SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
- ---------------------------------------- --------------
(State of incorporation or organization) (IRS Employer
Identification
No.)
P.O. Box 1600
100 West Houston St.
San Antonio, Texas 78205 78296-1400
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(Address of principal executive offices) (Zip Code)
Securities to be 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
- ------------------- ------------------------------
Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the
Act:
None
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(Title of Class)
<PAGE>
Item 1. Description of Registrant's Securities to be
--------------------------------------------
Registered.
----------
On January 26, 1999, the Board of Directors of
Cullen/Frost Bankers, Inc., a Texas corporation (the
"Company"), declared a dividend payable on March 15, 1999 of
one right (a "Right") for each outstanding share of common
stock, par value $0.01 per share, of the Company held of
record at the close of business on February 8, 1999, or
issued thereafter and prior to the Separation Time (as
defined in the Rights Agreement referred to below) and
thereafter pursuant to options and convertible securities
outstanding at the Separation Time. The Rights will be
issued pursuant to a Shareholder Protection Rights
Agreement, dated as of January 26, 1999 (the "Rights
Agreement"), between the Company and The Frost National
Bank, as Rights Agent.
The description of the Rights contained in the
Company's Current Report on Form 8-K dated January 29, 1999
is hereby incorporated by reference herein.
The Rights Agreement (which includes as Exhibit A the
forms of Rights Certificate and Election to Exercise and as
Exhibit B the form of Statement of Resolution Establishing A
Series of Shares of Junior Participating Preferred Stock) is
attached hereto as an exhibit and is hereby incorporated
herein by reference. The description of the Rights
incorporated by reference to the Company's Current Report on
Form 8-K, dated January 29, 1999 is qualified in its
entirety by reference to the Rights Agreement and such
exhibits thereto.
Item 2. Exhibits.
--------
Exhibit No. Description
- ---------- -----------
(1) Rights Agreement.
(2) Forms of Rights Certificate and of Election
to Exercise, included in Exhibit A to the
Rights Agreement.
(3) Form of Statement of Resolution Establishing
A Series of Junior Participating Preferred
Stock, included in Exhibit B to the Rights
Agreement.
Page 2 of 3 Pages
<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/Phillip D. Green
------------------------
Name: Phillip D. Green
Title: Senior Executive
Vice President and
Chief Financial
Officer
Date: January 29, 1999
Page 3 of 3 Pages
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EXHIBIT INDEX
- -------------
Exhibit
Number Description Method of Filing
- ------- ------------------------------------------- ----------------
(1) Rights Agreement Filed herewith
(2) Forms of Rights Certificate and of Election Filed herewith
to exercise, include in Exhibit A to the
Rights Agreement.
(3) Form of Statement of Resolution Establishing Filed herewith
A Series of Junior Participating Preferred
Stock, included in Exhibit B to the Rights
Agreement.
<PAGE>
EXHIBIT 1
Rights Agreement
<PAGE>
==============================================================================
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
January 26, 1999
between
CULLEN/FROST BANKERS, INC.
