SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-A12G/A
AMENDMENT NO. 1 TO
REGISTRATION STATEMENT ON FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Cullen/Frost Bankers, Inc.
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(Exact name of registrant as specified in its charter)
Texas 74-1751768
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(State of incorporation or organization) (IRS Employer
Identification No.)
P.O. Box 1600
100 West Houston Street
San Antonio, Texas 78296
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(Address of principal executive offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
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(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered.
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On July 25, 1989, the Board of Directors of Cullen/Frost Bankers,
Inc., a Texas corporation (the "Company"), declared a dividend of one preferred
share purchase right (a "Right") for each share of common stock, par value
$5.00 per share ("Common Stock"), of the Company held of record at the close of
business on August 1, 1989 (the "Record Date"), or issued thereafter and prior
to the Separation Time (as defined in the Original Rights Agreement described
below). The Rights were issued pursuant to a Rights Agreement, dated as of
July 25, 1989, between the Company and The Bank of New York, as rights agent
(the "Original Rights Agreement"). On July 30, 1996, the Company amended and
restated the Original Rights Agreement in its entirety (the "Restated Rights
Agreement") and appointed The Frost National Bank to replace The Bank of New
York, as Rights Agent. The terms of the Rights, as so amended, are summarized
herein.
Each Right entitles its registered holder to purchase from the
Company, after the Separation Time, one one-hundredth of a share of Junior
Participating Preferred Stock, par value $5.00 per share (the "Preferred
Stock"), for $100 (the "Exercise Price"), subject to adjustment. The Rights
will be evidenced by the Common Stock certificates until the close of business
on the earlier of the date (either, the "Separation Time") which is (i) the
tenth business day (or such later date as the Board of Directors of the Company
may from time to time fix by resolution adopted prior to the Separation Time
that would otherwise have occurred) after the date on which any Person (as
defined in the Restated Rights Agreement) commences a tender or exchange offer
which, if consummated, would result in such Person's becoming an Acquiring
Person, as defined below, or (ii) the tenth business day (or such earlier or
later date as the Board of Directors of the Company may from time to time fix
by resolution adopted prior to the Flip-in Date (as defined below) that would
otherwise have occurred) after the first date of public announcement by the
Company that such Person has become an Acquiring Person (the "Flip-in Date");
provided that if a tender or exchange offer referred to in clause (i) is
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cancelled, terminated or otherwise withdrawn prior to the Separation Time
without the purchase of any shares of stock pursuant thereto, such offer shall
be deemed never to have been made. An Acquiring Person is any Person who is
the Beneficial Owner (as defined in the Restated Rights Agreement) of 10% or
more of the outstanding shares of Common Stock, provided, however, such term
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shall not include (i) the Company, any wholly-owned subsidiary of the Company
or any employee stock ownership or other employee benefit plan of the Company,
(ii) any person who is the Beneficial Owner of 10% or more of the outstanding
Common Stock as of the date of the Restated Rights Agreement or who shall
become the Beneficial Owner of 10% or more of the outstanding Common Stock
solely as a result of an acquisition of Common Stock by the Company, until such
time as such Person acquires additional Common Stock, other than through a
dividend or stock split, (iii) any Person who becomes an Acquiring Person
without any plan or intent to seek or affect control of the Company if such
Person promptly
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divests sufficient securities such that such 10% or greater Beneficial
Ownership ceases or (iv) any Person who Beneficially Owns shares of Common
Stock consisting solely of (A) shares acquired pursuant to the grant or
exercise of an option granted by the Company in connection with an agreement to
merge with, or acquire, the Company prior to a Flip-in Date, (B) shares owned
by such Person and its Affiliates and Associates at the time of such grant, (C)
shares, amounting to less than 1% of the outstanding Common Stock, acquired by
Affiliates and Associates of such Person after the time of such grant or (D)
shares which are held by such Person in trust accounts, managed accounts and
the like or otherwise held in a fiduciary capacity, that are beneficially owned
by third persons who are not Affiliates or Associates of such Person or acting
together with such Person to hold shares, or which are held by such Person in
respect of a debt previously contracted. The Restated Rights Agreement
provides that, until the Separation Time, the Rights will be transferred with
and only with the Common Stock. Common Stock certificates issued prior to the
Separation Time shall evidence one Right for each share of Common Stock
represented thereby and shall contain a legend incorporating by reference the
terms of the Restated Rights Agreement (as such may be amended from time to
time). Notwithstanding the absence of the aforementioned legend, certificates
evidencing shares of Common Stock outstanding on or prior to the Record Date or
which bear an earlier form of legend shall also evidence one Right for each
share of Common Stock evidenced thereby. Promptly following the Separation
Time, separate certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of Common Stock at the Separation Time.
The Rights will not be exercisable until the Business Day (as
defined in the Restated Rights Agreement) following the Separation Time. The
Rights will expire on the earlier of (i) the close of business on July 25, 1999
and (ii) the date on which the Rights are redeemed as described below (in any
such case, the "Expiration Time").
The Exercise Price and the number of Rights outstanding, or in
certain circumstances the securities purchasable upon exercise of the Rights,
are subject to adjustment from time to time to prevent dilution in the event of
a Common Stock dividend on, or a subdivision or a combination into a smaller
number of shares of, Common Stock, or the issuance or distribution of any
securities or assets in respect of, in lieu of or in exchange for Common Stock.
In the event that prior to the Expiration Time a Flip-in Date
occurs, each Right (other than Rights Beneficially Owned by the Acquiring
Person or any affiliate or associate thereof, which Rights shall become void)
shall constitute the right to purchase from the Company, upon the exercise
thereof in accordance with the terms of the Restated Rights Agreement, that
number of shares of Common Stock of the Company having an aggregate Market
Price (as defined in the Restated Rights Agreement), on the date of the public
announcement of an Acquiring Person's becoming such (the "Stock Acquisition
Date") that
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gave rise to the Flip-in Date, equal to twice the Exercise Price for an amount
in cash equal to the then current Exercise Price. In addition, the Board of
Directors of the Company may, at its option, at any time after a Flip-in Date
and prior to the time an Acquiring Person becomes the Beneficial Owner of more
than 50% of the outstanding shares of Common Stock, elect to exchange all (but
not less than all) the then outstanding Rights (other than Rights Beneficially
Owned by the Acquiring Person or any affiliate or associate thereof, which
Rights become void) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of the
Separation Time (the "Exchange Ratio"). Immediately upon such action by the
Board of Directors (the "Exchange Time"), the right to exercise the Rights will
terminate and each Right will thereafter represent only the right to receive a
number of shares of Common Stock equal to the Exchange Ratio.
Whenever the Company shall become obligated under the preceding
paragraph to issue shares of Common Stock upon exercise of or in exchange for
Rights, the Company, at its option, may substitute therefor shares of Preferred
Stock, at a ratio of one one-hundredth of a share of Preferred Stock for each
share of Common Stock so issuable.
