Document:

Exhibit 10.3

    

     

    

    
      MODINE MANUFACTURING COMPANY

      PERFORMANCE CASH AWARD

      AWARD AGREEMENT

      

      

      We are pleased to inform you that you have been granted an opportunity to earn a Performance Cash Award of Modine Manufacturing Company (the “Company”), subject to the terms and conditions of this Award Agreement. 
        This Award Agreement is not subject to the Modine Manufacturing Company 2020 Incentive Compensation Plan (the “Plan”), but all terms used in this Award Agreement and not otherwise defined herein shall have the same meanings as set forth in the
        Plan.

       

      
        	
                Full name of Grantee:

              	
                Neil D. Brinker

              
	 	 
	
                Date of Award:

              	
                December 1, 2020

              
	 	 
	
                Target amount of
                  Performance Cash:

                

              	 
	 	 
	
                Performance Period:

              	
                April 1, 2020 to March 31, 2023

              

      

      

      

      1.  Performance Cash Award.  You are hereby granted a Performance Cash Award, subject to the terms and conditions of this Award Agreement.  “Performance Cash” means a cash award that is conditioned upon the
        satisfaction of one or more pre-established Performance Goals. The amount of Performance Cash that will be earned hereunder if the Target Performance Goals are achieved is set forth above.

      

      

      2.  Terms of Performance Cash Award and Performance Goals.  You have been granted an opportunity to earn a cash payment under this Performance Cash Award.  The actual amount of Performance Cash that would be
        earned by you will be determined as described below, based upon the actual results for the Performance Period set forth above compared to the Performance Goals set forth below, provided that you remain an employee of the Company or a Subsidiary for
        the entire Performance Period (subject to the provisions below regarding death, Disability or retirement) and the achievement of the Performance Goals is greater than the Threshold amount specified below (the “Conditions”).  If either of these
        Conditions is not satisfied, then except as otherwise provided in this Award Agreement, no Performance Cash shall be earned.  The Performance Goals for this Performance Cash Award are: Cash Flow Return on Invested Capital (“CFROIC”) and Average
        Annual Revenue Growth (“Revenue Growth”), with each having a 50% weight.  The Threshold Performance Goals are the minimum Performance Goals necessary for the Performance Period that must be achieved by the Company in order for you to qualify for
        any Performance Cash and the Maximum Performance Goals are the minimum Performance Goals for the Performance Period in order for you to qualify for the maximum amount of Performance Cash earned under this Performance Cash Award.

       

      

      
        
          

      

      
      
        	
                Performance Goal: CFROIC

              	
                Performance Cash Award Earned Based on

                Achievement of Performance Goal

              
	
                Threshold:  7.0%

              	
                5% of Target amount of Performance Cash

              
	
                Target:   10.5%

              	
                50% of Target amount of Performance Cash

              
	
                Maximum:   ≥14.0%

              	
                100% of Target amount of Performance Cash

              

      

      

      

      
        	
                Performance Goal: Average Annual 

                Revenue Growth

              	
                Performance Cash Award Earned Based on

                Achievement of Performance Goal

              
	
                Threshold:  3.0%

              	
                5% of Target amount of Performance Cash

              
	
                Target: 8.0%

              	
                50% of Target amount of Performance Cash

              
	
                Maximum: ≥13.0%

              	
                100% of Target amount of Performance Cash

              

      

      

      

      “CFROIC” or “Cash Flow Return on Invested Capital” means Cash Flow Conversion divided by Average Capital Employed.  Cash Flow Conversion equals Adjusted Free Cash Flow, which equals “net cash provided by
        operating activities”, less “expenditures for property, plant and equipment” (both as reported externally in the Company’s consolidated statement of cash flows), plus or minus Permitted Adjustments (defined below) plus Cash Interest, which
        is cash interest expense paid on outstanding debt.  Average Capital Employed for each fiscal year equals total debt plus shareholders’ equity averaged over five points (i.e., the last day of each fiscal quarter and prior fiscal year-end); and where
        shareholder’s equity excludes shareholder equity attributable to minority shareholders.  Permitted Adjustments include:

