby sells, assigns and transfers to, or upon the order of, CSW all right, title and interest in and to all the Shares that are being tendered hereby and hereby constitutes and appoints The Bank of New York (the "Depositary") the true and lawful agent and attorney-in-fact of the abovesigned with respect to such Shares, with full power of substitution (such power of attorney being an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares, or transfer ownership of such Shares on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of CSW, (b) present such Shares for registration and transfer on the books of WTU and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer. The Depositary will act as agent for tendering shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering shareholders. The abovesigned hereby represents and warrants that the abovesigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and that, when and to the extent the same are accepted for payment by CSW, CSW will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and the same will not be subject to any adverse claims. The abovesigned will, upon request, execute and deliver any additional documents deemed by the Depositary or CSW to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby. All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive the death or incapacity of the abovesigned, and any obligations of the abovesigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the abovesigned. Except as stated in the Offer, this tender is irrevocable. The abovesigned understands that tenders of Shares pursuant to any one of the procedures described under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement and in the instructions hereto will constitute the abovesigned's acceptance of the terms and conditions of the Offer. CSW's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the abovesigned and CSW upon the terms and subject to the conditions of the Offer. The abovesigned recognizes that, under certain circumstances set forth in the Offer to Purchase and Proxy Statement, CSW may terminate or amend the Offer or may not be required to purchase any of the Shares tendered hereby. In either event, the abovesigned understands that certificate(s) for any Shares not tendered or not purchased will be returned to the abovesigned. Unless otherwise indicated in the box below under the heading "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and/or return any Shares not tendered or not purchased, in the name(s) of the abovesigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above). Unless otherwise indicated in the box below under the heading "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and/or any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the abovesigned at the address shown below the abovesigned signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and/or return any Shares not tendered or not purchased in the name(s) of, and mail said check and/or any certificates to, the person(s) so indicated. The abovesigned recognizes that CSW has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if CSW does not accept for payment any of the Shares so tendered. 8 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 6 AND 7) (SEE INSTRUCTIONS 4, 6 AND 7) To be completed ONLY if the check for To be completed ONLY if the check for the purchase price of Shares purchased, the purchase price of Shares the certificates for Shares not tendered purchased, the certificates for Shares not or not purchased or the check for the Cash tendered or not purchased or the check for Payment are to be issued in the name of the Cash Payment are to be mailed to someone other than the abovesigned. someone other than the abovesigned or to Issue / / check and/or the abovesigned at an address other than / / certificate(s) to: that shown below the abovesigned's Name signature(s). (PLEASE PRINT) Mail / / check and/or Address / / certificate(s) to: (INCLUDE ZIP CODE) Name (TAXPAYER IDENTIFICATION OR (PLEASE PRINT) SOCIAL SECURITY NUMBER) Address (INCLUDE ZIP CODE) LOST CERTIFICATES BOX / / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 12.) Number of Shares represented by lost, destroyed or stolen certificates: ---------------
10 SOLICITED TENDERS (SEE INSTRUCTION 10) As provided in Instruction 10, CSW will pay to any Soliciting Dealer, as defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. The undersigned represents that the Soliciting Dealer which solicited and obtained this tender is: Name of Firm: __________________________________________________________________ (PLEASE PRINT) Name of Individual Broker or Financial Consultant: _______________________________________________________ Telephone Number of Broker or Financial Consultant: _______________________________________________________ Identification Number (if known): ______________________________________________ Address: _______________________________________________________________________ (INCLUDE ZIP CODE) The following is to be completed ONLY if customer's Shares held in nominee name are tendered. NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