In the event that prior to the Expiration Time the Company enters
into, consummates or permits to occur a transaction or series of transactions
after the time an Acquiring Person has become such in which, directly or
indirectly, (i) the Company shall consolidate or merge or participate in a
binding share exchange with any other Person if, at the time of the
consolidation, merger or share exchange or at the time the Company enters into
an agreement with respect to such consolidation, merger or share exchange, the
Acquiring Person Controls the Board of Directors of the Company (as defined in
the Restated Rights Agreement) and either (A) any term of or arrangement
concerning the treatment of shares of capital stock in such merger,
consolidation or share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of Common
Stock or (B) the Person with whom the transaction or series of transactions
occurs is the Acquiring Person or an Affiliate or Associate of the Acquiring
Person, (ii) the Company shall sell or otherwise transfer (or one or more of
its subsidiaries shall sell or otherwise transfer) assets (A) aggregating more
than 50% of the assets (measured by either book value or fair market value) or
(B) generating more than 50% of the operating income or cash flow, of the
Company and its subsidiaries (taken as a whole) to any other Person (other than
the Company or one or more of its wholly-owned subsidiaries) or to two or more
such Persons which are affiliated or otherwise acting in concert, if, at the
time such sale or transfer of assets or at the time the Company (or any such
subsidiary) enters into an agreement with respect to such sale or transfer, the
Acquiring Person Controls the Board of Directors of the Company (a "Flip-over
Transaction or Event") or (iii) any Acquiring Person shall (A) sell, purchase,
lease, exchange, mortgage, pledge,
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transfer or otherwise acquire or dispose of, to, from, or with, as the case may
be, the Company or any of its Subsidiaries, over any period of 12 consecutive
calendar months, assets (x) having an aggregate fair market value of more than
$15,000,000 or (y) on terms and conditions less favorable to the Company than
the Company would be able to obtain through arm's-length negotiations with an
unaffiliated third party, (B) receive any compensation for services from the
Company or any of its Subsidiaries, other than compensation for full-time
employment as a regular employee at rates in accordance with the Company's (or
its Subsidiaries') past practices, (C) receive the benefit, directly or
indirectly (except proportionately as a shareholder), over any period of 12
consecutive calendar months, of any loans, advances, guarantees, pledges,
insurance, reinsurance or other financial assistance or any tax credits or
other tax advantage provided by the Company or any of its Subsidiaries
involving an aggregate principal amount in excess of $5,000,000 or an aggregate
cost or transfer of benefits from the Company or any of its Subsidiaries in
excess of $5,000,000 or, in any case, on terms and conditions less favorable to
the Company than the Company would be able to obtain through arm's-length
negotiations with a third party, or (D) increase by more than 1% its
proportionate share of the outstanding shares of any class of equity securities
or securities convertible into any class of equity securities of the Company or
any of its Subsidiaries as a result of any acquisition from the Company (with
or without consideration), any reclassification of securities (including any
reverse stock split), or recapitalization, of the Company, any merger or
consolidation of the Company or any other transaction or series of transactions
(whether or not with or into or otherwise involving an Acquiring Person), the
Company shall take such action as shall be necessary to ensure, and shall not
enter into, consummate or permit to occur such Flip-over Transaction or Event
until it shall have entered into a supplemental agreement with the Person
engaging in such Flip-over Transaction or Event or the parent corporation
thereof (the "Flip-over Entity"), for the benefit of the holders of the Rights,
providing, that upon consummation or occurrence of the Flip-over Transaction or
Event (i) each Right shall thereafter constitute the right to purchase from the
Flip-over Entity, upon exercise thereof in accordance with the terms of the
Restated Rights Agreement, that number of shares of common stock of the Flip-
over Entity having an aggregate Market Price on the date of consummation or
occurrence of such Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the then current Exercise Price and (ii)
the Flip-over Entity shall thereafter be liable for, and shall assume, by
virtue of such Flip-over Transaction or Event and such supplemental agreement,
all the obligations and duties of the Company pursuant to the Restated Rights
Agreement. For purposes of the foregoing description, the term "Acquiring
Person" shall include any Acquiring Person and its Affiliates and Associates
counted together as a single Person.
The Board of Directors of the Company may, at its option, at any
time prior to the close of business on the Flip-in Date, redeem all (but not
less than all) the then outstanding Rights at a price of $.01
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per Right (the "Redemption Price"), as provided in the Restated Rights
Agreement. Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights, without any further action and without
any notice, the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive the Redemption Price in cash for
each Right so held.
The holders of Rights will, solely by reason of their ownership of
Rights, have no rights as shareholders of the Company, including, without
limitation, the right to vote or to receive dividends.
The Restated Rights Agreement (which includes as Exhibit A the
forms of Rights Certificate and Election to Exercise) is attached hereto as an
exhibit and is incorporated herein by reference. The foregoing description of
the Rights is qualified in its entirety by reference to the Restated Rights
Agreement and such exhibit thereto.
Item 2. Exhibits.
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Exhibit No. Description
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1 Amended and Restated Rights Agreement.
2 Form of Rights Certificate and of Election to Exercise,
included in Exhibit A to the Restated Rights Agreement.
3 Form of Statement of Resolution Establishing Series of
Shares of Participating Junior Preferred Stock, included
in Exhibit B to the Restated Rights Agreement.
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<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
CULLEN/FROST BANKERS, INC.
By /s/
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Name:
Title:
Date: August __, 1996
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<PAGE>
EXHIBIT INDEX
Exhibit Sequential
No. Description Page Numbers
- ------- -------------------- ------------
(1) Amended and Restated Rights
Agreement, dated as of
July 30, 1996 (the "Restated
Rights Agreement"), between
Cullen/Frost Bankers, Inc. and
The Frost National Bank, as
Rights Agent.
(2) Form of Rights Certificate and
of Election to Exercise, included
as Exhibit A to the Restated
Rights Agreement
(Exhibit 1 hereto).
(3) Form of Statement of Resolution
Establishing Series of Shares of
Participating Junior Preferred Stock,
included as Exhibit B to the Restated
Rights Agreement (Exhibit 1 hereto).
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Exhibit 1
Amended and Restated Rights Agreement, dated as of July 30, 1996
(the "Restated Rights Agreement"), between Cullen/Frost Bankers, Inc.
and The Frost National Bank, as Rights Agent
<PAGE>
========================================================================
PRIVILEDED AND CONFIDENTIAL
AMENDED AND RESTATED
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
July 30, 1996
between
CULLEN/FROST BANKERS, INC.
and
THE FROST NATIONAL BANK,
as Rights Agent
========================================================================
<PAGE>
AMENDED AND RESTATED
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
Page
----
Article I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions ........................... 2
Article II
THE RIGHTS
Section 2.1 Summary of Rights ............................ 14
Section 2.2 Legend on Common Stock
Certificates ............................... 14
Section 2.3 Exercise of Rights;
Separation of Rights ....................... 15
Section 2.4 Adjustments to Exercise Price;
Number of Rights ........................... 19
Section 2.5 Date on Which Exercise is
Effective .................................. 22
Section 2.6 Execution, Authentication, Delivery
and Dating of Rights Certificates........... 22
Section 2.7 Registration, Registration of
Transfer and Exchange ...................... 23
Section 2.8 Mutilated, Destroyed, Lost and
Stolen Rights Certificates ................. 25
Section 2.9 Persons Deemed Owners ........................ 26
Section 2.10 Delivery and Cancellation of
Certificates ............................... 27
Section 2.11 Agreement of Rights Holders .................. 28
Article III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
CERTAIN TRANSACTIONS
Section 3.1 Flip-in ...................................... 29
Section 3.2 Flip-over .................................... 34
Article IV
THE RIGHTS AGENT
Section 4.1 General ...................................... 35
Section 4.2 Merger or Consolidation or Change of
Name of Rights Agent ....................... 36
Section 4.3 Duties of Rights Agent ....................... 38
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Section 4.4 Change of Rights Agent ....................... 42
Article V
MISCELLANEOUS
Section 5.1 Redemption ................................... 44
Section 5.2 Expiration ................................... 45
Section 5.3 Issuance of New Rights
Certificates ............................... 45
Section 5.4 Supplements and Amendments ................... 46
Section 5.5 Fractional Shares............................. 46
Section 5.6 Rights of Action ............................. 47
Section 5.7 Holder of Rights Not Deemed a Stockholder .... 48
Section 5.8 Notice of Proposed Actions ................... 48
Section 5.9 Notices ...................................... 49
Section 5.10 Suspension of Exercisability ................. 50
Section 5.11 Costs of Enforcement ......................... 51
Section 5.12 Successors ................................... 51
Section 5.13 Benefits of this Agreement ................... 51
Section 5.14 Determination and Actions by
by the Board of Directors, etc.............. 51
Section 5.15 Descriptive Headings ......................... 52
Section 5.16 Governing Law ................................ 52
Section 5.17 Counterparts ................................. 52
Section 5.18 Severability ................................. 53
EXHIBITS
Exhibit A Form of Rights Certificate
(Together with Form of
Election to Exercise)
Exhibit B Form of Statement of Resolution
Establishing Series of Shares of
Junior Participating Preferred Stock
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<PAGE>
AMENDED AND RESTATED
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
---------------------------------------
SHAREHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to
time, this "Agreement"), dated as of July 30, 1996, between Cullen/Frost
Bankers, Inc., a Texas corporation (the "Company"), and The Frost National
Bank, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent hereunder).