      

      

      Restructuring Charges

      	

            	•	
              Fees and expenses for restructuring consultants or financial advisors

            

      	

            	•	
              Employee severance, outplacement and related benefits

            

      	

            	•	
              Employee insurance and benefits continuation

            

      	

            	•	
              Contractual salary continuation for terminated employees

            

      	

            	•	
              Equipment transfers and facility preparation

            

      	

            	•	
              Environmental services (e.g., plant clean-up prior to sale)

            

      

      

      Acquisition and Divestiture Charges

      	

            	•	
              Fees and expenses for transaction advisors

            

      	

            	•	
              Integration expenses

            

      	

            	•	
              Other incremental costs and charges that are non-recurring and directly related to the transaction

            

      

      

      Other

      	

            	•	
              Fees and expenses for strategy advisory services associated with a specific transaction or unique project

            

      	

            	•	
              Unusual, non-recurring or extraordinary cash and non-cash charges or income

            

       

      

      
        2

        
          

      

      Adoption of New Accounting Standards

      	

            	•	
              The impact of the adoption of new U.S. GAAP accounting standards and significant changes in the Company’s accounting methods.

            

      

      

      Divestitures

      	

            	•	
              The impact of significant divestitures, such that annual metrics will be calculated on a “continuing operations” basis for the periods following divestiture.

            

      

      

      Notwithstanding the foregoing, the Committee may disregard all or part of any Permitted Adjustment as separately applicable to each performance metric if doing so would decrease the amount payable under this
        Performance Cash Award.

      

      

      “Average Annual Revenue Growth” means the simple three-year arithmetic average of the Company’s annual change in revenue over the Performance Period, as reported externally in the Company’s audited financial
        statements.

      

      

      If actual CFROIC or Revenue Growth for the Performance Period is between Threshold and Target and/or between Target and Maximum, the amount of Performance Cash earned shall be determined on a linear basis.  In the
        event that the Company’s actual CFROIC or Revenue Growth does not meet the Threshold for the Performance Period, no Performance Cash shall be earned relative to such metric under this Performance Cash Award.  In the event that the Company’s actual
        CFROIC or Revenue Growth exceeds the Maximum for the Performance Period, only the Maximum percentage of the Target amount of Performance Cash set forth above shall be earned relative to such metric.

      

      

      3.  Payment of Performance Cash.   Performance Cash earned shall be paid after the end of the Performance Period as soon as administratively practicable after the Committee has approved and certified the amount
        of Performance Cash that has been earned hereunder or, in the event of payment covered under Paragraph 4 below, within thirty (30) days of the date of your termination of employment.

       

      4.  Change in Control.    Notwithstanding anything in this Agreement to the contrary, upon a Change in Control, all outstanding Performance Cash Awards shall be deemed to have satisfied the Target Performance
        Goals and shall be paid pro-rata based upon the period worked during the Performance Period as of the date of an involuntary termination of your employment with the Company or a Subsidiary by the Company without Cause or by you for Good Reason
        within one (1) year following a Change in Control.  “Good Reason” means a material diminution in your base salary; material diminution in your annual target bonus opportunity; material diminution in your authority, duties or responsibilities;
        material diminution in authority, duties or responsibilities of the supervisor to whom you report; material diminution in the budget over which you retain authority; or material change in the geographic location at which you must perform services.

       

      5.  Death or Disability.  Notwithstanding anything in this Agreement to the contrary, upon your termination of employment due to death or Disability (as defined herein), a prorated portion (based on the period
        working during the Performance Period) of the Performance Cash granted to you hereunder shall vest based on the Company’s actual achievement of the Performance Goals at the end of the Performance Period as certified by the Committee, and payment
        will be made to you after the Committee has approved and certified the amount of Performance Cash that has been earned hereunder.  For purposes of this Award Agreement, “Disability” shall mean “permanent and total disability” as defined in Section
        22 (e)(3) of the Code.

