Exhibit 1
$100,000,000
Cullen/Frost Bankers,
Inc.
[ ]%
Fixed-to-Floating Rate Subordinated Notes due 2017
Underwriting
Agreement
February
[ ], 2007
L EHMAN B ROTHERS I NC
.
As Representative of the several
Underwriters
named in Schedule I
hereto
c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
Cullen/Frost Bankers, Inc., a Texas
corporation, (the “Company”), proposes to issue and
sell $100,000,000 aggregate principal amount of its
[ ]% Fixed-to-Floating Rate Subordinated
Notes due 2017 (the “Notes”) to the several
underwriters named on Schedule I hereto (the
“Underwriters”), for which Lehman Brothers Inc. is
acting as representative (the “Representative”). The
Notes will (i) have terms and provisions which are summarized
in the Disclosure Package as of the Applicable Time and the
Prospectus dated as of the date hereof (each as defined in
Section 1(a) hereof) and (ii) be issued pursuant to an
Indenture dated as of February [ ], 2007
(the “Indenture”) between the Company and The Bank of
New York, as Trustee (the “Trustee”). This agreement
(this “Agreement”) is to confirm the agreement
concerning the purchase of the Notes from the Company by the
Underwriters.
1. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) An “automatic shelf
registration statement” (as defined in Rule 405 under
the Securities Act of 1933, as amended (the “Securities
Act”)) on Form S-3 in respect of the Notes (File
No. 333-
) (i) has been prepared by the Company in conformity with the
requirements of the Securities Act, and the rules and regulations
(the “Rules and Regulations”) of the Securities and
Exchange Commission (the “Commission”) thereunder,
(ii) has been filed with the Commission under the Securities
Act not earlier than the date that is three years prior to the Time
of Delivery (as defined in Section 3 hereof) and
(iii) upon its filing with the Commission, automatically
became and is effective under the Securities Act. Copies of such
registration statement and any amendment thereto (excluding
exhibits to such registration statement but including all documents
incorporated by reference in each prospectus contained therein)
have been delivered by the Company to the Representative; and no
other document with respect to such registration statement or any
such document incorporated by reference therein has heretofore been
filed or transmitted for filing with the Commission. For purposes
of this Agreement, the following terms have the specified
meanings:
“Applicable Time” means
[a.m.][p.m.] (New York City time) on the date of this
Agreement;
“Disclosure Package”
means, as of the Applicable Time, the most recent Preliminary
Prospectus, together with each Issuer Free Writing Prospectus filed
or used by the Company on or before the Applicable Time and
identified on Schedule II hereto, other than a road show that is an
Issuer Free Writing Prospectus under Rule 433 of the Rules and
Regulations;
“Effective Date” means
any date as of which any part of the Registration Statement or any
post-effective amendment thereto relating to the Notes became, or
is deemed to have become, effective under the Securities Act in
accordance with the Rules and Regulations (including pursuant to
Rule 430A of the Rules and Regulations);
“Final Term Sheet” means
the term sheet prepared pursuant to Section 4(a) of the
Agreement and substantially in the form attached in Schedule III
hereto;
“Issuer Free Writing
Prospectus” means each “free writing prospectus”
(as defined in Rule 405 of the Rules and Regulations) prepared by
or on behalf of the Company or used or referred to by the Company
in connection with the offering of the Notes, including the Final
Term Sheet;
“Preliminary Prospectus”
means any preliminary prospectus relating to the Notes included in
the Registration Statement or as filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations and provided to the
Representative for use by the Underwriters;
“Prospectus” means the
final prospectus relating to the Notes as filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and provided
to the Representative for use by the Underwriters; and
“Registration Statement”
means, collectively, the various parts of the above-referenced
registration statement, each as amended as of the Effective Date
for such part, including any Preliminary Prospectus or the
Prospectus and all exhibits to such registration
statement.
Any reference to the “most
recent Preliminary Prospectus” will be deemed to refer to the
latest Preliminary Prospectus included in the Registration
Statement or filed pursuant to Rule 424(b) of the Rules and
Regulations prior to or on the date hereof (including, for purposes
of this Agreement, any documents incorporated by reference therein
prior to or on the date of this Agreement). Any reference to any
Preliminary Prospectus or the Prospectus will be deemed to refer to
and include any documents incorporated by reference therein
pursuant to Form S-3 under the Securities Act as of the date of
such Preliminary Prospectus or the Prospectus, as the case may be.