WITNESSETH:
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WHEREAS, the Company and The Bank of New York, as rights agent,
entered into a Shareholder Protection Rights Agreement, dated as of July 25,
1989 (hereinafter referred to as the "Original Rights Agreement") with respect
to the declaration of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on
August 1, 1989 (the "Record Time"), each Right representing the right to
purchase one one-hundredth of a share of Preferred Stock (as hereinafter
defined), upon the terms and conditions set forth in the Original Rights
Agreement, and the Board of Directors authorized the issuance of one Right in
respect of each share of Common Stock issued after the Record Time and prior to
the Separation Time (as defined in the Original Rights Agreement);
WHEREAS, the Original Rights Agreement provides that prior to the
Flip-In Date (as defined therein), the Company and the rights agent may amend
such agreement in any
<PAGE>
respect (other than to change the Redemption Price or the Expiration Time);
WHEREAS, the Flip-In Date has not occurred;
WHEREAS, the Company desires to appoint The Frost National Bank to
replace The Bank of New York;
WHEREAS, the Company and the Rights Agent wish to amend and restate
the Original Rights Agreement in its entirety as follows:
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner
of 10% or more of the outstanding shares of Common Stock; provided, however,
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that the term "Acquiring Person" shall not include any Person (i) who is the
Beneficial Owner of 10% or more of the outstanding shares of Common Stock on
the date of this Agreement or who shall become the Beneficial Owner of 10% or
more of the outstanding shares of Common Stock solely as a result of an
acquisition by the Company of shares of Common Stock, until such time hereafter
or thereafter as any of such Persons shall become the Beneficial Owner (other
than by means of a
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stock dividend or stock split) of any additional shares of Common Stock, (ii)
who is the Beneficial Owner of 10% or more of the outstanding shares of Common
Stock but who acquired Beneficial Ownership of shares of Common Stock without
any plan or intention to seek or affect control of the Company, if such Person
promptly enters into an irrevocable commitment promptly to divest, and
thereafter promptly divests (without exercising or retaining any power,
including voting, with respect to such shares), sufficient shares of Common
Stock (or securities convertible into, exchangeable into or exercisable for
Common Stock) so that such Person ceases to be the Beneficial Owner of 10% or
more of the outstanding shares of Common Stock or (iii) who Beneficially Owns
shares of Common Stock consisting solely of one or more of (A) shares of Common
Stock Beneficially Owned pursuant to the grant or exercise of an option granted
to such Person (an "Option Holder") by the Company in connection with an
agreement to merge with, or acquire, the Company entered into prior to a Flip-
in Date, (B) shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock), Beneficially Owned by such
Option Holder or its Affiliates or Associates at the time of grant of such
option, (C) shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) acquired by Affiliates or
Associates of such Option Holder after the time of such
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grant which, in the aggregate, amount to less than 1% of the outstanding
shares of Common Stock and (D) shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock) which are
held by such Person in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity, that are beneficially owned by third
persons who are not Affiliates or Associates of such Person or acting together
with such Person to hold such shares, or which are held by such Person in
respect of a debt previously contracted. In addition, the Company, any wholly-
owned Subsidiary of the Company and any employee stock ownership or other
employee benefit plan of the Company or a wholly-owned Subsidiary of the
Company shall not be an Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of 1934,
as such Rule is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own", any securities as to
which such Person or any of such Person's Affiliates or Associates is or may be
deemed to be the beneficial owner of pursuant to Rule 13d-3 and 13d-5 under the
Securities Exchange Act, as such Rules are in effect on the date of this
Agreement as well as any securities as to which such Person or any of such
Person's
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Affiliates or Associates has the right to become Beneficial Owner (whether such
right is exercisable immediately or only after the passage of time or the
occurrence of conditions) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise; provided,
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however, that a Person shall not be deemed the "Beneficial Owner", or to have
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"Beneficial Ownership" of, or to "Beneficially Own", any security (i) solely
because such security has been tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until such
tendered security is accepted for payment or exchange or (ii) solely because
such Person or any of such Person's Affiliates or Associates has or shares the
power to vote or direct the voting of such security pursuant to a revocable
proxy given in response to a public proxy or consent solicitation made to more
than ten holders of shares of a class of stock of the Company registered under
Section 12 of the Securities Exchange Act of 1934 and pursuant to, and in
accordance with, the applicable rules and regulations under the Securities
Exchange Act of 1934, except if such power (or the arrangements relating
thereto) is then reportable under Item 6 of Schedule 13D under the Securities
Exchange Act of 1934 (or any similar provision of a comparable or successor
report). Notwithstanding the foregoing, no officer or
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director of the Company shall be deemed to Beneficially Own any securities of
any other Person by virtue of any actions such officer or director takes in
such capacity. For purposes of this Agreement, in determining the percentage
of the outstanding shares of Common Stock with respect to which a Person is the
Beneficial Owner, all shares as to which such Person is deemed the Beneficial
Owner shall be deemed outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in San Antonio, Texas are generally
authorized or obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 p.m. San
Antonio, Texas time on such date or, if such date is not a Business Day, 5:00
p.m. San Antonio, Texas time on the next succeeding Business Day.
"Common Stock" shall mean the shares of Common Stock, par value
$5.00 per share, of the Company.
"Exchange Time" shall mean the time at which the right to exercise
the Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which a
holder may purchase the securities issuable upon exercise of one whole Right.
Until adjustment thereof in accordance with the terms hereof, the Exercise
Price shall equal $100.
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"Expiration Time" shall mean the earlier of (i) the Redemption Time
or (ii) the close of business on July 25, 1999.
"Flip-in Date" shall mean the tenth business day after any Stock
Acquisition Date or such earlier or later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Flip-in
Date that would otherwise have occurred.
"Flip-over Entity," for purposes of Section 3.2, shall mean (i) in
the case of a Flip-over Transaction or Event described in clause (i) of the
definition thereof, the Person issuing any securities into which shares of
Common Stock are being converted or exchanged and, if no such securities are
being issued, the other party to such Flip-over Transaction or Event and (ii)
in the case of a Flip-over Transaction or Event referred to in clause (ii) or
(iii) of the definition thereof, the Person receiving the greatest portion of
the assets or earning power being transferred in such Flip-over Transaction or
Event, provided in all cases if such Person is a subsidiary of a corporation,
the parent corporation shall be the Flip-Over Entity.
"Flip-over Stock" shall mean the capital stock (or similar equity
interest) with the greatest voting power in respect of the election of
directors (or other persons
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similarly responsible for direction of the business and affairs) of the Flip-
Over Entity.
"Flip-over Transaction or Event" shall mean a transaction or series
of transactions after a Flip-in Date in which, directly or indirectly, (i) the
Company shall consolidate or merge or participate in a share exchange with any
other Person if, at the time of the consolidation, merger or share exchange or
at the time the Company enters into any agreement with respect to any such
consolidation, merger or share exchange, the Acquiring Person Controls the
Board of Directors of the Company and either (A) any term of or arrangement
concerning the treatment of shares of capital stock in such consolidation,
merger or share exchange relating to the Acquiring Person is not identical to
the terms and arrangements relating to other holders of the Common Stock or (B)
the Person with whom the transaction or series of transactions occurs is the
Acquiring Person or an Affiliate or Associate of the Acquiring Person, (ii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) assets (A) aggregating more than 50% of the
assets (measured by either book value or fair market value) or (B) generating
more than 50% of the operating income or cash flow, of the Company and its
Subsidiaries (taken as a whole) to any Person (other than the Company or one or
more of its wholly owned Subsidiaries) or to two or more such Persons which are
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Affiliates or Associates or otherwise acting in concert, if, at the time of the
entry by the Company (or any such Subsidiary) into an agreement with respect to
such sale or transfer of assets, the Acquiring Person Controls the Board of
Directors of the Company, or (iii) any Acquiring Person shall (A) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, to, from, or with, as the case may be, the Company or any of its
Subsidiaries, over any period of 12 consecutive calendar months, assets (x)
having an aggregate fair market value of more than $15,000,000 or (y) on terms
and conditions less favorable to the Company than the Company would be able to
obtain through arm's-length negotiations with an unaffiliated third party, (B)
receive any compensation for services from the Company or any of its
Subsidiaries, other than compensation for full-time employment as a regular
employee at rates in accordance with the Company's (or its Subsidiaries') past
practices, (C) receive the benefit, directly or indirectly (except
proportionately as a shareholder), over any period of 12 consecutive calendar
months, of any loans, advances, guarantees, pledges, insurance, reinsurance or
other financial assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries involving an aggregate principal
amount in excess of $5,000,000 or an aggregate cost or transfer of benefits
from the Company or any of its
-9-
<PAGE>
Subsidiaries in excess of $5,000,000 or, in any case, on terms and conditions
less favorable to the Company than the Company would be able to obtain through
arm's-length negotiations with a third party, or (D) increase by more than 1%
its proportionate share of the outstanding shares of any class of equity
securities or securities convertible into any class of equity securities of the
Company or any of its Subsidiaries as a result of any acquisition from the
Company (with or without consideration), any reclassification of securities
(including any reverse stock split), or recapitalization, of the Company, any
merger or consolidation of the Company or any other transaction or series of
transactions (whether or not with or into or otherwise involving an Acquiring
Person). For purposes of the foregoing description, the term "Acquiring
Person" shall include any Acquiring Person and its Affiliates and Associates,
counted together as a single Person. An Acquiring Person shall be deemed to
Control the Company's Board of Directors when, following a Flip-in Date, the
persons who were directors of the Company before the Flip-in Date shall cease
to constitute a majority of the Company's Board of Directors.