The acceptance of compensation by such Soliciting Dealer will constitute a representation by it that (a) it has complied with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder, in connection with such solicitation; (b) it is entitled to such compensation for such solicitation under the terms and conditions of the Offer to Purchase; (c) in soliciting tenders of Shares, it has used no soliciting materials other than those furnished by CSW; and (d) if it is a foreign broker or dealer not eligible for membership in the National Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations. THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY. (IF SHARES ARE BEING TENDERED, PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE) SIGN HERE: _____________________________________________________________________ Signature of Owner(s) _______________________________________ Signature of Owner(s) 11 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States which is a participant in an approved Signature Guarantee Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal and Proxy need not be guaranteed (a) if this Letter of Transmittal and Proxy is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) has not completed the box above under the heading "Special Payment Instructions" or the box above under the heading "Special Delivery Instructions" on this Letter of Transmittal and Proxy, (b) if such Shares are tendered for the account of an Eligible Institution or (c) if this Letter of Transmittal and Proxy is being used solely for the purpose of voting Shares which are not being tendered pursuant to the Offer. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of Transmittal and Proxy is to be used if (a) certificates are to be forwarded herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement or (c) Shares are being voted in connection with the Offer. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other documents required by this Letter of Transmittal and Proxy, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal and Proxy on or prior to the Expiration Date (as defined in the Offer to Purchase and Proxy Statement) with respect to all Shares. Preferred Shareholders who wish to tender their Shares yet who cannot deliver their Shares and all other required documents to the Depositary on or prior to the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery and Proxy in the form provided by CSW (with any required signature guarantees) must be received by the Depositary on or prior to the applicable Expiration Date and (c) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal and Proxy (or facsimile thereof) and any other documents required by this Letter of Transmittal and Proxy must be received by the Depositary by 5:00 p.m. (central time) within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery and Proxy, all as provided under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and Proxy Statement. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. No alternative, conditional or contingent tenders will be accepted. See "Terms of the Offer--Number of Shares; Purchase Price; Expiration Date Dividends" in the Offer to Purchase and Proxy Statement. By executing this Letter of Transmittal and Proxy (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO WTU'S RESTATED ARTICLES OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). In addition, Preferred Shareholders have the right to vote for the Proposed Amendment regardless of whether they tender their Shares by casting their vote and duly executing this Letter of 12 Transmittal and Proxy or by voting in person at the Special Meeting. By executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder is taken to have tendered the Shares described in such Notice of Guaranteed Delivery and Proxy and to have voted such Shares in accordance with the proxy contained therein. If no vote is indicated on an otherwise properly executed proxy contained within this Letter of Transmittal and Proxy (or within a Notice of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will be voted in favor of the Proposed Amendment. See "PROPOSED AMENDMENT AND PROXY SOLICITATION" in the Offer to Purchase and Proxy Statement. The Offer is being sent to all persons in whose names Shares are registered on the books of WTU on the Record Date (as defined in the Offer to Purchase and Proxy Statement). Preferred Shareholders who purchase or whose purchase is registered after the Record Date and who wish to tender in the Offer must arrange with their seller to receive a proxy from the holder of record on the Record Date of such Shares. Any holder of Shares held of record on the Record Date in the name of another must establish to the satisfaction of WTU his entitlement to exercise or transfer such Proxy. This will ordinarily require an assignment by such record holder in blank, or if not in blank, to and from each successive transferee, including the holder, with each signature guaranteed by an Eligible Institution. See Instruction 5. In order to facilitate receipt of proxies, Shares shall, during the period which commenced on , 1997 (two business days prior to the Record Date) and which will end at the close of business on the Expiration Date, trade in the over-the-counter market with a proxy providing the transferee with the right to vote such acquired shares in the Proxy Solicitation. No record date is fixed for determining which persons are permitted to tender Shares. However, only the holders of record, or holders who acquire an assignment of proxy from such holders, are permitted to vote for the Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any person who is the beneficial owner but not the record holder of Shares must arrange for the record transfer of such Shares prior to tendering or direct the record holder to tender on behalf of the beneficial owner. 4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares that are to be tendered in the box above under the heading "Description of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal and Proxy, unless otherwise provided in the box above under the heading "Special Payment Instructions" or "Special Delivery Instructions", as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND/OR NOTICE OF GUARANTEED DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together, the "Tender and Proxy Documents") is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered or voted under either Tender and Proxy Document is held of record by two or more persons, all such persons must sign such Tender and Proxy Document. If any of the Shares tendered or voted under either Tender and Proxy Document is registered in different names or different certificates, it will be necessary to complete, sign and submit as many separate applicable Tender and Proxy Documents as there are different registrations of certificates. If either Tender and Proxy Document is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal and Proxy is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If either Tender and Proxy Document or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to CSW of the authority of such person to act must be submitted. 