Any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus will be deemed to refer to and include
any document filed under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), after the date of such
Preliminary Prospectus or the Prospectus, as the case may be, and
incorporated by reference in such Preliminary Prospectus or the
Prospectus, as the case may be; and any reference to any amendment
to the Registration Statement will be deemed to include any annual
report of the Company on Form 10-K filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act after
the Effective Date that is incorporated by reference in the
Registration Statement;
(b) The Commission has not issued
any order preventing or suspending the effectiveness of the
Registration Statement or preventing or suspending the use of any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus; and no proceeding for any such purpose or pursuant to
Section 8A of the Securities Act against the Company or
related to the offering has been instituted or threatened by the
Commission. The Commission has not issued any order directed to any
document incorporated by reference in the most recent Preliminary
Prospectus or the Prospectus, and
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no proceeding has been instituted or threatened
by the Commission with respect to any document incorporated by
reference in the most recent Preliminary Prospectus or the
Prospectus. The Commission has not notified the Company of any
objection to the use of the form of the Registration
Statement;
(c) The Company has been, and
continues to be, a “well-known seasoned issuer” (as
defined in Rule 405 of the Rules and Regulations) and has not been,
and continues not to be, an “ineligible issuer” (as
defined in Rule 405 of the Rules and Regulations), in each case at
all times relevant under the Securities Act in connection with the
offering of the Notes;
(d) The Registration Statement
conformed on the Effective Date and conforms, and any amendment to
the Registration Statement filed after the date hereof will
conform, in all material respects to the requirements of the
Securities Act and the Rules and Regulations. The most recent
Preliminary Prospectus conforms on the date hereof, and the
Prospectus, and any amendment or supplement thereto, will conform
as of its date and as of the Time of Delivery, in all material
respects to the requirements of the Securities Act and the Rules
and Regulations. The documents incorporated by reference in the
most recent Preliminary Prospectus or the Prospectus, when they
became effective or were filed with the Commission, as the case may
be, conformed in all material respects, to the requirements of the
Securities Act or the Exchange Act, as applicable, and the Rules
and Regulations, and any further documents so filed and
incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be,
will conform, in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the Rules
and Regulations; and no such documents have been filed with the
Commission since the close of business of the Commission on the
Business Day immediately prior to the date hereof;
(e) The Registration Statement did
not, as of the Effective Date, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided , however , that no
representation or warranty is made as to information contained in
or omitted from the Registration Statement in reliance upon and in
conformity with written information furnished to the Company
through the Representative by or on behalf of any Underwriter
specifically for inclusion therein (which information is specified
in Section 8(e) hereof);
(f) The Disclosure Package did not,
as of the Applicable Time, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided, however , that no representation or
warranty is made as to information contained in or omitted from the
Disclosure Package in reliance upon and in conformity with written
information furnished to the Company through the Representative by
or on behalf of any Underwriter specifically for inclusion therein
(which information is specified in Section 8(e)
hereof);
(g) The Prospectus, and any
amendment or supplement thereto, will not, as of its date and on
the Time of Delivery, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however , that no representation or warranty is
made as to information contained in or omitted from the Prospectus
in reliance upon and in conformity with written information
furnished to the Company through the Representative by or on behalf
of any Underwriter specifically for inclusion therein (which
information is specified in Section 8(e) hereof);
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(h) The documents incorporated by
reference in any Preliminary Prospectus or the Prospectus did not,
and any further documents incorporated by reference therein will
not, when filed with the Commission, contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(i) Neither the Company nor any of
its subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
most recent Preliminary Prospectus and the Prospectus any material
loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the most recent
Preliminary Prospectus and the Prospectus; and, since the
respective dates as of which information is given in the most
recent Preliminary Prospectus and the Prospectus and except as
otherwise set forth therein, there has not been any change in the
capital stock or long-term debt (other than (i) issuances of
capital stock upon exercise of options and stock appreciation
rights, (ii) upon earn-outs of performance shares,
(iii) upon repayment of long-term debt in accordance with its
terms, (iv) upon conversions of convertible securities, in
each case which were outstanding on such date, and
(v) repurchases of the Company’s Common Stock, par value
$0.01 per share, in accordance with the Company’s share
repurchase plan authorized by its Board of Directors) of the
Company or any of its subsidiaries or any material adverse change
or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial
position, shareholders’ equity or results of operations of
the Company and its subsidiaries taken as a whole, otherwise than
as set forth or contemplated in the most recent Preliminary
Prospectus and the Prospectus;
(j) The Company has been duty
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Texas, with power and
authority (corporate and other) to own its properties and conduct
its business as described in the most recent Preliminary Prospectus
and the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such
jurisdiction;
(k) Each “significant
subsidiary” (as defined in Rule 1-02(w) of Regulation S-X