       

      

      
        3

        
          

      

      6. Retirement.  Notwithstanding anything in this Agreement to the contrary, upon your retirement (with Committee approval), the Committee may, in its sole discretion, vest some or all of the Performance Cash
        granted to you hereunder and payment shall be made on such terms and conditions as the Committee may deem appropriate; provided, however, such payment shall be made in a manner that is exempt from or complies with Section 409A of the Code.

      

      

      7.  Forfeiture.  Other than as described above in Paragraph 4 regarding a Change in Control or Paragraphs 5 or 6 regarding death, Disability or retirement, upon your termination of employment with the Company
        or a Subsidiary for any reason during the Performance Period, you will forfeit all Performance Cash covered by this Agreement.

      

      

      8.  Transfer.  This Performance Cash Award shall be nontransferable.  Notwithstanding the foregoing, you shall have the right to transfer this Performance Cash Award upon your death, either by the terms of your
        will or under the laws of descent and distribution.

      

      

      9.  No Obligation of Employment.  This Performance Cash Award shall not impose any obligation on the Company to continue your employment with the Company or any Subsidiary.

      

      

      10.  Controlling Provisions.  In the event of a conflict between the terms of this Award Agreement and any employment agreement or change in control agreement between you and the Company, this Award Agreement
        shall control.

      

      

      11.  Forfeiture Under Recoupment Policy.  The Company shall have the power and the right to require you to forfeit and return the Performance Cash paid hereunder consistent with any recoupment policy maintained
        by the Company under applicable law, as such policy is amended from time to time.

      

      

      12.  Amendment.  The Committee may from time to time amend, modify, suspend or terminate this Award Agreement; provided, however, that no such action shall adversely affect the Grantee without the Grantee’s
        consent.

      

      

      13.  Use of Words.  The use of words of the masculine gender in this Award Agreement is intended to include, wherever appropriate, the feminine or neuter gender and vice versa.

      

      

      14.  Successors.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.

      

      

      15.  Taxes.  The Company may require payment of or withhold any tax which it believes is required as a result of this Performance Cash Award, and the Company may defer making payment with respect to Performance
        Cash earned hereunder until arrangements satisfactory to the Company have been made with respect to such tax withholding obligations.

      

      

      16. Committee Discretion.  Notwithstanding anything in this Agreement, the Committee retains the discretion to make negative adjustments to the final determination of the achievement of any Performance Goals.

        

      

      
        4

        
          

      

      17. Controlling Law.  The law of the State of Wisconsin, except its law with respect to choice of law, shall be controlling in all matters relating to this Agreement.

      

      

      By your signature and the signature of the Company’s representative below, you and the Company agree that this Performance Cash Award awarded to you under this Award Agreement is subject to the terms and conditions
        hereof.  You hereby agree to accept as binding any decision of the Committee with respect to the interpretation of this Award Agreement, or any other matters associated therewith.

      

      

      IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed as of December 1, 2020.

      

      

      	 	
              MODINE MANUFACTURING COMPANY

            
	 	 	 
	 	
              By:

            	
              /s/ Michael B. Lucareli

            
	 	 	
              Michael B. Lucareli

            
	 	 	
              Interim President and Chief Executive Officer

            

      

      

      The undersigned hereby accepts the foregoing Performance Cash Award and agrees to the terms and conditions of this Award Agreement and of the Plan.

      

      

      	 	
              /s/ Neil D. Brinker

            
	 	
              Neil D. Brinker

            

      

      

      

      

      
        5Document

Exhibit 4.1
DESCRIPTION OF REGISTRANT’S SECURITIES

As of December 31, 2020, Cullen/Frost Bankers, Inc. (“Cullen/Frost” or “we”) had three classes of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”): (i) our common stock; (ii) our 6,000,000 depositary shares (the “Depositary Shares”) each representing a 1/40th interest in a share of our 4.450% non-cumulative perpetual preferred stock, Series B (the “Preferred Stock”); and (iii) our $100,000,000 aggregate principal amount of 4.500% subordinated notes due 2027 (the “Notes”).