13 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if tendered Shares are registered in the name of any person other than the person(s) signing this Letter of Transmittal and Proxy, the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See "Terms of the Offer--Acceptance of Shares for Payment and Payment of Purchase Price and Dividend" in the Offer to Purchase and Proxy Statement. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase price of any Shares purchased is to be issued in the name of, any Shares not tendered or not purchased are to be returned to or the check for the Cash Payment is to be issued in the name of, a person other than the person(s) signing this Letter of Transmittal and Proxy or if the check and/or any certificate for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal and Proxy or to an address other than that shown in the box above under the heading "Name(s) and Address(es) of Registered Holder(s)", then the "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal and Proxy should be completed. Preferred Shareholders tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such Preferred Shareholder at the Book-Entry Transfer Facility from which such transfer was made. 8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder or a Preferred Shareholder voting in favor of the Proposed Amendment is required to provide the Depositary with either a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, or a properly completed Form W-8. Failure to provide the information on either Substitute Form W-9 or Form W-8 may subject the Preferred Shareholder to 31% federal income tax backup withholding on the payment of the purchase price for the Shares or the Cash Payment. If the Preferred Shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the Preferred Shareholder may write "Applied For" in the space for the TIN in Part I of Substitute Form W-9. If the Preferred Shareholder writes "Applied For" in the space for the TIN in Substitute Form W-9 and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% on the payment of the purchase price for the Shares or the Cash Payment. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and addresses listed below. Requests for additional copies of the Offer to Purchase and Proxy Statement, this Letter of Transmittal and Proxy or other tender offer materials may be directed to the Information Agent or the Dealer Managers and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. 10. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal and Proxy which designates, under the heading "Solicited Tenders", as having solicited and obtained the tender, the name of (a) any broker or dealer in securities, including a Dealer Manager in its capacity as a dealer or broker, which is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (c) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by a holder unless the Letter of Transmittal and Proxy accompanying such tender designates such Soliciting Dealer. No such fee shall be payable to a Soliciting Dealer in respect of Shares registered in the name of such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as nominee and such Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal and Proxy or on the Notice of Solicited Tenders (included in 14 the materials provided to brokers and dealers). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. If tendered Shares are being delivered by book-entry transfer, the Soliciting Dealer must return a Notice of Solicited Tenders to the Depositary within three business days after expiration of the Offer to receive a solicitation fee. No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be paid to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealer's own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of CSW, the Depositary, the Information Agent or the Dealer Managers for purposes of the Offer. 11. IRREGULARITIES. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by CSW, in its sole discretion, and its determination shall be final and binding. CSW reserves the absolute right to reject any and all tenders of Shares that it determines are not in proper form or the acceptance for payment of or payment for Shares that may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any of the conditions to the Offer or any defect or irregularity in any tender of Shares and CSW's interpretation of the terms and conditions of the Offer (including these instructions) shall be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person shall be under any duty to give notice of any defect or irregularity in tenders nor shall any of them incur any liability for failure to give any such notice. Tenders will not be deemed to have been made until all defects and irregularities have been cured or waived. 