"Market Price" per share of any securities on any date shall mean
the average of the daily closing prices per share of such securities
(determined as described below) on each of the 20 consecutive Trading Days
through and
-10-
<PAGE>
including the Trading Day immediately preceding such date; provided, however,
-------- -------
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on
any date shall be the last reported sale price, regular way, or, in case no
such sale takes place or is quoted on such date, the average of the closing bid
and asked prices, regular way, for each share of such securities, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange, Inc. or, if the securities are not listed or admitted to trading on
the New York Stock Exchange, Inc., as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the securities are listed or admitted to
trading or, if the securities are not listed or admitted to trading on any
national securities exchange, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then
in use, or, if on any such date the securities
-11-
<PAGE>
are not listed or admitted to trading on any national securities exchange or
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the secu-
rities selected by the Board of Directors of the Company; provided, however,
-------- -------
that if on any such date the securities are not listed or admitted to trading
on a national securities exchange or traded in the over-the-counter market, the
closing price per share of such securities on such date shall mean the fair
value per share of securities on such date as determined in good faith by the
Board of Directors of the Company, after consultation with a nationally recog-
nized investment banking firm, and set forth in a certificate delivered to the
Rights Agent.
"Person" shall mean any individual, firm, partnership, association,
group (as such term is used in Rule 13d-5 under the Securities Exchange Act of
1934, as such Rule is in effect on the date of this Agreement), corporation or
other entity.
"Preferred Stock" shall mean the series of Junior Participating
Preferred Stock, par value $5.00 per share, of the Company created by a State
of Resolution Establishing Series of Shares in substantially the form set forth
in Exhibit B hereto appropriately completed.
"Redemption Price" shall mean an amount (calculated to the nearest
one one-hundredth of a cent)
-12-
<PAGE>
equal to the Exercise Price, as in effect at the Redemption Time, divided by
10,000 (i.e., initially $0.01).
"Redemption Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to Section 5.1 hereof.
"Separation Time" shall mean the close of business on the earlier
of (i) the tenth business day (or such later date as the Board of Directors of
the Company may from time to time fix by resolution adopted prior to the
Separation Time that would otherwise have occurred) after the date on which any
Person commences a tender or exchange offer which, if consummated, would result
in such Person's becoming an Acquiring Person and (ii) the Flip-in Date;
provided, that if any tender or exchange offer referred to in clause (i) of
- --------
this paragraph is cancelled, terminated or otherwise withdrawn prior to the
Separation Time without the purchase of any shares of Common Stock pursuant
thereto, such offer shall be deemed, for purposes of this paragraph, never to
have been made.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) that an Acquiring Person has become
such.
"Subsidiary" of any specified Person shall mean any corporation or
other entity of which a majority of the voting power of the equity securities
or a majority of the
-13-
<PAGE>
equity interest is Beneficially Owned, directly or indirectly, by such Person.
"Trading Day," when used with respect to any securities, shall mean
a day on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the
New York Stock Exchange, Inc., a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is open for
the transaction of business or, if such securities are not listed or admitted
to trading on any national securities exchange, a Business Day.
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the Record
-----------------
Time, the Company will mail a letter summarizing the terms of the Rights to
each holder of record of Common Stock as of the Record Time, at such holder's
address as shown by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the
-----------------------------------
Common Stock issued after the Record Time but prior to the Separation Time
shall evidence one Right for each share of Common Stock represented thereby and
shall have impressed on, printed on, written on or otherwise affixed to them
the following legend:
-14-
<PAGE>
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement, dated as of July 25,
1989 (as such may be amended from time to time, the "Rights Agreement"),
between Cullen/Frost Bankers, Inc. (the "Company") and The Bank of New
York, as Rights Agent, the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be redeemed, may be exchanged for shares
of Common Stock or other securities or assets of the Company, may expire,
may become void (if they are "Beneficially Owned" by an "Acquiring Person"
or an Affiliate or Associate thereof, as such terms are defined in the
Rights Agreement, or by any transferee of any of the foregoing) or may be
evidenced by separate certificates and may no longer be evidenced by this
certificate. The Company will mail or arrange for the mailing of a copy
of the Rights Agreement to the holder of this certificate without charge
within five days after the receipt of a written request therefor.
Certificates representing shares of Common Stock that are issued and
outstanding at the Record Time shall evidence one Right for each share of
Common Stock evidenced thereby notwithstanding the absence of the foregoing
legend.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to
----------------------------------------
Sections 3.1, 5.1 and 5.10 and subject to adjustment as herein set forth, each
Right will entitle the holder thereof, after the Separation Time and prior to
the Expiration Time, to purchase, for the Exercise Price, one one-hundredth of
a share of Preferred Stock.
(b) Until the Separation Time, (i) no Right may be exercised and
(ii) each Right will be evidenced by the certificate for the associated share
of Common Stock
-15-
<PAGE>
(together, in the case of certificates issued prior to the Record Time, with
the letter mailed to the record holder thereof pursuant to Section 2.1) and
will be transferable only together with, and will be transferred by a transfer
(whether with or without such letter) of, such associated share.
(c) Subject to the terms and conditions hereof, after the
Separation Time and prior to the Expiration Time, the Rights (i) may be
exercised and (ii) may be transferred independent of shares of Common Stock.
Promptly following the Separation Time, the Rights Agent will mail to each
holder of record of Common Stock as of the Separation Time (other than any
Person whose Rights have become void pursuant to Section 3.1(b)), at such
holder's address as shown by the records of the Company (the Company hereby
agreeing to furnish copies of such records to the Rights Agent for this
purpose), (x) a certificate (a "Rights Certificate") in substantially the form
of Exhibit A hereto appropriately completed, representing the number of Rights
held by such holder at the Separation Time and having such marks of identifi-
cation or designation and such legends, summaries or endorsements printed
thereon as the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any
-16-
<PAGE>
national securities exchange or quotation system on which the Rights may from
time to time be listed or traded, or to conform to usage, and (y) a disclosure
statement describing the Rights.
(d) Subject to the terms and conditions hereof, Rights may be
exercised on any Business Day after the Separation Time and prior to the
Expiration Time by submitting to the Rights Agent the Rights Certificate
evidencing such Rights with an Election to Exercise (an "Election to Exercise")
substantially in the form attached to the Rights Certificate duly completed,
accompanied by payment in cash, or by certified or official bank check or money
order payable to the order of the Company, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum sufficient to
cover any transfer tax or charge which may be payable in respect of any
transfer involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares or depositary receipts (or
both) in a name other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.3(d), and subject to
the terms and conditions hereof, the Rights Agent will thereupon promptly
(i)(A) requisition from a transfer agent stock certificates evidencing such
number of shares or other securities to be
-17-
<PAGE>
purchased (the Company hereby irrevocably authorizing its transfer agents to
comply with all such requisitions) and (B) if the Company elects pursuant to
Section 5.5 not to issue certificates representing fractional shares,
requisition from the depositary selected by the Company depositary receipts
representing the fractional shares to be purchased or requisition from the
Company the amount of cash to be paid in lieu of fractional shares in
accordance with Section 5.5 and (ii) after receipt of such certificates,
depositary receipts and/or cash, deliver the same to or upon the order of the
registered holder of such Rights Certificate, registered (in the case of
certificates or depositary receipts) in such name or names as may be designated
by such holder.
