SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
_______________________
Date of Report (Date of earliest
event reported) January 26, 1999
Texas 0-7275 74-1751768
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(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
P.O. Box 1600
100 West Houston St.
San Antonio, Texas 78296-1400
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(Address of principal executive offices) (Zip Code)
(210) 220-4011
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(Registrant's telephone number,
including area code)
N/A
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(Former name or former address, if changed since last report)
Items 1-4. Not Applicable.
Item 5. Other Events.
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On January 26, 1999, the Board of Directors of
Cullen/Frost Bankers, Inc., a Texas corporation (the
"Company"), declared a dividend payable March 15, 1999 (the
"Payment Time") of one right (a "Right") for each
outstanding share of common stock, par value $0.01 per share
("Common Stock"), of the Company held of record at the close
of business on February 8, 1999 (the "Record Time"), or
issued thereafter and prior to the Separation Time (as
hereinafter defined) 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
Cullen/Frost National Bank, as Rights Agent (the "Rights
Agent"). Each Right entitles its registered holder to
purchase from the Company, after the Separation Time, one
one-hundredth of a share of Junior Participating Preferred
Stock, par value $0.01 per share ("Participating Preferred
Stock"), for $200 (the "Exercise Price"), subject to
adjustment.
The Rights will be evidenced by the Common Stock
certificates until the close of business on the earlier of
(either, the "Separation Time") (i) the tenth business day
(or such later date as the Board of Directors of the Company
may from time to time fix by resolution adopted prior to the
Separation Time that would otherwise have occurred) after
the date on which any Person (as defined in the Rights
Agreement) commences a tender or exchange offer which, if
consummated, would result in such Person's becoming an
Acquiring Person, as defined below, and (ii) the tenth day
(the "Flip-in Date") after the first date (or such earlier
or later date as the Board of Directors of Cullen/Frost
Bankers, Inc. may from time to time fix) of public
announcement by the Company that any Person has become an
Acquiring Person (the date of such public announcement
being, the "Stock Acquisition Date"); provided that if the
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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 a tender or exchange offer
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referred to in clause (i) is cancelled, terminated or
otherwise withdrawn prior to the Separation Time without the
purchase of any shares of stock pursuant thereto, such offer
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shall be deemed never to have been made. An Acquiring
Person is any Person having Beneficial Ownership (as defined
in the Rights Agreement) of 10% or more of the outstanding
shares of Common Stock, which term shall not include (i) the
Company, any wholly-owned subsidiary of the Company or any
employee stock ownership or other employee benefit plan of
the Company, (ii) any person who is the Beneficial Owner of
10% or more of the outstanding Common Stock as of the date
of the Rights Agreement or who shall become the Beneficial
Owner of 10% or more of the outstanding Common Stock solely
as a result of an acquisition of Common Stock by the
Company, until such time as such Person acquires additional
Common Stock, other than through a dividend or stock split,
(iii) any Person who becomes the Beneficial Owner of 10% or
more of the outstanding Common Stock without any plan or
intent to seek or affect control of the Company if such
Person promptly divests sufficient securities such that such
10% or greater Beneficial Ownership ceases or (iv) any
Person who Beneficially Owns shares of Common Stock
consisting solely of (A) shares acquired pursuant to the
grant or exercise of an option granted by the Company in
connection with an agreement to merge with, or acquire, the
Company entered into prior to a Flip-in Date, (B) shares
owned by such Person and its Affiliates and Associates at
the time of such grant, (C) shares, amounting to less than
1% of the outstanding Common Stock, acquired by Affiliates
and Associates of such Person after the time of such grant
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. The Rights Agreement provides that, until the
Separation Time, the Rights will be transferred with and
only with the Common Stock. Common Stock certificates
issued after the Payment Time but prior to the Separation
Time shall evidence one Right for each share of Common Stock
represented thereby and shall contain a legend incorporating
by reference the terms of the Rights Agreement (as such may
be amended from time to time). Notwithstanding the absence
of the aforementioned legend, certificates evidencing shares
of Common Stock outstanding at the Payment Time shall also
evidence one Right for each share of Common Stock evidenced
thereby. Promptly following the Separation Time, separate
certificates evidencing the Rights ("Rights Certificates")
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will be mailed to holders of record of Common Stock at the
Separation Time.
The Rights will not be exercisable until the Business
Day (as defined in the Rights Agreement) following the
Separation Time and will become exercisable only upon the
expiration or redemption of the Company's presently
outstanding rights (which are scheduled to expire on July
25, 1999). The Rights will expire on the earliest of (i)
the Exchange Time (as defined below), (ii) the close of
business on February 8, 2009, and (iii) the date on which
the Rights are redeemed as described below (in any such
case, the "Expiration Time").