12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares has been lost, destroyed or stolen, the Preferred Shareholder should promptly notify the Depositary by checking the Lost Certificates Box immediately following the Special Payment Instructions/Special Delivery Instructions and indicating the number of Shares lost, destroyed or stolen. The Preferred Shareholder will then be instructed as to the procedures that must be taken in order to replace the certificate. The tender of Shares pursuant to this Letter of Transmittal and Proxy will not be valid unless prior to the Expiration Date (as defined in the Offer to Purchase and Proxy Statement): (a) such procedures have been completed and a replacement certificate for the Shares has been delivered to the Depositary or (b) a Notice of Guaranteed Delivery and Proxy has been delivered to the Depositary. See Instruction 2. IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY HEREOF), DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY AND PROXY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). IMPORTANT TAX INFORMATION Under federal income tax law, a Preferred Shareholder whose tendered Shares are accepted for payment or who will receive a Cash Payment as a result of voting in favor of the Proposed Amendment is required to provide the Depositary (as payer) with either such Preferred Shareholder's correct TIN on Substitute Form W-9 below or a properly completed Form W-8. If such Preferred Shareholder is an individual, the TIN is his or her social security number. For businesses and other entities, the number is the federal employer identification number. If the Depositary is not provided with the correct TIN or properly completed Form W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Preferred Shareholder may be subject to backup withholding. The Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If federal income tax backup withholding applies, the Depositary is required to withhold 31% of any payments made to the Preferred Shareholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of the tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 15 PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8 To avoid backup withholding on a Cash Payment or payments that are made to a Preferred Shareholder with respect to Shares purchased pursuant to the Offer, the Preferred Shareholder is required to notify the Depositary of his or her correct TIN by completing the Substitute Form W-9 attached hereto certifying that the TIN provided on Substitute Form W-9 is correct and that (a) the Preferred Shareholder is exempt from federal income tax backup withholding or (b) the Preferred Shareholder has not been notified by the Internal Revenue Service that he or she is subject to federal income tax backup withholding as a result of failure to report all interest or dividends or (c) the Internal Revenue Service has notified the Preferred Shareholder that he or she is no longer subject to federal income tax backup withholding. Foreign Preferred Shareholders must submit a properly completed Form W-8 in order to avoid the applicable backup withholding; provided, however, that backup withholding will not apply to foreign Preferred Shareholders subject to 30% (or lower treaty rate) withholding on the Cash Payment or on gross payments received pursuant to the Offer. WHAT NUMBER TO GIVE THE DEPOSITARY The Preferred Shareholder is required to give the Depositary the social security number or employer identification number of the registered owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 16
PAYER'S NAME: THE BANK OF NEW YORK SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number SIGNING AND DATING BELOW. TIN ------------------------ Name (Please Print) PART 2-- Address For Payees Exempt from Backup City State Zip Code Withholding (See Guidelines) PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: (1) the number shown on this form is my correct taxpayer identification number (or a TIN has not been issued to me but I have applied for a TIN or intend to do so in the near future), and (2) I am not subject to backup withholding either because I am exempt from backup withholding or I have not been notified by the Internal Revenue PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a TAXPAYER IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has AND CERTIFICATION notified me that I am no longer subject to backup withholding. I understand that, if I have written "Applied For" in the space for the TIN in Part I, I must provide a TIN by the time of payment, or 31% of the Cash Payment or the payment of the purchase price of the Shares made to me will be withheld. SIGNATURE DATE, 1997 You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER OR PROXY SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE DEALER MANAGERS: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Attention: Paul S. Galant
THE INFORMATION AGENT: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) 17 EX-5.(D) 10 LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL TO ACCOMPANY SHARES OF % SERIES CUMULATIVE PREFERRED STOCK CUSIP NUMBER OF CENTRAL POWER AND LIGHT COMPANY TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH BY CENTRAL AND SOUTH WEST CORPORATION, DATED , 1997, FOR PURCHASE AT A PURCHASE PRICE OF $ PER SHARE THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON , , 1997, UNLESS THE OFFER IS EXTENDED. TO: THE BANK OF NEW YORK, DEPOSITARY
BY MAIL: BY HAND OR OVERNIGHT COURIER: Tender & Exchange Department Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver window New York, New York 10286-1248 New York, New York 10286
BY FACSIMILE TRANSMISSION: (FOR ELIGIBLE INSTITUTIONS ONLY) (212) 815-6213 INFORMATION AND CONFIRM BY TELEPHONE: (800) 507-9357 NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN EXACTLY AS NAME(S) AND ADDRESS(ES) APPEAR(S) ON CERTIFICATE(S)) NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. SIGNATURE(S) OF OWNER(S) X - -------------------------------------------------------------------------------- X - -------------------------------------------------------------------------------- Dated: - --------------------------------------, 1997 Name(s): - ------------------------------------------------- .......................................... (PLEASE PRINT) Capacity (full title): - --------------------------------------------------- Address: - ------------------------------------------------------------- .......................................... (INCLUDE ZIP CODE) DAYTIME Area Code and Telephone No.: - ------------------------------------ (Must be signed by the registered holder(s) exactly as name(s) appear(s) on the stock certificates or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 4.) 2