and
THE FROST NATIONAL BANK
==============================================================================
<PAGE>
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
Page
----
Article I
DEFINITIONS
Section 1.1 Definitions ........................................ 2
Article II
THE RIGHTS
Section 2.1 Summary of Rights .................................. 17
Section 2.2 Legend on Common Stock
Certificates ....................................... 17
Section 2.3 Exercise of Rights;
Separation of Rights ............................... 18
Section 2.4 Adjustments to Exercise Price;
Number of Rights ................................... 22
Section 2.5 Date on Which Exercise is
Effective .......................................... 25
Section 2.6 Execution, Authentication, Delivery
and Dating of Rights
Certificates ....................................... 26
Section 2.7 Registration, Registration of
Transfer and Exchange .............................. 27
Section 2.8 Mutilated, Destroyed, Lost and
Stolen Rights Certificates ......................... 29
Section 2.9 Persons Deemed Owners .............................. 30
Section 2.10 Delivery and Cancellation of
Certificates ....................................... 31
Section 2.11 Agreement of Rights Holders ........................ 31
Article III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
CERTAIN TRANSACTIONS
Section 3.1 Flip-in ............................................ 33
Section 3.2 Flip-over .......................................... 38
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Article IV
THE RIGHTS AGENT
Section 4.1 General ............................................ 40
Section 4.2 Merger or Consolidation or Change of
Name of Rights Agent ............................... 41
Section 4.3 Duties of Rights Agent ............................. 42
Section 4.4 Change of Rights Agent ............................. 46
Article V
MISCELLANEOUS
Section 5.1 Redemption ......................................... 48
Section 5.2 Expiration ......................................... 49
Section 5.3 Issuance of New Rights
Certificates ....................................... 50
Section 5.4 Supplements and Amendments ......................... 51
Section 5.5 Fractional Shares .................................. 51
Section 5.6 Rights of Action ................................... 52
Section 5.7 Holder of Rights Not Deemed a
Shareholder ........................................ 53
Section 5.8 Notice of Proposed Actions ......................... 53
Section 5.9 Notices ............................................ 54
Section 5.10 Suspension of Exercisability ....................... 55
Section 5.11 Costs of Enforcement ............................... 56
Section 5.12 Successors ......................................... 56
Section 5.13 Benefits of this Agreement ......................... 56
Section 5.14 Determination and Actions
by the Board of Directors, etc. .................... 56
Section 5.15 Descriptive Headings ............................... 57
Section 5.16 Governing Law ...................................... 57
Section 5.17 Counterparts ....................................... 57
Section 5.18 Severability ....................................... 58
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>
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
---------------------------------------
SHAREHOLDER PROTECTION RIGHTS AGREEMENT (as
amended from time to time, this "Agreement"), dated as of
January 26, 1999, 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:
----------
WHEREAS, the Board of Directors of the Company has
(a) authorized and declared a dividend 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 February 8, 1999 (the "Record Time") and payable
in respect of each such share on March 15, 1999 (the
"Payment Time") and (b) as provided in Section 2.4,
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 hereinafter defined) and, to the
extent provided in Section 5.3, each share of Common Stock
issued after the Separation Time;
WHEREAS, subject to the terms and conditions
hereof, each Right entitles the holder thereof, after the
<PAGE>
Separation Time, to purchase securities or assets of the
Company (or, in certain cases, securities of certain other
entities) pursuant to the terms and subject to the
conditions set forth herein; and
WHEREAS, the Company desires to appoint the Rights
Agent to act on behalf of the Company, and the Rights Agent
is willing so to act, in connection with the issuance,
transfer, exchange and replacement of Rights Certificates
(as hereinafter defined), the exercise of Rights and other
matters referred to herein;
NOW THEREFORE, in consideration of the premises
and the respective agreements set forth herein, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this Agreement,
------------
the 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, 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
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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
stock dividend or stock split) of any additional shares of
Common Stock, (ii) who becomes 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 divests, or enters into
an agreement satisfactory to the Company, in its sole
discretion, pursuant to which it will divest (without
exercising or retaining any power, including voting power,
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
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<PAGE>
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
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.
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<PAGE>
"Affiliate" and "Associate" shall have the respec-
tive meanings ascribed to such terms in Rule 12b-2 under the
Exchange Act, as such Rule is in effect on the date of this
Agreement.
"Agreement" shall have the meaning set forth in
the preamble.
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 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 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, however, that a Person shall not be deemed the
- -------- --------
"Beneficial Owner", or to have "Beneficial Ownership" of, or
to "Beneficially Own", any security (i) solely because such
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<PAGE>
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 Exchange Act and pursuant to, and in
accordance with, the applicable rules and regulations under
the Exchange Act, except if such power (or the arrangements
relating thereto) is then reportable under Item 6 of
Schedule 13D under the Exchange Act (or any similar
provision of a comparable or successor report).
Notwithstanding the foregoing, no officer or 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.
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<PAGE>
"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 $0.01 per share, of the Company.
"Company" shall have the meaning set forth in the
preamble.