The Exercise Price and the number of Rights
outstanding, or in certain circumstances the securities
purchasable upon exercise of the Rights, are subject to
adjustment from time to time to prevent dilution in the
event of a Common Stock dividend on, or a subdivision or a
combination into a smaller number of shares of, Common
Stock, or the issuance or distribution of any securities or
assets in respect of, in lieu of or in exchange for Common
Stock.
In the event that prior to the Expiration Time a Flip-
in Date occurs, the Company shall take such action as shall
be necessary to ensure and provide, to the extent permitted
by applicable law, that each Right (other than Rights
Beneficially Owned by the Acquiring Person or any affiliate
or associate thereof, which Rights shall become void) shall
constitute the right to purchase from the Company, upon the
exercise thereof in accordance with the terms of the Rights
Agreement, that number of shares of Common Stock of the
Company having an aggregate Market Price (as defined in the
Rights Agreement), on the Stock Acquisition Date that gave
rise to the Flip-in Date, equal to twice the Exercise Price
for an amount in cash equal to the then current Exercise
Price. In addition, the Board of Directors of the Company
may, at its option, at any time after a Flip-in Date and
prior to the time that an Acquiring Person becomes the
Beneficial Owner of more than 50% of the outstanding shares
of Common Stock, elect to exchange all (but not less than
all) the then outstanding Rights (other than Rights
Beneficially Owned by the Acquiring Person or any affiliate
or associate thereof, which Rights become void) for shares
of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar
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transaction occurring after the date of the Separation Time
(the "Exchange Ratio"). Immediately upon such action by the
Board of Directors (the "Exchange Time"), the right to
exercise the Rights will terminate and each Right will
thereafter represent only the right to receive a number of
shares of Common Stock equal to the Exchange Ratio.
Whenever the Company shall become obligated, as
described in the preceding paragraph, to issue shares of
Common Stock upon exercise of or in exchange for Rights, the
Company, at its option, may substitute therefor shares of
Participating Preferred Stock, at a ratio of one one-
hundredth of a share of Participating Preferred Stock for
each share of Common Stock so issuable.
In the event that prior to the Expiration Time the
Company enters into, consummates or permits to occur a
transaction or series of transactions after the time an
Acquiring Person has become such in which, directly or
indirectly, (i) the Company shall consolidate or merge or
participate in a binding share exchange with any other
Person if, at the time of the consolidation, merger or share
exchange or at the time the Company enters into an agreement
with respect to such consolidation, merger or share
exchange, the Acquiring Person controls the Board of
Directors of the Company and (A) any term of or arrangement
concerning the treatment of shares of capital stock in such
merger, consolidation or share exchange relating to the
Acquiring Person is not identical to the terms and
arrangements relating to other holders of Common Stock or
(B) the Person with whom such transaction or series of
transactions occurs is the Acquiring Person or an Affiliate
or Associate thereof, (ii) the Company shall sell or
otherwise transfer (or one or more of its subsidiaries shall
sell or otherwise transfer) assets (A) aggregating more than
50% of the assets (measured by either book value or fair
market value) or (B) generating more than 50% of the
operating income or cash flow, of the Company and its
subsidiaries (taken as a whole) to any other Person (other
than the Company or one or more of its wholly owned
subsidiaries) or to two or more such Persons which are
affiliated or otherwise acting in concert, if, at the time
of such sale or transfer of assets or at the time the
Company (or any such subsidiary) enters into an agreement
with respect to such sale or transfer, the Acquiring Person
controls the Board of Directors of the Company or (iii) any
Acquiring Person shall (A) sell, purchase, lease, exchange,
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mortgage, pledge, transfer or otherwise acquire or dispose
of, to, from, or with, as the case may be, the Company or
any of its Subsidiaries, over any period of 12 consecutive
calendar months, assets (x) having an aggregate fair market
value of more than $15,000,000 or (y) on terms and
conditions less favorable to the Company than the Company
would be able to obtain through arm's-length negotiations
with an unaffiliated third party, (B) receive any
compensation for services from the Company or any of its
subsidiaries, other than compensation for full-time
employment as a regular employee at rates in accordance with
the Company's (or its subsidiaries') past practices, (C)
receive the benefit, directly or indirectly (except
proportionately as a stockholder), over any period of 12
consecutive calendar months, of any loans, advances,
guarantees, pledges, insurance, reinsurance or other
financial assistance or any tax credits or other tax
advantage provided by the Company or any of its subsidiaries
involving an aggregate principal amount in excess of