DESCRIPTION OF COMMON STOCK
The following description of Cullen/Frost’s common stock is a summary and does not describe every right, term or condition of owning Cullen/Frost’s common stock. It is subject to and is qualified in its entirety by reference to Cullen/Frost’s restated articles of incorporation (the “Articles of Incorporation”) and amended and restated bylaws (the “Bylaws”). For a complete description, refer to the Articles of Incorporation and the Bylaws and any applicable provisions of relevant law, including the applicable provisions of the Texas Business Organizations Code and federal law governing bank holding companies. 
General 
Pursuant to the Articles of Incorporation, Cullen/Frost is authorized to issue 210,000,000 shares of common stock, par value $0.01 per share. Cullen/Frost’s common stock is listed on The New York Stock Exchange (“NYSE”) under the symbol “CFR.”
Dividends
The holders of Cullen/Frost common stock are entitled to share ratably in dividends when and if declared by the Cullen/Frost board of directors from funds legally available for the dividends. Under the terms of the Preferred Stock, our ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of our common stock or any of our securities that rank junior to the Preferred Stock is subject to certain restrictions in the event that we do not declare and pay dividends on the Preferred Stock for the most recent dividend period.
Voting Rights
Each holder of Cullen/Frost common stock has one vote for each share held on matters presented for consideration by the shareholders. Directors are elected by a majority of the shareholder votes cast, provided that if the number of director nominees exceeds the number of directors to be elected, the directors are elected by a plurality of the votes cast. The Articles of Incorporation and the Bylaws prohibit shareholders from cumulating their votes in any election of directors or for any other purpose. 
Preemptive Rights
The holders of Cullen/Frost common stock have no preemptive rights to acquire any additional shares of Cullen/Frost common stock. 
Liquidation Rights
In the event of liquidation, dissolution or winding-up of Cullen/Frost, whether voluntary or involuntary, the holders of Cullen/Frost common stock will be entitled to share ratably in any of its assets or funds that are available for distribution to its shareholders after the satisfaction of its liabilities (or after adequate provision is made therefor) and after preferences of any outstanding Cullen/Frost preferred stock, including the Preferred Stock. Cullen/Frost common stock is neither redeemable nor convertible into another security of Cullen/Frost.
Classification of the Board
Cullen/Frost’s board of directors is not classified.
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DESCRIPTION OF THE DEPOSITARY SHARES EACH REPRESENTING
A 1/40TH INTEREST IN A SHARE OF 4.450% NON-CUMULATIVE 
PERPETUAL PREFERRED STOCK, SERIES B
Description of the Preferred Stock
Computershare Inc., as the depositary, is the sole holder of our Preferred Stock, and all references herein to the holders of the Preferred Stock shall mean the depositary. However, the holders of the Depositary Shares are entitled, through the depositary, to exercise the rights and preferences of the holders of the Preferred Stock, as described below under “Description of Depositary Shares.”
The following description of the Preferred Stock is a summary and does not describe every right, term or condition of owning the Preferred Stock. It is subject to and qualified in its entirety by reference to the pertinent sections of our Articles of Incorporation, including the certificate of designations creating the Preferred Stock, and any applicable provisions of relevant law, including the applicable provisions of the Texas Business Organizations Code and federal law governing bank holding companies. 
General
Our Articles of Incorporation authorizes us to issue 10,000,000 shares of preferred stock in one or more series and authorizes our board of directors or a duly authorized committee of the board to fix the number of shares and determine the rights, preferences, privileges and restrictions of any such series of preferred stock. As of December 31, 2020, we had no issued and outstanding series of preferred stock other than the Preferred Stock.
The Preferred Stock represents a single series of our authorized preferred stock, consisting of 150,000 shares having a par value of $0.01 per share. The Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of our stock or other securities and is not subject to any sinking fund or other obligation to redeem or repurchase. 
Dividend Rights 
Holders of the Preferred Stock are entitled to receive, when, as and if declared by our board of directors or a duly authorized committee of the board, out of funds legally available therefor, non-cumulative cash dividends at a rate of 4.450% per annum on the liquidation preference amount of $1,000 per share of Preferred Stock. Dividends on the Preferred Stock are payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, with respect to the quarterly dividend period (or portion thereof) ending on the day preceding such respective dividend payment date. 
Redemption 
The Preferred Stock will not be subject to any mandatory redemption, sinking fund, or other similar provisions. The holders of Preferred Stock will not have the right to require the redemption or repurchase of the Preferred Stock.
Optional Redemption. We may redeem shares of the Preferred Stock at our option on any dividend payment date on or after December 15, 2025, in whole or in part, from time to time, at a redemption price equal to $1,000 per share of Preferred Stock (equivalent to $25 per Depositary Share), plus any declared and unpaid dividends on the shares of Preferred Stock called for redemption for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then-current dividend period prior to but excluding the redemption date. Redemption of the Preferred Stock is subject to our receipt of any required prior approvals from the Federal Reserve and to the satisfaction of any conditions set forth in the capital or other guidelines or regulations of the Federal Reserve applicable to the redemption of the Preferred Stock.
Redemption Following a Regulatory Capital Treatment Event. We may redeem shares of the Preferred Stock at our option at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations creating the Preferred Stock), in whole but not in part, at a price equal to $1,000 per share of Preferred Stock (equivalent to $25 per Depositary Share), plus any declared and unpaid dividends for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then-current dividend period prior to but excluding the redemption date. Redemption of the Preferred Stock is subject to our receipt of any required prior approvals from the Federal Reserve and to the satisfaction of any conditions set forth in the capital or other guidelines or regulations of the Federal Reserve applicable to the redemption of the Preferred Stock.