"Election to Exercise" shall have the meaning set
forth in Section 2.3(d) hereof.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth
in Section 3.1(c) hereof.
"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
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<PAGE>
upon exercise of one whole Right. Until adjustment thereof
in accordance with the terms hereof, the Exercise Price
shall equal $200.
"Expansion Factor" shall have the meaning set
forth in Section 2.4(a) hereof.
"Expiration Time" shall mean the earliest of
(i) the Exchange Time, (ii) the Redemption Time and
(iii) the close of business on the tenth anniversary of the
Record Time.
"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
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<PAGE>
greatest portion of the (A) assets or (B) operating income
or cash flow 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
similarly responsible for direction of the business and
affairs) of the Flip-Over Entity.
"Flip-over Transaction or Event" shall mean a trans-
action 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 agree-
ment 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
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<PAGE>
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
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
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<PAGE>
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 reclassifica-
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<PAGE>
tion of securities (including any reverse stock split), or
recapitalization, of the Company, any merger or consol-
idation 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 (or persons
nominated and/or appointed as directors by vote of a
majority of such persons) before the Stock Acquisition 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
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
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<PAGE>
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 Securi-
ties Dealers, Inc. Automated Quotation System or such other
system then in use, or, if on any such date the securities
are not listed or admitted to trading on any national
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<PAGE>
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 secu-
rities 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 certifi-
cate delivered to the Rights Agent.
"Option Holder" shall have the meaning set forth
in the definition of Acquiring Person.
"Payment Time" shall have the meaning set forth in
the Recitals.
"Person" shall mean any individual, firm, partner-
ship, 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.
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<PAGE>
"Preferred Stock" shall mean the series of Junior
Participating Preferred Stock, par value $0.01 per share, of
the Company created by a Statement of Resolution
Establishing a Series of Shares in substantially the form
set forth in Exhibit B hereto appropriately completed.
"Record Time" shall have the meaning set forth in
the Recitals.
"Redemption Price" shall mean an amount equal to
one cent, $0.01.
"Redemption Time" shall mean the time at which the
right to exercise the Rights shall terminate pursuant to
Section 5.1 hereof.
"Right" shall have the meaning set forth in the
Recitals.
"Rights Agent" shall have the meaning set forth in
the Preamble.
"Rights Certificate" shall have the meaning set
forth in Section 2.3(c) hereof.
"Rights Register" shall have the meaning set forth
in Section 2.7(a) 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
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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 the foregoing results in the Separation Time being prior
to the Payment Time, the Separation Time shall be the
Payment Time and provided further, 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 a
Person has become an Acquiring Person.
"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
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
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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 secur-
ities 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:
Until the Separation Time (as defined in the Rights
Agreement referred to below), this certificate also
evidences and entitles the holder hereof to certain
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Rights as set forth in a Rights Agreement, dated as of
January 26, 1999 (as such may be amended from time to
time, the "Rights Agreement"), between Cullen/Frost
Bankers, Inc. (the "Company") and The Frost National
Bank, 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
become exercisable for securities or assets of the
Company or securities of another entity, 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 fore-
going) 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 certif-
icate without charge after the receipt of a written
request therefor.
Certificates representing shares of Common Stock that are
issued and outstanding at the Payment 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, following the earlier of the
expiration or redemption of the rights outstanding under the
Company's Amended and Restated Shareholder Protection Rights
Agreement dated as of July 30, 1996 each Right will entitle
the holder thereof, after the Separation Time and prior to
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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
(together, in the case of certificates issued prior to the
Payment 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 Cer-
tificate") in substantially the form of Exhibit A hereto
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<PAGE>
appropriately completed, representing the number of Rights
held by such holder at the Separation Time and having such
marks of identification 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
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
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<PAGE>
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
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
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<PAGE>
depositary receipts) in such name or names as may be desig-
nated 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 (sub-
ject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and fully paid
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 Exchange Act, 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
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<PAGE>
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
Factor") that a holder of one share of Common Stock immedi-
ately 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
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<PAGE>
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
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
-24-
<PAGE>
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 exer-
cise 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,
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<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
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<PAGE>
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
Assistant Secretaries. The signature of any of these
officers on the Rights Certificates may be manual or facsim-
ile.