(f) In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the
Rights Agent to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all
such action as may be necessary to ensure that all shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and fully paid
-18-
<PAGE>
and nonassessable; (ii) take all such action as may be necessary to comply
with any applicable requirements of the Securities Act of 1933 or the
Securities Exchange Act of 1934, and the rules and regulations thereunder, and
any other applicable law, rule or regulation, in connection with the issuance
of any shares upon exercise of Rights; and (iii) pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the original issuance or delivery of the Rights Certificates or of
any shares issued upon the exercise of Rights, provided that the Company shall
not be required to pay any transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for shares in a name
other than that of the holder of the Rights being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the
-----------------------------------------------
event the Company shall at any time after the Record Time and prior to the
Separation Time (i) declare or pay a dividend on Common Stock payable in Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares of Common Stock, (x)
the Exercise Price in effect after such adjustment will be equal to the
Exercise Price in effect immediately prior to such adjustment divided by the
number of shares of Common Stock (the "Expansion
-19-
<PAGE>
Factor") that a holder of one share of Common Stock immediately prior to such
dividend, subdivision or combination would hold thereafter as a result thereof
and (y) each Right held prior to such adjustment will become that number of
Rights equal to the Expansion Factor, and the adjusted number of Rights will be
deemed to be distributed among the shares of Common Stock with respect to which
the original Rights were associated (if they remain outstanding) and the shares
issued in respect of such dividend, subdivision or combination, so that each
such share of Common Stock will have exactly one Right associated with it.
Each adjustment made pursuant to this paragraph shall be made as of the payment
or effective date for the applicable dividend, subdivision or combination.
In the event the Company shall at any time after the Record Time
and prior to the Separation Time issue any shares of Common Stock otherwise
than in a transaction referred to in the preceding paragraph, each such share
of Common Stock so issued shall automatically have one new Right associated
with it, which Right shall be evidenced by the certificate representing such
share. To the extent provided in Section 5.3, Rights shall be issued by the
Company in respect of shares of Common Stock that are issued or sold by the
Company after the Separation Time.
(b) In the event the Company shall at any time after the Record
Time and prior to the Separation Time issue
-20-
<PAGE>
or distribute any securities or assets in respect of, in lieu of or in
exchange for Common Stock (other than pursuant to a regular periodic cash
dividend or a dividend paid solely in Common Stock) whether by dividend, in a
reclassification or recapitalization (including any such transaction involving
a merger, consolidation or share exchange), or otherwise, the Company shall
make such adjustments, if any, in the Exercise Price, number of Rights and/or
securities or other property purchasable upon exercise of Rights as the Board
of Directors of the Company, in its sole discretion, may deem to be appropriate
under the circumstances in order to adequately protect the interests of the
holders of Rights generally, and the Company and the Rights Agent shall amend
this Agreement as necessary to provide for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this
Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment to
the Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate.
(d) Rights certificates shall represent the securities purchasable
under the terms of this Agreement,
-21-
<PAGE>
including any adjustment or change in the securities purchasable upon exercise
of the Rights, even though such certificates may continue to express the
securities purchasable at the time of issuance of the initial Rights
Certificates.
2.5 Date on Which Exercise is Effective. Each person in whose
-----------------------------------
name any certificate for shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares
represented thereby on the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Exercise Price for such
Rights (and any applicable taxes and other governmental charges payable by the
exercising holder hereunder) was made; provided, however, that if the date of
-------- -------
such surrender and payment is a date upon which the stock transfer books of the
Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the stock transfer books of the Company are
open.
2.6 Execution, Authentication, Delivery and Dating of Rights
--------------------------------------------------------
Certificates. (a) The Rights Certificates shall be executed on behalf of the
- ------------
Company by its Senior Chairman of the Board, Chairman of the Board, President
or one of its Vice Presidents, under its corporate seal reproduced thereon
attested by its Secretary or one of its
-22-
<PAGE>
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Separation Time, the Company will notify the
Rights Agent of such Separation Time and will deliver Rights Certificates
executed by the Company to the Rights Agent for countersignature, and, subject
to Section 3.1(b), the Rights Agent shall manually countersign and deliver such
Rights Certificates to the holders of the Rights pursuant to Section 2.3(c)
hereof. No Rights Certificate shall be valid for any purpose unless manually
countersigned by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.7 Registration, Registration of Transfer and Exchange. (a)
---------------------------------------------------
After the Separation Time, the Company will cause to be kept a register (the
"Rights Register") in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed
-23-
<PAGE>
"Rights Registrar" for the purpose of maintaining the Rights Register for the
Company and registering Rights and transfers of Rights after the Separation
Time as herein provided. In the event that the Rights Agent shall cease to be
the Rights Registrar, the Rights Agent will have the right to examine the
Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of Section 2.7(c) and (d), the Company will
execute, and the Rights Agent will countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Rights Certificates evidencing the same
aggregate number of Rights as did the Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be
entitled to the same benefits under this Agreement as the Rights surrendered
upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed,
-24-
<PAGE>
or be accompanied by a written instrument of transfer in form satisfactory to
the Company or the Rights Agent, as the case may be, duly executed by the
holder thereof or such holder's attorney duly authorized in writing. As a
condition to the issuance of any new Rights Certificate under this Section 2.7,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.
(d) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under Section 3.1(b),
been exchanged under Section 3.1(c) or been redeemed under Section 5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates.
---------------------------------------------------------
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1,
the Company shall execute and the Rights Agent shall countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same number of Rights
as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections
-25-
<PAGE>
3.1(b), 3.1(c) and 5.1 and in the absence of notice to the Company or the
Rights Agent that such Rights Certificate has been acquired by a bona fide
---- ----
purchaser, the Company shall execute and upon its request the Rights Agent
shall countersign and deliver, in lieu of any such destroyed, lost or stolen
Rights Certificate, a new Rights Certificate evidencing the same number of
Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.8, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.8 in lieu of any destroyed, lost or stolen Rights Certificate shall evidence
an original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and, subject to Section 3.1(b) shall be entitled to all
the benefits of this Agreement equally and proportionately with any and all
other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights
---------------------
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) for registration
-26-
<PAGE>
of transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name such Rights
Certificate (or, prior to the Separation Time, such Common Stock certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
for all purposes whatsoever, including the payment of the Redemption Price, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary. As used in this Agreement, unless the context otherwise requires,
the term "holder" of any Rights shall mean the registered holder of such Rights
(or, prior to the Separation Time, the associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights
-----------------------------------------
Certificates surrendered upon exercise or for registration of transfer or
exchange shall, if surrendered to any person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly cancelled by
the Rights Agent. The Company may at any time deliver to the Rights Agent for
cancellation any Rights Certificates previously countersigned and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Rights Certificates so delivered shall be promptly cancelled by the Rights
Agent. No Rights Certificates shall be countersigned in lieu of or in exchange
for any Rights Certificates cancelled as provided in this Section 2.10, except
as expressly permitted by this
-27-
<PAGE>
Agreement. The Rights Agent shall destroy all cancelled Rights Certificates
and deliver a certificate of destruction to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights, by
---------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of, the associated
share of Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Stock certificate) for registration
of transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
for all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary;
-28-
<PAGE>
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to
time pursuant to Section 2.4(b) or 5.4 hereof.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in. (a) In the event that prior to the Expiration Time
-------
a Flip-in Date shall occur, then, to the extent applicable law permits Rights
owned by certain Persons referred to in Section 3.1(b) to become void pursuant
to the provisions thereof, except as provided in this Section 3.1, each Right
shall constitute the right to purchase from the Company, upon exercise thereof
in accordance with the terms hereof (but subject to Section 5.10), that number
of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event that on
or after such Stock Acquisition Date an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred with respect to
the Common Stock).