DESCRIPTION OF SHARES (IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION APPEARS ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) TOTAL NUMBER OF SHARES REPRESENTED BY NUMBER OF CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED**
* Need not be completed by shareholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 3. If any of your certificate(s) for Shares have been lost, stolen or destroyed, please call the Depositary at 1-800-507-9357. In addition, you should advise the Depositary of any certificate(s) you have in your possession. You will need to complete an Affidavit of Loss with respect to the lost certificate(s) (which will be provided by the Depositary) and pay an indemnity bond premium fee. GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 4) Authorized Signature: - ---------------------------- Name: - ---------------------------- Name of Firm: - ---------------------------- Address of Firm: - ---------------------------- Area Code and Telephone No.: - ---------------------------- Dated: - ----------------------------, 1997 3 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN TO THE DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED ABOVE AND, IF YOU ARE TENDERING ANY SHARES, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 7 AND "IMPORTANT TAX INFORMATION" BELOW. DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC., D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR THE CENTRAL POWER AND LIGHT COMPANY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used (a) if certificates for Shares are to be forwarded herewith or (b) if delivery of tendered Shares (as defined below) is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter collectively referred to as the "Book-Entry Transfer Facilities") pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase (as defined below). Preferred Shareholders who wish to tender Shares yet who cannot deliver their Shares and all other documents required hereby to the Depositary by the Expiration Date (as defined in the Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer-- Procedure for Tendering Shares" in the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO CENTRAL AND SOUTH WEST CORPORATION, CENTRAL POWER AND LIGHT COMPANY OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY. / / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH. (BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY) / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of tendering institution:___________________________________________ / / DTC / / PDTC Account No:________________________________________________________________ Transaction Code No:_______________________________________________________ / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of tendering shareholder(s)_____________________________________________ Date of execution of Notice of Guaranteed Delivery______________________________ Name of institution that guaranteed delivery____________________________________ If delivery is by book-entry transfer: Name of tendering institution___________________________________________________ Account no. - ---------------------- at / / DTC / / PDTC Transaction Code No.____________________________________________________________ NOTE: SIGNATURES MUST BE PROVIDED ABOVE. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The abovesigned hereby tenders to Central and South West Corporation, a Delaware corporation ("CSW"), the shares in the amount set forth in the box above labeled "Description of Shares Tendered" pursuant to CSW's offer to purchase any and all of the outstanding shares of the series of cumulative preferred stock of Central Power and Light Company ("CPL"), a Texas corporation and direct utility subsidiary of CSW, shown on the first 4 page hereof and to which this Letter of Transmittal is applicable (the "Shares") at the purchase price per Share shown on the first page hereof, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated , 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which as to the Shares, together with the Offer to Purchase, constitutes the "Offer"). Subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith in accordance with 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), the abovesigned hereby sells, assigns and transfers to, or upon the order of, CSW all right, title and interest in and to all the Shares that are being tendered hereby and hereby constitutes and appoints The Bank of New York (the "Depositary") the true and lawful agent and attorney-in-fact of the abovesigned with respect to such Shares, with full power of substitution (such power of attorney being an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares, or transfer ownership of such Shares on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of CSW, (b) present such Shares for registration and transfer on the books of CPL and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer. The Depositary will act as agent for tendering shareholders for the purpose of receiving payment from CSW and transmitting payment to tendering shareholders. The abovesigned hereby represents and warrants that the abovesigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and that, when and to the extent the same are accepted for payment by CSW, CSW will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and the same will not be subject to any adverse claims. The abovesigned will, upon request, execute and deliver any additional documents deemed by the Depositary or CSW