$5,000,000 or an aggregate cost or transfer of benefits from
the Company or any of its subsidiaries in excess of
$5,000,000 or, in any case, on terms and conditions less
favorable to the Company than the Company would be able to
obtain through arm's-length negotiations with a third party,
or (D) increase by more than 1% its proportionate share of
the outstanding shares of any class of equity securities or
securities convertible into any class of equity securities
of the Company or any of its subsidiaries as a result of any
acquisition from the company (with or without
consideration), any reclassification of securities
(including any reverse stock split), or recapitalization, of
the Company, or any merger or consolidation of the Company
with any of its subsidiaries or any other transaction or
series of transactions (whether or not with or into or
otherwise involving an Acquiring Person), (a "Flip-over
Transaction or Event"), the Company shall take such action
as shall be necessary to ensure, and shall not enter into,
consummate or permit to occur such Flip-over Transaction or
Event until it shall have entered into a supplemental
agreement with the Person engaging in such Flip-over
Transaction or Event or the parent corporation thereof (the
"Flip-over Entity"), for the benefit of the holders of the
Rights, providing, that upon consummation or occurrence of
the Flip-over Transaction or Event (i) each Right shall
thereafter constitute the right to purchase from the Flip-
over Entity, upon exercise thereof in accordance with the
terms of the Rights Agreement, that number of shares of
common stock of the Flip-over Entity having an aggregate
Market Price on the date of consummation
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or occurrence of such Flip-over Transaction or Event equal
to twice the Exercise Price for an amount in cash equal to
the then current Exercise Price and (ii) the Flip-over
Entity shall thereafter be liable for, and shall assume, by
virtue of such Flip-over Transaction or Event and such
supplemental agreement, all the obligations and duties of
the Company pursuant to the Rights Agreement. For purposes
of the foregoing description, the term "Acquiring Person"
shall include any Acquiring Person and its Affiliates and
Associates counted together as a single Person.
The Board of Directors of the Company may, at its
option, at any time prior to the close of business on the
Flip-in Date, redeem all (but not less than all) the then
outstanding Rights at a price of $.01 per Right) (the
"Redemption Price"), as provided in the Rights Agreement.
Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights, without any further
action and without any notice, the right to exercise the
Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in
cash for each Right so held.
The holders of Rights will, solely by reason of their
ownership of Rights, have no rights as stockholders of the
Company, including, without limitation, the right to vote or
to receive dividends.
The Rights will not prevent a takeover of the Company.
However, the Rights may cause substantial dilution to a
person or group that acquires 10% or more of the Common
Stock unless the Rights are first redeemed by the Board of
Directors of the Company. Nevertheless, the Rights should
not interfere with a transaction that is in the best
interests of the Company and its stockholders because the
Rights can be redeemed on or prior to the close of business
on the Flip-in Date, before the consummation of such
transaction.
As of January 26, 1999 there were 26,719,488 shares of
Common Stock issued (of which 26,718,488 shares were
outstanding and 0 shares were held in treasury) and 2,651,854
shares reserved for issuance pursuant to employee benefit plans.
As long as the Rights are attached to the Common Stock, the
Company will issue one Right with each new share of Common Stock
so that all such shares will have Rights attached.
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The Rights Agreement (which includes as Exhibit A the
forms of Rights Certificate and Election to Exercise and as
Exhibit B the form of Junior Participating Preferred Stock)
is attached hereto as an exhibit and is incorporated herein
by reference. The foregoing description of the Rights is
qualified in its entirety by reference to the Rights
Agreement and such exhibits thereto.
Item 6. Not Applicable.
Item 7. Exhibits.
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(4) 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.
(99) Press release, dated January 26, 1999, issued
by the Company.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
CULLEN/FROST BANKERS, INC.
By/s/Phillip D. Green
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Name: Phillip D. Green
Title: Senior Executive Vice President
and Chief Financial Officer
Date: January 29, 1999
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EXHIBIT INDEX
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Exhibit
Number Description Method of Filing
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(4) Rights Agreement, which includes as Exhibit A the Filed herewith
forms of Rights Certificate and Election to Exer-
cise and as Exhibit B the form of Statement of
Resolution Establishing a Series of Shares of
Junior Participating Preferred Stock.
(99) Press release, dated January 26, 1999, issued by Filed herewith
the Company.