-29-
<PAGE>
(b) Notwithstanding the foregoing, to the extent permitted by
applicable law, any Rights that are or were Beneficially Owned on or after the
Stock Acquisition Date by an Acquiring Person or an Affiliate or Associate
thereof or by any transferee, direct or indirect, of any of the foregoing shall
become void and any holder of such Rights (including transferees) shall
thereafter have no right to exercise or transfer such Rights under any
provision of this Agreement. If any Rights Certificate is presented for
assignment or exercise and the Person presenting the same will not complete the
certification set forth at the end of the form of assignment or notice of
election to exercise and provide such additional evidence of the identity of
the Beneficial Owner and its Affiliates and Associates (or former Beneficial
Owners and their Affiliates and Associates) as the Company shall reasonably
request, then the Company shall be entitled conclusively to deem the Beneficial
Owner thereof to be an Acquiring Person or an Affiliate or Associate thereof or
a transferee of any of the foregoing and accordingly will, to the extent
permitted by applicable law, deem the Rights evidenced thereby to be void and
not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at
any time after a Flip-in Date and prior to the time that an Acquiring Person
becomes the Beneficial Owner of more than 50% of the outstanding shares of
Common
-30-
<PAGE>
Stock, but only to the extent applicable law permits Rights owned by certain
Persons referred to in Section 3.1(b) to become void pursuant to the provisions
thereof, elect to exchange all (but not less than all) the then outstanding
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 3.1(b)) for shares of Common Stock at an exchange ratio
of one share of Common Stock per Right, appropriately adjusted in order to
protect the interests of holders of Rights generally in the event that after
the Separation Time an event of a type analogous to any of the events described
in Section 2.4(a) or (b) shall have occurred with respect to the Common Stock
(such exchange ratio, as adjusted from time to time, being hereinafter referred
to as the "Exchange Ratio").
Immediately upon the action of the Board of Directors of the
Company electing to exchange the Rights, without any further action and without
any notice, the right to exercise the Rights will terminate and each Right
(other than Rights that have become void pursuant to Section 3.1(b)) will
thereafter represent only the right to receive a number of shares of Common
Stock equal to the Exchange Ratio. Promptly after the action of the Board of
Directors electing to exchange the Rights, the Company shall give notice
thereof (specifying the steps to be taken to receive shares of Common Stock in
exchange for Rights) to the Rights Agent and the holders of the Rights (other
than Rights that
-31-
<PAGE>
have become void pursuant to Section 3.1(b)) outstanding immediately prior
thereto by mailing such notice in accordance with Section 5.9.
Each Person in whose name any certificate for shares is issued upon
the exchange of Rights pursuant to this Section 3.1(c) or Section 3.1(d) shall
for all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of any applicable taxes and other governmental charges payable by the
holder was made; provided, however, that if the date of such surrender and
-------- -------
payment is a date upon which the stock transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business
Day on which the stock transfer books of the Company are open.
(d) Whenever the Company shall become obligated under Section
3.1(a) or (c) to issue shares of Common Stock upon exercise of or in exchange
for Rights, the Company, at its option, may substitute therefor shares of
Preferred Stock, at a ratio of one one-hundredth of a share of Preferred Stock
for each share of Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury
shares or authorized but unissued shares of
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<PAGE>
Common Stock or Preferred Stock of the Company to permit the exercise or
exchange in full of the Rights in accordance with Section 3.1(a) or (c), and
the Company elects not to, or is otherwise unable to, make the exchange
referred to in Section 3.1(c), the Company shall either (i) call a meeting of
shareholders seeking approval to cause sufficient additional shares to be
authorized (provided that if such approval is not obtained the Company will
take the action specified in clause (ii) of this sentence) or (ii) take such
action as shall be necessary to ensure and provide, to the extent permitted by
applicable law and any agreements or instruments in effect on the Stock
Acquisition Date to which it is a party, that each Right shall thereafter
constitute the right to receive, (x) at the Company's option, either (A) in
return for the Exercise Price, debt or equity securities or other assets (or a
combination thereof) having a fair value equal to twice the Exercise Price, or
(B) without payment of consideration (except as otherwise required by
applicable law), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the Exercise Price, or (y) if the Board
of Directors of the Company elects to exchange the Rights in accordance with
Section 3.1(c), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the product of the Market Price of a
share of Common Stock on the Flip-in Date times the Exchange Ratio in
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effect on the Flip-in Date, where in any case set forth in (x) or (y) above
the fair value of such debt or equity securities or other assets shall be as
determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company
---------
shall not enter into any agreement with respect to, consummate or permit to
occur any Flip-over Transaction or Event unless and until it shall have entered
into a supplemental agreement with the Flip-over Entity, for the benefit of the
holders of the Rights, providing that, upon consummation or occurrence of the
Flip-over Transaction or Event (i) each Right shall thereafter constitute the
right to purchase from the Flip-over Entity, upon exercise thereof in accor-
dance with the terms hereof, that number of shares of Flip-over Stock of the
Flip-over Entity having an aggregate Market Price on the date of consummation
or occurrence of such Flip-over Transaction or Event equal to twice the
Exercise Price for an amount in cash equal to the Exercise Price (such right to
be appropriately adjusted in order to protect the interests of the holders of
Rights generally in the event that after such date of consummation or
occurrence an event of a type analogous to any of the events described in
Section 2.4(a) or (b) shall have occurred with respect to the Flip-over Stock)
and (ii) the
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Flip-over Entity shall thereafter be liable for, and shall assume, by virtue
of such Flip-over Transaction or Event and such supplemental agreement, all the
obligations and duties of the Company pursuant to this Agreement. The
provisions of this Section 3.2 shall apply to successive Flip-over Transactions
or Events.
(b) Prior to the Expiration Time, unless the Rights will be
redeemed pursuant to Section 5.1 hereof in connection therewith, the Company
shall not enter into any agreement with respect to, consummate or permit to
occur any Flip-over Transaction or Event if at the time thereof there are any
rights, warrants or securities outstanding or any other arrangements,
agreements or instruments that would eliminate or otherwise diminish in any
material respect the benefits intended to be afforded by this Rights Agreement
to the holders of Rights upon consummation of such transaction.
ARTICLE IV
THE RIGHTS AGENT
4.1 General. (a) The Company hereby appoints the Rights Agent to
-------
act as agent for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in
the administration
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and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted to be done by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
certificate for securities purchasable upon exercise of Rights, Rights
Certificate, certificate for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons.
4.2 Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent
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<PAGE>
or any successor Rights Agent is a party, or any corporation succeeding to the
shareholder services business of the Rights Agent or any successor Rights
Agent, will be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 4.4
hereof. In case at the time such successor Rights Agent succeeds to the agency
created by this Agreement any of the Rights Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall
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<PAGE>
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent to
be the Senior Chairman of the Board, the Chairman of the Board, the President
or any Vice President and by the Treasurer or any
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<PAGE>
Assistant Treasurer or the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any certificate for
securities purchasable upon exercise of Rights or Rights Certificate (except
its countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in
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<PAGE>
any Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 3.1(b) hereof) or any adjustment required under the provisions of
Section 2.4, 3.1 or 3.2 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
after receipt of the certificate contemplated by Section 2.4 describing any
such adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
securities purchasable upon exercise of Rights or any Rights or as to whether
any securities purchasable upon exercise of Rights will, when issued, be duly
and validly authorized, executed, issued and delivered and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by
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<PAGE>
the Rights Agent to be the Senior Chairman of the Board, the Chairman of the
Board, the President or any Vice President or the Secretary or any Assistant
Secretary or the Treasurer or any Assistant Treasurer of the Company, and to
apply to such persons for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered by it in good faith
in accordance with instructions of any such person.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Stock, Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct,
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<PAGE>
provided reasonable care was exercised in the selection and continued
employment thereof.
4.4 Change of Rights Agent. The Rights Agent may resign and be
----------------------
discharged from its duties under this Agreement upon 90 days' notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the Company
and to each transfer agent of Common Stock by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.9. The Company may
remove the Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent and to each transfer agent of the Common Stock by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.9. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Company will appoint a successor to the Rights Agent. If the
Company fails to make such appointment within a period of 30 days after such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
any Rights (which holder shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then the holder of any Rights may
apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be a corporation organized and doing business under the
laws of the United
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<PAGE>
States or of the State of Texas or any other state of the United States, in
good standing, which is authorized under such laws to exercise the powers of
the Rights Agent contemplated by this Agreement and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent will be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company will file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the holders
of the Rights. Failure to give any notice provided for in this Section 4.4,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
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<PAGE>
ARTICLE V
MISCELLANEOUS
5.1 Redemption. (a) The Board of Directors of the Company may,
----------
at its option, at any time prior to the close of business on the Flip-in Date,
elect to redeem all (but not less than all) the then outstanding Rights at the
Redemption Price and the Company, at its option, may pay the Redemption Price
either in cash or shares of Common Stock or other securities of the Company
deemed by the Board of Directors, in the exercise of its sole discretion, to be
at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights (or, if the resolution of the Board of
Directors electing to redeem the Rights states that the redemption will not be
effective until the occurrence of a specified future time or event, upon the
occurrence of such future time or event), without any further action and
without any notice, the right to exercise the Rights will terminate and each
Right will thereafter represent only the right to receive the Redemption Price
in cash or securities, as determined by the Board of Directors. Promptly after
the Rights are redeemed, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice in accordance with Section 5.9.