-2-

Liquidation Rights 
In the event we liquidate, dissolve or wind-up our affairs, either voluntarily or involuntarily, holders of the Preferred Stock will be entitled to receive in full an amount equal to $1,000 per share of Preferred Stock (equivalent to $25 per Depositary Share), together with an amount equal to all dividends (if any) that have been declared on the Preferred Stock but not paid prior to such date of payment (but without any amount in respect of dividends that have not been declared prior to such payment date), before we make any distribution or payment out of our assets to the holders of our common stock or any other class or series of stock ranking junior to the Preferred Stock with respect to the distribution of assets.
If we fail to pay in full all amounts payable, including declared but unpaid dividends, with respect to the Preferred Stock and any stock having the same rank as the Preferred Stock with respect to the distribution of assets, the holders of the Preferred Stock and that other stock will share in any distribution of assets in proportion to the respective aggregate liquidation preferences to which they are entitled including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable). After the holders of the Preferred Stock and any stock having the same rank as the Preferred Stock are paid in full, they will have no right or claim to any of our remaining assets. 
Neither the sale, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or any part of our property or business nor a merger or consolidation by us with or into any other entity will be considered a dissolution, liquidation or winding-up of our business or affairs. 
Voting Rights 
The Preferred Stock has no voting rights, except as provided below or as otherwise specifically required by Texas law. On any matter in which holders of Preferred Stock are entitled to vote, including when acting by written consent, each holder of Preferred Stock will have one vote per share, except as to votes upon a Nonpayment Event (as defined below) in which case the Preferred Stock will have voting rights in proportion to its liquidation preference. 
Right to Elect Two Directors upon a Nonpayment Event. Whenever dividends payable on the shares of Preferred Stock (whether or not declared) have not been paid in an aggregate amount equal to full dividends for six or more quarterly dividend periods, whether or not consecutive (a “Nonpayment Event”), the authorized number of our directors will automatically be increased by two. The holders of the Preferred Stock will have the right, together with holders of any other series of preferred stock on which similar voting rights have been conferred and are exercisable with respect to the matter (i.e., on which dividends likewise have not been paid), voting together as a class in proportion to their respective liquidation preferences, by a plurality of the votes cast, to elect two directors to fill such newly created directorships.
Other Voting Rights. So long as any shares of Preferred Stock are outstanding and not called for redemption, the vote or consent of the holders of at least 66 2/3% of the then-outstanding shares of Preferred Stock, voting separately as a single class, is necessary for effecting or validating certain changes, including certain amendments, alterations or repeals of any provision of our Articles of Incorporation or Bylaws that would significantly and adversely affect the Preferred Stock, binding share exchanges or reclassifications or mergers or consolidations involving Cullen/Frost. 
Preemptive and Conversion Rights 
The holders of the Preferred Stock do not have any preemptive rights. The Preferred Stock is not convertible into or exchangeable for property or shares of any other series or class of our capital stock. 
Certain Anti-Takeover Matters
The Articles of Incorporation and Bylaws include a number of provisions that may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with the board of directors rather than pursue non-negotiated takeover attempts. These provisions include the following: 
Advance Notice Requirements
The Bylaws establish advance notice procedures with regard to shareholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of shareholders of Cullen/Frost. These procedures provide that notice of such shareholder proposals must be timely given in writing to the Secretary of Cullen/Frost prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received not less than 60 days nor more than 90 days prior to the date of the meeting. The notice must contain certain information specified in the Bylaws. 
-3-