Rights Certificates bearing the manual or fac-
simile 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 counter-signature, 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 Certif-
icate 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.
-27-
<PAGE>
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
"Rights Registrar" for the purpose of maintaining the Rights
Register for the Company and registering Rights and trans-
fers 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 Expira-
tion 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 exe-
cute, 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 instruc-
tions, one or more new Rights Certificates evidencing the
same aggregate number of Rights as did the Rights Certifi-
cate so surrendered.
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<PAGE>
(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,
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 condi-
tion 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
- ------------
-29-
<PAGE>
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) evi-
dence 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
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
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<PAGE>
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 present-
---------------------
ment of a Rights Certificate (or, prior to the Separation
Time, the associated Common Stock certificate) for registra-
tion 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
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<PAGE>
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 can-
celled 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
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
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<PAGE>
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 Cer-
tificates will be transferable only on the Rights Register
as provided herein;
(c) prior to due presentment of a Rights Certifi-
cate (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;
(d) Rights beneficially owned by certain Persons
will, under the circumstances set forth in Section 3.1(b),
become void; and
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<PAGE>
(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).
(b) Notwithstanding the foregoing, to the extent
permitted by applicable law, any Rights that are or were
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<PAGE>
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 forego-
ing shall become void and any holder of such Rights (includ-
ing transferees) shall thereafter have no right to exercise
or transfer such Rights under any provision of this Agree-
ment. 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 Benefi-
cial 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 accord-
ingly 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
-35-
<PAGE>
Owner of more than 50% of the outstanding shares of Common
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 here-
inafter 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
-36-
<PAGE>
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
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.
-37-
<PAGE>
(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 Pre-
ferred Stock for each share of Common Stock so issuable.
(e) In the event that there shall not be suffi-
cient treasury shares or authorized but unissued shares of
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
-38-
<PAGE>
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
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,
-39-
<PAGE>
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 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
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
-40-
<PAGE>
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 accor-
dance 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 admin-
istration 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
-41-
<PAGE>
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 adminis-
tration 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
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
-42-
<PAGE>
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 Certifi-
cates 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 Certifi-
cates 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
-43-
<PAGE>
in case at that time any of the Rights Certificates shall
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 Agree-
ment 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 here-
under, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to
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<PAGE>
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, Chairman of the Board, the
President or any Vice President, the Chief Financial
Officer, Treasurer or any 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
-45-
<PAGE>
or the execution and delivery hereof (except the due author-
ization, execution and delivery hereof by the Rights Agent)
or in respect of the validity or execution of any certifi-
cate 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
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.
-46-
<PAGE>
(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 per-
forming 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 per-
formance of its duties hereunder from any person believed by
the Rights Agent to be the Senior Chairman of the Board,
Chairman of the Board, the President or any Vice President
or the Secretary or any Assistant Secretary or the Chief
Financial Officer, 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, direc-
tor, 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
-47-
<PAGE>
lend money to the Company or otherwise act as fully and
freely as though it were not Rights Agent under this Agree-
ment. 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,
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 Agree-
ment 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 accor-
dance 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
-48-
<PAGE>
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
States or any 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
-49-
<PAGE>
responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predeces-
sor 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.
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
-50-
<PAGE>
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.
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,
respectively.
-51-
<PAGE>
5.3 Issuance of New Rights Certificates. Not-
-----------------------------------
withstanding 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
adverse tax consequences to the Company or to the Person to
whom such Rights Certificates would be issued, (ii) no such
-52-
<PAGE>
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) prior to the close of business on the Flip-in Date, in
any respect and (ii) after the close of business on the
Flip-in Date, to make any changes that the Company may deem
necessary or desirable and which shall not materially
adversely affect the interests of the holders of Rights
generally or 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
exercise or redemption of Rights, the Company shall, in lieu
-53-
<PAGE>
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 preferences 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 in
cash.