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<PAGE>
5.2 Expiration. The Rights and this Agreement shall expire at the
----------
Expiration Time and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1 or 5.1 hereof.
5.3 Issuance of New Rights Certificates. Notwithstanding any of
-----------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the number or kind or class of shares of stock purchasable upon
exercise of Rights made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock
by the Company following the Separation Time and prior to the Expiration Time
pursuant to the terms of securities convertible or redeemable into shares of
Common Stock or to options, in each case issued or granted prior to, and
outstanding at, the Separation Time, the Company shall issue to the holders of
such shares of Common Stock, Rights Certificates representing the appropriate
number of Rights in connection with the issuance or sale of such shares of
Common Stock; provided, however, in each case, (i) no such Rights Certificate
-------- -------
shall be issued, if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material
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<PAGE>
adverse tax consequences to the Company or to the Person to whom such Rights
Certificates would be issued, (ii) no such Rights Certificates shall be issued
if, and to the extent that, appropriate adjustment shall have otherwise been
made in lieu of the issuance thereof, and (iii) the Company shall have no
obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.
5.4 Supplements and Amendments. The Company and the Rights Agent
--------------------------
may from time to time supplement or amend this Agreement without the approval
of any holders of Rights (i) in any respect prior to the Flip-in Date (other
than to change the Redemption Price or the Expiration Time, except as
contemplated elsewhere herein), (ii) to make any changes following the close of
business on the Flip-in Date which the Company may deem necessary or desirable
and which shall not materially adversely affect the interests of the holders of
Rights generally or (iii) in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be inconsistent with any
other provisions herein or otherwise defective. The Rights Agent will duly
execute and deliver any supplement or amendment hereto requested by the Company
which satisfies the terms of the preceding sentence.
5.5 Fractional Shares. If the Company elects not to issue
-----------------
certificates representing fractional shares upon
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<PAGE>
exercise or redemption of Rights, the Company shall, in lieu thereof, in the
sole discretion of the Board of Directors, either (a) evidence such fractional
shares by depositary receipts issued pursuant to an appropriate agreement
between the Company and a depositary selected by it, providing that each holder
of a depositary receipt shall have all of the rights, privileges and pre-
ferences to which such holder would be entitled as a beneficial owner of such
fractional share, or (b) pay to the registered holder of such Rights the
appropriate fraction of the Market Price per share.
5.6 Rights of Action. Subject to the terms of this Agreement
----------------
(including Section 3.1(b)), rights of action in respect of this Agreement,
other than rights of action vested solely in the Rights Agent, are vested in
the respective holders of the Rights; and any holder of any Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise such holder's Rights in the manner provided in such
holder's Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any
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<PAGE>
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Shareholder. No holder, as
-----------------------------------------
such, of any Rights shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of shares or any other securities which may at any
time be issuable on the exercise of such Rights, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 5.8 hereof), or to receive
dividends or subscription rights, or otherwise, until such Rights shall have
been exercised or exchanged in accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose
--------------------------
after the Separation Time and prior to the Expiration Time (i) to effect or
permit a Flip-over Transaction or Event or (ii) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in
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accordance with Section 5.9 hereof, a notice of such proposed action, which
shall specify the date on which such Flip-over Transaction or Event,
liquidation, dissolution, or winding up is to take place, and such notice shall
be so given at least 20 Business Days prior to the date of the taking of such
proposed action.
5.9 Notices. Notices or demands authorized or required by this
-------
Agreement to be given or made by the Rights Agent or by the holder of any
Rights to or on the Company shall be sufficiently given or made if delivered or
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Cullen/Frost Bankers, Inc.
P.O. Box 1600
100 West Houston Street
San Antonio, Texas 78296
Attention: Chief Financial Officer
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
The Frost National Bank
100 West Houston Street
4th Floor
San Antonio, Texas 78205
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<PAGE>
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice.
5.10 Suspension of Exercisability. To the extent that the Company
----------------------------
determines in good faith that some action will or need be taken pursuant to
Section 3.1 or to comply with federal or state securities laws, the Company may
suspend the exercisability of the Rights for a reasonable period in order to
take such action or comply with such laws. In the event of any such
suspension, the Company shall issue as promptly as practicable a public
announcement stating that the exercisability or exchangeability of the Rights
has been temporarily suspended. Notice thereof pursuant to Section 5.9 shall
not be required.
Failure to give a notice pursuant to the provisions of this
Agreement shall not affect the validity of any action taken hereunder.
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<PAGE>
5.11 Costs of Enforcement. The Company agrees that if the Company
--------------------
or any other Person the securities of which are purchasable upon exercise of
Rights fails to fulfill any of its obligations pursuant to this Agreement, then
the Company or such Person will reimburse the holder of any Rights for the
costs and expenses (including legal fees) incurred by such holder in actions to
enforce such holder's rights pursuant to any Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any Person other than the Company, the Rights Agent
and the holders of the Rights any legal or equitable right, remedy or claim
under this Agreement and this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the holders of the Rights.
5.14 Determination and Actions by the Board of Directors, etc.
---------------------------------------------------------
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and
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power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors of
the Company to any liability to the holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein for
--------------------
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED
-------------
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
TEXAS AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED
ENTIRELY WITHIN SUCH STATE.
5.17 Counterparts. This Agreement may be executed in any number
------------
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
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<PAGE>
5.18 Severability. If any term or provision hereof or the
------------
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
CULLEN/FROST BANKERS, INC.
By:_________________________
Name:
Title:
THE FROST NATIONAL BANK
By:_________________________
Name:
Title:
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Exhibit 2
Form of Rights Certificate and of Election to Exercise, included
as Exhibit A to the Restated Rights Agreement (Exhibit 1 hereto).
<PAGE>
05 89-5P EXHIBIT A
---------
[Form of Rights Certificate]
Certificate No. W- _______ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE OPTION OF
THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING WILL BE VOID.
Rights Certificate
CULLEN/FROST BANKERS, INC.
This certifies that ____________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Amended and Restated Shareholder Protection Rights Agreement,
dated as of July 30, 1996 (as amended from time to time, the "Rights
Agreement"), between Cullen/Frost Bankers, Inc., a Texas corporation (the
"Company"), and The Frost National Bank, as Rights Agent (the "Rights Agent",
which term shall include any successor Rights Agent under the Rights
Agreement), to purchase from the Company at any time after the Separation Time
(as such term is defined in the Rights Agreement) and prior to the close of
business on July 25, 1999, one one-hundredth of a fully paid share of Junior
Participating Preferred Stock, par value $5.00 per share (the "Preferred
Stock"), of the Company (subject to adjustment as provided in the Rights
Agreement) at the Exercise Price referred to below, upon
<PAGE>
presentation and surrender of this Rights Certificate with the Form of Election
to Exercise duly executed at the principal office of the Rights Agent in San
Antonio. The Exercise Price shall initially be $100 per Right and shall be
subject to adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the
Rights evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Preferred Stock, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies
of the Rights Agreement are on file at the principal office of the Company and
are available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged
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<PAGE>
for another Rights Certificate or Rights Certificates of like tenor evidencing
an aggregate number of Rights equal to the aggregate number of Rights evidenced
by the Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be entitled
to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right
evidenced by this Certificate may be (a) redeemed by the Company under certain
circumstances, at its option, at a redemption price of $0.01 per Right or (b)
exchanged by the Company under certain circumstances, at its option, for one
share of Common Stock or one one-hundredth of a share of Preferred Stock per
Right (or, in certain cases, other securities or assets of the Company),
subject in each case to adjustment in certain events as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of any
securities which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
-3-
<PAGE>
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised or exchanged as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Date: ____________
ATTEST: CULLEN/FROST BANKERS, INC.
___________________________ By______________________
Secretary
Countersigned:
THE FROST NATIONAL BANK
By____________________________
Authorized Signature
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<PAGE>
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: Cullen/Frost Bankers, Inc.