promulgated by the Commission) of the Company (each, a
“Significant Subsidiary” and, collectively, the
“Significant Subsidiaries”) has been duly incorporated
or organized and is validly existing as a corporation or as a
national banking association, as the case may be, in good standing
under the laws of the jurisdiction of organization or
incorporation, with power and authority (corporate and other) to
own its properties and conduct its business as described in the
most recent Preliminary Prospectus and the Prospectus, and has been
duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
(l) The Company has an authorized
capitalization as set forth in the most recent Preliminary
Prospectus and the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable; and all of the
issued shares of capital stock of each Significant Subsidiary have
been duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors’ qualifying shares)
are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims;
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(m) The Indenture has been duly
authorized, executed and delivered by the Company and is a valid
and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws relating to or affecting creditors’ rights
generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law). The Indenture (i) has been duly qualified under
the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), (ii) complies as to form with the
requirements of the Trust Indenture Act and (iii) conforms to
the description thereof in the most recent Preliminary Prospectus
and the Prospectus;
(n) The Notes have been duly
authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the Indenture and
delivered to the Underwriters against payment therefor in
accordance with the terms of this Agreement, will be validly issued
and delivered, and will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to or
affecting the enforcement of creditors’ rights generally and
by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law),
and the Notes conform, or will conform, to the description thereof
in the Disclosure Package and the Prospectus;
(o) This Agreement has been duly
authorized, executed and delivered by the Company;
(p) The execution and delivery of
this Agreement, the Indenture and the Notes and the consummation of
the transactions contemplated herein and therein, have been duly
authorized by all necessary corporate action and when executed by
the Company and the other parties thereto will not conflict with or
result in any breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any security interest, lien, charge or encumbrance
upon any property or assets of the Company or its subsidiaries,
pursuant to any indenture, mortgage, deed of trust, loan agreement,
contract or other agreement or instrument to which the Company or
any Significant Subsidiary is a party or by which the Company or
any Significant Subsidiary may be bound or to which any of the
property or assets of the Company or any Significant Subsidiary is
subject, nor will such action result in any violation of the
provisions of the Restated Articles of Incorporation or the Bylaws
of the Company or the charter or bylaws or other constituent
documents of any Significant Subsidiary or any statute or any
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any Significant
Subsidiary or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue
and sale of the Notes or the consummation by the Company of the
transactions contemplated by this Agreement, the Indenture or the
Notes, except such as have been, or will have been obtained or
received prior to the Time of Delivery and such consents,
approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Notes by the
Underwriters;
(q) Neither the filing of the
Registration Statement, the most recent Preliminary Prospectus or
the Prospectus nor the offer or sale of the Notes as contemplated
by this Agreement gives rise to any rights, other than those which
have been duly waived or satisfied, for or relating to the
registration of any securities of the Company;
(r) There is no contract or document
required to be described in the Registration Statement, any
Preliminary Prospectus or the Prospectus or to be filed as an
exhibit to the Registration Statement or to a document incorporated
by reference into the Registration Statement, any Preliminary
Prospectus or the Prospectus which is not described or filed as
required;
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(s) Neither the Company nor any of
its affiliates has taken or will take any action which is designed
to or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Notes;
(t) The Company is not, and after
giving effect to the offering and sale of the Notes and the
application of the proceeds therefrom as described under “Use
of Proceeds” in each of the most recent Preliminary
Prospectus and the Prospectus will not be, an “investment
company”, or an entity “controlled” by an
“investment company”, as such terms are defined in the
United States Investment Company Act of 1940, as amended (the
“Investment Company Act”);
(u) The statements set forth in the
most recent Preliminary Prospectus and the Prospectus under the
caption “Description of Notes” insofar as they purport
to constitute a summary of the terms of the Notes, and under the
caption “Underwriting”, insofar as they purport to
describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair;
(v) The Company is not in violation
of its Restated Articles of Incorporation or Bylaws and each
Significant Subsidiary of the Company is not in violation of its
charter or bylaws or other constituent documents. Neither the
Company nor any Significant Subsidiary is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, which,
individually or in the aggregate, would reasonably be expected to
result in any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general
affairs, management, financial position, shareholders’ equity
or results of operations of the Company and its subsidiaries taken
as a whole;
(w) There is not pending or, to the
Company’s knowledge, threatened, any actions, suits or
proceedings to which the Company or any of its subsidiaries is a
party, before or by any court or governmental agency or body,
which, (i) except as set forth or contemplated in the most
recent Preliminary Prospectus and the Prospectus, taking into
account the likelihood of the outcome, the damages or other relief
sought and other relevant factors, individually and in the
aggregate, would reasonably be expected to result in any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, shareholders’ equity or results of
operations of the Company and its subsidiaries taken as a whole, or