to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby. All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive the death or incapacity of the abovesigned, and any obligations of the abovesigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the abovesigned. Except as stated in the Offer, this tender is irrevocable. The abovesigned understands that tenders of Shares pursuant to any one of the procedures described under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase and in the instructions hereto will constitute the abovesigned's acceptance of the terms and conditions of the Offer. CSW's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the abovesigned and CSW upon the terms and subject to the conditions of the Offer. The abovesigned recognizes that, under certain circumstances set forth in the Offer to Purchase, CSW may terminate or amend the Offer or may not be required to purchase any of the Shares tendered hereby. In either event, the abovesigned understands that certificate(s) for any Shares not tendered or not purchased will be returned to the abovesigned. Unless otherwise indicated in the box below under the heading "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and/or return any Shares not tendered or not purchased, in the name(s) of the abovesigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above). Unless otherwise indicated in the box below under the heading "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and/or any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the abovesigned at the address shown below the abovesigned signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and/or return any Shares not tendered or not purchased in the name(s) of, and mail said check and/or any certificates to, the person(s) so indicated. The abovesigned recognizes that CSW has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if CSW does not accept for payment any of the Shares so tendered. 5 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 3, 5 AND 6) (SEE INSTRUCTIONS 3, 5 AND 6) To be completed ONLY if the check for To be completed ONLY if the check for the purchase price of Shares purchased the purchase price of Shares purchased and/or certificates for Shares not and/or certificates for Shares not tendered or not purchased are to be issued tendered or not purchased are to be mailed in the name of someone other than the to someone other than the abovesigned or abovesigned. to the abovesigned at an address other Issue / / check and/or than that shown below the abovesigned's / / certificate(s) to: signature(s). Name Mail / / check and/or (PLEASE PRINT) / / certificate(s) to: Address Name (INCLUDE ZIP CODE) (PLEASE PRINT) (TAXPAYER IDENTIFICATION OR Address SOCIAL SECURITY NUMBER) (INCLUDE ZIP CODE) LOST CERTIFICATES BOX / / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 11.) Number of Shares represented by lost, destroyed or stolen certificates: ---------------
6 SOLICITED TENDERS (SEE INSTRUCTION 9) As provided in Instruction 9, CSW will pay to any Soliciting Dealer, as defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager). However, Soliciting Dealers will not be entitled to a solicitation fee for Shares beneficially owned by such Soliciting Dealer. The undersigned represents that the Soliciting Dealer which solicited and obtained this tender is: Name of Firm: __________________________________________________________________ (PLEASE PRINT) Name of Individual Broker or Financial Consultant: _______________________________________________________ Telephone Number of Broker or Financial Consultant: _______________________________________________________ Identification Number (if known): ______________________________________________ Address: _______________________________________________________________________ (INCLUDE ZIP CODE) The following is to be completed ONLY if customer's Shares held in nominee name are tendered. NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
The acceptance of compensation by such Soliciting Dealer will constitute a representation by it that (a) it has complied with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder, in connection with such solicitation; (b) it is entitled to such compensation for such solicitation under the terms and conditions of the Offer to Purchase; (c) in soliciting tenders of Shares, it has used no soliciting materials other than those furnished by CSW; and (d) if it is a foreign broker or dealer not eligible for membership in the National Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations. THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY. (IF SHARES ARE BEING TENDERED, PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE) SIGN HERE: _____________________________________________________________________ Signature of Owner(s) _______________________________________ Signature of Owner(s) 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States which is a participant in an approved Signature Guarantee Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) has not completed the box above under the heading "Special Payment Instructions" or the box above under the heading "Special Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 4. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal is to be used if (a) certificates are to be forwarded herewith or (b) delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal on or prior to the Expiration Date (as defined in the Offer to Purchase) with respect to all Shares. Preferred Shareholders who wish to tender their Shares yet who cannot deliver their Shares and all other required documents to the Depositary on or prior to the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by CSW (with any required signature guarantees) must be received by the Depositary on or prior to the applicable Expiration Date and (c) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by this Letter of Transmittal must be received by the Depositary by 5:00 p.m. (central time) within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided under the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to Purchase. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. No alternative, conditional or contingent tenders will be accepted. See "Terms of the Offer--Number of Shares; Purchase Price; Expiration Date Dividends" in the Offer to Purchase. By executing this Letter of Transmittal (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares that are to be tendered in the box above under the heading "Description of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box above under the heading "Special Payment Instructions" or "Special Delivery Instructions", as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 4. SIGNATURES ON LETTER OF TRANSMITTAL AND/OR NOTICE OF GUARANTEED DELIVERY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of Transmittal or the Notice of Guaranteed Delivery (together, the "Tender Documents") is signed by the registered holder(s) of the Shares tendered hereby, the 8 signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered under either Tender Document is held of record by two or more persons, all such persons must sign such Tender Document. If any of the Shares tendered or voted under either Tender Document is registered in different names or different certificates, it will be necessary to complete, sign and submit as many separate applicable Tender Documents as there are different registrations of certificates. If either Tender Document is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If either Tender Document or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to CSW of the authority of such person to act must be submitted. 5. STOCK TRANSFER TAXES. Except as set forth in this Instruction 5, CSW will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if tendered Shares are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See "Terms of the Offer--Acceptance of Shares for Payment and Payment of Purchase Price and Dividend" in the Offer to Purchase. EXCEPT AS PROVIDED IN THIS INSTRUCTION 5, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY. 6. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase price of any Shares purchased is to be issued in the name of, and/or any Shares not tendered or not purchased are to be returned to, a person other than the person(s) signing this Letter of Transmittal or if the check and/or any certificate for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to an address other than that shown in the box above under the heading "Name(s) and Address(es) of Registered Holder(s)", then the "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal should be completed. Preferred Shareholders tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such Preferred Shareholder at the Book-Entry Transfer Facility from which such transfer was made. 7. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder is required to provide the Depositary with either a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, or a properly completed Form W-8. Failure to provide the information on either Substitute Form W-9 or Form W-8 may subject the tendering Preferred Shareholder to 31% federal income tax backup withholding on the payment of the purchase price for the Shares. If the tendering Preferred Shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such Preferred Shareholder may write "Applied For" in the space for the TIN in Part I of Substitute Form W-9. If the tendering Preferred Shareholder writes "Applied For" in the space for the TIN in Part I of Substitute Form W-9 and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% on the payment of the purchase price for the Shares. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective telephone numbers and 9 addresses listed below. Requests for additional copies of the Offer to Purchase, this Letter of Transmittal or other tender offer materials may be directed to the Information Agent or the Dealer Managers and such copies will be furnished promptly at CSW's expense. Preferred Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. 9. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share for any Shares tendered, accepted for payment and paid pursuant to the Offer in transactions for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more Shares, provided that fees payable in transactions equal to or exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal which designates, under the heading "Solicited Tenders", as having solicited and obtained the tender, the name of (a) any broker or dealer in securities, including a Dealer Manager in its capacity as a dealer or broker, which is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (c) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by a holder unless the Letter of Transmittal accompanying such tender designates such Soliciting Dealer. No such fee shall be payable to a Soliciting Dealer in respect of Shares registered in the name of such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as nominee and such Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or on the Notice of Solicited Tenders (included in the materials provided to brokers and dealers). No such fee shall be payable to a Soliciting Dealer with respect to the tender of Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. If tendered Shares are being delivered by book-entry transfer, the Soliciting Dealer must return a Notice of Solicited Tenders to the Depositary within three business days after expiration of the Offer to receive a solicitation fee. No such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer the amount of such fee to a depositing holder (other than itself). No such fee shall be paid to a Soliciting Dealer with respect to Shares tendered for such Soliciting Dealer's own account. No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of CSW, the Depositary, the Information Agent or the Dealer Managers for purposes of the Offer. 