The undersigned hereby irrevocably elects to exercise
_______________________ whole Rights represented by the attached Rights
Certificate to purchase the shares of Junior Participating Preferred Stock
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
___________________________________
Address:___________________________
___________________________________
Social Security or Other Taxpayer
Identification Number:_____________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
___________________________________
Address:___________________________
___________________________________
Social Security or Other Taxpayer
Identification Number:_____________
Dated: _______________, 19__
Signature Guaranteed: _________________________
Signature
(Signature must correspond to name as
written upon the face of the attached
Rights Certificate in every
particular, without alteration or
enlargement or any change whatsoever)
<PAGE>
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee Medallion program), pursuant to
SEC Rule 17Ad-15.
- -------------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders
of Rights and shares of Common Stock, that the Rights evidenced by the attached
Rights Certificate are not, and, to the knowledge of the undersigned, have
never been, Beneficially Owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
_________________________
Signature
- -------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported exercise, the Company will deem the Beneficial
Owner of the Rights evidenced by the attached Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem
the Rights evidenced by such Rights Certificate to be void and not transferable
or exercisable.
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Exhibit 3
Form of Statement of Resolution Establishing Series of Shares of
Participating Junior Preferred Stock, included as Exhibit B to
the Restated Rights Agreement (Exhibit 1 hereto).
<PAGE>
EXHIBIT B
STATEMENT OF RESOLUTION
ESTABLISHING A SERIES OF SHARES
-------------------------------
To the Secretary of State
of the State of Texas:
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, the undersigned submits the following statement for the
purpose of establishing and designating a series of shares and fixing and
determining the relative rights and preferences thereof:
1. The name of the corporation is Cullen/Frost Bankers, Inc., a
Texas corporation (the "Corporation").
2. The following resolution, establishing and designating a series
of shares and fixing and determining the relative rights and preferences
thereof, was duly adopted by the Board of Directors of the Corporation on July
30, 1996:
RESOLVED, that there is hereby established a series of Junior
Preferred Stock, par value $5.00 per share, of the Corporation, and the
designation and certain powers, preferences and other rights of the
shares of such series, and certain qualifications, limitations and
restrictions thereon, are hereby fixed as follows:
(i) The distinctive serial designation of this series
shall be "Junior Participating Preferred Stock" (hereinafter called
"this Series"). Each share of this Series shall be identical in
all respects with the other shares of this Series except as to the
dates from and after which dividends thereon shall be cumulative.
(ii) The number of shares in this Series shall initially
be 250,000, which number may from time to time be increased or
decreased (but not below the number then outstanding) by the Board of
<PAGE>
Directors. Shares of this Series purchased by the Corporation shall
be cancelled and shall revert to authorized but unissued shares of
Preferred Stock undesignated as to series. Shares of this Series may
be issued in fractional shares, which fractional shares shall,
entitle the holder, in proportion to such holder's fractional share,
to all rights of a holder of a whole share of this Series.
(iii) The holders of full or fractional shares of this
Series shall be entitled to receive, when and as declared by the
Board of Directors, but only out of funds legally available therefor,
dividends, (A) on each date that dividends or other distributions
(other than dividends or distributions payable in Common Stock of the
Corporation) are payable on or in respect of Common Stock comprising
part of the Reference Package (as defined below), in an amount per
whole share of this Series equal to the aggregate amount of dividends
or other distributions (other than dividends or distributions payable
in Common Stock of the Corporation) that would be payable on such
date to a holder of the Reference Package and (B) on the last day of
March, June, September and December in each year, in an amount per
whole share of this Series equal to the excess (if any) of $25.00
over the aggregate dividends paid per whole share of this Series
during the three month period ending on such last day. Each such
dividend shall be paid to the holders of record of shares of this
Series on the date, not exceeding sixty days preceding such dividend
or distribution payment date, fixed for the purpose by the Board of
Directors in advance of payment of each particular dividend or
distribution. Dividends on each full and each fractional share of
this Series shall be cumulative from the date such full or fractional
share is originally issued; provided that any such full or fractional
share originally issued after a dividend record date and on or prior
to the dividend payment date to which such record date relates shall
not be entitled to receive the dividend payable on such dividend
payment date or any amount in respect of the period from such
original issuance to such dividend payment date.
The term "Reference Package" shall initially mean
100 shares of Common Stock, par
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<PAGE>
value $5.00 per share ("Common Stock"), of the Corporation. In the
event the Corporation shall at any time after the close of business
on _____________, 19___* (A) declare or pay a dividend on any Common
Stock payable in Common Stock, (B) subdivide any Common Stock or (C)
combine any Common Stock into a smaller number of shares, then and in
each such case the Reference Package after such event shall be the
Common Stock that a holder of the Reference Package immediately prior
to such event would hold thereafter as a result thereof.
Holders of shares of this Series shall not be
entitled to any dividends, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided on
this Series.
So long as any shares of this Series are
outstanding, no dividend (other than a dividend in Common Stock or in
any other stock ranking junior to this Series as to dividends and
upon liquidation) shall be declared or paid or set aside for payment
or other distribution declared or made upon the Common Stock or upon
any other stock ranking junior to this Series as to dividends or upon
liquidation, nor shall any Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange
for stock of the Corporation ranking junior to this Series as to
dividends and upon liquidation), unless, in each case, the full
cumulative dividends (including the dividend to be due upon payment
of such dividend, distribution, redemption, purchase or other
acquisition) on all outstanding shares of
______________________
* For a certificate of designation relating to shares to be issued pursuant
to Section 2.3 of the Rights Agreement, insert the Separation Time. For
a certificate designation relating to shares to be issued pursuant to
Section 3.1 (d) of the Rights Agreement, insert the Flip-in Date.
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<PAGE>
this Series shall have been, or shall contemporaneously be, paid.
(iv) In the event of any merger, consolidation,
reclassification or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of
this Series shall at the same time be similarly exchange or changed
in any amount per whole share equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the
case may be, that a holder of the Reference Package would be entitled
to receive as a result of such transaction.
(v) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of full and fractional shares of this Series
shall be entitled, before any distribution or payment is made on any
date to the holder of the Common Stock or any other stock of the
Corporation ranking junior to this Series upon liquidation, to be
paid in full an amount per whole share of this Series equal to the
greater of (A) $___________*or (B) the aggregate amount distributed
or to be distributed prior to such date in connection with such
liquidation, dissolution or winding up to a holder of the Reference
Package (such greater amount being hereinafter referred to as the
"Liquidation Preference"), together with accrued dividends to such
distribution or payment date, whether or not earned or declared. If
such payment shall have been made in full to all holders of shares of
this Series, the holders of shares of this Series as such shall have
no right or claim to any of the remaining assets of the Corporation.
This Series shall be subordinate to, and shall be entitled
to a distribution upon liquidation after, all series of Preferred
Stock of the Corporation except for such Series as by its terms ranks
pari passu with, or subordinate to, this Series.
_______________________
* Insert an amount equal to 100 times the Exercise Price in effect as of
the Separation Time.
-4-
<PAGE>
In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to the first
paragraph of this Section (v), after giving effect to the second
paragraph of this Section (v), no such distribution shall be made on
account of any shares of any other class or series of Preferred Stock
ranking on a parity with the shares of this Series upon such
liquidation, dissolution or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this
Series, ratably in proportion to the full distributable amounts for
which holders of all such parity shares are respectively entitled
upon such liquidation, dissolution or winding up.
Upon the liquidation, dissolution or winding up of the
Corporation, the holders of shares of this Series then outstanding
shall be entitled to be paid out of assets of the Corporation
available for distribution to its stockholders all amounts to which
such holders are entitled pursuant to the first and second paragraphs
of this Section (v) before any payment shall be made to the holders
of Common Stock or any other stock of the Corporation ranking junior
upon liquidation to this Series.
For the purpose of this Section (v), the consolidation or
merger of the Corporation with any other corporation shall not be
deemed to constitute a liquidation, dissolution or winding up of the
Corporation.
(vi) The shares of this Series shall not be redeemable.
(vii) In addition to any other vote or consent of
shareholders required by law or by the Restated Certificate of
Incorporation, as amended, of the Corporation, each whole share of
this Series shall, on any matter, vote as a class with any other
capital stock comprising part of the Reference Package and voting on
such matter and shall have the number of votes thereon that a holder
of the Reference Package would have.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed and attested this
certificate on the ______ day of ____________, ____.
CULLEN/FROST BANKERS, INC.
By:_________________________
Name:
Title:
Attest:
- --------------------------------
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