(ii) is required to be disclosed in the most recent
Preliminary Prospectus and the Prospectus and is not
disclosed;
(x) Each of the Company and The New
Galveston Company, Inc., a Delaware corporation, is a bank holding
company registered under the Bank Holding Company Act of 1956, as
amended; and the Company and the Significant Subsidiaries are in
substantial compliance with, and conduct their respective
businesses in substantial conformity with, all applicable laws and
governmental regulations governing bank holding companies, banks
and subsidiaries of bank holding companies,
respectively;
(y) Neither the Company nor any of
its affiliates does business with the government of Cuba or with
any person or affiliate located in Cuba within the meaning of
Section 517.075, Florida Statutes;
(z) Ernst & Young LLP, who
have certified certain financial statements of the Company and its
subsidiaries, and who have audited the Company’s internal
control over financial reporting and management’s assessment
thereof, are an independent registered public accounting firm as
required by the Securities Act and the Rules and Regulations and
the rules and regulations of the Public Company Accounting
Oversight Board;
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(aa) The financial statements
(including the related notes and supporting schedules) included or
incorporated by reference in the most recent Preliminary Prospectus
and the Prospectus present fairly the financial condition, results
of operations and changes in financial position of the Company and
its subsidiaries at the respective dates or for the respective
periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved and comply as to form in all material respects with the
Rules and Regulations;
(bb) There is, and has been, no
failure on the part of the Company or, to the Company’s
knowledge, any of the Company’s directors or officers, in
their capacities as such, to comply with the provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith;
(cc) Each of the Company and its
subsidiaries maintains a system of internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance
with U.S. management’s general or specific authorization and
(iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action
is taken with respect thereto. The Company’s internal control
over financial reporting is effective, and the Company is not aware
of any material weaknesses in its internal control over financial
reporting; and
(dd) The Company maintains
disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Exchange Act) that comply with the requirements
of the Exchange Act; and such disclosure controls and procedures
have been designed to ensure that material information relating to
the Company and its subsidiaries is made known to the
Company’s principal executive officer and principal financial
officer by others within those entities; and such disclosure
controls and procedures are effective.
For purposes of this Section 1,
as well as for Section 7 hereof, references to “the most
recent Preliminary Prospectus and the Prospectus” or
“the Disclosure Package and the Prospectus” are to each
of the most recent Preliminary Prospectus or the Disclosure
Package, as the case may be, and the Prospectus as separate or
stand-alone documentation (and not the most recent Preliminary
Prospectus or the Disclosure Package, as the case may be, and the
Prospectus taken together), so that representations, warranties,
agreements, conditions and legal opinions will be made, given or
measured independently in respect of each of the most recent
Preliminary Prospectus or the Disclosure Package, as the case may
be, and the Prospectus.
2. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
to the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at a price equal to
[ ]% of the principal amount thereof, plus
accrued interest, if any, from
[ ],
2007, the principal amount of the Notes set forth opposite such
Underwriter’s name in Schedule I hereto.
3. (a) The Notes to be purchased by
the Underwriters hereunder will be represented by a global security
in book-entry form which will be deposited by or on behalf of the
Company with The
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Depository Trust Company (“DTC”) or
its designated custodian. The Company will deliver the Notes to the
Representative, against payment by the Representative of the
purchase price therefor by wire transfer of Federal (same day)
funds to an account designated by the Company, by causing DTC to
credit the Notes to the account of the Representative at DTC. The
Company will cause the certificate representing the Notes to be
issued in book-entry form to be made available to the
Representative for checking at least twenty-four hours prior to the
Time of Delivery (as defined below) at the office of DTC or its
designated custodian (the “Designated Office”). The
time and date of such delivery and payment shall be 10:30 a.m., New
York City time, on February [ ], 2007 or
such other time and date as the Representative and the Company may
agree upon in writing. Such time and date are herein called the
“Time of Delivery”.
(b) The documents to be delivered at
the Time of Delivery by or on behalf of the parties hereto pursuant
to Section 7 hereof, including the cross-receipt for the Notes
and any additional documents requested by the Representative
pursuant to Section 7(g) hereof, will be delivered at such
time and date at the offices of Sullivan & Cromwell LLP,
125 Broad Street, New York, New York 10004 (the “Closing
Location”), and the Notes will be delivered at the Closing
Location, all at the Time of Delivery. A meeting will be held at
the Closing Location on the New York Business Day next preceding
the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will
be available for review by the parties hereto. For the purposes of
this Section 3, “New York Business Day” shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally
authorized or obligated by law or executive order to
close.
4. The Company agrees with the
Underwriters that:
(a) The Company (i) will
prepare the Prospectus in a form approved by the Representative and
file the Prospectus pursuant to Rule 424(b) of the Rules and
Regulations within the time period prescribed by such Rule;
(ii) will not file any amendment or supplement to the
Registration Statement or the Prospectus or file any document under
the Exchange Act before the termination of the offering of the
Notes by the Underwriters if such document would be deemed to be
incorporated by reference into the Prospectus, which filing is not
consented to by the Representative after reasonable notice thereof
(such con