5.6 Rights of Action. Subject to the terms of
----------------
this Agreement (including Sections 3.1(b) and 5.14), 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.
-54-
<PAGE>
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 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.
-55-
<PAGE>
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
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
-56-
<PAGE>
Any notice or demand authorized or required by this Agree-
ment 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
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
-57-
<PAGE>
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 provi-
sions of this Agreement shall not affect the validity of any
action taken hereunder.
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 provi-
----------
sions 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.
-58-
<PAGE>
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
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
-59-
<PAGE>
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.
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 unen-
forceable, such term or provision shall be ineffective as to
such jurisdiction to the extent of such invalidity or unen-
forceability without invalidating or rendering unenforceable
-60-
<PAGE>
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.
-61-
<PAGE>
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: /s/Richard W. Evans, Jr.
----------------------------
Name: Richard W. Evans, Jr.
Title: Chairman/CEO
THE FROST NATIONAL BANK
By: /s/ Phillip D. Green
-----------------------------
Name: Phillip D. Green
Title: Senior Executive Vice President
& Chief Financial Officer
-62-
EXHIBIT 2
Forms of Rights Certificate and of Election to Exercise, included in
Exhibit A to the Rights Agreement.
<PAGE>
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 reg-
istered assigns, is the registered holder of the number of
Rights set forth above, each of which entitles the regis-
tered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Protection Rights Agreement,
dated as of January 26, 1999 (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 February 8,
2009, one one-hundredth of a fully paid share of Junior
<PAGE>
Participating Preferred Stock, par value $0.01 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 presentation and
surrender of this Rights Certificate with the Form of Elec-
tion to Exercise duly executed at the principal office of
the Rights Agent in San Antonio, Texas. The Exercise Price
shall initially be $200 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 reg-
istered holder thereof to purchase securities of an entity
other than the Company or securities of the Company other
than Preferred Stock or assets of the Company, 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 incorpo-
rated 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, obliga-
tions, duties and immunities hereunder of the Rights Agent,
-2-
<PAGE>
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
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 reg-
istered 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
-3-
<PAGE>
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
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.
-4-
<PAGE>
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been counter-
signed 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
-5-
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED ________________________ hereby
sells, assigns and transfers unto ___________________
(Please print name
_____________________________________________________
and address of transferee)
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _______________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, ____
Signature Guaranteed: -------------------------
Signature
(Signature must correspond
to name as written upon the
face of this Rights
Certificate in every
particular, without
alteration or enlargement or
any change whatsoever)
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.
<PAGE>
- ------------------------------------------------------------
(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 this Rights Certificate are not, and, to
the knowledge of the undersigned, have never been, Bene-
ficially 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 assignment, the
Company will deem the Beneficial Owner of the Rights
evidenced by the enclosed 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.
-2-
<PAGE>
07 89-5P [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 exer-
cise _______________________ whole Rights represented by the
attached Rights Certificate to purchase the shares of
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 evi-
denced 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: _______________, ____
Signature Guaranteed: _________________________
Signature
(Signature must correspond
to name as written upon the
face of the
<PAGE>
attached Rights Certificate
in every particular, without
alteration or enlargement or
any change whatsoever)
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.
EXHIBIT 3
Form of Statement of Resolution Establishing A Series of Junior
Participating Prefferred Stock, included in Exhibit B to the Rights Agreement
<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
January 26, 1999:
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
<PAGE>
time to time be increased or decreased (but not
below the number then outstanding) by the Board of
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
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<PAGE>
period from such original issuance to such
dividend payment date.
The term "Reference Package" shall
initially mean 100 shares of Common Stock, par
value $0.01 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
- --------------------
*
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>
(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
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
- ---------------------
*
Insert an amount equal to 100 times the Exercise Price
in effect as of the Separation Time.
-4-
<PAGE>
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.
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.
-5-
<PAGE>
(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.
IN WITNESS WHEREOF, the undersigned have signed
and attested this certificate on the ______ day of
____________, ____.
CULLEN/FROST BANKERS, INC.
By:_________________________
Name:
Title:
Attest:
_____________________________
-6-