Limitation on Ability of Shareholders to Call Special Meetings
The Bylaws provide procedures pursuant to which holders of record of not less than 10% of the voting power of outstanding shares of the common stock may call a special meeting of shareholders. 
Amendment of Bylaws
Amendments of the Bylaws require the approval of either a majority of the board of directors or the vote of the holders of three-quarters of the outstanding shares entitled to vote thereon. 
Removal of Directors
In order for any director to be removed, the Bylaws require the vote of the holders of two-thirds of the shares then entitled to vote for the election of directors.
Description of the Depositary Shares
General
The Depositary Shares represent proportional fractional interests in shares of the Preferred Stock. Each Depositary Share represents a 1/40th ownership interest in one share of the Preferred Stock, and is evidenced by a depositary receipt. We deposited the underlying Preferred Stock with a depositary pursuant to a deposit agreement among us, Computershare Inc. acting as depositary, and the holders from time to time of the depositary receipts evidencing the Depositary Shares (the “Deposit Agreement”). Subject to the terms of the Deposit Agreement, each holder of a Depositary Share is entitled, through the depositary, in proportion to the applicable fraction of a share of Preferred Stock represented by such Depositary Share, to all the rights and preferences of the Preferred Stock represented thereby (including dividend, voting, redemption and liquidation rights).
Dividends and Other Distributions
Each dividend payable on a Depositary Share will be in an amount equal to 1/40th of the dividend declared and payable on the related share of the Preferred Stock. 
The depositary will distribute any cash dividends or other cash distributions received in respect of the deposited Preferred Stock to the record holders of Depositary Shares relating to the underlying Preferred Stock in proportion to the number of Depositary Shares held by the holders.
Record dates for the payment of dividends and other matters relating to the Depositary Shares will be the same as the corresponding record dates for the Preferred Stock.
Withdrawal of Preferred Stock
In accordance with the requirements of the Deposit Agreement, a holder of depositary receipts may withdraw the number of whole shares of Preferred Stock represented thereby by surrendering such receipts at the office of the depositary at which its depositary receipt business is administered or at such other offices designated by the depositary; provided, however that no such whole shares of Preferred Stock which have previously been called for redemption may be withdrawn. In no event will fractional shares of the Preferred Stock (or any cash payment in lieu thereof) be delivered by the depositary.
Holders of such whole shares of Preferred Stock so withdrawn will not thereafter be entitled to deposit such shares of Preferred Stock under the Deposit Agreement or to receive a depositary receipt evidencing Depositary Shares for those shares of Preferred Stock. If the Depositary Shares surrendered by the holder in connection with the withdrawal exceed the number of Depositary Shares that represent the number of whole shares of Preferred Stock to be withdrawn, the depositary will deliver to the holder at the same time a new depositary receipt evidencing the excess number of Depositary Shares.
Redemption of Depositary Shares
If we redeem the Preferred Stock represented by the Depositary Shares, the Depositary Shares will be redeemed from the proceeds received by the depositary resulting from the redemption of the Preferred Stock held by the depositary. The redemption price per Depositary Share is expected to be equal to 1/40th of the redemption price per share payable with respect to the Preferred Stock (or $25 per Depositary Share), plus any declared and unpaid dividends (without accumulation of any undeclared dividends).
-4-