10. IRREGULARITIES. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by CSW, in its sole discretion, and its determination shall be final and binding. CSW reserves the absolute right to reject any and all tenders of Shares that it determines are not in proper form or the acceptance for payment of or payment for Shares that may, in the opinion of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any of the conditions to the Offer or any defect or irregularity in any tender of Shares and CSW's interpretation of the terms and conditions of the Offer (including these instructions) shall be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary, the Information Agent or any other person shall be under any duty to give notice of any defect or irregularity in tenders nor shall any of them incur any liability for failure to give any such notice. Tenders will not be deemed to have been made until all defects and irregularities have been cured or waived. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares has been lost, destroyed or stolen, the Preferred Shareholder should promptly notify the Depositary by checking the Lost Certificates Box immediately following the Special Payment Instructions/Special Delivery Instructions and indicating the number of Shares lost, destroyed or stolen. The Preferred Shareholder will then be instructed as to the procedures that must be taken in order to replace the certificate. The tender of Shares pursuant to this Letter of Transmittal will not be valid unless prior to the Expiration Date (as defined in the Offer to Purchase): (a) such procedures have been completed and a replacement certificate for the Shares has been delivered to the Depositary or (b) a Notice of Guaranteed Delivery has been delivered to the Depositary. See Instruction 2. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF), DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE). 10 IMPORTANT TAX INFORMATION Under federal income tax law, a Preferred Shareholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payer) with either such Preferred Shareholder's correct TIN on Substitute Form W-9 below or a properly completed Form W-8. If such Preferred Shareholder is an individual, the TIN is his or her social security number. For businesses and other entities, the number is the federal employer identification number. If the Depositary is not provided with the correct TIN or properly completed Form W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Preferred Shareholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding. The Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If federal income tax backup withholding applies, the Depositary is required to withhold 31% of any payments made to the Preferred Shareholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of the tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8 To avoid backup withholding on payments that are made to a Preferred Shareholder with respect to Shares purchased pursuant to the Offer, the Preferred Shareholder is required to notify the Depositary of his or her correct TIN by completing the Substitute Form W-9 attached hereto certifying that the TIN provided on Substitute Form W-9 is correct and that (a) the Preferred Shareholder is exempt from federal income tax backup withholding or (b) the Preferred Shareholder has not been notified by the Internal Revenue Service that he or she is subject to federal income tax backup withholding as a result of failure to report all interest or dividends or (c) the Internal Revenue Service has notified the Preferred Shareholder that he or she is no longer subject to federal income tax backup withholding. Foreign Preferred Shareholders must submit a properly completed Form W-8 in order to avoid the applicable backup withholding; provided, however, that backup withholding will not apply to foreign Preferred Shareholders subject to 30% (or lower treaty rate) withholding on gross payments received pursuant to the Offer. WHAT NUMBER TO GIVE THE DEPOSITARY The Preferred Shareholder is required to give the Depositary the social security number or employer identification number of the registered owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 11
PAYER'S NAME: THE BANK OF NEW YORK SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number SIGNING AND DATING BELOW. TIN ------------------------ Name (Please Print) PART 2-- Address For Payees Exempt from Backup City State Zip Code Withholding (See Guidelines) PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: (1) the number shown on this form is my correct taxpayer identification number (or a TIN has not been issued to me but I have applied for a TIN or intend to do so in the near future), and (2) I am not subject to backup withholding either because I am exempt from backup withholding or I have not been notified by the Internal Revenue PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a TAXPAYER IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has AND CERTIFICATION notified me that I am no longer subject to backup withholding. I understand that, if I have written "Applied For" in the space for the TIN in Part I, I must provide a TIN by the time of payment, or 31% of the payment of the purchase price of the Shares made to me will be withheld. SIGNATURE DATE, 1997 You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE DEALER MANAGERS: GOLDMAN, SACHS & CO. SMITH BARNEY INC. 85 Broad Street 388 Greenwich Street New York, New York 10004 New York, New York 10013 (800) 828-3182 (800) 655-4811 Attention: Paul S. Galant
THE INFORMATION AGENT: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (800) 755-3107 (Toll Free) 12 -----END PRIVACY-ENHANCED MESSAGE-----