If we redeem shares of Preferred Stock held by the depositary, the depositary will redeem, as of the same redemption date, the number of Depositary Shares representing shares of Preferred Stock so redeemed. If fewer than all of the outstanding Depositary Shares are redeemed, the depositary will select the Depositary Shares to be redeemed pro rata or by lot or in such other manner proportionate and applicable to the manner in which shares of the Preferred Stock are redeemed as determined to be fair and equitable by our board of directors or a duly authorized committee thereof. The depositary will mail notice of redemption to record holders of the depositary receipts not less than 30 and not more than 60 days prior to the date fixed for redemption of the Preferred Stock and the related Depositary Shares.
Voting the Depositary Shares
Because each Depositary Share represents a 1/40th interest in a share of the Preferred Stock, holders of depositary receipts will be entitled to 1/40th of a vote per Depositary Share under those limited circumstances in which holders of the Preferred Stock are entitled to a vote.
When the depositary receives notice of any meeting at which the holders of the Preferred Stock are entitled to vote, the depositary will mail (or otherwise transmit by an authorized method) the information contained in the notice to the record holders of the Depositary Shares relating to the Preferred Stock. Each record holder of the Depositary Shares on the record date, which will be the same date as the record date for the Preferred Stock, may instruct the depositary to vote the amount of the Preferred Stock represented by the holder’s Depositary Shares. To the extent possible, the depositary will vote the maximum number of whole shares of Preferred Stock represented by Depositary Shares as to which any particular voting instructions are received in accordance with the instructions it receives. We will agree to take all reasonable actions that the depositary determines are necessary to enable the depositary to vote as instructed. If the depositary does not receive specific instructions from the holders of any Depositary Shares representing the Preferred Stock, it will not vote the amount of the Preferred Stock represented by such Depositary Shares.
Preemptive and Conversion Rights
The holders of the Depositary Shares do not have any preemptive or conversion rights.
Registrar, Transfer Agent, Dividend Disbursing Agent and Redemption Agent
Computershare Inc. is the registrar, transfer agent, dividend disbursing agent and redemption agent in respect of the depositary receipts evidencing the Depositary Shares.
Depositary
Computershare Inc. is the depositary for the Depositary Shares.
Form of Depositary Shares
The Depositary Shares have been issued in book-entry form through DTC.
Listing
The Depositary Shares are listed on the NYSE under the symbol “CFR PrB.”
-5-

DESCRIPTION OF THE NOTES
The following is a brief description of the terms of the Notes and the relevant indenture (the “Indenture”). It does not purport to be complete in all respects. This description is subject to and qualified in its entirety by reference to the Notes and the Indenture, which has been filed with the SEC and are available upon request from Cullen/Frost.
General 
We issued $100,000,000 aggregate principal amount of the Notes on March 17, 2017. We have the right to issue additional notes of the same series without the consent of the holders of the Notes. Any such additional notes would have the same terms as the Notes (except for the issue date and public offering price). The Notes are unsecured and subordinated in right of payment to all our senior indebtedness and effectively subordinated to all debt and all other liabilities of our subsidiaries.
The Indenture does not limit the amount of senior or subordinated debt that we or our subsidiaries may incur either under the Indenture or other indentures, loan agreements or other instruments to which we or our subsidiaries become a party. The Notes are not convertible or exchangeable for our common stock or preferred stock. 
Maturity; Interest 
The Notes will mature on March 17, 2027. The Notes bear interest at an annual rate equal to 4.500%. Interest on the Notes is payable semi-annually in arrears on March 17 and September 17 of each year to the persons in whose names the Notes are registered at the close of business on the preceding February 28 and August 31 of each year. Interest on the Notes at the maturity date will be payable to the persons to whom principal is payable. 
Optional Redemption 
The Notes are redeemable, in whole or in part, at our option at any time or from time to time on or after February 17, 2027 and are not subject to any sinking fund or similar provisions. The redemption price will be equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest to the redemption date. 
Mandatory Redemption
The Notes are not mandatorily redeemable at the option of the holders. 
Subordination 
The Notes are subordinated in right of payment to the prior payment in full of all of our senior indebtedness. As of December 31, 2020, Cullen/Frost had minimal outstanding indebtedness that would rank senior to the Notes. In addition, as of that date, the aggregate amount of all debt and other liabilities of our subsidiaries, including deposits, that would effectively rank senior to the Notes was approximately $38.3 billion.
Events of Default and Defaults 
Under the Indenture, our filing for bankruptcy and the occurrence of certain other events of bankruptcy, insolvency or reorganization relating to Cullen/Frost or the receivership of any “major constituent bank” (as defined in the Indenture) are defined as “events of default”. 
Under the Indenture, the following are defined as “defaults” with respect to the Notes:
•failure to pay principal of or any premium on any note when due;
•failure to pay any interest on any note when due and that default continues for 30 days;
•failure to perform any other covenant in the indenture and that failure continues for 60 days after written notice to us by the trustee or the holders of at least 25% in aggregate principal amount of outstanding notes; and
•any event of default.
If an event of default occurs and is continuing, then the maturity of the Notes will automatically accelerate without any action by the trustee or the holders. After acceleration, but before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of outstanding Notes may, under circumstances set forth in the Indenture, rescind the acceleration if we have deposited monies on account of certain overdue amounts with the trustee. 
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If a default occurs that is not also an event of default, neither the trustee nor the holders may act to accelerate the maturity of the Notes. But if a default occurs, the trustee may proceed to enforce any covenant and other rights of the holders of the Notes. Furthermore, if the default relates to our failure to make any payment of interest due and payable and such default continues for 30 days or such default is made in the payment of the principal or any premium at its maturity, then the trustee may demand payment of the amounts then due and payable and may proceed to prosecute any failure on our part to make such payments.
Cullen/Frost will furnish to the trustee annually a statement as to its performance of its obligations under the Indenture and as to any default in performance.
Modification of the Indenture 
The following summarizes changes we can make to the Indenture and the Notes issued under the Indenture. 
Changes Requiring Each Holder’s Approval. First, there are changes that cannot be made without the approval of each holder of a Note affected by the change under the Indenture, including changes to the maturity for the principal or interest payment on a Note, reduction of the principal amount, the amount payable on acceleration of the maturity after a default, the interest rate or the redemption price for a Note, and impairment of any right a holder may have to require repayment of its Note. Refer to the Indenture for a full list of additional such changes. 
Changes Not Requiring Approval. The second type of change does not require any approval by holders of the Notes. These changes are limited to clarifications and changes that would not adversely affect the Notes of that series in any material respect. Nor do we need any approval to make changes that affect only Notes to be issued under the Indenture after the changes take effect. 
We may also make changes or obtain waivers that do not adversely affect a particular Note, even if they affect other debt securities that we may issue under the Indenture. In those cases, we do not need to obtain the approval of the holder of the unaffected debt security; we need only obtain any required approvals from the holders of the affected debt securities. 
Changes Requiring Super-Majority Approval. Any other change to the Indenture and the Notes issued under the Indenture would require certain super-majority approvals as described in the Indenture. 
Actions Not Restricted by Indenture 
The Indenture does not contain restrictions on our ability to: 
•incur, assume or become liable for any type of debt or other obligation;
•create liens on our property for any purpose; or
•pay dividends or make distributions on our capital stock or repurchase or redeem our capital stock.
The Indenture does not require the maintenance of any financial ratios or specified levels of net worth or liquidity. In addition, the Indenture does not contain any provisions that would require us to repurchase or redeem or modify the terms of any of the Notes upon a change of control or other event involving it that may adversely affect the creditworthiness of the Notes. 
The Trustee
The Bank of New York Mellon is the indenture trustee. Subject to the provisions of the Indenture relating to the duties of the trustee, in case an event of default occurs and is continuing, the trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders, unless such holders have offered to the trustee reasonable indemnity. Subject to such provisions for the indemnification of the trustee, the holders of a majority in aggregate principal amount of the outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee.

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